The Bank of East Asia (00023), the executive chairman of Li Guobao, experienced a 74.94% decline in net profit in the first half of the year to RMB 1 billion
During the period, the loan credit rating deteriorated, and the impairment loss was 5.063 billion yuan, up 16.89 times year-on-year. . The performance regressed and the dividend was cut, dragging the bank’s share price down 1.65% yesterday to close at 20.85 yuan.
The Bank of East Asia’s performance has regressed and dividends have been cut. The second from left is Li Minbin and the third from left is Li Minqiao.
East Asia explained that due to the deterioration of the commercial real estate market environment in the first-half cities in the first half of the year, there were four credit assets with a face value of about 6.2 billion yuan, and the credit level was lowered, so that the net loss of financial assets was soared. The earnings performance was seriously affected. The impaired loan ratio of the Mainland business increased by 3.16 percentage points to 4.89%.
Mainland business loss of 2.8 billion
In addition, East Asia’s interim dividend of 0.11 yuan per share, significantly reduced by 78.43%.
East Asia Interim Results
The market has been concerned about the loan assets that have been downgraded by credit rating. East Asia said that after the profit warning was issued in June, some of the relevant loan assets were sold to third parties.
On the other hand, the bank announced yesterday that at the end of February last year, its East Asia China agreed to transfer the rights of the 1 billion yuan loan to the Mitsui Sumitomo Bank of China, a major shareholder of the bank, Sumitomo Mitsui Banking Co., Ltd., for a price of 1 billion yuan (about 12.36) HK$100 million), no gains or losses were incurred in the transfer of creditor’s rights.
It is worth noting that the East Asian mainland business recorded a net loss of 2.846 billion yuan in the first half of the year. The bank pointed out that due to the economic slowdown and Sino-US trade disputes, the business environment in the Mainland in the first half of the year was full of challenges. As at the end of June, total corporate and personal customer loans for the East Asian business decreased by 3.7% year-on-year to $146.2 billion, while customer deposits also fell by 6.4% to $177.3 billion.
Loan pessimism throughout the year
Li Minbin, the co-CEO of the bank, said that the interest rate mechanism for the mainland reform loan market has lowered the bank loan interest rate and corporate financing costs. He admits that the net interest margin performance of the mainland business will be under certain pressure in the second half of the year, and the macro environmental uncertainty is high. It is still difficult to count “not seeing red” throughout the year. In fact, the bank disclosed in its performance report that it has injected an additional RMB 2 billion into East Asia China in June this year.
As for the Hong Kong business, Li Minqiao, another co-chief executive of the bank, turned pessimistic about the performance of the loan for the whole year. He lowered the growth forecast from medium to high single digits to the middle unit. He also pointed out that the pace of recruitment will be adjusted depending on economic changes.