Slide 1: Investor Presentation 1Q2019
Investor Presentation 1Q2019 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 Company Profile Key Investment Merits Corporate Financial Highlights 2 3
Slide 4: Economic Environment 1Q2019
Economic Environment 1Q2019 WORLD ECONOMY PHL ECONOMY PHL BANKING 2019 GDP may decline to 3.3% 1Q GDP to hover around 4Q18’s (Feb 2019 data) in 2019 from 3.6% in 2018 6.1% Weakening expansion amid Budget impasse may impact trade frictions & stricter Assets up 10%; Loans up 13% GDP by -0.7 to -
Slide 5: Economic Environment
Economic Environment PH has performed strongly over the years Rapid credit growth warrants continued monitoring PH remains one of the fastest-growing economies in Asia Household debt to GDP remains low 4 3
Slide 6: Economic Environment
Economic Environment Share of capital formation to GDP continues to increase 25,000 20,000 15,000 10,000 5,000 0 2011 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2017 2001 2002 2018 Q12018 Q12019 1998 1999 2000 2003 -5,000 Household consumption Government consumption Capital formatio
Slide 7: Economic Environment
Economic Environment Public investment remains low compared to Asian peers Infrastructure Investments as % of GDP 2010-2015 8.0 6.8 6.0 5.7 5.4 4.0 3.0 2.6 2.3 2.3 1.8 2.0 0.0 China Vietnam India Malaysia Indonesia Singapore Philippines Thailand 6 5
Slide 8: Economic Environment
Economic Environment Significantly lower than ASEAN neighbors Ph External Debt as % of GDP ASEAN External Debt as % of GDP (%) 100 69.1 80 49.4 60 34.8 32.1 40 26.3 23.5 20 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Malaysia Singapore Indonesia Thailand Vietnam Phil
Slide 9: Snapshot of China Bank
Snapshot of China Bank Long history as one of the oldest privately owned bank in the Philippines, established in 1920 Publicly-listed since 1927 in Manila Stock Exchange Strong presence in the entrepreneur, middle market and business segments Longest relationship with Chinese-Filipinos, serving this
Slide 10: 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 11: Bank Milestones
Bank Milestones Expand portfolio in SME, MME and Consumer segments further enhanced by recent strategic acquisitions Acquired Manila Bank with 75 branch licenses Acquired and renamed to Infused additional P500M capital to CBS 1920 1927 2007 2012 2013 2014 2015 2016 2018 Infused Increased stake in ad
Slide 12: Rapid Network Expansion since 2007
Rapid Network Expansion since 2007 As of March 2019 China China Bank % Share No. of Branches Bank Savings Total Total Metro Manila 251 79 330 53 Luzon 114 67 181 29 Visayas 56 10 66 11 Mindanao 37 6 43 7 Total 458 162 620 100 1000 966 968 888 CHIB CBS 805 800 740 PDB ATM 661 620 621 561 596 600 511
Slide 13: Comprehensive Financial Services Platform
Comprehensive Financial Services Platform China Bank’s Organizational Structure 1 2 3 Savings Bank & Other Relationship Banking Financial Markets Business Units Retail Banking Lending China Bank Business Segment Treasury Savings, Inc. (98.3%) - SME Branches Institutional China Bank Capital - Consume
Slide 14: 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 15: Established Strength in Affluent Chinese-Filipino Business Segment
1 Established Strength in Affluent Chinese-Filipino Business Segment Predominantly focused on the SME/MME Loyal and highly valuable customer base segments Multi-generational relationships Agile and entrepreneurial mindset Sustainable and profitable niche client relationships 14 15
Slide 16: Established Strength in Affluent Chinese-Filipino Business Segment
1 Established Strength in Affluent Chinese-Filipino Business Segment FIRST CREDIT LINE IN AIDED DMCI IN CRITICAL 1949 TIMES “My relationship with the “China Bank is not like other banks.” Bank has always been special to me.” - DAVID M. CONSUNJI DMCI - HENRY SY SR. Founder of SM FRIENDS THROUGH GOOD
Slide 17: Established Strength in Affluent Chinese-Filipino Business Segment
1 Established Strength in Affluent Chinese-Filipino Business Segment THE MAKING OF A HARDWARE CONSUMER’S PARADISE Banking with China Bank since 1920.. “ . . .they always accommodate us.” - JOHNNY O. COBANKIAT ACE Hardware FROM HUMBLE BEGINNINGS “Malaki ang tulong na ibinigay sa amin ng China Bank.”
Slide 18: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Organic growth and acquisitions Total Assets (PHP in B) 866 893 96 97 751 723 633 89 89 527 83 471 76 414 47 15 21 797 324 769 257 9 662 635 262 234 550 2 4 176 209 5 451 5 0 399 403 5 315 229 255 258 204 171 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 19: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Emphasis on core lending business, reduced reliance on securities/trading 893 866 Assets Mix (PHP in B) 751 19% 24% 723 633 17% 18% 16% 527 471 14% 414 13% 61% 57% 60% 16% 62% 324 61% 262 21% 59% 257 62% 234 209 23% 53% 29% 176 31% 27% 24% 59% 46% 55% 5
Slide 20: Strong Balance Sheet with Sustainable Growth
2 Strong Balance Sheet with Sustainable Growth Healthy liquidity 80% 73% 73% 73% 71% 71% 71% 70% 70% 70% 67% 66% 65% 65% 65% 62% 63% 63% 63% 61% 58% 60% 55% 62% 61% 61% 62% 59% 60% 59% 57% 55% 50% 53% 40% 2011 2012 2013 2014 2015 2016 2017 2018 1Q2018 1Q2019 Loans (Net) to Total Assets Loans (Net) t
Slide 21: Diversified Loan Portfolio
3 Diversified Loan Portfolio More room to grow in consumer segment Gross Loans (PHP in B) 8-yr CAGR Business Loans * Consumer 2010-2018 600 513 515 500 Consumer 456 455 26% 17% 17% 394 16% 16% 400 317 15% 298 Business 300 Loans 15% 18% 14% 228 198 200 13% 83% 83% 154 12% 84% 84% 126 85% 12% 85% 11%
Slide 22: Diversified Loan Portfolio
3 Diversified Loan Portfolio More room to grow in consumer segment Consumer Loans (PHP in B) Housing Auto Personal + Civil Servants Loan Credit card 76 79 2% 2% 7.2% 7% 63 65 2% 2% 4% 5% 27% 26% 52 2% 31% 5% 29% 41 1% 30% 5% - 33 28% 6% 29% 64% 21 64% - 3% 64% 63% 16 30% 63% 10 1%- 34% 66% 7 65% 4%
Slide 23: Diversified and Well-collateralized Loan Portfolio
3 Diversified and Well-collateralized Loan Portfolio Loans By Security 513 515 Unsecured Secured 456 394 57% 62% 298 317 56% 55% 228 198 52% 58% 126 154 53% 53% 51% 43% 44 % 39% 60% 45% 48% 42% 47% 47% 49% 40% 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q2019 22 23
Slide 24: Improving Asset Quality and Loan Loss Coverage
4 Improving Asset Quality and Loan Loss Coverage Post acquisition asset quality ratios better than industry… NPL Ratios LLR Coverage Plantersbank 350% 330% * acquisition 323% Plantersbank 3% acquisition 300% 2.5% 3% 2.2% 250% 2.0% 1.9% 2% 200% 175% 153% 157% 153% 1.9% 1.9% 1.4% 2% 150% 123% * 1.2% 1
Slide 25: Improving Asset Quality and Loan Loss Coverage
4 Improving Asset Quality and Loan Loss Coverage Credit Cost – lower than the industry 1.01% 1.22% 1.06% 0.86% 1.67% 0.94% 1.43% 1.30% 0.92% 1.22% 0.69% 0.56% 0.67% 0.57% 0.51% 0.33% 0.44% 0.42% 0.38% 0.38% 0.41% 0.34% 0.29% 0.31% 0.19% 0.24% 0.18% 0.21% 0.11% 0.13% 0.17% 0.03% 2004 2005 2006 2007 2
Slide 26: 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 600 592 722 527 720 458 500 635 17% 614 18% 372 542 17% 327 439 19% 283 15% 354 399 39% 39% 218 15% 33% 30% 167 272 18% 38%
Slide 27: Funding – Strong Brand Franchise / Retail Base: Stable Margins
5 Funding – Strong Brand Franchise / Retail Base Stable Margins 7% 6.08% 6% 5.57% 5.64% 4.73% 4.77% 5% 4.22% 4.31% 4.32% 4.20% 4.19% 3.97% 3.76% 4% 3.30% 3.37% 3.20% 3.11% 3.10% 2.90% 2.98% 2.94% 3% 2.82% 2% 2.21% 2.06% 1.90% 1.73% 1% 1.30% 1.12% 1.02% 1.14% 0.98% 0% 2010 2011 2012 2013 2014 2015 20
Slide 28: Healthy Capital Position
6 Healthy Capital Position Capital Adequacy Ratio (CAR) CET 1 Ratio Industry Average CAR 24.0% 22.0% 20.0% 18.0% 15.8% 15.4% 16.0% 13.1% 13.8% 14.0% 12.0% 12.9% 12.2% 10.0% P15 bn Stock P8 bn Stock rights rights Plantersbank 88 90 acquisition 84 83 Manila Bank Basel 2 acquisition 63 implementation 5
Slide 29: Very Good Credit Ratings
6 Very Good Credit Ratings Investment grade credit rating of baa2 from May 2017 • Same level as the Philippine sovereign rating and at par with the country’s top 3 biggest banks • Affirmed in December 2018 Upgraded IDR in Sept 2016 to ‘BB+’ from “BB’ and its viability rating to ‘bb+’ from bb (stable
Slide 30: Well Diversified Revenue Stream
7 Well Diversified Revenue Stream Reduced reliance on volatile trading gains (PHP in B) Net Interest Income Trading and Securities Other Fees 28.55 25.73 20% 21% 21.79 22% 24% 18.85 19.57 19% 2% 23% 21% 23% 4% 22% 25% 13.86 15.10 2% 13.32 12.74 3% 21% 22% 21% 34% 35% 21% 33% 42% 13% 80% 13% 12% 21%
Slide 31: Effective Cost Management
7 Effective Cost Management … branch expansion on last phase, focus on profitability Cost to Income – Philippine Banks March 2019 Cost to Income – China Bank (%) 66.0% 80% 62.2% 62.3% 61.3% 62.0% 63.0% 63.0% 66% 69% 55.2% 59.2% 59.0% 56.0% 58.0% 60% 62% 64% 67% 53.5% 55.4% 56.0% 57.2% 53% 54% 55% 60
Slide 32: Growing Distribution Network
7 Growing Distribution Network 5th Largest Distribution Network in the Philippines Slowdown in branch expansion by 2019 (No. of Branches, ATMs) Mar 2019 (No. of Branches and ATMs) 1,113 PDB CBS 1,032 Branches ATMs CHB ATMs 966 1,600 5,000 888 4,362 4,500 805 1,400 1,322 740 4,000 1,200 661 1,062 620
Slide 33: … Brand Refresh, Modern Branch Look and Feel
7 … Brand Refresh, Modern Branch Look and Feel 32 33
Slide 34: Supported by Robust Infrastructure
7 Supported by Robust Infrastructure Customer-centric technology initiatives… EMV Compliant since January 2017 New Treasury system - Calypso (One of 1st Phil banks) New Trust/Asset Management system Cash Management / Corporate Online Mobile Banking launched in 2018 Digital Banking transf
Slide 35: Sustained Delivery of Shareholder Returns
8 Sustained Delivery of Shareholder Returns Consistent dividends track record (In Mn) Dividend Yield – consistently above industry average Cash Dividends Cash Payout 2.6 41.9% 45% 9% 8.5% 2.4 36.5% 40% 8% 34% 33% 6.8% 35% 7% 2.2 31% 31% 31% 30% 29.1% 29% 28% 30% 6% 2.0 26% 5.3% 4.8% 25% 5% 1.8 2.4 2
Slide 36: Strong Support from Shareholders and Synergies with the SM Group
9 Strong Support from Shareholders and Synergies with the SM Group Current Shareholdings Snapshot of SM Group Business Lines 27% 38% SMIC @ 19.9% 8% 27% Retail Banking Property 77% 20% 45% 50% SM Retail CHIB BDO SM Prime SM Group - Henry Sy Sr. First became Shareholder in 1979 HOTELS AND CONVENTIONS
Slide 37: Strong Support from Shareholders and Synergies with the SM Group
9 Strong Support from Shareholders and Synergies with the 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 38: Track Record of Excellence in Corporate Governance
10 Track Record of Excellence in Corporate Governance 2nd ASEAN Corporate Governance Awards Top 11 to 30 among the top 50 PLCs in ASEAN PSE Bell Awards for Corporate Governance Top 5 Bell Awardee for 6 consecutive years (2012-2017 ) Top 5 Finalist (2017 ) 8th Asian Excellence Awards 2018 – Corpor
Slide 39: Governance – Adapting ESG Framework
10 Governance – Adapting ESG Framework 38 39
Slide 40: Board of Directors
11 Board of Directors • Chairman of the Board since May 5, 2011 • Vice Chairman of the Board since May 5, 2011 • Vice Chairman from 1989 to 2011 • Chairman from 1989 to 2011 • China Bank Board Director since May 21, • China Bank Director since 1969 1986, • Chairman of the Boards: Union Motor Corpora
Slide 41: Board of Directors
11 Board of Directors • China Bank Board Director since November 7, • China Bank Director since 2001 2007 • Former President of SM Investments • Chairman: SM Investments Corp. Corp. • Director : Atlas Consolidated Mining and • Director: SM Synergy Properties Holdings Development Corp., Belle Corp. C
Slide 42: Management Team – Experienced, Successors in Place
11 Management Team – Experienced, Successors in Place Hans T. Sy Chairman of the Board Gilbert U. Dee Vice Chairman since 1989 Vice Chairman of the Board Director since 1986 William C. Whang Director and President since Nov. 1, 2017 Romeo D. Uyan, EVP and COO Chairman ExCom of China Bank Savings, In
Slide 43: Management Team – Experienced, Successors in Place
11 Management Team – Experienced, Successors in Place Ryan Martin L. Tapia Marisol M. Teodoro President - China Bank Capital Corp. President and CEO - China Bank Securities Corp. Director: China Bank Securities Corp. Jose L. Osmeña, FVP Deputy Group Head of Retail Banking Business Ananias S. Corneli
Slide 44: Financial Highlights
Financial Highlights Income Statement JAN-MAR JAN-MAR Variance (In Million Pesos) 2019 2018 Amt % Net Interest Income 5,929 5,292 637 12.0% Non-Interest Income 1,294 852 443 51.9% Total Operating Income 7,223 6,143 1,080 17.6% Total Operating Expenses 5,074 4,413 662 15.0% Income before Income Tax 2
Slide 45: Financial Highlights
Financial Highlights Balance Sheet M ARCH M ARCH Variance (In M illion Pesos) 2019 2018 Am t % Total Assets 892,856 723,435 169,421 23.4% Loans & Receivables (Net) 507,609 445,926 61,683 13.8% Total Deposits 720,219 613,639 106,580 17.4% Low Cost Deposits 406,761 338,728 68,033 20.1% Tim e Deposits
Slide 46: Awards and Recognition
Awards and Recognition Top Corporate Issue Pagtugon Award Best Investor Best Corporate Best Bank for Debt Best Debt Capital Manager / Arranger for Universal and Relations Bank Governance Bank – Capital Markets Market (DCM) House Investment House Commercial Philippines Philippines Philippines Philipp
Slide 47: Thank you.
CHINABANK Thank you. 46