Banks' interims strong

THE Hong Kong Chinese Bank (HKCB) and the Union Bank of Hong Kong both announced interim results yesterday at the high end of market expectations.

HKCB reported a 42.3 per cent growth in net profit, to $44.77 million. Earnings per share fell from 10.5 cents to eight cents, a decline attributed to the increase in the number of shares from 300 million to 500 million.

The conversion of warrants at the beginning of the period increased the number of shares to 599 million, further diluted earnings. The interim dividend was unchanged at four cents.

HKCB said local banks had benefitted immensely from the continued growth in the economy, particularly in trade financing, which had been boosted by the increase in re-export volumes.

It expects its close relationship with China Resources, which holds 50 per cent of the bank, to bring in more customers and help it make inroads into the China market.

The bank opened a representative office in Shanghai in April.

The new joint-venture bank in Shenzhen, Chinese Mercantile Bank, in which it has a 40 per cent stake, will open in September.

Union Bank reported a similar interim profit increase, of 38.8 per cent to $51.33 million.

Earnings per share increased by 33.7 per cent, from 16.6 cents last year to 22.2 cents. An interim dividend of seven cents was declared, compared with five cents previously.

The bank said it continued to enjoy steady growth in its deposit and loan activities and expected economic growth to continue in the second half.

Barring unforeseen circumstances, the bank would have a satisfactory result for the whole year, it said.

The recently announced economic adjustments and efforts by China to reduce its trade deficit might lead to a decline in commodity imports, which might affect Hong Kong's re-export trade.

However, it said, as the construction of various infrastructure projects had begun and the inflation rate had dropped slightly, Hong Kong would maintain significant growth.

In June, the bank opened its 19th branch, and others are to follow. In the same month, the bank issued $280 million floating rate certificates of deposit for a term of three years.