Gotianun-led East West Banking Corp. (EastWest) may hold off declaring dividends until next year due to expansion plans, its top chief said.
“We don’t expect to declare dividends this year or maybe next year too. [It] also depends on our future expansion plans,” EastWest CEO Antonio C. Moncupa, Jr. said in a recent stockholders’ meeting.
While Moncupa did not explain further the initiative, he said that the expansion could benefit the shareholders in the future as well.
EastWest “is in a state of expansion, which means that it’s with consumer capital… [E]xpansion is a very positive project for our shareholders,” he explained.
Apart from this, the EastWest chief said that the bank has become more conservative in terms of capital management with the coronavirus pandemic.
Moncupa clarified, however, that there was still a chance to declare dividends this year given that the bank was earning well.
According to its 2019 annual financial report, the listed bank has total unappropriated retained earnings available for dividend declaration amounting to P20.97 million.
The last time EastWest declared dividends was in 2018, according to its disclosure to the local bourse, issuing them in the form of 750 million stocks.
In the same meeting, Moncupa revealed that the bank was seeing around P10 billion in provisions for bad debts this year as it gears up from the financial impact of the government measures addressing the pandemic.
This estimate is close to 4 percent of its projected total loan portfolio this year.
As of April, EastWest has booked provisions for nonperforming loans amounting to P4.5 billion, which is nearly half the anticipated 2020 full-year figure. Comparing this to the first quarter, provisions grew by almost twofold from P2.4 billion.
With this estimate, Moncupa said that EastWest’s income for 2020 would take a hit.
EastWest is projecting its net income to only reach around P5 billion to P6 billion this year, which is lower than its earlier target of P12 billion prior the pandemic. The bank’s latest estimates are lower than its last year’s net income amounting to P6.24 billion.
“The bad news is we will not have the banner year we’d hoped we will this year,” he added, noting there were still many uncertainties. Still, he said that the bank’s “balance sheet is resilient, and it could churn good profits.”
Moncupa reported that the bank’s net income amounted to P2.7 billion as of end-April.
As of quarter ending-March, EastWest’s total assets inched up 3 percent to P384.1 billion while loans jumped by 6 percent to P261.4 billion. Deposits, meanwhile, hiked by 3 percent to P294.3 billion for the period.