Dah Sing Banking expects to benefit from lower funding costs this year as its retail and commercial businesses recover from an increase in costs and low interest rates on lending.
'Funding markets are finally looking much more beneficial than that in the last six to nine months,' said Nicholas Mayhew, the bank's deputy chief executive. He said the improvement would help boost the bank's interest income.
Dah Sing's net profit remained flat at HK$1.08 billion last year, up 0.4 per cent from the previous year. The earnings report highlighted the challenging environment for Hong Kong banks last year as lending profitability dropped.
When asked whether the bank would consider merging with a larger mainland bank, Dah Sing chief executive Harold Wong said the company 'cannot rule out the possibility of mergers and acquisitions'. But the bank would focus on organic growth for now, he said.
The bank's treasury business, which includes operations like foreign exchange, interest rate and centralised cash management, jumped to HK$123 million profit before tax, compared to a HK$49 million loss the previous year.
Its holdings in Chongqing Bank also helped boost profits, bringing in HK$353 million, an increase of 42 per cent from the previous year.
But Dah Sing's overall performance was limited by challenges in its retail and commercial banking businesses. Earnings before tax in both sectors fell HK$130 million due to more expensive funding costs last year amid tightening liquidity.