EastWest earns 60% more in H1

MANILA, Philippines -  Gotianun-led East West Banking Corp. has upgraded its 2017 profit guidance to P4.8 billion after its net income surged 60 percent in the first half as strong core banking businesses wiped out the sharp drop in trading income.

The net income of the consumer-oriented bank reached P2.5 billion from January to June, P938.6 million higher than the P1.56 billion recorded in the same period last year.

EastWest vice chairman and chief executive officer Antonio Moncupa Jr. said the bank has raised its net income guidance to P4.8 billion instead of P4.25 billion as the increase registered in the first half is more than double the projected full-year expansion of 25 percent.

“We are now looking at 2017 full year income of at least P4.8 billion,” he said.

Originally, EastWest pegged the projected growth at 25 percent to P4.25 billion this year from P3.4 billion in 2016. The revised profit guidance is now 41.2 percent higher than the 2016 level.

“It now appears that we will not be sad. Income growth will likely be higher than 25 percent. Based on the first half 2017 results and the trajectory of our businesses, we have a chance to end 2017 with above industry average return on equity,” Moncupa said.

Jesus Roberto Reyes, president and deputy CEO at EastWest, said the bank’s operating leverage continues to improve as it completes its store expansion program.

“Our businesses, particularly consumer loans and deposits, continue to post robust growth. On the other hand, credit costs tapered off as asset expansion were more on secured and lower credit cost sectors,” Reyes said.

As of end -June, EastWest has a total of 389 branches and 576 ATMs nationwide. Its subsidiaries have 58 branches across the country.

The listed bank’s net interest income rose 22 percent to P9 billion in the first half from P7.3 billion in the same period last year as its loan book surged 34 percent to P212 billion.

EastWest remained focused in growing its consumer and mid-market corporate loans, with consumer loans taking up a substantial 71 percent of total loan portfolio.

Deposits, on the other hand, grew 24 percent to P254.9 billion.

Securities trading and foreign exchange gains fell 71.4 percent to P262.6 million in the first semester from a year-ago level of P918.2 million due to the ebbs and flows inherent in the trading business.

Gains from securities trading plunged 94 percent to P51.4 million while gains from foreign exchange jumped 66 percent to P211.2 million from January to June.

“Our first half trading revenues were not as good as we hoped. We are happy though that our core recurring income has more than made up for the lower trading revenues. Our core revenues are improving at double the pace of the increase in operating expenses,” Reyes said.

The bank’s operating expenses increased 14 percent to P6.5 billion from P5.71 billion due to the growth of its business translating to higher taxes and license fees, rent as well as depreciation and amortization.

Total assets of EastWest went up 20 percent to P309.6 billion in end-June this year from P257.4 billion in end-June last year.