EastWest Bank net profit down 10% in the first quarter
EAST WEST Banking Corp. (EastWest Bank) saw its net income fall 10% in the first quarter due to lower interest income and business gains, as well as increased spending.
The bank said in a local exchange disclosure Thursday that its pro netFit amounted to P2 billion in the Fifirst three months of the year, down from the P2.3 billion it had reserved for the same period in 2020.
This translated into a return on equity of 14.4%, up from 18% last year. Return on assets also fell from 2.3% to 2.1%.
âThe decrease in income is mainly due to net interest income (NII), lower trading earnings and higher taxes. NII, on Sunffthe difference between interest income and interest expense was lower due to the decrease in loan volume and Fifixed income, âEastWest Bank said in a statement.
âIn 2020, banks were beset by higher provisions and a substantial drop in loan growth; it was offsecured by higher net interest margins and higher trading earnings, âsaid the managing director of EastWest Bank OffiCer Antonio C. Moncupa, Jr. was quoted as saying.
âFor 2021, it looks like lower provisions will offset lower net interest margins and lower trading gains. Fortunately, EastWest, like the rest of the banks, has growing capital buffers that should allow the industry to remain resilient and help the economy recover once the virus is brought under control, âadded Moncupa.
The lender’s quarterly report showed its net interest income of 5.91 billion pesos in the first quarter, down 11% from the 6.64 billion pesos seen in the same period a year ago. .
Loans and receivables fell 11% to P232.1 billion, which, according to the bank, was “mainly due to maturities and lower aggregate demand, as businesses and households delayed their loans.” Consumer loans fell 12% to 176.9 billion pesos, while business loans fell 10% to 56.8 billion pesos.
He noted that the credit card interest rate cap imposed by Bangko Sentral ng Pilipinas (BSP) also contributed to the decline in its NII and lowered its net interest margin to 7.5%. , against 8.1%.
Meanwhile, EastWest Bank securities trading and foreign exchange gains amounted to 854.1 million pesos during the period Fifirst quarter, “still higher than normal but 52% lower than in the first quarter of 2020”.
âThe bank expects trade gains to normalize in the future due to the constant level of interest rates. Last year there was a sharp increase in trading earnings due to the signiFicannot cut interest rates as the BSP eased monetary policy in response to the pandemic, âhe said.
Total operating profit was 7.83 billion pesos, 18% lower than the 9.57 billion pesos seen in the same period in 2020.
At the same time, operating expenses excluding loan loss provisions fell 7% to 4.2 billion pesos.
This brought its cost-to-income ratio to 53.9%, up from 47.6% last year.
EastWest Bank said improving its deposit mix in favor of low-cost current accounts, savings accounts or CASA deposits, as well as lower loan loss provisions due to the base thffects, helped offfixes the decrease in its net interest income.
Deposits with the bank rose 5% to 308.3 billion pesos, with CASA deposits increasing 9% to 15.8 billion pesos. The CASA ratio improved to 70% from 67% in the previous year. Term deposits fell 4% to 92.5 billion pesos.
Meanwhile, its loan loss provisions fell to 723.1 million pesos from 44 billion last year.
âMost of the pandemic-induced provisions were recorded in 2020. Unless the virus worsens and significantly infects more Filipinos, loan loss provisions are expected to be lower in 2021,â added Jacqueline S Fernandez, Director of Loans for EastWest. .
In contrast, EastWest Bank’s capital adequacy ratio (CAR) and Tier 1 (CET1) ratios improved to 14.4% and 13.2%, respectively, in March, after 12 , 5% and 11.3% last year.
This, while its capital increased by 12% to 57.2 billion pesos against 51.2 billion pesos.
Meanwhile, total assets ended at 385.7 billion pesos in March, almost flfrom the P384.1 billion seen a year ago.
The bank had a total of 392 branches as of March 31, including 213 in the Metro Manila area. Its network of automated teller machines (ATM) was at 587, consisting of 401 on-site ATMs and 186 offATMs on site.
EastWest Bank shares closed at 9.40 P each Thursday, up four centavos or 0.43% from the previous day.