me foreign banks will continue fueling expansion in the Chinese mainland in the second half of this year despite that they experienced a profit fall there in the first half of the year.
Foreign banks released financial results for the first half of this year in succession recently and judging from the results, they performed not well in the Chinese mainland in the six months. And for instance, Hang Seng Bank (China) Ltd., the operation of Hang Seng Bank Ltd. (SEHK: 0011) in the market, saw loans and deposits each rise 16.8 percent and 11.6 percent from the end of last year. While, the net interest income dropped by 21.6 percent. In detail, the aggregate operating revenue reached HKD 796 million, down 15.3 percent from a year ago. And of it, HKD 649 million was net interest income, down 22 percent from a year earlier. HKD 39 million was net service fees, down 20 percent. And HKD 108 million was trading income, up 71 percent. The operating profit hit HKD 129 million, diving 35.2 percent from the previous year. It mainly attributed the sharper operating profit fall to expanded outlet size, which directly caused related operating expenditures to surge up by 5.6 percent. And both fierce competition in the deposit sector and fluctuations in the interbank market delivered a strong impact on its interest margin.
The Bank of East Asia (China) Ltd., the operation of The Bank of East Asia Ltd. (SEHK: 0023) in the market, also performed not well during the period. In detail, it saw the aggregate loans and deposits each rise 10.6 percent and 4.8 percent from the end of last year to about HKD 141.56 billion and around HKD 201.28 billion. The net profit was HKD 865 million, up 28.4 percent from half a year ago but down 10 percent from a year earlier. And the net interest margin was 2.11 percent, compared to 2.03 percent in the second half of last year. It mainly attributed the increased net interest margin to rising importance attached to managing loan mixes and deposit base in a new interest rate environment there.
A top executive with a Shanghai-based foreign bank disclosed in an interview recently that it was lucky for them to report only a profit fall for the six months as some even booked a loss-making operation. Despite that, some foreign banks still planned to continue fueling expansion there through opening more outlets in the second half of the year.
