Bank of East Asia logs HK$2.1b profit for H1

Ongoing commercial real estate (CRE) concerns led to the 19.9% decline.

Bank of East Asia (BEA) saw its profit attributable to owners of the parent decline 19.9% year-in-year (YoY) to $269.28m (HK$2.1b) in the first six months of 2024, the bank’s interim results showed.

Basic earnings per share is HK$0.69 for H1, compared to HK$0.87 in H1 2023.

In the report, the Hong Kong-based bank noted the “complex” operating environment in the banking industry.

“The situation facing developers in both the Chinese Mainland and Hong Kong continued to be difficult,” BEA said in its financial review.

The mainland commercial real estate (CRE) sector continued to be a main concern for asset quality, accounting for 52% of the bank’s loan loss provisions, BEA said.

However, investment sentiment picked up despite what BEA called “lingering concerns” over geopolitical tensions. Global inflationary pressures also began to subside, and economic growth was steady across BEA’s major markets, the bank said.

Impairment losses were $369.29m (HK$2.88b), which was lower than in H2 2023 although higher than in H1 2023. Impaired loan ratio declined from 2.69% in December 2023 to 2.62% in June 2024.

Net interest income rose 2.3% to almost $1.05b (HK$8.23b), and net interest margin expanded 7 basis points to 2.10% in H1 versus 2.03% in H1 2023.

Net fee and commission income dropped 2.2% YoY to $182.08m (HK$1.42b) on the back of weak market sentiment, BEA said.

Net fee income decline from loans and credit cards was offset by the growing contribution of trade finance fees and sales of third-party insurance policies.

Total operating income rose 2% to $1.34b (HK$10.48b) in H1. 

Operating expenses rose 4.9%, with BEA investing in talent and digital capabilities.

As of 30 June, BEA’s total capital ratio was 22.8%, whilst its Tier 1 capital ratio was 19.2%. Common equity tier 1 capital ratio is 17.1%.