East-West Bancorp stock rises following robust first quarter

Investing.com -- Shares of East-West Bancorp (NASDAQ:EWBC) climbed 10% today after the company reported a strong first quarter, with net income reaching $290 million and diluted earnings per share (EPS) at $2.08. The bank’s performance, which included record revenue, fee income, and loans, surpassed analyst expectations for the EPS and revenue, signaling a positive start to the year.

East-West Bancorp’s first quarter EPS of $2.08 edged out the analyst estimate of $2.05, while revenue for the quarter was reported at $693 million, exceeding the consensus estimate of $672.61 million. These figures represent a notable improvement when compared to the same quarter last year.

The bank’s chairman and CEO, Dominic Ng, attributed the impressive results to record loans, revenue, and fee income, as well as a nearly 16% return on average tangible common equity. The bank experienced an 11 basis point expansion in net interest margin due to deposit cost optimization, which contributed to over $600 million in net interest income for the quarter. Fee income also saw an 8% growth quarter-over-quarter, driven by robust customer activity.

In terms of credit performance, East-West Bancorp reported strengthened results, with net charge-offs at $15 million or 12 basis points of total loans. Both nonaccrual loans and nonperforming assets decreased, although the bank increased its allowance for loan losses to a prudent level of 1.35% of loans.

Ng expressed confidence in the bank’s operational strength, diversified balance sheet, and strong capital levels, which he believes position the company well to support customers in any economic environment and to capitalize on opportunities.

Financial analysts have weighed in on the results, with Janney analyst Timothy Coffey commenting, "While we remain buyers of EWBC, we have adjusted our estimates for slower balance sheet growth and earnings growth rates due to economic uncertainty. We do not believe tariffs or slower international trade could have an outsized impact on EWBC." Coffey’s statement reflects a belief that external economic factors such as tariffs or international trade slowdowns are unlikely to significantly affect East-West Bancorp’s performance, as the bank’s commercial clients have limited direct exposure and its fee income products are mainly domestically focused.

Investors reacted positively to these results, which demonstrate the bank’s ability to generate strong earnings and revenue growth amidst a challenging economic landscape. The bank’s focus on optimizing deposit costs and growing fee income has paid off, leading to a significant uptick in its stock price during today’s trading session.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.