At the annual stockholders’ meeting last Thursday, May 3, 2012 of China Bank (stock code: CHIB), the stockholders approved the declaration of a 10% stock and a P12.00 per share cash dividend for a total of P1.42 billion to holders of 117.99 million outstanding shares (before stock split). The stockholders likewise approved a ten-for-one stock split of the Bank’s common shares to provide more domestic liquidity to the Bank’s shares.
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The cash dividends represent 27.90% of the 2011 net income of P5.075 billion (earnings per share of P43.02). Based on China Bank’s latest share price of P522.00, the P12.00 cash dividend per share translates to an annualized dividend yield of 2.30%.
The dividends and stock split are subject to approval by the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, and the Philippine Stock Exchange.
China Bank posted a 27% increase in consolidated net income of P1.10 billion for the first quarter of the year. The improved earnings translate to a return on equity of 11.02% and a return on assets of 1.64%.
China Bank President and CEO Peter S. Dee said, “We are delighted to report an improvement in our core earnings—this performance continue to be supportive of our regular dividend payments to shareholders.” The CEO also noted that the Bank has been consistently providing good returns to shareholders thru substantial cash and stock dividends. In 2011, it paid P12.00 per share cash dividend for a total of P1.30 billion and a 10% stock dividend.
During the quarter, the Bank reported strong growth in loans and fee-based income but modest growth in deposits, while experiencing thinner margins from the continuing decline in asset yields.
Customer loans portfolio stood at P154 billion by end-March 2012, a 34% year-on-year ADB growth, driven by higher bookings from retail, commercial, and consumer borrowers. Despite the drop in lending rates, the higher loan volume boosted interest income from loans and receivables by 15%. Fee-based income improved by 166% due to hefty trading and foreign exchange gains as the Bank took advantage of favorable market conditions. The improvement also came from higher contributions from trust operations (trust fees increased 25% from higher volume of trust assets) and the sale of acquired assets.
Total resources stood at P272 billion, up 14% from the same period last year. Total deposits grew by 14% to P222 billion with total low cost deposits at P81 billion. This translates to a healthy low cost to total peso deposits ratio of 48.53%.
Tighter monitoring of loans quality led to a drop in non-performing loans by P737 million, reducing China Bank’s non-performing loans ratio to 2.80%. The Bank also booked an additional P100 million in provisions for probable loan losses, bringing up its loan loss coverage ratio to 148.72%. Meanwhile, the loans-to-deposits ratio stood at 67.22%.
As China Bank carried out its expansion program, operating expenses rose by 26%, mainly from higher compensation, taxes and licenses, and occupancy costs. The Bank still maintained its cost efficiency with a cost-to-income ratio of 60.18%, slightly better than the 61.41% reported last year.
In line with its higher growth projections, China Bank recently appointed new executives to key positions: Victor O. Martinez, first vice president for Corporate Banking; Virgilio O. Chua, first vice president for Investment Banking Group; Ma. Victoria G. Pantaleon, assistant vice president for Private Banking Group; and Cristina D. Cristobal, senior assistant vice president for I.T.
China Bank’s financial position remains solid with total capital funds rising by 15% to P40.32 billion, equivalent to a tier 1 capital adequacy ratio of 15.97%—still one of the strongest in the industry.
Hans T. Sy and Gilbert U. Dee were re-elected chairman and vice chairman of the Board, respectively. The following directors were also re-elected to the China Bank Board: Peter S. Dee, president and CEO; Ricardo R. Chua, senior executive vice president and COO; Joaquin T. Dee; Harley T. Sy; Herbert T. Sy; Jose T. Sio; independent directors Dy Tiong, Alberto S. Yao, and Robert F. Kuan; and Pilar N. Liao as advisor to the Board. Henry Sy, Sr. remained honorary chairman and advisor to the Board.
China Bank, established in 1920, was listed on the Philippine Stock Exchange in 1965, was the first bank in Southeast Asia to process deposit accounts on-line in 1969, and was the first Philippine bank to offer phone banking in 1988. China Bank provides a wide range of banking services through close to 300 branches and 480 ATMs nationwide (including thrift bank subsidiary China Bank Savings). Complementing this vast network are electronic banking channels that provide efficient and secure 24/7 service: China Bank TellerPhone (phone banking) and China Bank Online (Internet and mobile banking).