Bank of China Group, plagued by non-performing loans owed by mainland-backed companies, expects its bad-debt provisions this year to be above the average level for Hong Kong banks. The group's provisioning should not exceed the HK$11 billion set aside last year, said Liu Jinbao, chief executive of the Hong Kong-Macau regional office. However, he said it would be higher than the local average. At the end of last year, the average provision level for local banks was about 6.5 per cent of their loan portfolios. The Bank of China Group's bad-debt provision last year wiped out two-thirds of the pre-provisioning operating profit at the company - which manages 12 banks in Hong Kong that operate about 370 branches. Mr Liu said the group's focus was on reducing its bad-loan burden and on receiving collateral. This year, it has received collateral worth more than HK$20 billion. Guangdong Investment and Guangdong International Trust and Investment Corp account for a significant portion of the group's non-performing loans. The group hopes to see the ratio between non-performing loans and total loans drop to 12 per cent this year, 4 per cent lower than last year. Despite the group's bad-loan problems, Mr Liu is optimistic about the future. This year's large provisions would benefit group fundamentals. It is in the process of restructuring, to streamline operations and reorganise its business. Mr Liu said the group estimated it would spend HK$1 billion on the restructuring, which would include valuations, management consultants and branch renovations. He said it was not aimed at closing branches or laying off staff. The bank has seen some 600 employees leave the company through natural wastage so far this year. Meanwhile, the group yesterday launched its online banking service in Hong Kong - four months after it introduced mobile banking. 'This is a significant step marching towards the boundless virtual Internet world,' Mr Liu said. The service enables customers to open time deposits, check balances, transfer funds and pay bills. Mr Liu said there was still room to further develop the group's banking services and that it would be continuing to expand its e-banking and e-commerce facilities.
