China Bank grows profits in third quarter

MANILA, Philippines — China Banking Corp. posted higher profits in the third quarter, which the company said would serve as "buffer" against shocks from the lingering coronavirus pandemic.

In a disclosure to the stock exchange on Thursday, the Sy-led lender said it netted P3 billion during the July-September period, up 21% year-on-year. That sent the company's 9-month net income to P8.2 billion, 23% higher than its bottomline a year ago.

Despite the better financial results, William Whang, company president, is cautiously optimistic. "We are still expecting continuing challenges from a difficult environment, and the results give us the buffer to absorb further stresses down the road,” Whang said.

Since March, when the outbreak reached pandemic proportions, banks were setting aside more funds to protect their balance sheet from a potential accumulation of bad loans from borrowers who were laid off and cash-strapped businesses.

As of September, China Bank allocated P6.3 billion to cover these non-performing loans or credit that remain unpaid 30 days past due. The amount set aside was 12 times bigger from last year and sufficient to cover 104% of existing soured loans. Unpaid loans in the first 9 months remained generally healthy at 2.5% of the bank's loan books.

"Amid the pandemic, China Bank’s capital and liquidity position remains strong," Patrick Cheng, company chief finance officer, said. "We continue to productively deploy resources to drive strategic growth, finance our clients’ needs, and contribute to the country’s economic recovery."

Financial results showed loans and deposits rose by 6% each year-on-year to P595 billion and P827 billion, respectively. That yielded a loans-to-deposit ratio of 72%.

Total assets increased by P60 billion to reach P1 trillion, ahead of the bank’s year-end target. 

Net interest income in first 9 months jumped 35% annually to P25 billion on the back of 36% drop in interest expense. This led to a higher net interest margin of 3.89%. Meanwhile, fee-based income grew 35% on-year to P7 billion as trading gains surged 3.6 times and income from trust business expand 15%. 

Overall, operating income without trading gains reached P28 billion, up 24% year-on-year and outpacing a 6% growth in expenses to P16 billion, which were mainly incurred from pandemic-related costs.

On Thursday, shares in China Bank shed 0.23% to close at P21.60 each.