China property weighs on BEA

The Bank of East Asia's (0023) earnings fell 43.9 percent for the first six months of this year to HK$1.5 billion mainly due to a significant increase in impairment losses related to the Chinese property sector and will have a share buyback of HK$500 million.

Net interest income for the lender increased by 5.6 percent to HK$5.83 billion and the net interest margin widened by 0.04 percentage points to 1.42 percent, it said in a filing.

The BEA expects the margin to be further increased by 20 basis points in the coming 12 months as interest rates increase, which could bring the bank an extra HK$1.7 billion in net interest income.

It slashed the interim dividend by 54 percent to 16 HK cents and warned of logging more impairment losses in the second half, if the real estate woes continue.

Its China business booked HK$990 million in impairment losses for the six months, up by 2.1 times from the previous year.