China Banking Corp. · PSE:CBC
China Banking — H1 2022 Earnings Presentation
39 slides from China Banking's earnings presentation, Aug 12, 2022
Slide 1: China Banking Corporation Investor Analysts' Briefing Presentation
China Banking Corporation INVESTOR ANALYSTS’ BRIEFING PRESENTATION 1H 2022 Results 9M 2021 Performance August 12, 2022
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 IR Head Chief Economist 3
Slide 4: Reminders
Reminders Microphones and cameras are disabled during the presentation. For the Q & A, attendees may: Post a live question click the “Raise Hand” button to be recognized Send questions thru the chat box
Slide 5: Macroeconomic Outlook
Macroeconomic Outlook & 2 2 8 c a THE BEST BANK IN THE COUNTRY &, misses Since 1920
Slide 6: Macroeconomic Overview
Macroeconomic Overview Global outlook 1. Slower global GDP due to a weaker China and recessionary risks in some major economies (e.g. US, UK) 2. Elevated commodity prices and supply chain bottlenecks 3. Further monetary policy tightening Domestic outlook Economy hinged on domestic Elevated inflation
Slide 7: Macroeconomic Overview
Macroeconomic Overview FY 2020A FY 2021A 1H 2022A FY 2022F FY 2023F GDP growth (%) -9.6 5.6 7.8 6.6 5.5-6.0 Inflation (%) 2.4 3.9 4.4 5.2 4.0-4.5 Policy rate (end, %) 2.0 2.0 2.5 4.0 4.5 10-Year BVAL Rate (end, %) 3.00 4.82 7.04 6.5 5.0-6.0 USDPHP (end) 48.0 51.0 55.0 54.5-55.0 53.0-54.0 Key Takeawa
Slide 8: 1H 2022 Financial Performance
1H 2022 Financial Performance
Slide 9: 1H 2022 Performance Highlights
1H 2022 Performance Highlights • Increased profitability with 1H 2022 net income up 39% to P10.1 Billion YoY driven by sustained NII growth; quarterly income breaches P5.0-Bn mark in Q2 Profitability • Improved return on equity of 16.4% and return on assets of 1.7% • Prudent cost management led to a
Slide 10: How did we compare?
How did we compare? The country’s 4th largest private commercial bank as of June 2022 Source: Published SOCs #4 #4 #4 1trillion .2 946 #6 655 billion billion 124 billion ASSETS NET LOANS DEPOSITS EQUITY Details 10
Slide 11: 1H 2022 Financial Highlights
1H 2022 Financial Highlights INCOME STATEMENTS 1H22 vs 1H22 vs 1H2021 2H2021 1H2022 In Php billions, except % 2H21 1H21 Interest income 22.7 23.0 25.9 12% 14% Interest expense (3.8) (3.6) (3.9) 8% 2% Net interest income 18.9 19.4 22.0 13% 16% Fee-based income 5.9 4.4 3.2 -27% -46% Total revenue 24.8
Slide 12: 1H 2022 Financial Highlights
1H 2022 Financial Highlights BALANCE SHEETS Jun'22 vs Jun'22 vs Jun-21 Dec-21 Jun-22 in Php billions, except % Dec'21 Jun'21 Liquid Assets 177 188 169 -10% -4% Investment Securities 238 279 341 22% 43% Net Loans 576 609 655 8% 14% Other Assets 36 36 38 3% 5% Total Assets 1,027 1,112 1,202 8% 17% Dep
Slide 13: Sustained profitability amidst a challenging environment
Sustained profitability amidst a challenging environment Quarterly Net Income (In PHP Bn) +39% vs 1H21 12 +29% vs 2H21 10.1 10 +41% vs 2Q21 7.8 Trailing 12-month EPS P6.7/sh 8 7.3 +6% vs 1Q22 6 5.2 4.9 Return on Assets 4 3.6 3.7 3.9 3.9 1.7% 2 Return on Equity 16.4% 0 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 1
Slide 14: Resilient NII despite pressure on yields
Resilient NII despite pressure on yields NIM stabilizes above 4% Net interest income continues to grow Q-on-Q Net Interest Income (In PHP Bn) +17% vs 2Q21 6.2% 12 consecutive +4% vs 1Q22 quarters of growth 5.5% 5.5% (since 3Q19) 11.2 5.0% 5.1% 10.8 5.0% 10.3 9.9 9.6 9.3 8.7 8.9 4.3% 8.3 7.9 7.6 4.3%
Slide 15: Fee-based income driving revenue growth
Fee-based income driving revenue growth Core Fee income continues to grow Fee-based Income (In PHP Bn) 7.0 5.9 6.0 5.0 4.0 3.7 3.7 3.2 1.0 Core fee income grew 24% YoY to P2.8 billion. 3.0 0.4 Trading gains declined by 83% YoY to P596 million. 2.0 +24% 2.7 2.8 vs 1H21 Service charges, fees, an
Slide 16: Stable asset quality and adequate cover result to lower provisions
Stable asset quality and adequate cover result to lower provisions Lower provisions from stable asset quality NPL has stabilized; NPL cover remains sufficient Provisions (In PHP Bn) 13.0% 167% 180% 160% 11.0% 8.9 8.9 129% 128% 128% 140% -69% YoY 9.0% 116% 108% 120% 95% 98% 7.0% 94% 5.4 89% 100% 5.0%
Slide 17: Demonstrated operational resiliency amidst COVID-19 pandemic
Demonstrated operational resiliency amidst COVID-19 pandemic Prudent cost management Improving efficiency Operating Expenses ex provisions (In PHP Bn) 47% 14 45% 1H2021 FY2021 1H2022 44% 45% 12 10 11.1 11.2 11.1 40% Headcount 9,807 9,747 9,704 8 35% Branches 636 637 637 6 30% 4 ATMs 1,038 1,037 1,03
Slide 18: Disciplined loan growth
Disciplined loan growth Continued expansion in both consumer and corporate segments Well-secured consumer lending portfolio Gross Loans (In PHP Bn) Consumer Loans Breakdown, Jun-22 vs Jun-21 +13% YoY 2018-2021 CAGR Jun-22 12% 6% 673 Unsecured 624 596 21% 578 572 135 +16% YoY 16% 513 123 107 116 114
Slide 19: Sustained Deposit growth
Sustained Deposit growth Strong CASA growth and steady funding mix Improving CASA per branch Deposits (In PHP Bn) Deposits per branch (In PHP Bn) +14% YoY 1.48 1.35 1.32 1.30 945 1.23 863 1.16 835 827 0.56 775 0.48 722 +15% YoY 0.58 0.49 357 308 0.58 310 0.52 366 364 321 +14% YoY 0.87 0.92 589 0.81
Slide 20: Strong internal capital generation results to higher capital buffer
Strong internal capital generation results to higher capital buffer Enough capital buffer: 16% 0.58% to absorb credit shock; 1.44% 1.05% 0.08% to support Asset growth; and 14.92% 14.82% to sustain dividend payment to shareholders 14% 15.7% 15.7% 14.7% 13.7% 0.8% 0.8% 13.1% 0.9% 12% 0.9% 0.9% 1
Slide 21: Digital Initiatives
Digital Initiatives THE BEST BANK IN THE COUNTRY
Slide 22: Digital Banking
DIGITAL BANKING +44% 1H ‘22 vs 1H ‘21 Digital TXNs year-on-year Bringing our signature touch in relationship banking to our customers anytime, anywhere. +16% Active Users year-on-year ≈70% +43% share of digital & e- banking to total TXNs Enrollments year-on-year as of Jun’22 +45% underpinned by a ra
Slide 23: Awards and Recognitions
Awards and Recognitions & 2 2 8 c a THE BEST BANK IN THE COUNTRY &, misses Since 1920
Slide 24: We are the Best Bank in the Philippines
We are the Best Bank in the Philippines China Bank Best Bank in the Philippines China Bank Capital Best Bond Adviser (Domestic) for the 6th consecutive year Best New Bond: Sole issue manager, bookrunner and lead underwriter, D&L Industries’ P5 Bn fixed-rate retail bond Best Green Bond – Corp
Slide 25: Best Practice in Governance
Best Practice in Governance Track record of excellence in Corporate Governance The ASEAN Capital Markets Forum named China Bank for fiscal year 2019 as: Among the top 3 publicly listed companies (PLCs) in the Philippines; Among the top 20 PLCs in ASEAN, and As an ASEAN Asset Class The Institut
Slide 26: Other Citations
Other Citations China Bank 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 Phi
Slide 27: In summary, CHIB continues to be..
In summary, CHIB continues to be.. 1H2021 FY2021 1H2022 Return on Equity 13.4% 13.6% 16.4% Profitable Return on Assets 1.4% 1.5% 1.7% CET 1/Tier 1 Ratio 14.2% 14.9% 14.8% Adequately-capitalized Capital Adequacy Ratio 15.1% 15.7% 15.7% NPL Ratio 3.5% 2.5% 2.3% Well-managed NPL Coverage Ratio 99% 116%
Slide 28: Q & A
Q&A Please click the “Raise Hand” button to be recognized. You may also send questions thru the chat box.
Slide 29: Additional Information
Additional Information & 2 2 8 c a THE BEST BANK IN THE COUNTRY &, misses
Slide 30: Our response to COVID-19
Our response to COVID-19 EMPLOYEES CLIENTS AND COMMUNITY 98% of employees fully vaccinated, 58% given booster shots Almost 100% of branches open for operations Compliant with health standards of DOH, DOLE, DTI, and IATF Working closely with clients in the most challenged sectors • Detection,
Slide 31: China Bank Profile
China Bank Profile Who we are One of the oldest privately owned banks, established in 1920 Publicly-listed since 1927 on the Manila Stock Exchange Strong presence in the entrepreneur, middle market and business segments Longest relationship with Chinese-Filipinos, serving up to the 4th gener
Slide 32: China Bank Profile
China Bank Profile EQUITY PROFILE CREDIT RATINGS Particulars August 12, 2022 Investment grade credit rating of Baa2 with stable outlook from May 2017 Ticker CHIB Same level as the Philippine sovereign rating Stock Price Php28.15 and at par with the country’s three biggest Market Cap (in PHP Mn)
Slide 33: China Bank Profile
China Bank Profile Corporate Milestones 2007 Acquired Manila Bank 2020 and operated it as 2018 China Bank Savings 2014 Raised P15 billion via (CBS); Entered into a 2016 Infused P500 million to fixed-rate retail bonds; Acquired Plantersbank CBS and P40 million to bancassurance joint Celebrated 100 ye
Slide 34: Strong Support and Synergies with the SM Group
Strong Support and Synergies with the SM Group China Bank benefits from being part of one of the largest and most diversified conglomerates in the Philippines Snapshot of SM Group Business Lines Current Shareholdings Others SM Investments 23% 26% Sysmart Corp 15% SM Group Sy Family 1% 39% Retail Ban
Slide 35: Financial Highlights – Quarterly Income Statements
Financial Highlights – Quarterly Income Statements INCOME STATEMENTS 2Q'22 VS 2Q'22 VS 1Q'21 2Q'21 3Q'21 4Q'21 1Q'22 2Q'22 In PHP billions, except % 2Q'21 2Q'21 Interest income 11.4 11.4 11.6 12.2 12.6 13.2 5% 17% Interest expense (2.0) (1.8) (1.8) (1.8) (1.9) (2.0) 7% 12% Net interest income 9.3 9.
Slide 36: Highly capable management team
Highly capable management team* Hans T. Sy Gilbert U. Dee William C. Whang Chairman of the Board Vice Chairman of the Board Director and President Romeo D. Uyan, Jr. Patrick D. Cheng Rosemarie C. Gan Senior Executive Vice President and Executive Vice President and Chief Executive Vice President and
Slide 37: How did we compare? Balance Sheet Indicators (June 2022)
How did we compare? Balance Sheet Indicators (June 2022) CONSOLIDATED Assets Net Loans1/ Deposits Equity in PHP Billions Amt Rank Amt Rank Amt Rank Amt Rank BDO 3,754 1 2,371 1 2,956 1 432 1 MBT 2,707 2 1,249 3 2,062 2 301 3 BPI 2,472 3 1,550 2 1,995 3 303 2 CHIB 1,226 4 655 4 946 4 124 6 PNB 1,204
Slide 38: How did we compare? Net Income and ROE
How did we compare? Net Income and ROE CONSOLIDATED NET INC NET INCOME Y/y ROE Common Themes during the period in PHP Billions 1H'21 1Q 2Q 1H'22 %/x 1H'22 NII growth amid increase in BDO 21.5 11.8 12.3 24.0 12% 11.3% interest expenses Improvement in core other MBT 11.8 8.1 7.7 15.8 34% 10.0% inc
Slide 39: Thank You!
Thank You! ASC Ref No. C010P013122CS THE BEST BANK IN THE COUNTRY