{"id":324863,"date":"2023-09-14T01:12:24","date_gmt":"2023-09-13T17:12:24","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324863"},"modified":"2023-09-14T01:52:29","modified_gmt":"2023-09-13T17:52:29","slug":"stock-in-focus-east-west-banking-corp-ew-14-sept-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-east-west-banking-corp-ew-14-sept-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: East West Banking Corp. (EW) – 14 Sept 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>14 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 9.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We raise our target price for EW by 10% to Php9.50 as we rolled over our Price-to-Book Ratio (PBR)-based valuation. Our revised Target Price offers a potential total return of 12.7%, including our dividend yield forecast of 4.6%. EW has been on a roll, with its share price up 19% month to date. It remains a bargain, still the cheapest bank in our basket with a PBR of 0.3x, below the average 0.9x FY23F PBR of our coverage.<\/p>\n\n\n\n

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

Earnings Recap<\/strong><\/p>\n\n\n\n

EW doubled its 1H 2023 net income to Php3.3 billion. Net interest income climbed 18% to Php13.0 billion as net interest margin (NIM) expanded by 77bps to 7.5%, while consumer loans (77% of total loans) grew by 27%. Fees and commissions surged 70% to Php2.3bn due to improved banking transactions and improved securities and FX trading. Operating expenses grew by 16% to Php9.5 billion driven by manpower, IT, and business-related expenses. CAR and CET1 were at 14.0% and 13.2%, respectively.<\/p>\n\n\n\n

Continued recovery<\/strong><\/p>\n\n\n\n

We expect the strength EW has shown in 1H 2023 to be sustained throughout the rest of the year, with fees & commissions, and loans growing by double-digit y\/y. Recall that in 1H 2022, EW\u2019s net income tumbled 60% to Php1.5 billion primarily due to the 1% slide in consumer loans (74% of total loans) and the 15% drop in fees and income. Furthermore, we see NIMs continuing to expand on loan growth and further loan re-pricing.<\/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>