EastWest sees slower loan growth this year

MANILA, Philippines — East West Banking Corp. expects loan growth to settle at the high single-digit to low-teens range this year as the lender becomes more selective in consumer credit and shifts incremental lending toward secured and lower-risk segments amid elevated credit costs.

During an online investor briefing, EastWest CEO Jerry Ngo said the bank is deliberately moderating expansion after several years of rapid growth in its consumer portfolio.

“We’re seeing more measured pace of growth this year, probably high single-digit to low teens,” Ngo said. “Our strategy remains deploying capital efficiently while maintaining a safe, comfortable level of capital.”

The lender is looking to expand more aggressively in mortgages, auto loans and small and medium enterprise business loans to complement its higher-yielding unsecured consumer portfolio.

“We’re moving towards expanding more our secured businesses,” Ngo said. “We want to make sure that there’s a balance as we go through the cycle.”

EastWest’s loan portfolio grew by 10 percent to P396.7 billion as of end-June, while consumer loans accounted for P331.2 billion. Business loans reached P59.2 billion during the period.

The more cautious growth stance comes as the bank deals with higher credit costs following the rapid expansion of its unsecured portfolio over the past three to four years.

Provisions for potential loan losses reached P10.1 billion in the first half, equivalent to a credit cost of 5.2 percent, as EastWest accounted for portfolio seasoning and a more challenging macroeconomic environment.

Ngo said it was still too early to determine whether provisioning had already peaked.

“Its too early to tell. Not sure if this has peaked yet because there’s a lot of things outside our control,” he said. “We’re also expecting credit costs to remain elevated as newer accounts season.”

EastWest expects greater visibility as its loan portfolio matures, with credit costs likely to normalize gradually thereafter.

The bank has already tightened origination standards by raising credit score cutoffs and income requirements while reducing exposure to selected higher-risk segments.

It is also cutting credit limits for accounts showing elevated risk signals and redirecting new lending toward secured, seasoned or lower-risk borrowers.

Ngo stressed that the measures do not signal a retreat from consumer banking.