Bank of China (HK) posts highest first-half profit rise
August 29, 2011 Category Finance, Weekly
Bank of China Hong Kong posted its highest first-half net profit since listing in 2002, but its lending profitability continued to drop because of pressure from yuan-related business. Net profit rose 66.8% year-on-year to a record HKD11.99 billion, but the net interest margin (NIM) fell 37 basis points year-on-year to 1.21% in the first half. He Guangbei, Vice Chairman and Chief Executive, said narrowing NIM was partly due to the bank’s function as Hong Kong’s sole yuan clearing bank. If the yuan effect were discounted, net interest margin would have dropped by only 16 basis points to 1.48%. “Our net interest margin pressure was great, as the clearing bank’s yuan assets increased by a larger amount in the first half”, said He. He added that the yuan business had nonetheless helped to boost revenue and as a strategic plan, the bank would continue to develop that business by expanding its yuan deposit base, seeking more investment channels and developing trade settlements. BOCHK’s Hong Kong dollar loan-to-deposit ratio had risen to more than 75% with a decline in Hong Kong dollar deposits. BOCHK said first-half net interest income from core lending activities rose 14% to HKD10.21 billion. Yuan deposits rose by 39.9% to HKD218.8 billion and the yuan loan-to-deposit ratio stayed at 60.95% as of the end of June. Total customer deposits increased by 7.5% to HKD1.1trillion in the first half, the South China Morning Post reports.
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