Led by a sharp dip in bad and doubtful debts, the International Bank of Asia (IBA) has reported a staggering 925 per cent increase in net profit to HK$244.39 million for the year to December 31, 2000. The bank's earnings per share rose from 2.03 HK cents to 20.85 HK cents, due mainly to an increase in interest income, strong growth in non-interest income and lower provisions against bad and doubtful loans. The results, released yesterday, were slightly above analysts' consensus forecast of a HK$200 million net profit and earnings per share of 20 HK cents. The bank benefited from a 58 per cent decline in specific provisions for bad and doubtful loans. This comes in stark contrast to the situation last year, when higher than expected provisions saw the bank post a net profit of HK$23.83 million. Mainland-related non-performing loans decreased by 28.9 per cent as resolution of overdue mainland loans commenced. Final payments were received from a number of mainland borrowers. China loans now make up less than 6 per cent of IBA's loan portfolio. In total, IBA's loan portfolio grew by 29 per cent, with advances to customers climbing to HK$17.4 billion. Vice-chairman, managing director and chief executive officer of IBA, Mike Murad, believed the results were testament to IBA's growth strategy. 'IBA put in place a growth strategy which took advantage of the economic rebound,' Mr Murad said. 'The 10-fold increase in profits and the 29 per cent expansion of loans in a very soft market testify to the success of the strategy.' General provisions grew in line with the expansion of the loan book. Fee income grew by 73 per cent to HK$205 million, while net interest income rose by 6 per cent to HK$703 million. A strong increase in loan fees, securities brokerage and credit-card fees was behind the surge in fee income. Also included in this year's fee income was a HK$35 million gain from the sale of shares in Hong Kong Exchanges and Clearing. Loan growth was led by a 68 per cent increase in high-yield hire-purchase loans and a 30 per cent increase in consumer loans. Corporate lending grew by almost 30 per cent and residential mortgage loans also had significant growth. 'Growth came across the board,' said Mr Murad. 'Expenses rose 14 per cent as a result of increased headcount, investment in technology and a very strong advertising programme.' IBA maintained a net-interest margin of 2.93 per cent despite the heavy competition in lending which has seen mortgage rates slashed. Mr Murad outlined the bank's plans on increasing its fee income revenue. 'We're going to concentrate really on having less reliance on interest income and more reliance on fees income,' said Mr Murad. 'The loan demand continues to be weak.' Mr Murad also refuted suggestions that IBA was to be sold. 'IBA is not being sold,' he said. 'We want to expand.' Other developments included the opening of two additional investment centres and the inauguration of the company's first 'superbranch' in Causeway Bay. The superbranch saw a 39 per cent growth in deposits from new and existing customers. Liquidity averaged 43 per cent for the year while investments increased 25 per cent to HK$2.7 billion. By year-end the loan-to-deposit ratio stood at 71 per cent.
