MANILA, Philippines - East West Banking Corp. (EWBC), the financial services unit of the Gotianun family, received a rating boost from Philippine Rating Services Corp. with a credit rating upgrade from PRS A plus to PRS Aa.
A company rated PRS Aa differs from the highest rated corporates only to a small degree, and has a strong capacity to meet its financial commitments relative to that of other Philippine corporates.
In upgrading the rating, PhilRatings took into account the bank’s sustained and strong earnings growth; tempered deposit growth rate; continued asset quality improvement; and adequate capitalization.
Over the past five years, EWBC’s assets more than doubled from P30.3 billion in 2006 to P75.9 billion as of end-September 2010 mainly through organic growth, although the acquisition of AIG Philam Bank added around P8 billion in loans and receivables.
In the nine months ending September last year, EWBC posted a net income of P1.5 billion, nearly three times the P531 million recorded in 2009, on an expanding asset base and consumer loan portfolio. Net interest income rose 23.2 percent to P3.2 billion.
“EWBC’s return on average assets and equity were at 2.7 percent and 23 percent, respectively, for the first nine months of 2010, making it one of the most profitable banks in the industry,” PhilRatings said.
PhilRatings also noted that EWBC’s non-performing assets ratio declined from 14.3 percent as of end-2009 to 12.8 percent in the same period last year.
The improvement was brought about by a larger loan portfolio and lower non-performing assets. The bank also had substantial provisioning for non-performing loans (NPL), with NPL coverage at 111.5 percent. EWBC also posted an 8.7 percent growth in deposits as of end-September 2010.
The bank’s capital adequacy ratio (CAR) was also higher at 15.9 percent during the period under review, well above the 10 percent minimum requirement of the Bangko Sentral ng Pilipinas.
EWBC expects to sustain its growth momentum given the improvement in the country’s economic situation and higher investment levels to boost the domestic market. The bank expects margins to narrow as asset growth is expected to come mostly from lower yielding corporate loans, mortgages and given a more competitive environment.
The bank also plans to improve operating efficiencies by zeroing in on enhancements in IT infrastructure to improve productivity and customer service via faster turnaround time. Such enhancements will also improve the monitoring and collection of accounts.
EWBC is likewise expanding its branch network and may offer services like leasing and underwriting.