Hong Kong Bank of East Asia posts first loss in four decades
By Kelvin Wong, BloombergHONG KONG -- Bank of East Asia Ltd., the Hong Kong lender that suffered a brief run on deposits in September, had its first loss in at least four decades after writing down the value of credit-market investments.
February 18, 2009, 10:28 am TWN
The HK$855 million (US$110 million) deficit for the six months ended Dec. 31, derived by subtracting first-half earnings from full-year numbers reported by the company Tuesday, compares with profit of HK$2.26 billion a year earlier.
Chairman David Li said he'll “fast track” measures to cut costs after expenses rose 23 percent last year and bad-loan charges more than doubled. Bank of East Asia's shares tumbled 61 percent in the past year, and the September run on the lender spurred Hong Kong's central bank to guarantee all bank deposits.
“They have never been good at controlling expenses but the 23 percent increase is just way too high,” said Lee Yuk-kei, Hong Kong-based analyst at Core-Pacific Yamaichi International Ltd. “The rise in loan charges is also quite worrying.”
Impairment losses on loans rose to HK$558 million last year from HK$216 million in 2007, pushing total impairment charges to HK$948 million, the bank said. The Hong Kong Monetary Authority last week said banks face a “difficult” year as lending slows and demand for investment products wanes.
“The financial tsunami that swept over the global economy in September 2008 has left a bleak economic outlook in its wake,” Li said in the statement. The effects will be felt “well into 2009,” he said.