EAST West (EW) Banking Corp. reported a 14-percent decline in its net income in the first nine months of the year due to lower trading gains and loan demand.
The subsidiary of the Gotianun family-led Filinvest Development Corp. said its net income reached P5.1 billion in January to September this year, down from the P5.9 billion in the same period last year. The bank’s return on equity (ROE) translated to 11.7 percent.
“The pandemic has not been easy. While EW remained profitable through the pandemic, this is not the way we wish to do our business. We are looking forward to deploying more capital and recoup lost loan volumes,” EW CEO Antonio C. Moncupa Jr. said.
Moncupa said they plan to “get back to the business of supporting businesses and households.”
“We join the nation in the hope that indeed, the good Covid statistics we see everyday signals the tail-end of the pandemic,” he added.
The bank’s total revenues for the first nine months was lower by 18 percent to P21.8 billion due to lower net interest income (NII) and lower trading gains. NII—or the difference between interest income and interest expense—was down by 18 percent to P16.4 billion.
The bank blamed weak loan demand, faster run-offs of the higher yielding consumer loans, particularly automobile and personal loans and the interest rate cap in credit cards for the decline.
EW’s trading gains of P2.3 billion was also 33 percent or P1.1 billion lower than last year. Fee income, meanwhile, was lower by 4 percent to P2.8 billion from the lower loan releases and transaction levels.
Meanwhile, provisions for losses were also lower by 72 percent to P2.1 billion. The bank said most of the pandemic-induced provisions have been recognized in 2020 and expected loan losses started to stabilize.
The lower bookings of new consumer loans since the pandemic started also contributed to the lower provisions.
“Consumer loans provisions are typically heavy upfront. We believe that we are way past the peak of the pandemic-induced higher loan losses, and provisions will continue to be at lower levels until the next cycle of recovery and higher consumer loan bookings” EW Chief Lending Officer Jacqueline S. Fernandez said.
EW’s total loans were lower by 10 percent to P220.9 billion, mostly from the consumer segment’s weak demand. Deposits, meanwhile, had a slight decline of 2 percent to P318.6 billion as funding needs declined. The decline was mainly from the higher-cost time deposits, which decreased by 23 percent. CASA deposits, however, increased by 9 percent to P231.5 billion. CASA ratio improved to 73 percent, from the previous year’s 65 percent.
The Bank’s capital adequacy ratio stands at 15.1 percent while its Common Equity Tier-1 ratio is at 14 percent; both are above regulatory requirements.