EAST WEST Banking Corp. (EastWest Bank) is optimistic that it can post another record net income this year, backed by “healthy” asset and margin growth as its consumer business remains strong.
“We continue to sustain our net income trajectory, likely to beat last year’s for another strong performance. Hopefully more,” EastWest Bank Chief Executive Officer Jerry G. Ngo said in a presentation during the Philippine Stock Exchange’s Investor Day held virtually on Wednesday.
“We have enough room to leverage on our existing balance sheet while maintaining above regulatory capital levels. Our profitable trajectory is on track, and with a measured approach in terms of growth of business that will optimize our returns and capital accretion,” he said.
EastWest Bank’s net income grew by 25% year on year to an all-time high of P7.6 billion in 2024.
It booked attributable net earnings of P2.3 billion in the second quarter, bringing its first-semester profit to P4.13 billion, rising from P3.49 billion in the comparable year-ago period.
Mr. Ngo said EastWest Bank is “well-placed to thrive in a sustained consumption-led economy that is benefiting from the demographic dividends of the Philippines,” noting that it is “the most consumer-centric” among universal banks in the country.
The bank’s consumer loans grew by 15% year on year in the first half to P298 billion, making up 84% of its total loan portfolio.
“Going consumer is not an easy thing. It takes a long maturity process… Year on year, our consumer loans grew by 15%, and that for me is a good number. I think 12-15% asset growth is probably optimal over a long period of time,” Mr. Ngo said.
“We have largely balanced our consumer loan mix between secured loans of auto, mortgage loans, as well as the unsecured portfolio of credit cards and personal loans. Meanwhile, we also have this third category, which is called salary loans to government teachers. We’re one of the largest in the market… This carries a relatively lower risk profile. And this combination is very supportive of a high-performance loan mix.”
EastWest Bank’s negatively-gapped loan book allows for margin growth even as the central bank’s easing cycle continues, Mr. Ngo said.
He added that their consumer loan portfolio’s asset quality remains healthy compared to the rest of the industry, which he attributed to improved credit underwriting and collection initiatives.
The bank also has adequate buffers for loan losses, with its provisioning amounting to P6.1 billion in the first semester, which is equivalent to a credit cost of around 3.5%, Mr. Ngo said.
“This is brought about by a predominantly consumer portfolio that has grown rapidly in the last three years… This level of provisioning is appropriate for us right now at this stage of our growth. Our expected credit loss models prescribe higher provisioning early in the life of the loan, and that’s really just from conservatism. But this declines as the customer’s payment behavior is established,” he said.
“We expect credit cost to be sustained at its current levels as we continue to expand our consumer lending portfolio. This may improve further as we continue to season our existing portfolio while balancing our portfolio loan mix.”
EastWest Bank’s consumer lending strength is also backed by a stable funding base of mostly low-cost current and savings account deposits, Mr. Ngo added.
The bank is rationalizing its expenses following massive spending on technology, customer acquisition, and workforce expansion to build scale, he said, adding that these investments allow for “flexible and scalable” business models.
“This integrated approach not only enhances our ability to deliver personalized, seamless experiences to our customers, but also leverages data-driven insights, AI-driven automation to unlock new revenue streams and operational efficiencies…,” Mr. Ngo said.
“We have a very focused phygital approach, which is the physical and the digital combined together, augmenting the capabilities of our relationship managers so that they become very effective in meeting and serving the needs of their clients… Our belief is that banking, at the end of the day, will continue to be a person-to-person relationship. It might be augmented with physical and digital, and that whole ecosystem, that whole customer journey, needs to be enhanced. But we really need to make sure that we have the right people, the right capabilities, and obviously, more importantly, the right culture to serve and continue to serve and support our clients.”
EastWest Bank shares went down by 12 centavos or 0.98% to close at P12.16 apiece on Wednesday. — BVRwith a report from K.K. Chan
