Date
22 September 2017
Chief executive Rose Lee said the capital could be invested in areas driven by Beijing's policies or related to the bank's core business. Photo: HKEJ
Chief executive Rose Lee said the capital could be invested in areas driven by Beijing's policies or related to the bank's core business. Photo: HKEJ

Hang Seng eyes ways to use Industrial Bank stake sale proceeds

Hang Seng Bank Ltd. (00011.HK) is considering various ways to use the money it earned from selling its stake in Industrial Bank Co. Ltd. (601166.CN), vice chairman and chief executive Rose Lee Wai-mun said.

Lee said the lender seeks to strike a balance between dividend distribution and business development while maintaining a certain level of share price, the Hong Kong Economic Journal reported.

The capital could be invested in areas driven by the central government’s policies or related to the bank’s core business, she said.

The bank will continue to modify its asset portfolio in accordance with its risk appetite, Lee said, although unlike its parent HSBC Holdings Plc (00005.HK), it has no target in reducing its risk-weighted assets.

In February, the bank announced it was selling a 5 percent stake in Industrial Bank for HK$15.8 billion (US$2.04 billion).

In May, it sold another 5 percent stake in the Shanghai-based bank for 16.8 billion yuan (US$2.71 billion).

After the disposals, Hang Seng still holds a 0.88 percent stake in Industrial Bank. 

As of the end of June, the bank’s tier-1 common equity ratio (CET1) stood at 17.1 percent, with the average return on equity at 29.4 percent.

The CET1 would still reach 15.6 percent if the capital from the equity sale was not taken into consideration.

Analysts with Barclays Bank Plc said Hang Seng Bank should have room to pay a special dividend of HK$8.5 as its CET1 was way above the management’s target of 13 to 14 percent.

Mizuho Securities Asia Ltd. has revised up Hang Seng’s earnings estimate by 7 percent with target price adjusted to HK$170 from HK$165.

[Chinese version中文版]

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