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Hong Kong’s Bank of East Asia net profit falls 99%

Officials of the Hong Kong-based Bank of East Asia blamed the “financial tsunami” for the dramatic drop in their annual profits for 2008. (AFP) 

Hong Kong's Bank of East Asia said on Tuesday its 2008 net profit fell 99 per cent compared to the previous year, as it sold off a huge chunk of toxic assets at the centre of the global credit crunch.

Net profit at the lender fell from HK$4.14 billion ($531 million; Dh1.95 billion) in 2007 to just HK$39 million last year, the company said in a statement to the Hong Kong Stock Exchange.

"The financial tsunami that swept over the global economy in September 2008 has left a bleak economic landscape in its wake," said chairman and chief executive David Li.

"This has led to a sudden and sharp plunge in new business for local and regional companies and the unprecedented scale of the decline is destined to have a significant impact well into 2009."

Net interest income rose from HK$5.98 billion in 2007 to HK$6.79 billion.

But the company booked a non-interest loss of HK$336 million compared to a profit of HK$2.84 million in 2007, after it sold a huge chunk of toxic securities.

The bank said in October it expected its 2008 profits to be slashed by HK$3.5 billion after it disposed of its entire portfolio of collateralised debt obligations (CDOs).

The announcement was the latest setback for Hong Kong's fifth largest lender by assets.

In September, savers launched a short-lived run on the bank, following the spread of text message rumours that BEA was overexposed to assets linked to collapsed US investment bank Lehman Brothers and troubled insurer AIG.

BEA is the first of the financial hub's major banks to report its 2008 results. HSBC is expected to release its annual results in early March.