MANILA, Philippines - China Banking Corp., a banking unit under the SM Group of Companies, posted a consolidated net income of P1.16 billion in the first quarter, down 35 percent from the same period in 2013 amid lower trading gains.
In a disclosure to the Philippine Stock Exchange, Chinabank said the income figure, however, still excludes earnings from newly-acquired Planters Development Bank.
Chinabank said despite the drop, its 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 such as investment banking, private banking, non-life insurance and remittance.
Return on equity and return on assets stood at 10.3 percent and 1.14 percent, respectively.
The bank’s loan portfolio expanded 31 percent year-on-year to P234.98 billion, on strong demand from all customer segments. Inclusive of Plantersbank, loan growth would have been 49 percent.
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 50 percent 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 Chinabank senior executive vice president and chief operating officer Ricardo Chua.
As Chinabank carried out its expansion program, operating expenses were controlled, rising four percent to P2.52 billion. Cost-to-income ratio stood at 63 percent.
Total assets expanded 23 percent to P408.04 billion (Chinabank and China Bank Savings). Combined with Plantersbank, the increase is 37 percent to P455 billion in resources as of March 31, 2014, ranking fifth largest among domestic private commercial banks in the country.
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 145.7 percent from 135.82 percent.
Total capital in the first quarter stood at P45.78 billion, equivalent to a Tier 1 capital adequacy ratio of 13.69 percent.
The Chinabank Group now has 450 branches to date (299 Chinabank, 73 Chinabank Savings and 78 Plantersbank).
The bank is also implementing a new core banking system for roll-out in the last quarter of the year.