Hang Seng Bank posted a better-than-expected 2.9 per cent fall in interim net profit but warned that banks would continue to be hurt by escalating defaults on credit cards and narrowing margins due to low interest rates.
The 62.14 per cent-owned subsidiary of HSBC reported attributable profit of HK$5.22 billion for the six months to June 30, against HK$5.37 billion a year ago.
Provisions for bad and doubtful debts rocketed more than 12-fold to HK$281 million from HK$21 million in the year-ago period, although they were lower than the HK$403 million recorded in the second half of last year.
An interim dividend of HK$2.10 was declared, unchanged from last year.
Vice-chairman and chief executive Vincent Cheng Hoi-chuen said the hefty increase in provisions was due mainly to the low base of comparison last year, when the bank recorded substantial increases in recoveries and releases of specific provisions from corporate accounts.
More than 50 per cent of the provisions made in the first half were for defaults on credit cards and personal loans, Mr Cheng said. A surge in personal bankruptcies pushed up the credit card charge-off ratio to an average of 8 per cent in the first half this year against 3.1 per cent previously.