• By The Financial District

EastWest Income Slips, 2022 Income Guidance Retained

Gotianun-led EastWest Bank (EW) booked a net income of ₱507.6 million for the first three months of 2022 from the ₱2.0 billion it reported for the same period last year, primarily due to lower fixed-income trading revenues and lower income from loans.

Photo Insert: Overall, EW’s total revenues declined by ₱2.0 billion or 26%, to ₱5.8 billion.

The Bank, however, kept its income guidance for 2022 to be around ₱4.0 billion, near its 2021 income.

Total trading revenues dropped by ₱1.1 billion as global and local interest rates increased, even as the Bank kept a lower level of fixed-income securities. EW has 12% of its assets in fixed-income investments compared to the industry average of 26%.

“The Bank remains cautious on its investment activities and is keeping a higher level of liquidity as we watch the development in the interest rate market. However, once we deploy the excess liquidity into higher-yielding securities, we expect to generate additional annual revenue of at least ₱2.0 billion.” EW Senior Executive Vice President and Head of Treasury and Markets, Raffy Algarra said.

Meanwhile, net interest income for the first three months of 2022 stood at ₱5.2 billion, 12% or ₱700.8 million lower than the previous year, due to lower loan levels and fixed-income income securities. In addition, the Bank’s consumer loans declined by 11.0% or ₱19.4 billion in the last 12 months as bookings remained lower than customer loan pay downs.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

“The Bank has resumed its loan rebuilding activities, with 100% of our workforce back to office work. We expect our consumer loan portfolio to start showing net increases in the next two months.” EW Chief Lending Officer Jackie Fernandez said.

Overall, EW’s total revenues declined by ₱2.0 billion or 26%, to ₱5.8 billion.

Business: Business men in suite and tie in a work meeting in the office located in the financial district.

“We have a weak Q1 income due to the lag effect of the pandemic. Our consumer-focused balance sheet bucked the trend, and allowed the Bank to book higher income while the overall industry was going lower in 2020. We now have the reverse. Our Q1 declined while the industry as a whole increased as the full impact of the consumer decline is fully manifesting. We expect to align with the industry trend as the pandemic wanes, and the economy returns to higher growth. We expect 2022 core income to be around 2021 levels and get back to double-digit equity return in 2023.” Fernandez added.

EastWest Bank’s total assets as of March 2022 stood at ₱404.2 billion, or 5% higher than the same period last year. Likewise, total deposits grew by 5% to ₱323.9 billion, driven by CASA deposit growth of 14% to ₱245.3 billion. CASA ratio improved to 75% from the previous year’s 70%.

Banking & finance: Business man in suit and tie working on his laptop and holding his mobile phone in the office located in the financial district.

The Bank’s capital ratios improved to 15.2% and 14.0% for Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) ratios, well above regulatory standards. The Bank expects to deploy its excess capital to rebuild its loan portfolio while maintaining its target CET1 ratio of 12 to 13%.

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