Bank of East Asia (BEA) in Hong Kong exceeded expectations with a 14% increase in first-half net profit, reaching HK$2.41 billion. The growth was driven by a robust wealth-management business, although bad debt from commercial real estate also rose.

The bank will pay an interim dividend of 39 HK cents per share, a 25.8% increase from the previous year. Fee income from insurance and wealth-management products contributed to the growth, offsetting bad debt provisions for commercial property loans.

BEA’s co-CEO expressed caution about commercial real estate loans in Hong Kong due to rising non-performing loan ratios. The bank had reduced lending to the sector in recent years, with commercial real estate loans now accounting for 10.8% of total loans in Hong Kong.

Despite a 10% decrease in net interest income due to lower interest rates, BEA’s co-CEO remains optimistic about business prospects. The bank expects the US to cut its key rate by the end of the year, leading to increased borrowing and investment.

BEA shares surged 6.8% to HK$13.52 following the results announcement. The stock has gained 37% this year, outperforming the Hang Seng Index, which rose 25%. This positive performance reflects investor confidence in the bank’s strategic decisions and financial outlook.

Read more at Yahoo Finance: Bank of East Asia profits rise as wealth business offsets bad property loans in Hong Kong