Fubon Bank 2010 earnings increase by more than tenfold

The operating performance of Fubon Bank and its subsidiaries improved significantly, with full-year 2010 net profits of HK$266 million. The figure represents more than tenfold increase from the HK$23 million reported in 2009.

Amid more stable market conditions and the Bank’s efforts to manage credit risk, impairment losses on advances to customers and available-for-sale securities reduced substantially year-on-year. The Bank also saw higher fee-based revenues, especially from credit-related services and the sale of unit trust and insurance products, on the back of an improved economy and more positive investor sentiment. Earnings per share were at 15.62 Hong Kong cents after accounting for the dividend
payment for preference shares.

Gross interest income declined 23 per cent to HK$1,196 million for 2010 whereas gross interest expense decreased only 17 per cent to HK$344 million over the corresponding period.

As a result, net interest income decreased by HK$290 million or 25% to HK$852 million. The decline in net interest income was attributed to lower average interest-earning assets, resulting from the gradual depletion of the high-yield hire
purchase portfolio and the Bank taking a more cautious stance in loan underwriting during the first half of 2010.

Total assets as at 31 December 2010 were at HK$61.8 billion, an increase of HK$0.8 billion from HK$61.0 billion as at 31 December 2009. Customer deposits grew by HK$2.8 billion or 6% in the second half of 2010 to HK$46.0 billion as at 31 December 2010. In terms of loan growth, during the first half of 2010, the Bank maintained a prudent approach to credit underwriting and acquiring new loans in light of uncertainties in external markets.

In 2011, the Bank will continue to build its local franchise, broaden its customer base and expand its product and service offering to bring in additional revenues. To strengthen its foothold in a very competitive environment in Hong Kong, the Bank will focus on attracting deposits while steadily growing its loan book, and continue to invest in IT infrastructure to improve customer service and product innovationwhile enhancing operational efficiency.