Higher loan loss provisions weigh on EastWest first-half net income

Insider Spotlight

• First-half net income declined to P3.40 billion as higher loan-loss provisions offset strong revenue growth
• Net revenues climbed 19 percent to P28.40 billion, driven by a 21 percent increase in net interest income
• Pre-provision operating profit surged 30 percent to P14.40 billion as revenue growth outpaced expenses
  
  
  
  

East West Banking Corp. (EastWest) reported a net income of P3.40 billion for the first half of 2026, down from P4.1 billion a year earlier, as a sharp increase in provisions for probable losses offset robust revenue growth during the period.

The increase in loan-loss provision reflects the bank’s more cautious stance on credit risk amid persistent macroeconomic and geopolitical uncertainty.

Why it matters

The results show EastWest's core banking franchise continued to expand at a healthy pace, but management opted to build buffers against potential credit risks, weighing on reported earnings despite stronger operating performance.

By the numbers

Net revenues increased 19 percent to P28.40 billion from P23.80 billion a year earlier. Net interest income rose 21 percent to P23.10 billion, while non-interest income grew 14 percent to P5.30 billion.

Operating expenses climbed 11 percent to P14.00 billion, allowing pre-provision operating profit to jump 30 percent to P14.40 billion. The bank's cost-to-income ratio improved to 49.3 percent.

Provision for probable losses reached P10.10 billion, reflecting what the bank described as a more prudent approach to recognizing and managing credit risk.

“Our core businesses continued to deliver strong growth, as reflected in the increase in net revenues and pre-provision operating profit,” EastWest CEO Jerry G. Ngo said in a statement. “At the same time, we maintained a disciplined approach to credit risk while preserving our capacity to support customers and pursue sound growth opportunities.”

Balance sheet

Total assets expanded 16 percent to P623.90 billion, supported by a 10-percent increase in loans to P396.70 billion. Deposits grew 15 percent to P472.90 billion, with the current account and savings account (CASA) ratio holding at 76 percent.

The bank reported a capital adequacy ratio (CAR) of 12.5 percent and a Common Equity Tier 1 (CET1) ratio of 11.7 percent, both comfortably above regulatory minimums even after declaring cash dividends in May.

Looking ahead

During the first half, EastWest expanded its wealth management, payments and digital banking offerings through enhancements to EastWest Priority and the rollout of Garmin Pay. 

It also continued investing in digital platforms, data analytics, innovation and artificial intelligence (AI) capabilities to improve customer experience, productivity and risk management while maintaining safeguards for data privacy, cybersecurity and governance.

The bank also waived InstaPay transfer fees effective July 15 in support of the Bangko Sentral ng Pilipinas' digital payments and financial inclusion initiatives. —Ramon C. Nocon | Ed: Corrie S. Narisma