Gotianun-led EastWest Bank (EW) posted a net income of P4.5 billion in the first half of 2020, 65 percent higher than the previous year. The higher income was due to better margins from its core lending and deposit-taking business and higher trading gains.
The bank reported a Return on Equity (ROE) of 17.4 percent.
“While we are happy to see the fruits of past investments and the efforts of every EWbanker to serve our customers better, we are well aware that we live in challenging times. We continue to build our reserves for loan losses, so we can move past this pandemic sooner and assure our depositors, concentrate in assisting our borrowers and prepare to participate in the economic recovery efforts after the pandemic,” Tony Moncupa, Jr., EW CEO, said.
“Our priority is to sustain the strength and resiliency of our balance sheet. We are positive we can meet, if not exceed, the P5 to 6 billion income guidance we gave earlier while building our reserves for loan losses. This puts EastWest in a good position as we remain hopeful the country will resume its robust growth after this pandemic,” he added.
Net revenues rose by 39 percent to P18.4 billion from the previous year. Net Interest Income, accounting for 73 percent of revenues, was at P13.4 billion, 38 percent higher than 2019 as the Bank sustained its industry leading margins.
Net Interest Margin improved by 142 bps to 8.3 percent. Non-interest income, on the other hand, increased by 42 percent or P1.5 billion, mainly driven by fixed income securities trading gains.
Operating expenses, excluding provisions for losses, increased marginally by 2 percent to P8.0 billion mainly from higher compensation costs. Cost-to-income ratio improved to 44 percent from last year’s 60 percent.
The bank booked higher loan loss provisions of P5.5 billion, 3.3x more than the previous year. The pre-emptive provisions are made to anticipate the economic impact to households and businesses from the virus-induced disruption.
EastWest’s Total Assets stood at P383.0 billion, 2 percent lower than the previous year. Loans were flat at P255.6 billion.
With less assets to fund, deposits increased by only 4 percent to P300.4 billion, with low cost CASA increasing by 22 percent. It’s CASA ratio improved to 63 percent from the previous year’s 54 percent, pushing its margins higher. Net NPL ratio was at 1.8 percent.