HKCB Bank Holding Co has provided a rare insight into the impact of banks' margin financing activities in the aftermath of last year's financial crisis, revealing that most of a $97 million specific provision arose from bad or doubtful margin financing loans for stock purchases. It is understood HKCB Bank Holding also made a $99 million provision for foreign exchange losses due to Asian currency depreciation. Kelvin Lo, financial controller at subsidiary Hongkong Chinese Bank, confirmed that most of the $97 million provision, taken for the year to December, was derived from the margin financing activities of Lippo Securities, a wholly owned subsidiary of HKCB Bank Holding Co. On Monday, the company revealed charges for bad and doubtful debts had surged 6.66 times to $267.24 million but did not offer further details. Mr Lo said the $97 million provision did not include money set aside for the bank's margin financing activities. However, he declined to quantify them. Few banks have detailed the proportion of provisions derived from margin financing activities that have already led to the downfall of a number of broking firms, such as units of the CA Pacific group. Analysts said the size of the Lippo Securities provision appeared high and sent a negative signal about the likely cost of last year's share market free fall on the balance sheet of other smaller banks. 'It raises some concerns about the credit policies of some of these banks,' one said. Lippo Securities is understood to have aggressively expanded into margin financing for client share purchases in the past two years but has substantially reduced its loan book since December. Mr Lo said the size of the Lippo provision was not of grave concern because the broking firm's profit was larger than the provision. 'It still made a huge profit,' he said. On Monday, HKCB Bank Holding Co reported a 22.5 per cent increase in attributable profit to $180.53 million for the year to December, well below market forecasts due to margin finance and currency loss provisions. The company owns Hongkong Chinese Bank, Lippo Securities and has a 50 per cent stake in Lippo Protective Life Insurance. China Resources Enterprise and the Indonesian Riady family-controlled Lippo Group have equal stakes of 30.5 per cent in HKCB Bank Holding Co. Last month, Liu Chong Hing Bank said it was increasing provisioning to $84.13 million from the previous $55.52 million after share financing credit increased 21 per cent between August and December last year.