David Li, chairman and chief executive, said the disposal of its entire collateralised debt obligation holdings was “decisive”. He said the bank would perform better this year although the impact of the “financial tsunami” would extend “well into 2009”.

BEA's writedown in October contributed to a 111.9 per cent decrease in its non- interest income to HK$3.2bn. It also offset a 13.7 per cent rise in net interest income to HK$6.8bn. Net profit in 2008 was HK$104m, compared with HK$4.2bn in 2007 and the average HK$281m forecast by analysts. According to Reuters calculations, BEA swung to a net loss of HK$746m in the second half from a net profit of HK$2.3bn a year earlier. It was the bank's first half-year loss in four decades.

BEA's poor results are likely to be followed by other Hong Kong banks, which are expected to report falling profits for last year in the following weeks because of higher impairment charges, falling margins and declining fee incomes.