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GLOBAL
credit-rating agency Fitch Ratings has maintained a
“stable” outlook on China Banking Corp., affirming the
bank with an “AA” long-term national rating, the bank
said in a disclosure to the Philippine Stock Exchange (PSE).
Fitch
also gave the bank a “BB” long-term issuer-default
rating for local and foreign currency and an individual
rating of “C/D.”
China
Bank said Fitch cited the bank’s “good core
profitability” because of its strong franchise in the
Filipino-Chinese community.
In the
first quarter of the year, the bank posted a 7 percent
decline in net income to P703 million as it incurred
higher costs from the integration of Manila Bank
branches into its network.
The
bank, partly owned by conglomerate SM Investments Corp.,
said in an earlier disclosure to the PSE that revenues
for the first three months improved by 4 percent to
P3.43 billion while interest income from loans grew 13
percent year-on-year.
Its
operating expenses rose 11 percent after the completion
of the integration of Manila Bank branches in February
2008.
China
Bank said its total capital funds reached P26.8 billion,
translating to a capital-adequacy ratio of 14.59 percent
against the industry requirement of 10 percent.
Driven
by an 18-percent increase in its loan portfolio last
year, the bank posted a net income of P3.68 billion, up
4 percent from 2006.
Its
return on equity figured at 15.7 percent and its return
on assets was pegged at 2.2 percent versus the industry
average of 1.3 percent.
Fitch
noted that despite low trading gains, the bank was able
to keep a “strong” return on assets ratio.
“Credit
costs declined in 2007 amid the benign credit
environment with sufficient reserves already built up in
the previous years. The debt-paper trading gains—which
the bank had been enjoying over 2005/2006—were more
limited in 2007, although without such earnings, the
bank’s performance would still have been solid.”
China
bank said that to minimize trading losses in the face of
rising interest rates, it has been readjusting the
composition of its government securities portfolio—now
27 percent of its total assets—by shortening the
portfolio’s duration. Of this, 95 percent are government
papers. |
