The Bank of East Asia (BEA), Hong Kong’s largest independent and family-run lender, said its half-year profit soared 75 per cent as it benefited from declining impairment costs for soured loans in mainland China and in Hong Kong. The banking group, whose business is primarily focused on Hong Kong and mainland China, said it was “cautiously optimistic” about the pace of the economic recovery from the coronavirus pandemic . It reported a profit of HK$2.67 billion (US$343 million) for the first six months of 2021, up from HK$1.53 billion in the same period a year earlier. “The recovery is uneven, with some sectors lagging behind, including the airline and hotel industries. However, with a relatively stable epidemic situation in Hong Kong, positive momentum will continue. Due to different bases of comparison, the growth rate in the second half will be lower than the first,” the bank said in a stock exchange filing . During the period, the 103-year-old lender agreed to sell its life insurance unit to AIA Group Limited for US$653 million, following a strategic review prompted by activist shareholder Elliott Management. That sale has been approved by Hong Kong’s Insurance Authority and is expected to be completed soon, BEA said. The bank said it would pay an interim dividend of 35 HK cents a share, compared with 16 HK cents a share a year ago. Shares of BEA rose 1.6 per cent to close at HK$12.74 in Hong Kong following Thursday’s announcement. The lender said its net charge for impairment losses declined to HK$581 million for the first six months of the year as it continued to benefit from a reduction in losses in its mainland business. That compared with a charge of HK$2.9 billion for impairment losses in the first half of 2020. The bank said it would reorganise its mainland operations last year after posting its worst annual results in a decade for full-year 2019. The bank’s mainland business reported a pre-tax profit of HK$415 million for the half year, compared with a pre-tax loss of HK$602 million in the first half of 2020. In Hong Kong, pre-tax profit rose to HK$1.99 billion from HK$1.11 billion a year earlier, driven by higher fee income, reduced impairments and a “positive swing in mark-to-market revaluations” as business conditions improved. Adrian Li Man-kiu, BEA’s co-CEO, said the lender remains confident about Hong Kong’s prospects as an international financial centre even as Beijing prepares a new anti-sanctions law for Hong Kong that could increase the risks for banks and other financial firms operating in the city. “We have always been operating in different markets according to the applicable laws and regulations,” he said on a conference call with journalists. “We are confident we will be able to do this going forward.” The sale of its life insurance business in March followed a five-year legal battle with US hedge fund Elliott over its direction. The legal battle was put on hold last year after BEA said it would undertake the strategic review. As part of the sale, the bank agreed to become an exclusive distributor of AIA’s life insurance and long-term savings products to its retail banking customers in the city, in Macau, and in the nine mainland Chinese cities in the Greater Bay Area for 15 years. BEA hopes to leverage its network of 140 branches in Hong Kong and in the mainland as the upcoming Wealth Management Connect scheme and other programmes increase collaboration between Hong Kong and other cities in the bay area. In January, the bank named Christine Lo, its head of retail lending, to lead its bay area office . As a whole, the bay area has a total population of 70 million people and a combined economy of US$1.7 trillion, the equivalent to the world’s 11th biggest economic entity. “The impending launch of the Wealth Management Connect should bring additional opportunities for fee revenue growth,” Li said. “Beyond this, further integration of the Chinese financial markets will broaden our customer base, particularly for wealth management services.”