{"id":323682,"date":"2023-06-15T00:17:54","date_gmt":"2023-06-14T16:17:54","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323682"},"modified":"2023-06-15T00:17:55","modified_gmt":"2023-06-14T16:17:55","slug":"stock-in-focus-east-west-banking-corp-ew-15-june-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-east-west-banking-corp-ew-15-june-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: East West Banking Corp. (EW) – 15 June 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>EW<\/td><\/tr>
Company Name<\/strong><\/td>East West Banking Corp.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>15 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 8.60<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We set our Target Price for EW at Php8.60 per share. Our Target Price offers a potential share price upside of 19.8%. Including dividend yield forecast of 5.7%, total upside is 25.5%. We recommend a BUY as EW is one of the cheapest in the industry.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

1Q 2023 net income triples to Php1.6 billion<\/strong><\/p>\n\n\n\n

EW tripled its 1st quarter (1Q) 2023 net income year-on-year (y\/y) to Php1.6 billion. Net interest income (NII) climbed by 17% to Php6.1 billion from the 20% increase in loans and 1% slip in deposits. Net interest margin (NIM) grew by 1.1ppts y\/y to 7.40%. Fee income soared 71% to Php1.2bn y\/y while foreign exchange gains tripled to Php99 million and trading gains turned positive at Php111 million. As a result, operating income grew 34% to Php7.8 billion. Operating expenses, excluding provisions, increased by 18% to Php4.8 billion while cost-to-income ratio was at 61%.<\/p>\n\n\n\n

Improved asset quality<\/strong><\/p>\n\n\n\n

While EW has one of the best net interest margins (NIMs), its asset quality also improved, sitting with a non-performing loans (NPL) ratio of 7.00%, 4.0ppts lower y\/y. However, this is still one of the worst in the industry, as its customers were broadly affected by the impact of the pandemic.<\/p>\n\n\n\n

Forecasts<\/strong><\/p>\n\n\n\n

We expect 2023\/2024 net interest income to climb by 17% and 8%, respectively, on the back of our conservative loan and deposit growth of 10% and 2% for 2023 and
2024. <\/p>\n\n\n\n

We expect EW to continue its NIM expansion, growing by 54bps y\/y in FY23F and 37bps y\/y in FY24F. We project non-interest income to grow by 17%\/5% in FY23F\/FY24F underpinned by the rise in fee income and trading gains. Finally, we forecast core net income to climb by 43% this year and by another 9% in 2024.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>