February 22, 2018 / 4:57 AM / 8 months ago

UPDATE 1-HK-based Bank of East Asia's 2017 profit soars on asset sales

* Profit at HK$9.3 bln vs HK$6.7 bln estimates

* Profit included HK$3 bln from asset sale

* Chairman says will boost asset quality, fee income in 2018 (Adds earnings details, chairman comments)

By Sumeet Chatterjee and Donny Kwok

HONG KONG, Feb 22 (Reuters) - Hong Kong-based Bank of East Asia Ltd (BEA) posted a near tripling in profit in its full fiscal year, beating street estimates, bolstered by a sharp jump in income from the sale of some non-core assets as well as a drop in impairment losses.

Net profit was HK$9.3 billion ($1.19 billion) in 2017, up from HK$3.72 billion in the year prior, the lender said. That exceeded the average estimate of HK$6.7 billion, according to Thomson Reuters data based on forecasts from eight analysts.

The profit included HK$3 billion booked last year from the sale of share registry arm Tricor Holdings Ltd and its units to private equity firm Permira Holdings Ltd, the bank said in its earnings statement on Thursday.

BEA has survived as an independent lender in a market dominated by majors HSBC Holdings PLC and Standard Chartered PLC, while deteriorating business conditions has seen several of Hong Kong’s other family-owned firms put up for sale.

Activist investor Elliott Management, which owns nearly 8 percent of BEA’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 BEA’s chairman and former politician David Li, whose grandfather founded the bank nearly 100 years ago.

On the back of the improved performance last year, Li said in the statement on Thursday that BEA would further enhance its asset quality, expand sources of fee income and carry out the third year of its cost-reduction programme in 2018.

The bank’s earnings in the previous years were weighed down by a spike in bad loans due to economic slowdown and sluggish credit demand in China and Hong Kong, two of its main markets.

In 2017, BEA’s impaired loan ratio fell to 1.09 percent from 1.49 percent in 2016, as it took “a more conservative approach” to underwriting standards and reduced its exposure to stressed sectors, Li said.

$1 = 7.8266 Hong Kong dollars Reporting by Sumeet Chatterjee and Donny Kwok

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