Bank of East Asia's H1 profit tumbles 75%, warns of protest impact on HK (updated)

The Bank of East Asia

21/08/2019 06:21

(Adds details of writedown and Hong Kong protest context)
    By Alun John and Felix Tam
    HONG KONG, Aug 21 (Reuters) - Hong Kong-based Bank of East
Asia Ltd (BEA)  0023.HK  posted a 75% slump in first-half net
profit after it wrote down loans in  mainland China because of a
downturn in commercial property markets outside China's top
cities. 
    BEA, which counts Hong Kong and China as its main markets,
posted a net profit of HK$1 billion ($127.50 million) for the
Jan-June period, versus HK$3.99 billion a year earlier, the
lender said in a statement to the Hong Kong stock exchange.
    The bank's impaired loan ratio for its mainland China
operations rose to 4.89% from 1.73% at the end of 2018, and its
net charge on impairment losses rose to HK$5.01 billion from
HK$282 million in the first six months of last year. 
    This was largely because the bank downgraded four loans in
mainland China worth HK$6.2 billion, which it attributed to
weakening conditions in the commercial property market in non
tier-1 cities. 
    The bank had flagged this in a previous profit warning.
 urn:newsml:reuters.com:*:nL4N23L0YV 
    BEA also warned that social unrest in Hong Kong and the
trade dispute between China and the United States could affect
the economies of Hong Kong and mainland China. 
    "The tense atmosphere [in Hong Kong] is likely to weigh on
consumer and business confidence, and on in-bound tourism, if
there is no resolution soon," the filing said. 
    Some Hong Kong companies have been dragged into political
controversy in Hong Kong after 11 weeks of sometimes violent
clashes between police and pro-democracy protesters, angered by
a perceived erosion of freedoms.  urn:newsml:reuters.com:*:nL4N25G0RH 
    BEA, and its rivals, have closed branches in the vicinity of
protests on a number of separate occasions in past weeks.  
    BEA has survived as an independent lender in a market that
is dominated by HSBC Holdings  HSBA.L , Bank of China (Hong
Kong)  2388.HK  and Standard Chartered  STAN.L , while several
of Hong Kong's other family-owned firms have been put up for
sale amid deteriorating business conditions.
($1 = 7.8432 Hong Kong dollars)

 (Reporting by Alun John and Felix Tam; Editing by Himani Sarkar
and Muralikumar Anantharaman)
 ((Alun.John@thomsonreuters.com; +852-28415827;))