Bank of China (HK) set to continue loan war in second half as competitors turn conservative
BOCHK underwrites 60 per cent of all new loans in the city, with analysts saying growth could even accelerate based on its strong balance sheet
Hong Kong’s loan market is set to see the dominance of Bank of China (Hong Kong) expand even more in the second half of the year, with BOCHK management taking advantage of competitors turning conservative in their credit assessments in the wake of heavy losses.
Regulatory data shows that in the eight months to the end of August Hong Kong’s loan market has been largely flat, growing at a pace of just 2.2 per cent year on year. However, against the tide of negative growth in the industry and even shrinking balance sheets at its peer banks, BOCHK’s said its new loans grew at a 11.1 per cent clip in the eight months to end of August to HK$99 billion, accounting for 60 per cent of the total in Hong Kong. The remainder of Hong Kong’s lenders lent out HK$66 billion in the period.
However, the loans growth came at a price, with BOCHK’s first half core net profit dropping 2.3 per cent year on year to HK$11.8 billion, when excluding its one-off HK$30 billion gain from the sale of Nanyang Commercial Bank to China Cinda Asset Management.
At the bank’s latest results briefing on August 30, deputy chief executive Lin Jingzhen said the lender was “confident [it could] keep up with double-digit growth”.
He said the bank will focus on loan growth in three key areas: mainland corporates going global; local industries seeking to internationalise, especially in the Southeast Asian market; and Southeast Asian related loans, which Lin thinks have potential for up to HK$30 billion of business.
