November 11, 2014

EW reports net income of P1.6b in 9M14

In a disclosure to the Exchange, EasWest Bank (EW) reported that its net income reached P1.6b in the first nine months of 2014, 5% lower YoY, mainly due to lower trading gains this year. The bank’s 9M14 results translate to RoE of 10.9% and RoA of 1.4%. The bank reported that net interest income increased 20% YoY, while fees increased 29% YoY, on the back of 31% asset growth, 29% loan growth and 34% deposit growth.

The bank’s consumer portfolio, which accounted for 54% of total loans, continued to drive its net interest margin (NIM). At 8.1%, the bank’s NIM is the highest in the sector and more than double the sector average. Operating expenses grew 10% YoY to P6.6b, as the bank continued to realize costs related to their aggressive branch expansion program.

Meanwhile, provisions for losses remained relatively flat at P2.3b while NPL is at 3.4% as the bank continued to grow its consumer loan portfolio. The bank also reported that its Capital Adequacy Ratio (CAR) and Tier 1 Ratio came in at 14.8% and 10.4%, respectively.

Our take: The bank’s 9M14 results are trailing 2014 consensus earnings estimates of P2.3b, accounting for only 71% of estimates. The shortfall may be attributed to lower trading gains while operating expenses and provisions for losses remaining at elevated levels as an offshoot of the bank’s aggressive branch expansion program. Some costs may normalize next year and this should bode well for the bank. – WealthSec