Hang Seng Bank profit tumbles 43 percent
Hang Seng Bank Ltd, the Hong Kong lender controlled by HSBC Holdings Plc, posted a 43 percent drop in 2014 profit after a year-earlier result was boosted by an accounting gain for a stake in China’s Industrial Bank Co.
Net income was HK$15.1 billion ($1.95 billion), or HK$7.91 a share, down from HK$26.7 billion, or HK$13.95 a share, the bank told Hong Kong’s stock exchange on Monday. The earnings compared with the HK$15.5 billion average of seven analysts’ estimates compiled by Bloomberg.
Excluding effects connected with the Industrial Bank stake, a shareholding that Hang Seng has partly sold down, net income edged ahead 0.4 percent, the bank said.
Rising bad l oans could weigh on the lender’s shares, while prospects for a special dividend may lend support.
“Investors are expecting Hang Seng Bank to sell the remaining shares in Industrial Bank this year and they may distribute a special dividend after that,” said Edmond Law, a Hong Kong-based analyst at UOB-Kay Hian Holdings Ltd. “Asset quality for the rest of the year will remain an issue for investors given Chi- na’s rising bad loans.”
The bank’s loan impairment charges more than doubled in 2014 to HK$1.14 billion “due to the more challenging credit environment in the Chinese mainland”, the company said.
In 2013, the lender’s profit included an accounting gain of HK$9.52 billion related to the Industrial Bank stake. The 2014 result included a HK$2.1 billion impairment loss on the same investment.
The lender sold 5 percent of Industrial Bank this month for about $2 billion and said it will keep reviewing a remaining stake of 5.87 percent.
Shares of Hang Seng Bank fell 0.35 percent to HK$142.2 on Tuesday. The benchmark Hang Seng Index was up 0.35 percent. The lender is up more than 10 percent this year, outstripping a 5 percent gain in the index.