East West Banking Corp. (EastWest Bank) is not planning to return to the local bond market anytime soon as it remains liquid, with deposit levels high and lending activity weak.

The bank does not see the need to tap the capital market at the moment but will continue to observe market conditions and will remain open to the option, EastWest Bank President Antonio C. Moncupa, Jr. said in an online briefing on Thursday.

“At the rate that it is headed, you don’t need additional funds and at the rate that the market is flooded with liquidity, I don’t think there is much pressure to get to the bond market. There are just too much deposits. There’s so much money floating around,” Mr. Moncupa said. 

“We don’t see it (tapping the bond market) at this time — I always say at this time, because we don’t know what will happen two to three months from now,” he added.

The bank tapped the bond market in February, raising P3.7 billion in three-year bonds. This was the first issuance out of its P10-billion program launched in June 2019.

The Gotianun-led lender saw its deposits pick up by four percent to P300.4 billion at end-June. Meanwhile, its loan portfolio stood at P255.6 billion, with its net non-performing loan ratio at 1.8%.

Mr. Moncupa said lending activities have been tempered as consumers remain cautious amid the ongoing pandemic. 

For instance, credit card usage has gone down significantly as consumers limit their spending given economic uncertainties, he said.

“In terms of restructuring (loans), we’re not seeing much at this time because I think the deferral that Bayanihan (to Heal as One Act) gave a lot of people some room to maneuver — but it is starting to trickle in,” he said. 

The bank estimates it will set aside P10 billion in loan loss provisions this year, which is about four percent of its loan book, in anticipation of potential credit losses. 

Currently, the lender “can handle the bad loans,” Mr. Moncupa said, and may not need to access a special purpose vehicle that has been proposed by policymakers to help banks unload soured debt.

“We’re trying to focus on assisting our borrowers because their cash flows are distorted, both on the business side and on the household side. So we have expanded our collection efforts and we have created a loan advisory group that could tailor-fit the less standard packages that we can offer our customers to help them manage their cash flow and avoid them going into default,” he said.

EastWest Bank saw its first-half net income surge 65% to P4.5 billion on the back of improved margins from its core lending and deposit-taking business.

The bank’s shares inched up 0.51% to P7.84 each on Thursday from the Wednesday’s close of P7.80 apiece. — B.M. Laforga