East West Chairman and CEO Dominic Ng.
The East West Bank, one of the largest US banks serving US-Chinese business today, began life banking for Chinese immigrants in California in 1973. Much has changed in the banking industry since then, but East West has not lost its existence. initial focus.
This space, in turn, should help the US weather interest rate hikes and an economic downturn this year, President and CEO Dominic Ng said in an interview.
“If you’re in business and you have 6,000 U.S. banks to compete against you, every time the market slows down, you’re going to get hurt badly and the competition is going to eat you alive because they’re doing everything right thing.” ‘ Ng said Tuesday in a Zoom interview from Los Angeles.
“But if you’re one of the few options out there for your customers, you can literally pick and choose and get orders even if the economy slows down,” he said. “We take that mindset and we kind of keep finding clients.”
The bank, which has a Nasdaq market cap of about $11 billion and operates from more than 120 locations in the U.S. and China, earlier this month reported net income of $258 million for the three months ended June, more than a year before. A 15% increase in comparison. NG said more than 90% of its business is with US customers.
NG knows the world of migration and immigration firsthand. His parents lost most of their fortune when they fled the Shanghai area for Hong Kong after the Chinese Civil War. His father rebuilt the bus transport business but passed all seven vehicles on to employees after his retirement. Ng came to America in 1977 to earn a degree in business administration from the University of Houston. New to the language and culture, he adapted in part by doing television shows such as Mary Tyler Moore Show and everyone in the familyHe later became a CPA and worked at Deloitte & Touche in Houston and Los Angeles for nearly a decade before founding an investment advisory firm that transformed the Nursalim family’s forerunner of the East West Bank (East West Federal Bank) in 1991. Bought on behalf of for $40 million. from Singapore.
And when the Asian financial crisis hit the Southeast Asian regions in late 1997, he planned to sell East West in a management-led buyout that raised $238 million in June 1998. Then he took the bank public in February 1999.
Regarding the US outlook, Ng said the current economic slowdown is likely to continue as the Federal Reserve hikes interest rates to combat inflation, which is now at a four-decade high.
“I’m not optimistic that ‘business as usual’ can continue in an environment of rapid Federal Reserve rate hikes,” he said.
An example of downward pressure on the economy from its banking sector is mortgage lending. The rate hike has decimated the home loan refinancing business, he said, as major banks like JPMorgan and Wells Fargo laid off mortgage-related staff. He said this would further impact lower spending in consumer-facing businesses in home lending, layoffs in construction and consumer goods in the housewares sector.
“Interest rates could continue to rise in the second half of this quarter and again in the fourth quarter,” he said. “It will slow down the economy. Maybe a slight slowdown,” Ng said.
He said US trade with Asia would buffer its own business. Customers who have had to adjust after Trump-era tariffs on China have shown resilience by shifting business to other Asian markets, particularly Southeast Asia.
“Customers will find out how to deal with today’s economic problems,” he said. “Despite the pandemic and supply chain issues or inflation, this is a huge region” that is still growing, Ng said of Southeast Asia. In July, President Biden appointed Ng as Chair of the Economic Advisory Council on Asia-Pacific Economic Cooperation in 2023 during the United States’ APEC Host Year.
The banker, who positioned himself in a promising position as a trade bridge between America and Asia three decades ago, still believes there is much more to come.
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