EastWest flags tougher 2026 as risks mount

MANILA, Philippines — East West Banking Corp. expects a more challenging operating environment in 2026 as external shocks and inflationary pressures weigh on consumption, prompting the Gotianun-led bank to adopt a more cautious stance on growth while strengthening buffers against potential risks.

Speaking during an online media briefing, EastWest CEO Jerry Ngo said the biggest threat this year lies in uncertainties coming from outside the country.

“The biggest risk is basically… the unknown unknowns,” Ngo said, noting that many of the shocks affecting the economy are “outside of our control” and driven by developments abroad.

He explained that these external disruptions are feeding into supply-side shocks, particularly inflation, which could eventually translate into weaker affordability and higher credit risk.

Ngo said the bank expects consumer activity to moderate this year, especially as higher fuel prices and global uncertainties dampen spending.

“We are expecting consumption to be a bit more muted than what we have previously seen,” he said, adding that the shift toward essential spending is already becoming evident.

He noted that discretionary purchases may take a backseat as households prioritize necessities, a trend the bank is factoring into its strategy through partnerships tied to everyday spending.

Against this backdrop, EastWest expects loan expansion to be more subdued in 2026 as it tightens risk management.

“Loan growth is expected to be more muted. Provisioning will continue… prudence and discipline is the way forward,” Ngo said.

The bank has been building buffers ahead of potential stress, increasing provisions and raising its non-performing loan (NPL) coverage ratio to above 80 percent, higher than the typical 60 to 70 percent range for consumer portfolios.

Ngo added that provisioning would continue on a steady path, with no abrupt changes but sustained increases to stay ahead of risks.