Bank of East Asia Profit Rises 39% as Trading Income Climbs

Bank of East Asia Ltd., Hong Kong’s largest family-run lender, said 2012 profit jumped 39 percent as trading income climbed, helping offset a decline in profit from the mainland China business.

Net income rose to HK$6.06 billion ($781 million), or HK$2.72 a share, from HK$4.36 billion, or HK$1.96, a year earlier, the bank said in a filing to the Hong Kong stock exchange today. That exceeds the HK$4.91 billion average estimate of 24 analysts surveyed by Bloomberg News.

Trading income and profit from securities holdings jumped as Hong Kong’s benchmark Hang Seng stock index rose 23 percent last year, compared with a 20 percent decline in 2011. Pretax profit from mainland China operations, which grew by an average 31 percent in 2010 and 2011, declined last year as the economy slowed for the first three quarters before a rebound.

“Trading income is dependent on the market situation, it’s difficult to tell if it will be sustained through 2013,” Grace Wu, an analyst at Daiwa Capital Markets Hong Kong Ltd., said by telephone. “In 2013 Bank of East Asia may be under less pressure on lending margins. Given the tighter credit supply in China, banks in general have stronger bargaining power.”

Shares (23) in the bank rose 1.8 percent to HK$31.45 at 1:06 p.m., their biggest intraday gain since Feb. 6, extending a 0.2 percent gain before the earnings were announced.

The third-largest Hong Kong-based lender booked a trading profit of HK$765 million in 2012, up from HK$175 million a year earlier. It also posted a gain on financial instruments of HK$664 million, improving from a loss of HK$354 million the previous year.

Bank of East Asia’s pretax income from mainland China declined to HK$2.25 billion from a restated HK$2.37 billion a year earlier.

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