Investor Presentation 3Q 2017
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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%
7.0%
6.0% Philippine Economy on Higher Growth Trajectory
5.0% The Philippines shows solid economic 4.0% performance amidst global economic turbulence. 3.0% 2.0% With increasing investment rate and young and educated workforce, there is sufficient scope 1.0% for potential growth to rise further, aided by 0.0% greater capital formation. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q32017 The current administration aims for a steady acceleration of growth (7.0-8.0%) supported by 90 7.0% sustained and deepened structural reforms. 80 83 6.0% 79 Reforms include comprehensive tax reform, 70 75 72 69 5.0% sustained investment in infrastructure, human 60 65 62 62 capital development, easing of restrictions on 50 57 58 58 4.0% foreign investments
40 3.0%
Thousands 30 2.0% 20 1.0% 10
- 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q32017
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
5 Competitive Landscape
Private Banks – CHIB No 6 in Assets, No 5 in Loans, Deposits
ASSETS LOANS (Net) DEPOSITS CAPITAL ROE Institution Amt Mkt Share Amt Mkt Share Amt Mkt Share Amt Mkt Share Jan-Sep Jan-Sep Branches (Sep 2017) (in P Bn) (%) (in P Bn) (%) (in P Bn) (%) (in P Bn) (%) '17 '16 BDO 2,593 18.17% 1,730 21.30% 2,090 18.97% 294 19.24% 10.11% 12.59% 1,157 MBT 1,988 13.93% 1,175 14.47% 1,475 13.39% 211 13.80% 8.66% 8.49% 955 BPI 1,794 12.57% 1,130 13.92% 1,506 13.67% 176 11.52% 13.10% 14.70% 850 PNB 807 5.65% 467 5.76% 612 5.55% 110 7.17% 5.30% 7.00% 689 SECB 795 5.57% 366 4.50% 431 3.91% 101 6.62% 9.83% 11.27% 297 CHIB 693 4.85% 430 5.29% 578 5.25% 82 5.38% 10.41% 10.47% 569 UBP 547 3.83% 263 3.24% 438 3.97% 66 4.33% 12.20% 17.30% 313 RCBC 526 3.69% 336 4.14% 375 3.40% 65 4.24% 7.16% 7.82% 503 EW 315 2.21% 211 2.60% 257 2.33% 37 2.44% 13.80% 9.60% 447 Gov't Banks 2,041 14.30% 872 10.74% 1,675 15.20% 149 9.73% LBP 1,481 10.37% 599 7.38% 1,306 11.86% 102 6.66% DBP 560 3.92% 273 3.36% 368 3.34% 47 3.05% Foreign Banks 1,133 7.93% 655 8.06% 716 6.50% 125 8.15% Other Local Banks 1,043 7.30% 485 5.97% 865 7.85% 113 7.38% TOTAL 14,275 100% 8,120 100% 11,017 100% 1,531 100% Source: Published SOCs except China Bank (based on Audited figures, PFRS)
1/ ROE based on SEC-17Q Report
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 Exchange by 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 asset 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 (China Bank Securities Corp) 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 with 75 branch licenses and renamed to
Acquisition Bancassurance joint venture with 5% stake
10 Bank Strategy – Continued Network Expansion
As of Sept 2017
China No. of China Bank % Share Branches Bank Savings Total Total Metro 221 76 297 52% Manila Luzon 100 68 168 30% Visayas 55 9 64 11% Mindanao 35 5 40 7% Total 411 158 569 100%
900 865 805 800 CHIB CBS 740 661 700 PDB ATM 561 600 511 561 475 517 541 431 500 383 445 470 158 366 376 150 361 78 165 400 78 276 316 293 78 250 269 72 300 33 216 25 188 2 16 141 200 148 1 391 411 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 Sep-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 China Bank - Consumer Banking Capital Corp Manulife- - Corporate - Investment Banking China Bank - Commercial China Bank Life Assurance Securities Corp Corporation - Securities Brokerage (MCBLife)
China Bank Consumer Wealth Insurance Banking Management 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)
633 693
527 565 88 83 471 414 80 76
324 15 21
257 262 9 605 4 550 2 485 451 399 403 315 255 258
2010 2011 2012 2013 2014 2015 2016 3Q2016 3Q2017
China Bank China Bank Savings Planters Development Bank
16 2 Strong Balance Sheet with Sustainable Growth
Emphasis on core-recurring income
Assets Mix (PHP in B)
633 693
565 527 17% 471 16% 414 16% 13% 12% 324 16% 60% 257 262 61% 20% 59% 62% 62% 29% 24% 53% 59% 46% 55% 31% 26% 28% 23% 22% 23% 25% 21% 21% 2010 2011 2012 2013 2014 2015 2016 3Q2016 3Q2017
Others Net Loans Investment Securities
17 2 Strong Balance Sheet with Sustainable Growth
Healthy liquidity
80.00% 74.31% 72.73% 75.00% 71.43% 72.57% 69.90% 70.52% 70.00% 67.20% 64.50% 64.64% 64.71% 65.72% 62.25% 63.00% 65.00% 60.99% 60.00% 57.99% 55.33% 62.01% 61.63% 61.09% 60.75% 55.00% 58.64% 58.80% 55.39% 50.00% 53.31% 45.00% 40.00% 2011 2012 2013 2014 2015 2016 3Q2016 3Q2017
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
394 437 Consumer 28%
351 16% 317 298 15% 19% 15% Commercial 15% 22% 30% 228 14% 23% 198 43% 13% 154 45% 126 12% 39% 12% 41% Corporate 11% 65% 31% 63% 14% 28% 62%
47% 48% 43% 40% 61% 57%
2010 2011 2012 2013 2014 2015 2016* 3Q2016 3Q2017 * Loans were reclassified into corporate (accounts with assets of 100M up) from commercial loans
19 3 Diversified and Well Collateralized Loan Portfolio
Loans continue to grow fast in consumer segment (CHIB & CBS)
Consumer Loans (PHP in B) Housing Auto Personal Credit card
60 52 2% 5% 41 47 2% 5% 2% 30% 33 5% 1% 5% 28% - 29% 28% 21 6% 29% 16 3% - 63% 10 30% 65% 1% - 64% 66% 7 34% 4% 65% - 48% 67% 56% 66% 44% 48% 2010 2011 2012 2013 2014 2015 2016 3Q2016 3Q2017 * Excludes CTS & loans to developers
20 Diversified and Well Collateralized Loan Portfolio - – For 3 update
Loans By Security
404 394
Unsecured Secured 317 331 298 55% 58% 228 53% 198 52% 58%
154 53% 126 53% 51% 60% 45% 42% 48% 42% 47 % 47% 47% 40% 49%
2010 2011 2012 2013 2014 2015 2016 Q32016 Q32017
21 4 Improving Asset Quality and Loan Loss Coverage
Asset Quality Ratios post PDB integration continue to improve…
NPL Ratios LLR Coverage
3% 180% 2.68% 159% 2.53% 2.63% 153% 157% 153% 160% 3% 2.24% 135% 156% 2.38% 140% 124% 125% 142% 123% 1.99% 1.93% 147% 2% 1.86% 120% 1.57% 1.76% 91% 94% 100% 1.90% 1.88% 1.81% 2% 1.78% 1.77% 87% 91% 1.57% 1.13% 80% 101% 93% 87% 1.08% 78% 80% 1% 60% 1.11% 1.05% Plantersbank acquired 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% 0.28% 0.41% 0.34% 0.29% 0.31% 0.16% 0.24% 0.24% 0.08% 0.19% 0.17% 0.17% 0.16% 0.16% 0.19% 0.11% 0.13% 0.13%
CHIB Industry
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
578 484 542 473 372 458 395 439 399 16% 326 15% 283 354 17% 15% 218 272 18% 38% 35% 20% 159 168 213 216 37% 36% 20% 37% 25% 23% 41% 47% 47% 48% 42% 41% 48% 48% 39% 45% 33% 36% 33% 2010 2011 2012 2013 2014 2015 2016 3Q2016 3Q2017
Loans to Deposits Ratio CASA to Peso Deposits Ratio 80% 67% 71% 70% 70% 62% 57% 58% 73% 74% 70% 71% 60% 60% 46% 48% 50% 50% 55% 49% 55% 40% 40% 44% 41% 30% 30% 20% 20% 10% 10% 0% 2010 2011 2012 2013 2014 2015 2016 3Q2017
24 5 Funding – Strong Brand Franchise / Retail Base
Stable Margins
7%
6.08% 6% 5.57%
5% 4.73% 4.31% 4.32% 4.22% 3.97% 4.20% 4.18% 4% 3.76% 3.30% 3.37% 2.90% 2.98% 3.20% 3% 2.21% 3.09% 1.90% 2.06% 2% 1.30% 1.12% 1.15% 0.98% 1% 1.02%
0% 2010 2011 2012 2013 2014 2015 2016 3Q2017 Asset Yield Cost of Funds NIM
25 6 Healthy Capital Position
Capital Adequacy Ratio (CAR) CET 1 Ratio Industry Average CAR
19.0% 18.9% 20.0% 18.5% 17.7% 17.3% 18.0% 15.9% 16.0% 16.3% 16.3% 16.2% 15.7% 16.0% 16.0% 15.8% 15.4% 15.1% 16.0% 14.9% 14.7% 15.5% 13.5% 15.1% 13.5% 15.4% 15.2% 14.0% 12.8% 14.5% 14.0% 12.2% 13.9% 12.0% 12.6% 12.6% 11.9% 11.3% 10.0% 82
63 57 59 42 45 35 39 30 25 27 26
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q2017
Basel II Preemptive rights P15Bn stock rights in implementation P8Bn stock rights in waived (By Laws 2017 Industry data as of Dec 2016 2014 amended)
26 7 Well Diversified Income Stream
Operating Income Mix (PHP in B)
Net Interest Income Trading and Securities Other Fees
21.79 19..,57 19.16 18.85 19% 23%
21% 25% 4% 116.46 22% 23% 15.10 25% 25% 13.32 13.86 2% 18% 12.74 3% 26% 3% 21% 7% 21% 22% 35% 34% 21% 33% 42% 13% 13% 12% 21%
77% 75% 77% 74% 74% 66% 65% 67% 58%
2010 2011 2012 2013 2014 2015 2016 9M2016 9M2017
27 7 Effective Cost Management
… even with cost drag of branch expansion
Cost to Income – Philippine Banks Sep 2017 Cost to Income – China Bank (%)
79.2% 62.2% 62.3% 70.0% 61.3% 61.2% 67.2% 59.2% 59.0% 61.2% 56.8% 52.7% 53.7% 55.2% 57.2% 50.4% 51.5% 53.5% 55.4% 56.0% 58.2%
2010 2011 2012 2013 2014 2015 2016 3Q2017
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 Sep 2017 4.3% 2.90% 2.71% 2.82% 2.65% 3.3% 3.4% 2.41% 2.44% 2.30% 2.36% 2.7% 2.4% 2.4% 2.5% 2.1% 1.6%
2010 2011 2012 2013 2014 2015 2016 3Q2017
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 Sep 2017 ) (No. of Branches and ATMs) +467
1,272 PDB CBS 1,272 Branches ATMs 3,916 CHB ATMs 1,191 1,400 4,200 1,116 2,328 1,032 3,700 1,200 1,157 865 3,061 3,200 805 740 +189 1,000 955 730 1,176 692 720 850 2,700 661 672 865 614 200 +50 800 1,539 569 182 191 689 2,200 517 541 172 579 162 470 158 569 361 150 600 321 1,700 503 683 78 165 447 78 1,200 +139 400 510 520 530 313 297 452 500 700 148 391 411 314 352 200 200 148
- (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 31.0% 33.5% 6.79% 33.1% 35% 7.00% 31.0% 31.1% 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 Snapshot of SM Group Business Lines
27% 38%
SMIC @ 19.9% 9% Financial 26% Retail Property Services
SM Group - Henry Sy Sr. First became Shareholder in 1979
Foreign Shareholders
Dee Group
Others
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
• Vice Chairman of the Board since May 5, 2011 • Member of the Board since April 14, 1977 • Chairman from 1989 to 2011 • President and Chief Executive Officer of the Bank • China Bank Board Director since 1969 from 1985 to 2014 • Chairman of the Boards of Union Motor • Director in CBC-PCCI, CBC-IBI and CBC Forex, Corporation and China Bank subsidiary CBC Hydee Management & Resources Corporation, Properties and Computer Center, Inc. (CBC- Commonwealth Foods, Inc., and GDSK PCCI), and Director of Super Industrial Development Corporation
Corporation • Independent Director in City & Land Developers,
Inc. and Cityland Development Corporation
Gilbert U. Dee Peter S. Dee
. Director and President since Nov 1, 2017 . EVP and COO from Feb 2017 to Oct 2017; Head of Lending Business Segment • Director since 1984 . Director/Treasurer of Chinabank Insurance Brokers, • Director/ President of JJACCIS Development Inc. (CBC-IBI) and China Bank Computer Center Corporation and Enterprise Realty Corporation, Inc. (CBC-PCCI) and Director/ Treasurer of Suntree Holdings . Director of China Bank Savings (CBSI). China Bank Corporation Capital Corp (CBCC) . Director of BancNet, Inc.
William C. Whang Joaquin T. Dee
35 10 Board of Directors
• Director since 1993 • Director since 2001 • Director of SM Prime Holdings, Inc. • Former 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 • Chairman of SM Investments Corp. to the China Bank Board on May 5, 2005 • Director of Atlas Consolidated Mining • Member of the Boards of Trustees of St. Luke’s and Development Corporation, Belle Medical Center, SLMC Global City, Inc., St. Luke’s Corp., and BDO Unibank, Inc. College of Medicine – William H. Quasha • Adviser to the Board of Directors in Memorial, and Brent International School, Inc Premium Leisure Corporation & SM • Independent Director of Seaoil Phils., Inc. and Prime Holdings, Inc. Towers Watson Insurance Brokers Philippine Inc.,
• Director in OCLP (Ortigas) Holdings, Inc., CBSI and CBCC
Manila North Tollways Corporation, and • Independent Director of Far Eastern University, CityMall Commercial Centers Inc. Robert F. Kuan Incorporated Jose T. Sio • President of SM Foundation, Inc. and Independent Director Director 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 President of Richphil House Alberto S. Yao Incorporated, and Megarich Property Margarita L, San Juan Independent Director Ventures Corp. Independent Director • Director of CBSI and CBCC
*Ricardo R. Chua, the former President and CEO, was appointed as Advisor to the Board effective November 1, 2017 36 10 Experienced and Competent Management Team
Hans T. Sy Gilbert U. Dee Chairman of the Board Vice Chairman of the Board
William C. Whang Romeo D. Uyan Director and President EVP and Chief Operating Officer (COO) since Nov. 1, 2017 since Nov 1, 2017
Rosemarie C. Gan Alberto Emilio V. Ramos Executive Vice President and Executive Vice President and Head of Retail Banking Business President of China Bank Savings
Patrick D. Cheng Alexander C. Escucha Senior Vice President and Chief Finance Senior Vice President and Officer (CFO) effective Dec 1, 2017 Head of Investor and Corporate
Relations Group
Benedict L. Chan Lilian Yu First Vice President and First Vice President II and Head of Head of Treasury Group effective Dec 1, 2017 Institutional Banking Group since Nov 1, 2017
37 10 Experienced and Competent Management Team
Renato K. De Borja Jose L. Osmeña First Vice President and First Vice President and Head of Consumer Banking Business Deputy Group Head of Retail (Housing/Auto, Remittance and Credit Cards) Branch Banking
Lilibeth R. Carino Virgilio O. Chua First Vice President and Treasurer and Managing Director, Head, Consumer Banking Group Head of Investment Banking, China Bank
Capital Corp.
Ryan Martin L. Tapia Ananias S. Cornelio III Chief Operating Officer and Managing Director, First Vice President and Head of Mergers and Acquisitions and Advisory, Chief Risk Officer China Bank Capital Corp.
Delia Marquez Atty. Corazon I. Morando First Vice President and Vice President and Head of Centralized Operations Group Corporate Secretary effective Dec 1, 2017
38 Presentation Outline
Economic Environment
Company Profile
Key Investment Merits
CorporateCorporate andand FinancialFinancial HighlightsHighlights
39 Corporate Update during 9 months of 2017
. Increase in capital stock from P25B to P33B in Aug
. Capital intelligence upgrade of the bank’s Financial Strength to ―BBB‖ from ―BBB-‖ with stable outlook . Regulatory approval of P2.5B capital infusion to CBS . Full subscription of P15 Bn Stock Rights Offer . Investment Grade Credit Rating from Moody’s – Baa2 . Full Settlement of USD 158 Mn syndicated loan – ahead of June 2018 maturity . LTNCD Tranche 2 worth P6.35 Bn, following the P9.58 Bn release in Nov 2016 due 2022 . PEACe Bond Ruling - The SC ordered BIR to return P5 Bn worth of withholding tax and additionally pay 6% interest p.a. (starting 2011) to PEACe bondholders, including China Bank
40
Financial Performance
Net Income (PBN) Net Interest Income (PBN) Operating Income (PBN)
5.68 14.26 19.16 16.46 2.24 1.22 0.58 1.19 2.09 1.79 4.84 12.26 14.26 12.26
9M2016 9M2017 9M2016 9M2017 9M2016 9M2017
Assets (PBN) Loans Net (PBN)
693 Deposits (PBN) 430 700 60% 565 578 600 473 52.9% 343 500 55% 51.7% 400 50% 300
200 45% 100 - 40% 3Q2016 3Q2017 Deposits CASA to Total Deposits Ratio 3Q2016 3Q2017 3Q2016 3Q2017 41 Financial Highlights
Income Statement (In Millions) 9M 9M Change 2017 2016 Amt % Net interest Income 14,262 12,256 2,006 16.4 Non-Interest Income 4,901 4,206 696 16.5 Total Operating Income 19,164 16,462 2,701 16.4 Total Operating Expenses 12,313 10,682 1,631 15.3 Income before Income Tax 6,850 5,780 1,070 18.5 Provision for Income Tax 1,166 937 229 24.5 Net Income 5,684 4,843 841 17.4 Attributable to: Equity Holders of the Parent Bank 5,677 4,854 85.5 Non-controlling Interest 7 (11) (159.2) Ratios: Net Interest Margin (%) 3.09 3.22 Cost-to-Income Ratio (%) 61.23 61.25 Return on Average Equity (%) 10.41 10.47 Return on Average Assets (%) 1.16 1.19
42 Financial Highlights
Balance Sheet (In Millions) 9M 9M Change 2017 2016 Amt % Total Assets 692,744 564,785 127,959 22.7 Loans & Receivables (Net) 429,564 343,096 86,468 25.2 Total Deposits 578,038 472,774 105,264 22.3 Low Cost Deposits 306,037 244,436 61,602 25.2 Time Deposits 272,001 228,338 43,663 19.1 Total Equity 82,380 63,868 18,512 29.0 Ratios: Loans to Deposits 74.31 72.57 Non-Performing Loans 1.76 2.38 NPL Coverage 91.29 86.57 Car Tier / CET 1 13.85 13.32 CAR Total 14.65 12.40
43 Credit Ratings
. Investment grade credit rating of Baa2 . Same level as the Philippine sovereign rating and at par with the country’s top 3 biggest banks
. Upgraded IDR in Sept 2016 to ‘BB+’ from “BB’ and its viability rating to ‘bb+’ from bb (stable outlook)
. Affirmed just recently (Feb 2017)
. Upgraded Financial Strength Rating (FSR) to ‘BBB’ from “BBB-’ with Stable outlook
44 Awards and Recognition
. Highest corporate governance standards as recognized by the general market . Bell Award for Corporate Governance for the 6th Straight Year from The Philippine Stock Exchange (Top 5 of 268 listed companies)
. Asian Corporate Director Recognition Award 2016 - Corporate Governance Asia Awards 2016 Asia Pacific Entrepreneurship Award – Financial Services Sector from . 2016 Asia Pacific Entrepreneurship Award – Enterprise Asia Award (for Mr. Ricardo R. Chua, CEO) Recipient of Asian Financial Services Sector from Enterprise Corporate Director Asia Award (for Mr. Ricardo R. Chua, CEO) Recognition award from Corporate Governance Asia – Chairman Hans T. . Ranked among top 50 publicly-listed Sy companies in ASEAN Corporate Governance Scorecard Country Reports and Assessments 2013-2014 . Gold Award for Outstanding Company 2011
and 2012 from Institute of Corporate Recipient of the Bell Award Directors for Corporate Governance for the 5th straight year by PSE, Gold award from ICD in 2011 & 2012
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Awards and Recognition
Best Core Top Corporate Issue Best Investor Banking System Best Bank for Debt Top Corporate Issue Manager / 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
Asia’s Best CEO Best Investor Relations Best Managed Asian Corporate Best in Investor (Investor Fund for Bond Director Recognition Professional - 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
46 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]
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