Hang Seng Bank reported a 381.9 per cent surge in bad debts and a sharp decline in its wealth management business for last year as the global financial crisis took hold.
Deteriorating business conditions led the city's second-biggest lender to report a worse than expected 22.71 per cent decline in profit to HK$14.1 billion for last year. Analysts expected earnings to fall 14.39 per cent on average, according to Thomson Reuters estimates.
Earnings stood at HK$7.37 per share, against a profit of HK$18.24 billion or HK$9.54 per share a year earlier. It was the bank's first profit decline since 2005 when earnings dipped 0.2 per cent.
The bank's shares fell 3.16 per cent yesterday to HK$84.25.
Hang Seng vice-chairman and chief executive Raymond Or Ching-fai said the surge in bad debts was partly due to a write-off of its entire holdings of debt securities in the collapsed Washington Mutual Bank. Previously, one of the largest United States lenders, Washington Mutual collapsed in September last year.
While Mr Or did not disclose its exact holding in Washington Mutual debt securities, he said the bank 'can now put the implication of Washington Mutual investment to an end'.
The bank's annual results showed its bad treasury debts, including Washington Mutual and other bonds which had become worthless, had reached HK$1.37 billion.
