Dah Sing Banking Group’s profits down 1% to HK$1.09b in H1

Property woes in Hong Kong and Mainland China doubled the bank’s credit impairment losses.

Dah Sing Banking Group’s (DSBG) profits remained nearly flat in the first half of the year, with its profit attributable to shareholders declining 1% year-on-year to over HK$1.09b during the period, according to its latest interim report.


The board has declared an interim dividend of HK$0.10 per share for DSBG, similar to H1 2021; whilst its earnings per share was at HK$0.78.


The bank’s insurance holding company, Dah Sing Financial Holdings (DSFH), also suffered a 5% decline due to the new COVID wave. DSFH’s profit attributable to shareholders during the same period, reporting HK$833m in profits. DSFH’s earnings per share for the period was HK$2.61, and an interim dividend of HK$0.33 per share will be paid out.
 
Dah Sing Bank noted that it was negatively affected by lockdowns imposed due to the fifth wave of COVID-19, which hit the Hong Kong economy during the first half of the year. As a result, gross domestic product shrank 2.6%, reversing the 5% rise in H2 2021. Total exports grew a tepid 0.4.

The bank also noted the ongoing liquidity crisis faced by embattled property developers not just in Hong Kong but also in Mainland China.

As a result, the bank’s credit impairment losses more than doubled, rising by 161% as the outlook for economic conditions turned sharply during the period.

DSBG’s operating profit after credit impairment losses fell by 19% to HK$931m. Mild retail asset growth, higher surplus funds yields and focus on deposit cost management during the period helped offset funding cost pressure, it said. 

Net interest margin improved 2 basis points to 1.74% as a result of the above.

Net interest income grew 3% to HK$2.02b for the first half of 2022.

In contrast, net fee and commission income dropped by 25% to HK$482m during the period, hit by sustained weakness in customer investment appetite, and continued suspicion of its bancassurance sales.

Net trading and other income grew 8% to HK$125m, benefitting from the strengthening of the US dollar, the group reported.

Meanwhile, profit contribution from associated company Bank of Chongqing rose 5% to HK$454m; whilst impairment charges from the bank fell 45% to HK$138m.