East West Bank: An Undervalued Bank

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Strong growth and strong profitability makes the bank of good value

Along with other Philippine banks, shares of East West Bank (EW) has turned south so far this year with 9.23% decline.

The thirteenth largest bank by assets stated it grew its revenue by 17% in 2017 and profits surged by 48%.

“We are pleased to see the 48% increase in net income after 2016’s 70% increase. We appreciate the efforts of EWBankers that made this possible. I am sure these results will only motivate our colleagues to continue to exert efforts to serve our customers better and show their deep appreciation for our customers’ continued trust and confidence in EastWest.”

Tony Moncupa, EastWest CEO said

EW delivered a net profit margin of 7.8% for the recent year compared with 7.7% in 2016.

Exact figures researched by this blog were not available at the time of writing and most figures were retrieved from EW’s nine month operations that ended in September 2017.

EW’s book value was at 37.6 billion giving it a price-book value multiple of 1.2x compared to industry’s 3x.

In September, EW’s capital adequacy ratio was at 12.6% compared to 14% a year earlier.

EW’s non-performing loan ratio, meanwhile, improved to 1.5% compared to 2.7% twelve months earlier.

COL Financial rates EW as a buy with a value of 36.50/share vs. 29/share at the time of writing.

Personal estimates indicated a per share figure of 50/share.

Disclosure: EW bank investor.

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