Wing Hang Bank expects profit flat in H2

As stated in Goldman Sach's report, the management of Wing Hang Bank (0302) expected a flat profit performance in the second half of 2001 with loan growth of 6% year to date (versus 5.6% in the first half) and a mild uptick in costs and that the asset quality will continue to deteriorate. After the discussion with the management of the bank, Goldman Sachs found that the loan growth of the bank is driven by expansion of the mortgage portfolio in the PRC which yields prime minus 1% compared with a Hong Kong mortgage at prime minus 2.5%. The net interest margin is predicted to continue to deteriorate with the lagging repricing of the time deposit base and declining yield on free funds. But what is positive is that the repricing of the mortgage portfolio appears to be near an end with mortgage yields stable in the second half of 2001.

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