Hong Kong's fifth-largest lender, Bank of East Asia, is likely to report net earnings growth of between 29 per cent and 41 per cent, or $1.02 billion to $1.3 billion, when it begins the industry's interim reporting season tomorrow. Against a background of poor loan demand but an improving credit outlook, the main drivers of profit growth at the bank chaired by David Li Kwok-po, were likely to have been lower bad debt charges, and increased non-interest income - including its fast-growing insurance business - and China operations, according to analysts. At the top end of the forecast range, Morgan Stanley analyst Amit Rajpal projected net earnings of $1.3 billion and cash earnings per share of 93 cents against 80 cents in the same period last year. 'With the combined effects of lower consumer bad debts and rising property prices, we believe the [bad loan] provision will drop,' Mr Rajpal said. '[It] will be the major catalyst for earnings. We look for a $154 million decline in the loan loss provision, or down 51 per cent year on year.' DBS Vickers' bank analyst Tony Liu said BEA's pre-provisioning profit growth was likely to beat its rivals. 'BEA's expansion plan over the past two years is paying off. Core earnings growth should surpass its peers thanks to the successful China-expansion, synergy from previous acquisitions and rising profitability,' he said. DBS Vickers did not provide an interim profit forecast, but expects full-year net profit to be up 78 per cent to $2.26 billion. BNP Paribas analyst Patrick Ho forecast 34.7 per cent growth in net profit 'driven by non-interest income and reduced provision charges, but affected by low income from associates'. While net interest margin was likely to fall due to narrower spreads earned on mortgages, securities trading commissions, investment funds, corporate services and customer-driven dealing activities would produce higher non-interest income growth, he said. Core Pacific Yamaichi analyst Bonnie Lai said BEA's small debt securities investment portfolio, which accounts for about 11 per cent of assets, and a large amount of excess liquidity placed in the interbank, would have combined to reduce net interest margins. But helped mainly by lower bad debt charges, bottom-line earnings were likely to show a 33.6 per cent increase in net earnings to $1.05 billion, she said.