Update | Hang Seng Bank first-half net profit surges 137 per cent to HK$20 billion
Hang Seng Bank on Monday reported net profit for the first half this year rose 137 per cent to HK$20.05 billion mainly due to one-off gains from the disposal of its investment in mainland lender Industrial Bank.
Excluding the one-off gain, net profit was up 11 per cent to HK$9.41 billion. Hang Seng is a subsidiary of HSBC.
Brokers had estimated the banks’ net profit would range from HK$17.57 billion to HK$19.87 billion, and sharply up compared to a net profit of HK$8.47 billion during the same period a year earlier.
“Our forward-looking capital planning will enable us to continue to invest in our core business for long-term growth and to respond to new business opportunities promptly in the year ahead,” said vice-chairman and chief executive Rose Lee Wai-mun.
The strong growth was mainly due to one-off gains of HK$10.64 billion from its sale of its 11 per cent stake in Shanghai-listed Industrial Bank in two transactions in May and February to cash in a total of 29.54 billion yuan on what was originally a 1.7 billion yuan investment in 2004. Hang Seng still holds a 0.88 per cent stake in the mainland lender.
The gain is offset by rising bad-debt provisions in the first six months which soared 76 per cent to HK$594 million. Lee said this came mainly from a small number of individually assessed impairment charges due to the more challenging credit environment in mainland China.
Collective impairment charges also increased due to expanded credit card and personal loan portfolio.
Operating profit increased 14 per cent to HK$10.79 billion in the first half, thanks to growth in the wealth management business that help boost fee income 27 per cent year on year to HK$3.88 billion.
The lender also enjoyed an 8 per cent rise in net interest income to HK$10.44 billion, which is driven by a growth of consumer lending and financial investment although this was offset by a decrease of net interest margin by six basis points to 1.86 per cent.
Net trading income rose 30 per cent to HK$1.38 billion because of higher forex trading income and rising demand of customer equity linked treasury products.
The bank declared a second interim dividend of HK$1.10 per shares. Together with the first interim dividend, the total first half dividend would be HK$2.20 per share, the same as last year.