Hang Seng Bank is looking at ways to better utilise its abundant supply of capital, probably through acquisitions or more aggressive growth in new businesses, in pursuit of doubling shareholder value in five years.
Vice-chairman and chief executive Vincent Cheng Hoi-chuen said the bank was looking for opportunities to acquire bank or non-bank financial institutions in Hong Kong.
'We don't have a shopping list or a preference [for] a particular type of business into which we want to extend our foothold. We just think acquisition could be a way of better utilising our capital,' he said.
A new accounting practice issued by the Hong Kong Society of Accountants allowed Hang Seng Bank to book its long-term equity investments at market value, against the previous practice of stating them at cost.
This gave rise to a revaluation surplus which was put into the investment revaluation reserve, part of the bank's tier-one capital. Tier one is a bank's core capital, and is used in computing capital adequacy.
Benefiting from this practice, Hang Seng Bank's capital-adequacy ratio rose a percentage point to a high 22.7 per cent.
