East West Bank nets P1.28 B in first sem

EAST West Bank CEO Tony Moncupa

MANILA, Philippines—East West Bank grew its first semester net profit by 40 percent year-on-year to P1.28 billion as the bank generated higher revenues from lending, securities trading and fee-based services.

This translated to a return on equity of 14.2 percent and return on assets of 2.1 percent, the bank said in a press statement late Monday.

For the second quarter alone, net profit amounted to P541 million or about 42 percent of the six-month bottomline. Net profit for the second quarter went up by 20 percent from the level a year ago.

“Clearly, we have the momentum. We remain confident that we will meet this year’s 25 percent net income growth guidance we announced early this year,” said EastWest president Antonio C. Moncupa Jr.

“So far, we are doing better than initially thought. We expected that growth in operating expenses will outstrip revenue growth this year and next although revenues appear to be contesting that expectations. We now rank seventh in terms of branch network, even as our branches are new and not fully productive yet. There is still a lot of work to be done and every EastWest banker is working hard to unlock the bank’s potential,” Moncupa added.

For the six-month period, the bank attained a 59-percent year-on-year increase in revenues to P7.1 billion while assets grew by 41 percent to P130.9 billion.

First-semester net interest income rose by 41 percent to P3.9 billion from a year ago as the bank grew its loan book by 51.5 percent focusing on high-margin segments. Total loans to businesses, mostly to mid-size corporates, went up by 60 percent from last year while consumer loans increased by 45 percent to P44.6 billion. All consumer loan segments – credit card receivables, personal loans, auto, and mortgages registered high double digit growth. The bank is now the fifth largest in credit card receivables in the country.

The robust increase in loans and the bigger and better deposits profile allowed EastWest to retain its industry-leading net interest margin of 8.2 percent for the first half – more than double the industry average.

“EastWest has distinguished itself among universal banks as the bank with a balance sheet that has the most focus on consumer and middle markets,” the bank said.

The bank also grew non-interest earnings by 87.4 percent. Total fees, excluding trading, was up by 62.7 percent by end-June to P1.6 Billion from a year ago. Fixed income and foreign exchange trading revenues went up by 121.9 percent. Gains on securities trading amounted to P1.5 billion, surging by 160 percent year-on-year.

On the funding side, the bank ended the semester with P101.5 billion in deposits, higher by 50 percent compared to the same period last year which the bank attributed to its expanded branch network. Transactional low-cost deposits – current account/savings accounts – grew by 61.5 percent to P58.1 billion.

EastWest is currently embarking on an expansion program that seeks to grow its nationwide footprint, including that of its rural bank subsidiary, to 400 by first quarter of next year from 324 at present. The bank raised P4.8 billion from an initial public offering last year to fund this branch rollout.

Meanwhile, total expenses rose by 51.7 percent to P4.2 billion. As an efficiency gauge, cost-to-Income ratio declined to 59 percent from 62 percent in the same period last year as a result of strong core banking and trading revenue growth.

EastWest’s capital adequacy ratio to risk assets stood at 16.8 percent with core or tier 1 capital ratio at 13.5 percent.