Bank of China

Property boom fuels Wing Hang expansion

PUBLISHED : Tuesday, 14 March, 2006, 12:00am
UPDATED : Tuesday, 14 March, 2006, 12:00am

Family-run small lender Wing Hang Bank is aggressively expanding its mortgage operation in Macau, where a boom in the property market has being driven by Hong Kong investment.

According to Lee Tak-lim, a director and general manager at the bank's Macau flagship Banco Weng Hang, mortgages are expected to increase 5 per cent in volume this year, coming on top of 10 per cent growth last year.

Of the $1.7 billion loans drawn down last year, $1.4 billion was earmarked for property and most of that for mortgages.

Starting yesterday, customers can transfer money instantly between their Wing Hang bank accounts in Hong Kong and Weng Hang bank accounts in Macau. Previously, such transactions took at least one day.

'The new cross-border transaction service will facilitate Hong Kong customers in paying back their mortgages in Macau,' Mr Lee said, adding that there was an increase in Hong Kong people investing in Macau property recently.

Weng Hang, which has 11 outlets in Macau, aims to open two new branches this year. The Macau expansion is more significant when compared with Wing Hang's planned Hong Kong expansion to add up to three more branches to the existing 37.

While the territorial size of Macau was small, Mr Lee said there was still room for the bank to further expand its retail network, pointing to the fact that the Bank of China now had 20 branches in the former Portuguese enclave.

The Macau flagship is offering a mortgage rate of up to 2.25 percentage points below the prime rate of 7.75 per cent - 5.5 per cent without rebate. Weng Hang has a 24 per cent market share in mortgages in Macau.

Commenting on the price war on mortgages in Hong Kong, Mr Lee said: 'Not much money can be made at such a low rate.'

Wing Hang is offering a mortgage rate of 2.75 percentage points below the prime rate of 8 per cent - 5.25 per cent with a rebate of up to 0.25 per cent in Hong Kong.

Stephen Wong, the head of retail banking and deputy general manager for Wing Hang, said the bank aimed to maintain its current mortgage rates and 3 per cent market share of mortgages in Hong Kong.

Mr Wong said there had not been any significant outflow of customers as the current price war on mortgages proceeded.

Meanwhile, Weng Hang expects double-digit loan growth this year. 'But that will not be as high as the 20 per cent we achieved last year,' Mr Lee said.

While non-interest income accounted for 26 per cent of Weng Hang's total $154.7 million operating income in the first half, Mr Lee said the aim was to increase it to 30 per cent this year.

Weng Hang contributed 11.7 per cent of operating income and 12.3 per cent net profit to Wing Hang.

Mr Lee said it aimed to lift income from wealth management to 15 per cent of its total revenue this year, from 10 per cent last year.