Bank of China Group (BOC) is expected to announce improved interim earnings next week, helped by smaller provisions and better business performance, according to the banking group's chief. Liu Jinbao, chief executive of the Hong Kong-Macau regional office, said the improvement in the overall economic environment in the SAR had made Hong Kong banks able to achieve growth in their interim earnings. Mr Liu said BOC's operations during the first six months reflected the market's improved business conditions. The bank's interim financial report will be announced next Wednesday. The banking group's bad-debt provisions in the first half would be smaller than those of last year and that would further help bolster the interim result, Mr Liu said. BOC, which manages 12 banks in Hong Kong with about 370 branches, made HK$4.72 billion in provisions for the first half of last year. Last year, total provisions amounted to more than HK$10 billion, which wiped out two-thirds of the pre-provisioning operating profit at the company. To strengthen its market position in the domestic banking industry, Mr Liu said BOC was expanding its online banking service in Hong Kong. Mr Liu said there was a strong growth potential in e-banking and the group would continue to eye up new opportunities such as e-commerce facilities and electronic subscription services for initial public offerings. Pricing, security and value-added services would be the crucial factors to affect e-banking business performance, he said. Mr Liu said Hong Kong's banks were also in a fierce battle in residential mortgages, generally offering a rate at more than two percentage points below prime rates for primary projects. He said banks would find it difficult to make a profit if the price war further intensified. Mr Liu warned that banks should carefully monitor their risks and profit margins when they offered low mortgage rates to attract customers. The loan delinquency ratio - a measure of loans overdue for more than three months against total outstanding loans - rose to 1.23 per cent in June from 1.19 per cent in May. He believed that the price war on residential mortgage loans would continue. But it could see a slowdown in the fourth quarter as other loan sectors such as trade finance was expected to be more active amid the improving economy.