Mid-tier lender Wing Lung Bank lost HK$816.15 million last year, becoming the first Hong Kong bank to report a full-year loss since 1999, while its parent China Merchants Bank made a goodwill provision and suffered a 61 per cent year-on-year plunge in profit in the fourth quarter.
Merchants Bank, the nation's fifth-largest lender by market value, saw its fourth-quarter profit drop to 2.08 billion yuan (HK$2.36 billion) from a year earlier, based on mainland accounting standards, because of higher bad debt provisions and expenses related to its acquisition of Wing Lung.
Figures for the quarter were obtained by subtracting profits in the first nine months from the full-year earnings.
The bank also made a goodwill impairment charge of 579 million yuan for Wing Lung, a 75-year-old family-run lender in Hong Kong, which Merchants Bank bought for HK$36.33 billion last year.
Wing Lung's HK$816.15 million loss last year compared with a HK$1.37 billion profit in 2007. The loss stemmed from the write-down of provisions of HK$819 million for its collateralised debt obligations investments and HK$316 million for its exposure to structured investment vehicles.
The Hong Kong lender also set aside provisions for some of its bond and investment holdings, which lost market value because of the financial turmoil, as well as allowances for the Lehman Brothers minibond setback.