A significant improvement in interest income, coupled with lower funding costs, has helped Liu Chong Hing Bank record a healthy 20.09 per cent growth in interim attributable profit to $270.18 million for the six months to June. Earnings per share were 68 cents, up from 56 cents last year. An interim dividend of 18 cents has been declared. The reallocation of $600 million from the interbank market to higher-margin commercial lending, when added to organic loan growth of 28.6 per cent, resulted in a 16.57 per cent increase in interest income. Interest expenses grew only 8.84 per cent due to a lower funding cost environment in the first half and the bank's successful strategy in attracting more deposits, which increased by 17.1 per cent. This resulted in net interest income rising 26.81 per cent. Executive director Nam Lee-yick said the bank had not sacrificed profit margins or credit quality to generate greater business volumes. Its net interest margin had improved to 3.55 per cent from 3.42 per cent last year. Mr Nam warned that as United States interest rates appeared to be on an upwards trend, the bank's net interest margin might not be maintained at this level in the second half as there was always a time lag between the rise of deposit rates and lending rates. The bank's provision for bad debts grew 30.34 per cent to $15 million, of which $10 million was general provision and $5 million was specific. Mr Nam said the bank intended to bring the general provision level to 0.7 per cent of total loans by the end of this year from the existing 0.68 per cent. Liu Chong Hing announced yesterday the appointment of Zhang Dachun, executive vice-chairman of Cosco (Hong Kong) Group and Masahiko Yumino, director and regional executive for Hong Kong at Tokyo-Mitsubishi, as non-executive directors.
