Eastwest Core Businesses Register Double Digit Growth

EastWest Bank reported a Net Income of P1.6 Billion for the first nine months of 2014, with steady quarterly growth but lower by 5% from the same period last year due mainly to lower trading gains. Recurring income on the other hand continues to improve at the back of solid growth in core banking businesses.

EastWest Bank reported robust growth in its core income as Net Interest Income and Fees increased by 20% and 29%, respectively on the back of healthy growth in Loans and Deposits.

Total Assets stood at Php167 billion as of September 30, 2014, or 31% higher from the same period last year. The growth in assets largely came from customer loans, which grew by 28% year-on-year, with both consumer and corporate loans growing by double-digit at 29% and 26%, respectively.

EastWest continues to be the most consumer-focused universal bank with its consumer portfolio at 54% of total loans. As a result, it continued to register the highest Net Interest Margin at 8.1%, which is more than double the industry average.

Deposit levels stood at Php128 billion, up by 34% from third quarter 2013. The year-on-year growth is largely attributable to the expanded branch store network. EastWest currently has a total of 393 consolidated branches and expects to close the year with at least 400, combined with its subsidiary EastWest Rural Bank.

Net Interest Income for the first nine months stood at Php7.3 billion or 20% higher than the Php6.1 billion posted in the same period last year as interest income increased by 17%, while interest expense declined by 2% largely due to the loan growth and lower cost of deposits.

Total Operating Expenses, including provision for loan losses, increased by 7% to Php8.8 billion. The Bank reported that its costs still have to improve as its branch stores become more productive. The bank opened 178 branches in 2012 and 2013 which has driven costs higher this year.

“As expected, our costs will be most bloated this year due to the branch store expansion. We just have to bear this short term pain as we prepare EastWest to face up to the ever challenging competitive environment. We should see significant improvements starting next year.”

“We expected our first nine months profit to be lower year-on-year because of last year's one-off income from trading. That is fine as we continue to focus on recurring income from loans and deposits as well as fee-based revenues”, said EastWest Senior Executive Vice President and Chief Operating Officer Jose Emmanuel U. Hilado.

The bank’s annualized return on equity and return on assets were at 10.9% and of 1.4%, respectively. Its Capital Adequacy Ratio (CAR) and Tier 1 were 14.8% and 10.4%, respectively.

Summary of Key Financials and Ratios

Balance Sheet (in Php billions)
September 30, 2014
September 30, 2013
y/y Growth %
Assets 166.9 127.4 31%
Consumer Loans 61.1 47.5 29%
Corporate Loans 52.4 41.5 26%
Total Deposits 127.7 95.2 34%
Capital 21.0 19.1 10%

Profitability (in Php millions)
September 30, 2014
September 30, 2013
y/y Change %
Net Interest Income 7,348 6,100 20%
Other Income 3,592 3,905 (8%)
Operating Expenses(Ex- Provision for Losses) 6,568 5,963 10%
Provision for Losses 2,274 2,309 (2%)
Net Income After Tax 1,646 1,731 (5%)

Key Financial Ratios
September 30, 2014
September 30, 2013
Variance b/(w)
Return on Equity 10.9% 12.6% (1.7%)
Return on Assets 1.4% 1.8% (0.4%)
Net Interest Margin 8.1% 8.3% (0.2%)
Cost-to-Income Ratio 60.0% 59.6% (0.4%)
Capital Adequacy Ratio 14.8% 17.1% (2.3%)