Wing Hang Bank has become the latest among smaller banks in Hong Kong to reveal soaring charges for bad and doubtful debts, reporting an almost 71 per cent jump which dragged attributable profit down 21 per cent to $365.6 million in the six months to June. The charge for bad and doubtful debts rose to $119.65 million, containing $90 million of specific provisions and $30 million general provisions. Chairman Patrick Fung Yuk-bun said the bank had made sufficient provisions during the first half. 'In the wake of the uncertain outlook for the second half, we've made the general provision which we didn't need to,' he said. Non-performing loans - where repayment of principal and interest is between three and six months overdue - more than doubled to $591 million as at June 30 from $219.93 million in December. This was largely attributed to trade financing and business lending to small-sized enterprises. The non-performing loans accounted for 1.8 per cent of total loans, which was below the industry average, analysts said. Mr Fung emphasised the bank was well protected from the non-performing loans because almost 60 per cent were covered by collateral. Capital adequacy ratio rose to 14.2 per cent from 13.5 per cent. Nikko Research Center senior analyst Steven Thompson said: 'The increase in bad and doubtful debt charges was in line with the market. The collateral level is high, but the relatively low capital ratio has constrained the bank's loan growth.' This meant Wing Hang would be less able to take advantage of any recovery in weak demand for loans in the market. The bank saw slight loan growth of 0.54 per cent, bringing its loan to deposit ratio to 77 per cent in the first half. 'The ratio will fall in the second half as demand for lending is expected to remain low,' Mr Fung said. Due to the volatile interest rate environment and a sharp fall in securities lending in the first half, Wing Hang's net interest margin was squeezed to 2.78 per cent from 3.3 per cent in June last year and 2.82 per cent in the second half of last year. The squeeze caused net interest income to drop 4.8 per cent to $656.14 million. Earnings per share dropped 21 per cent to $1.24 while interim dividend was cut by the same rate to 30 cents. Mr Fung said the economy was expected to remain weak in the second half and the bank would expand its lending business cautiously.