BEA pressured by commercial real estate

Cici Shi

Bank of East Asia (0023) said its net profit last year dipped 5.5 percent to HK$4.12 billion as it declared a second interim dividend of 18 HK cents.

Accounting for 82 percent of loan loss provisions, China's commercial real estate sector continued to be the main concern for asset quality, according to the bank.

Its exposure to the sector has decreased to 7.7 percent, with the proportion of private companies down by eight percentage points to 51 percent, said Ivy Chan Shuk-pui, the bank's chief risk officer.

Co-chief executive Brian David Li Man-bun said that the Chinese property market bottomed out and will not deteriorate further.

Li also predicted that US interest rate cuts would have a moderate impact on the net interest margin and net interest income for the year.

The bank's net interest income amounted to HK$16.8 billion - 24.9 percent higher than last year - as the net interest margin widened by 49 basis points to 2.14 percent with high interest rates.

Net fee and commission income year-on-year increased slightly by 4.1 percent to HK$2,640 million amid the continued weak market sentiment.

Hong Kong operations recorded a 9.9 percent rise in profit before tax to HK$3.46 billion, driven by the increase in net interest income.

The drop in the net profit was influenced by the gain recorded in August 2022 on the disposal of Blue Cross and Blue Care as well as the one-time shared gain from the disposal of AFFIN Hwang Asset Management.