FPB Bank Holdings' profit in the first half of this year have fallen 79.5 per cent from a year earlier to $30.84 million. FPB, which owns First Pacific Bank, attributed the drop mainly to a ninefold increase in provisions for bad and doubtful debts. Net interest income dropped 11.4 per cent to $268.12 million while fee income slid 15.61 per cent to $56.91 million. 'Assuming the economy has stabilised, I think the worst is over,' said managing director James Ng Chi-ming. FPB will not pay an interim dividend for the period. It paid shareholders 2.5 cents at the half-year stage last year. Earnings were 2.5 cents per share, down from 12 cents. The company took a $101.8 million provision against bad loans in the first half, up from $11.3 million for the same period last year. 'We've already taken steps to reduce our balance sheet because of the economic turmoil,' Mr Ng said. He said the company rarely lent without taking collateral, which meant 'problem loans are under control'. Of FPB's $1.3 billion in non-performing loans, the bank has $1.1 billion in collateral assets. 'We have set up a special asset team which will dispose of these assets in an orderly fashion over the next six to nine months,' he said. Mr Ng attributed the fall in gross advances to rising competition among banks for customers with acceptable credit risk. However, Mr Ng said this was partially compensated for by the 'widening of interest spreads resulting' from the fall in the interbank rate. Net interest margin rose to 2.35 per cent in the first half, compared with 1.81 per cent in the second half of last year. Mr Ng said the company would not look to increase its loan exposure in the mainland. Mainland companies accounted for 0.9 per cent of gross advances to June 30, 29 per cent of which has been specifically provided for. 'The market is not so good there. Any companies needing a loan would only be using it to salvage what they have,' Mr Ng said.