Affected by the liquidity problems faced by many mainland real estate developers last year, Bank of East Asia (0023) significantly increased its loan provision for the industry, and the profit attributable to shareholders also decreased by 17.3% year-on-year.
Li Minqiao, co-chief executive officer of the Bank of East Asia, said at the results conference that the provision for loans related to domestic real estate began to increase significantly in the second half of last year, accounting for 70% of the overall provision. Introduce different support measures, describing "the worst time for provisioning is over".
Li Minbin, the co-chief executive officer, added that it will take time for relevant corporate restructuring, and the non-performing loan ratio will remain at a relatively high level in the future.
However, the mainland economy has seen recovery, and the authorities have also introduced a number of measures for the property market. Sales have improved in the past month. I believe that market confidence will return, and the level of provisions related to mainland real estate this year will also be lower than last year.
He also pointed out that in the past 18 months, the exposure of mainland real estate, especially private enterprises, has been reduced. The loans related to mainland real estate have dropped to about 10% of the total.
He pointed out that the risk-weighted asset (RWA) tool will be used to increase the net return rate (ROE), and it will also diversify bank loans.
Last year, BEA significantly increased its loan provision for mainland developers, and the profit attributable to shareholders also decreased by 17.3% year-on-year.
(Picture of online meeting)
He also pointed out that the current Tier 1 capital adequacy ratio of banks' common shares is 15.8%, and the capital level is healthy. With the return to normal after the epidemic, it is believed that interest, non-interest and commission income will rebound, and it is possible to increase dividends to shareholders.
In terms of the property market, Li Minqiao pointed out that since January this year, property prices have rebounded by about 2%, and they have gradually cleared the customs. With the recovery of trading volume, banks can do more mortgage business, and he is optimistic about the property market prospects.
In terms of manpower, although the manpower fell by more than 4% last year, in order to cope with the business opportunities after the cross-border Wealth Management Connect and China-Hong Kong customs clearance, the frontline manpower has increased by 28%, and investment in digitalization has also been strengthened.