China Banking Corporation (China Bank, PSE symbol: CHIB) booked P5.0 billion net income for the first quarter of 2023, driven by robust asset base expansion, strong net interest income and lower credit provisions. This translated to a return on equity of 14.7% and return on assets of 1.5%, still among the best in the industry.
As announced in its annual stockholders' meeting on April 20, 2023, all CHIB stockholders on record as of May 5, 2023 will be paid P1.90 per share cash dividend (P1.00 per share regular cash dividend and P0.90 per share special cash dividend). The cash dividends, totalling P5.1 billion, is 27% higher compared to the P4.0 billion paid last year.
Amid an operating environment challenged by elevated interest rates and inflation, the Bank’s net profit managed to increase by 13% from the previous quarter.
Net interest income grew by 18% from the same period last year on the back of 46% increase in topline revenues to P18.4 billion, as the Bank further built its earning asset portfolio. Net loans increased by 15% to P709 billion due to a 13% and 23% expansion in business and consumer loans, respectively. The Bank’s thrift banking arm, China Bank Savings, sustained robust growth in retail loans, with its personal loans doubling year-on-year to account for almost a third of total consumer business. Consolidated net interest margin remained healthy at 4.2%.
As the economy recovers, the Bank recorded a 44% drop in credit provisions to P440 million. Nevertheless, asset quality remained sound with a better-than-industry non-performing loans (NPL) ratio of 2.3% and NPL coverage ratio of 118%.
Operating expenses (excluding provision for impairment and credit losses) increased by 19% to P6.8 billion mainly from higher volume-related taxes. Core operating expenses growth was also modest with the Bank’s continued investments on digital transformation and human resource development.
"The bank continues to do well amidst the challenging operating environment, reflecting the quality of our balance sheet, our prudent management and the strength of our core businesses. We are off to a good start as our strong capital position and solid liquidity allow us to play a major role in the reopening and growth of the Philippine economy,” said China Bank President & CEO Romeo D. Uyan, Jr.
The country’s fourth largest private universal bank saw its total resources grow by 20% to P1.4 trillion as of March 31, 2023. On the funding side, total deposits expanded by 24% to P1.1 trillion, reflecting the Bank’s solid customer relationships.
"We sustained the strong momentum in loans and deposits, outpacing the industry average and reflecting the successful execution of our strategy to strengthen our core businesses, effectively manage resources, and prudently reduce risks," said China Bank CFO Patrick D. Cheng.
The Bank improved its capitalization, increasing by 11% to P139 billion, with a common equity tier 1 (CET 1) ratio of 15.4% and total capital adequacy ratio (CAR) of 16.3%.