The Financial Performance of the Bank of East Asia

The Financial Performance of the Bank of East Asia

Short Background to the Bank

            The bank of East Asia (BEA) in Hong Kong is typically engaged in the financial services related, in the corporate, in the investor, and in the business. The company also offers its services as the personal banking, the corporate banking, the wealth management, the investment banking, and the international division. The bank has currently 100 branches in the whole Hong Kong which signifies that the bank is competitive.

            To have knowledge on the performance of this company it is necessary to make a financial analysis on the bank to determine it trend as well as to forecast the future. The methods include the comparative analysis, the ratio analysis, the cash flow analysis and the historical analysis.

Comparative Analysis

            Annual Income Statement

Millions of HKD

(except for per share items)

2006

2005

12/31/2006

12/31/2005

 

 

 

Interest Income, Bank

12,866

7,807

Total Interest Expense

8,000

4,046

Net Interest Income

4,866

3,760

Loan Loss Provision

–

0

NetInterIn after Loan Loss Provision

4,866

3,760

 

Fees & Commish from Operation

1,611

1,368

Insur Commish Fees& Premium

52

89

Dealer Trading Acct Profit

-40

176

Invest Securities Gains

507

140

Foreign Currency Gains

146

294

Other Revenue

400

575

Non-Interest Income, Bank

2,676

2,642

Labor & Related Expenses

-1,868

-1,604

Depreciation Expense

-299

-259

Amortization of Intangibles

-2

0

Amortization of Acq Costs

–

–

Investment Securities Losses

0

-1

Other Unusual Expense

-65

-158

Other Expense

-1,047

-1,168

Non-Interest Expense, Bank

-3,282

-3,189

Net Income Before Taxes

4,260

3,213

 

Provision for Income Taxes

775

427

Net Income After Taxes

3,486

2,786

 

Minority Interest

-51

-37

Net Income Before Extra. Items

3,435

2,749

 

Net Income

3,435

2,749

 

Income Available to Common Excl. Extra. Items

3,435

2,749

Income Available to Common Incl. Extra. Items

3,435

2,749

 

Basic/Primary Weighted Average Shares

1,534

1,502

Basic/Primary EPS Excl. Extra. Items

2.239

1.83

Basic/Primary EPS Incl. Extra. Items

2.239

1.83

Dilution Adjustment

0

0

Diluted Weighted Average Shares

1,544

1,506

Diluted EPS Excl. Extra. Items

2.225

1.825

Diluted EPS Incl. Extra. Items

2.225

1.825

 

DPS – Common Stock Primary Issue

1.46

1.26

Gross Dividend – Common Stock

2,258

1,902

 

Pro Forma Net Income

–

–

 

Depreciation, Supplemental

299

259

 

Total Special Items

65

158

Normalized Income Before Tax

4,325

3,371

Effect of Special Items on Income Taxes

12

21

Inc Tax Ex Impact of Sp Items

786

448

Normalized Income After Tax

3,538

2,923

Normalized Inc Avail to Common

3,487

2,886

Basic Normalized EPS

2.274

1.921

Diluted Normalized EPS

2.259

1.916

           

            As we can see in the income statement, it has been stated that the income for the in the year 2006 had been increase compare for the past year. This income shows that the trend of the company is going up and shows a very good income flow. If we compare the performance of the bank when it comes to the income to the Industrial and Commercial Bank of China (ICBC) we can distinguish that the value of the income of ICBC for 2005 is 41, 390 and the income of the value in the 2006 is 22, 684. We can see that the income of the ICBC gets lower but when we compare it to the Bank of East Asia then we can simply determine that ICBC has much income than the Bank of East Asia. The company also met its benchmark and now continues growing.

 

 

Annual Balance Sheet

Millions of HKD

(except for per share items)

 

 

2006

12/31/2006

 

 

2005

12/31/2005

 

 

 

Cash & Due from Banks

8,318

4,526

Interest-Earning Deposits

–

–

Trading Account Assets

3,558

3,858

Securities Held

10,249

13,017

Securities for Sale

12,002

8,399

Total Invest. Securities

22,252

21,416

Other Earning Assets

66,864

45,347

Other Erng. Assets, Total

92,674

70,622

Total Gross Loans

175,829

145,650

Loan Loss Allowances

-732

-813

Net Loans

175,097

144,837

Buildings

4,231

4,304

Machinery/Equipment

2,255

1,999

Other Property/Plant/Equipment

1,289

951

Property/Plant/Equipment – Gross

7,774

7,254

Accumulated Depreciation

-2,025

-1,898

Property/Plant/Equipment – Net

5,750

5,356

Goodwill, Gross

2,605

2,495

Accum. Goodwill Amort.

0

0

Goodwill, Net

2,605

2,495

Long Term Investments

1,077

769

Def. Inc. Tax – LT Asset

39

38

Other Assets

8,643

10,158

Other Assets, Total

8,643

10,158

Total Assets

294,202

238,799

 

Interest Bearing Deposits

216,523

182,326

Other Deposits

31,959

13,785

Total Deposits

248,482

196,112

Other Current Liabilities, Total

334

262

Total Long Term Debt

8,154

8,549

Total Debt

8,154

8,549

Deferred Income Tax

598

627

Minority Interest

382

207

Other Liabilities, Total

8,989

8,845

Total Liabilities

266,939

214,602

 

Common Stock

3,875

3,776

Additional Paid-In Capital

1,099

743

Retained Earnings (Accumulated Deficit)

22,289

19,679

Total Equity

27,263

24,197

Total Liabilities & Shareholders’ Equity

294,202

238,799

Total Common Shares Outstanding

1,550

1,510

 

            When we talk of the liquidity ratio we have been distinguish that the value of the current ratio of the bank for the 2005 is 1.11275 and for the 2006 is 1.102131. This means that the company still cannot support its short term debt which came from its current assets.        

 

 

 

 

 

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