China Banking Corp., partly owned by mall magnate Henry Sy, reported a net income of P884 million for the first quarter of the year, up 26 percent from the P703 million recorded in the same quarter in 2008.

In a statement, the bank said its profits were driven by sustained growth in its core banking activities.

Interest income from loans increased 25.97 percent to P2.2 billion as net loans expanded by 19.12 percent to P101.83 billion and total deposits climbed 19.8 percent to P170.66 billion. Net interest income rose 36.2 percent to P1.92 billion.

China Bank's fee-based revenues went up 17.95 percent due to higher trading and foreign exchange gains, it said.

Despite its continued branch expansion, the bank kept its expenses under control, with its cost-to-income ratio decreasing from 59.74 percent in the first quarter of 2008 to 58.06 percent in the same period this year.

The bank said it is on track with its target to reach 300 branches by 2010, opening five of the planned 40 branches this year. It currently has 221 branches and 331 automated teller machines nationwide.

As of end-March, China Bank's total resources stood at P207.79 billion and its total capital funds amounted to P27.78 billion. This translates to a capital adequacy ratio of 13.34 percent, above the minimum regulatory requirement of 10 percent.

Ricardo Chua, China Bank executive vice president and chief operating officer, said the bank will continue with its plan to broaden revenue sources by focusing on building its lending portfolio and increasing other fee-based businesses such as private banking, cash management and bancassurance.

"The first quarter income is very encouraging considering that market conditions continue to be challenging," he said.