East West Bancorp (EWBC) Q4 2023 earnings summary

Executive summary

• Record FY23 revenue of $2.614bn, up 11% YoY; net income was $1.161bn, diluted EPS was $8.18, and adjusted EPS was $8.56.

• Adjusted pre-tax, pre-provision income was $1.788bn, up 12% YoY; Q4 net income was $239.0m and adjusted diluted EPS was $2.02.

Financial highlights

• FY23 net interest income was $2.312bn versus $2.046bn in FY22.

• Q4 net interest income was $574.8m and total revenue was $654.7m; net income was $239.0m and diluted EPS was $1.69.

• FY23 fee income was $276m; Q4 fee income was $73m, up $6m, or 9%, QoQ.

• Q4 noninterest expense was $290m, including the $70m FDIC assessment; adjusted noninterest expense was $215.5m.

Outlook and guidance

• FY24 end-of-period loans expected to grow 3%–5% YoY; NII expected to decline 4%–6%, driven by rate cuts.

• FY24 adjusted noninterest expense expected to rise 6%–8% YoY, primarily from compensation and benefits, partly offset by lower deposit account expense.

• Net charge-offs expected in line with Q4 in 1Q24, then to increase modestly; subsequent quarters expected in a 15–25 bps range.

• NIM trough expected in 2H24, assuming the consensus economic outlook; FY24 assumptions include a softening economy with modest growth and rate cuts beginning in Q2.

• Effective tax rate expected to increase modestly.