Bloomberg News

Bank of East Asia Posts Record Profit in 2011 on China Growth

February 14, 2012

Feb. 14 (Bloomberg) -- Bank of East Asia Ltd., Hong Kong’s third-largest lender by market value, said last year’s profit rose 3.2 percent to a record, bolstered by China-related lending and fee income.

Net income increased to HK$4.36 billion ($562 million), or HK$1.96 a share, from HK$4.22 billion, or HK$1.92, a year earlier, the bank said in a filing to the Hong Kong stock exchange today. Profit missed the HK$4.63 billion average estimate of 18 analysts surveyed by Bloomberg.

The family-run bank led by 72-year-old David Li is increasing revenue by expanding in China and tapping cross- border funding demand from Hong Kong companies that have operations on the mainland. Bank of East Asia’s pretax profit from China last year increased 71 percent to HK$2.44 billion.

“Fundraising will be the focus in 2012,” Ivan Li, deputy head of research at Kim Eng Securities Hong Kong Ltd., said by telephone before the results announcement, citing a “high” chance the bank will seek new equity. “Bank of East Asia relies on China business growth, which is mainly driven by lending. Capital was consumed quite fast.”

Shares of the Hong Kong-based lender fell 0.5 percent to HK$30.45 at the midday trading break in Hong Kong. The stock has dropped 8.3 percent in the past 12 months, outperforming the 16 percent fall in the Hang Seng Finance Index.

Net interest income, the difference between revenue from lending and payments on deposits, climbed 23 percent to HK$9.26 billion, while net fee and commission income rose 13.6 percent to HK$3.34 billion.

Bank of East Asia’s core capital adequacy ratio shrank to 9.4 percent from 9.8 percent at the end of 2010.

--Editors: Nathaniel Espino, Chitra Somayaji

To contact the reporter on this story: Stephanie Tong in Hong Kong at stong17@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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