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MANILA, Philippines - China Banking Corp's profit grew by more than a quarter in the first three months of the year on the back of a strong growth in loans.
China Bank, in a statement, said that it posted a 27-percent increase in consolidated net income of P1.1 billion for the first quarter of the year compared with the same period in 2011.
During the period, China Bank reported an increase in loans and fee-based income that compensated for a modest growth in deposits and thinner margins from the continuing decline in asset yields.
"Customer loans portfolio stood at P154 billion by end-March 2012, a 34 percent year-on-year [across the board] growth, driven by higher bookings from retail, commercial, and consumer borrowers," it said.
Despite the drop in lending rates, the higher loan volume boosted the bank's interest income from loans and receivables by 15 percent.
Fee-based income improved by 166 percent due to hefty trading and foreign exchange gains as the bank took advantage of favorable market conditions.
The improvement also came from higher contributions from trust operations (trust fees increased 25 percent from higher volume of trust assets) and the sale of acquired assets.
China Bank's total resources stood at P272 billion, up 14 percent from the same period last year. Total deposits grew by 14 percent to P222 billion with total low cost deposits at P81 billion. This translates to a healthy low cost to total peso deposits ratio of 48.53 percent.
Meanwhile, the company announced that stockholders approved the declaration of a 10 percent stock and a P12.00 per share cash dividend for a total of P1.42 billion to holders of 117.99 million outstanding shares (before stock split).
The stockholders likewise approved a ten-for-one stock split of the Bank’s common shares to provide more domestic liquidity to the Bank’s shares.
The cash dividends represent 27.90 percent of the 2011 net income of P5.075 billion (earnings per share of P43.02). Based on China Bank’s latest share price of P522.00, the P12.00 cash dividend per share translates to an annualized dividend yield of 2.30 percent.
The dividends and stock split are subject to approval by the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, and the Philippine Stock Exchange.
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