Despite an anticipated surge in soured loans caused by the Middle East war, Gotianun-led East West Banking Corp. (EastWest Bank) has shown a firm commitment to penetrating the micro, small, and medium enterprises (MSME) segment beyond lending, as it also aims for “embedded banking” within firms’ business operations.

During a media roundtable following the bank’s annual stockholders’ meeting (ASM) on Thursday, April 23, EastWest Bank Chief Executive Officer (CEO) Jerry G. Ngo reported a robust financial foundation that could support the expansion.

EastWest Bank posted a 2025 net income of ₱9.2 billion, a 21-percent increase from 2024 earnings.

Following this growth, the domestic financial system entered a challenging environment caused by shocks stemming from the Middle East war. This threatens domestic stability as it prolongs failed talks between the United States (US) and Iran.

Ngo said that the bank is bracing for the indirect impacts of the Middle East conflict on credit risk.

S&P Global Ratings last week said Philippine banks face a potential surge in soured loans as tensions in the Middle East threaten to disrupt the domestic economy and weaken the repayment capacity of households.

“What we’re probably experiencing over the past few months is because certain things are happening, and they are outside of our control, and we’re basically recipients of the impact of those extraneous decisions that are made outside of the country predominantly,” Ngo said.

He further cautioned that the domestic market should prepare for a slowdown in retail activity. “We are expecting consumption to be a bit more muted than what we have previously seen. That’s going to continue to be a feature, at least in the next [period].”

Despite these headwinds, EastWest Bank still sees a significant opening in the “underserved” MSME segment. S&P said earlier that it sees the “sharper” second-round impact translating into deteriorating repayment capacity among poor households, as well as MSMEs.

“We’re actually expanding into the SME sector. We have a business banking unit that’s coming in, and we are going through that at the moment,” Ngo said, adding that the core strategy driving this is hyperlocalization, focusing on regional trading hubs like the cities of Davao, Cebu, and Bacolod.

“It’s an area that we would like to focus on, and that kind of links back to the hyperlocal conversation. We want to be relevant to the SMEs that we serve in the locations where they are operating,” he said.

EastWest Bank intends to go beyond lending by integrating its services directly into SME operations through embedded banking. Using application programming interface (API)-based transactions, it seeks to help businesses cut costs and streamline collections while expanding its SME presence.

Even the conflict in the Middle East is viewed through a lens of eventual recovery. “While the Middle East crisis may be painful at the moment, rebuilding will be necessary after the war, and this will require a large workforce,” Ngo said.

Further, given the high attrition rate of small businesses, EastWest Bank is positioning itself as a strategic partner to ensure long-term resilience.

“I think a lot of that capability also has to extend beyond just the banking side, but also how we partner with SME owners, the principals, to give them the right skills and capabilities to manage their businesses and their finances through cycles,” Ngo said.