Dah Sing Banking Group (2356) saw a 1.9 percent rise in its net profit to HK$2.18 billion in 2017, while a final dividend of 31 Hong Kong cents per share was declared.
The company recognized an impairment charge of HK$815 million for its investment in Bank of Chongqing, leading the book value of this investment to be written down to HK$4.1 billion.
Gary Wang Pak-ling, the chief financial and operating officer, said the impairment charge is a non-cash item, so it does not affect the cash position or liquidity and the capital adequacy of the bank.
He added Bank of Chongqing is Dah Sing's long-term investment, with a strong growth after listing. Despite the growth being slower in recent years, the company does not have a plan to sell its shares.
Managing director Harold Wong Tsu-hing said loan growth of the group was 5 percent, lower than the market's 10 percent. It is attributed to the expansion of core business to attract quality loans.
Net interest income increased by 7 percent to HK$3.9 billion, while net interest margin in 2017 was 1.98 percent, the same as the previous year.
Basic earnings per share was HK$1.56.
Wong predicted US rates will increase several times in 2018, which is favorable for the lending rate at banks. However, if the capital cost rises faster than the lending rate, it will result in interest margin compression.