East West Bancorp ((EWBC)) has held its Q4 earnings call. Read on for the main highlights of the call.
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East West Bancorp’s recent earnings call conveyed a strong sense of optimism and confidence, underscored by record financial performance and robust strategic initiatives. Despite facing challenges in the technology sector, the company demonstrated resilience and a positive outlook for future growth.
Record Financial Performance
East West Bancorp reported record-breaking financial results for 2024, achieving new peaks in revenue, fee income, net income, and earnings per share. The company saw substantial growth in average deposits, increasing by 9% year-over-year, while loans grew by 6%. These figures highlight the company’s strong operational capabilities and market position.
Strong Deposit Growth
The company achieved a notable 13% increase in deposits, reaching an unprecedented $63.2 billion. This growth enabled East West Bancorp to repay $4.5 billion of BTFP borrowings, showcasing confidence in their core deposit growth strategy.
Shareholder Returns
East West Bancorp emphasized its commitment to delivering strong shareholder returns, reporting a 17% return on tangible common equity and a 13% growth in tangible book value per share. The board approved a $300 million share repurchase authorization and a 9% increase in the quarterly dividend to $0.60 per share, reinforcing shareholder value.
Fee Income Growth
The company experienced a 12% growth in fee income in 2024, driven by successful performances in wealth management, foreign exchange, and treasury management sales. This diversified income stream underscores East West Bancorp’s strategic focus on expanding its fee-based businesses.
Net Interest Margin Stability
Despite fluctuating market conditions, East West Bancorp maintained a stable net interest margin of 3.24%, with a quarter-over-quarter interest rate spread increase of 9 basis points. This stability reflects effective balance sheet management and interest rate risk mitigation.
Problem Credits in Technology Sector
The company faced challenges with problem credits in the technology sector, resulting in $64 million in net charge-offs from two unrelated domestic commercial and industrial credits. This issue highlights the risks associated with industry-specific credit exposures.
Credit Loss Provision Increase
East West Bancorp increased its provision for credit losses by $28 million from the previous quarter, totaling $70 million. This adjustment reflects a cautious approach to managing potential credit risks amid the current economic environment.
Forward-Looking Guidance
Looking ahead to 2025, East West Bancorp provided comprehensive guidance, anticipating end-of-period loan growth between 4% to 6%, driven by strong C&I and residential lending. Net interest income is expected to rise by 4% to 6%, supported by balance sheet growth and improving deposit costs. The company projects total revenue growth in the range of 5% to 7%, alongside an increase in operating expenses by 7% to 9%, mainly due to investments in personnel and technology. East West foresees full-year net charge-offs between 25 to 35 basis points and plans to manage capital effectively using a robust common equity tier 1 capital ratio of 14.3% and a new $300 million share repurchase program.
In conclusion, East West Bancorp’s earnings call painted a picture of a financially healthy and strategically agile company. Despite encountering some headwinds in the technology sector, their record performance, strong deposit growth, and positive forward guidance underscore a promising outlook for continued success.
