MANILA, Philippines - East West Banking Corp. recorded a five percent drop in net earnings in the first nine months of 2014 due mainly to lower trading gains.
In a statement, the bank said from P1.73 billion in the first three quarters of 2013, net profit slipped to P1.6 billion in the first nine months this year.
EastWest Bank senior executive vice president and chief operating officer Jose Emmanuel U. Hilado said the slightly weaker earnings was anticipated.
“We expected our first nine months profit to be lower year-on-year because of last year’s one-off income from trading. That is fine as we continue to focus on recurring income from loans and deposits as well as fee-based revenues,” Hilado said.
Net interest income and fees increased 20 percent and 29 percent, respectively, on the back of healthy growth in loans and deposits.
Customer loans grew 28 percent year-on-year, as both consumer loans expanded 29 percent and corporate loans went up 26 percent.
The universal bank of the Filinvest Group said its consumer portfolio accounts for 54 percent of total loans. Net interest margin stood at 8.1 percent, among the highest in the industry.
Deposit levels stood at P128 billion, up 34 percent from the third quarter 2013. The year-on-year growth is largely attributable to the expanded branch store network.
EastWest Bank operates a combined of 393 consolidated branches and expects to close the year with at least 400, including subsidiary EastWest Rural Bank.
Net interest income stood at P7.3 billion this year or 20 percent higher than the P6.1 billion posted in the same period last year as interest income increased by 17 percent.
On the other hand, interest expense declined two percent largely due to the loan growth and lower cost of deposits.
Total operating expenses, including provision for loan losses, increased seven percent to P8.8 billion.
Hilado explained costs still have to improve as the bank’s branch stores become more productive. In the past two years, EastWest opened 178 branches, which drove costs higher this year.
“As expected, our costs will be most bloated this year due to the branch network expansion. We just have to bear this short term pain as we prepare EastWest to face up to the ever challenging competitive environment. We should see significant improvements starting next year,” the bank’s chief operating officer added.