Gotianun-led EastWest Bank plans to book P10 billion in provisions for probable loan losses this year to prepare for the fallout from the coronavirus (COVID-19) pandemic.
Before the pandemic erupted, the bank was originally expecting to book P12 billion in profits coming from the growth of its core deposits and loans businesses and trading gains from government bonds. However, it is now setting aside higher provisions for bad loans in anticipation of the adverse economic impact of the virus to the economy and its borrowers.
“We were in a roll after our banner year in 2019. This year is supposed to be even much better. But it was not to be. We are nevertheless happy that our balance sheet is resilient and could churn good profits that we can face this pandemic squarely,” EastWest bank chair Jonathan Gotianun said during the bank’s stockholders meeting on Thursday.
The P10-billion loan loss buffer targeted for this year is equivalent to 4 percent of its projected loan book, compared to the 1.5 percent ratio last year.
EastWest reported to its shareholders that as of April 2020, it was almost halfway to its target, with total provisions at P4.5 billion, equivalent to 1.7 percent of its total loans.
“The truth is we really don’t know yet the damage from the pandemic. But we think the prudent thing to do is to anticipate that the pandemic will adversely affect some segments of our borrowers. While we have increased our provisions for bad loans, we stand ready to assist our borrowers to get through these challenging times” Gotianun added.
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