EastWest net soars 191% to P1.8B
Malaya Business Insight
By: Jimmy Calapati
East West Banking Corp., the financial services arm of Filinvest Development Corp., posted a net income of P1.81 billion for 2010, almost triple its earnings of P621.7 million in 2009.
Tony Moncupa, EastWest president and chief executive, said the income jump was the "fruit of the seeds" the bank had planted in the past few years.
"The programs we have adopted to improve customer service, increase operating efficiencies, and put in place sound governance and risk management practices are paving the path towards sustainable growth and profitability," Moncupa said.
EastWest chairman Jonathan Gotianun said bank officials are committed to sustain the momentum of growth they achieved in the past year.
"(We) will continue to harness the strength of (the bank's) balance sheet and the capabilities of its human resources in maintaining its performance for the current year and in the years to come," Gotianun said.
In a disclosure to the Philippine Stock Exchange, Moncupa said the bank's net revenues increased 36 percent to P7.44 billion as both net interest income and fee-based earnings rose.
Net interest income surged 22 percent to P4.32 billion in 2010 from P3.53 billion as loans expanded 20.1 percent, with business loans climbing a hefty 30.4 percent to P22.8 billion.
Consumer loans, which consist of credit cards, auto and home mortgages, grew 11 percent.
EastWest also said it has maintained its good deposit cost structure.
Total interest-bearing liabilities increased 10.1 percent even as interest expense declined by P102.8 million or 6.2 percent year on year.
This was mostly due to the higher increase in low-cost deposits at 20.3 percent vis a vis a 5.4 percent rise in the cost funds and generally lower interest rates.
As a result of its earning asset expansion and better liability structure, EastWest continued to have one of the higher net interest margins in the industry at 6.05 percent as of the end of 2010.
Fees and other income (ex-trading) climbed 30.7 percent to P1.67 billion.
This resulted as expansion of the bank's customer base continued and was boosted by growth in the bank's branch network.
Total non-interest income, including trading, expanded 60.8 percent.
The bank said return on equity stood at 19.8 percent, one of the highest in the industry.
"Both loans to deposit and liquidity ratios remained healthy at 68.0 percent and 45.5 percent, respectively. Of the bank's total resources of P83.76 billion, P38.10 billion constituted liquid assets," Moncupa added.
"Our capital adequacy ratio (CAR) remained at 15.96 percent, way above the 10 percent minimum requirement of the BSP with Tier 1 ratio at a healthy 11.0 percent," he added.
Total operating expenses, excluding provisions, increased by P523.2 million or only 14.8 percent to P4.1 billion, as the bank continued to improve productivity from economies of scale.
The increase largely came from compensation and benefits, which grew 30.2 percent on account of higher provisions for bonuses to employees. Other operating expenses grew only 8.3 percent.
Moncupa added that the bank's non-performing loans ratio decreased from 6.89 percent in end 2009 to 3.54 percent at end-2010.
"This improvement on the back of a robust 20 percent increase in loan receivables was a result of fine-tuning the bank's credit processes and increased collection efficiencies," Moncupa added.
The bank set aside total provisions for bad loans equivalent to 94.5 percent of non-performing loans (NPLs).
"The bank expects no further losses from these NPLs and in fact there could be potential reversals of loan loss provisions if we take into account collaterals and the normal number of borrowers who naturally experience better fortunes. The positive economic prospects should increase chances of significant recoveries from loans already with loan-loss provisions," Moncupa said.
EastWest opened 28 branches in 2010, growing its network to 113 branches.
It announced recently that it plans to open at least 30 more branches this year as it continues to expand its footprint nationwide.