Bank of East Asia profits crashed 30.4% to $6.5b in 2018

Weak investment activity hit its retail and private banking arm.

The Bank of East Asia (BEA) profit’s crashed 30.4% to $6.5b in FY18 from $9.3b in 2017.

The Group’s net interest income from continuing operations increased by $1.127b, or 9.5%, to $12,959m. Net interest margin increased from 1.65% to 1.73%, and average interest bearing assets increased by 4.6%.

Net insurance revenue from continuing operations decreased by $392m, or 57.1%, to $295m, mainly due to the inclusion of a net revaluation loss of $424m on financial assets mandatory at fair value through profit or loss following the adoption of HKFRS 9 in 2018 and a disposal gain of $216m on available-for-sale financial assets in 2017 due to the transition to HKFRS 9.

Overall, non-interest income from continuing operations fell by 0.2% to $4,113m. Operating income from continuing operations increased by 7.0% to $17,072m.

Total operating expenses from continuing operations rose by 6.1% to $8,563m. This rise was mainly attributable to the increase in staff costs at Group level, and expenses incurred for new business initiatives and partnerships in China in 2018.

The bank’s retail banking segment struggled in the second half of the year as sales of investment products at the retail level recorded a moderate drop due to sluggish market conditions.

Its private banking segment also suffered as its rise in net interest income was offset by a decline in revenue from investment activity and insurance sales. Overall, its operating income declined by 6.2%.