Acquisitions help Dah Sing Banking grow profit 23pc
Dah Sing Banking Group yesterday reported a 23 per cent gain in first- half net profit thanks to two acquisitions made in the second half of last year and a widening of its interest rate spread that lifted loan income.
Parent Dah Sing Financial Holdings posted a 58 per cent gain in net profit due to a one-off gain from selling shares in its banking arm.
Shares of Dah Sing Banking rose 1.01 per cent to close at HK$15.90 and Dah Sing Financial jumped 3.49 per cent to HK$68.10 after the results were released at noon.
Net profit for Dah Sing Banking climbed to HK$566 million, or 61 HK cents a share, in the first half this year, compared with HK$461 million, or 50 HK cents a share, during the same period last year.
Net interest income, which accounted for 75 per cent of overall operating earnings, leapt 46 per cent year on year to HK$940 million. The gains reflected a widening of the spread between the prime rate and the Hong Kong interbank offered rate and profits from the two acquisitions, Pacific Finance and Banco Comercial de Macau, said managing director Derek Wong Hong-hing yesterday.
Net interest margin widened by 40 basis points to 2.46 per cent from 2.06 per cent. Mr Wong attributed 19 basis points of that increase to higher profits from the two acquisitions and 13 basis points to the widening interest spread.
The interest spread is the difference between a bank's cost of funds and the rate it charges for loans.
Consumer lending company Pacific Finance contributed HK$45 million in after-tax profit while Macau-based Banco Comercial added HK$54 million. The two units' results were not included in the previous year's first-half results as the purchases came in the second half of last year.
Net fee and commission income rose 23 per cent to HK$253 million mainly due to higher income from wealth management and investment services.
Operating expenses rose 27 per cent to HK$560 million as the costs of Pacific Finance and Banco Comercial were consolidated into the group's results and the amortisation costs for the intangible assets recognised on these acquisitions.
Net profit for parent Dah Sing Financial, which owns 75 per cent of Dah Sing Banking, soared to HK$728 million in the first half from HK$461 million a year ago.
If the HK$189 million of one-off gains from selling the bank's 3.6 per cent stake in Dah Sing Banking was stripped out, the parent company said its profit growth would slip to 17 per cent.