EASTWEST BANK POSTS 75% HIKE IN EARNINGS

EastWest Bank (EW) has posted a 75 % increase in its net income to  P2.3 billion  for the first quarter of the year on better margins from its core lending activities and trading gains.

However, it similarly increased its  loan loss provisions by ₱1.6 billion to ₱2.4 billion, 2.8x higher from last year in anticipation of COVID-19 fall out .

Net revenues rose by 45% to ₱9.6 billion from ₱6.6 billion in the same period last year while  interest income, accounting for 69% of revenues, increased by 42% or ₱1.9 billion.

Net interest margin (NIM) was at 8.1%, 173 bps higher from 2019 as market liquidity, and deposit rates normalized. In the early part of 2019, deposit costs were substantially higher and pushed bank’s margins lower. Non-interest income, on the other hand, increased by 52% or ₱1.0 billion, mainly driven by securities trading gains.

Meanwhile, operating expenses, excluding provisions for losses, increased by 14% to ₱4.6 billion from higher compensation costs. Cost-to-income ratio improved to 48% from last year’s 60%. Provisions for losses more than doubled to ₱2.4 billion, mostly in anticipation of the pandemic economic fallout.

"We were looking forward to another record year, at least ₱8.0 billion in income for 2020 – until COVID-19 struck. Now, we have to be ready that profits could be lower this year.

We have to book ‘anticipative provisions’ for loan losses and may need to continue doing so in the coming months as the economic damage to households and businesses from the virus-induced disruption unfolds”, Tony Moncupa, EastWest CEO said.