East West Bank forays into stocks, insurance

Fresh from an P8-billion capital-raising exercise, Gotianun-led East West Bank plans to invest in new businesses like stock and insurance brokerage.

Since debuting on the Philippine Stock Exchange three years ago, EW has more than doubled its branch network to reach 408 to date, exceeding its target. Confident that it has reached the critical mass in terms of distribution channel, top bank officials said Friday that from hereon, the bank would be selective in branch expansion, focusing instead on increasing efficiency and productivity as well as diversifying revenue stream.

In the first quarter of the year, EW grew its net profit by 32 percent year-on-year to P600 million, driven by a strong growth in recurring revenues. Net interest income went up by 18 percent year-on-year to P2.7 billion in the first three months.

The bank’s loan book expanded by 21 percent year-on-year to P123.8 billion in the first quarter.

EW president Antonio Moncupa Jr. said that if the bank won’t grow its net profit by 25 percent annually, “we’ll be sad.”

Moncupa said EW had gone through the worst part of its branch expansion program, which expectedly gnawed at profitability in the past due to the increase in expenses. “The expansion is done. It will now proceed at a more normal pace,” he said.

When it listed on the PSE three years ago, EW committed to increase branches from 125 to 350. This has already been exceeded, ending 2014 at 405 and further to 408 so far this year. Even at 300 branches, Moncupa said this would have been enough to cover the whole archipelago.

“We’re going to be more choosy. We’re looking at anywhere between 15 to 20 (new branches) on an annual basis,” said EW chief finance officer Rene de Borja Jr.

Having put in place the distribution network, EW plans to make use of its universal banking license— which gives it leeway to embark on other allied and non-allied businesses outside of regular commercial banking—to build new businesses and boost productivity.

“In the spirit of low interest rates, the economies of scale is very much pronounced so we need to find that level where our efficiency or productivity is comparable to the big banks of the country,” Moncupa said.

In the next few years, EW aims to grow its balance sheet to between P300 billion and P400 billion to intensify its competitive footing. At present, EW has total resources of P184.7 billion and expects to breach the P200-billion mark by next quarter. Doris Dumlao-Abadilla