Dao Heng lifts profit 57pc
Dao Heng Bank has reported net profit up 57 per cent at the halfway mark, to $800.84 million, helped by a sharp decline in provisions for bad and doubtful debts and a surge in net interest income.
The increase, for the six months to December 31, followed a 66.7 per cent decline in bad and doubtful debt provisions to $183.14 million and a 24.43 per cent rise in net interest income to $1.48 billion.
The jump in interest income was despite a decline in gross interest revenues from $4.62 billion to $4.15 billion, reflecting a 48 basis point increase to 2.62 per cent in the interest margin earned by the bank.
But while operating profit was up 65.75 per cent to $989.05 million, the bank took a $30.42 million loss on disposal of assets which left attributable profit 57 per cent higher.
Shareholders have been rewarded with an interim dividend of 30 cents a share, up from 25 cents previously and payable on April 17.
Basic earnings rose to $1.15 a share from 74 cents.
At 7.1 per cent, growth in total deposits to $108.66 billion outpaced loan growth of just 2.8 per cent to $65.5 billion. The bank's key loan-deposit ratio declined as a result to 60.3 per cent.
But Dao Heng, part of Guoco Group, said the lending ratio would rise as Hong Kong's economy recovered.
'Looking ahead, external demand will remain the key driving force in 2000,' the bank said.
Given a friendly budget, expectations of stronger growth momentum in investment and consumption, and enhanced corporate productivity, the economy could expand by around 5.7 per cent, the bank said.
This would bring benefits to bank sector loan quality and earnings.
Meanwhile, Guoco Group announced a substantially higher attributable profit of $469.74 million for the six months to December, up from $90.47 million in the previous period.
This was despite a drop in turnover to $5.12 billion from $6.77 billion. The company said the comparative profit figure for 1998 was $27.55 million above what was originally reported due to a new accounting standard.
It said its share of associates' profits totalled $86.78 million, compared with a loss of $48.7 million previously.
Interim dividend is 15 cents a share, up from 10 cents, while earnings rose to $1.10 a share from 21 cents.
Guoco shares jumped $1.45 yesterday to close at $16.80 while Dao Heng shares dropped 10 cents to $31.