[I-bank focus] New Lehman deal may boost PBT by 1.6-35% (14:33)
(ET Net News Agency, 28 March 2011) Hong Kong banks received information from receiversof Lehman Brothers that the banks could recover ~70-93% of value from Lehman Minibonds. The percentage of recovery was higher than the 60-70% range that the banks offered in the repurchase agreement settled with SFC and HKMA in Jul-2009.
Citigroup believes the expected provision write-back is one-off in nature, and is a short-term positive for the involved banks.
BOCHK (02388) said it expects to reduce related provision to HK$1bn from HK$4bn made during 2009-10. A HK$3bn write-back is equivalent to 12.8% of the house's pre-announcement2011 pretax profit of HK$23.4bn.
If other Hong Kong banks achieve a similar percentage of recovery as in BOCHK (i.e., 75%) on Lehman Minibond-related provisions, they could reveal a one-off PBT increase of 1.6-35%. (KL)
