Bank of East Asia reports first-half profit up 60pc, shares rally

Bank of East Asia’s performance bounced back in the first half, with profit from its continuing operations 60 per cent higher than a year earlier.

The bank posted profit of HK$3.17 billion (US$405 million) for the period, compared with HK$1.99 billion in the first half of last year.

Gains in its mainland Chinese operations, which returned to profit in the first half following a troubled 2016, as well as improved performance in retail banking in Hong Kong helped mitigate declines in commercial and corporate bank profit.

BEA’s shares jumped 3.74 per cent to HK$34.70 in afternoon trade on Friday following the results announcement.

“The business environment improved in the first half of 2017,” said David Li Kwok-po, the bank’s chairman and chief executive in a statement to the Hong Kong stock exchange.

In March, BEA completed the sale of its stake in corporate services provider Tricor, which resulted in a net profit of approximately HK$3 billion for the bank, and in May it sold its rural banking subsidiary based in Shaanxi for 24 million yuan.

Including these sales, BEA group earned a profit attributable to owners of the parent of HK$6.22 billion, an increase of 197 per cent, compared with the same period in 2016.

BEA’s mainland China operations posted a first half profit of HK$336 million, turning round a net loss of HK$462 million for the full year in 2016.

Li attributed the performance to an improving economy, as well as actions taken by the management.

In Hong Kong, BEA’s income from its retail banking operations rose by 17.4 per cent on year, but income from its corporate and commercial banking operations fell.

Overall, BEA’s net interest income amounted to HK$5.73 billion in the first half, up 4.7 per cent, while non interest income was up 14.8 per cent to HK $1.89 billion.

Elliott’s suit against Bank of East Asia draws to a close, pending verdict

BEA is currently locked in a legal battle with activist hedge fund Elliott Management, who are seeking to have the High Court order the removal of agreements the bank has with its two largest shareholders, Sumitomo Banking Corporation, and Criteria Caixa, a Spanish investment fund which owns Caixa bank. Last month BEA sought to have Elliott’s case “struck out”, and a decision from Mr Justice Jonathan Harris is expected in the coming weeks.

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