Gotianun-led EastWest Bank (EW) posted a Net Income of ₱6.5 billion in 2020, 4% higher from last year’s ₱6.2 billion. Return on Equity (ROE) was at 12.3%. Total Assets at ₱408.2 billion, were almost flat from 2019’s ₱406.3 billion.

“The pandemic defined EastWest’s operating results in 2020. Lockdowns, social distancing, and limited mobility resulted to the economy contracting by 9.5% and appropriately prompted the monetary authorities to loosen financial conditions. For EW, this meant lower growth as the uncertainties put resiliency at the top of its agenda. It also resulted in lower volume of new business, less transactions across all businesses, and higher provisions for loan losses. On the other hand, lower rates and the consequent lower funding costs resulted in higher net interest margins and higher trading gains. These offsetting tendencies drove the flattish operating results of the Bank.”, EW CEO Tony Moncupa noted.

EW’s Net Revenues rose by 16% to ₱33.4 billion from the previous year. Net Interest Income was at ₱26.5 billion, 23% higher than 2019, mainly due to lower funding costs. The Bank sustained its industry leading margins, with Net Interest Margin (NIM) at 8.1%.

Total Provisions for Loan Losses were at ₱9.8 billion, 2.4x higher from last year’s ₱4.0 billion and stood at 4% of total Loans.

Non-interest Income, on the other hand, decreased by 5% to ₱6.9 billion mostly accounted by the decline in Fees and other income due to the pandemic induced slowdown in business activities, the Bayanihan Act, and assistance to customers. The Bank booked a ₱2.7 billion ‘modification loss’ or the value of the assistance given to loan borrowers over the life of their loans that arose from the mandated and bank initiated cashflow relief programs.

The lower fees and cost of the debt relief programs were mitigated by the ₱4.2 billion increase in Securities Trading Gains. The pandemic resulted in the global monetary easing that pushed interest rates lower and created opportunities for trading income.

Meanwhile, Operating Expenses, excluding Provisions for Losses, decreased by 1% to ₱16.2 billion. Cost-to-income ratio improved to 49% from last year’s 57%.

EastWest’s total Loans & Receivables were down 9% to ₱243.7 billion, mostly due to contractual maturities and lower overall demand as businesses and households held off borrowing due to the pandemic. Deposits on the other hand increased by 8% to ₱329.1 billion, with low-cost CASA increasing by 23% to ₱228.8 billion. The CASA ratio improved to 70%, from the previous year’s 61%.

The higher income and slower growth of risk-weighted assets improved capital buffers with the Bank’s Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) ratio at 13.8% and 12.6%, respectively, from 12.9% and 10.4% in the previous year.

“While the Bank has been among the top 3 most profitable universal banks in the last four years, the prospect of a ‘five-peat’ is uncertain for 2021. The shifting contours of the coronavirus pandemic make it difficult to pin down a 2021 income guidance. Fortunately, the Bank with its higher capital buffers and the loan loss provisions in 2020 is in a good position to face the remaining pandemic challenges and the rebuilding that will follow the vaccines”, Tony Moncupa concluded.