HONG KONG: Bank of East Asia (BEA), the fifth-largest lender here, expects to retain its place among the top-five banks in the local mortgage market.

And as such, it sees its mortgage business growing by double digits this year.

BEA yesterday announced the launch of a new residential mortgage plan that offers customers a fixed rate of 2.48 percent for the first year and the bank's prime rate minus 2 percent thereafter.

BEA General Manager and Head of the Corporate Banking Division Adrian Li told reporters that the lender will strive to enhance its mortgage business this year. "The bank garnered 11.23 percent market shares in primary housing mortgages last month, ranking second among local lenders," Li said.

BEA liaises with developers to offer mortgages for their customers. Li said he believed that price cuts by developers will invigorate the property market.

Although fixed-rate mortgage wasn't popular for homebuyers in the past, Li pointed out that the fixed package becomes more attractive in view of the fluctuating interest environment.

When asked whether the bank will increase the length of the fixed period, Li said the bank might consider releasing new packages with three- to five-year fixed periods if the market response is positive.

Despite the rising number of negative-equity cases, Li said, the bank's delinquency ratio remains low at 0.17 percent. He said he believed the increase in mortgage business won't hurt the bank's financial status.

Regarding BEA selling about HK$10-billion worth of mortgage assets to the Hong Kong Mortgage Corporation (HKMC) last year, Li explained that the decision was made in consideration of the reasonable asset price. Plus, the sale can boast the bank's liquidity condition.

"Whether the expansion of our mortgage business will catch up to the disposal value this year will depend on market response (to the mortgage plan)," he said. "Many lenders shifted their focus back to traditional banking businesses after the outbreak of the financial tsunami. The bank will increase its exposure to the businesses, and we hope our mortgage business will undergo double-digit growth this year."

Aside from residential mortgage, Li said, the lender has spent HK$300 million to bail out about 200 small and medium-sized enterprises via the SME Loan Guarantee Scheme.

Shares of BEA yesterday closed at HK$16.32, down 2.04 percent.

(HK Edition 02/24/2009 page16)