Hang Seng posts strong half year profits
(1 August 2017 – Asia) Hang Seng Bank has reported that its 2017 first half net profit rose 23 percent to HK$9.84 billion (A$1.5 billion) as its fee income and fund sales were buoyed by more positive market sentiment and a decrease in bad debt.
The half-year profits compare favourably with same period last year, which saw the bank post HK$8 billion, yet substantially lower than its 2015 profits of HK$20 billion following the sale of its share in China’s Industrial Bank.
The bank’s first half operating income from mainland China was down 10.5 percent to HK$921 million but pretax profit was up 47.3 percent to HK$81 million.
The bank’s recently appointed chief executive, Louisa Cheang Wai Wan said the easing in income from mainland China was a result of higher renminbi funding costs and government tightening of lending policy to reduce risk.
She predicted that interest rate movements and stock performance will be key factors affecting Hang Seng’s business performance in the second half.
“I would like to see the core business grow further and more cross selling among different segments. I would also like to see the cross border business between the mainland and Hong Kong grow further,” she said.
The bank recorded a seven percent drop in bad debt provisions to HK$670 million, namely from an improving credit environment on the mainland.
Operating profit increased 23 percent to HK$11.73 billion in the first half year, while its wealth management business fee income rose 39 percent.
Net interest income increased seven percent to HK$11.81 billion, driven by growth of consumer lending and financial investments while net interest margin widened to 1.94 percent from 1.85 percent in the first half of 2016.
At the end of June, the bank’s total capital ratio was 20.2 percent, up from 20.8 per cent at the end of 2016.
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