EastWest sees slower income growth amid shift to digital banking
EAST WEST Banking Corp. (EastWest Bank) expects its income to grow by 20% this year from 2016, even as the lender eases up on its branch expansion efforts -- a turnaround from its previous strategy -- as it shifts its focus to digital banking.
In a roundtable with members of the media after the bank’s annual stockholders’ meeting on Friday, outgoing EastWest Bank President Antonio C. Moncupa, Jr. said the lender sees its earnings growing by a slower pace of 20% this year from the 70% year-on-year increase seen in 2016, on the back of sustained momentum in its traditional commercial and retail banking.
“We expect for 2017 that our net income should increase by at least 20%,” Mr. Moncupa said.
For the first quarter alone, Mr. Moncupa said he expects a “good” increase, led by its “old-fashioned” efforts to increase its loans and deposits.
“In the end, EastWest is depending almost always on old-fashioned business -- in both deposit taking and lending to both businesses and consumers,” he said.
“We are not saying that we’re not going to other businesses. We’re not shy. If there are opportunities, we will still be there to grab it,” Mr. Moncupa added.
The bank’s first quarter income report is expected to be out next week.
The growth in EastWest Bank’s earnings for this year will also come even as the lender said it won’t be as aggressive in expanding its branches, a departure from its strategy in previous years, to prepare for the emerging trend of digital banking and financial technology (fintech).
“We will not move as aggressively as we used to. The question really is how do we see digital banking…evolving? This is a question of time [as to] when the market adapt to digital…that you no longer need as much physical branches,” said Mr. Moncupa.
“So we figured to get to about 450-500 [branches] thereabout... That’s enough to cover the whole country, and really, at that number, nagkakatabi na ang mga stores (stores are practically beside each other),” he said.
EastWest Bank had 445 branches at end-2016.
In line with its digital banking thrust, Mr. Moncupa said EastWest Bank is looking to launch a mobile banking platform soon, with the lender already getting regulatory approval from the Bangko Sentral ng Pilipinas.
“We have the mobile [application]. We are ready. We have launched it internally; we will soon launch it publicly,” Mr. Moncupa said. “We need to prepare for that. At this time, we’re starting to plan the digital onslaught.”
Meanwhile, asked if EastWest Bank plans to become a qualified Association of Southeast Asian Nation (ASEAN) bank (QAB) for the ASEAN Banking Integration Framework (ABIF), Mr. Moncupa said: “It’s quite far.”
Mr. Moncupa said EastWest Bank will firm up its local base first, anticipating increased competition amid foreign banks entering the country.
“We’re moving very hard to gain the scale. At the end of the day, that’s it -- you have to protect yourself. You have to be as efficient as they are,” he said.
The ABIF was first endorsed in December 2014 and sought to allow duly-identified QABs to “operate freely” across member-economies in the region.
Mr. Moncupa will step down by May 1 as EastWest Bank’s president and will be replaced by Union Bank of the Philippines (UnionBank) Senior Executive Vice-President, Chief Financial Officer and Treasurer Jesus Roberto S. Reyes. In turn, Mr. Moncupa will become vice chairman of the lender’s board of directors.
EastWest shares closed at P20.80 apiece on Friday, up 10 centavos or 0.48% from the previous day. -- EJCT