CHINA Banking Corp., the eighth-largest bank in terms of assets, plans to issue up to P20 billion worth of long-term negotiable certificates of time deposits mainly to support its strategic initiatives and business expansion.
China Bank said in a disclosure to the stock exchange Tuesday it would apply for a shelf program and issue the paper in tranches of P5 billion to P10 billion each with tenors ranging from five to seven years.
“The timing will be subject to regulatory approvals and tranche issue size and implementation will depend on prevailing market conditions,” the bank said.
China Bank expects to tap existing clients and depositors for the distribution of the LTNCD.
LTNCDs are time deposits that have longer maturity and are higher yielding than regular deposits. These instruments are negotiable and insured with Philippine Deposit Insurance Corp. up to the maximum coverage of P500,000 per depositor.
China Bank last entered the LTNCD market in 2008 when it successfully offered the five-year P5-billion LTNCD maiden issue that was oversubscribed just two days into the offering period.
“This issuance is expected to expand the bank’s long-term deposit base and boost its long-term asset growth,” it said.
China Bank remains one of the leading banks in the industry, with a total capital adequacy ratio of 12.28 percent. It is the eighth largest publicly-listed bank in market capitalization.
China Bank in the first half this year posted a 30-percent increase in net income to P3.27 billion year-on-year on the strength of its core and fee-based businesses.
The performance in the first six months translated into a return on equity of 10.74 percent and a return on assets of 1.22 percent.
Net revenues before operating expenses rose 15 percent to P10.85 billion, with net interest revenues up 7 percent to P7.95 billion, driven by the 12-percent growth in loan portfolio.
Non-interest revenues climbed 42 percent to P2.90 billion, supported by higher trading gains of P993.52 million from P345.91 million, and a 16-percent increase in service charges, fees and commissions.
Total operating expenses remained manageable at 11 percent to P6.66 billion, even as the bank continued its network expansion and embarked on new product initiatives.
Total assets increased 16 percent to P555.55 billion, driven by loans and deposit growth. Net loans expanded 12 percent to P324.03 billion, driven by a strong 24-percent increase in consumer loans.
Total deposits grew 16 percent to P462.62 billion, with low-cost CASA (checking and savings accounts) deposits growing 18 percent to P239.04 billion. The CASA to total deposits ratio improved to 51.67 percent from 50.66 percent last year, while the loans to deposit ratio stood at 70.04 percent from 72.49 percent.
Total capital funds rose 6.23 percent to P62.47 billion. The bank”Ÿs CET 1/ Tier 1 and total capital adequacy ratios stood at 12.28 percent and 13.20 percent, respectively.
China Bank”Ÿs credit rating was recently upgraded by international ratings agency Fitch Ratings to „BB+”Ÿ from „BB”Ÿ, with a stable outlook. The Fitch Ratings upgrade was based on the “expectation that the bank will maintain broadly-steady asset quality, adequate capital buffers and stable funding and liquidity profiles as it grows and potentially gains market share”.