MANILA, Philippines ? The Philippine unit of Taiwan-based banking giant Chinatrust Commercial Bank grew its net profit in 2010 by 20.84 percent to P410 million, on the back of improved interest margins and large treasury earnings.

This translated to 7.3 percent return on equity and 1.6 percent return on assets of Chinatrust (Philippines) Commercial Bank.

Better margins were on account of lower cost of funds while income from treasury operations substantially increased, the bank in a disclosure to the Philippine Stock Exchange on Thursday.

"The favorable economic environment that prevailed last year allowed Chinatrust to take advantage of the opportunities in the bond markets," the bank. Trading gains and foreign exchange gains thus amounted to P307 million, an increase of 90.33 percent from a year ago.

Net interest income on the other hand, amounted to P1.56 billion for the same period under review, or an increase of 3.6 percent from a year ago.

For the year 2010, Chinatrust has set aside some P286.95 million as provisions for potential loan losses.

The bank?s capital adequacy ratio to risk assets ? a key measure of financial strength ? was recorded at 24.68 percent as of year-end, higher than industry average and substantially higher than the BSP requirement of 10 percent.