Union Bank of Hong Kong may make provisions for lending to struggling Guangdong Enterprises (Holdings) (GDE) in the first half of this year. Chief executive David Yau Man-tak, at the bank's annual general meeting yesterday, declined to disclose the bank's exposure to GDE, which is proposing to undergo a debt restructuring. Mr Yau said the company was waiting to see how the Guangdong government would handle the matter. GDE is the Hong Kong commercial arm of the provincial government. If agreement on the restructuring could not be reached by the middle of the year, the bank's GDE loans would be classified as non-performing, he said. In that event, Union Bank would make provisions in the first half, Mr Yau said. However, Union Bank would continue lending to mainland companies as it was confident the market would recover. Mr Yau said only 0.7 per cent of the bank's more than $3 billion in mainland loans was doubtful. Heavy exposure to the mainland saw Union Bank's attributable profit plunge 90.3 per cent to $32.95 million last year after $295 million in provisions for bad and doubtful debts. Of that provision, $10 million had been written back after more than $100 million was recovered in the first quarter this year.