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.
Credit:ivythesis.typepad.com
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