China Banking Corporation (China Bank) continued its strong performance amid the community quarantine, posting P5.2 billion in net income in the first half of 2020, up 24 percent year-on-year.
This translated to a return on equity of 10.64 percent and return on assets of 1.07 percent.
In a statement, China Bank said the growth was achieved even as it ramped up provisions more than fourteen times to P4.8 billion in anticipation of the impact of COVID-19 and ongoing quarantine measures on asset quality.
“Our first half results reflect China Bank’s continued strength and resilience, and demonstrate the soundness of our strategies to thrive in the new normal. I am very grateful to our employees for their dedication and flexibility and to our customers for their continued trust and patronage,” William Whang, China Bank President, said.
“In these uncertain times, we remain cautiously optimistic. We are adapting our strategies accordingly and managing our capital with the prudence that the current volatility calls for. I am convinced that we could overcome the difficulties, and like in the last 100 years, we would do so by standing by our customers, cooperating with regulators, and doing our part to fight this pandemic and emerge stronger together,” said Whang.
Total operating income rose 40 percent year-on-year to P21.0 billion.
Net interest income grew 39 percent to P16.2 billion on the back of higher volume of earning assets and lower funding costs as market interest rates declined.
Net interest margin improved to 3.8 percent from 3.2 percent.
Non-interest income surged 41 percent to P4.7 billion primarily from strong trading and securities gains, which grew 212 percent to P2.8 billion.
“Our balance sheet reflects ample liquidity and sufficient capitalization. We are closely monitoring developments and working with our customers who are under financial distress in these difficult times. While the long-term impact of the global pandemic on the Philippine economy and banking industry remains uncertain, we are confident that China Bank’s enduring financial strength will enable us to navigate the new or even the next normal,” Patrick Cheng, China Bank Chief Finance Officer, said.
Operating expenses increased 5 percent to P10.4 billion mainly from COVID-19 and higher volume related expenses.
Cost-to-income ratio improved to 50 percent from 66 percent in the same period last year.
Total assets grew 8 percent to P982 billion due primarily to loan growth.
The bank’s loan portfolio expanded 11 percent to P593 billion as the bank continued to provide credit across market segments.
Asset quality remained healthy amid the loans growth, with a non-performing loan (NPL) ratio of 1.6 percent and NPL cover at 146 percent.
On the funding side, total deposits grew 3 percent to P773 billion with CASA at 53 percent. Total capital stood at P98 billion, up 8 percent year-on-year.
At the June 18 Annual Stockholders’ Meeting, the bank declared a record dividend payout of P2.68 billion, 14 percent higher than previous year, as net profits reached P10.1 billion in 2019. The cash dividends are equivalent to P1.00 per share.