Full-year 2020 (FY20) net income up 4% year-on-year (YoY) to P6.5 Billion

EW managed to post better FY20 results even after the bank recognized a 143% increase in loan loss provisions to P9.8 Billion. The P6.5 Billion net income is in line with our forecast. Net interest income improved to P26.5 Billion, up 23% YoY, driven by the 125-basis point (bp) NIM expansion. Meanwhile, non-interest income dropped 5% YoY to P6.9 Billion due to softer contribution from fee-based and commission income businesses, despite the P5.1 Billion securities trading gains. Operating expenses decreased 1% YoY to P16.2 Billion, and along with higher revenues, CIR improved by 8pp to 49%.

Healthy balance sheet

Loans contracted by 9% to P245.5 Billion, with corporate loans down 18% due to contractual maturities while consumer loans went down by 6% amid weakness across auto, mortgage, and credit cards. Total deposits stood at P329.1 Billion, up 8% YoY, boosted by the 22% growth in low-cost CASA to P228.8 Billion.


We adjusted our Target Price for EW to P12.63 by projecting a higher 2021 net income of P7.5 Billion from the previous estimate of P6.9 Billion. We also upgrade our rating from Hold to BUY, taking into consideration the lower credit costs for 2021.


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