Wing Hang earnings up 17pc on loan growth
Wing Hang Bank, a Hong Kong-based family-run bank, said first-half net profit increased 17 per cent on growth in investment and residential mortgages, initial public offering financing and consumer lending.
Net profit rose to HK$956.3 million from HK$817.4 million a year earlier. Net interest income gained 14.1 per cent to HK$1.16 billion on strong growth in loan volumes.
As concern grows globally about the direct and indirect impact of the subprime mortgage crisis in the United States, Wing Hang said the effect on its results could almost be ignored.
'We did hold CDOs [collateralised debt obligations], but the ones we hold are backed by corporate loans instead of subprime mortgages,' chairman and chief executive Patrick YB Fung said. 'The amount we hold is about US$100 million, and they are all Triple A and Double A tranches.'
The bank had HK$134 billion in total assets at the end of June.
Total deposits grew 7.9 per cent to HK$115.9 billion while customer deposits increased by 4.5 per cent to HK$106.7 billion.
Its net interest margin fell from 1.95 per cent to 1.92 per cent on mortgage re-pricing pressure and a narrower spread between prime and Hong Kong overnight offered rates.
The bank noted that despite generally weak demand for loans and keen competition in the mortgage market, residential mortgages had increased 10.7 per cent since the end of last year and now represent 22.9 per cent of Wing Hang's total lending portfolio.
Non-interest income rose by 7.1 per cent to HK$486.2 million, mainly thanks to an increase in commissions from brokerage, loan and wealth management, and foreign currency trading income.
The bank, which earlier this year established Wing Hang Bank (China), expects to offer yuan services to domestic residents in the mainland in this half. It also plans to open sub-branches in Shenzhen and Guangzhou.
The US subprime crisis has had little effect on the bank's business
Amount of CDOs Wing Hang holds in Triple A and Double A tranches, in US$: $100m