BEA closes 2021 with 45.8% surge in attributable profits

The bank got a boost from a significant reduction in impairment losses.

The Bank of East Asia (BEA) and its subsidiaries earned a profit attributable to owners of the parent of
$670m, representing an increase of 45.8% for the year-ended 31 December, compared to the $460m earned in 2020.

According to BEA, the increase in profit was mainly due to a significant reduction in the impairment losses in Mainland China, improved net fee and commission income, and a gain of $115.53m on its recent disposal of BEA Life.

Return on average assets rose from 0.3% to 0.5%, whilst the return on average equity rose from 3.0% to 4.4%. Basic earnings per share rose from HK$0.97 in 2020 to HK$1.53 in 2021.

Group net interest income was pressured under the prolonged low-interest-rate environment. Net interest margin for the full year narrowed from 1.48% to 1.37%, leading to a 3.2% drop in net interest income to $1.42b, despite a 4.7% increase in average interest earning assets. However, the situation stabilised in the second half of the year, with net interest income rising by 2.5% half-on-half.

Net fee and commission income rose by 5% to $390m. The increase was mainly led by higher income from sales of insurance policies, as well as improved results from investment activity in Hong Kong and other revenue streams across the Group.

The total operating income decreased by 5.9% to $2.09b. Total operating expenses were contained at $1.19b despite continued investments in technology and talent, as efficiency gains from automation and straight-through processing began to take effect. Excluding the impact of exchange rate movements, costs grew by just 1%.

The loan-to-deposit ratio stood at 78.6% at the end of December 2021, compared to
79.1% at the end of 2020. As at 31st December, 2021, the total capital ratio, tier 1 capital ratio, and common equity tier 1 capital ratio were 21.6%, 19.8%, and 17.0%, respectively. The average liquidity coverage ratio for the quarter ended 31st December, 2021 was 182.4%, well above the statutory minimum of 100%.

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