Tighter lid on costs lifts BEA shares

Finance | Daisy Wu and agencies 16 Feb 2016

The share price of Bank of East Asia (0023) rose by 2.44 percent to HK$23.10 despite posting a 17.1 percent year-on-year drop in net profit to HK$5.52 billion last year, dragged down by its mainland operations.

Chairman and chief executive David Li Kwok-po said BEA will freeze headcount across the group and merge some of its sub-branches in the mainland as it does not expect any "material improvement" in its business environment.

His son and deputy chief executive, Adrian Li Man-kiu, said a board meeting in April will decide whether a pay freeze is to be adopted or not.

The dividend for the year fell 20.7 percent to 88 HK cents, representing a payout ratio of 46 percent. Basic earnings per share slumped 28.3 percent to HK$1.95.

Net interest income fell 5.8 percent to HK$11.93 billion as net interest margin at BEA China narrowed to 1.82 percent from 2.2 percent.

The contraction came after China's central bank reduced interest rates and as BEA employed a more conservative lending approach.

Impairment losses on loans and advances surged 106.4 percent to HK$2.04 billion as BEA China's nonperforming loan ratio surged to 2.63 percent at the end of the year.

That compares with the 1.59-percent average for Chinese lenders in September.

"The worst is not over [yet]," said another son of David Li and deputy chief executive Brian Li Man-bun.

David Li said the family will not sell the bank and will do better to "fight back" hedge-fund firm Elliott Management, which is pushing for a sale and has accused its executives of serially mismanaging the business. Elliott Management owns a 7 percent stake.

But the bank and NWS Holdings (0659) did yesterday say they are considering a sale of Tricor Holdings.

BEA holds 76 percent of Tricor, which provides business and investor services, while the rest is owned by NWS.

Search Archive

Advanced Search
September 2021

Today's Standard