EastWest Banking Corp. records lower net profit in 2021

An EastWest Bank branch in Bonifacio Global City. PHOTO BY AARON RONQUILLO

DECREASE in lending levels, a credit card rate cap and adjusted trading gains led to lower net income for East West Banking Corp. last year.

The Gotianun-led lender said in a statement on Friday that its net profit for 2021 was 4.5 billion pesos, down 30.76% from 6.5 billion pesos in 2020.

Due to lower net interest income (NII) and trading gains, the company’s overall revenue for the year fell 19% to 27.0 billion pesos.

“The bank recorded a lower NII of 21.0 billion pesos for the year due to lower car, mortgage and personal loan volumes compared to pre-pandemic levels,” he added. .

EastWest said the slow recovery in consumer lending in the sector had a bigger impact on it because of its unique lending structure, with consumer loans accounting for more than 70% of its total lending.

“The good news is that our balance sheet is much more resilient in terms of liquidity and capital adequacy. The challenge is that we need to grow to take advantage of the bank’s capabilities,” explained Tony Moncupa, CEO of EastWest. . “We hope that the pandemic and the situation in Ukraine will clear up and that we can resume work on the plan to double the death toll in the next five years.” With lower risk assets and additional capital from earnings, its capital ratios improved to 15.6% and 14.5% for the capital adequacy ratio and Tier 1 capital ratios Level 1 (CET1), respectively – well above regulatory minimums.

As it rebuilds its loan portfolio, the bank aims to use its excess capital. It aims for a CET1 ratio of between 12 and 13%.

While interest rates remained stable for most of the year, EastWest said trading gains had started to normalize, standing at 1.9 billion, down 65% as the interest rates stabilized.

“The impact of low interest rates on trade gains has not been as pronounced in 2021,” he added.

Fee and commission income was flat at 3.7 billion pesos, the lender reported, as transaction levels remained below pre-pandemic levels.

On the other hand, operating expenses increased by 2% to reach 16.5 billion pesos due to strategic investments in technology and digital offerings.