Investor Presentation 1Q 2018
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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, SAM Website: www.chinabank.ph [email protected]
1 Presentation Outline
EconomicEconomic EnvironmentEnvironment
Company Profile
Key Investment Merits
Corporate and Financial Highlights
2 Economic Environment
WORLD ECONOMY PH ECONOMY PH BANKING
Cyclical upswing underway Solid economic performance Resilient to external shocks
US - GDP growth at 2.3%; GDP growth at 6.8% Asset base expanded 11% yoy Added 2 million jobs; Deposits up 12.6%; Inflation uptrend to 3.8% Three 25-bps policy rate Loans up 17.2% in Mar hikes Unemployment slightly Asset quality improved to 1.8%; China - GDP growth at 6.8%; up to 5.7% LLR at 126% in Mar Deleveraging; Policy rate raised to 3.25% UK/B Total CAR stood at 14.98% as Heavy capital outflow of Dec 2017
3 Competitive Landscape
Private Banks – CHIB No. 5 in Assets, Loans and Deposits
ASSETS LOANS (Net) DEPOSITS CAPITAL ROE Institution Amt Mkt Share Amt Mkt Share Amt Mkt Share Amt Mkt Share Jan-Mar Jan-Mar Branches (Mar 2018) (in P Bn) (%) (in P Bn) (%) (in P Bn) (%) (in P Bn) (%) '18 '17 BDO 2,768 18.49% 1,869 21.46% 2,242 19.27% 299 19.05% 7.9% 9.4% 1,207 MBT 2,069 13.82% 1,263 14.50% 1,554 13.35% 212 13.51% 11.3% 11.2% 952 BPI 1,909 12.75% 1,232 14.15% 1,589 13.65% 188 11.96% 13.5% 15.0% 945 PNB 844 5.64% 497 5.71% 658 5.66% 115 7.31% 4.9% 4.5% 700 CHIB 719 4.80% 439 5.04% 614 5.28% 77 4.88% 7.1% 9.2% 599 SECB 701 4.69% 361 4.15% 420 3.61% 104 6.61% 8.9% 11.4% 301 UBP 608 4.06% 295 3.39% 440 3.78% 69 4.39% 15.9% 13.1% 316 RCBC 588 3.93% 374 4.30% 395 3.39% 68 4.34% 6.8% 6.5% 508 EW 318 2.12% 210 2.41% 255 2.19% 40 2.53% 9.6% 13.8% 447 Gov't Banks 2,255 15.07% 991 11.38% 1,872 16.09% 156 9.93% Foreign Banks 1,119 7.48% 635 7.29% 704 6.05% 134 8.53% Other Local Banks 1,068 7.14% 542 6.22% 893 7.68% 110 6.97% TOTAL 14,967 100% 8,707 100% 11,636 100% 1,571 100% Source: Published SOCs 1/ ROE based on SEC-17Q Report
4 Presentation Outline
Economic Environment
CompanyCompany ProfileProfile
Key Investment Merits
Corporate and Financial Highlights
5 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
6 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)
7 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
8 Bank Strategy – Continued Network Expansion
As of March 2018
China No. of China Bank % Share Branches Bank Savings Total Total Metro 237 78 315 53% Manila Luzon 109 67 176 29% Visayas 56 9 65 11% Mindanao 37 6 43 7% Total 439 160 599 100%
950 888 902 805 850 CHIB CBS 740 750 PDB ATM 661 599 650 596 561 511 541 550 475 517 160 160 431 445 470 450 150 366 376 383 78 165 361 78 316 350 276 293 78 269 72 250 25 33 250 216 2 16 188 436 439 1 391 141 148 1 352 150 295 314 248 253 268 283 187 215 148 50 141
-50 2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
9 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 and Asset Management
10 Presentation Outline
Economic Environment
Company Profile
KeyKey InvestmentInvestment MeritsMerits
Corporate and Financial Highlights
11 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
12 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
13 2 Strong Balance Sheet with Sustainable Growth
Organic growth and strategic acquisitions Total Assets (PHP in B)
751 723
89 620 633 87
83 527 86 471 76 414 47 15 21 324 9 662 636 257 262 550 535 2 4 451 399 403 315 255 258
2010 2011 2012 2013 2014 2015 2016 2017 1Q17 1Q18
China Bank China Bank Savings Planters Development Bank
14 2 Strong Balance Sheet with Sustainable Growth
Emphasis on core-recurring income
Assets Mix (PHP in B)
751 723
17% 633 620 18%
527 16% 16% 471 13% 414 12% 60% 324 16% 62% 61% 60% 257 262 20% 59% 62% 29% 24% 53% 59% 46% 55% 23% 31% 26% 28% 23% 24% 20% 25% 21% 21% 2010 2011 2012 2013 2014 2015 2016 2017 1Q17 1Q18
Others Net Loans Investment Securities
15 2 Strong Balance Sheet with Sustainable Growth
Healthy liquidity
72.7% 72.7% 75.0% 71.4% 69.9% 70.5% 70.7% 70.0% 67.2% 64.5% 64.6% 64.6% 62.3% 63.0% 63.1% 65.0% 61.0% 60.0% 58.0% 55.3% 61.6% 61.1% 61.6% 59.7% 55.0% 58.6% 58.8% 55.4% 50.0% 53.3%
45.0%
40.0% 2011 2012 2013 2014 2015 2016 2017 1Q18
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)
16 3 Diversified and Well Collateralized Loan Portfolio
Loans growth faster in consumer segment
Gross Loans (PHP in B)
Corporate Commercial Consumer 8-yr CAGR 2010-1Q18 456 455 Consumer 394 26% 16% 378 16%
15% 16% 317 20% 19% 298 Commercial 15% 22% 13% 14% 22% 228 198 13% 154 12% 45% 126 43% 12% 39% 64% 65% Corporate 11% 41% 63% 20% 31% 62% 28% 47% 48% 43% 40% 61% 57%
2010 2011 2012 2013 2014 2015 2016* 2017 1Q17 1Q18 * Loans were reclassified into corporate (accounts with assets of 100M up) from commercial loans
17 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 66 63 2% 2% 5% 5% 53 52 2% 2% 6% 31% 5% 29%
41 1% 28% 28% 5% 33 - 6% 28%
29% 21 3% - 64% 62% 16 30% 65% 64% 1% - 10 34% 66% 65% 7 4% - 48% 67% 56% 66% 44% 48% 2010 2011 2012 2013 2014 2015 2016 2017 1Q17 1Q18 * Excludes CTS & loans to developers
18 3 Diversified and Well Collateralized Loan Portfolio
Loans By Security
456 455 Unsecured 394 Secured 317 298 56% 57% 55% 228 198 52% 58% 154 126 53% 53% 51% 60% 45% 44 % 43% 48% 42% 47% 47% 40% 49%
2010 2011 2012 2013 2014 2015 2016 2017 1Q2018
19 4 Improving Asset Quality and Loan Loss Coverage
Asset Quality Ratios post PDB integration continue to improve…
NPL Ratios LLR Coverage
3% 300% 282% 2.7% 2.6% 2.5% 3% 2.4% 2.2% 250%
2.0% 1.9% 2% 1.9% 1.8% 1.8% 200% 175% 157% 159% 1.9% 1.9% 153% 153% 156% 1.8% 1.8% 1.4% 142% 149% 2% 1.3% 150% 135% 1.6% 1.6% 123%124% 125% 147% 1% 100% 1.1% 1.1% 1.1% 1.1% 101% 94% 93% 99% Plantersbank acquired 87% 87% 91% 91% 0.8% 78% 80% 1% 0.7% 50% Plantersbank acquired 0% 0%
Parent CHIB Conso Parent CHIB Conso
20 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% 0.44% 0.51% 0.33% 0.38% 0.42% 0.39% 0.35% 0.39% 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% 0.18% 0.11% 0.13% 0.13% 0.15%
CHIB Industry
21 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
527 500 458 635 614 447 542 17% 531 372 19% 327 439 15% 399 16% 283 354 15% 33% 30% 218 18% 38% 37% 20% 167 272 37% 160 213 216 20% 37% 25% 23% 41% 47% 47% 50% 51% 42% 41% 48% 47% 39% 45% 33% 36% 33% 2010 2011 2012 2013 2014 2015 2016 2017 1Q17 1Q18 2010 2011 2012 2013 2014 2015 2016 2017 1Q17 1Q18
Loans to Deposits Ratio CASA to Peso Deposits Ratio 80% 70% 70% 73% 73% 70% 71% 71% 71% 60% 60% 67% 61% 63% 62% 50% 57% 55% 50% 55% 40% 48% 49% 44% 46% 40% 41% 30% 30% 20% 20% 10% 10% 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 0% 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
22 5 Funding – Strong Brand Franchise / Retail Base
Stable Margins
7% 6.08% 6% 5.57%
5% 4.73% 4.22% 4.31% 4.32% 4.20% 4.19% 4.32% 3.97% 4% 3.76% 3.30% 3.37% 3.20% 3.11% 3.06% 2.90% 2.98% 3% 2.21% 2.06% 1.90% 2% 1.30% 1.40% 1.14% 1.12% 0.98% 1.02% 1%
0% 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 Asset Yield Cost of Funds NIM
23 6 Healthy Capital Position
Capital Adequacy Ratio (CAR) CET 1 Ratio Industry Average CAR 23.1% 24.0%
22.0% 22.1% 19.0% 18.9% 20.0% 18.5% 17.7% 17.3% 15.9% 18.0% 16.3% 16.3% 16.2% 16.0% 16.0% 16.0% 15.8% 15.7% 15.4% 14.9% 15.1% 15.0% 15.0% 16.0% 14.2% 13.7% 13.5% 15.4% 15.5% 13.5% 15.1% 12.8% 15.2% 14.0% 14.5% 12.2% 14.0% 13.5% 12.0% 12.6% 12.6% 12.8% 11.9% 11.3% 10.0% 84 83
63 57 59 42 45 35 39 30 25 27 26
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18
Basel II Preemptive rights P15Bn stock rights in implementation P8Bn stock rights in waived (By Laws 2017 Industry data as of Sep 2017 2014 amended)
24 7 Well Diversified Income Stream
Operating Income Mix (PHP in B)
Net Interest Income Trading and Securities Other Fees
25.73
21.79 22% 24% 19.57 18.85 19% 2% 23% 21% 23% 15.10 22% 25% 4% 13.86 2% 13.32 3% 12.74 21% 21% 22% 42% 34% 35% 21% 33% 13% 13% 12% 21% 76% 6.14 75% 77% 77% 5.66 19% 14% 66% 19% 65% 67% 58% 2% 21% 79% 86%
(5%) 2010 2011 2012 2013 2014 2015 2016 2017 1Q17 1Q18
25 7 Effective Cost Management
… even with cost drag of branch expansion
Cost to Income – Philippine Banks Mar 2018 Cost to Income – China Bank (%)
75.5% 71.7% 69.9% 69.0% 69.0% 59.2% 59.0% 62.2% 62.3% 61.3% 62.0% 58.3% 55.2% 55.1% 55.5% 53.5% 52.9% 57.2% 50.5% 55.4% 56.0%
56.0% 63.4%
2010 2011 2012 2013 2014 2015 2016 2017 1Q18
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 2018 5.7% 2.90% 2.71% 2.82% 2.65% 2.41% 2.44% 3.6% 3.7% 2.30% 2.31% 2.30% 3.1% 2.7% 2.3% 2.3% 2.4% 1.8%
2010 2011 2012 2013 2014 2015 2016 2017 1Q18
BPI
UBP
PNB
MBT
EWB
BDO
CHIB
SECB RCBC
26 7 Growing Distribution Network
5th Largest Distribution Network in the Philippines Network Expansion Plan (No. of Branches, ATMs as of Mar 2018 ) (No. of Branches and ATMs)
1,113
PDB CBS 1,032 4,106 Branches ATMs CHB ATMs 993 1,400 4,200 888 902 2,387 1,207 3,700 805 1,200 3,105 740 3,200 952 1,295 661 653 1,000 945 599 640 653 2,700 596 902 517 541 162 162 800 1,580 162 700 2,200 470 160 160 572 150 599 508 78 165 600 326 715 1,700 361 447 78 1,200 400 316 301 478 491 491 436 439 700 148 391 314 352 200 200 148
- (300) BDO MBT BPI PNB CHIB RCB EWB UBP SECB 2006 2014 2015 2016 2017 1Q18 2018F 2019F 2020F
27 7 … Brand Refresh, Modern Branch Look and Feel…
28 7 Supported by Robust Infrastructure
Customer-centric technology initiatives…
. July 2016 – Upgrade Retail Internet China Bank Online . New Treasury system -- . EMV Compliant since January Calypso 2017 . Replace Trust/Asset . Mobile Banking Initiative Management system . Cash Management / Corporate Online . Digital Banking transformation
Since 2015 ATM cards, machines – 1 of the first in PHL
…supported by robust infrastructure platform
Calypso Treasury System
29 8 Sustained Delivery of Shareholder Returns
Consistent dividends track record Dividend Yield – consistently (In Mn) above industry average Cash Dividends Cash Payout
2.4 41.9% 45% 9.00% 8.53%
40% 8.00% 2.2 36.5% 34% 33% 7.00% 6.79% 31% 31% 31% 35% 2.0 29% 30% 28% 30% 6.00% 26% 5.28% 1.8 25% 5.00% 4.75%
1.6 2.23 20% 4.00% 3.55% 1.99 15% 3.00% 2.58% 2.57% 2.72% 1.4 1.85 2.28% 2.26% 2.38% 1.72 10% 2.00% 1.54 1.56 1.59 1.2 1.42 1.29 5% 1.00% 1.06 1.17 1.0 0% 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
30 Strong Support from Shareholders and Synergies with the 9 SM Group Current Shareholdings Snapshot of SM Group Business Lines
26% 39%
SMIC @ 19.9% 8% Financial 27% 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.
31 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
32 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 Ex-Com Chair of SM Prime Holdings, Inc. (Emeritus), and SM Prime Holdings, Inc. 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 . Director of Philippine Payments Management, Inc. Joaquin T. Dee (PPMI)
33 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 34 Management Team – Experienced, Successors in Place
Hans T. Sy Gilbert U. Dee Chairman of the Board Vice Chairman of the Board Vice Chair since 1989 Director since 1986
William C. Whang Romeo D. Uyan Director and President since Nov. 1, 2017 EVP and Chief Operating Officer (COO) Chairman of China Bank Securities Corp. since Nov 1, 2017
Vice Chairman of China Bank Capital
Corp.
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 Head of Officer (CFO) since Dec 1, 2017 Investor and Corporate Relations Group Director of China Bank Savings Director of China Bank Savings
Benedict L. Chan Lilian Yu First Vice President and First Vice President and Head of Head of Treasury Group since Dec 1, 2017 Institutional Banking Group since Nov 1, 2017 Advisor to the Board of China Bank Capital Corp.
35 Management Team – Experienced, Successors in Place
Lilibeth R. Carino Renato K. De Borja First Vice President and First Vice President and Head Remittance and Head, Consumer Banking Group Credit Cards Business (Housing and Auto)
Virgilio O. Chua Ryan Martin L. Tapia Managing Director and Treasurer, President of China Bank Capital Corp. Head of Coverage and Origination, Director of China Bank Securities Corp. China Bank Capital Corp.
Jose L. Osmeña
First Vice President and Ananias S. Cornelio III Deputy Group Head of Retail First Vice President and Branch Banking Chief Risk Officer
Delia Marquez Mary Ann Lim First Vice President and Vice President , Trust Officer and Head of Head of Centralized Operations Group Trust and Asset Management Group effective Dec 1, 2017 since January 1, 2018
Atty. Corazon I. Morando Atty. Aileen Paulette De Jesus Vice President and Vice President , Chief Compliance Corporate Secretary Officer effective March 1, 2018
36 Presentation Outline
Economic Environment
Company Profile
Key Investment Merits
CorporateCorporate andand FinancialFinancial HighlightsHighlights
37 Financial Highlights
Income Statement (In Millions) 1Q 1Q Change 2018 2017 Amt % Net interest Income 5,292 4,471 821 18.4 Non-Interest Income 852 1,190 (338) (28.4) Total Operating Income 6,143 5,660 483 8.5 Total Operating Expenses 4,413 3,881 532 13.7 Income before Income Tax 1,731 1,779 (48) (2.7) Provision for Income Tax 231 308 (76) (24.8) Net Income 1,500 1,472 28 1.9 Attributable to: Equity Holders of the Parent Bank 1,498 1,470 28 1.9 Non-controlling Interest 2 2 (0) (4.2) Ratios: Net Interest Margin (%) 3.06 3.02 Cost-to-Income Ratio (%) 69.03 66.37 Return on Average Equity (%) 7.09 9.15 Return on Average Assets (%) 0.81 0.93
38 Financial Highlights
Balance Sheet (In Millions) 1Q 1Q Change 2018 2017 Amt % Total Assets 723,435 620,399 103,035 16.6 Loans & Receivables (Net) 445,926 371,289 74,637 20.1 Total Deposits 613,639 530,520 83,119 15.7 Low Cost Deposits 338,728 272,577 66,151 24.3 Time Deposits 274,911 257,943 16,968 6.6 Total Equity 83,029 64,912 18,117 27.9 Ratios: Loans to Deposits 72.67 69.99 Non-Performing Loans 1.32 1.93 NPL Coverage 148.90 94.00 Car Tier / CET 1 12.79 11.97 CAR Total 13.65 12.78
39 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 2018)
. Upgraded Financial Strength Rating (FSR) to ‘BBB’ from “BBB-’ with Stable outlook
40 Awards and Recognition
. Bell Award for Corporate Governance for the 5th Straight Year from The Philippine Stock Exchange (Top 5 of 268 listed companies) – Special Citation in 2017
. Asian Corporate Director Recognition Award 2016 - Corporate Governance Asia Awards
. 2016 Asia Pacific Entrepreneurship Award – Financial Services Sector from Enterprise Asia Award (for Mr. Ricardo R. Chua, CEO)
. Asian Corporate Director Recognition Award 2016 - Corporate Governance Asia Awards, Chairman Hans T. Sy
. Best Managed Fund of the Year Award - Dollar Long-Term Bond Category - CFA Society Philippines (CFA) 2017 Charter Awards 2016 Asia Pacific Entrepreneurship Award – Financial Services Sector from . Asia's Best CEO, Investor Relations - Ricardo R. Chua Enterprise Asia Award (for Mr. Ricardo (President and CEO), Best Investor Relations Company R. Chua, CEO) Recipient of Asian (Philippines) - China Bank, Best Investor Relations Professional Corporate Director Recognition award from (Philippines) - Alexander C. Escucha (SVP) - The 7th Asian Corporate Governance Excellence Awards 2017 - Corporate Governance Asia Asia – Chairman Hans T. Sy . Asia's Outstanding Company on Corporate Governance - China Bank, Best Asian Corporate Director - Mr. Hans T. Sy - The Best of Asia 2016 - Corporate Governance Asia
. Best Core Banking Implementation (Mid-size banks) - The Asian Banker Technology Innovation Awards 2017 - The Asian Banker
. Power Deal of the Year – Philippines (GNPower Dinginin Recipient of the Bell Award for Corporate Governance Limited Company US$670 million/7.5 billion pesos project for the 6th straight year by financing facilities) - The Asset Triple A Asia Infrastructure PSE, Gold award from ICD in Awards 2017 - The Asset 2011 & 2012
41
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 Best Managed Asian Corporate Best in Investor (Investor Fund for Bond Fund for Bond Director Recognition Professional - Relations Company - Relations) – Philippines Long-Term Long-Term Award - Philippines Philippines SVP Alexander C. Dollar Dollar Chairman Hans T. Sy China Bank Pres. & CEO Escucha Category Category Ricardo R. Chua 2015, 2016 2015, 2016, 2015, 2016, 2015, 2016 2016 2017
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
42 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, SAM Website: www.chinabank.ph [email protected]
43