China Bank income jumps 20% in 2020

MANILA, Philippines —China Banking Corp. earned 20 percent  more in 2020 as its asset base breached the P1-trillion level despite the uncertainties brought about by the COVID-19 pandemic.

In a statement, China Bank president William Whang said the bank remained well positioned to weather the impact of the global health crisis. Last year, its earnings went up to P12.1 billion from P10.1 billion in 2019.

“Going into the crisis, China Bank was operationally and financially sound, but what enabled us to remain resilient and to sustain our growth momentum was our employees who went above and beyond in 2020,” Whang said.

The bank, a member of the SM Group of Companies, said the strong growth in core businesses and better investment and trading returns helped offset its pandemic-related loan buffer of P8.9 billion, which was 3.5 times higher than the P2.6 billion allocated in 2019.

China Bank’s net interest income surged 30 percent to P33.8 billion on the back of the 39 percent drop in interest expense, resulting in higher net interest margin of 3.9 percent.

Likewise, non-interest income increased by 19 percent to P10 billion as trading and securities gains more than doubled to P5.4 billion.

Sustained efforts in cost management kept the growth of operating expenses controlled at six percent to P21.5 billion last year from P20.3 billion in 2019.

Cost-to-income ratio improved to 49 percent from 59 percent as income growth continued to outpace expense growth.

The higher profit translated to an improved return on equity of 12.1 percent from 11 percent, and a better return on assets of 1.2 percent from 1.1 percent.

China Bank’s asset base expanded by eight percent to hit P1.04 trillion last year from P962 billion in 2019.

“Our relentless efforts to build and maintain robust liquidity and capital levels have positioned the bank well to weather the ongoing storm, and at the same time, to help our customers and the country recover,” Whang said.

The bank’s deposit base grew eight percent to P835 billion, underpinned by a  14 percent growth in checking and savings accounts, easing its overall funding cost.

China Bank’s loan book slipped one percent to P572 billion as business customers reduced loan drawdown.

The bank reported a higher non-performing loan (NPL) ratio rose of 2.3 percent from the previous year’s 1.5 percent, while NPL cover remained sufficient at 128 percent from 129 percent.

Patrick Cheng, chief finance officer at China Bank, said the bank continues to support customers through the uncertainty of COVID-19, providing credit, debt relief, and payment moratorium while ensuring capital and liquidity preservation.

“We have formulated strategies to mitigate asset quality issues given the possibility of a drawn out pandemic,” Cheng said.