Gotianun-led East West Banking Corporation (EW) reported a 70 percent drop in net income to P3 billion in the first nine months of the year from P5.1 billion in the same period of 2021 due to lower trading revenues.

In a disclosure to the Philippine Stock Exchange, the bank said earnings improved 17 percent in the third quarter to P1.5 billion in 2022 from the P1.3 billion in the same quarter last year.

The bank said the recovery was driven by increases in loans and fixed income securities.

Year-to-date (YTD) trading gains were lower by P2.3 billion. In 2021, trading gains were above normal levels due to the accommodative monetary policy that drove interest rates to very low levels.

Core revenues, excluding trading income, was at P20.4 billion, 4 percent higher than 2021’s P19.5 billion.

EW said its net income increased by around P500 million in each of the last two quarters or from P500 million in the first quarter, P1.0 billion in the second quarter and P1.5 billion in the third quarter as the Bank’s efforts to rebuild its loans and fixed income portfolio continue.

Total loans increased by 10 percent with consumer loans and business loans increasing by 11 percent and 6 percent, respectively. Fixed income securities were higher by 72 percent.

Net interest income (NII) stood at P17.1 billion, 5 percent higher year-on-year (YoY), translating to a 50 basis point (bps) improvement in net interest margin (NIM) to 7.1 percent.

Fees and other income, meanwhile, were higher by 3 percent to P3.2 billion.

Operating expenses marginally declined by 1 percent to P12.6 billion. Provisions for losses were higher by 65 percent at P3.5 billion.

The Bank said it believes that the current level of provisions is adequate as it shakes off the residual adverse impact of the pandemic.

Deposit level was steady at P319.1 billion. The Bank started to deploy its liquidity buffers, which were at higher than normal levels, to fund increases in loans and fixed income securities.

“While CASA ratio improved to 80 percent from the previous year’s 73 percent, we expect deposit cost to go higher as the Bank starts to source new deposits and the impact of higher interest rates start to manifest. We also expect some CASA depositors to shift to better yielding time deposits as opportunity costs of holding CASA increase.” EW Head of Retail Banking Gerry Susmerano said.

EW President Jacqueline Fernandez said “Net income for 2022 is expected at P4.5 billion with fourth quarter at P1.5 billion or P6.0 billion on an annualized basis.”

She added that, “While the income level is expected to be flattish unlike 2021 when quarterly income was on a decreasing trend due to loan run-offs this year, income is on the uptrend as the Bank started to recover lost loan volumes and has rebuilt its fixed income portfolios.”