Bank of East Asia touts commitment to SMEs as it reports 20% first-half profit slump Bank of East Asia (BEA), Hong Kong’s largest family-owned lender, has pledged continuing dedication to the city’s small and medium-sized enterprises (SMEs) amid concerns that many such companies are struggling with cash-flow issues. The bank, which focuses primarily on Hong Kong and mainland China, said it approved HK$2.6 billion (US$333.6 million) in SME loans via around 80 transactions in the first six months of this year. On Monday, the Hong Kong Monetary Authority promised to set up a task force to help SMEs after industry leaders warned they are under strain to repay loans amid a property market slump and the city’s struggling post-pandemic economic recovery. “Being a local bank, we are fully committed to supporting the local economy as well as the local SMEs,” BEA’s co-CEO Adrian Li said in a media briefing on the bank’s interim results on Thursday. “So far, we have not seen material credit deterioration, and our non-performing loan [NPL] ratio is not significant.” BEA’s profit slumped 20 per cent year on year to HK$2.11 billion in the six months through June amid the downturn in Hong Kong and mainland China’s real estate sectors and global economic uncertainties. The bank will continue to conduct SME business, which will be boosted by the government’s supporting measures and a favourable operating environment induced by Hong Kong’s integration with the Greater Bay Area and the coming interest-rate cut, Li said. The segment’s customer base and lending remain significant to BEA, which currently allocates about 15 per cent of its loan balance in Hong Kong to SME customers. This is a slight drop from last year because some government guarantee programmes are expiring, Li said. The SME customer base has increased by 4.1 per cent year on year, he added. However, BEA maintains a prudent approach to new lending, mainly due to liquidity strain in the real estate sector. “The Hong Kong commercial real estate [CRE] portfolio was closely monitored, with priority given to high-quality names,” the bank said in its interim report. Local loans overdue for more than three months surged 55 per cent to HK$3.6 billion as of June 30, compared with the end of 2023, while NPLs rose 1.4 per cent to HK$4.9 billion. Impairment losses on financial instruments jumped 15.6 per cent year on year to HK$2.88 billion, with more than half of that due to loan loss provisions in the Chinese CRE sector and 24 per cent coming from certain Hong Kong CRE clients following a drop in collateral value, the bank said. However, BEA’s NPL ratio in mainland China dropped by 2 percentage points to 2.66 per cent compared with the end of last year, while the group’s overall NPL ratio declined to 2.62 per cent from 2.69 per cent. Net interest income rose 2.3 per cent year on year to HK$8.23 billion in the first half thanks to elevated interest rates. Concerns about the challenges SMEs face remerged after real estate industry representatives met authorities earlier this month to discuss the tightening of property loans by banks. The Hong Kong General Chamber of Commerce also revealed in a recent survey that 74.3 per cent of SMEs cited cash flow as their biggest challenge in the coming 12 months. https://www.scmp.com/business/banking-finance/article/3275488/bank-east-asia-touts-commitment-smes-it-reports-20-first-half-profit-slump (ICE HONG KONG)

Fonte notizia: South China Morning Post