Interest income lifts ICBC (Asia) profit 27pc

ICBC (Asia), the Hong Kong unit of the mainland's largest bank, said net profit increased 27 per cent last year as strong growth in net interest income more than offset a jump in loan impairment charges.

Net profit rose to HK$1.25 billion from HK$980 million a year earlier. Net interest income soared 41 per cent to HK$1.85 billion and net interest margin widened 26 basis points to 1.45 per cent.

Impairment loan charges jumped to HK$132 million from HK$6.23 million on fewer provision write-backs and higher loan growth.

Managing director and chief executive Zhu Qi said the profit increase was partly due to the bank's diversification to high-yield lending.

The firm aimed to further widen its interest margin this year and focus more on yuan lending through subsidiary Chinese Mercantile Bank, which it bought from its parent in 2005.

The change in emphasis would help improve net interest margin as the interest spread on yuan loans was higher, Mr Zhu said.

Chinese Mercantile planned to issue yuan bonds in Hong Kong and had talked with the regulators in Shenzhen, he said.

ICBC (Asia) deputy general manager Stanley Wong Yuen-fai said Chinese Mercantile intended to serve ICBC's Hong Kong customers with business in the mainland.

Non-interest income grew 4 per cent as the 39.6 per cent gain in net fee and commission income failed to offset the 41.96 per cent decline in other operating income.

Mr Zhu reiterated that neither the bank nor its parent had any plans to privatise ICBC (Asia) despite market speculation.

The bank proposed a final dividend of 46 HK cents per share.

Shares in ICBC (Asia) closed up 1.25 per cent at HK$16.14 yesterday.