EAST WEST Banking Corp. (EastWest Bank) booked a higher net income in the first nine months on an improved net interest margin and increased trading gains.

The Gotianun-led bank reported a profit of P5.9 billion as of end-September, rising by 28% from P4.6 billion in the comparable year-ago period, it said in a disclosure to the local bourse on Wednesday. Its annualized return on equity stood at 15.1%.

The lender’s revenues jumped by 27% to P26.7 billion at end-September. Net interest income, which accounted for 75% of its revenues, grew 33% to P20.1 billion amid lower funding costs. Net interest margin stood at 8.3%.

Loans declined by 6% to P246.5 billion on contractual maturities and lower working capital requirements of corporate loan borrowers.

The bank, meanwhile, ramped up its loan loss provisions to P7.7 billion in the first nine months. It said this was “preemptive in nature to anticipate the cashflow impact to households and businesses of the virus-induced disruptions.”

On the other hand, deposits with the bank increased by 11% to P324.3 billion as its current account, savings account or CASA deposits climbed 26% to P211.5 billion. Its CASA ratio improved to 65% from 58% a year ago.

Meanwhile, non-interest income reached P6.6 billion, higher by 13% year on year, on the back of a three-fold growth in trading gains. Fees and commissions, on the other hand, declined by 25% to P3 billion, which the bank attributed to “the general slowdown in business activities as a result of the lockdowns” and Republic Act 11494 or the Bayanihan to Recover as One Act, which ordered banks to waive some of their fees.

Operating expenses, excluding provisions for losses, decreased by 3% to P12 billion.

EastWest Bank’s cost-to-income ratio improved to 45% from last year’s 59%.

The bank said its assets stood at P403.7 billion at end-September, up 4% from a year prior.

Its capital adequacy ratio improved to 13.5% from 13%, while its common equity Tier 1 ratio rose to 12.3% from 10.4%.

EastWest Bank said it expects a net income of at least P7 billion for 2020.

“We now revise our net income estimate for the year to at least P7 billion. While we expect net interest margins to hold and income before loan loss provisions to trend higher, there are still epidemiological uncertainties from the virus and its full economic impact is still playing out,” East West Bank Chief Executive Officer Antonio C. Moncupa, Jr. said.

“While we certainly hope that we can soon return to normal life, we want to be prepared to increase provisions for losses as the pandemic damage unfold and ensure the continued resilience of our balance sheet,” he added.

EastWest Bank’s shares closed at P10.20 apiece on Wednesday, rising by eight centavos or 0.79% from its previous finish. — K.K.T. Jose