950807

Bank is bit cautions

IBA may face hard

time in second half

HONG KONG: International Bank of Asia Ltd (IBA) could face a tougher time in the second half of the year, the bank's chief executive said on Monday.

"We don't think that (operating in the second half) will be as easy as some people think. It will be just as challenging as the first half," chief executive Mike Murad told reporters.

The Hong Kong-based bank last week announced profits of HK$120.34 million (US$15.5 million) in the first half of 1995, a 24 percent increase over the same period in 1994.

At the time the figures were released, IBA had attributed its strong first-half earnings partially to growth in its residential mortgage portfolio. But Murad said the bank "is a bit cautious on that issue".

"The market is starting to pick up, and if regulators ease some of the burden as far as (loan to value) ratios go, we might see some banks coming back into this product. But we don't rely on mortgages as a bread-and-butter business," he said.

Within Hong Kong, Murad said the bank would continue its efforts to diversify business and attract new customers through promotional programmes.

"The market has started to anticipate that IBA will come up with new deposit programmes and innovative products and services," said Murad. "We are now in the process of putting the final touches on another promotional programme that will be announced soon."

But he said deposit rates were not the only factor drawing customers. Convenience and innovation also count.

"We've found that promotional deposit activity is a very meaningful and very effective way to generate more deposits -- but we can also retain them," said Murad. "People are not coming in just for Lucky Draw."

Murad was speaking to reporters following a signing ceremony for the bank's recent floating rate certificate of deposit issue, which was increased to US$90 million from US$75 million in syndication.

Arrangers of the deal said the good response reflected IBA's strong performance and healthy outlook.

The bank's commitment to diversification is a key factor in its success, Murad stressed.

Core businesses of the bank and its subsidiaries include retail banking, credit cards and leasing, corporate lending, investment banking, trade finance and insurance.

IBA's recently opened representative office in Vietnam "is doing exceedingly well", Murad said. "The flow of investment in projects there is helping us tremendously."

All transactions of the Vietnam office are booked in Hong Kong, Murad said, but "we are looking at opening a full branch sometime next year".

The bank may also consider setting up a "physical presence" in China. "We cannot neglect a market like (China) and we are looking at it," he said.

IBA's interests in China are conducted through its association with China Everbright Holdings, a state-owned enterprise.

The bank also has a minority stake in a joint venture finance company, IBA Finance, in the Philippines.

IBA is a subsidiary of Arab Banking Corp, which is headquartered in Bahrain. IBA was listed on the Hong Kong stock exchange in November 1994.-Reuter