The recent yuan devaluation has failed to shake Chong Hing Bank's confidence in the yuan business or its determination to expand in China, the Hong Kong-based bank said on Monday while announcing a mixed bag of interim results. The bank said it plans to raise HK$3.71 billion through a rights issue. The proceeds will be used to fund the bank's expansion on the mainland and in Hong Kong, bolster its capital adequacy, and upgrade its branch network and banking infrastructure. The issue will be priced at HK$17.05 per share - a 26 per cent discount on the last closing price of the bank's stock before it was suspended from trading on Friday ahead of the announcement. The offer represents 50 per cent of the bank's existing shares. Most of the newly issued shares will go to its China parent, Guangdong government investment vehicle Yuexiu Holdings, which bought 75 per cent of the bank's stake last year. Despite increased lending in China, bad debt at Chong Hing stood at a well-controlled 0.05 per cent. The bulk of Chong Hing's China lending has been to government-related entities. Excluding one-off gains from the sale of an office on Des Veoux Road in the Central district of Hong Kong, Chong Hing's net profit rose by 87 per cent compared to the same time last year. But net profit dropped 69 per cent from January to June. Total assets at the bank was up by 7 per cent in the first half. It recorded strong growth in trading income, which rose by 90 per cent. Asked on the unexpected yuan devaluation last week, Margaret Leung, deputy chairwoman of Chong Hing Bank, said Hong Kong being a mature market, has not been affected by "minor adjustments" of the yuan's pricing. A devaluation of just 2 to 4 per cent would not affect investor demand or corporate operations, she said. Leung is focusing the bank's expansion in Guangdong, where it operates two branches and is backed by Yuexiu. It is keen to open more branches in the strategically important province, where, she said, cross-border trade relations continue to deepen. "Guandong is in itself one big free-trade zone," Leung said, "Hong Kong, as the largest offshore RMB centre, will see more opportunities ahead. Between the mutual recognition scheme for funds, the Shanghai-Hong Kong Stock Connect and the coming Shenzhen Stock Connect, Hong Kong will see an increase in demand for renminbi products." The bank, accordingly, plans to increase its Hong Kong-based headcount from 1,400 to 1,500. More headcount will be added as its pending applications in China are accepted.