ALWAYS ALWAYS ON HERE ALWAYS IN ANNUAL REPORT 2019 01 About the Theme About EastWest Always ON. Always IN. Always HERE. East West Banking Corporation (EastWest) is one of the largest universal banks in the Philippines today. We cater to the financial needs of consumers, middle-market clients, and the mass The banking industry is facing major disruptions and challenges. Those that cannot affluent. thrive in this operating environment are bound to wither and die on the vine. For EastWest Bank, to be successful in its chosen markets means being consistent — Our multiple customer touch points include our network of 467 stores, of which 391 are always. EastWest parent bank stores and 76 are stores of EastWest Rural Bank, 584 ATMs nationwide, internet banking for individuals and corporates (EastWest Online), mobile banking (EastWest ALWAYS ON, uncovering moments of opportunity, such as offering digital solutions to Mobile), phone banking, and 24-Hour EastWest Customer Service. enable more Filipinos to access our products and services in the channel or on the time of their choosing. EastWest is a subsidiary of Filinvest Development Corporation (FDC), one of the country’s leading conglomerates with diverse interests ranging from real estate, banking, sugar, ALWAYS IN, being innovative and entrepreneurial, staying relevant to rapidly evolving hospitality, power generation, to infrastructure. needs and customer preference, and being agile and flexible, especially as circumstances change. Since 2012, EastWest has been trading under the symbol ‘EW’ in the Philippine Stock Exchange (PSE). ALWAYS HERE, assuring our customers that we will be their partner — in good times or in bad — to help them achieve their dreams. Customers can rely on our proven financial As of end-2019, EastWest had 6,317 full-time employees. EastWest’s subsidiaries have 1,050 strength, soundness, and stability to assist them during periods of uncertainty. employees, bringing the combined manpower to 7,367. For more information, visit www.ewbanker.com. Brand Pillars Service Pillars • Insightful expertise directed PERSONABLE: Warm and positive attitude, genuine sentiment, and towards your priorities personal concern for the customer’s well-being and business affairs • Dedication to making banking easier for you DEPENDABLE: Dedicated to making banking as easy as possible for the customer — taking the effort away whenever we can but with • Entrepreneurial spirit to realize professional regard for due process our collective best potential Vision PROACTIVE: Actively listening, offering the right information at the To be a world-class bank anchored on service excellence in our chosen markets right time, considering what the customer needs with thoughtful cross-selling Mission To create value: Contents For our chosen markets, by providing them with excellent service in the delivery of integrated and innovative products, responsive to their current and future financial needs, at the best value 01 About EastWest 46 Consumer Protection 88 Senior Officers For our employees, by continuously providing them with opportunities to develop their full 02 Financial Highlights 50 Risk Management 89 Organizational Chart potential and by giving recognition and rewards commensurate to their contribution 03 Key Performance Indicators 54 Capital Adequacy 90 Subsidiaries For our community, by committing ourselves to improving the quality of life of those around us 04 Message from the Chairman 58 Risk Exposure 92 Affiliate through the support for various charities and involvement in outreach activities 08 Q&A with the Vice Chairman & CEO 66 Corporate Governance 94 Products and Services For our regulators, by uncompromisingly adhering to the highest standards of business ethics 12 Operational Highlights 78 Board of Directors 96 EastWest Store Network and corporate governance 22 Our People and the Community 80 Directors’ Profiles 108 EastWest Rural Bank Store Network For our shareholders, by managing the bank professionally and prudently to consistently 28 Sustainability at EastWest 82 Senior Management 111 Offsite ATM Network achieve optimal possible returns Always ON. Always IN. Always HERE. 02 03 Financial Highlights Summary of Key Financial Ratios 2019 2018 Net Income Net Income Assets in Billions Php in Billions Php in Billions Php Profitability (in Millions Php) Net Interest Income 21,467 19,277 6.2 Trading Income 1,393 503 Fees & Other Income 5,838 5,717 6.2 406.3 Assets 28,698 25,497 5.1 Net Revenues in Billions Php 3 6 7. 3 Operating Expenses 16,405 15,219 4.5 3 1 7. 6 291.8 Provision for Losses 4,042 3,906 232.9 406.3 3.4 Provision for Taxes 1,669 1,468 2 Net Income 6,242 4,508 Loans 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 in Billions Php Balance Sheet Data (in Millions Php) Assets 406,324 367,339 Loans Deposits 2 6 7. 6 in Billions Php in Billions Php Consumer Loans 197,772 173,251 Corporate Loans 71,333 73,482 Deposits Low-Cost Deposits (CASA) 186,785 145,527 in Billions Php High-Cost Deposits 117,941 142,712 2 6 7. 6 304.7 245.9 Capital 49,067 42,657 288.2 223.5 304.7 258.7 240.2 201.8 184.1 Key Financial Ratios (in %) 157 Capital Return on Equity 13.7 11.0 in Billions Php Return on Assets 1.6 1.4 Net Interest Margin 6.9 7. 4 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 49.1 Cost-to-Income Ratio 5 7. 2 59.7 Capital Adequacy Ratio 12.9 12.8 Store Network Capital Store Network in Billions Php Per common share data (in Php) 467 Net Income Per Share: Basic 2.8 2.0 Diluted 2.8 2.0 466 467 49.1 42.7 Book Value Per Share 21.8 19.0 445 446 38.8 433 34.4 31.4 Others Cash Dividends Declared (in millions Php) - - Stock Dividends Declared (in million Php) - 7,500 Headcount 7, 3 6 7 7,527 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Officers 3,138 3,044 Staff 4,229 4,483 EastWest Annual Report 2019 Always ON. Always IN. Always HERE. 04 05 Message from the Chairman Always here for you 2019 was another eventful year for the global market. Lingering tension between the United States and China weighed heavily on their major trading partners, including the tiger economies of Asia. A fresh wave of geopolitical tensions swept the European Union, with the impending exit of Britain (Brexit); Asia, with the political protests in Hong Kong and the unresolved territorial disputes of several Southeast Asian nations with China; and the Middle East, with the dispute between Iran and Saudi Arabia, and the war in Syria, among other things. Not isolated from the rest of the world, the Philippines posted a slower GDP growth of 5.9% in 2019 versus 6.2% in 2018. Further dragging our momentum was the congressional impasse on the approval of the national budget, which curbed government spending for the year. Thanks to our hardworking overseas Filipino workers, who sent home a record $33.5 billion in remittances, consumer spending remained our economy’s growth driver. The Bangko Sentral ng Pilipinas (BSP) relaxed its monetary policies with a series of policy rate cuts to help stimulate the economy and prop up consumer confidence and household spending. These challenges, however, pale in comparison to the unprecedented crisis that all nations are collectively facing because of the global coronavirus (COVID-19). While there is no vaccine invented yet, we are already grappling with the economic fallout from this global pandemic. As we prepare this report, it is still unclear how the so-called “new normal” will impact our businesses, our employees, our workplace, and above all, our way of life. One thing, however, is certain: EastWest will always be here for you. EastWest Annual Report 2019 Always ON. Always IN. Always HERE. 06 07 Message from the Chairman Times like these are a test to the strength of partnerships and EastWest is determined to be always here for you, through highs and lows. Our confidence in our ability to serve you is based on our From a business continuity aspect, we have comprehensive We are confident that we will emerge from these straining proven track record of financial strength and stability. plans in place and a designated team mandated to prevent times more resilient and stronger. Times like these are a test service disruption and sustain our operations. Immediately to the strength of partnerships and EastWest is determined Before this pandemic, EastWest posted its highest recorded after the coronavirus broke out in the country, we took steps to be always here for you, through highs and lows. Our income ever of Php6.2 billion in 2019, a 38.0% surge from to implement company-wide measures to protect the health primary responsibility as a financial institution is to protect the previous year. Even as we faced a margin squeeze in and safety of our employees, and are crucial in sustaining the hard-earned money of our customers and to safeguard the first half of 2019 due to the decline in interest rates, the seamless service we offer our customers. We have their financial security. The pandemic has not changed this we quickly rebounded in the second half and continued to clearly defined steps to maintain critical processes during commitment. move from strength to strength due to higher consumer various threat levels. Like many of our peers, we have also lending and trading gains. We stayed the course in our implemented policies to enable work from multiple sites. To our customers and business partners, thank you for your journey to be one of the top five players in the Philippine continued support.