Hang Seng Bank posts 23 pct drop in 2008 profit
HONG KONG, March 2 (Reuters) - Hong Kong's Hang Seng Bank (0011.HK), controlled by global lender HSBC Holdings (HSBA.L), on Monday posted a 23 percent drop in earnings in 2008 as the economic downturn ate into fee income. Hang Seng reported 2008 net profit of HK$14.09 billion ($1.8 billion), compared with the HK$18.24 billion it earned for the previous year. The results lagged the average full-year profit forecast of HK$15.59 billion by 15 analysts polled by Reuters.
It maintained its final dividend at HK$3.00 a share.
Shares in Hang Seng Bank, which is 62 percent owned by HSBC (0005.HK), have skidded 40 percent in the 52 weeks through Friday amid the broader selldown in financial stocks, and a lost a further 4.37 percent on Monday morning to HK$83.20.
Unlike many of its peers, Hang Seng largely avoided buying exotic instruments that turned toxic such as CDOs (collateralised debt obligations) and SIVs (structured investment vehicles), although it held bonds in failed U.S. lender Washington Mutual.
Its overall investment in bank bonds is HK$156 billion, according to a Morgan Stanley note.
Hang Seng Bank trades at a steep premium to its peers, at 2.8 times book value. By comparison, Bank of East Asia (0023.HK) trades at about 0.85 times book and Bank of China (Hong Kong) (3988.HK) at 0.88 times book. (US$=HK$7.8) (Reporting by Tony Munroe; Editing by Jonathan Hopfner)
