China Banking Corp. · PSE:CBC
China Banking — Investor Presentation (September 2018)
44 slides from China Banking's investor presentation, September 2018
Slide 1: Investor Presentation September 2018
Investor Presentation September 2018 Your Success is our Business
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 Economic Environment Company Profile Key Investment Merits Corporate and Financial Highlights 2
Slide 4: Economic Environment
Economic Environment WORLD ECONOMY PHL ECONOMY PHL BANKING 2018 GDP est. +3.7% 3Q 2018 GDP +6.1% (Sept 2018 data) Slowdown amid trade Infra spending up 50% to Assets up 10%; Loans up tensions P506 Bn in Jan-Aug 16% US GDP up 3.5% in 3Q; Deposits up 10%; Loans to Oct inflation at 6.7% PCE
Slide 5: Competitive Landscape
Competitive Landscape Private Banks – CHIB No. 5 in Assets, Loans and Deposits ASSETS LOANS (Net) DEPOSITS CAPITAL ROE Institution Rank Amt Mkt Rank Amt Mkt Rank Amt Mkt Rank Amt (Sept 2018) Mkt Share Jan-Sept Jan-Sept Branches Share Share Share (in P Bn) (in P Bn) (in P Bn) (in P Bn) (%) '18 '17 (%
Slide 6: Presentation Outline
Presentation Outline Economic Environment Company Profile Company Profile Key Investment Merits Corporate and Financial Highlights 5
Slide 7: Snapshot of China Bank
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 com
Slide 8: 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 9: Bank Milestones
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 rename
Slide 10: Bank Strategy – Continued Network Expansion
Bank Strategy – Continued Network Expansion As of Sept 2018 China No. of China Bank % Share Branches Bank Savings Total Total Metro 249 79 328 53 Manila Luzon 112 68 180 29 Visayas 56 9 65 11 Mindanao 37 6 43 7 Total 454 162 616 100 970 888 951 870 CHIB CBS 805 740 770 PDB ATM 661 670 596 616 561 54
Slide 11: Comprehensive Financial Services Platform
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 - Consume
Slide 12: Presentation Outline
Presentation Outline Economic Environment Company Profile Key Investment Key Investment Merits Merits Corporate and Financial Highlights 11
Slide 13: 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 14: Established Strength in Affluent Chinese-Filipino Business Segment
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
Slide 15: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Organic growth and strategic acquisitions Total Assets (PHP in B) 751 816 693 93 633 89 527 88 83 471 414 76 47 324 15 21 723 257 262 662 9 605 4 550 2 451 399 403 315 255 258 2010 2011 2012 2013 2014 2015 2016 2017 3Q17 3Q18 China Bank China Bank Savin
Slide 16: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Emphasis on core-recurring income Assets Mix (PHP in B) 751 816 633 20% 693 20% 527 16% 471 16% 414 13% 12% 324 61% 61% 16% 62% 257 262 61% 20% 59% 62% 29% 24% 53% 59% 46% 55% 28% 23% 19% 22% 19% 31% 26% 25% 21% 21% 2010 2011 2012 2013 2014 2015 2016 20
Slide 17: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Healthy liquidity 75.0% 72.7% 72.3% 70.5% 71.4% 70.7% 69.9% 70.0% 67.2% 64.5% 64.6% 64.9% 65.0% 62.3% 63.0% 63.1% 61.0% 60.0% 58.0% 55.3% 61.6% 61.1% 61.3% 58.8% 59.7% 55.0% 58.6% 55.4% 50.0% 53.3% 45.0% 40.0% 2011 2012 2013 2014 2015 2016 2017 3Q18 Loa
Slide 18: Diversified and Well Collateralized Loan Portfolio
3 Diversified and Well Collateralized Loan Portfolio Loans growth faster in consumer segment Gross Loans (PHP in B) 8-yr CAGR Corporate Commercial Consumer 2010-3Q18 507 Consumer 456 26% 437 16% 394 16% 16% 317 15% 23% Commercial 298 20% 17% 19% 228 15% 22% 198 14% 154 13% 126 12% 43% 45% Corporate
Slide 19: Diversified and Well Collateralized Loan Portfolio
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 63 71 2% 5% 60 2% 52 5% 2% 6% 31% 2% 41 5% 29% 28% 33 1% 30% 5% - 6% 28% 21 29% 62% 16 - 3% 64% 64% 30% 63% 10 - 1% 34% 66% 7
Slide 20: Diversified and Well Collateralized Loan Portfolio
3 Diversified and Well Collateralized Loan Portfolio Loans By Security Unsecured Secured 507 456 394 317 298 57% 56% 55% 228 198 52% 58% 154 53% 126 53% 51% 43% 60% 45% 44 % 48% 42% 47% 47% 40% 49% 2010 2011 2012 2013 2014 2015 2016 2017 3Q2018 19
Slide 21: Improving Asset Quality and Loan Loss Coverage
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% 197% 2% 1.9%1.9%1.8% 200% 181% 1.8% 175% 1.9% 153%157% 159% 153% 156% 1.9% 1.8%1.8% 1.4% 1.4% 135% 142% 149% 2% 1.
Slide 22: Improving Asset Quality and Loan Loss Coverage
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% 0.39% 0.35% 0.34% 0.39% 0.28% 0.41% 0.34% 0.31% 0.16% 0.29% 0.24% 0.24% 0.08% 0.19% 0.17% 0.17% 0.16% 0.19% 0.18% 0.11% 0.13% 0.13% 0.16% 0.1
Slide 23: 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 527 569 635 653 484 458 542 554 18% 439 17% 372 399 15% 16% 327 354 33% 29% 283 15% 272 18% 38% 35% 218 213 216 20% 20% 37%
Slide 24: Funding – Strong Brand Franchise / Retail Base
5 Funding – Strong Brand Franchise / Retail Base Stable Margins 7% 6.08% 6% 5.57% 5% 4.73% 4.63% 4.22% 4.31% 4.32% 4.20% 4.19% 3.97% 4% 3.76% 3.30% 3.37% 3.20% 3.11% 3.17% 2.90% 2.98% 3% 2.21% 2.06% 1.90% 2% 1.57% 1.30% 1.12% 1.02% 1.14% 0.98% 1% 0% 2010 2011 2012 2013 2014 2015 2016 2017 3Q18 Asset
Slide 25: Healthy Capital Position
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% 18.0% 15.9% 16.3% 16.0% 16.0% 16.3% 16.0% 16.2% 15.7% 15.8% 15.8% 15.4% 15.1% 14.9% 15.0% 16.0% 14.2% 13.5% 15.4% 15.5% 13.5% 15.1% 12.8% 15.2% 13.0% 1
Slide 26: Well Diversified Income Stream
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% 20.72 19.57 19.16 18.85 19% 2% 23% 19% 23% 18% 15.10 22% 25% 21% 4% 23% 26% 13.32 13.86 2% 12.74 21% 3% 3% 22% 21% 42% 34% 35% 21% 33% 13% 13% 12% 21% 76% 82% 75
Slide 27: Effective Cost Management
7 Effective Cost Management … even with cost drag of branch expansion Cost to Income – Philippine Banks Sept 2018 Cost to Income – China Bank (%) 74% 63.3% 67% 62.2% 62.3% 61.3% 62.0% 62% 63% 61% 57% 59% 60% 59.2% 59.0% 54% 55.2% 57.2% 53.5% 56.0% 55.4% 59.0% 56.0% 2010 2011 2012 2013 2014 2015 2016
Slide 28: Growing Distribution Network
7 Growing Distribution Network 5th Largest Distribution Network in the Philippines Network Expansion Plan (No. of Branches, ATMs as of Sept 2018 ) (No. of Branches and ATMs) 1,113 PDB CBS 1,032 Branches ATMs 993 CHB ATMs 951 1,600 4,247 4,500 888 1,400 4,000 805 740 3,500 1,200 3,167 661 640 653 653
Slide 29: Brand Refresh, Modern Branch Look and Feel
7 … Brand Refresh, Modern Branch Look and Feel… 28
Slide 30: Supported by Robust Infrastructure
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
Slide 31: Sustained Delivery of Shareholder Returns
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% 6.79% 31% 31% 31% 35% 7.00% 2.0 29% 30% 28% 30% 6.00% 26% 5.28% 1.8 25% 5.00% 4.
Slide 32: Strong Support from Shareholders and Synergies with the SM Group
Strong Support from Shareholders and Synergies with the 9 SM Group Current Shareholdings Snapshot of SM Group Business Lines 27% 38% SMIC @ 19.9% 8% Financial 27% Retail Services Property SM Group - Henry Sy Sr. First became Shareholder in 1979 Foreign Shareholders Dee Group Others Source: Company f
Slide 33: Benefits of SM Group Synergy
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 c
Slide 34: Board of Directors
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
Slide 35: Board of Directors
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., a
Slide 36: Management Team – Experienced, Successors in Place
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 Ban
Slide 37: Management Team – Experienced, Successors in Place
Management Team – Experienced, Successors in Place Marisol M. Teodoro Ryan Martin L. Tapia President, CEO and Director of China Bank Securities President of China Bank Capital Corp. Corp. Director of China Bank Securities Corp. Jose L. Osmeña First Vice President and Ananias S. Cornelio III Deputy G
Slide 38: Presentation Outline
Presentation Outline Economic Environment Company Profile Key Investment Merits Corporate and Corporate and Financial Financial Highlights Highlights 37
Slide 39: Financial Highlights – Income Statement
Financial Highlights Income Statement Change (In Million Pesos) Jan- Sep 2018 Jan- Sep 2018 Amount % Net Interest Income 17,085 14,262 2,822 19.8 Non-interest Income 3,635 4,901 (1,266) (25.8) Total Operating Income 20,720 19,164 1,556 8.1 Total Operating Expenses 13,522 12,313 1,209 9.8 Income befo
Slide 40: Financial Highlights – Balance Sheet
Financial Highlights Balance Sheet Change (In Million Pesos) Sep-18 Sep-17 Amount % Total Assets 816,203 692,744 123,459 17.8 Loans and Receivables (net) 500,069 429,564 70,505 16.4 Total Deposits 691,657 578,038 113,619 19.7 Low Cost Deposits 394,984 306,037 88,947 29.1 Time Deposits 296,673 272,00
Slide 41: Credit Ratings
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 Affirmed in July 2018 Upgraded IDR in Sept 2016 to ‘BB+’ from ―BB’ and its viability rating to ‘bb+’ from bb (stable outlook) Affirmed in No
Slide 42: Awards and Recognition
Awards and Recognition Top 2 Public-listed Company in the Philippines and Top 11-30 in ASEAN in the 2nd ASEAN Corporate Governance Awards China Bank is among the country's top-scoring listed companies in the ASEAN Corporate Governance Scorecard (ACGS) for 2017—the only bank among the Philippine
Slide 43: 2018 Awards and Recognition
2018 Awards and Recognition Best Investor Relations Best Investor Best Corporate Best Investor Best Bank for Debt Professional - Relations Company – Governance Bank Relations Bank – Capital Markets Philippines – Philippines (Philippines) Philippines SVP Alexander C. China Bank Escucha 2015, 2016, 20
Slide 44: More than your banker, the right partner.
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 acescucha@chinabank.ph Phone: (632) 885-5601 Fax: (632) 892-0238 Aerol Paul B. Banal, S
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