Hang Seng Bank 0011

[winston]

DJ MARKET TALK: Citi Tips Hang Seng Bank FY08 Net Profit Down 20%

0929 [Dow Jones] STOCK CALL: Citigroup estimates Hang Seng Bank's (0011.HK) FY08 net profit fell 20% on-year to HK$14.976 billion. Expects HK$6.5 billion markdowns for Available for Sale securities, only 4% of 1H08 exposure, but says will impact Tier 1 capital and possibly 2009 dividend outlook.

Expects 2H08 NIM to fall on-half on treasury, partly due to de-risking, narrowing deposit spreads, lower free funds contributions. Says wealth management likely to disappoint after Lehman mini-bond incident. Expects insurance-portfolio equity losses set to continue.

Tips minimal 2H08 loan growth vs 1H08's +9% on-half. Notes also, expects provisions for Washington Mutual. Says valuations remain expensive at 3.4X 2009E P/B. Rates at Sell, target at HK$86. Results due March 2. Shares ended yesterday down 1.6% at HK$89.45.

[winston]

DJ MARKET TALK: CPY Upgrades Hang Seng Bank To Buy; Tips High Div

1229 [Dow Jones] STOCK CALL: Core Pacific-Yamaichi upgrades Hang Seng Bank (0011.HK) to Buy from Hold, targets HK$99.00 based on 3.6X 2009 P/E. Tips HSB to keep high dividend payout, expected at 70% for both 2008, 2009, after 66% in 2007, given bank's strong capital base, stable earnings.

Adds HSB shares have already plunged by more than 50% from historical high of HK$170.00, current valuations "very attractive". Says, "as the bank would only suffer from a profit decline less than its peers and has a strong capital base, we think the risk of dividend cut would be slim and the bank may even increase its dividend payout ratio." Shares +2.9% at HK$84.35 in technical rebound after stock fell 7.6% last week. FY results due March 2.

[winston]

Where's their growth ? China ?

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Hang Seng Bank out of parent's shadows by Alfred Liu

Compared with parent HSBC Holdings (0005), Hang Seng Bank (0011) will likely report more favorable earnings results due to its focus on local operations and limited exposure to toxic investments, analysts said.

Hang Seng Bank is today expected to announce a HK$15.58 billion net profit in 2008, down 14.58 percent from a year ago, according to 18 brokers polled by Thomson Reuters.

Analysts anticipate Hang Seng Bank's final dividend to be flat in 2008 at HK$6.30 per share. Macquarie analyst Nick Lord expects the dividend to fall about 10 percent to HK$5.70 in 2009.

BNP Paribas said in a report: "We don't expect any shock" from Hang Seng Bank's second-half 2008 results.

But the lender is expected to reveal its exposure to Washington Mutual Bank.

"We don't expect significant writedown from its debts investment apart from WaMu, which we factor in impairment losses of HK$1 billion to be recognized in the profit and loss account," said JPMorgan analyst Michael Chan.

Daiwa Institute of Research forecasts the bank to go from recording a trading profit of HK$224 million for the first half last year to recording a trading loss of HK$500 million for the second half.

JPMorgan expects, on a full-year basis, total fees income to contract by 30 percent year on year and total non-interest income to decline by 32.1 percent.

It also predicts the bank's second-half results will show a deterioration across multiple revenue streams. Net interest margin is tipped to shrink by six- basis points in the last six months from the first half.

Meanwhile, Hang Seng Bank is today also expected to announce the retirement of Raymond Or Ching-fai as chief executive and vice chairman in May.

HSBC general manager and global co- head of commercial banking Margaret Leung Ko May-yee is expected to replace him.

"Or's efforts are highly appreciated, but there should be no big change for Hang Seng as it is a large bank," explained Ample Finance Group director Alex Wong Kwok- ying.

[winston]

DJ MARKET TALK: CS Cuts Hang Seng Bank To Neutral From Outperform

0951 [Dow Jones] STOCK CALL: Credit Suisse downgrades Hang Seng Bank (0011.HK) to Neutral from Outperform, cuts target to HK$90 from HK$120 after FY08 net profit after tax falls 23% on-year to HK$14.1 billion, below house's expectations. Notes revenue 6% below house's forecast on decline in net interest margin, collapse in wealth-management-fee income; NPLs at 1.03% vs 0.41%, house's forecast at 0.6%.

Notes results not devoid of positives as 2008 expenses up only 2% on-year, down 7% on-year in 2H08, with dividend stable at HK$6.30, marking 7.5% yield. Expects challenging outlook for revenue, credit cost to continue in 2009; cuts 2009-10 EPS forecasts 13%, 11%. Says weak earnings, prospect of dividend cut likely to weigh on near-term performance. Stock down 1.5% at HK$83.00 at pre-open.

[winston]

DJ MARKET TALK: Macq Cuts Hang Seng Bank Target To HK$84 Vs HK$89

1033 [Dow Jones] STOCK CALL: Macquarie raises Hang Seng Bank (0011.HK) 2009 earnings forecast by 2% despite 2008 profit falling 23% on-year to HK$14.1 billion, below house's estimate of HK$15.7 billion, on strong impairment charge. Says, however, no material change to 2009 outlook, expects NIM to continue to fall, but lowers 2009 loan impairment charge forecast to HK$3.2 billion vs HK$3.8 billion on 2H08's incremental provision charges. Notes dividend kept steady at HK$6.30/share, in line with house's view; tips 2009 DPS to fall 8% to HK$5.80.

Keeps at Neutral. Estimates trough valuations could be as low as HK$66, but that defensive returns and dividends will support share; tips longer-term valuation at HK$105; says with risk-reward finely balanced, sets target in middle of range at HK$84 vs previous at HK$89. Shares down 4.05 at HK$80.90; HSI down 2.9%.

[winston]

DJ MARKET TALK: JPM Cuts Hang Seng Bank Target To HK$96 Vs HK$130

1011 [Dow Jones] STOCK CALL: JPMorgan cuts Hang Seng Bank (0011.HK) DDM-based target price to HK$96 from HK$130 after lowering FY09-10 dividend estimates for both years. "Even by paying out 100% of earnings in FY09, DPS will still fall short of the HK$6.30 paid in FY08, based on our estimates. We believe it is unlikely that the bank will pay out 100% as Tier-1 ratio is lower these days than it was in the late 1990s."

Cuts FY09, FY10 EPS estimates by 26.8%, 14.0% on higher credit costs, lower NIM and fees income; expects FY09 dividend to fall to HK$4.50. However, keeps at Overweight, says 5.3% dividend yield to provide downside support. Notes FY08 net profit at HK$14.1 billion, 6.3% below house's estimate. Tips accumulating stock around HK$75, marking approximately 3.0X BV, 6% yield as stock historically has found good support there. Shares down 0.2% at HK$81.10; HSI down 0.5%

[winston]

DJ MARKET TALK: Citi Ups Hang Seng Bank Target To HK$103 Vs HK$80

1020 [Dow Jones] STOCK CALL: Citigroup raises Hang Seng Bank (0011.HK) target to HK$103 from HK$80 after increasing FY09-10 EPS forecasts 10%, 14%, mainly on lower credit cost assumption due to more benign-than-expected NPL environment.

But notes, 1H09 NIM likely weak, down on-half due to impact of low interest rates on deposit spreads and free funds, bank's management indicates severe trade-finance contraction, pickup in mortgage lending insufficient to offset this weakness, China loans contracted on fierce competition by domestic banks.

Keeps at Sell on rich valuations, low beta; expects stock to underperform. Says bank's earnings among least sensitive to economic recovery due to high profitability, ROA. "We believe HSB's valuations are rich on over 3X price/book, positive catalysts are lacking as negative trends are likely in almost every P&L line item, and earnings will likely be weak." Shares down 0.7% at HK$110.30.

[winston]

Is this a one-off case or a systemic risk in the bank ? So easy to steal your money ?

Jail for banker in $98m theft by Diana Lee, The Standard HK

A former Hang Seng Bank manager has admitted she stole HK$98.67 million from the accounts of 13 clients.
Cheuk Sau-yee, 31, said she was under pressure to meet the bank's annual sales target of US$50 million (HK$390 million).

Cheuk was remanded in custody by Judge Joseph Yau Chi- lap of the District Court. He adjourned sentencing until July 16 pending background and psychiatric reports.

Among Cheuk's victims were comic book guru Ma Wing-shing who lost HK$22.19 million and retired actress Chingmy Yau Suk-ching.

Cheuk worked as public relations manager of the private banking department between November 2006 and June 2008.

She admitted making 153 unauthorized fund transfers from the assets of 13 clients in the form of savings, time deposits and company shares between February 2007 and June 2008, until a client found out and told police.

Under caution, Cheuk said she used the accounts of two clients to engage in stock and warrant trading to meet the revenue target.

When she suffered huge losses she said she had no alternative but to continue the unauthorized trading in the hope of recovering the losses someday.

Cheuk's boyfriend, private banker Jason Chan Chun-sing, 31, pleaded not guilty to laundering HK$566 million and will face trial starting July 31.

Chan's account, which suffered losses of HK$44 million in securities, was found to be funded by accounts of Cheuk's clients.

Her clients' assets were also used to settle the purchase of a luxury property valued at HK$13.72 million, to which Cheuk contributed HK$1.6 million. She also had credit card debts of over HK$641,000.

In mitigation,Cheuk said her downfall began when she misheard a client's instruction and lost HK$7 million from the account.

She then tried to cover up the loss by mobilizing the assets of other clients, making further investments hoping to compensate for the loss.

[winston]

Hong Kong bank manager steals $13 mn from customers

A bank manager in Hong Kong was Friday sent to jail for stealing almost $13 million from the accounts of wealthy customers.

A number of prominent Hong Kong socialites were among the victims of Cheuk Sau-yee, 31, a relationship manager in the private banking department of Hang Seng Bank.

Cheuk said she began taking the money to cover up for a $900,000 loss she made through a blunder on one client's account, fearing the mistake would lead to her losing her $14,000-a-month job.

She made more than 150 unauthorised bank transfers to steal the money between February 2007 and June 2008, using some of the money to buy a luxury flat and repay credit card debts.

Cheuk admitted 17 counts of theft and was sentenced to six years and eight months in jail at a hearing in Hong Kong's District Court Thursday.

Sentencing her, judge Joseph Yau said her behaviour had tarnished Hong Kong's reputation as an international finance centre. All her clients have recovered their losses from the bank.

Cheuk's boyfriend is accused of handling some of the cash. He has pleaded not guilty to money laundering and will face trial later this month.

[winston]

MING PAO

-- Citigroup expects Hang Seng Bank (0011.HK) to post a 26 percent year-on-year drop in interim profit to HK$6.73 billion when the lender announces its earnings next week, but a big improvement compared with the second half of last year.