Wing Hang braced for an increase in bad debt

PUBLISHED : Friday, 25 April, 2003, 12:00am
UPDATED : Friday, 25 April, 2003, 12:00am

Credit-card receivables at Wing Hang Bank dropped by between 10 and 20 per cent during the first quarter of this year, according to chairman and chief executive Patrick Fung Yuk-bun.

But Mr Fung hinted that rising unemployment might also further inflate bad-debt provisions.

'We haven't noticed any trouble spots yet with bad debt, but we expect that retail-related sectors or personal loans, because of the unemployment situation, would see some problems in the third quarter,' Mr Fung said yesterday.

He described the lending margins in the government's HK$3.5 million fund to help employers as 'not exciting', although the bank would participate in the scheme.

The mid-tier lender stands to earn a credit spread of less than one percentage point from the loans after taking into account the cost of funds.

Mr Fung also pointed out that employee wages only made up about 20 per cent of the costs of an average business, while rent - which companies will still have to pay from their own pockets - accounted for the main portion of expenses.

'I don't think any rescue would be comprehensive enough. Right now, they are receiving help on only part of their working capital,' he said.