EastWest Bank profit down in Q3

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EAST WEST Banking Corp. (EastWest Bank) posted a lower net profit in the third quarter as it posted trading losses and a decline in its interest income.

The bank’s net profit went down by 12% to P1.295 billion in the July to September period from P1.471 billion a year earlier, based on its quarterly financial report.

This brought the bank’s net income for the first nine months to P5.098 billion, dropping by 13.9% year on year from P5.924 billion.

As of end-September, EastWest Bank’s return on equity and return on assets were at 11.7% and 1.7%, respectively. Both declined from the 15.1% and 2% seen a year earlier.

In the third quarter, the bank’s net interest income declined 26.8% year on year to P4.91 billion from P6.708 billion mainly due to weak demand for loans.

EastWest Bank’s loans decreased 10% year on year to P220.9 billion, mainly dragged by a weak consumer segment.

Despite a decline in credit, its nonperforming loan ratio rose to 11.3% from 7.4% a year ago due to the impact of the pandemic on borrowers’ repayment ability, the bank said.

The lender’s net interest margin as of end-September was the industry’s highest at 6.9%, although it decreased from the 8.3% a year earlier.

Meanwhile, its fee income in the third quarter also decreased 44% to P642.114 million from P1.147 billion.

EastWest Bank incurred trading losses worth P129.467 million in the third quarter, a reversal of the gains worth P166.16 million it posted a year earlier.

On the other hand, foreign exchange gains surged nearly 10 times (882%) in the July to September period to P835.462 million from P95.23 million.

The lender’s total operating income declined by 17.9% to P6.806 billion in the three months ended September from P8.285 billion a year ago.

Meanwhile, operating expenses in the third quarter dropped by 19.39% year on year to P5.013 billion from P6.219 billion.

EastWest Bank set aside P718.008 million for impairment losses, smaller by 67% than the P2.223 billion last year. This brought its credit provisions for the first nine months to P2.146 billion, down 72% from the P7.69 billion a year earlier.

On the funding side, deposits slipped 2% to P318.6 billion at end-September, mainly due to the 23% decrease in higher-cost time deposits. On the other hand, current account, savings account or CASA deposits rose 23% to P231.5 billion, bringing its CASA ratio to 73% as of end-September.

The lender’s capital adequacy ratio and common equity Tier 1 ratio were at 15.1% and 14% as of end-September, respectively.

“We are looking forward to deploying more capital and recoup lost loan volumes. We want to get back to the business of supporting businesses and households,” EastWest Bank President and Chief Executive Officer Antonio C. Moncupa, Jr. said.

EastWest Bank’s shares closed at P9.95 apiece on Monday, down by four centavos or 0.4%. — L.W.T. Noble