BEA's interim profit plunges 75pc to $1b

Business | Kevin Xu 22 Aug 2019

Bank of East Asia (0023) interim net profit slumped by 74.9 percent year-on-year to HK$1 billion, mainly due to the significant increase in impairment losses in mainland China.

Co-chief executive Brian Li Man-bun said the provisions made are enough to cover impairment losses, with a provision coverage ratio of 140 percent, including collateral value.

He believes that the level of provisions in the second half will be much less than in the first half, as the previous downgrade of problematic loans was one-off.

The 100-year-old lender warned in June that four legacy loan assets in the mainland with a nominal value of HK$6.2 billion had been downgraded, after commercial property market conditions weakened in non-tier-1 cities during the first half.

Certain legacy loan assets were disposed of to third parties, the bank reported.

Its share price fell 1.65 percent to HK$20.85 yesterday.

Li also said the proportion of loans to individuals in the mainland is already about 35 percent, and corporate loans amount to 65 percent. The bank would maintain the ratio in the second half.

The family-run bank said last year that it expects retail loans to account for 30 percent of total loans in the mainland by 2020.

The bank declared an interim dividend of HK$0.11 per share, down by 78.43 percent from a year before.

Net interest income increased by 18.5 percent year-on-year to HK$7.41 billion, with net interest margin rising by 0.2 percent to 1.90 percent, and average interest-bearing assets growing by 6.4 percent.

Overall, non-interest income grew by 18.4 percent to HK$2.69 billion. Operating income increased by 18.5 percent to HK$10.10 billion.

Impaired loan ratio rose to 1.63 percent at the end of June, compared with 0.70 percent at the end of December last year. The impaired loan ratio for Hong Kong operations declined by 0.03 percent to 0.26 percent, while that for Mainland China operations rose by 3.16 percent to 4.89 percent.

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