Listed East West Banking Corp. (EastWest Bank) reported on Wednesday that its net income grew to P6.5 billion last year on higher interest margins and trading gains.
The latest amount was a 4.83-percent increase from P6.2 billion in 2019. It also translated to a return on equity of 12.3 percent.
In a statement, EastWest Chief Executive Officer Tony Moncupa said the coronavirus pandemic-related lockdowns, physical-distancing protocols and limited mobility resulted in the lower volume of new businesses, fewer 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,” he added.
The Gotianun-led lender’s net revenues soared by 16 percent to P33.4 billion from the 2019 figure. Net interest income reached P26.5 billion, 23 percent bigger year-on-year, mainly because of lower funding costs.
Its net interest margin stood at 8.1 percent. Total provisions for loan losses grew to P9.8 billion, 2.4 times greater than the previous year’s P4.0 billion and settled at 4 percent of total loans.
Non-interest income fell by 5 percent to P6.9 billion, “mostly accounted by the decline in fees and other income,” EastWest Bank said.
The bank incurred what it called a P2.7-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 P4.2-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,” it said.
Operating expenses, excluding provisions for losses, shrank by 1 percent to P16.2 billion. Cost-to-income ratio rose to 49 percent from last year’s 57 percent.
EastWest Bank’s total assets hit P408.2 billion, marginally higher than 2019’s P406.3 billion. Its capital adequacy ratio and common equity tier 1 ratio settled at 13.8 percent and 12.6 percent, respectively.
EastWest Bank shares jumped by 5 centavos or 0.53 percent to close at P9.56 each on Wednesday.