EastWest ramping up credit business in Philippines

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Gotianun-led East West Banking Corp. is strengthening its credit business for possible upticks in loan demand later this year, its top official said.

In a virtual press briefing, EastWest CEO Jerry Ngo said rate cuts from the Bangko Sentral ng Pilipinas (BSP) later this year could support the bank's core market, the consumer segment.

'We are waiting and getting ourselves prepared,' he said. 'We're all prepared to pull. The team has been ready with regard to getting essentially the term funding as and when the markets come down,' he said.

When central banks reduce interest rates, it becomes cheaper for consumers and business to borrow money. Borrowers are more likely to take out loans such as mortgages, car loans or credit for businesses.

At its April meeting, the BSP Monetary Board stood pat for a fourth straight meeting and kept its benchmark rate at 6.50 percent, the highest in nearly 17 years.

This was after the Monetary Board hiked borrowing costs by 450 basis points from May 2022 to October 2023.

BSP Governor Eli Remolona Jr. has signaled that monetary authorities may delay rate cuts this year if risks to inflation continue to persist.

The BSP believes inflation could quicken to above the two to four percent target range over the next two quarters.

Ngo said EastWest is getting ready for funding amid the likely surge in loan demand once the BSP eases its tight monetary policy, which may come from basic deposits.

The bank's net income jumped by 32 percent to P6.1 billion in 2023 from P4.6 billion in 2022 on the back of double-digit growth in loan portfolio and stable funding sources.

The lender earlier said its net revenues increased by 26 percent to P35.7 billion, driven by the 25-percent rise in consumer lending portfolio, which accounts for 80 percent of total loans, the highest among its peer banks.

The bank's total loans and receivables grew by 15 percent to P296.6 billion.

'The interest rate environment is going to be persistently high, which I think is going to affect the rest of the industry. Right now, the global markets are expecting one or two rate cuts toward the end of the year,' Ngo said.

'So, we just need to get better at what we do with regards to the basics. It is clear that to become a top consumer bank, we need to be focused on our strategy and our approach,' he said.

The Gotianun-led bank is also investing heavily in technology and digitalization expansion this year.

'We continue to invest heavily in digital banking. We are launching new products coming in, hopefully in the next month or so. Lots of them are coming up, and we're pushing that hard into the market,' he said.