Kwong On Bank has reported a 428.7 per cent increase in the charge for bad-debt provisions, forcing down attributable profit 35.9 per cent to $162.4 million for the first six months of this year. Chairman Ronald Leung Ding-bong attributed the downturn wholly to Hong Kong's economic woes and anticipated that conditions would remain difficult in the second half. Charges for bad and doubtful debts for the period increased to $84.6 million, from $16 million for the first six months of last year. Specific provisions jumped by 94.5 per cent to $169.99 million during the period, while general provisions gained 0.8 per cent, in line with the 1.1 per cent growth in loans to $20.17 billion. The bank did not identify the source of the specific provisions, only blaming the asset-quality deterioration on the economic downturn. Non-performing loans - loans on which interest has been suspended or on which interest accrual has ceased - stood at $441.45 million or 2.16 per cent of its loans, from 1.16 per cent in December. The value of collateral covering non-performing loans was not disclosed. Overdue loans - repayment of which was overdue for more than three months - stood at $365.83 million or 1.79 per cent of loans. They were covered by $123.72 million in specific provisions and $241.63 million in collateral held. The bank, 44 per cent owned by Japan's Fuji Bank, also saw net interest income fall by 8.2 per cent, down from $448.3 million last year to $411.4 this year. Interest income actually increased 22.9 per cent to $1.27 billion, but was offset by an increase in interest expenses of 46.6 per cent to $862.8 million. Operating costs increased by 3.1 per cent to $246.9 million from $239.4 million last year. The board recommended an interim dividend payment of 8 cents, down 37.5 per cent.