Filinvest commits to strengthen EastWest Bank

MANILA, Philippines - The Filinvest Group is committed to grow its banking subsidiary, EastWest Banking Corp. through acquisitions and organic growth, a top official said.

Filinvest Development Corp. (FDC) and EastWest Bank chairman Jonathan Gotianun told reporters over the weekend that while they consider acquiring more banks, they have also been aggressively allocating internal funds to grow the distribution network of EastWest.

FDC allots five percent or P1.9 billion of its P38-billion capital expenditure budget for 2014 to fund the expansion program of EastWest.

 â€œWe are working hard to grow the bank organically, internally, but of course if there are opportunities, we will always take a look at it. If it makes sense if it will contribute to the success of the bank, in doing an acquisition we will definitely (acquire) but even without an acquisition, we putting in place the infrastructure for the growth of the bank,” Gotianun said.

EastWest president and CEO Antonio Moncupa Jr. confirmed that they have signified interest to take part in the recapitalization scheme of United Coconut Planters Bank (UCPB).

UCPB has announced its plan to tap partners or take in new investors to help in its recapitalization program.

“It (UCPB) has a very good customer base, good deposit level,”Moncupa said, when asked why they believe UCPB is a good buy.

Moncupa said they are only waiting for the terms of reference (TOR) to be released by UCPB.

 â€œWe are always looking for opportunities, we expect that the competition to acquire  is very intense at this point, everybody realizes that as interest rate goes down and competition gets intense, spreads will continue to be very very challenging so the only way is that there are two things that you could cope, you have to scale up or expand your revenue base and second, you have to commit lesser mistakes,” the bank official said.

 â€œThe reason we are expanding a lot on our distribution network is because we realize that while there would be opportunities to acquire but for every one open for acquisition there would be 10 or more banks competing for it. We don’t want to be relying much on that opportunities. So we have to grow organically,” Moncupa added.

He said they would want to take advantage of growing the bank aggressively while the economy is doing good.

In the next few months, the bank will be raising capital by P10 billion through Tier 2 notes and preferred issuances.

The bank expects its total branches to hit at least 400 by the end of this year from the present 376.

FDC president and CEO and EastWest Bank director Lourdes Josephine Gotianun-Yap, for her part, said while the bank’s income declined in the first quarter, they expect an improvement in the next months.

EastWest reported a 38 percent drop in net income in the first three months of 2014 to P455.7 million due to substantial decline in trading gains during the period.A P756 million drop in trading income was recorded in the first quarter.

EastWest’s lower trading revenues, however, were offset by the strong gains on its core banking businesses.

Its customer loans increased 37.1 percent to P102 billion, with both corporate and consumer lending businesses posting double-digit growth of 47.8 percent and 28.4 percent, respectively. 

Total deposits stood at P122.9 billion, or a growth of 41.8 percent as compared to the same period last year, with  low-cost deposits (CA/SA) growing by 50.5 percent on account of its expanded branch network.

The bank also maintained its industry-leading net interest margin of eight percent for the first three months of the year, driven by its significant consumer portfolio and improvement in its funding costs.  

EastWest has the highest proportion of consumer loans among universal banks, with 52 percent of its loan portfolio in consumer.