The lender has yet to fully integrate systems with its $4.8b acquisition The benefits derived from the acquisition of Chekiang First Bank will not be fully reflected in Wing Hang Bank's earnings until next year, according to chairman and chief executive Patrick Fung Yuk-bun. In August last year, Wing Hang bought Chekiang from Japan's Mizuho Financial Group for $4.8 billion, doubling its assets overnight to become Hong Kong's sixth-largest lender. Chekiang began contributing profits from September 30 last year. 'There will be more synergies from the merger in the future and we are confident that full integration benefits will be achieved by the end of 2005,' Mr Fung said. 'Some of our information-technology systems have not been fully integrated and we still haven't realised some of the cross-selling opportunities in the mainland.' Mr Fung was speaking after unveiling the bank's interim result that showed the cost-income ratio rose to 41.7 per cent from 32 per cent a year ago. He said the figure would come down as more synergies from the merger kicked in. Wing Hang also suffered a $6.97 million one-time loss from the disposal of several investments made by Chekiang before the merger. Tung Tai Securities associate director Kenny Tang Sing-hing said the higher cost-income ratio was 'understandable' given the merger took place less than a year ago. But he urged caution over Wing Hang's market-beating results - the bank posted a 43.6 per cent rise in net earnings to $530.19 million, its highest half-year profit to date. 'Chekiang didn't start contributing until very late last year so the current interim report isn't exactly an apples-to-apples comparison,' Mr Tang said. 'Its next set of results will be a more accurate reflection of how the bank has been performing and what benefit the merger has really brought to Wing Hang.' Nevertheless, the bank did show healthy growth across different sectors. Net interest income, the weak spots of many Hong Kong lenders due to sluggish consumer loan demand, rose 23.8 per cent to $916.6 million on the back of Chekiang's strong small and medium enterprise loan portfolio. Excluding Chekiang, net interest income grew 2.4 per cent to $758.2 million. Non-interest income rose 70.6 per cent to $328.1 million. Without Chekiang, the rise would have been 26.2 per cent to $242.8 million. Profit contribution from Chekiang stood at 8 per cent of the bank's after provision profit for the first half. Chekiang was credited with 4 per cent of Wing Hang's 2003 full-year profit. Wing Hang shares rose 4.89 per cent to close at $47.10 yesterday.