EastWest Bank profit drops
EAST WEST Banking Corp. (EastWest Bank) posted lower net profit in the first quarter on the back of low contributions from its rural bank and security trading arms.
In a disclosure to the Philippine Stock Exchange on Wednesday, the Gotianun-led EastWest Bank said its net income in the January to March period was at P945.4 million, down 22% from the same period last year.
EastWest Bank attributed the lower net income to the “lower contribution from its whollyowned subsidiary EW Rural Bank and its Securities Trading desks.”
“The Department of Education suspended new loans to teachers pending the renewal of the terms of the [d]epartment’s Automatic Payroll Deduction System ( APDS) last November 2017,” the lender said, adding that the move “heavily impacted” EastWest Bank’s rural lender EW Rural Bank (EWRB) as loans to public school teachers was its main business.
“On EWRB, we will continue to work to see how to proceed on the loans to public school teachers,” EastWest Bank President Jesus Roberto S. Reyes was quoted as saying in the statement.
The bank’s total operating income was also down 4.8% last quarter due to the suspension of new loans.
“We remain optimistic this can resume as our loans to public school teachers have the most favorable terms for the borrowers among similar lending program for the public sector,” Mr. Reyes added.
Aside from this, the bank also incurred trading losses of P136.5 million in the first quarter.
STOCKS FELL on Wednesday, following the downtrend in regional markets caused by rising US Treasury yields along with fresh geopolitical tension in the region.
The bellwether Philippine Stock Exchange index (PSEi) dropped to the 7,700 level intraday before trimming losses at the closing bell, finishing 0.20% or 16.41 points lower to 7,869.56. The broader all-shares index also went down 0.32% or 15.34 points to 4,754.80.
“We followed the decline in regional markets after Treasury yields hit the highest level since 2011,” AB Capital Securities, Inc. Senior Equity Analyst Lexter L. Azurin said via text.
Ten-year US Treasury yields peaked on Tuesday to 3.08%, its highest level in seven years.
“Meanwhile, there are renewed geopolitical tensions amid the US- North Korea summit. This prompted some investors to book their profits given that we’ve rallied about 5% from the recent low,” Mr. Azurin said.
North Korean leader Kim Jong Un has threatened to suspend its scheduled Singapore summit with US President Donald J. Trump on June following joint military drills conducted by the US with South Korea.
North Korea also suspended talks with South Korea because of the military drill, just a few weeks after its leaders agreed to work on the denuclearization of the Korean peninsula and to officially declare an end to the Korean War.
Following this, overnight, the Dow Jones Industrial Average gave up 0.78% or 193 points to 24,706.41. The S& P 500 index declined 0.68% or 18.68 points to 2,711.45, while the Nasdaq Composite index dipped 0.81% or 59.69 points to 7,351.63.
Back home, four sectoral counters ended in the red, with holding firms leading the decline as it dropped 0.93% or 73.46 points to 7,776.76. Industrials slipped 0.66% or 74.08 points to 11,111.66; services lost 0.25% or 3.90 points to 1,549.96; and financials down 0.02% or 0.52 point to 1,942.95.
Meanwhile, the property sector climbed 0.86% or 33.38 points to 3,903.88 while mining and oil firmed up 0.62% or 63.14 points to 10,254.48.
Some 661.03 million issues switched hands, resulting in a turnover of P6.38 billion, lower than the previous session’s turnover of P8.66 billion.
Decliners trumped advancers, 106 to 84, while 53 issues were unchanged.
Foreign investors turned sellers, clocking in net outflows of P479.58 million versus net purchases of P293.36 million on Tuesday.
Most Southeast Asian stock markets also slipped on Wednesday tracking Asian peers after North Korea called off talks with Seoul while the 10-year US Treasury yields hit a seven-year high, sparking fears of faster fund outflows from regional equities.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.20% after the US 10year paper crossed 3% on Tuesday, hurting US equity markets on concerns it would undercut stock valuations. •