EAST WEST Banking Corp. (EastWest Bank) could issue peso bonds early next year as they expect benchmark interest rates to decline further, its top official said.

“Most likely the first quarter because of the fresh books,” EastWest Bank Chief Executive Officer Jerry G. Ngo told reporters on the sidelines of an event on Monday. “It’s not urgent. It’s really more to match our books so that we can balance the durations. It’s risk management more than anything else, and the prices will probably continue to fall.”

The official earlier said the bank is looking to issue bonds worth up to P10 billion in several tranches and tenors.

Mr. Ngo said they expect further rate cuts from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

“Everyone’s very dovish at the moment,” he said, adding that further rate cuts by the BSP would support economic growth.

BSP Governor Eli M. Remolona, Jr. last week said the Monetary Board could slash benchmark interest rates by 50 basis points (bps) more this year by delivering two 25-bp cuts at its next two meetings scheduled for Oct. 16 and Dec. 19.

The central bank began its easing cycle in August, cutting its policy rate for the first time in nearly four years by 25 bps to 6.25% from the over 17-year high of 6.5%.

Meanwhile, Fed Chair Jerome H. Powell indicated on Monday that the US central bank would likely stick with quarter-percentage-point interest rate cuts moving forward and was not “in a hurry” after new data boosted confidence in ongoing economic growth and consumer spending, Reuters reported.

“This is not a committee that feels like it is in a hurry to cut rates quickly,” Mr. Powell told a National Association for Business Economics conference, even though the policy-setting Federal Open Market Committee kicked off its easing cycle with a larger-than-expected half-percentage-point reduction at its Sept. 17-18 meeting.

Mr. Powell said the baseline was currently for two quarter-percentage-point reductions by the end of this year, as indicated in policy makers’ updated economic projections released earlier this month. The Fed’s policy rate is currently set in the 4.75%-5% range.

Mr. Ngo added that EastWest Bank’s asset and profit growth will be driven by an increase in its clients.

“Our balance sheet is growing 15%, mid-teens, overall… Our net income after tax last year grew by around 30%. I think we should be able to do the same this year. The hope is to continue a long-term sustainable growth going forward rather than volatile growth,” he said. “I think steady, solid performance brought about by solid growth from clients is actually very important. The Philippines is a relatively young population; there’s an emerging affluent sector. There’ll be a lot of them as the Philippines becomes an upper middle-income country.”

“Our strategy is really this emerging affluent segment, MSMEs (micro, small and medium enterprises), entrepreneurs, and professionals. And then on the other side is consumer lending. I think that the two sides are growing very well because of the shape of our macroeconomy.”

The bank also expects to get a boost from the reserve ratio reduction that will take effect this month amid its consumer-dominant balance sheet, he said.

“Liquidity-wise, it will benefit us quite a fair bit. It gives us a few months’ worth of bookings, which is good,” Mr. Ngo added.

AUM GROWTH
Meanwhile, the bank expects a 30% compounded annual growth rate in assets under management (AUM) this year, EastWest Bank Senior Executive Vice-President and Financial Markets and Wealth Management Cluster Head Rafael S. Algarra, Jr. said, adding that they hit their P60-billion AUM target for end-2023.

The bank wants to tap the younger generation as more of them join the affluent sector, he said.

“I think there’s risk-on sentiment at the moment… particularly as interest rates are being cut. So, I think there’s going to be a bit more focus on options, particularly on higher-yielding instruments. Then you couple that with what’s going on in the country with the emerging affluent that’s coming up,” Mr. Ngo added.

EastWest Bank is also looking to expand its priority centers to 20 in the next two to three years from the current 12, focusing outside the National Capital Region.

“There’s been an over-concentration on some of the centers like Metro Manila and there is a lot of potential outside. There are a lot of cities or emerging cities coming from all over the country. People are getting richer and more diverse on where they’re getting richer. It’s not like everybody’s just rich in Metro Manila. You can see growth all over the place,” Mr. Ngo said. — A.M.C. Sy with Reuters

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