China Banking Corp., the seventh-largest lender in terms of assets, said net income in the first six months of 2018 hit P3.6 billion, unchanged from a year ago, on the back of sustained expansion in core businesses.
The bank said in a disclosure to the stock exchange Thursday core operating income (recurring income) rose 15 percent to P13.3 billion on year. Total operating income stood at P13.1 billion, up 7 percent.
Net interest revenues climbed 20 percent to P11.1 billion due to a robust growth in loans and securities. Improving loan yields offset the rise in funding cost, leading to an improvement in net interest margin to 3.16 percent from 3.07 percent.
Fee-based revenues fell 32 percent to P2.1 billion as the bank reduced its reliance on securities trading.
Total assets grew 17 percent to P768.4 billion. Deposits expanded 18 percent to P653.4 billion, underpinned by a 32-percent increase in low-cost funds to P374.6 billion, which funded the growth in lending.
Loans rose 18 percent to P469.4 billion, driven by strong demand across all customer segments, with consumer lending growing by 21 percent. The resulting loans to deposit ratio was a healthy 72 percent.
Tighter loan monitoring and remedial efforts enabled the bank to maintain asset quality amid the loan expansion. Non-performing loans dropped P314 million or 4 percent, which led to an improved NPL ratio of 1.5 percent.
NPL coverage improved to 107 percent from previous year’s 93 percent at the consolidated level, and a healthier 181 percent at the parent bank level.
Total capital funds grew 4 percent year-on-year to P83.6 billion. The bank’s common equity tier 1 (CET 1) and total capital adequacy ratios stood at 12.6 percent and 13.3 percent, respectively, well above the minimum regulatory requirement.
China Bank recently successfully raised P10.25 billion through a public offering of peso-denominated Long Term Negotiable Certificates of Time Deposits, the first tranche of its planned P20 billion LTNCD offering.
Two times oversubscribed, it was the largest LTNCD issuance in the banking industry so far in 2018, and also the biggest tranche of LTNCD done in China Bank’s history. The bank plans to use the proceeds from the fund-raising activity to support strategic initiatives and expansion programs.
