EastWest Bank net profit up 5% to P464M in Q1

MANILA, Philippines—Newly listed EastWest Banking Corp. grew its first-quarter net profit by 4.9 percent year on year to P464 million on higher interest and fee-based earnings as well as trading gains.

This translated to an annualized return on equity of 16.45 percent and return on assets of 2.05 percent for the Gotianun-led bank, still among the best in the banking industry.

In a disclosure to the Philippine Stock Exchange on Tuesday, EastWest Bank reported that three-month revenues amounted to P2.12 billion, up by 34.4 percent from the same period last year.  On the other hand, trading income from fixed income securities and foreign exchange accounted for 49.8 percent of the increase in total revenues, reflecting the favorable environment for banks’ treasury businesses during the period.

Core earnings from lending as well as fees/commissions rose by 18.1 percent year on year, which the bank attributed to the following:

* Expansion in assets by 14.4 percent to P86.6 billion;

* Expansion in consumer loan portfolio where margins are higher, consisting of credit cards, auto, personal loans and mortgages which grew by 25.7 percent;

* Growth in loans to businesses was at a more modest pace of 6.6 percent as the bank reduced its exposure to top-tier corporations—where margins are lower—while there was concentration of efforts to mid-sized enterprises;

* Increase in low-cost deposits under current account and savings accounts by 22.2 percent to P30.5 billion.

“What is important to us at this point is to build our revenue base. To do that, we will continue expanding our national footprint of branches and increase our coverage of the consumer and mid-sized corporate lending businesses and further improve customer service,” said EastWest Bank president Antonio Moncupa Jr.

“While competition is getting stiffer and the global economic prospects remain uncertain, we remain guardedly positive of the local economic prospects and we will continue with our expansion plans for the year,” Moncupa said.

The bank ended March with 144 branches, expanding its distribution network by 31 branches since end-2011. Part of the bank’s ambition is to grow this branch network to 350 by 2014.

On the expenditure side, EastWest Bank’s operating costs rose by 36.2 percent year on year to P1.3 billion in the first quarter.

This increase was attributed to ongoing expansion efforts as well as for manpower, technology and advertising costs. Provisions for doubtful assets also increased even as non-performing loans as a ratio of total loans dipped to 4.36 percent from 5.76 percent in 2011.

Capital adequacy ratio at end-March stood at 18.1 percent while tier 1 ratio was at 13.6 percent.