CHINA BANKING CORPORATION (CHIB)€¦ · bancassurance JV with Manulife; acquired Manila Banking ... The Wall Street Journal Digital Network, Bloomberg BB+ (from BB) Ba1 (from Ba2)

CHINA BANKING CORPORATION (CHIB)Investor PresentationSM Group Corporate Day /Macquarie Securities

Healthier and more inclusive GDP growth

Sound macroeconomic fundamentals

Improved governance and competitive indicators

Prudent monetary policy

Strong external position

Sound and stable banking system

IT’S MORE FUN TO INVEST IN THE PHILIPPINES!

The Economic Backdrop

Your Success Is Our Business

CHINA BANK MILESTONES – 92 Years

1920‐1939•1920•Established by Chinese immigrants as the 1st

privately owned local commercial bank in the Phils.

1940‐1959•1947•CHIB listed on the local stock exchange

1960‐1979•1969•Became the 1st bank in Southeast Asia to process deposit accounts online

1980‐1999•1988•Joined 7 other banks in setting up BancNet, the country’s largest ATM network

•1991•Acquired unibanklicense

•1996•Accessed offshore capital markets by issuing US$50 MN FRCD

2000‐2012•2006•Start of rapid branch expansion; Completed its first international US$53 MN secondary share offering

•2007•Signed a bancassuranceJV with Manulife; acquired Manila Banking Corporation with 75 branches

2000‐2012•2008•Launched China Bank Savings subsidiary

•2009•Cited by Stern Stewart as one of the top 100 ASEAN companies in terms of delivering shareholder value for 2002-2008

2000‐2012•2011•2x Gold awardee (95%) in corporate governance awarded by ICD

•2012•Breached the 300-mark in branch network; Ten to one Stock split; Bell Awardee for Corporate Governance


Competitive Landscape (Dec 2012)


Competitive Posture Amt Amt Amt Amt

(P BN) (P BN) (P BN) (P BN)

TOTAL 7,733 100.0 5,481 100.0 3,738 100.0 861 100.0

BDO 1,250 16.2 930 17.0 738 19.7 156 18.1 763MBT 1,038 13.4 739 13.5 509 13.6 122 14.1 828BPI 976 12.6 804 14.7 558 14.9 93 10.8 820PNB/Allied 516 6.7 388 7.1 234 6.3 58 6.7 653RCBC 369 4.8 249 4.5 178 4.8 42 4.9 418CHIB 322 4.2 272 5.0 187 5.0 39 4.5 316UBP 275 3.6 190 3.5 117 3.1 45 5.2 186SECB 259 3.4 143 2.6 130 3.5 37 4.3 208Gov't 1,046 13.5 721 13.2 388 10.4 118 13.7 Foreign Banks 977 12.6 505 9.2 415 11.1 56 6.5 Local Banks 706 9.1 541 9.9 284 7.6 97 11.2

Net Loans CapitalBranches

Mkt Share (%)

Mkt Share (%)

Mkt Share (%)

Mkt Share (%)

Big Banks

Peer Banks

Others

Institution

Assets Deposits

Key Investment Merits

Strong balance sheet and asset quality

Solid capital base

Clear strategy for growth and expansion

Focused management, effective governance

Sustained delivery of superior value to shareholders

Sustained profitability


Net Income, ROE


ROE, ROA


Cost to Income


Branch network more than doubledfrom 148 in 2006 to 316 in 2012

Revenue Diversification Profile


14.5 14.1 14.5

17.5 17.916.9

19.3In BN



Solid capital base






Assets


Loan Portfolio - well collateralized


Excludes UDSCL

Much room for loans growth…


Gross Loans to Deposit Ratio

Improving asset quality, more than adequate reserve cover


*Industry LLR Ratio as of October 2012

Deposit, Funding Mix


122140

174193

213 216

272

Sustained growth in low-cost deposits








Solid capital base


From excess capital to efficient use of capital - Basel II 2007, acquired Manila Bank 2007, expansion


21 22

24 27

31

36

41


Capital & loss reserves well above stress test tresholds


Maintained top ratings from credit rating agencies

Standard and Poor's

Capital Intelligence

BankNational Rating

Individual Rating

Bank Financial Strength

Rating (BSFR)

Foreign Currency

Short-term Deposit Rating

BPI AAA C C- Not-PrimeDBP AA+ C/DBDO C/D D Not-PrimeCHIB AA- C/D BBB-SECB AA- DRCBC D D- Not-PrimeABC D E+ Not-PrimeUBP A+ DLBP AA C/D(from D)

MBT C/D (from D) D Not-PrimeBB Positive (from BB-)

BB Positive (from BB-)

PNB D/E E+ Not-PrimeBB Positive (from BB-)

BB Positive (from BB-)

PhilippinesBB+ (from

BB)BB+ (from

BB)Sources: Business World Online, PhilStar.com, The Wall Street Journal Digital Network, Bloomberg

BB+ (from BB) Ba1 (from Ba2)

Moody'sFitch Ratings







Solid capital base


2222Your Success Is Our Business

Branches, ATM expansion on track…

188216

255269

293316

383

415440

3-Year Plan


Leverage bigger branch footprint to distribute products and services

Metro Manila ‐ 50%

Mindanao ‐ 10%

Luzon ‐ 26%

Visayas ‐ 14%

New branches – 24% of accounts


148

180

214

241253

268283

No. of accts in Existing branches

No. of accts in New branches

Existing branches New branches

598,193

676,094

742,784771,759

818,582872,564

949,699

No. of A

ccou

nts N

o. of Branches

2525Your Success Is Our Business

Key challenges – Cost drag of new branches-- More than 85% of Opex covered

Operating Exp Adjusted Net FY 2012 Income / (Loss)

Opened in 2006 (7) (70.89) 23.40 Opened in 2007 (12) (115.20) (12.95) Opened in 2008 (34) (311.54) (49.50) Opened in 2009 (27) (256.35) 6.65 Opened in 2010 (12) (96.64) (54.49) Opened in 2011 (15) (110.39) (91.64) Opened in 2012 (15) (34.03) (29.33) Converted Manila Bank (20) (195.60) 30.08 TOTAL (142) (1,190.64) (177.76)

(P MN)


Key challenges –Margin squeeze due to system liquidity

Spread between average lending rates and fixed deposit rates


156

176209

234

257 262

324

Asset mix towards more loans, less treasury


194224

276

333

Faster growth in higher margin segments – consumer, commercial

CAGR= 20%(2012-2015)

56%

24%

8%

150

113

Consumer

Commercial

Corporate


Maximize synergy with

existing “new” businesses

Launch “new” businesses

•Investment Banking•Bancassurance JV

with Manulife•Private Banking •Insurance•Remittance

•Credit/Debit Cards

•FOREX Business

•Derivatives

Diversify Revenue streams


China Bank Savings - to become a major bottomlinecontributor by 2014

Expand distribution network

•Savings Bank•Acquisition opportunities

• Unity Bank, rural bank from Central Luzon•Full & mini branches

•Mini branch in SaveMore (SM) supermarkets•Fastest growth in branch network in the

Thrift Banking Industry


New Core Banking System

New ATM Switch

Credit Card/ Debit Card System

Roll our new ALM System (Sungard)

Rolled out Reuters, Kondor + Treasury System

Robust Platforms,

Cost Effective

Processes




Solid capital base








Respected Management

Management team is highly respected in the banking industry especially among Chinese Filipino businessmen

Hans T. Sy – Chairman since 2011Gilbert U. Dee – Vice ChairmanPeter S. Dee – President & CEORicardo R. Chua – SEVP & COO

Mgt team strengthened by recent key executives hiringWilliam Whang – Head of Institutional BankingVirgilio Chua – Head of Investment Banking



Strong Shareholder Support

SM SynergyBank’ branches/ATMS in mallsSavings bank in Savemore stores SM suppliers, merchants,

contractors

Foreign ownership of Dec 2012 24% share

Excellence in Governance - awards and citations


2011 – Gold (score of 95% above)

2010 – Gold (score of 95% above)

2009 –Silver (score of 90%)



Excellence in Governance - awards and citations

2012: Bell Award for Excellence in Corporate Governance from the Philippine Stock Exchange (PSE)

•The only bank among the five publicly-listed companies awarded, from among 255 publicly-listed companies




Solid capital base








10:1 stock split in September 2012BN

P 42

P 51

P 35 P 36

P 46 P 47

P 71






During the stockholders meeting last May 2012, the Bank declared cash dividend of P12/share and stock dividend of P10/share

Dividend History


2006 2007 2008 2009 2010 2011 2012Market Value Per Share (P) 680.00 660.00 395.00 370.00 434.00 398.00 54.60

Adjusted for stock split* 68.00 66.00 39.50 37.00 43.40 39.80 54.60 Cash Dividends Paid (P MN) 1,480 1,542 1,542 1,064 1,170 1,287 1,416Cash Dividends Per Share (P) 30 25 20 12 12 12 12Stock Dividends Paid (P MN) 1,233 1,542 1,156 887 975 1,073 1,180Stock Dividends Per Share (%) 25 25 15 10 10 10 10EPS (P)

Adjusted for stock split* 2.73 2.84 2.25 3.16 3.86 3.86 3.89 BVPS (P)

Adjusted for stock split* 19.25 20.50 19.88 23.40 27.30 30.25 32.58 P/E Ratio Adjusted for stock split* 24.94 23.26 17.59 11.71 11.26 10.31 14.04 Dividend Yield 4.41% 3.79% 5.06% 3.24% 2.76% 3.02% 2.20%Price to Book 3.53 3.22 1.99 1.58 1.59 1.32 1.68 * Restated based on the new par value of P10 per share (previously P100) which took effect on Sept 6, 2012








Solid capital base


Thank you!


Documents

CHINA BANKING CORPORATION (CHIB)€¦ · bancassurance JV with Manulife; acquired Manila Banking ... The Wall Street Journal Digital Network, Bloomberg BB+ (from BB) Ba1 (from Ba2)