Thailand Financial News

BOC Hong Kong (Holdings) Limited (“the Company”, Stock Code 2388; ADR OTC Symbol “BHKLY”) today announced its 2006 interim results. The Company and its subsidiaries (“the Group”) registered a profit attributable to shareholders of HK$7,093 million for the first half of 2006, an increase of 8.4% compared with the same period of 2005.

Earnings per share rose to HK$0.6709 from HK$0.6191, up 8.4%.
The growth in the Group’s profits was mainly attributable to a strong increase in operating profit before loan impairment allowances of 34.3% to HK$7,546 million. The growth was driven by the substantial rise in net interest income as well as net fees and commission income. Both operating profit before loan impairment allowances and profit attributable to shareholders reached the highest interim levels since the Company’s IPO in 2002. Return on average total assets remained at 1.59%. Return on average shareholders’ funds was 17.63%. The Group’s asset quality further improved. Impaired loan ratio dropped further in the first half of 2006 to 1.09% versus 1.28% as at the end of 2005. The Board has declared an interim dividend of HK$0.401 per share, up 22.3 % as compared with the same period last year. The interim dividend will be payable on 26 September 2006 (Tuesday) to those persons registered as shareholders on 19 September 2006 (Tuesday). Key Financial Performance
As Hong Kong economy continued to perform well and with the intrinsic strengths and growth momentum built up within the Group in the past few years, the Group has been able to forge ahead with its 2006-2011 Strategic Plan approved by the Board last year. Substantial growth was therefore achieved in total operating income, operating profit and profit attributable to shareholders respectively. The Group’s total operating income, which reflects its capability in driving business growth, continued to grow strongly in the first six months of 2006, up by 34.8% to HK$13,577 million. While net operating income before loan impairment allowances increased by 26.5% to HK$10,517 million, operating profit was up by a healthy 16.1% to HK$8,188 million although loan impairment allowance write-back, at HK642 million, was 55.3% lower than the first half of 2005 after significant improvement in the Group’s asset quality over the past few years. On the other hand, in line with the property market trend, the Group’s net gain on investment properties revaluation dropped by 48% to HK$477 million. Notwithstanding these two factors, which had contributed significantly to net profit in the first half of 2005, the Group still managed to grow its profit attributable to shareholders by 8.4% to HK$7,093 million. The Group’s net interest income increased substantially by over 26% to HK$7,573 million. Average interest-earning assets grew by HK$78,194 million, or 10.4%, due mainly to the increase in average deposits and IPO-related funds. Net interest margin was widened to 1.84%, up 23 basis points from a year ago. Gross yield on average loans increased by 247 basis points year-on-year as a result of the Group’s efforts in maintaining loan spreads and higher market interest rates. Gross yields on debt securities also increased by 152 basis points as the Group continued to diversify its investment portfolio to enhance return. Net fees and commission income rose by 21.2% to HK$1,761 million, reflecting the strong growth in commission income from stockbroking and asset management by 95.2% and 60.6% respectively. Total investment and insurance income surged by HK$375 million, or 54.2% year-on-year to HK$1,067 million, primarily due to an increase in investment and insurance fee income of HK$296 million, or 52.7%, and the upsurge of insurance income of BOC Life by HK$79 million, or 60.8%. Net trading income declined by 13.3% to HK$606 million. While net trading income from foreign exchange and related products increased by 27.2%, that from interest rate instruments posted a net loss due to the adverse effect of rising interest rates on the fair value of certain financial assets. Operating expenses rose by 10.3% mainly as a reflection of the increase in staff salary. The cost-to-income ratio improved considerably to 28.25%, compared to the 32.40% a year ago, due to the substantial growth in operating income. The Group’s impaired loans shrank by HK$646 million or 15.2%. Impaired loan ratio improved by 0.19 percentage point to 1.09% due to improved credit quality as well as strong collection and recovery efforts. Total collections amounted to approximately HK$0.7 billion. Total assets amounted to HK$860,335 million as at the end of June 2006, an increase of 3.5% from end-2005. Total advances to customers declined by 0.2% to HK$333,208 million, due to intensified market competition particularly in the residential mortgage market. The decrease was offset by growth in corporate loans in Hong Kong and loans for use outside Hong Kong. Total liabilities registered an increase of 3.75% to HK$777,384 million. Deposits from customers increased by 1.3% to HK$640,891 million. Loan to deposit ratio was 51.18% at end of June 2006, compared with 52.27% as at end-2005. The Group maintained strong capital and liquidity positions. Consolidated capital adequacy ratio was 14.61% as at the end of June, down 0.76 percentage point from end-2005 due to an increase of 6.7% in total risk-weighted assets as a result of higher securities investment. Average liquidity ratio rose to 50.3% from 42.02% of six months ago.
–www.theasianbanker.com (August 31 2006)–