EastWest Bank earnings drop 18% in H1

MANILA, Philippines - East West Banking Corp. has reported an 18-percent decline in net earnings in the first six months of 2014 to P1 billion, mainly due to lower trading gains, lower miscellaneous income, and higher income taxes.

However, core banking revenues grew double-digits on strong lending an deposit generation.

“The growth in core revenues was driven mainly by higher yielding consumer loans, coupled with lower trading cost as a result of current account/savings account (CASA) growth,” the universal bank of the Filinvest Group said.

Net interest income expanded 22.7 percent while the 26.2-percent growth in services fees strengthened non-interest gains.

The strong growth in core revenues was driven mainly by the growth in customer loans, coupled with lower funding costs.

Customer loans increased 29.1 percent to end the period at P106.1 billion, with both corporate and consumer lending businesses growing double-digits at 30.9 percent and 27.6 percent, respectively.

Total deposits grew 24.3 percent ending at P126.1 billion, with CASA growing faster, which was attributed to the bank’s expanded branch network.

EastWest Bank maintained its industry-leading net interest margin (NIM) at 8.1 percent for the first six months of the year driven by sustained growth in high yield consumer loans and improvement in funding costs.

The bank posted double-digit growth across all consumer business segments, and it has the highest proportion of consumer loans among universal banks at 54 percent of total consumer loans.

The bank’s NIM helped net interest income to increase 22.7 percent to P4.8 billion, as interest income grew 16 percent while interest expense declined 15.8 percent, even as deposits grew 24.3 percent.

Service charges, fees and commission grew 26.2 percent to P1.5 billion, coming from transactional and servicing fees of consumer lending and branches. The rest of the other operating income declined 56.4 percent to P858.4 million, as a result of the decline in securities trading gains and due to one-off miscellaneous income posted last year.

Total operating expenses, including provision for credit losses, was flat at P5.9 billion.

Annualized return on assets (ROA) and return on equity (ROE) stood at 1.4 percent and 10.6 percent, respectively, for the first half of 2014.

Its total assets also went up 19.1 percent to P155.9 billion versus the same period last year.

Capital adequacy ratio (CAR) and Tier 1 were 11.7 percent and 10.9 percent, respectively, for the first semester of 2014.

 “The bank’s CAR will improve starting third quarter with its issuance of P5-billion Basel III-eligible Tier 2 notes in July,” Rene K. de Borja Jr., senior vice president and chief finance officer of EastWest Bank, said.

The Filinvest financial institution continues to open more branches, totaling 178 in the past two years. It opened 39 branches in 2014, which brings its total consolidated branch network to 386, with 339 EastWest branches and 47 EastWest Rural Bank branches.

Borja said the bank would continue to focus on consumer and middle market segments, and optimize its expanded branch network, which are good sources of recurring income base.