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Banks Reap Higher Net Profits

Bank of China (BOC) Hong Kong and ICBC (Asia) - the Hong Kong units of two of China's largest banks - Monday reported higher net profits for fiscal 2003.

BOC Hong Kong's profit grew 17 percent to HK$7.96 billion (US$1.0 billion) while that of ICBC (Asia) rose 10 percent to HK$522 million (US$66.9 million).

BOC Hong Kong's results beat expectations - 25 analysts polled by Reuters forecast HK$7 billion (US$897 million); while ICBC Asia's results were below the HK$530 million (US$64.9 million) market consensus.

BOC Hong Kong attributed profit growth to higher wealth-management income, cost control - operating expenses fell 6.1 percent to HK$5.66 billion (US$725.6 million) - and lower charges for bad and doubtful loans.

Bad debt charges were down 41 percent to HK$1.67 billion (US$214.1 million).

Citing analysts, Reuters said BOC Hong Kong still had one of the highest non-performing loan (NPL) ratios among listed lenders - 5.78 percent at the end of 2003 compared with 7.99 percent a year earlier.

Net interest income fell by an undisclosed margin to HK$12.87 billion (US$1.65 billion), the bank said in a brief statement.

Its shares fell 1.3 percent in the morning, but rebounded in the afternoon to close at HK$14.65 (US$1.88).

ICBC Asia shares fell 2.6 percent to close at HK$11.25 (US$1.44).

A 19 percent rise - to HK$823 million (US$105 million) - in net interest income boosted by increased lending was behind its profit growth, ICBC Asia said.

Loans grew 27 percent to HK$68 billion (US$8.7 billion) last year.

The provision for bad and doubtful debts fell 29 percent to HK$129 million (US$16.5 million), with the NPL ratio at 1.7 percent at the end of December compared with 2.3 percent a year earlier.

ICBC Asia agreed to buy the Hong Kong operations of the Belgian Fortis Bank for HK$2.16 billion (US$276.9 million) last December.

The acquisition would raise the size of its assets, upon completion of the deal next month, from HK$66 billion (US$8.5 billion) to HK$95 billion (US$12.2 billion).

(China Daily March 23, 2004) 

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