EastWest Bank reported a dip in its 2018 net income owing largely to higher deposit interest costs and lower trading gains during the year.
The bank said on Thursday it was able to post a net income of P4.5 billion in 2018, with a return on equity of 11 percent and return on assets of 1.4 percent. The 2018 net income is an 11.7-percent drop from the P5.1 billion the bank recorded in 2017.
“We like to look at our 2018 results as ‘half-full’ rather than ‘half-empty,’” EastWest President and Deputy CEO Jesus Roberto S. Reyes said. “While external developments were on the more challenging side, the bank managed to register a good level of profitability.”
The bank attributed its lower revenue growth to “margin compression due to significantly higher deposit-interest cost, lower fixed-income trading profits, and almost half-year suspension of its rural bank subsidiary’s lending program to teachers,” Reyes was quoted in a statement as saying.
The bank’s consumer loans, on the other hard, was reported to have risen during the year, with its auto, credit card and personal loans portfolio growing by 16 percent in 2018.
EastWest’s net interest income was up by P826.9 million to P19.3 billion, owing largely to the growth in its consumer loans.
“EastWest remains the most consumer-focused universal bank in the country with consumer loans accounting for 70 percent of its total loans,” the bank said.
Fees and commissions were at P4.9 billion, 9 percent lower than the previous year. The bank blamed this drop “largely to regulatory changes, particularly the suspension of its rural bank’s lending program and the reduced charges for delayed credit cards payment.”
Trading income, on the other hand, was lower by 34 percent, ending at P502.7 million for the year. The bank’s operating expenses excluding provisions for loan losses also increased by 10 percent to P15.4 billion—almost half of which were due to increased spending in training, advertising and higher documentary stamp taxes.
Provisions for loan losses went down by 16 percent from the previous year to P 3.8 billion as the bank’s consumer loan portfolio has largely matured.
“We are positive that 2019 will be a better year for EastWest as interest rates stabilize and the country’s growth story continues,” Reyes said.