Bank of China (Hong Kong) has pledged to increase profitability this year without laying off employees.
The bank announced yesterday that net profit dropped 46.9 per cent to HK$2.76 billion last year because of Hong Kong's weakened economy and a one-off charge from restructuring. It is the first time Hong Kong's second-largest bank by assets has issued financial figures since its 12 Hong Kong subsidiaries were merged last year.
The bank's total expenditure for restructuring and the merger was HK$937 million.
The hefty restructuring cost plus a HK$1.06 billion drop in net interest income and a HK$1.23 billion loss on the revaluation of fixed assets, both of which resulted from last year's 'adverse market environment', were the main factors for the drop in net profit.
'If we purely look at profits, it's quite misleading because it depends on how large the shareholders' funds are,' South China Research analyst Patrick Pong said.
'So return on equity [ROE] would be a good indicator for profits.'
The bank's ROE for last year was 7.3 per cent, largely due to its HK$10.6 billion provision, HK$937 million restructuring costs and other factors. By comparison, HSBC had a ROE of 11.7 per cent last year while Hang Seng Bank's was 22.4 per cent.
