EastWest Bank net income up 75% in Q1 amid COVID-19 provisions

EastWest Banking Corporation (EW) reported a 75% increase in net income to ₱2.3 billion in the first quarter of 2020, despite setting aside ₱1.6 billion more for loan loss provisions in anticipation of the economic impact of COVID-19.

The bank's improved earnings were driven by a 45% rise in net revenues to ₱9.6 billion, boosted by its core lending and deposit-taking operations and significant trading gains.

Net interest income grew by 42%, contributing significantly to the overall revenue, with a notable increase in Net Interest Margin (NIM) to 8.1% due to normalized deposit rates.

Non-interest income also saw a substantial 52% increase, largely attributed to gains from securities trading.

Despite the positive performance in early 2020, EastWest Bank's CEO Tony Moncupa cautioned that profits for the entire year might be lower due to the ongoing economic repercussions of the COVID-19 pandemic, necessitating 'anticipative provisions' for loan losses.

The bank's total assets grew by 3% to ₱384.1 billion, and total loans increased by 6% to ₱261.4 billion, though asset and loan growth were notably slower than in previous years.

Deposits saw a modest 3% increase to ₱294.3 billion, with the bank focusing on replacing higher-cost time deposits with more affordable funding sources, which also contributed to better margins.