China Banking Corp. · PSE:CBC
China Banking — H1 2023 Earnings Presentation
32 slides from China Banking's earnings presentation, Aug 4, 2023
Slide 1: Analysts' Briefing 1H2023 Results
ANALYSTS’ BRIEFING 1H2023 Results August 4, 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 6.25% 5.8% INFLATION 5.6% RATE +425 bps since May 2022 GDPfrom 7.6% in FY 2022 from 5.8% in FY 2022 & FX BSP to hold rate at 6.25% until Q2 Moderate growth due to Inflation to ease further; 2024 prolonged elevated interest rates expected to fall to
Slide 7: Macroeconomic Outlook forecast table
Macroeconomic Outlook Chinabank’s view FY 2022A 1H2023A FY 2023F FY 2024F GDP growth (%) 7.6 6.2 F 5.8 5.5 Inflation (%) 5.8 7.2 5.6 2.8 Policy rate (end, %) 5.50 6.25 6.25 4.50 10-Year BVAL Rate (end, %) 6.986 6.304 5.9 5.1 USDPHP (end) 55.76 55.20 53.00 51.00 Key Takeaways 1. Modest economic growt
Slide 8: 1H2023 Financial Performance
1H2023 Financial Performance
Slide 9: 1H 2023 Performance Highlights
1H 2023 Performance Highlights Profitabilit We delivered strong returns P10.8 B 15.9% 1.6% P7.38* y 1H2023 Net Income Return on Equity Return on Assets Earnings per share Growtha quality balance sheet We maintained and prudent risk management 2.2% 122% NPL Ratio NPL Cover We sustained a solid capita
Slide 10: 1H 2023 Financial Highlights: Income Statement
1H 2023 Financial Highlights INCOME STATEMENTS 1H'23 vs 1H'23 vs 1H 2022 2H 2022 1H 2023 In Php billions, except % 1H'22 2H'22 Interest income 25.9 31.3 37.9 46% 21% Interest expense (3.9) (7.7) (12.3) 218% 59% Net interest income 22.0 23.6 25.5 16% 8% Fee-based income 3.2 6.8 1.7 -48% -76% Total re
Slide 11: 1H 2023 Financial Highlights: Balance Sheet
1H 2023 Financial Highlights BALANCE SHEETS June 30, Dec 31, June 30, Jun'23 vs Jun'23 vs in Php billions, except % 2022 2022 2023 Jun'22 Dec'22 Liquid Assets 169 178 141 -17% -21% Investment Securities 341 412 476 40% 16% Net Loans 655 700 726 11% 4% Other Assets 38 40 42 12% 5% Total Assets 1,202
Slide 12: Sustained profitability amidst a challenging environment
Sustained profitability amidst a challenging environment Quarterly Net Income (In PHP Bn) Semi-annual Net Income (In PHP Bn) +7% vs 1H22 +20% vs 2H22 10.8 +12% vs 2Q22 10.1 9.0 +16% vs 1Q23 5.8 5.2 5.0 4.9 4.6 4.4 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 1H22 2H22 1H23 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) +15% vs 2Q22 +2% vs 1Q23 6.27% 6.12% 6.32% +20 bps 14.0 16 consecutive 12.7 12.9 5.52% vs 1Q23 quarters of growth 11.7 11.9 12.0 5.28% (since 3Q19) 11.
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) Cost of funds up 140 bps 40 YoY 36 32 0.6 6.8 7.2 28 24 5.2 0.7 25.5 Gross yield up 124 bps 20 22.0 YoY Loans and 16 investment securities grew 12 11% and 40%, respectively. 8 4 0 Ne
Slide 15: Fee-based income remains strong
Fee-based income remains strong Core Fee income continues to grow Fee-based Income (In PHP Bn) 8 6.8 6 Core fee income grew 18% YoY to P3.3 billion. 3.8 4 Service charges, fees, and commissions were up 3.2 1.7 20% to P1.8 billion due to higher deposits and 0.4 transactions-based fees. 2 3.1 3.3
Slide 16: 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% 123% 122% 116% 11.0% 120% 8.9 8.9 9.0 9.0% 108% 100% 103% 94% 95% 7.0% 89% 80% 5.0% 60% -47% YoY 4.1% 2.6 3.
Slide 17: Operating expenses impacted by persistently high inflation
Operating expenses impacted by persistently high inflation during the period Operating Expenses ex provisions (In PHP Bn) +22% vs 1H22 +2% vs 2H22 13.6 13.2 11.1 Volume-related taxes higher due to 4.6 Manpower 4.7 higher operating income and bigger deposit +33% YoY balances. 3.4 Taxes and licenses
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, June 2023 +11% YoY 2019-2022 CAGR 13% 745 7% 718 673 624 161 +20% YoY 144 578 572 134 Auto 123 12% 107 114 Housing 57% 573 584 53
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) +19% YoY 1,121 1,066 1.75 1.67 945 863 1.47 835 1.35 775 492 568 1.32 357 +59% YoY 1.23 0.77 0.89 308 0.56 366 0.48 364 0.58 0.58 Pre-pandemic CASA level 555 573 589 553 0.92 0
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% 16.1% to support Asset growth; and 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, 1H‘23 vs 1H‘22 Bringing our signature touch in relationship +30% banking to our customers O/S Active Users anytime, anywhere. year-on-year +31% O/S Enrollments ≈74% year-on-year share of digital & e- banking to total TXNs Jan-Jun 2023 +37% Gross
Slide 22: Awards & Distinctions
Awards & Distinctions Chinabank also received the Five- Golden Arrow Recognition, the highest corporate governance award Chinabank was recognized by the ASEAN Capital given by the Institute of Corporate Markets Forum as among the ASEAN Asset Class, Directors ASEAN Top 20, and Top 3 Philippine Public
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.. 1H'22 FY2022 1H'23 Return on Equity 16.4% 15.1% 15.9% Profitable Return on Assets 1.7% 1.6% 1.6% CET 1/Tier 1 Ratio 14.8% 15.1% 15.2% Adequately-capitalized Capital Adequacy Ratio 15.7% 15.9% 16.1% NPL Ratio 2.3% 2.3% 2.2% Well-managed NPL Coverage Ratio 128%
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: Chinabank Profile
Chinabank 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 genera
Slide 28: Chinabank Profile: Equity Profile and Credit Ratings
Chinabank Profile EQUITY PROFILE CREDIT RATINGS Particulars August 3, 2023 Investment grade credit rating of Baa2 with stable outlook from May 2017 Ticker CHIB Same level as the Philippine sovereign Stock Price Php31.00 rating and at par with the country’s three Market Cap (in PHP Mn) 83,430 big
Slide 29: Chinabank Profile: Corporate Milestones
Chinabank Profile Corporate Milestones 2007 Acquired Manila Bank 2020 2022 and operated it as 2018 Chinabank Savings 2014 (CBS); Entered into a 2016 Infused P500 million to Raised P15 billion via Became the 4th largest* fixed-rate retail bonds; bancassurance joint Acquired Plantersbank CBS and P40 m
Slide 30: Strong Support and Synergies with the SM Group
Strong Support and Synergies with the SM Group Chinabank 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% 25% Sysmart Corp 15% SM Group 39% Others 1% Retail Banking
Slide 31: 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 32: Thank You
CHINABANK THANK YOU