China Bank profit up 14% to P2.5 B in H1

MANILA, Philippines - Earnings of China Banking Corp. grew 14 percent in the first half of the year on the back of higher interest income and lower expenses.

China Bank reported yesterday to the Philippine Stock Exchange (PSE) its net income reached P2.51 billion or P310 million higher than last year’s P2.2 billion.

The bank said it managed to sustain the strong growth in its core businesses in the first semester of the year.

It booked a return on equity (ROE) of 8.67 percent and a return on assets (ROA) of 1.06 percent in the first six months of the year.

China Bank said its net interest income went up nine percent to P7.42 billion on the back of higher loans volume while its interest expense fell nine percent to P2.06 billion.

This resulted in an improved net interest margin of 3.36 percent for the first six months.

Furthermore, the bank’s non-interest income increased four percent to P2.05 billion from higher trading gains as well as fees and commissions.

Total assets of China Bank went up five percent to P479.29 billion, driven by loans and deposit growth.

The bank’s loan portfolio increased 10 percent to P289.32 billion, fuelled by the 26 percent jump in consumer loans.

As total deposit growth remained steady at three percent, the bank’s 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 checking and savings accounts to total deposits ratio stood at 50.70 percent versus 45.63 percent year-on-year, while the loans to deposit ratio stood at 72.43 percent from 68.11 percent.

The bank’s income before tax rose 11 percent to P3.20 billion, while operating income grew eight 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 six percent to P6.01 billion.

This reflected 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.