EastWest Bank sees ‘muted’ loan growth as war shock hits consumer sector

EAST WEST Banking Corp. (EastWest Bank) expects subdued lending this year as the Middle East war’s impact on consumption is expected to hit its retail business, which is its main growth driver.

“I think it’s expected to be more muted in terms of loan growth. Provisioning will continue. You’ve seen us do that over the last few years, and we will continue. I think prudence and discipline are the way forward,” EastWest Bank Chief Executive Officer Jerry G. Ngo said in an online media briefing on Thursday.

The bank already increased its provisioning preemptively as they expected weak Philippine economic growth in 2025 in the wake of a corruption scandal involving government infrastructure projects to continue weighing on consumer sentiment this year, he said.

“Unfortunately, this time, I wouldn’t say we’re a victim of circumstance, but we’re basically recipients of secondary impact and effects. So, we are expecting consumption to be a bit more muted than what we have previously seen,” he said. “I think we’re going to start to see shifts in types of consumption, some discretionary, lavish consumption. I think it will be more focused on essentials.”

“I do expect from a macro perspective that it’ll be a bit more of a challenging year than what we were experiencing last year.”

EastWest Bank’s net loans grew by 13% year on year to P336.4 billion in 2025. Consumer loans went up 16% to P274.4 billion, driven mainly by credit cards, teachers’ loans, auto loans and personal loans, while corporate loans rose to P60 billion from P59.6 billion.

The bank plans to sustain its loan loss provisioning at about 80%.

EastWest Bank will be more prudent in its lending and focus on certain sectors to manage potential asset quality risks, Mr. Ngo said. The bank could also adjust its loan book mix, as about 80% of its portfolio is from the consumer sector.

It will also continue to build its private wealth segment and expand its small, and medium enterprise loan book despite possible risks from higher oil prices.

Mr. Ngo said in February that they are targeting broad-based growth this year and aim to increase the share of corporate borrowings in its total portfolio by two to three percentage points, with the segment expected to grow faster than its entire loan book’s expansion.

Meanwhile, the bank’s net interest margins could be pressured if the central bank turns hawkish to manage inflation risks, he said. The Bangko Sentral ng Pilipinas on Thursday hiked benchmark interest rates by 25 basis points in a preemptive move to help rein in price pressures amid the Middle East war. It also signaled further tightening ahead as it now sees inflation breaching its 2%-4% tolerance band until next year.

EastWest Bank’s net income surged by 21% to P9.1 billion last year on the back of strong core revenue and fee income growth.

Its shares went up by 50 centavos or 3.7% to end at P14 each on Thursday. — Aaron Michael C. Sy