Gotianun-led EastWest Bank grew its first semester net profit by 60 percent year-on-year to P2.5 billion on higher earnings from core lending.
This first half performance is seen putting EastWest within a striking distance to its P4.25 billion net profit guidance for the full year, potentially 25 percent better than the level booked in 2016.
The six-month earnings also jacked up the bank’s return on equity to 14.1 percent from 9.8 percent in 2016. Return on assets also improved to 1.7 percent compared to 1.3 percent last year.
EastWest vice chair and chief executive officer Antonio Moncupa had earlier said that the bank would we sad if 2017 income would fall below P4.25 billion.
“It now appears that we will not be sad. Income growth will likely be higher than 25 percent. Based on the first half 2017 results and the trajectory of our businesses, we have a chance to end 2017 with above industry average return on equity. We are now looking at 2017 full year income of at least P4.8 billion,” Moncupa said in a press statement.
The bank’s net revenues increased by 16 percent year-on-year to P12.1 billion in the first semester. Taking out trading income, net revenues grew by 25 percent during the period. On the other hand, trading revenues declined by 71 percent.
“Our first half trading revenue was not as good as we hoped. We are happy though that our core
recurring income has more than made up for the lower trading revenues. Our core revenues are
improving at double the pace of the increase in operating expenses,” EastWest president and deputy CEO Bobby Reyes said.
The bank increased its loan book by 19 percent to P212 billion, led by the 34 percent growth in consumer loans which now account for a lion’s share or about 71 percent of total loans.
EastWest maintained its industry-leading net interest margin of 7.8 percent. The bank also reported that net interest margin net of provisions for loan losses, a metric that makes comparison among banks more meaningful, stood at 6.1 percent compared to the industry ratio of 3.3 percent in 2016.
Meanwhile, the bank’s deposit base ended the semester at P255 billion, 24 percent higher versus the same period in 2016.
“The bank’s operating leverage continues to improve as we complete our store expansion program. Our businesses, particularly consumer loans and deposits, continue to post robust growth. On the other hand, credit costs tapered off as asset expansion were more on secured and lower credit cost sectors,” said Reyes.
On the expenditure side, the bank’s operating expenses increased by 14 percent to P6.5 billion.
EastWest’s total assets grew by 20 percent to P310 billion driven by the growth in the bank’s loan portfolio.