Slide 1: Investor Presentation 1H 2019 Results
Investor Presentation 1H 2019 Results
Slide 2: Legal Disclaimer
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 conta
Slide 3: Presentation Outline
Presentation Outline Economic Environment Company Profile Key Investment Merits Corporate Financial Highlights 3 2
Slide 4: Economic Environment 1st Half 2019
Economic Environment 1ST Half 2019 4 3
Slide 5: Economic Environment
Economic Environment Sustained decline in Debt-To-GDP ratio… Unemployment is at its lowest in 40 years… 5 34
Slide 6: Economic Environment
Economic Environment Stable and sound banking system… 6 45
Slide 7: Economic Environment
Economic Environment Public investment remains low compared to Asian peers Infrastructure Investments as % of GDP 2010-2015 8.0 6.8 6.0 5.7 5.4 4.0 3.0 2.6 2.3 2.3 1.8 2.0 0.0 China Vietnam India Malaysia Indonesia Singapore Philippines Thailand 56
Slide 8: Economic Environment
Economic Environment Significantly lower than ASEAN neighbors Ph External Debt as % of GDP ASEAN External Debt as % of GDP (%) 100 69.1 80 49.4 60 34.8 32.1 40 26.3 23.5 20 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Malaysia Singapore Indonesia Thailand Vietnam Phil
Slide 9: Snapshot of China Bank
Snapshot of China Bank Long history as one of the oldest privately owned bank in the Philippines, established in 1920 Publicly-listed since 1927 in Manila Stock Exchange Strong presence in the entrepreneur, middle market and business segments Longest relationship with Chinese-Filipinos, serving this
Slide 10: Primary Business
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
Slide 11: Bank Milestones
Bank Milestones Expand portfolio in SME, MME and Consumer segments further enhanced by recent strategic acquisitions Acquired Manila Bank with 75 branch licenses Acquired and renamed to Infused additional P500M capital to CBS 1920 1927 2007 2012 2013 2014 2015 2016 2018 Infused Increased stake in ad
Slide 12: Rapid Network Expansion since 2007
Rapid Network Expansion since 2007 As of June 2019 China China Bank % Share No. of Branches Bank Savings Total Total Metro Manila 252 79 331 53 Luzon 114 67 181 29 Visayas 56 10 66 11 Mindanao 37 6 43 7 Total 459 162 621 100 1000 966 976 888 CHIB CBS 805 800 740 PDB ATM 661 620 621 561 596 600 511 5
Slide 13: Comprehensive Financial Services Platform
Comprehensive Financial Services Platform China Bank’s Organizational Structure 1 2 3 Savings Bank & Other Relationship Banking Financial Markets Business Units Retail Banking Lending China Bank Business Segment Treasury Savings, Inc. (98.3%) - SME Branches Institutional China Bank Capital - Consume
Slide 14: Key Investment Merits
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 c
Slide 15: Established Strength in Affluent Chinese-Filipino Business Segment
1 Established Strength in Affluent Chinese-Filipino Business Segment Predominantly focused on the SME/MME Loyal and highly valuable customer base segments Multi-generational relationships Agile and entrepreneurial mindset Sustainable and profitable niche client relationships 14
Slide 16: Established Strength in Affluent Chinese-Filipino Business Segment
1 Established Strength in Affluent Chinese-Filipino Business Segment FIRST CREDIT LINE IN AIDED DMCI IN CRITICAL 1949 TIMES “My relationship with the “China Bank is not like other banks.” Bank has always been special to me.” - DAVID M. CONSUNJI DMCI - HENRY SY SR. Founder of SM P500,000 CLEAN LOAN I
Slide 17: Established Strength in Affluent Chinese-Filipino Business Segment
1 Established Strength in Affluent Chinese-Filipino Business Segment THE MAKING OF A HARDWARE CONSUMER’S PARADISE Banking with China Bank since 1920.. “ . . .they always accommodate us.” - JOHNNY O. COBANKIAT ACE Hardware FROM HUMBLE BEGINNINGS “Malaki ang tulong na ibinigay sa amin ng China Bank.”
Slide 18: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Organic growth and acquisitions Total Assets (PHP in B) 908 866 768 98 97 751 89 92 633 83 527 471 414 76 47 15 21 810 324 769 257 262 662 676 9 234 4 550 176 209 2 5 0 451 5 399 403 5 315 229 255 258 204 171 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 19: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Emphasis on core lending business, reduced reliance on securities/trading 908 866 Assets Mix (PHP in B) 768 23% 751 19% 633 17% 20% 16% 527 471 14% 414 13% 61% 58% 60% 16% 61% 324 61% 262 21% 59% 257 62% 234 209 23% 53% 29% 176 31% 27% 24% 59% 46% 55% 5
Slide 20: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Healthy liquidity 80% 73% 73% 71% 72% 70% 71% 71% 70% 70% 67% 66% 65% 65% 64% 62% 63% 63% 63% 61% 58% 60% 55% 62% 61% 61% 61% 59% 60% 59% 58% 55% 50% 53% 40% 2011 2012 2013 2014 2015 2016 2017 2018 1H2018 1H2019 Loans (Net) to Total Assets Loans (Net) t
Slide 21: Diversified Loan Portfolio
3 Diversified Loan Portfolio More room to grow in consumer segment Gross Loans (PHP in B) 8-yr CAGR Business Loans * Consumer 2010-2018 600 533 513 500 477 Consumer 456 17% 26% 17% 16% 394 16% 400 317 15% 298 Business 300 Loans 15% 18% 14% 228 198 83% 200 13% 83% 84% 154 12% 84% 126 85% 12% 85% 11%
Slide 22: Diversified Loan Portfolio
3 Diversified Loan Portfolio More room to grow in consumer segment Consumer Loans (PHP in B) Housing Auto Personal + Civil Servants Loan Credit card 83 76 2% 9% 2% 7% 63 68 2% 4% 2% 26% 5% 27% 52 30% 2% 5% 29% 41 1% 30% 5% - 33 28% 6% 29% 64% 21 64% - 3% 64% 16 64% 1%- 30% 63% 10 34% 66% 7 65% 4% -
Slide 23: Diversified and Well-collateralized Loan Portfolio
3 Diversified and Well-collateralized Loan Portfolio Loans By Security 533 513 Unsecured Secured 456 394 56% 57% 298 317 56% 55% 228 198 52% 58% 126 154 53% 53% 51% 43% 44% 44 % 60% 45% 48% 42% 47% 47% 49% 40% 2010 2011 2012 2013 2014 2015 2016 2017 2018 1H2019 22
Slide 24: Improving Asset Quality and Loan Loss Coverage
4 Improving Asset Quality and Loan Loss Coverage Post acquisition asset quality ratios better than industry… NPL Ratios LLR Coverage Plantersbank acquisition 350% 323% * Plantersbank 3% acquisition 300% 2.5% 254% 3% 2.2% 250% 2.0% 1.9% 2% 200% 175% 153% 157% 153% 1.9% 1.9% 1.4% 2% 150% 123% * 1.2% 1
Slide 25: Improving Asset Quality and Loan Loss Coverage: Credit Cost
4 Improving Asset Quality and Loan Loss Coverage Credit Cost – lower than the industry CHIB Industry 1.80% 1.60% 1.67% 1.40% 1.43% 1.20% 1.30% 1.22% 1.00% 1.06% 1.01% 0.94% 0.80% 0.92% 0.86% 0.60% 0.69% 0.67% 0.57% 0.56% 0.40% 0.51% 0.42% 0.44% 0.41% 0.38% 0.38% 0.37% 0.34% 0.33% 0.34% 0.20% 0.29% 0
Slide 26: Funding – Strong Brand Franchise / Retail Base
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 629 600 722 750 527 531 635 653 458 17% 18% 372 542 17% 19% 327 439 15% 283 354 399 39% 30% 39% 218 15% 33% 167 272 18% 38%
Slide 27: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Healthy liquidity 80% 73% 73% 71% 72% 70% 71% 71% 70% 70% 67% 66% 65% 65% 64% 62% 63% 63% 63% 61% 58% 60% 55% 62% 61% 61% 61% 59% 60% 59% 58% 55% 50% 53% 40% 2011 2012 2013 2014 2015 2016 2017 2018 1H2018 1H2019 Loans (Net) to Total Assets Loans (Net) t
Slide 28: Healthy Capital Position
6 Healthy Capital Position Capital Adequacy Ratio (CAR) CET 1 Ratio Industry Average CAR 24.0% 22.0% 20.0% 18.0% 15.8% 15.4% 16.0% 13.1% 13.8% 14.0% 12.0% 12.9% 12.2% 10.0% P15 bn Stock P8 bn Stock rights rights Plantersbank 88 90 acquisition 84 84 Manila Bank Basel 2 acquisition 63 implementation 5
Slide 29: Very Good Credit Ratings
6 Very Good Credit Ratings Investment grade credit rating of baa2 from May 2017 • Same level as the Philippine sovereign rating and at par with the country’s top 3 biggest banks • Affirmed in June 2019 Upgraded IDR in Sept 2016 to ‘BB+’ from “BB’ and its viability rating to ‘bb+’ from bb (stable out
Slide 30: Well Diversified Revenue Stream
7 Well Diversified Revenue Stream Other income improving… (PHP in B) Net Interest Income Trading and Securities Other Fees 28.55 25.73 20% 21% 21.79 22% 24% 18.85 19.57 19% 2% 23% 13.15 21% 23% 4% 22% 25% 15.10 15.11 13.86 2% 13.32 12.74 3% 16% 21% 22% 22% 21% 34% 17% 6% 35% 21% 33% 80% 16% 42% 13%
Slide 31: Effective Cost Management
7 Effective Cost Management … branch expansion on last phase, focus on profitability Cost to Income – Philippine Banks June 2019 Cost to Income – China Bank (%) 66.2% 80% 62.2% 62.3% 61.3% 62.0% 63.0% 65% 66% 69% 53.5% 55.2% 59.2% 59.0% 55.4% 56.0% 57.2% 56.0% 58.0% 60.4% 60% 59% 63% 53% 54% 55% 60%
Slide 32: Growing Distribution Network
7 Growing Distribution Network 5th Largest Distribution Network in the Philippines Slowdown in branch expansion by 2019 (No. of Branches, ATMs) June 2019 (No. of Branches and ATMs) 1,113 PDB CBS 1,032 Branches ATMs CHB ATMs 966 1,600 5,000 4,379 888 1,362 4,500 1,400 805 4,000 740 1,200 1,094 661 65
Slide 33: Brand Refresh, Modern Branch Look and Feel
7 … Brand Refresh, Modern Branch Look and Feel 32
Slide 34: Supported by Robust Infrastructure
7 Supported by Robust Infrastructure Customer-centric technology initiatives… EMV Compliant since January 2017 New Treasury system - Calypso (One of 1st Phil banks) New Trust/Asset Management system Cash Management / Corporate Online Mobile Banking launched in 2018 Digital Banking transf
Slide 35: Sustained Delivery of Shareholder Returns
8 Sustained Delivery of Shareholder Returns Consistent dividends track record (In Mn) Dividend Yield – consistently above industry average Cash Dividends Cash Payout 2.6 41.9% 45% 9% 8.5% 2.4 36.5% 40% 8% 34% 33% 6.8% 35% 7% 2.2 31% 31% 31% 30% 29.1% 29% 28% 30% 6% 2.0 26% 5.3% 4.8% 25% 5% 1.8 2.4 2
Slide 36: Strong Support from Shareholders and Synergies with the SM Group
9 Strong Support from Shareholders and Synergies with the SM Group Current Shareholdings Snapshot of SM Group Business Lines 27% 38% SMIC @ 19.9% 8% 27% Retail Banking Property 77% 20% 45% 50% SM Retail CHIB BDO SM Prime SM Group - Henry Sy Sr. First became Shareholder in 1979 HOTELS AND CONVENTIONS
Slide 37: Benefits of SM Group Synergy
9 Strong Support from Shareholders and Synergies with the 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 c
Slide 38: Track Record of Excellence in Corporate Governance
10 Track Record of Excellence in Corporate Governance Golden Arrow Recognition Ceremony 2019 4-arrow recognition with score range of 110-119 in ACGS 2nd ASEAN Corporate Governance Awards Top 11 to 30 among the top 50 PLCs in ASEAN PSE Bell Awards for Corporate Governance Top 5 Bell Awardee for 6
Slide 39: Governance – Adapting ESG Framework
10 Governance – Adapting ESG Framework 38
Slide 40: Board of Directors
11 Board of Directors • Chairman of the Board since May 5, 2011 • Vice Chairman of the Board since May 5, 2011 • Vice Chairman from 1989 to 2011 • Chairman from 1989 to 2011 • China Bank Board Director since May 21, • China Bank Director since 1969 1986, • Chairman of the Boards: Union Motor Corpora
Slide 41: Board of Directors
11 Board of Directors • China Bank Board Director since November 7, • China Bank Director since 2001 2007 • Former President of SM Investments • Chairman: SM Investments Corp. Corp. • Director : Atlas Consolidated Mining and • Director: SM Synergy Properties Holdings Development Corp., Belle Corp. C
Slide 42: Management Team – Experienced, Successors in Place
11 Management Team – Experienced, Successors in Place Hans T. Sy Chairman of the Board Gilbert U. Dee Vice Chairman since 1989 Vice Chairman of the Board Director since 1986 William C. Whang Director and President since Nov. 1, 2017 Romeo D. Uyan, EVP and COO Chairman ExCom of China Bank Savings, In
Slide 43: Management Team – Experienced, Successors in Place
11 Management Team – Experienced, Successors in Place Ryan Martin L. Tapia Marisol M. Teodoro President - China Bank Capital Corp. President and CEO - China Bank Securities Corp. Director: China Bank Securities Corp. Jose L. Osmeña, FVP Deputy Group Head of Retail Banking Business Ananias S. Corneli
Slide 44: Financial Highlights: Income Statement
Financial Highlights Income Statement JAN-JUN JAN-MAR Variance (In Million Pesos) 2019 2018 Amt % Net Interest Income 11,743 11,058 685 6.2% Non-Interest Income 3,364 2,086 1,278 61.3% Total Operating Income 15,107 13,145 1,963 14.9% Total Operating Expenses 10,336 8,594 1,742 20.3% Income before In
Slide 45: Financial Highlights: Balance Sheet
Financial Highlights Balance Sheet JUNE JUNE Variance (In M illion Pesos) 2019 2018 Am t % Total Assets 908,221 768,437 139,784 18.2% Loans & Receivables (Net) 525,591 469,448 56,143 12.0% Total Deposits 750,137 653,443 96,694 14.8% Low Cost Deposits 429,778 374,588 55,190 14.7% Tim e Deposits 320,3
Slide 46: Awards and Recognition in Corporate Governance
Awards and Recognition in Corporate Governance Among the top 10 PSE Bell Awardee 4-Arrow Recognition PLC with a score of Best Corporate Best Bank Golden Arrow 100 points and Governance Bank – Governance - Recognition above in the ACGS Philippines Philippines 2012, 2013, 2014, 2015, 2016, 2017 2019 2
Slide 47: Awards and Recognition
Awards and Recognition Top Corporate Issue Pagtugon Award Best Investor Best Corporate Best Bank for Debt Best Debt Capital Manager / Arranger for Universal and Relations Bank Governance Bank – Capital Markets Market (DCM) House Investment House Commercial Philippines Philippines Philippines Philipp
Slide 48: Thank you.
CHINABANK Thank you. 47