EAST WEST Banking Corp. booked a higher net income in the first quarter. — BW FILE PHOTO

EAST WEST Banking Corp. (EastWest Bank) booked a 36% increase in net income in the first quarter on the back of improved lending and trading gains.

In a disclosure to the Philippine Stock Exchange on Wednesday, EastWest Bank said its net profit grew 36% year-on-year to P1.3 billion in the first quarter from P945 million in the same period last year.

The bank’s first quarter income translated to a return on equity of 12%.

EastWest Bank attributed the increase in its income to “the resumption of its rural bank subsidiary’s DepEd (Department of Education) loan program, improved trading income, and lower credit costs.”

The lender’s revenues rose by 13.3% to P6.6 billion in the first quarter from P5.8 billion in the same period last year, primarily driven by fees and commissions growing by 29% to P1.3 billion. Securities and foreign exchange trading gains stood at P525.1 million, a reversal of the loss worth P136.5 million in the comparable year-ago period.

Interest income increased by 19% to P7 billion. EastWest Bank said around 50% or P516.1 million of the increase in interest income was accounted for by the rise in consumer loans.

Total gross loans grew 12% to P249 billion on the back of strong performances from both consumer and business loans.

EastWest Bank said consumer lending, which made up 71% of its loan portfolio, grew by 10% to P177.5 billion in the first three months from P161.3 billion last year.

Corporate or middle-market business loans also increased by 19% to P71.6 billion from P60.2 billion in the same period a year ago.

Interest expense, on the other hand, more than doubled to P2.3 billion from P1 billion last year. This caused its net interest income to fall by by 3% to P4.69 billion to translate to a net interest margin of 6.4%.

On the funding side, total deposits grew 12% to P286.2 billion in the quarter. The bank’s low-cost deposits increased by 4% year-on-year to P143.1 billion from P137.4 billion.

Meanwhile, operating expenses excluding provisions for losses increased by 19% to P4 billion, mainly due to business taxes and other business related expenses. Provisions for losses went down by 22% to P872.6 million from the previous year.

EastWest Bank’s capital rose 10% to P43.9 billion, while total assets stood at P372.8 billion at end-March, growing by 18% from the same period last year.

The bank’s capital adequacy ratio stood at 12.6%, while its common equity Tier 1 ratio stood at 9.9%.

As of March 31, EastWest Bank has a total of 390 stores. Its total automated teller machine network is at 584. Meanwhile, the bank’s subsidiaries have a total of 76 stores.

“For the rest of 2019, East West expects market liquidity situation to improve and interest rates to go lower as the year progresses,” EastWest Bank said in its quarterly report. “This is expected to be felt in the second half of the year. In the first six months of the year, we expect continued challenges on net interest margins as deposit costs is expected to remain high while competition will exert pressure for loan yield adjustments to be subdued.”

EastWest Bank shares closed at P10.98 apiece on Wednesday, up by 0.73%. — RJNI