China Banking Corp. · PSE:CBC
China Banking — Q3 2023 Earnings Presentation
33 slides from China Banking's earnings presentation, Nov 8, 2023
Slide 1: Analysts' Briefing 3Q 2023 Results
ANALYSTS’ BRIEFING 3Q 2023 Results November 8, 2023
Slide 2: Disclaimer
Disclaimer ANY INVESTMENT DECISION TO PURCHASE SECURITIES IN THE CONTEXT OF A PROPOSED OFFERING, IF ANY, SHOULD BE MADE ON THE BASIS OF THE FINAL TERMS AND CONDITIONS OF THE SECURITIES AND THE INFORMATION CONTAINED IN THE OFFERING CIRCULAR PUBLISHED IN RELATION TO SUCH AN OFFERING AND NOT ON THE BAS
Slide 3: Panelists
Panelists Patrick D. Cheng Gerald O. Florentino Domini S. Velasquez Chief Finance Officer Investor Relations Head Chief Economist 3
Slide 4: Reminders
Microphones and cameras are disabled during the presentation. For the Q & A, attendees may: REMINDERS Post a live question click the “Raise Hand” button to be recognized Send questions thru the chat box
Slide 5: Macroeconomic Outlook
Macroeconomic Outlook
Slide 6: Macroeconomic Outlook: Chinabank's view
Macroeconomic Outlook Chinabank’s view POLICY 6.50% INFLATION 6.1% RATE +450 bps since May 2022 GDP 5.2% from 7.6% in FY 2022 from 5.8% in FY 2022 & FX Moderate growth due to Inflation to remain above the prolonged elevated interest BSP to hold rates at 6.50% until Q3 BSP’s target for the rest
Slide 7: Macroeconomic Outlook forecast table and key takeaways
Macroeconomic Outlook Chinabank’s view FY 2022A Latest 2023 FY 2023F FY 2024F GDP growth (%) 7.6 5.3 5.2 5.8 Inflation (%) 5.8 6.4 6.1 3.6 Policy rate (end, %) 5.50 6.50 6.50 6.00 6.60 10-Year BVAL Rate (end, %) 6.986 6.8 5.2 (as of Nov 6) 56.12 USDPHP (end) 55.76 55.50 54.00 (as of Nov 7) Key Takea
Slide 8: 9M 2023 Financial Performance
9M 2023 Financial Performance
Slide 9: 9M 2023 Financial Highlights
9M 2023 Financial Highlights P16.2 Bn 15.6% 1.6% P52.5 9M’23 Net Income Return on Equity Return on Assets Book value per share 9M’23 Net income grew 10% YoY to P16.2 Bn; Resilient NII despite pressure on funding cost; NIM improved by 14 bps QoQ Income Statement to 4.33% in 3Q’23; Provisions de
Slide 10: 9M 2023 Financial Highlights: Income Statements
9M 2023 Financial Highlights INCOME STATEMENTS 9M2022 9M2023 YoY In Php billions, except % Interest income 40.6 58.2 44% Interest expense (6.8) (19.0) 179% Net interest income 33.7 39.2 16% Fee-based income 8.3 1.6 -80% Total revenue 42.0 40.8 -3% Operating expenses (18.0) (20.5) 14% Income before p
Slide 11: 9M 2023 Financial Highlights: Balance Sheets
9M 2023 Financial Highlights BALANCE SHEETS Sep 23 vs Sep 23 vs Sep 2022 Dec 2022 Sep 2023 in Php billions, except % Sep 22 Dec 22 Liquid Assets 168 178 136 -19% -23% Investment Securities 391 412 485 24% 18% Net Loans 676 700 746 10% 7% Other Assets 40 40 43 10% 9% TOTAL ASSETS 1,274 1,330 1,411 11
Slide 12: Sustained profitability amidst a challenging environment
Sustained profitability amidst a challenging environment Quarterly Net Income (In PHP Bn) YTD Net Income (In PHP Bn) +10% YoY 16.2 Trailing 12 months EPS 14.7 P7.67/sh +11% YoY +16% vs 3Q22 5.8 5.2 5.0 5.4 4.9 4.6 4.4 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 9M22 9M23 12
Slide 13: Resilient NII despite pressure on funding costs
Resilient NII despite pressure on funding costs NIM stabilizes above 4% Net interest income continues to grow Q-on-Q Net Interest Income (In PHP Bn) +16% vs 3Q22 6.27% 6.12% 6.32% 6.46% +14 bps vs 2Q23 16.0 17 consecutive +6% vs 2Q23 5.52% 14.0 quarters of growth 13.6 5.28% (since 3Q19) 12.7 12.9 5.
Slide 14: Resilient NII despite pressure on funding costs
Resilient NII despite pressure on funding costs Net interest income continues to grow Net Interest Income (In PHP Bn) +16% YoY 60 56 52 48 0.9 10.4 10.2 44 40 36 7.2 Gross yield Cost of funds 1.1 39.2 up 117 bps up 109 bps 32 33.7 YoY YoY Loans and 28 investment 24 securities grew 10% and 24%, 20 re
Slide 15: Core fee-based income remains strong
Core fee-based income remains strong Fee-based Income (In PHP Bn) 12 +45% YoY +23% YoY +16% YoY 0.7 0.4 0.1 The decline in Treasury and FX- 8 related gains was offset by 8.3 3.9 higher accrual income on Investment securities Core fee income continues to grow on higher deposits, Trust and transaction
Slide 16: Operating expenses impacted by persistently high inflation
Operating expenses impacted by persistently high inflation during the period Operating Expenses ex provisions (in PHP Bn) +14% YoY +16% YoY +8% YoY +23% YoY +15% YoY 0.5 20 0.2 20.5 +16% YoY 0.4 0.5 Heavy Higher deposit investments on 0.9 Higher volume- balances digital related taxes innovation 18.0
Slide 17: Stable asset quality and sufficient NPL cover
Stable asset quality and sufficient NPL cover Stable asset quality results to lower provisions NPL ratio has stabilized; NPL cover remains adequate Provisions (In PHP Bn) 13.0% 140% 129% 128% 126% 123% 116% 11.0% 120% 8.9 8.9 9.0 -81% YoY 9.0% 108% 100% 104% 6.9 94% 95% 7.0% 89% 80% 5.0% 60% 2.6 4.1
Slide 18: Sustained loan growth
Sustained loan growth Continued expansion in both consumer and business segments Well-secured consumer lending portfolio Gross Loans (In PHP Bn) Consumer Loans Breakdown, September 2023 +54% YoY +8% YoY +8% YoY +7% YoY 19 765 7 2 41 Auto 718 12% 697 +19% YoY Housing 56% P170 624 Bn 572 +10% YoY Unse
Slide 19: Strong Deposit growth
Strong Deposit growth CASA declined but still above pre-pandemic level Deposits per branch (In PHP Bn) Deposits (In PHP Bn) +14% YoY 1,145 1,066 1.78 1,001 1.67 1.57 863 835 1.35 582 1.32 775 492 420 +39% YoY 1.23 0.91 0.77 0.66 308 366 0.48 364 0.58 0.58 Pre-pandemic CASA level 555 573 582 563 0.90
Slide 20: Strong internal capital generation results to higher buffer
Strong internal capital generation results to higher buffer Enough capital buffer: to absorb credit shock; 15.9% to support Asset growth; and 15.8% 15.8% 14.7% 0.8% 0.9% 0.9% to sustain dividend payment to shareholders 13.7% 0.9% 0.9% Total Dividends Paid (in PHP billions) +2.2X vs 2019 +27% Y
Slide 21: Digital Banking
Digital +51% Banking Digital TXNs year-on-year Retail, 9M‘23 vs 9M‘22 Bringing our signature touch in relationship +30% banking to our customers O/S Active Users anytime, anywhere. year-on-year +28% O/S Enrollments ≈74% year-on-year share of digital & e- banking to total TXNs Jan-Sep 2023 +35% Gross
Slide 22: Awards & Distinctions
Awards & Distinctions Chinabank was recognized by the ASEAN Capital Markets Forum as among the ASEAN Asset Class, ASEAN Top 20, and Top 3 Philippine Publicly Listed Companies Chinabank is the best governed bank for 2 years in a row and still the only bank awarded with the Five People Management Asso
Slide 23: Other Citations
Other Citations Chinabank Easy Tax Mobile Banking & Apo Agua Infrastructure 2nd Strongest Bank in the Payment Initiative of the Top Corporate Securities Php9 Billion financing Cesar E.A. Virata Award Best Digital Business Philippines Year Market Makers and Top (Bank Category) Banking Initiative Phil
Slide 24: In summary, Chinabank continues to be..
In summary, Chinabank continues to be.. 9M'22 FY2022 9M'23 Return on Equity 15.6% 15.1% 15.6% Profitable Return on Assets 1.6% 1.6% 1.6% CET 1/Tier 1 Ratio 14.9% 15.1% 14.9% Adequately-capitalized Capital Adequacy Ratio 15.7% 15.9% 15.8% NPL Ratio 2.0% 2.3% 2.2% Well-managed NPL Coverage Ratio 161%
Slide 25: Q & A
Please click the “Raise Hand” button to be recognized. Q&A You may also send questions thru the chat box. NOTE: Unaudited figures; Material & strictly confidential information
Slide 26: Additional Information
Additional Information NOTE: Unaudited figures; Material & strictly confidential information
Slide 27: History of Chinabank
History of Chinabank Pre-2000s 2007 - 2015 2016 - 2019 2020 - 2022 2007. Acquired Manila Bank and 2020. Raised P15 Bn via fixed- operated it as China Bank rate retail bonds; Celebrated Savings; 100 years and restored Binondo Business Center Entered into a bancassurance JV 2021. Raised P20 Bn via fix
Slide 28: Company Profile
Company Profile Extensive Distribution Channels Subsidiaries & Affiliates 1,064 10,507 Investment Grade Credit Rating Best in Corporate Governance Baa2 PRS Aaa (corp.) Stable Chinabank was recognized by the ASEAN Capital Stable Markets Forum as among the ASEAN Asset Class, ASEAN Top 20, and Top 3 Ph
Slide 29: SM Group: Strong Support & Synergies
SM Group: Strong Support & Synergies Chinabank benefits from being part of one of the largest and most diversified conglomerates in the Philippines Snapshot of SM Group Business Lines Chinabank’s Current Shareholdings Others SM Group 25% 39% SM Investments – 23% Retail Banking Property Sysmart Corp.
Slide 30: Highly capable management team
Highly capable management team Hans T. Sy Gilbert U. Dee Romeo D. Uyan, Jr. Chairman of the Board Vice Chairman of the Board President and Chief Executive Officer Patrick D. Cheng Aloysius C. Alday, Jr. Jose L. Osmeña, Jr. Executive Vice President and Chief Executive Vice President and Head of Execu
Slide 31: Historical Financial Highlights
Historical Financial Highlights BALANCE SHEETS Sep 23 vs Sep 23 vs Dec 2019 Dec 2020 Dec 2021 Dec 2022 Sep 2022 Sep 2023 in Php billions, except % Sep 22 Dec 22 Liquid Assets 144 205 188 178 168 136 -19% -23% Investment Securities 213 236 279 412 391 485 24% 18% Net Loans 569 557 609 700 676 746 10%
Slide 32: Historical Financial Highlights
Historical Financial Highlights INCOME STATEMENTS 9M'23 vs FY2019 FY2020 FY2021 FY2022 9M2022 9M2023 In Php billions, except % 9M'22 Interest income 47.7 47.7 46.5 57.2 40.6 58.2 44% Interest expense (21.6) (13.3) (7.4) (11.6) (6.8) (19.0) 179% Net interest income 26.1 34.4 39.1 45.6 33.7 39.2 16% F
Slide 33: Thank You
CHINABANK THANK YOU