Slide 1: Investor Presentation Year-end 2015
Year-end 2015 Investor Presentation 0
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation has been prepared by China Banking Corporation solely for your information and for use at the presentation by the Bank and has not been independently verified. This presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other
Slide 3: Agenda
Agenda Company Profile Sector Overview Key Investment Merits Financial Highlights Management & Board of Directors Q&A 2
Slide 4: Company Profile
Company Profile 3
Slide 5: Snapshot of China Bank
Snapshot of China Bank 1 Long history as the oldest privately owned bank in the Philippines, established in 1920 2 Listed since the establishment of the Manila Stock Exchange in 1927 Ranked 6th in total assets, 5th in deposits and loans (net) and number of branches 3 (local private banks) Longest re
Slide 6: Bank Strategy
Bank Strategy Expand portfolio in SME, MME and Consumer segments further enhanced by recent 1 strategic acquisitions 1920 2007 2013 2014 2015 (5% stake) (Increased to 40% stake) ( Merger between CBS & PDB with CBS as surviving bank) 5
Slide 7: Bank Strategy
Bank Strategy Continue branch expansion to increase customer touch points and grow customer 2 base No. of Branches by Brand as of Dec 2015 Geographical Share Luzon (174) No. of China Bank Branches Chinabank Savings Plantersbank Metro Visayas (64) Metro Manila 175 36 27 Manila (238) Luzon 91 42 41 Vi
Slide 8: Comprehensive Financial Services Platform
Comprehensive Financial Services Platform China Bank’s organization anchored on three engines of growth: 1 2 3 Financial Capital Savings Banks and Relationship Banking Markets and Investment Other Business Units Retail Banking China Bank Savings, Lending Business Inc. Segment Investment Banking Plan
Slide 9: Sector Overview
Sector Overview 8
Slide 10: Macroeconomic Environment
Macroeconomic Environment External vulnerabilities are relatively low and policy space is flexible in Philippines Emerging Market Sovereign External Vulnerability Summary Heatmap Minimal vulnerability, considerable flexibility Moderate vulnerability, moderate flexibility Elevated vulnerability, dimi
Slide 11: Macroeconomic Environment
Macroeconomic Environment The Philippine economy will remain among the fastest-growing in Southeast Asia Real GDP growth will remain strong… Private consumption will be the main driver of GDP growth supported by BPO and remittance sectors… 10 Source: BSP, Moody’s
Slide 12: Macroeconomic Environment
Macroeconomic Environment Capital Formation – Fixed Investment Durable Public Private Fix investment Others equipment construction construction Percentage points 2010 19.06 11.61 0.57 6.78 0.10 2011 -1.89 1.30 -4.74 1.33 0.22 2012 10.81 3.53 1.32 5.43 0.54 2013 11.91 7.53 1.20 3.08 0.10 2014 8.57 4.
Slide 13: Macroeconomic Environment
Macroeconomic Environment Strongest sovereign credit ratings for PHL December Inflation at 1.5% Scored a positive outlook from Fitch in Sept amid strong external Uptrend towards yearend due to weather-related supply chain position and significant improvement in macroeconomic disruptions and ramp
Slide 14: Macroeconomic Environment
Macroeconomic Environment Total & Ave. Annual Family Income & Expenditure by Source by Region Distribution % Income Class No. of Families Salaries Other 250,000 & Over (Est. in 000) Business Wages Sources Philippines 6,228 48.5 18.0 33.6 NCR 1,617 54.4 14.9 30.7 CAR 122 40.8 27.6 31.6 Ilocos 247 39.
Slide 15: Macroeconomic Environment
Macroeconomic Environment Monetary policy & Reserve requirements kept steady Current stance appropriate to support inflation and growth targets Reserve Requirement unchanged 14
Slide 16: Banking Sector Overview
Banking Sector Overview For the Second year, The Philippines is the only Asian Philippines banks are well capitalised to withstand banking system rated with positive outlook by Moody’s unexpected pressures…. 2015 Moody’s Asian Banking System Outlook Banking System Capitalization Trend (Core Equity T
Slide 17: Banking Sector Overview
Banking Sector Overview No property bubble… Residential & commercial property prices rose in tandem with GDP per Capita… Source: BSP, Moody’s Investor Services 16
Slide 18: Key Investment Merits
Key Investment Merits 17
Slide 19: Key Investment Merits
Key Investment Merits 7 Strong support 1 Established from SM Group strength in Affluent and Experienced Filipino-Chinese management business segment Sustained Strong 6 delivery o f balance sheet 2 Shareholder with Returns sustainable growth Well positioned for growth with diversified income Well div
Slide 20: Established Strength in Affluent Filipino-Chinese Business Segment
1 Established Strength in Affluent Filipino- Chinese 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 19
Slide 21: Strong Balance Sheet with Sustainable Growth (1/3)
2 Strong Balance Sheet with Sustainable Growth (1/3) Steady Increase in Assets Through Sustainable Organic Growth and Strategic Acquisitions Total Assets (PHP in B) Securities/Treasury Assets Net Loans Others China Bank (CBC) China Bank Savings (CBS) Planters Development Bank (PDB) CAGR:19% YoY:12%
Slide 22: Strong Balance Sheet with Sustainable Growth (2/3)
2 Strong Balance Sheet with Sustainable Growth (2/3) Gross Loans (PHP in B) YoY: 7% Corporate Commercial Consumer CAGR: 20% Consumer Loans 317 298 YoY: 12% 48 43 228 198 30 128 142 23 154 89 126 18 82 14 47 35 127 127 109 88 94 77 2010 2011 2012 2013 2014 2015 Gross includes UDSCL: Consumer loans in
Slide 23: Strong Balance Sheet with Sustainable Growth (3/3)
2 Strong Balance Sheet with Sustainable Growth (3/3) Funding (PHP in B) Peso Deposits (PHP in B) CASA High Cost FCDU YoY: 10% CAGR: 16% 439 373 399 354 67 327 73 283 272 71 160 218 213 216 54 147 146 160 167 53 48 128 89 86 179 212 137 70 82 90 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014
Slide 24: Well Diversified Loan Portfolio with Quality Assets (1/4)
3 Well Diversified Loan Portfolio with Quality Assets (1/4) Started as a SME lender, China Bank has evolved into a universal bank with 40%, 45% and 15% of Total Loans in the Corporate, Commercial and Corporate respectively Loans By Segment (% of Gross Loans) Loans By Industry (%, 2015) 100% 100% Rea
Slide 25: Well Diversified Loan Portfolio with Quality Assets (2/4)
3 Well Diversified Loan Portfolio with Quality Assets (2/4) 45.3% of Loans Are Secured, of which 43% of Secured Loans are secured by real estate mortgages, properties, deposits and equity shares of other banks Loans Breakdown – Secured vs. Unsecured Security by Type (% of Secured Loans) (PHP in B) U
Slide 26: Well Diversified Loan Portfolio with Quality Assets (3/4)
3 Well Diversified Loan Portfolio with Quality Assets (3/4) Continuous improvement in assets and loan provisions and steady coverage NPA and NPL Ratios (%) - Group 3.8% 3.9% 3.7% 3.6% 2.9% 3.0% 2.9% 2.6% 2.5% 2.2% 2.0% 2.2% 2010 2011 2012 2013 2014 2015 Loan Loss Coverage Ratio (%) - Group 134.7% 13
Slide 27: Strong and Improving Capital Levels
4 Strong and Improving Capital Levels The Only Major Bank without Hybrid Tier-2 Notes Issuances to comply with Basel II Capital Requirement Total Equity (PHP in B) Capital Adequacy Ratio (CAR) Tier-1 Ratio Industry Average CAR 23.6% 22.0% 17.7% 16.0% 17.3% 17.8% 19.0% 18.9% 16.4%* 16.6% 16.2% 14.8%
Slide 28: Well Positioned for Growth With Well-Diversified Income Stream (1/3)
Well Positioned for Growth With Well- Diversified 5 Income Stream… (1/3) Operating Income by Income Type (PHP in M) Net Interest Income Fee Income Trading & Securities Others CAGR: 8% YoY: 3.8% 19,572 18,848 1,909 2,411 15,097 535 467 13,856 1,813 2,111 13,319 12,744 1,679 1,348 1,275 1,221 1,905 1,
Slide 29: Effective Cost Management (2/3)
5 …Effective Cost Management…(2/3) Despite massive expansion, cost parameters compare well with its peers in the Philippines Cost to Income – Philippine Banks (%, 2015) Cost to Income – China Bank (%) 69.7%67.7% 56.3% 62.3% 62.0% 59.8% 56.0% 58.8% 62.2% 62.3% 50.3% 59.2% 59.0% 55.2% 53.5% BDO PNB BP
Slide 30: Extensive Distribution Network and Scalable Infrastructure Platform (3/3)
…and Extensive Distribution Network and 5 Scalable Infrastructure Platform (3/3) 5th Largest Distribution Network in the Philippines Ongoing Network Expansion Plan (No. of Branches, as of 31 Dec 2015) (No. of Branches and ATMs) 1029 PDB CBS CHB ATMs 973 1182 823 1102 1026 665 947 857 517 740 682 456
Slide 31: Sustained delivery of shareholder returns
Sustained delivery of shareholder returns 6 Strong Cash Dividends (In Mn) Dividend Yield Cash Dividends Cash Payout 3.50% 1.800 40.0% 3.02% 1.716 3.00% 2.76% 2.69% 1.589 33.5%35.0% 2.66% 31.0% 28.5% 2.50% 1.600 27.9% 1.557 31.1% 30.0% 2.24% 2.13% 25.0% 2.00% 25.7% 1.416 1.400 20.0% 1.50% 1.287 15.0%
Slide 32: Strong Support from SM Group and Experienced Management Team
7 Strong Support from SM Group and Experienced Management Team Distinct Benefits for China Bank as a Shareholding Support from SM Group member of the SM Group Mutually Beneficial to the SM Group’s ecosystem of merchants, suppliers and contractors Priority rights to place branches and ATMs in SM shop
Slide 33: Strong Support from SM Group and Experienced Management Team
Strong Support from SM Group and Experienced 7 Management Team Hans T. Sy Carlos M. Borromeo Chairman of the Board SVP/CFO, Head of Financial Mgt Segment Gilbert U. Dee Highly respected senior management Alberto Emilio V. Ramos Vice Chairman of the team in the industry… SVP & President of China Boar
Slide 34: Strong Support from SM Group and Experienced Management Team (3/3)
7 Strong Support from SM Group and Experienced Management Team (3/3) …The Result: Recognition of China Bank’s Strength in Corporate Governance Recipient of the Bell Award for Corporate Governance for the 4th straight year by PSE • Only bank among the awardees in the publicly-listed company category
Slide 35: Financial Performance Highlights
Financial Performance Highlights 34
Slide 36: Financial Highlights
Financial Highlights Income Statement (In Millions) Change FY 2015 FY 2014 Amt % Net interest Income 15,085 14,089 996 7.1 Non-Interest Income 4,491 4,732 (241) (5.1) Total Operating Income 19,576 18,821 755 4.0 Total Operating Expenses 13,167 12,166 1,001 8.2 Income before Income Tax 6,409 6,655 (2
Slide 37: Financial Highlights Balance Sheet
Financial Highlights Balance Sheet In Millions Change FY2015 FY2014 Amt % Total Assets 526,898 470,773 56,125 11.9 Loans & Receivables (Net) 309,762 290,419 19,343 6.7 Total Deposits 439,266 399,302 39,964 10.0 Low Cost Deposits 227,558 193,230 34,328 17.8 Time Deposits 211,708 206,071 5,637 2.7 Tot
Slide 38: China Bank: Board of Directors
China Bank: Board of Directors 37
Slide 39: China Bank: Board of Directors
China Bank: Board of Directors 38
Slide 40: China Bank: Management
China Bank: Management • EVP, Head of the Financial Capital Markets • EVP, Head of the Lending Business Segment, and & Investment Segment, and concurrent concurrent Head of Institutional Banking Group Head of Treasury Group • Director/Treasurer of China Bank Insurance • Currently Director of CBC For
Slide 41: China Bank: Management
China Bank: Management • SVP and Head of Investor & Corporate • SVP and President of China Bank Savings Relations Group (seconded in 2011) since Aug 1, 2011 • Director of CBS & Plantersbank • Currently Director of both CBS & PDB and a • Chairman of the UP Visayas Foundation nominee to the additional
Slide 42: China Bank: Management
China Bank: Management • Vice President and Chief Compliance • Vice President and Corporate Secretary Officer • Currently Senior Vice President on Corporate and • Concurrently Chief Compliance Officer Legal Affairs and Compliance Officer in SM of Planter Development Bank Investments Corporation and