Bad-debt charges at International Bank of Asia (IBA) shot up 46 per cent last year as more people filed for bankruptcy, causing Hong Kong's smallest lender to post a 23.7 per cent fall in profits. Consumer bad debt took the lion's share of the bank's provisions, soaring 117.4 per cent to HK$285.2 million from HK$131.2 million in 2001. Credit cards made up 18.8 per cent of IBA's profits in 2001 but the bank did not break out its card earnings in this year's results announcement. A bank spokesman said this was because credit card business no longer contributed significantly to overall earnings. The bank declined to reveal its credit card charge-off ratio for last year. It reported a net profit of HK$225.3 million, down from HK$295.3 million in 2001. IBA chief executive Mike Murad yesterday sought to reassure investors the leap in provisions was a one-off. 'Provisions will drop extensively because we had a fairly large one-off payment which is not going to happen again this year as a result of changes of policy,' he said. Interest income dropped by a third, to HK$1.13 billion last year from HK$1.71 billion in 2001, as loans contracted by 9.4 per cent due to weak demand. Competition in the local lending market caused interest margins to fall to 2.61 per cent last year from 2.9 per cent previously. Mr Murad yesterday defended Hong Kong's smaller banks, which face consolidation in the crowded banking industry. 'I sincerely believe banks with a good niche in the market can still operate and make money. If you have a good client base, if you have good services . . . you can make money. I would not subscribe to the view that small and medium-size banks must consolidate.'