Investor Presentation Q12017 Results
Your Success is our Business Legal Disclaimer
This presentation and the information contained herein as well as the materials distributed herewith ("Presentation") are the sole and exclusive property of China Banking Corporation (“China Bank”) and shall only be used for the purpose intended herein. None of the information contained in this Presentation constitutes a solicitation, offer, opinion, or recommendation by China Bank to buy or to sell any securities or financial instrument or to provide any investment service or investment advice. The information contained in this Presentation is based on carefully selected sources believed to be reliable but no representation or warranty as to its accuracy or completeness is made. All statements in this Presentation, other than statements of historical facts, that address activities, events, or developments that China Bank expects or anticipates will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forwardlooking statements. China Bank’s actual results or developments may differ materially from those expressed or implied in these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, market shares, competition, changes in legal, financial and regulatory frameworks, international economic and financial market conditions, political risks, cost estimates, and other risks and factors beyond our control. Your use of the Presentation shall be at your sole risk and you shall form your own conclusions as to the reliability of any information presented and as to any conclusions to be drawn therefrom. China Bank shall not be directly or indirectly liable, in any way, for any inaccuracies, errors, or omissions in the Presentation , including but not limited to any quotes or financial data contained therein, nor for any damages resulting therefrom. Any opinion/data/forward-looking statements herein reflected may be subject to change by China Bank without notice.
Investor Relations: Investor Relations (IR) Team: 28/F, BDO Equitable Tower, 8751 Paseo de Roxas, Makati City Alexander C. Escucha Philippines, 1226 Senior Vice President acescucha@chinabank.ph Phone: (632) 885-5601 Fax: (632) 892-0238 Aerol Paul B. Banal, SM Email: [email protected] Vicky N. Quisido, AM Website: www.chinabank.ph [email protected]
1 Presentation Outline
EconomicEconomic EnvironmentEnvironment
Company Profile
Key Investment Merits
Corporate and Financial Highlights
2 Economic Environment— Philippines
Philippine GDP
8.0% 7.6% 7.1% 6.8% 7.0% 6.6% 6.7% Philippine Economy on Higher Growth Trajectory 6.2% 6.4% 5.9% 6.0% The Philippines shows solid economic 5.0% performance amidst global economic 4.2% turbulence. 4.0% 3.7%
3.0% With increasing investment rate and young and educated workforce, there is sufficient scope 2.0% 1.1% for potential growth to rise further, aided by 1.0% greater capital formation.
0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q12017 The current administration aims for a steady acceleration of growth (7.0-8.0%) supported by sustained and deepened structural reforms. 90 7.0% 80 Reforms include comprehensive tax reform, 83 6.0% 79 sustained investment in infrastructure, human 70 75 72 69 5.0% capital development, easing of restrictions on 60 65 62 62 foreign investments, reduction of cost of doing 50 57 58 58 4.0% business, and strengthening of agro-industrial linkages 40 3.0%
Thousands 30 2.0% 20 1.0% 10
- 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q12017
GDP per Capita (Php '000) Growth Rate
3 Economic Environment— Philippines
BPO - a strong driver of employment and revenues… 50.0 1,800 2,000 9.0% 66.0% 8.0% 40.0 1,600 65.0% 7.0% 1,148 6.0% 64.0% 1,044 30.0 958 1,200
858 5.0%
777 63.0%
4.0%
20.0 640 38.9 800
8.0%
527 7.5%
7.4% 7.4%
7.3%
7.1%
7.0% 7.0% 424 3.0% 6.8% 62.0%
371 6.3%
298 22.9 5.5% 10.0 236 20.5 400 2.0% 15.8 18.0 11.0 13.2 61.0% 4.5 6.1 7.1 8.9 1.0% 3.4 - - 0.0% 60.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2022F 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Revenues (US$ Bn) Employment ('000s) Unemployment Rate Labor Participation Rate
Sustained growth of OFW remittance over the years… 30.0 25% 20% 25.0 20% 20.0 13% 13% 15% 15.0 9% 7% 10% 7% 6% 7% 10.0 5% 4% 5% 5.0 5% 12.8 14.5 16.4 17.3 18.8 20.1 21.4 23.0 24.6 25.6 26.8 - 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
OFW Remittance (US$ Bn) Growth Rate
4 Economic Environment— Philippine Banking Industry
Asset base expansion & industry consolidation: Resources up 12.1% Better fund utilization: LDR uptrend to 66.9% in Feb; to P13.3Tn; No. of banking institutions down by 30 YoY to 602 CASA remained primary source of funds accounting for 72% of total deposits • Loans up 18.9% to P6.9 Tn • Deposits up 13.3% to 10.4Tn
Healthy asset quality & adequate coverage: Gross NPL ratio Capital levels well-above threshold: UKB industry CAR inched up improved to 1.97%, lower than 4-year average of 2.6%; NPL Cov. to 15.40% (Solo) & 16.15 (Conso) in Sept 2016 Ratio at 121.08%, up from 119.45% last year
5 Competitive Landscape
Private Banks – CHIB No 6 in Assets, No 5 in Loans, Deposits
ASSETS LOANS (Net) DEPOSITS CAPITAL ROE1/ Institution Amt Mkt Amt Mkt Amt Mkt Amt Mkt Share Jan-Mar Jan-Mar' Branches (Mar 2017) Share Share Share (in P Bn) (in P Bn) (in P Bn) (in P Bn) (%) '17 '16 (%) (%) (%) BDO 2,396 17.78% 1,543 20.83% 1,928 18.65% 282 19.64% 9.42% 11.00% 1,126 MBT 1,922 14.26% 1,157 15.62% 1,431 13.85% 199 13.87% 11.22% 10.85% 959 BPI 1,730 12.84% 1,033 13.94% 1,439 13.92% 169 11.73% 14.80% 12.95% 838 PNB 778 5.78% 416 5.62% 590 5.71% 106 7.36% 4.41% 9.80% 679 SECB 728 5.40% 301 4.06% 379 3.67% 98 6.85% 11.43% 22.06% 291 CHIB 618 4.59% 374 5.06% 531 5.14% 60 4.20% 9.15% 9.23% 548 RCBC 527 3.91% 310 4.18% 365 3.53% 63 4.41% 6.47% 12.24% 475 UBP 515 3.82% 253 3.41% 406 3.92% 62 4.34% 13.09% 10.85% 305 EW 294 2.18% 201 2.71% 238 2.30% 35 2.46% 13.82% 9.90% 446 Gov't Banks 1,892 14.04% 757 10.23% 1,540 14.90% 135 9.40% LBP 1,377 10.22% 529 7.14% 1,216 11.77% 89 6.17% 15.59% 17.39% 372 DBP 515 3.82% 228 3.08% 324 3.13% 46 3.20% 9.72% 11.29% 116 Foreign Banks 1,108 8.22% 610 8.23% 692 6.69% 118 8.24% Other Local Banks 966 7.17% 452 6.10% 798 7.72% 108 7.50% TOTAL 13,474 100% 7,406 100% 10,337 100% 1,436 100% Source: Published SOCs, ROE-SEC-17Q Reports except LBP & DBP
6 Presentation Outline
Economic Environment
CompanyCompany ProfileProfile
Key Investment Merits
Corporate and Financial Highlights
7 Snapshot of China Bank
Long history as the oldest privately owned bank in the Philippines, established in 1920
Listed since the establishment of the Manila Stock Exchange in 1927
Strong presence in the entrepreneur, middle market and business segments
Longest relationship with Chinese-Filipinos, serving this community up to the 4th generation
8 Primary Business
A. Deposits & Related Services B. Internet Banking and Mobile Banking Services (Retail & Corporate)
Corporate Consumer Wealth Management Corporate, Commercial & SME Consumer loans Trust and investment lending (mortgages, vehicle, management personal, teacher loans) Cash management Credit cards Wealth management, Private Banking Factoring Remittances Life insurance and investments (MCBLife) Investment Banking (China Bank Capital Corp), securities brokerage Treasury and Foreign Exchange Trading Non life insurance (China Bank Insurance Brokerage)
9 Bank Milestones
Expand portfolio in SME, MME and Consumer segments further enhanced by recent strategic acquisitions
1920 1927 2007 2012 2013 2014 2015 2016
Listed in Manila Stock Exchange Increased stake in China Bank JV to 40% Securities Corp Acquired Manila Bank CBC Assets One with 75 branch licenses (SPC), Inc and renamed to
Acquisition Bancassurance joint venture with 5% stake
10 Bank Strategy – Continued Network Expansion
As of March 2017
China No. of China Bank % Share Branches Bank Savings Total Total Metro 205 70 275 50% Manila Luzon 97 72 169 31% Visayas 54 10 64 12% Mindanao 35 5 40 7% Total 391 157 548 100%
900 805 824 800 CHIB CBS 740 661 700 PDB ATM 561 600 511 548 475 517 541 431 500 383 445 470 366 376 150 157 361 78 165 400 78 276 316 293 78 250 269 72 300 33 216 25 188 2 16 141 200 148 1 391 391 1 352 283 295 314 248 253 268 100 187 215 141 148 0 2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Mar-17
11 Comprehensive Financial Services Platform
China Bank’s organization anchored on three engines of growth:
1 2 3 Savings Bank & Other Relationship Banking Financial Markets Business Units
Retail Banking Lending China Bank Business Segment Treasury Savings, Inc. - SME Institutional - Consumer Banking China Bank Capital Corp - Corporate Manulife- - Investment Banking China Bank - Commercial - Securities Brokerage Life Assurance Corporation (MCBLife)
China Bank Consumer Private Banking Insurance Banking Brokers, Inc. - Housing/Auto - Remittance - Credit Card Trust
12 Presentation Outline
Economic Environment
Company Profile
KeyKey InvestmentInvestment MeritsMerits
Corporate and Financial Highlights
13 Key Investment Merits
1 Established strength in affluent Chinese-Filipino business segment
2 Strong balance sheet with sustainable growth
3 Diversified and well collateralized loan portfolio
4 Improving asset quality and loan loss coverage
5 Funding – strong brand franchise / retail base
6 Healthy capital position
Well diversified income stream, effective cost management , growing distribution 7 network supported by robust infrastructure
8 Sustained delivery of shareholder returns
9 Strong Support from Shareholders and Synergies with the SM Group
10 Experienced and competent management team
14 1 Established Strength in Affluent Chinese-Filipino Business Segment
Loyal and highly valuable customer Predominantly focused on the base SME/MME segments
Multi-generational relationships Agile and entrepreneurial mindset
Sustainable and profitable niche client relationships
15 2 Strong Balance Sheet with Sustainable Growth
Organic growth and strategic acquisitions Total Assets (PHP in B)
633 620
83 86 527 543
74 471 76 414 15 21
324 9 257 262 550 535 2 4 451 469 399 403 315 255 258
2010 2011 2012 2013 2014 2015 2016 Q12016 Q12017
China Bank China Bank Savings Planters Development Bank
16 2 Strong Balance Sheet with Sustainable Growth
Less reliance on investment securities (volatile / non recurring)
Assets Mix (PHP in B)
633 620
16% 543 16% 527 471 13% 13% 414 12% 16% 324 61% 60% 59% 257 262 20% 59% 62% 53% 29% 24% 59% 46% 55% 31% 26% 28% 23% 28% 24% 25% 21% 21%
2010 2011 2012 2013 2014 2015 2016 Q12016 Q12017
Others Net Loans Investment Securities
17 2 Strong Balance Sheet with Sustainable Growth
Healthy Liquidity
72.73% 75.00% 71.43% 69.90% 70.52% 70.37% 69.99% 70.00% 67.20% 64.50% 64.64% 62.25% 63.00% 62.73% 63.06% 65.00% 60.99% 60.00% 57.99% 55.33% 61.63% 61.09% 59.85% 55.00% 58.64% 58.80% 58.63% 55.39% 50.00% 53.31%
45.00%
40.00% 2011 2012 2013 2014 2015 2016 Q12016 Q12017
Loans (Net) to Total Assets Loans (Net) to Customer Deposits Loans (Net) to Stable Funds
Source: Capital Intelligence Rating report where; Customer Deposits, Savings, Demand, Time Stable funds - total customer deposits + medium &long term funding + subordinated debt + hybrid capital + free capital (total capital-subsidiaries & affiliates-fixed assets)
18 3 Diversified and Well Collateralized Loan Portfolio
Loans growth faster in consumer segment
Gross Loans (PHP in B)
Corporate Commercial Consumer 6-yr CAGR 2010-2016
394 Consumer 378 28% 15% 325 16% 317 298 15% 15% Commercial 14% 30% 42% 228 43% 198 13% 43% 44% 12% 45% 154 126 12% 39% 41% 11% Corporate 31% 14% 28% 43% 42% 43% 40% 41% 47% 48% 61% 57%
2010 2011 2012 2013 2014 2015 2016 Q12016 Q12017 2014 – Plantersbank consumer portfolio P3.89B; Consumer includes CTS loans
19 3 Diversified and Well Collateralized Loan Portfolio
Loans growth faster in consumer segment (CHIB & CBS) -- room to grow consumer portfolio Consumer Loans (PHP in B) Housing Auto Personal Credit card
55 52 2% 2% 5% 5% 41 43 2% 28% 1% 28% 5% 5% 33 - 28% 6% 28%
21 29%
16 3% - 66% 30% 65% 1% - 10 66% 34% 66% 7 4% 65% - 48% 67% 56% 66% 44% 48% 2010 2011 2012 2013 2014 2015 2016 Q12016 Q12017
20 3 Diversified and Well Collateralized Loan Portfolio
Loans By Security
394 378
Unsecured Secured 317 325 298
55% 54% 228 51% 198 52% 58%
154 53% 126 53% 51% 60% 45% 49% 46% 48% 42% 47% 47% 40% 49%
2010 2011 2012 2013 2014 2015 2016 Q12016 Q12017
21 4 Improving Asset Quality and Loan Loss Coverage
Asset Quality Ratios post PDB integration improving…
NPL Ratios LLR Coverage
3% 180% 2.68% 159% 2.53% 2.63% 153% 157% 153% 160% 3% 2.24% 135% 2.38% 140% 124% 125% 123% 1.99% 1.93% 147% 2% 1.86% 120% 1.57% 91% 94% 100% 1.90% 1.88% 2% 1.78% 1.77% 87% 1.57% 1.13% 80% 101% 87% 78% 80% 1% 60% Plantersbank acquired 1.11% Plantersbank acquired 40% 1% 20%
0% 0%
Parent CHIB Conso Parent CHIB Conso
22 4 Improving Asset Quality and Loan Loss Coverage
Credit Cost – lower than the industry
0.94%
0.92% 0.86%
0.69%
0.56% 0.67% 0.57% 0.51% 0.33% 0.44% 0.42% 0.38% 0.35% 0.34% 0.41% 0.41% 0.34% * 0.29% 0.31% 0.24% 0.24% 0.19% 0.17% 0.17% 0.16% 0.11% 0.13% 0.13%
CHIB Industry
No BSP data yet on provision for losses
23 5 Funding – Strong Brand Franchise / Retail Base Strong branch franchise/retail funding base Deposits (PHP in B), core deposits 70% Peso Deposits (PHP in B) CASA High Cost FCDU
458 542 446 531 372 387 326 439 15% 453 16% 399 283 14% 354 15% 218 18% 38% 37% 272 20% 168 37% 40% 159 213 216 20% 37% 41% 25% 23% 47% 47% 42% 41% 48% 46% 47% 39% 45% 33% 36% 33%
2010 2011 2012 2013 2014 2015 2016 Q12016 Q12017
Loans to Deposits Ratio CASA to Peso Deposits Ratio 80% 57% 55% 67% 71% 60% 70% 62% 73% 46% 48% 70% 71% 70% 50% 60% 55% 55% 50% 49% 40% 44% 41% 40% 30% 30% 20% 20% 10% 10% 0% 2010 2011 2012 2013 2014 2015 2016 Q12017
24 5 Funding – Strong Brand Franchise / Retail Base
Stable Margins Credit ratings upgraded in 2016, affirmed in 2017
7% • Upgraded in Sept 2016 China 6.08% Bank’s Issuer Default Rating to 6% 5.57% ‘BB+’ from “BB’ (stable outlook); and its viability rating to ‘bb+’ 4.73% 5% 4.31% 4.32% from bb (stable outlook 3.97% 4.22% 4.20% 4.12% 4% 3.76% • Affirmed just recently (Feb 2017) 3.30% 3.37% 2.90% 2.98% 3.20% 3% 2.21% 1.90% 2.06% 3.02% 2% • Ratings upgrade reflect the bank’s: 1.30% 1.12% 1.19% 0.98% 1% -- Broadly steady asset quality 1.02% -- Adequate capital buffers -- table funding and liquidity profile 0%
Asset Yield Cost of Funds NIM
25 6 Healthy Capital Position
Capital Adequacy Ratio (CAR) CET 1 Ratio Industry Average CAR
23.1%
18.5%22.1% 19.0% 18.9% 16.0% 17.7% 17.3% 14.9% 15.9% 16.0% 16.3% 16.3% 16.0% 16.2% 16.2% 15.7% 15.4% 13.5%15.8% 12.2% 13.5% 12.8% 12.8% 15.1% 15.4% 15.5% 15.2% 14.5% 14.0% 12.6% 12.6% 11.9% 12.0% 11.3%
63 65 57 59 45 39 42 35 30 25 27 26
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q12017
Basel II P8Billon stock rights in Preemptive rights waived implementation 2014 (By Laws amended)
26 7 Well Diversified Income Stream
Operating Income Mix (PHP in M)
Net Interest Income Trading and Securities Other Fees
21,789 19,572 18,848 19% 23%
21% 25% 4% 15.097 22% 25% 13,319 13,856 2% 12,744 3% 21% 21% 22% 35% 34% 21% 33% 42% 13% 13% 12% 21%
77% 5,661 75% 77% 5,270
66% 19% 17% 2% 21% 65% 67% 58% 9% 26%
74% 79%
2010 2011 2012 2013 2014 2015 2016 Q12016 Q22017
27 7 Effective Cost Management
… even with cost drag of branch expansion
Cost to Income – Philippine Banks Mar 2017 Cost to Income – China Bank (%)
76.3%
72.8% 66.4% 69.9% 59.2% 59.0% 62.2% 62.3% 61.3% 66.4% 53.5% 55.2% 57.2% 63.2% 55.9% 53.8% 55.4% 56.0% 51.1% 51.3% 47.1%
2010 2011 2012 2013 2014 2015 2016 Q12017
CHIB Conso Ex CBS/PDB
B
BPI
C
UBP
SEC
PNB
MBT
RCB
EWB BDO CHIB Cost to Average Assets – China Bank (%) Cost to Average Assets – Philippine Banks Mar 2017 4.4% 2.90% 2.82% 3.5% 2.71% 2.65% 3.2% 2.41% 2.44% 2.30% 2.40% 2.8% 2.2% 2.3% 2.3% 2.4% 1.6%
2010 2011 2012 2013 2014 2015 2016 Q12017
BPI
UBP
PNB
MBT
EWB
BDO
CHIB
SECB RCBC
28 7 Growing Distribution Network
5th Largest Distribution Network in the Philippines Network Expansion Plan (No. of Branches, ATMs as of Mar 2017 ) (No. of Branches and ATMs) +467
1,272 PDB CBS 1,272 Branches ATMs CHB ATMs 1,191 1,200 3,749 4,200 1,126 1,116 2,314 1,032 3,700 1,000 959 3,044 3,200 805 824 838 740 +189 730 800 1,092 2,700 661 692 720 672 679 824 614 200 +50 2,200 548 182 191 1,405 517 541 172 600 548 566 470 162 475 1,700 361 150 157 446 299 643 78 165 400 1,200 78 305 +139 291 510 520 530 452 500 700 352 391 391 200 148 314 200 148
- (300) BDO MBT BPI PNB CHIB RCB EWB UBP SECB
29 7 … Brand Refresh, Modern Branch Look and Feel…
30 7 Supported by Robust Infrastructure
Customer-centric technology initiatives…
. Aug 2015 - New Core banking . New Treasury system -- platform (P.L.U.S.) Calypso . July 2016 – Upgrade Retail . Replace Trust/Asset Internet China Bank Online . EMV Compliant, ahead of schedule Management system . Cash Management / Corporate Online . Digital Banking
transformation/ Mobile Since 2015 ATM cards, machines – initiative 1 of the first in PHL
…supported by robust infrastructure platform
Calypso Treasury System
31 8 Sustained Delivery of Shareholder Returns
Consistent dividends track record Dividend Yield – consistently (In Mn) above industry average Cash Dividends Cash Payout
9.00% 2.2 41.9% 45% 8.53%
8.00% 36.5% 40% 2.0 33.5% 6.79% 33.1% 35% 7.00% 31.0% 31.1% 31.0% 28.5% 1.8 27.9% 30% 6.00% 25.7% 5.28% 25% 5.00% 4.75% 1.6 20% 4.00% 3.55% 1.99 1.85 1.4 15% 3.00% 2.58% 2.57% 2.72% 1.72 2.28% 2.26% 1.59 1.54 1.56 10% 2.00% 1.2 1.42 1.29 5% 1.00% 1.17 1.06 1.0 0% 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
32 Strong Support from Shareholders and Synergies with the 9 SM Group
Current Shareholdings Distinct Benefits for China Bank
27% 38% Access to the SM Group’s SMIC @ 19.9% ecosystem of merchants, 9% suppliers and contractors
26%
SM Group - Henry Sy Sr. First became Shareholder in 1979 Priority rights to place branches Foreign Shareholders and ATMs in shopping malls Dee Group owned by SM Prime Holdings, Inc. Others
Snapshot of SM Group Business Lines Superior network locations for opening mini-branches in SM Group’s Savemore supermarkets
Access to SM Group’s retail network Financial Retail Property to promote new products such as its Services upcoming payment cards products
Source: Company filings, presentations, and Public Ownership Report.
33 Strong Support from Shareholders and Synergies with the 9 SM Group Benefits of SM Group Synergy
Priority rights to locate branches and ATMs in SM shopping malls
CBS mini-branches in SM Group’s Savemore, CityMall locations, ATMs at Alfamart
Access to SM Group’s ecosystem of merchants, suppliers and contractors
Access to SM Group’s retail network to promote new products
34 10 Board of Directors
• Honorary Chairman and Advisor to the Board • Chairman of the Board since May 5, 2011 since 1997 • Vice Chairman from 1989 to 2011 • He is also the Chairman of listed companies of • China Bank Board Director since May 21, 1986, SM Investments Corporation, BDO Unibank, • Director and President of SM Prime Holdings, Inc., Inc. (Emeritus), and SM Prime Holdings, Inc. and serves as Adviser to the Board of SM (Emeritus) Investments Corporation as well as occupies positions in various companies of the SM Group
Henry Sy, Sr. Hans T. Sy Honorary Chairman Chairman
• Vice Chairman of the Board since May 5, 2011 • President and Chief Executive Officer since • Chairman from 1989 to 2011 September 1, 2014 • China Bank Board Director since 1969 • Director of the Bank since May 8, 2008 • Chairman of the Boards of Union Motor • Chief Operating Officer from 1995 - 2014
Corporation and China Bank subsidiary CBC • Joined CHIB in 1975 (42 years) Properties and Computer Center, Inc. (CBC- • Director of the China Bank Savings, Inc. (CBSI),
PCCI), and Director of Super Industrial Chinabank Insurance Brokers, Inc. (CBC-IBI), CBC- Corporation PCCI, Chinabank Capital Corp. (CBCC), Manulife
China Bank Life Assurance Corp. (MCBLife),
Gilbert U. Dee Bankers Association of the Philippines (BAP) Ricardo R. Chua Vice Chairman • President of BancNet, Inc. Director & President
• Member of the Board since April 14, 1977 • Director since 1984 • President and Chief Executive Officer of the • Director/ President of JJACCIS Development Bank from 1985 to 2014 Corporation and Enterprise Realty Corporation, and • Director in CBC-PCCI, CBC-IBI and CBC Forex, Director/ Treasurer of Suntree Holdings Corporation Hydee Management & Resources Corporation, Commonwealth Foods, Inc., and GDSK Development Corporation • Independent Director in City & Land Developers, Inc. and Cityland Development
Corporation Peter S. Dee Joaquin T. Dee Director Director
35 10 Board of Directors
• Director since 1993 • Director since 2001 • Director of SM Prime Holdings, Inc. • President of SM Investments Corp. • Director of Supervalue, Inc., Super • Director of SM Synergy Properties Holdings Corp., Shopping Market, Inc., National Sybase Equity Investments Corp., and Tagaytay University and Sanford Marketing Corp. Resort Development Corporation
Herbert T. Sy Harley T. Sy Director Director
• Director since November 7, 2007 • Lead Independent Director and was first elected • Director, EVP and CFO of SM to the China Bank Board on May 5, 2005
Investments Corp. • Member of the Boards of Trustees of St. Luke’s • Director of Atlas Consolidated Mining Medical Center, SLMC Global City, Inc., St. Luke’s and Development Corporation, Belle College of Medicine – William H. Quasha Corp., and BDO Unibank, Inc. Memorial, and Brent International School, Inc
• Adviser to the Board of Directors in • Independent Director of Seaoil Phils., Inc. and Premium Leisure Corporation & SM Towers Watson Insurance Brokers Philippine Inc.,
Prime Holdings, Inc. CBSI and CBCC • Director in OCLP (Ortigas) Holdings, Inc., • Independent Director of Far Eastern University, Jose T. Sio Manila North Tollways Corporation, and Robert F. Kuan Incorporated Director CityMall Commercial Centers Inc. Independent Director • President of SM Foundation, Inc. and GlobalFund Holdings, Inc.
• Independent Director and was first • Elected as Independent Director to the China elected to the China Bank Board on Bank Board last May 4, 2017 July 7, 2004 • Independent Director of China Bank Savings • President & CEO of Richwell Trading • Formerly Senior Vice President and Group Head of Corporation, Richwell Philippines, Inc., the Account Management Group (known now as Europlay Distributor Co., Inc., and Institutional Banking Group) until her retirement on Internationale Globale Marques, Inc.; Feb. 12, 2012 Alberto S. Yao President of Richphil House Margarita L, San Juan Independent Director Incorporated, and Megarich Property Independent Director Ventures Corp. • Director of CBSI and CBCC
36 10 Experienced and Competent Management Team
Hans T. Sy Gilbert U. Dee Chairman of the Board Vice Chairman of the Board
Ricardo R. Chua William C. Whang President and Executive Vice President and Chief Executive Officer (CEO) Chief Operating Officer (COO)
Romeo D. Uyan Rosemarie C. Gan Executive Vice President and Executive Vice President and Treasurer Head of Retail Banking Business
President of China Bank Capital Corp.
Alberto Emilio V. Ramos Alexander C. Escucha Executive Vice President and Senior Vice President and President of China Bank Savings Head of Investor and Corporate
Relations Group
Patrick D. Cheng Lilian Yu Senior Vice President, Trust Officer and First Vice President and Head of Trust and Asset Management Group Deputy Group Head, Institutional Banking
Group
37 10 Experienced and Competent Management Team
Renato K. De Borja Benedict L. Chan First Vice President and First Vice President and Head of Consumer Banking Business Head of Treasury – Trading and Sales (Housing/Auto, Remittance and Credit Cards)
Lilibeth R. Carino Jose L. Osmeña First Vice President and First Vice President and Head, Consumer Banking Group Deputy Group Head of Retail
Branch Banking
Ryan Martin L. Tapia Virgilio O. Chua Chief Operating Officer and Managing Director, Treasurer and Managing Director, Head of Mergers and Acquisitions and Advisory, Head of Investment Banking, China Bank China Bank Capital Corp. Capital Corp.
Delia Marquez Ananias S. Cornelio III First Vice President and First Vice President and Comptroller Chief Risk Officer
Atty. Marissa B. Espino Atty. Corazon I. Morando Vice President and Vice President and Chief Compliance Officer Corporate Secretary
38 Presentation Outline
Economic Environment
Company Profile
Key Investment Merits
CorporateCorporate andand FinancialFinancial HighlightsHighlights
39 Recent Corporate Developments
P15 Bn stock rights offering - Eligible shareholders are entitled to one share per 4.1375 existing common shares @ P31/share
Declared 8% or P0.80 cash dividends and 8% stock dividends subject to approval by regulatory agencies
China Bank Capital as Joint Issue Manager, Joint Lead Underwriter and Joint BookRunner for Ayala Corp.’s P10 Bn Retail Bond
China Bank Securities, as Lead Underwriter Eagle Cement ‘s P9.0 Bn IPO deal
40 Financial Performance
Operating Income (PBN) Net Income (PBN) Net Interest Income (PBN) 5.66 5.27 0.45 1.47 0.35 0.11 0.47 0.63 0.54 4.47
1.39 4.47 3.92 3.92
Q12016 Q12017
Q12016 Q12017 Q12016 Q12017 NII Service Charges, Fees & Comm Trading & Securities Others Deposits (PBN) Assets (PBN) Loans Net (PBN) 540 531 60% 372 620 520 55% 500 51.4%
480 50.0% 318 50% 460 453
440 543 45% 420
400 40% Q12016 Q12017 Q12016 Q12017 Deposits CASA to Total Deposits Ratio Q12016 Q12017 41 Financial Highlights
Income Statement (In Millions) Q1 Q1 Change 2017 2016 Amt % Net interest Income 4,471 3,918 553 14.1 Non-Interest Income 1,190 1,352 (162) (12.0) Total Operating Income 5,661 5,270 391 7.4 Total Operating Expenses 3,880 3,596 284 7.9 Income before Income Tax 1,780 1,674 106 6.3 Provision for Income Tax 308 288 20 6.9 Net Income 1,472 1,386 86 6.2 Attributable to: Equity Holders of the Parent Bank 1,470 1,388 82 5.9 Non-controlling Interest 2 (2) 4 (200.0) Ratios: Net Interest Margin (%) 3.02 3.17 Cost-to-Income Ratio (%) 66.37 66.15 Return on Average Equity (%) 9.15 9.23 Return on Average Assets (%) 0.93 1.05
42 Financial Highlights
Balance Sheet (In Millions) Q1 Q1 Change 2017 2016 Amt % Total Assets 620,399 543,069 77,330 14.2 Loans & Receivables (Net) 371,289 318,415 52,874 16.6 Total Deposits 530,520 452,515 78,005 17.2 Low Cost Deposits 272,577 225,905 46,672 20.7 Time Deposits 257,943 226,610 31,333 13.8 Total Equity 64,912 61,544 3,368 5.5 Ratios: Loans to Deposits 69.99 70.37 Non-Performing Loans 1.93 2.68 NPL Coverage 94.02 78.00 Car Tier / CET 1 11.97 13.05 CAR Total 12.78 13.97
43 Awards and Recognition
Highest corporate governance standards as recognized by the general market Highly respected senior management team On average, over 20 years of Industry experience Successful track record of managing acquisitions and achieving financial results Bell Award for Corporate Governance for the 5th Straight Year from The Philippine Stock Exchange (Top 5 of 268 listed companies)
2016 Asia Pacific Entrepreneurship *Asian Corporate Director Recognition Award 2016 - Award – Financial Services Sector from Enterprise Asia Award (for Mr. Ricardo Corporate Governance Asia Awards R. Chua, CEO) Recipient of Asian Corporate Director 2016 Asia Pacific Entrepreneurship Award – Financial Recognition award from Corporate Governance Services Sector from Enterprise Asia Award (for Mr. Asia – Chairman Hans T. Ricardo R. Chua, CEO) Sy Ranked among top 50 publicly-listed companies in ASEAN Corporate Governance Scorecard Country Reports and Assessments 2013-2014 Gold Award for Outstanding Company 2011 and
2012 from Institute of Corporate Directors Recipient of the Bell Award for Corporate Governance for the 5th straight year by PSE, Gold award from ICD in 2011 & 2012
44
Awards and Recognition
Top Corporate Best Core Issue Manager / Best Investor Banking System Best Bank for Debt Top Corporate Issue Arranger Relations Bank Implementation Capital Markets Banking and Finance Manager / Arranger Investment House Philippines Philippines Philippines Firm of the Year Bank Category Category
2016 2016 2016 2016 2016 2017
Best Investor Asia’s Best CEO Relations Best Managed Asian Corporate Best in Investor (Investor Professional - Fund for Bond Director Recognition Relations Company - Relations) – Philippines Long-Term Award - Philippines Philippines SVP Alexander C. Dollar Chairman Hans T. Sy China Bank Pres. & CEO Escucha Category Ricardo R. Chua 2015, 2016 2015, 2016 2015, 2016 2015, 2016 2016
Php42.15B Loan Facility to San Php31.97B Loan Facility to Php38.8B San Miguel Brewery Buenaventura Power Limited Therma Visayas Bond Issue Company Best PR Tool for Triple A Best Best Collecting China Bank Commercial Triple Power Most Innovative Local Currency Bond House 2015 Annual Bank Deal - Philippines Deal – Philippines Bond– Philippines Report
2016 2016 2016 2016 2016 2017
45 More than your banker, the right partner.
Investor Relations: Investor Relations (IR) Team: 28/F, BDO Equitable Tower, 8751 Paseo de Roxas, Makati City Alexander C. Escucha Philippines, 1226 Senior Vice President [email protected] Phone: (632) 885-5601 Fax: (632) 892-0238 Aerol Paul B. Banal, SM Email: [email protected] Vicky N. Quisido, AM Website: www.chinabank.ph [email protected]
46