East West Banking Corp. (EastWest Bank) booked a higher net income in the first semester on better margins from lending and deposits.

The Gotianun-led lender’s net earnings in the January to June period climbed 65% to P4.5 billion, it said in a filing on Wednesday.

“The higher income was due to better margins from its core lending and deposit-taking business and higher trading gains,” EastWest Bank said.

The bank’s net revenues rose 39% to P18.4 billion in the period.

Its net interest income, which made up 73% of revenues, jumped 38% to P13.4 billion. Net interest margin improved by 142 basis points to 8.3%.

Meanwhile, EastWest Bank’s non-interest income rose 42% on the back of gains from fixed income securities trading.

The lender set aside loan loss provisions worth P5.5 billion in the semester, 3.3 times bigger than last year, amid the pandemic. 

“We continue to build our reserves for loan losses, so we can move past this pandemic sooner and assure our depositors, concentrate in assisting our borrowers and prepare to participate in the economic recovery efforts after the pandemic,” EastWest Bank President Antonio C. Moncupa, Jr. was quoted as saying.

Minus provisions for losses, operating expenses inched up by 2% to P8 billion due to higher compensation costs. The bank’s cost-to-income ratio was at 44%, down from 60% in the first half of 2019.

EastWest Bank’s loan portfolio stood at P255.6 billion. Its net non-performing loan ratio was at 1.8%.

Meanwhile, deposits grew 4% to P300.4 billion, with low-cost current account, savings account (CASA) deposits rising 22%. This caused the bank’s CASA ratio to improve to 63% from 54%, resulting in higher margins.

EastWest Bank’s assets however inched down 2% to P383 billion at end-June.

Moving forward, Mr. Moncupa said the bank can still meet its P5-6 billion income guidance even as it sets aside more funds for loan losses.

““Our priority is to sustain the strength and resiliency of our balance sheet. We are positive we can meet, if not exceed, the P5 to 6 billion income guidance we gave earlier while building our reserves for loan losses. This puts EastWest in a good position as we remain hopeful the country will resume its robust growth after this pandemic,” he said.

EastWest Bank’s shares closed unchanged at P7.20 apiece on Wednesday. — L.W.T. Noble

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