EastWest Bank profit surges 60%

The Gotianun-controlled EastWest Bank (EW) reported a 60 percent jump in net income to R2.5 billion for the first six months of the year, sustaining the 70 percent and 54 percent growth in 2016 and the first quarter of 2017, respectively.

In a disclosure to the Philippine Stock Exchange, the bank said total assets grew 20 percent to R310 billion – driven by the growth in the bank’s loan portfolio.

Total loans increased 19 percent to R212 billion, led by the 34 percent growth in consumer loans. Consumer loans account for 71 percent of the bank’s total loans.

The consumer-focused universal bank maintained its industry leading net interest margin of 7.8 percent. The bank also reported that its net interest margin net of provisions for loan losses, a metric that makes comparison among banks more meaningful, was at 6.1 percent.

Net interest margin net of provisions for loan losses of listed universal and commercial banks was at 3.3 percent in 2016. Meanwhile, deposits stood at R255 billion, 24 percent higher versus the same period in 2016.

“The bank’s operating leverage continues to improve as we complete our store expansion program. Our businesses, particularly consumer loans and deposits, continue to post robust growth. On the other hand, credit costs tapered off as asset expansion were more on secured and lower credit cost sectors,” said EW President Bobby Reyes.

Net revenues increased by 16 percent to R12.1 billion year-on-year even as net revenues before trading income was 25 percent better. EastWest reported that its total trading revenues declined by 71 percent from R918 million in the first half of 2016.

“Our first half trading revenue was not as good as we hoped. We are happy though that our core recurring income has more than made up for the lower trading revenues. Our core revenues are improving at double the pace of the increase in operating expenses,” Reyes added.

EW Vice Chairman and CEO Tony Moncupa previously said that “...we will be sad if our 2017 income is less than R4.25 billion, or 25 percent better versus the R3.4 billion we booked in 2016...”

“It now appears that we will not be sad. Income growth will likely be higher than 25 percent. Based on the first half 2017 results and the trajectory of our businesses, we have a chance to end 2017 with above industry average return on equity. We are now looking at 2017 full year income of at least R4.8 billion,” Moncupa said.