GOTIANUN-led EastWest (EW) Bank’s net income of P3.2 billion in the first nine months of 2018 was 13 percent lower due to several one-off items and lower income contribution from its wholly owned subsidiary, EastWest Rural Bank (EWRB), the bank said in a statement on Monday.
In late-June 2018, EWRB resumed its lending program to public school teachers, after it was suspended in November 2017. One-off expenses related to its increase in capital stock and lower trading revenues contributed to the decline. On the other hand, its core recurring operating revenues increased by 8 percent or P1.3 billion, EW disclosed in a statement.
Still, the bank said its net income “translated to a return on equity of 10.7 percent and return on assets of 1.4, still among the highest returns in the industry.”
“We are comfortable where we are now. In spite of the harder environment of higher inflation and interest rates and our own specific challenges, we continue to improve our operating efficiencies. We are positive that we can sustain productivity improvement moving forward,” EW President and Deputy CEO Jesus Roberto S. Reyes said.
EW’s net interest income increased by 6 percent to P14.5 billion in spite of lower EWRB contribution and higher deposit costs, driven by the increase in its consumer lending businesses. Excluding teachers’ loans, which declined, its consumer portfolio of credit cards, auto, home and personal loans were up 14 percent. Its commercial lending business increased by 6 percent. The increase in consumer loans allowed the bank to minimize the impact of lower margins as deposit interest rates rose faster and higher than loan rates.
Fees and commissions were 16 percent lower at P3.4 billion, again due to the lower contribution from its rural bank subsidiary. Trading income, on the other hand, was higher by 33 percent ending at P444.8 million, driven by foreign-exchange trading gains.
Operating expenses increased by 13 percent to P11.1 billion, primarily due to the impact of its advertising campaign, investments in training and higher transaction taxes and licenses.
Total assets stood at P337.2 billion as of September 30, 2018, 7 percent higher from the previous year. EW remains to be the most consumer-focused universal bank. Consumer loans accounted for 72 percent of its total loans.
Capital ratios meanwhile, remain healthy with capital adequacy ratio and Common Equity Tier 1 ratio at 13.1 percent and 10.6 percent, respectively.