EastWest Bank expects return to pre-pandemic profit by 2024

MANILA, Philippines — Gotianun-led East West Banking Corp. expects to return to pre-pandemic profitability level in 2024 as it continues to rebuild its businesses after being badly affected by the pandemic.

During the company’s annual stockholders’ meeting held virtually, EastWest president and CEO Antonio Moncupa Jr.  said the bank’s net income is likely to be near or slightly below last year’s level before returning to 2019 level by 2024.

“This year’s income will probably be closer to 2021 income if not lower, considering the market situation. But toward yearend, our earning capacity should have increased significantly and we should be back in 2023 to closer to our 2019 income levels,”  Moncupa said.

The bank’s net income fell by 31 percent to P4.5 billion in 2021 from P6.5 billion in 2020 due to the impact of the COVID response measures of the Bangko Sentral ng Pilipinas (BSP) on the banking sector.

The bank’s total revenues   retreated by 19 percent to P27 billion in 2021 from P33.4 billion a year ago due to lower volumes of auto loans, mortgage, and personal loans compared to pre-pandemic levels.

EastWest’s provisions for loan losses fell by 58 percent to P4.1 billion last year from P9.8 billion in 2020.

Moncupa said EastWest does not expect its net income this year to be back to pre-pandemic level of P6.5 billion.  “The reduction, the impact of the pandemic on our loan portfolio is quite significant and we need to rebuild the loans,” he said.

Due to the global health crisis, Moncupa said the bank’s loans were lower due to the slowdown in business activity, the slowdown in household spending, and uncertainties.

He said consumer loans fell by 21.5 percent to P155.28 billion last year from P197.77 billion in 2020, while business loans declined by 15 percent to P60.59 billion from P71.33 billion.

Likewise, auto loans dropped by 33.2 percent to P69.49 billion from P104.09 billion, while credit card loans slipped by 6.9 percent to P33.1 billion from P35.26 billion.

Moncupa said housing loans slowed down by 10.7 percent to P19.9 billion, personal loans plunged by 42.7 percent to P4.68 billion, while Department of Education (DepEd) and other loans was steady at P28.07 billion.

“The full impact of the two COVID years will spill over this year. Recovering lost volumes have resumed but it will take time for the impact to manifest. The pace of the recovery of our loan portfolio and the rebuilding of our fixed income portfolio will also depend on market developments, particularly on how the pandemic will evolve,” Moncupa said.