China Everbright blames slump in banking operation for $1b loss

Red chip China Everbright yesterday posted a near HK$1 billion loss due to write-offs sustained by its mainland banking and securities operations.

Financial services had been a favourite of mainland investors but a stock-market bust has hurt firms. A central bank directive to accelerate bad loan provisions worsened the group's losses.

China Everbright reported a HK$993 million loss for the last calendar year after its 21.39 per cent-held China Everbright Bank made an 8.63 billion yuan (about HK$8.08 billion) charge-off for a 1999 investment in China Investment Bank.

That compared with a net profit of HK$371.43 million in the previous year.

Rough estimates suggest that China Everbright shared a HK$1.8 billion loss provision in the bank, which it was compelled to buy in 1999.

Weak financial markets took a heavy toll with the firm's 49 per cent-held subsidiary, Everbright Securities, reporting a net loss of HK$259 million due to investment losses of HK$138 million and write-offs for accounts receivable and other assets totalling HK$100 million.