EastWest Bank sees sustained profit gains

MANILA, Philippines — Gotianun-led East West Banking Corp. is targeting to sustain its double-digit income growth this year as it expects higher consumer loan demand, according to its top official.

On the sidelines of the BusinessWorld Economic Forum last week, EastWest Bank CEO Jerry Ngo said consumer lending drove the bank’s 32-percent income growth in 2023 and may continue to drive performance this year.

“We hope to be able to sustain something similar. Obviously, we’re going to have to invest more in order to have a higher growth trajectory. So that’s the balance that we need to keep,” he told reporters.

He said the bank needs to keep its investors satisfied, especially those looking for profitability amid the changing competitive landscape.

“We need to make sure that we’re continuing with our goals. We’re continuing to deliver. But also, we’re preparing ourselves for the future,” he said, adding that the bank is eyeing to invest more in technology.

In 2023, EastWest Bank’s net income stood at P6.1 billion on the back of double-digit growth in loan portfolio and stable funding sources.

Its net revenues increased by 26 percent to P35.7 billion, driven by the 25 percent rise in consumer lending portfolio. The consumer lending portfolio of EastWest accounts for 80 percent of total loans, the highest among its peers.

The bank’s total loans and receivables grew by 15 percent to P296.6 billion in 2023, amid the strong demand for consumer loans.

In the first quarter, the bank’s net profit grew by eight percent to P1.7 billion from P1.57 billion in the same period last year.

Ngo said the bank is also expecting its net interest margin to widen when the Bangko Sentral ng Pilipinas (BSP) starts to cut interest rates.

“We have loans that are fixed. As interest rates go up, our margins are increasing. But as interest rates go down because of the rate cut, that creates liquidity. So our margins will open. So interestingly, it’s going to be positive for us. (We’re) very different from the rest of the market,” he said.

Asked for his outlook on when the BSP will deliver rate cuts, the banker said it would all depend on the US Federal Reserve.

However, a rate cut is “bound to happen” as the tighter-for-longer rate environment needs to “ease up a little bit.”

“I think it is more important to ask whether they will continue to cut or they will keep it persistently high. A persistently high (rate environment), even at lower interest rates than today, will still be a higher for longer scenario,” he said.

“How does that translate into the main economy? How many people can actually support, sustain, survive that higher-for-longer scenario?”