Bank of East Asia:First Take,Below expectations on weaker credit,top-line better

During the Feb 17 mid-market close, BEA (Sell; last close HK$34.5) reported 2H16EPS (continuing) of HK$0.47, 6% below GSe, 27% lower hoh. Results were mixedwith better-than-expected top-line but worse-than-expected asset quality. On a hohbasis, there was a pick up in NIMs (+3bp) as well as credit costs (+42bp), bothlargely led by China. It would seem like BEA is coming out of the worsening assetquality cycle in China with NIMs being helped by the tightening of liqudity onshore.

Our estimates and price target are under review pending more updates during themanagement briefing at 3:00pm HKT in JW Marriott Hotel Hong Kong.