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China Bank posts P2.2 B net income in Q1 2020, up 19%

Thursday, May 07, 2020

China Banking Corporation (China Bank, stock symbol: CHIB) saw its net income increase by 19% to P2.2 billion in the first quarter of 2020, driven by the sustained growth of its core businesses amid the Luzon-wide enhanced community quarantine (ECQ).  This translated to a return on equity of 9.15% and return on assets of 0.92%.

Total operating income rose 26% year-on-year to P9.1 billion.

Net interest income grew 34% to P7.9 billion on the back of higher revenues from earning assets and lower interest expense, which dropped 23%.  Net interest margin improved to 3.82% from 3.32%.

Weaker market conditions impacted the Bank’s trading activities and led to a lower fee income of P1.2 billion.

Operating expenses increased 22% to P5.8 billion as the Bank continued to strengthen and expand its operations and provided for COVID-19 related expenses. Nevertheless, cost-to-income ratio improved to 64% from 66% in the same period last year.

Despite the scaled-down branch operations in Metro Manila and the rest of Luzon starting mid-March, total assets expanded 10% to P984 billion.

Gross loans grew 15% to P592 billion, driven by strong demand across all customer segments. On the funding side, deposits rose 9% to P785 billion.  Loans to deposits ratio improved to 74%.

China Bank’s non-performing loan (NPL) ratio remained stable at 1.7%. The Bank increased provisions by 51% in anticipation of possible higher credit losses in the face of the ongoing COVID-19 pandemic. NPL cover was at 109%. 

The Bank’s total capital stood at P97 billion, with regulatory capital ratios well above regulatory levels.

“The impact of the COVID-19 pandemic on our customers, employees, and society as a whole is a great concern for China Bank.  We are committed to extend the help, support, and flexibility that our stakeholders need in these challenging times to ease the negative economic consequences of this global health crisis. We are also very grateful to our hardworking and dedicated frontliners who enable us to deliver on this vital commitment,” said China Bank President William C. Whang. 

Throughout the ECQ, China Bank continued to provide banking services while implementing appropriate safeguards for the health and safety of its employees and customers.  Aside from adopting the Bayanihan To Heal As One Act, which, among others, mandates a nationwide 30-day moratorium on loan payments, the Bank also implemented measures to protect the interests of its stakeholders, including paying employees’ salaries in full during the ECQ, giving financial assistance to agency personnel (security guards, drivers, janitors, and utility staff), waiving certain fees, ensuring the availability of its digital banking channels, and increasing ATM withdrawal limits. 

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