EastWest Bank Boosts Preemptive Loan Provisions

It reported a net income for the first four months of 2020 of P2.7 billion.

MANILA, Philippines – Gotianun-led lender EastWest Bank has informed the Philippine Stock Exchange of its plans to book P10 billion in preemptive loans provisions this year.

The bank reported to its shareholders that as of April 2020, it is almost halfway to its target with total provisions at P4.5 billion. It reported a net income for the first four months of 2020 of P2.7 billion.

“We were on a roll after our banner year in 2019. This year is supposed to be even much better, but it was not to be due to the pandemic. We are nevertheless happy that our balance sheet is resilient and could churn good profits that we can face this pandemic squarely,” said EastWest Chairman Jonathan Gotianun.

The bank also reported its net interest margin has expanded to 8.1% as deposit rates went down. Interest rates are on a downtrend after the BSP responded to the pandemic by lowering its policy rates by a total of 125 bps to 2.75%, cutting the reserve requirement on deposits by 200 bps to 14%, and ensuring enough market liquidity.

During its Annual Stockholders’ meeting held via video conferencing today, EastWest President Antonio C. Moncupa, Jr. reported that it was originally expecting to hit record profits of up to P12 billion coming from the growth of its core deposits and loans businesses, better economies of scale and trading gains from government bonds.

However, with COVID-19, it is cautiously setting aside higher provisions for potentially higher NPLs in anticipation of the adverse economic impact of the virus to the economy and its borrowers.

“We stand ready to assist our borrowers to get through these challenging times,” Moncupa added.

EastWest Bank also announced its entry in the digital race with Komo, the first exclusively digital banking service to be offered by a local universal bank.

The Bank, through its fully owned subsidiary, EastWest Rural Bank, secured BSP approval for Komo under its Electronic Payment and Financial Services license.

With Komo, customers can only perform transactions through a secured mobile app. Since everything is done digitally with no need for branches, Komo returns the savings from lower overhead cost to customers with “time deposit-like” interest rates on their savings account.

“This pandemic is forcing us to adapt. And it is not only by pushing us to accelerate our digital efforts like Komo and enhancing our automated solutions. It is also coaxing us to improve our internal processes so that it becomes more efficient and responsive to our customers in these days of social distancing and workfrom-home,” Rick Pusag, EastWest Executive Vice President for Technology and Business Processes said. – BusinessNewsAsia.com