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Exceptionals key to Dah Sing profits jump

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Dah Sing Banking Group yesterday said net profit surged last year, but much of the increase came from exceptional items, while operating profit plunged due to the expense of compensating investors for Lehman Brothers-linked products.

The bank posted a net profit of HK$600.88 million, compared with HK$188.64 million in the previous year. Operating profit dropped 22.5 per cent to HK$2.34 billion from HK$3.01 billion. Net interest income fell 3.3 per cent to HK$2.13 billion while net fee and commission income plummeted 34.6 per cent to HK$348.28 million.

Managing director Derek Wong Hong-hing said that in addition to low interest rates and increased investor caution, operating income was hit by a mark-to-market net trading loss of HK$174.93 million, compared with a gain of HK$211.06 million the year before.

Operating expenses increased 11 per cent to HK$427.66 million as the bank made provisions for the settlement of Lehman-linked minibonds.

Executive director Gary Wang Pak-ling said he was 'confident' that almost all costs related to Lehman had been incurred.

The bank said that like its rivals, it did not disclose the exact figure incurred for such losses, but in August last year, it estimated the cost of its minibond buy-back would be about HK$444 million.

Operating income was helped by a fall in bad-debt charges as loan impairment losses dropped 35 per cent to HK$428 million from HK$659 million in 2008.

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