Visa International country manager Bob Joubert and business development officer Mennie So recently visited the Bank's executive office to confer two plaques of recognition to Chinatrust president Joey Bermudez and Retail Banking head Tony Robles, citing Chinatrust for having the Highest Visa Debit Retail Sales Volume Growth and Highest Visa Debit Average Spend Per Card in 2006. Chinatrust registered the highest number of point-of-sale usage, in the Philippines and abroad, and correspondingly the highest average spend per transaction, which grew by 45% to $11 per card.
Chinatrust's tie-up with Visa, now considered the largest payment system in the world, opened up possibilites for the Bank's clients, allowing them access to their accounts through over 1 million ATMs and make cashless purchases via more than 27 million accredited merchants, worldwide. Introduced during the latter part of 2004, the Chinatrust Visa Debit & ATM card has been delivering convenience not just to Chinatrust's depositors and payroll clients, but also to remittance beneficiaries and Salary Stretch borrowers.

Locally, Chinatrust's BancNet membership affords clients to pay for their credit card, insurance, and utility bills, among others, as well as transfer funds to any Chinatrust account and other ATM-based BancNet member accounts. With the completion of BancNet's interconnection with ExpressNet and Megalink, Chinatrust Visa Debit & ATM card holders can now withdraw through any ATM in the Philippines.

Chinatrust recently opened two new branches in Cebu to serve the growing number of traders, SMEs and manufacturing companies in the area.

“The opening of our Mandaue and Magallanes branches is a manifestation of our keen interest in the strong potential of Cebu. This is actually our third branch in this dynamic Visayan province,” shares Executive Vice President and Retail Banking head Tony Robles.

Chinatrust Mandaue Branch opened last January at the ground floor of Diamond Plaza along the National Highway in Mandaue City, Metro Cebu. It targets the numerous business establishments and locators in the area that are into manufacturing and exportation, among others, for its cash management products.

Chinatrust Magallanes Branch, on the other hand, opened this February at the ground floor of Tokyu Building in 79 Magallanes Street in Downtown Cebu. “We are excited to open here, which is also known as the Chinatown of Cebu, where traders and high net worth individuals abound. We are confident that our value-creating deposit products can meet their investment objectives.”

Now on its twelfth year in the Philippines, Chinatrust has earned for itself a reputation of innovation and performance excellence. Last year, its application for five branch licenses was granted by the BSP, to make its total branch network 23. Its branch expansion efforts saw the opening of its Davao and Angeles branches during the latter part of 2006, the two Cebu Branches in January and February, and its Las Piñas branch by the second half of 2007.

Chinatrust Philippines’ unaudited net income for 2006 jumped to Php500 million, topping 2005 net income by 20%.

Total revenue grew by 37% boosted by healthy growth in all business lines. Trading gains soared by a hefty 149% to Php548 million from Php220 million a year ago while net interest income surged by 14% to Php 1.39 billion from Php1.22 billion last year despite a shrinkage in the corporate portfolio. The improvement in net interest margin was accounted for by the 46% growth in low-cost deposits and the 24% growth of the Bank’s mortgage and personal loan portfolio.

Over the last five years, Chinatrust Philippines has successfully built a market-leading personal loan portfolio and a segment-focused mortgage business. It has maintained an active presence in the treasury business, again making it among the top ten government securities dealers in 2006. Unlike other banks, Chinatrust's low-cost deposits come largely from its unique cash management offerings and not from its borrowers' maintaining balances. Together, the treasury franchise, the consumer finance business, and the low-cost deposit portfolio have made Chinatrust one of the most profitable banks in the country. Based on the statements of condition published by all commercial banks as of September 29, 2006 and contained in the BSP website, Chinatrust Philippines was among the best banks in terms of return on equity. Its return on assets was one of the highest, if not the highest, among all foreign banks. Despite its active presence in the riskier consumer finance business, Chinatrust's NPL ratio as of the third quarter of 2006 was better than the industry average.

Operating expense growth in 2006 was kept at 13% despite the Bank’s continued investment in its core businesses and the expansion in its branch network. The Bank recently opened new branches in Angeles City, Davao City and Mandaue bringing its total network to twenty-one branches. Despite the increase in operating expense, cost to income ratio of the Bank considerably improved to 44% from 55% last year. A declining cost to income ratio indicates that the company is becoming more efficient because it spends less for every peso of revenue earned.

The Bank’s capital adequacy ratio as of December 31, 2006, stood at 32.56% way above the regulatory requirement of 10% and higher than the December 2005 ratio of 30.78%. Among all banks listed in the Philippine Stock Exchange, Chinatrust had the best capital adequacy ratio among as of the third quarter of 2006.

Chinatrust’s capital adequacy ratio (CAR) for the first quarter of 2007 rose to 33.80% from 30.25% in December 31, 2006. This is more than double the December 2006 industry average of 15.6% and way above the BSP requirement of 10%. The Bank also consistently posted one of the highest CARs among the listed banks.

CAR refers to the ratio of the bank’s capital to risk weighted assets computed in accordance with the risk-based capital adequacy framework. CAR determines the ability of the Bank to absorb a reasonable level of losses before becoming insolvent. The higher the bank’s CAR, the higher the level of protection available to the depositors.

Chinatrust’s high CAR reflects the Bank’s prudent deployment of its resources and sound risk management process. Moreover, with its present CAR, the Bank can withstand the higher capital charge required under the BASEL II Accord without the need to resort to capital build-up measures.

Because of its strong capital position, Chinatrust has been able to invest heavily in technology and infrastructure in the last three years, apart from taking advantage of the liberalized environment for branch openings. In the last twelve months, the Bank has expanded its branch network from 18 to 23, relocated 5 branches to better sites, and renovated its other branches.

The Bank also reported an increase in net interest income by 23% to Php391 million from PhP 318 million in the same period last year. Interest income grew by 16% as the Bank invested its funds in gainful outlets amid the record low interest rate environment. The Bank’s interest revenues from debt securities and interbank loans and deposits went up by PhP 107 million. At the same time, its high-yielding consumer finance portfolio sustained its healthy climb, ending the quarter with PhP 422 million new loan bookings compared to the previous quarter’s PhP 380 million.

On the other hand, interest expense growth was kept at 6% despite the PhP 4.5 billion increase in deposit volume as average cost of funds in the first quarter of 2007 fell to 4.46% from last year’s 5.08%. The lower average cost of funds can be attributed to the healthy growth in low-cost deposits which rose by 42% from previous year’s PhP 3.8 billion. Low-cost deposits now account for 26% of total deposits, compared to the 24% ratio during the same period last year. Unlike other banks, Chinatrust’s low-cost deposits come largely from its unique cash management offerings and not from its borrowers’ maintaining balances.

Among these cash management offerings is the Chinatrust cash card. With its Visa cash card product, Chinatrust has now become the local distributor of choice for many remittance companies that provide cheaper but legitimate alternatives to overseas Filipino workers who want to send money to their beneficiaries. These cash cards have also become a preferred medium for payroll disbursements by companies with large employee populations.

Close to P6.8billion in total loans has been lent out by Chinatrust to more than 120,000 borrowers composed of salaried employees coming from the business outsourcing, manufacturing, distribution, I.T., and banking industries, among others, since its foray into the personal loans business in the middle of 2003.

“From the day we started, Chinatrust (Philippines) Commercial Bank Corporation has been relentless in its bid to meet the financing requirements of the underserved middle income employees,” shares Tony Robles, Chinatrust executive vice president and Retail Banking Head. “Most employees are used to borrowing money by using their payroll ATM as collateral. During payday, you will see long lines of borrowers at the ATM together with their lender, who first withdraws the loan payment before giving the rest of the borrower’s salary,” he narrated.

Chinatrust saw the need to give an alternative means of lending to the public using the formal banking channel, featuring a more structured lending and collection system without the need for a collateral, mostly based on the proper assessment of the borrower’s capacity to pay and credit history. With Chinatrust Salary Stretch, borrowers are afforded a means to improve their standard of living at less interest.

In 2003, the bank saw the opportunity to jumpstart its business by purchasing the portfolio of ABN Amro. “The deal helped us gather good quality corporate partners who were willing for us to lend to their employees,” avers Tony. Chinatrust was able to tweak its product offering to make it the bank of choice in personal loans with over 700 corporate partners.

In 2004, the bank aggressively sold Salary Stretch to the public, through its agent network, immediately doubling total loans released. The same feat was accomplished in 2005 as the business continued to grow, lending out over P2.48 billion in personal loans.

“Our success in the business required a lot of hard work of course, and we are fully aware that our peer banks have begun to take a look at the personal loans business seriously,” Tony said. “Instead of moving forward as forcefully in the past, we took a few steps back in 2006 to reassess the business. We introduced a more novel way to access loan proceeds via our Chinatrust Debit and ATM Card. We also beefed up our credit and after-sales support, to ensure the quality of our portfolio and account servicing.” Despite the conventional perception that unsecured personal lending is riskier than many lending businesses, Chinatrust ended 2006 with an NPL ratio that is lower than that of the banking industry.

In the coming months, the Bank aims to sustain its strong hold of the business through enhanced relations with corporate partners and agents. Chinatrust recently signed a memorandum of agreement with the People Management Association of the Philippines, the premier organization of Human Resource Practitioners and People Managers to become the latter’s major partner for the third straight year. The Bank likewise introduced its Same Day Loan, allowing borrowers to apply for a loan in the morning and get their cash before the end of the day.

Chinatrust (Philippines) Commercial Bank Corporation announced yesterday that the bank’s personal loan portfolio as of the end of the first semester of 2007 amounted to Php 2.23 billion. This represents an increase of approximately 28.1% over the Php 1.74 billion recorded for the same comparative period the previous year. Personal loans comprise the most profitable and best performing segment of the Bank’s consumer finance portfolio. The other components of the portfolio are mortgage loans and salary-deducted employee loans.

Chinatrust president Joey A. Bermudez said that this growth in the bank’s personal loan portfolio further strengthened Chinatrust’s market leadership in this product category, and was achieved by the bank notwithstanding the entry of new and extremely aggressive players in the industry.

“While other banks have almost single-mindedly focused on high net worth individuals, top corporations and SME’s, we have quietly developed a niche among the country’s working class” said Bermudez. “The vast majority of the Filipino population is composed of salaried workers, managers and executives whose revenue streams are constant and who have a constant need for credit to smoothen out occasional glitches in their finances brought about by large, non-recurring expenditures. Looking at the “paluwagan” phenomenon, the “vale” tradition, and the success of employees’ credit cooperatives, it is not difficult to appreciate the huge unsatisfied demand for credit in this segment. These individuals are the hardworking breadwinners of the family or upwardly mobile individuals who are better educated than before, who are more prudent in their use of funds and who are more conscientious in fulfilling their obligations.”

The bank’s personal loans and salary-deducted employee loans are offered under the Salary Stretch brand. They account for some 22% of the bank’s aggregate loan portfolio while contributing around 46% of the bank’s revenue stream from loans.

Bermudez further revealed that Chinatrust will continue to build on its personal loan portfolio as its flagship in the consumer finance business. “The business is adequately priced for risk and requires core competencies that are not exclusive to large banks. A medium-sized bank like us can hold its own against the big banks if it has the right elements. Robust infrastructure, good risk management, efficient distribution, and excellent service delivery are the key drivers of success in this business” he says. “Experience has shown us that customer acquisition is not driven by aggressive pricing or by extensive branch networks but by the ability to deliver the product on time.”

“We intend to keep our dominance in the personal loan business as we bring the product closer to our target market,” continued Bermudez. “We have made this product available in our branches in Metro Manila, Central Luzon, Cebu and Davao. We have also improved our credit process to make it possible for a borrower to apply for a loan in the morning and get his cash in the evening, without sacrificing our credit criteria.”

Chinatrust (Philippines) Commercial Bank Corporation reported that its total deposits grew to Php18.2 billion as of end-July, 2007, an increase of Php 2.0 billion from the P16.2 billion it recorded in the same period last year.

The increase was attributed by the bank’s president, Joey A. Bermudez to the expansion of the Bank’s sales force, the huge investments made by Chinatrust in upgrading its core deposit system, the unique cash management offerings that it has introduced, and the new branches that it opened in Las Piñas, Angeles City, Cebu City, Mandaue City, and Davao City. The bank further credited the growth in its deposit base to the manner with which it bundled its deposit products with its highly popular cash cards and personal loans.

“A unique driver in the continued growth in our deposits is the aggressiveness with which we promoted the use of the Chinatrust Visa Debit and ATM Cards,” announced Bermudez. “This eventually became a popular vehicle for disbursing the proceeds of our personal loan accounts and in locally distributing the remittances of overseas Filipino workers to their beneficiaries in the country. In fact, our cash card product has neatly complemented our internet banking product. Together, these two products have become the favorite transmission vehicle among remittance companies who want to assist overseas Filipino workers transmit funds real-time from their place of work abroad to their families in the Philippines via the electronic loading of the latter’s cash cards”. This has tremendously reduced the cost of sending money to the Philippines.

The bank intends to make its internet banking cum cash card offering available to other customers who presently suffer from cumbersome transmission arrangements. Recently, the bank signed agreements with the Social Security System to enable pensioners to receive their monthly allotments electronically instead of having to wait for their pension checks. The cash card will enable the pensioner to go to any Visa-accredited store to purchase goods or withdraw cash from any ATM. Other cash card variants offered by the bank include client-reloadable linked cards and gift cards. In the near future, these cash cards will also be made available to microfinance institutions who may want to make their loan and benefit disbursement systems more efficient and secure.

Of the bank’s total deposits as of end-July, 2007, Php 5.5 billion was made up of low-cost deposits which grew by 20% from the end-July, 2006 level.