EastWest profit slips 10% to P2 billion

MANILA, Philippines — East West Banking Corp.’s profit slipped in the first quarter but the Gotianun-led bank hopes to recover with higher trading gains for the rest of the year as it takes advantage of the record low interest rates.

EastWest reported its net income slipped by over 10 percent to P2.02 billion in the first quarter, from P2.25 billion during the same period last year.

The bank attributed the drop to a decline in loan takeup as economic activities slowed due to lockdowns imposed to curb the spread of COVID-19.

Operating income slid by close to a fifth to P7.82 billion while net interest income dipped by about 11 percent to P5.91 billion despite a decrease in interest expenses, especially deposit liabilities.

EastWest president and CEO Antonio Moncupa Jr. said the bank will bounce back for the rest of the year as the economy recovers from the impact of the pandemic. Loans are seen to pick up in the second quarter onward with the central bank’s decision to keep interest rates at an all-time low.

“Last year, there was sharp increase in trading gains because of the significant and furious drop in interest rates as monetary policy was loosened in response to the pandemic,” EastWest said.

Moncupa added provisions may go down this year to neutralize declines in net interest margins and trading gains, as opposed to 2020’s trend where growth in net interest margins and trading gains offset the increase in provisions.

“Fortunately, EastWest, as with the rest of the banks, have growing capital buffers which should allow the industry to remain resilient and help the economy recover once the virus is subdued,” he said.

For the first quarter, EastWest set aside P2.4 billion for provisions to accommodate loan losses. The bank’s non-performing loan ratio doubled to 10.4 percent, from 5.1 percent during the same period last year.

Sales of investment securities at amortized cost sank by 17 percent to P1.51 billion while service charges, fees and commissions steadied at P1.09 billion. Losses incurred in trading and securities widened six-fold to P635.28 million, from P107.61 million.

EastWest said banking institutions are projected to recover this year, but noted it would depend on how fast incomes bounce back for this rebound to materialize.

Last year EastWest booked a net income of P6.5 billion in the face of a pandemic that pressed it to double its provisions for loan losses.