Wing Hang Bank raised its dividend despite a 16.1 per cent drop in net profit for last year, while Chong Hing Bank cut its payout as earnings fell 3.1 per cent.
Wing Hang declared a final dividend of HK$1.62 per share, which works out to a dividend payout ratio of 35 per cent for last year, up from 25 per cent in 2011.
"After taking into account Basel III [capital requirements], we think such a ratio is sustainable with our capital growth," chairman and chief executive Patrick Fung Yuk-bun said. He said the bank hoped to maintain the payout ratio at the current level. Its core capital adequacy ratio last year was 10 per cent.
Wing Hang has subordinated debt of US$220 million with a 9 per cent coupon that will mature this year. Fung said the bank might be able to issue such debt at a coupon rate as low as 3 per cent in future. This will raise net interest margin by five to 10 basis points. Net interest margin declined five basis points to 1.62 per cent last year.
Net profit fell to HK$1.8 billion, owing to a larger impairment loss on the mainland. Fung said the bank had made provisions to fully cover its loans on the mainland and was not worried about further deterioration in asset quality there.
Chong Hing reported net profit declined to HK$543.3 million last year.
It declared a final dividend of 35 HK cents per share. Total dividend amounted to 46 HK cents per share, less than the 50 HK cents per share for 2011.
Chief executive Felton Lau Wai-man expects net interest margin to improve this year by five basis points. Net interest margin rose to 1.13 per cent in the second half of last year from 1.06 per cent in the first. But it fell seven basis points to 1.1 per cent on a yearly basis.