BEA looks to expansion on the mainland
Updated: 2011-12-08 07:41
By Emma An(HK Edition)
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Customers walk out of the Bank of East Asia's headquarters in Hong Kong. The bank wants to expand its lending on the mainland by more than 10 percent next year. Antony Dickson / AFP |
Bank to hire 400, open up to 15 more branches annually over next 3-5 years
Bank of East Asia Ltd (BEA), Hong Kong's third-largest lender by market value, expects to increase the profit contribution from its mainland operations more than 40 percent in the next three to five years from 35 percent currently as it continues to expand there, the bank said on Wednesday.
BEA Deputy Chief Executive Brian Li said that the bank will be opening 10-15 branches on the mainland per annum during the next three to five years and plans to add 400 staff - or 10 percent of its current 4,000.
BEA's decision to expand further on the mainland and continue hiring comes at a time when the economy has shown signs of losing steam, and the anemic world economy and lingering eurozone sovereign debt crisis have led banks to axe jobs one after another to limit costs.
US banking giant Citigroup said on Tuesday that it is to slash 4,500 jobs worldwide, joining its rivals including HSBC and Bank of America which have both announced job cuts to reduce costs.
On the domestic front, China's economic growth eased to a two-year low of 9.1 percent in the third quarter from 9.5 percent during the second quarter and 9.7 percent in the first quarter.
The consensus is that the economy is on a downtrend though the extent of the slowdown remains to be seen.
But Brian Li believes that the economy is only heading for a soft landing and its long-term growth momentum remains intact.
Li predicted that loans made by BEA's mainland division will likely have grown in the high single-digits this year and said that the bank wants to expand its lending on the mainland by more than 10 percent next year. Lending growth at BEA's mainland operations slowed in the second half of the year from the first half amid external challenges, according to Li.
Like BEA, Li believes that major mainland banks will be seeking stronger loan growth in the year ahead following the People's Bank of China's (PBoC) latest move to lower banks' reserve requirement ratio by 50 basis points, the first reduction in three years which will release an estimated 396 billion yuan of liquidity into the banking system.
"There is a gradual loosening of monetary policy underway," said Linus Yip, a strategist with First Shanghai Securities. He reckons that banks' lending capacity will improve after the PBoC's move to replenish liquidity in the country's banking system.
Yip acknowledged that BEA's mainland expansion will help the lender better capture lending opportunities there.
Net interest margin at BEA's mainland division stood at 2.45 percent for the six months ended June, which saw slight improvement during the second half of the year, according to Li.
Meanwhile, Li said that BEA sees no imminent need to raise capital. The bank's core capital adequacy ratio was 9.4 percent at end-June, down from 9.8 percent at the end of last year, while its total capital adequacy ratio slipped to 12.6 percent from 13.2 percent at last year's end.
Li said the bank is "satisfied" with its current capital position and sees no need to boost capital anytime soon.
emmaan@chinadailyhk.com
China Daily
(HK Edition 12/08/2011 page2)