MANILA, Philippines — Gotianun-led EastWest Banking Corp. sees its earnings hitting P4.5 billion this year after jumping by 49 percent to P1.51 billion in the third quarter from a year-ago level of P1.29 billion.
From January to September, the listed bank reported a 40.5-percent slump in net income to P3.03 billion from P5.1 billion in the same period last year.
EastWest president Jackie Fernandez said the bank’s net income for 2022 is expected at P4.5 billion, with fourth quarter at P1.5 billion or P6 billion on an annualized basis.
“While the income level is expected to be flattish, unlike 2021 when quarterly income was on a decreasing trend due to loan run-offs this year, income is on the uptrend as the bank started to recover lost loan volumes and has rebuilt its fixed income portfolios,” Fernandez said.
The bank’s net income increased by around P500 million in each of the last two quarters or from P500 million in the first quarter, P1 billion in the second, and P1.5 billion in the third quarter as its efforts to rebuild its loans and fixed income portfolio continue.
EastWest traced the recovery in the third quarter to the increases in loans and fixed income securities.
Its loan book increased by 10 percent, with consumer loans and business loans increasing by 11 and six percent, respectively.
On the other hand, the year-to-date drop in earnings was due to lower trading revenues by P2.3 billion. In 2021, trading gains were above normal levels due to the accommodative monetary policy that drove interest rates to very low levels.
Core revenues, excluding trading income, inched up by four percent to P20.4 billion from P19.5 billion, while return on equity (ROE) was at 6.8 percent.
Total assets inched up by two percent to P405.2 billion, two percent higher than the previous year.
Net interest income stood at P17.1 billion, five percent higher year on year, translating to a 50-basis point improvement in net interest margin (NIM) to 7.1 percent.
For the third quarter alone, net interest income was 24 percent higher than in the same quarter last year, reversing previous quarters’ declines as the bank’s growth efforts continue to gain traction.
Fees and other income, meanwhile, inched up by three percent to P3.2 billion.
Operating expenses slipped by one percent to P12.6 billion.
EastWest’s provisions for losses surged by 65 percent to P3.54 billion from January to September compared to P2.15 billion in the same period last year. For the third quarter alone, the amount doubled to P1.44 billion from P718 million in the same quarter last year.
“The bank believes that the current level of provisions is adequate as it shakes off the residual adverse impact of the pandemic,” EastWest said in a statement.
Its deposit base was steady at P319.1 billion. The bank started to deploy its liquidity buffers, which were at higher than normal levels, to fund increases in loans and fixed income securities.
“While CASA ratio improved to 80 percent from the previous year’s 73 percent, we expect deposit cost to go higher as the bank starts to source new deposits and the impact of higher interest rates start to manifest. We also expect some CASA depositors to shift to better yielding time deposits as opportunity costs of holding CASA increase.” EastWest head of retail banking Gerry Susmerano said.
The bank’s capital ratios improved to 13.9 percent and 13.1 percent for capital adequacy ratio (CAR) and common equity tier 1 (CET1) ratio, respectively, both well above regulatory requirements.