CHINA Banking Corp., the listed affiliate bank of the SM Group, is confident it will reach its full-year profit target of P6.4 billion on the back of its robust loan business and the contribution streams from its thrift bank arm China Bank Savings.
For the first nine months of the year, China Bank’s net income increased 31 percent to P4.84 billion from P3.69 billion in the period last year.
“We’re on target to meet our goal of P6.4 billion net income for this year,” Alex Escucha, China Bank senior vice president, told The Manila Times last Thursday.
He said this confidence is driven by the bank’s robust loan business, which posted growth of 19 percent in the first nine months of the year led by a 24 percent jump in consumer loans.
“And also, our savings bank is now making money; break even in the second quarter. So we also see that as a major contributor moving forward,” he added.
Escucha said the bank will retain its “P1 billion a year” capital expenditure (capex) program to fund expansion and sustain growth.
“Our capex is typically a billion a year: half for branch expansion, and half for IT-related expenses,” he said.
As of end-September, China Bank operates 526 branches nationwide, including 160 China Bank Savings branches.
Asked about how a potential US interest rate hike in December and possible rate increases thereafter would affect the local banking industry moving forward, Escucha said the industry and China Bank will continue to leverage on structural demand of the robust Philippine economy.
“The question of the rate increases may have a slight effect on demand but in terms of the structural demand in the banking industry, we are still in a growth mode. By all metrics—ratio of loans to GDP [gross domestic product], banking assets to GDP, mortgages to GDP—we are still the lowest in Asia. There is so much room to grow,” the China Bank SVP said.
“The central bank statistics show that 69 percent of the population is still unbanked. There is a very highly underpenetrated market. There is really so much room to grow,” he reiterated.
Last week, China Bank issued an initial tranche of P5 billion in long-term negotiable certificates of time deposits (LTNCD) out of its P20 billion LTNCD program.
The P20-billion LTNCD program, which is intended to support the bank’s strategic initiatives and business growth, will be issued in tranches of P5 billion to P10 billion with tenors ranging from five to seven years.
Established in 1920, China Bank is an affiliate bank of the country’s wealthiest man, Henry Sy. It mainly caters to the small and medium enterprises (SME) market while also offering banking services to the corporate, commercial, and retail segments.