EastWest Bank posts FY2015 profit of P2B; sustains strong core business growth

EastWest Bank, one of the country’s fastest growing universal banks, continues to post healthy growth in its core revenues (net revenues ex-trading) driven mainly by Net Interest Income (NII) growing by 23%. The growth in NII was driven by the expansion of the loan portfolio. Net Income as of December 31, 2015 was P2.0 billion, 3% lower vs. the previous year due to lower trading gains, higher credit provisions, and higher tax expense.

Total Assets stood at P232.9 billion or 24% higher than end-2014. The bank is starting to benefit from its expansion program. In the last 3 years, the Bank put up 141 branch stores and likewise expanded its lending organization to deploy the expected increase in deposits from its expanding customer base. Total loans grew by 29% while deposits increased by 25%.

Consumer loans grew by 38% to P90.8 billion led by Auto loans and Personal loans. Corporate loans grew by 18% to P66.4 billion. Consumer loans accounted for 58% of total customer loans making EastWest still the most consumer loan focused universal bank.

The Bank’s Operating Income grew by 10% to P16.3 billion as the P2.3 billion increase in NII was partially offset by P587.7 million higher credit provisions and P616.7 million lower trading gains.

The Bank’s Net Interest Income, driven by its above industry net interest margin (NIM) of 8.0%, grew by 23% to P12.3 billion from P10.0 billion the previous year. NII net of provisions for loan losses, grew by 26% to P8.4 billion. NIM net of loan loss provisions was at 5.3%, still higher than industry average of NIM of around 3.0%.

Fee-based Income, mainly from transactional and service fees of consumer lending and the branch stores is flat at P3.3 billion. This was due to accounting adjustments during the period totaling P695.6 million. Considering the impact of these one-off adjustments, fee income in 2015 grew by 21%.

The rest of the Operating Income declined by 56% to P690.0 million due to lower trading income. Total Operating Expenses including Provision for Credit Losses increased by 11% to P13.7 billion. The increase in expenses was driven mainly by manpower and infrastructure related expenses associated with the expansion in branch store network. The increase in provisions for credit losses was driven mainly by credit cards and auto loans. Provision for Income Taxes was higher at P659.3 million due to higher taxable income vs. the previous year.

Customer loans grew by 29% year-on-year to end at P157.2 billion. The Bank remains focused in growing its consumer and mid-market corporate loans, with consumer loans still taking up more than half of total customer loans at 58%. Consumer loans grew by 38% to P90.8 billion driven mainly by Auto loans. Corporate loans, which are mostly in the middle market sector, grew by 18% to P66.4 billion.

Deposits stood at P184.1 billion as of December 31, 2015, up by 25% from 2014. The growth is largely attributable to the expanded branch store network as reflected in the growth of low cost deposits (CASA) which ended at P97.6 billion for an increase of 38% from the previous year. High cost deposits (inclusive of LTNCDs) on the other hand increased by 12% to end at P86.6 billion.

Overall NPL ratios improved as the Bank’s NPL to Total Customer Loans, net of fully provided NPLs, declined to 3.6% in December 31, 2015 from 4.2% as of December 31, 2014.

The Bank’s Capital Adequacy Ratio (CAR) under Basel 3, remain more than adequate at 15.6% as of end 2015 while Tier-1 ratio stood at 12.4%. The Bank’s Tier 1 capital is composed entirely of common equity.

“We are pleased with the continuing growth in our core operations. We ramped up investments to strengthen and expand our operations in the last three years and we’re just beginning to realize the positive impact of these investments. The growth of our core businesses shows we’re on the right track,” said Rene K. de Borja Jr., SVP & CFO at EastWest Bank.

“We will continue to focus on the consumer and middle market sectors. We will complement our current line-up of products and services with new offerings, starting with bancassurance products through our newly formed joint venture with Ageas,” added de Borja.

The bank recently obtained approval from the Bangko Sentral ng Pilipinas (BSP) to engage in bancassurance. Its joint venture with the Belgium-based Ageas Insurance International NV (Ageas), EastWest Ageas Life Insurance Corporation (EastWest Ageas Life), will start selling life insurance products at EastWest branch stores in April.

EastWest Bank has a combined nationwide network of 433 stores and 579 ATMs.