China Banking Corp. (China Bank) had huge plans to mark its centennial this year but the sudden rise of the coronavirus disease resulted to profound changes in the conduct of business and most firms have to struggle just for survival.
The bank, however, said it continued with its strong performance amid the community quarantine, posting P5.2 billion in net income in the first half of 2020, up 24 percent year-on-year.
“In these uncertain times, we remain cautiously optimistic. We are adapting our strategies accordingly and managing our capital with the prudence that the current volatility calls for. I am convinced that we could overcome the difficulties, and like in the last 100 years, we would do so by standing by our customers, cooperating with regulators, and doing our part to fight this pandemic and emerge stronger together,” China Bank president William Whang said.
ROE at 10.64%
The bank’s financial performance translated to a return on equity of 10.64 percent and return on assets of 1.07 percent.
The growth was achieved even as the bank ramped up loss provisions by more than fourteen times to P4.8 billion in anticipation of the impact of COVID-19 and ongoing quarantine measures on asset quality.
“Our first half results reflect China Bank’s continued strength and resilience, and demonstrate the soundness of our strategies to thrive in the new normal. I am very grateful to our employees for their dedication and flexibility and to our customers for their continued trust and patronage,” Whang said.
Year of challenges
“The year 2020 will go down in China Bank’s history, not just for our centennial anniversary, but for our resolve to make the best out of a very difficult situation, keeping in mind the safety and welfare of our stakeholders,” Wang noted.
Total operating income rose 40 percent on-year to P21 billion. Net interest income grew 39 percent to P16.2 billion on the back of higher volume of earning assets and lower funding costs as market interest rates declined. Net interest margin improved to 3.8 percent from 3.2 percent.
Meanwhile, non-interest income surged 41 percent to P4.7 billion primarily from strong trading and securities gains, which grew 212 percent to P2.8 billion.
Operating expenses increased five percent to P10.4 billion mainly from COVID-19 and higher volume related expenses. Cost-to-income ratio improved to 50 percent from 66 percent in the same period last year.
“Our balance sheet reflects ample liquidity and sufficient capitalization. We are closely monitoring developments and working with our customers who are under financial distress in these difficult times. While the long-term impact of the global pandemic on the Philippine economy and banking industry remains uncertain, we are confident that China Bank’s enduring financial strength will enable us to navigate the new or even the next normal,” China Bank chief finance officer Patrick Cheng noted.