UBS Still Neutral on East West Bank (EWBC)
East West Bancorp Inc. (NASDAQ:EWBC) is one of the 10 Best Bank Stocks to Buy in 2026.
UBS, on February 4, marginally trimmed its target price on East West Bancorp (EWBC) to $125 (from $126). Despite the target price cut, the firm retained its Neutral call on the stock, as it updated its bank models following the release of Q4 2025 results. The firm noted that mid-cap banks as a whole performed strongly in the previous quarter, avoiding credit risk concerns. It also noted that investor sentiment on regional banks is likely to remain high, supported by a steepening yield curve, accelerating loan growth, and increased M&A activity, such as Santander’s (SAN) acquisition of Webster (WBS).
EWBC reported its earnings on January 22. The company grew its Q4 net income by 21.5% YoY to $356.3 million (from $293.1 million), which led to a 103-basis point YoY improvement in the bank’s return on average common equity (from 15.08% points to 16.11% points). This strong result allowed EWBC to raise its quarterly dividend by 33% to $0.80 (from $0.60) and translated into a 15.9% YoY growth in its book value per share (from $55.79 to $64.68).
The earnings growth was driven primarily by an 11.9% YoY growth in net interest income (NII) (from $588 million to $658 million), which in turn was driven by both net interest margin (NIM) expansion and loan growth. NIMs rose 17 basis points to 3.41% (from 3.24%), as the bank’s cost of deposits fell 43 basis points to 2.16% (from 2.59%). The lower cost of funds from deposits more than offset the ~31-basis point decline in average loan yields (from 6.51% to 6.20%).
Loan book, meanwhile, grew 6.0% YoY to $56.9 billion (from $53.7 billion). For 2026, the bank’s management is expecting a 5% to 7% YoY increase in both loans and net interest income.
Copyright: stokkete / 123RF Stock Photo
East West Bancorp Inc. (NASDAQ:EWBC) is a holding company that operates East West Bank. The company has two main operating segments: Consumer Banking and Commercial Banking. It is based in Pasadena, California, and was founded in August 1998.
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Disclosure: None. This article is originally published at Insider Monkey.
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