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BEA charts China credit expansion

Victor Cheung

Tuesday, February 21, 2012

Bank of East Asia (0023), which has reported strong loan demand from mainland firms, will intensify efforts to lend to small and medium businesses this year.

Deputy chief executive Brian Li Man-bun said yesterday that such lending has been profitable.

In December, BEA opened an outlet in the Zhangjiang area of Pudong, Shanghai, to serve SMEs. It is the bank's 100th outlet in China, where Li sees double-digit loan growth.

The net interest margin may stay at about 2.5 percent "if it's not a rapid loosening" on the latest reserve-ratio requirement cut for mainland banks, Li added.

But the bank will remain prudent on lending. BEA's non-performing ratio in China was at 0.09 percent last year versus the industry average of 1 percent and 0.4 percent among foreign banks in the mainland, said Li, son of chairman David Li Kwok-po.

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As for the bank's offshore yuan business, Li said some customers preferred to conduct yuan trade in Singapore, partly due to tighter documentation requirements in Hong Kong.

The bank has conveyed its views on the rules to the Hong Kong Monetary Authority.

The yuan businesses of BEA's Singapore branch amounts to 15 to 20 percent of the branch's assets, Li said.

He rejected any notion that BEA needed immediate equity financing. But it may consider the issue "depending on business."


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