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Chinabank profit declines but core business better.

China Banking Corporation posted 35 percent drop in net income to P1.16 billion (consolidated, excluding Plantersbank) in the first quarter of the year amid lower trading gains.

However, the bank said in a disclosure to the Philippine Stock Exchange that core business showed very robust results, with net interest income up 42 percent, boosted by a 20 percent increase in interest revenues from loans and a 33 percent drop in interest expense.

Non-interest income, excluding trading gains, grew 21 percent, driven by increased earnings from fee-based businesses like investment banking, private banking, non-life insurance, and remittance.

While earnings in the first three months were dampened by market volatility and the expected drop in trading gains, the growth of core businesses was very strong.

The Bank's loan portfolio expanded 31 percent year-on-year to P234.98 billion, driven by strong demand from all customer segments (49 percent loans growth if including Plantersbank).

Deposits increased 29 percent to P350.93 billion, underpinned by a 51 percent increase in low-cost deposits (checking and savings accounts or CASA) to P142.26 billion, which now accounted for half of total peso deposits.

The Bank's net interest margin improved to 3.13 percent from 2.74 percent despite tough competition and declining interest rates.

"Our first quarter profit was in line with our expectations for this time of the year. We are focusing on sustainable earnings through loans and deposits growth and strengthening other fee-based businesses, and we will work hard to meet our goals for the year," said China Bank senior executive vice president Ricardo R. Chua.

Even as the loan book showed healthy growth, asset quality further improved as close monitoring and tighter controls led to a drop in gross non-performing loans (NPL) ratio to 1.92 percent from 2.79 percent, with net NPL ratio even lower to 0.10 percent. Loan loss cover was hiked to 145.70 percent from 135.82 percent.

The Bank's total capital in the first quarter stood at P45.78 billion, equivalent to a tier 1 capital adequacy ratio of 13.69 percent. (James Loyola)


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Title Annotation:Business News
Publication:Manila Bulletin
Article Type:Financial report
Date:May 16, 2014
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