Banks place bets on mainland market
Updated: 2012-08-04 06:49
By Oswald Chen(HK Edition)
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A man stands in front of Hang Seng Bank. The local bank said on Monday that its mainland business contributes 23.1 percent to its profit before tax in the first half, amid a growing trend where more HK-based banks are expecting additional profit from mainland operations. Jerome Favre / Bloomberg |
More Hong Kong-based banks are expecting their mainland operations and yuan-related financing businesses to contribute a larger portion to their revenues or profits though the mainland economy is slowing down amid the global macroeconomic headwinds.
DBS (Hong Kong) Ltd, the local banking arm of the Singaporean DBS Group Holdings, envisaged the lending business on the mainland will still register single-digit growth in 2012.
"The mainland economy is indeed slowing down, and the negative impacts arising from the possible further deterioration of the European sovereign debt crisis are causing headwinds to our business," said DBS (Hong Kong) Chief Executive Officer Sebastian Paredes on Friday after the group's result announcement. "We can capitalize on the trade flows between Hong Kong, Singapore and the mainland to conduct more trade finance business for the bank."
"We are confident that the asset quality of our mainland loan portfolios will not deteriorate as witnessed in our strength in the mainland's consumer and small and medium enterprises lending business," Paredes said.
"We (will) develop new relationships with the mainland state-owned enterprises and private-owned enterprises, and convert existing relationships with mainland customers into multi-product relationships," DBS (Hong Kong) said in a Friday statement.
The business vision is echoed by Standard Chartered Bank (Hong Kong), a subsidiary of the Standard Chartered Plc, which expected revenues generated from the mainland operations to be the future engine for profit growth.
"The Greater China region is currently making a 30 percent (contribution) to the group's overall profit. We expect the portion to jump (higher) in the future," said Benjamin Hung, chief executive officer at the Standard Chartered Bank (Hong Kong).
Hang Seng Bank, a subsidiary of the HSBC Holdings Plc, said on Monday that its mainland business contributed 23.1 percent to the bank's profit before tax in the first half of 2012, up 4.8 percentage points from the 18.3 percent a year ago.
The yuan-related financing business will also be another profit growth engine for all the local-based banks against the backdrop of the continued yuan internationalization.
"In the first half of 2012, the bank's yuan-related financing business revenues surged 60 percent from a year ago. In the same period, our yuan deposits grew 32 percent and our yuan lending even skyrocketed by 100 percent. Our market share in the local dim-sum bond market is 13 percent, ranking us in second position," Standard Chartered Bank (Hong Kong) Hung said.
"Currently our yuan-related revenues represent 21 percent of the total revenues in the Hong Kong market," DBS (Hong Kong) Paredes added. "The yuan business becomes one of the important drivers for our earnings growth in Hong Kong."
DBS (Hong Kong)'s yuan deposits at the end of June stood at 40 billion yuan and its yuan lending business grew 21 percent to 22 billion yuan in the first half of 2012.
oswald@chinadailyhk.com
(HK Edition 08/04/2012 page2)