EastWest 2018 profit down 10.8%
Gotianun-led EastWest Bank posted a net income of P4.5 billion last year, down by 10.8 percent from the previous year, due to smaller lending margins, slower treasury gains and the disruption of a crucial lending program for teachers.
Despite a decline in net profit last year, however, EastWest maintained a higher return on equity of 11 percent, the highest among its peers for the last three years.
“While external developments were on the more challenging side, the bank managed to register a good level of profitability. We are positive that 2019 will be a better year for EastWest as interest rates stabilize and the country’s growth story continues,” bank president and deputy CEO Bobby Reyes Reyes said in a disclosure to the Philippine Stock Exchange.
Net revenue last year was P25.5 billion, flat from the level in 2017. This was attributed by Reyes to “margin compression due to significantly higher deposit interest cost, lower fixed income trading profits, and almost half year suspension of its rural bank subsidiary’s lending program to teachers.”
The bank extends salary loans to teachers under an accreditation program of the Department of Education (DepEd). In the first half of 2018, this program was suspended as DepEd fine-tuned its processes. The program resumed only in the second half of last year.
EastWest Bank sustained the growth of its consumer loans. Its auto, credit card and personal loans portfolio grew by 16 percent last year. Consumer loans accounted for 70 percent of its total loan portfolio.
Net interest income rose by P826.9 million to P19.3 billion, as the growth in its consumer loan volume offset lower interest margins. Its net interest margin at 7.4 percent continues to be the highest among universal banks.
Banks absorbed a significant amount of higher interest costs in 2018 due to tight competition for market share.
The bank grew its total resources last year by 16 percent to P367.4 billion. —DORIS DUMLAO-ABADILLA
