Gotianun-led EastWest Bank grew its first semester net profit by 65 percent year-on-year to P4.5 billion as earnings from core lending and securities trading accelerated at a double-digit pace.
This performance suggested a second quarter net profit of P2.25 billion, up by 59.6 percent year-on-year, despite the challenging environment caused by the coronavirus (COVID-19) pandemic.
The higher six-month income was attributed to better margins from its core lending and deposit-taking business alongside higher trading gains. This was even as the consumer-focused bank jacked up by 3.3 times its loan loss provisioning to P5.5 billion compared to last year’s buffer.
The pre-emptive provisions were made to anticipate the economic impact of the COVID19 pandemic on households and businesses.
This six-month performance translated to a return on equity of 17.4 percent, EastWest disclosed to the Philippine Stock Exchange on Wednesday.
The bank’s net revenues rose by 39 percent year-on-year to P18.4 billion. Net interest income, accounting for 73 percent of revenues, rose by 38 percent year-on-year to P13.4 billion.
Net interest margin improved by 142 basis points to 8.3 percent. Non-interest income, on the other hand, increased by 42 percent, mainly driven by fixed income securities trading gains.
Meanwhile, operating expenses, excluding provisions for losses, increased by 2 percent to P8 billion, mainly from higher compensation costs.
The bank spent 44 centavos to earn every peso in the first semester, more efficient than last year’s spending of 66 centavos to earn every peso.
“While we are happy to see the fruits of past investments and the efforts of every EWbanker to serve our customers better, we are well aware that we live in challenging times. We continue to build our reserves for loan losses, so we can move past this pandemic sooner and assure our depositors, concentrate in assisting our borrowers and prepare to participate in the economic recovery efforts after the pandemic”, said Eastwest chief executive officer Antonio Moncupa Jr.
EastWest’s total assets stood at P383 billion, 2 percent lower than the level in the previous year.
The loan book stood flat at P255.6 billion relative to year-ago level.
EastWest’s deposits increased at a modest pace of 4 percent to P300.4 billion, with low cost-deposits increasing by 22 percent.
Low-cost deposits now account for 63 percent of the bank’s total deposits, higher than the 54 -percent share in the same period last year.
Bad loans accounted for 1.8 percent of total portfolio.
“Our priority is to sustain the strength and resiliency of our balance sheet. We are positive we can meet, if not exceed, the P5 billion to P6 billion income guidance we gave earlier while building our reserves for loan losses. This puts EastWest in a good position as we remain hopeful the country will resume its robust growth after this pandemic,” Moncupa said.
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