Hello, Allen. Please pardon my long delay in replying. I have not been on-line much the last two weeks & not at S.I. at all.
I have not seen the earnings announcements you were looking for.
I did see HSBC's & Hang Seng's. I guess "good" is relative term.
I thought HSBC did the correct thing. They sacrificed making a
good quarterly showing by taking HUGE loan loss reserves. This is
the same consistent, prudent management style that has, over time,
rewarded long-term shareholders. HSBC could have hoped the entire Asia affair would be cleaned up by the IMF and that things would
work themselves out. But, they recognized a problem, and took the
necessary steps to keep themselves on firm financial ground.
A few years back, before the banks were required to disclose all of their reserves, many HK banks had "hidden internal reserves." That made analyzing banks very very difficult. I remember that one of the
reasons Bank of East Asia's price was low for so long was their internal reserves were nowhere near what analysts thought they were.
I've never really understood why more banks do not take big reserves.
The money is on the books, it is reflected in book value of the stock.
But unlike earnings, loan loss reserves are untaxed. The bank basically has a built in "tax free" savings account of their very own.
I'm sure it could be over done, but I would think it would have to
be outrageous before the Government would accuse a bank of being
"overly conservative". <g>
Doug |
