East West profit jumps 75% in Q1 to P 2.3B

Gotianun family-led East West Bank grew its net profit in the first quarter by 75 percent year-on-year to P2.3 billion even as the bank jacked up loan loss provisioning to prepare for the fallout from the coronavirus pandemic.

The bank increased its buffer against potential credit losses by about 2.8 times last year’s provision to P2.4 billion in the first quarter.

The higher income in the first three months was driven by better margins from its core lending and deposit-taking business alongside higher trading gains and improved operating efficiency, the bank disclosed to the Philippine Stock Exchange on Tuesday. This performance translated to a return on equity of 18 percent.

“We were looking forward to another record year, at least P8 billion in income for 2020—until COVID-19 struck. Now, we have to be ready that profits could be lower this year. We have to book anticipative provisions for loan losses and may need to continue doing so in the coming months as the economic damage to households and businesses from the virus-induced disruption unfolds,” EastWest chief executive officer Antonio Moncupa said.Net interest income, accounting for 69 percent of revenues, increased by 42 percent year-on-year, or P1.9 billion. Net interest margin increased by 173 basis points to 8.1 percent from the year-ago level as market liquidity and deposit rates normalized.

In the early part of 2019, deposit costs were substantially higher, then curbing bank margins.

Noninterest income, on the other hand, increased by 52 percent, or P1 billion, mainly driven by securities trading gains. —Doris Dumlao-Abadilla INQ