China Bank’s expansion plans prove effective
(10 August 2015 – Philippines) China Banking Corporation (China Bank) posted a 14 percent increase in consolidated profits for the first half of 2015 to P2.51 billion (A$7.44 million) from P2.20 billion for the same period last year, as the Bank sustained the strong growth in its core businesses.
This translates to a return on equity (ROE) of 8.67 percent and a return on assets (ROA) of 1.06 percent.
Net interest income is up 9 percent to P7.42 billion on the back of higher loans volume and lower interest expense, which dropped 9 percent to P2.06 billion.
This resulted in an improved net interest margin of 3.36 percenty for the first six months.
Meanwhile, non-interest income is up 4 percent to P2.05 billion from higher trading gains and fees and commissions.
Total assets increased 5 percent year-on-year to P479.29 billion, driven by loans and deposit growth.
Net loans expanded 10 percent year-on-year to P289.32 billion, underpinned by a 26 percent increase in consumer loans.
Total deposits stood at P399.45 billion, deposit growth remained steady at 3 percent, the Bank’s CASA (checking and savings accounts) level rose 14 percent to P202.50 billion and replaced a significant block of high cost funding, thus improving the funding mix and reducing interest expense by P210 million.
The CASA to total deposits ratio stood at 50.70 percent versus 45.63 percent year-on-year, while the loans to deposit ratio was at 72.43 percent from 68.11 percent.
The Bank’s income before tax reached P3.20 billion, up 11 percent.
Operating income grew 8 percent to P9.47 billion.
Even as the Bank pursued its expansion plans, the increase in operating expenses (excluding loan-loss provision) was controlled at 6 percent to P6.01 billion, reflecting the Bank’s effective cost management that led to an improved cost efficiency ratio of 63.46 percent from 65.01 percent.
With the sustained expansion of its loan portfolio, China Bank increased its provision for credit losses by 37 percent to P255.59 million.
Total capital funds rose 6 percent to P58.81 billion.
The Bank’s CET1/Tier 1 and total capital adequacy ratios stood at 13.58 percent and 14.49 percent, respectively.
Recently, the Bank returned to the offshore markets, securing a US$158 million syndicated three-year term loan.
Global credit rating agency Fitch affirmed the Bank’s long-term foreign and local currency Issuer Default Rating (IDRs) at 'BB', with a stable outlook.
China Bank celebrates its 95th year in August and is switching to a new and more powerful core banking system and is launching China Bank MasterCard which comes in three variants: Prime, Platinum, and World.
China Bank offers a wide range of financial products and services through over 485 branches to date, including those of subsidiaries China Bank Savings (CBS) and Plantersbank.
The Bank is on track with its plan of adding 30 more branches this year, having already opened seven China Bank and eight CBS branches since January.
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