Shares of Bank of East Asia yesterday posted their biggest fall in two weeks after the city's third-largest lender reported thinning core capital and earnings that failed to meet analysts' expectations.
BEA said attributable profit rose 3.2 per cent last year to HK$4.36 billion, against average analyst target of HK$4.63 billion.
The bank's stock fell 2.78 per cent to close at HK$29.75 after the earnings announcement.
BEA said it suffered from trading losses as bond and equity markets experienced high volatility last year. It recorded a negative swing of HK$588 million on trading and investment activities, said David Li Kwok-po, the bank's chairman and chief executive.
Although deputy chief executive Brian Li Man-bun said the bank was 'comfortable' with its capital adequacy ratio, uncertainty over how it would replenish its thinning core capital, which consists mainly of equity, would undermine its share price, analysts said.
Deputy chief executive Samson Li Kai-cheong said it might consider using 'internal' channels to raise capital and sell non-core assets.
Michael Werner, a senior analyst at Sanford C. Bernstein, said he expected the bank to return to the equity markets to raise money, as its core capital ratios were the lowest among the city's listed banks.