The Bank of East Asia Limited (0023)

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Profit Warning

The Bank of East Asia announced that the Group expects to report a material decrease in profit for the six months ending 30th June, 2019 as compared with the reported attributable profit of HK$3.992 billion for the six months ended 30th June, 2018.

The likely decrease in profit is attributable to an expected downgrade of four legacy loan assets in Mainland China with a nominal value of approximately HK$6.2 billion resulting from worsening market conditions, which have impacted the commercial property sector in non-tier-1 cities in Mainland China. The downgrade would result in significant post-tax impairment losses, estimated to be between HK$2.5 billion and HK$3.0 billion.

The Bank’s Common Equity Tier 1 (CET1) and Total Capital Adequacy Ratio as of 30th June, 2019 are expected to remain above 14.5% and 19%, respectively which are well above the regulatory requirements. The Bank’s liquidity position continues to be strong.

The Group’s core banking operations remain strong and the Group anticipates healthy growth in pre-provision operating profit.
Specuvestor: Asset - Business - Structure.

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