August 25, 2017 / 5:01 AM / 2 years ago

UPDATE 1-HK's Bank of East Asia H1 profit boosted by asset sales, cost cuts

* H1 net at HK$7.3 bln vs HK$2.1 bln year prior

* Profit boosted by HK$3 bln from Tricor sale

* Sees no “significant deterioration” in 2017 bad loan ratio (Adds further earnings figures, details on asset sales and loan impairment)

By Sumeet Chatterjee

HONG KONG, Aug 25 (Reuters) - Hong Kong-based Bank of East Asia Ltd (BEA) reported first-half net profit that more than trebled on Friday, helped by proceeds from asset sales as well as a drop in loan impairment losses and operational expenses.

Net profit was HK$7.3 billion ($932.99 million) in January-June, versus HK$2.1 billion in the same period last year, the lender said in a statement to Hong Kong’s stock exchange.

The figure included about HK$3 billion from the October sale of share registry arm Tricor Holdings Ltd to private equity firm Permira Holdings Ltd for HK$6.5 billion, the bank said.

It also said operating expenses fell 7.9 percent to HK$3.9 billion, while its cost-to-income ratio reached 51.2 percent, from 59.4 percent in the same six-month period a year earlier.

Impairment losses on loans and receivables fell 38.5 percent to HK$763 million, helping keep its impaired loan ratio at 1.49 percent at the end of June compared with the end of December.

Gross loans rose 2.7 percent to HK$466 billion and deposits from customers grew 2.5 percent to HK$549 billion.

The bank said it would continue to focus on managing asset quality through a host of initiatives it had undertaken, and as a result did not expect “significant deterioration” in its non-performing-loan ratio in the current year.

Bank of East Asia has survived as an independent lender in a market dominated by global financial institutions HSBC Holdings PLC and Standard Chartered PLC, while deteriorating market conditions has seen several of Hong Kong’s other family-owned banks put up for sale.

But activist investor Elliott Management Corp, which owns over 8 percent of the bank’s outstanding shares, has been agitating for a sale. The U.S. hedge fund has also filed a lawsuit against the bank in protest over a share placement.

The dispute pits the fund founded by billionaire Paul Singer against Bank of East Asia’s chairman and former politician David Li, whose grandfather founded the bank nearly 100 years ago.

Bank of East Asia has said the lawsuit goes against the interests of the bank and its shareholders.

($1 = 7.8243 Hong Kong dollars)

Reporting by Sumeet Chatterjee; Editing by Christopher Cushing

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