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Bank of East Asia (BEA), Hong Kong’s largest family-owned lender, beat expectations with 14 per cent growth in its first-half net profit, as a robust wealth-management business offset an increase in bad debt from commercial real estate.
The bank recorded HK$2.41 billion (US$309 million) in net profit for the six months to June, or 86 HK cents per share, compared with HK$2.11 billion a year earlier, according to a stock exchange filing on Thursday. Analysts had expected 11 per cent profit growth.
The bank will pay an interim dividend of 39 HK cents per share, 25.8 per cent higher than a year earlier.
A 16 per cent increase in fee income from the sale of insurance, wealth-management products and structured products drove the growth, bringing in HK$1.65 billion, the bank reported.
This was offset by an increase in bad debt provisions for commercial property loans, as Hong Kong’s non-performing-loan ratio in the sector rose to 7.5 per cent in June from 6 per cent in December, the bank said. In addition, 10 per cent of the sector’s outstanding loans were classified as risky, it added.
“We are very cautious about the commercial real estate loans made in Hong Kong, and cannot rule out a continuing rise in the non-performing loan ratio,” BEA’s co-CEO Adrian Li Man-kiu said in a results briefing.
Amid weak demand for office and retail space, HSBC, Hang Seng Bank and Standard Chartered also revealed higher provisions for commercial-property loans in their first-half results.
