Friday, 14 August 2009

Philippines' China Bank six-month income up 38%

Erik dela Cruz
Business Mirror

CHINA Banking Corp. clocked a 38-percent jump in net income to P2.02 billion for the first half of 2009, from P1.46 billion in the same period last year, on higher interest earnings and bigger trading gains.

The country’s ninth-largest bank in assets, which is controlled by retail tycoon Henry Sy, posted a 24.4-percent increase in revenue.

Net interest revenue was up 32 percent while fee-based and other revenues grew 52.4 percent, it said in a statement.

“We are gratified with these positive results, given the very tough environment last year and considering that we are in the midst of our biggest branch expansion plan,” said executive vice president and chief operating officer Ricardo Chua.

Market conditions, he said, had recently improved from last year.

“In addition, more stable interest rates allowed for recovery of net interest margins,” he said.

The bank is looking to expand its branch network to 300 by 2010.

Despite a 32.8-percent rise in operating expenses as a result of the investments in new branches and automated teller machines, as well investments in new technology platforms, it said its cost-to-income ratio improved to 55.24 percent from 57.47 percent last year.

Its asset base expanded by 12.2 percent to P213.23 billion as of end-June, with gross loans increasing by 8.1 percent led by corporate and consumer loans.

The bank lowered its nonperforming loans ratio to 4.92 percent from 6.24 percent a year earlier after getting rid of almost P1 billion in bad loans.

Provisioning for probable losses was accelerated, with the total provisions in the first half of P400 million exceeding the provisions made for the whole year of 2008. As a result, loan loss coverage ratio shot up to 106.6 percent

The bank said its ongoing branch expansion fueled growth in both low-cost and dollar deposits, boosting total deposits to P175.86 billion.

It opened 10 branches, including two China Bank Savings outlets, in the first half and intends to open 20 more within the year.

“The share of current and savings accounts to total peso deposits further improved to 41.8 percent, underpinning the improvement in net interest margins,” it said.

Total capital funds stood at P28.58 billion, with a Tier 1 capital adequacy ratio (CAR) of 12.54 percent and total CAR of 13.43 percent, well above the minimum regulatory requirement of 10 percent.

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