The Bank of East Asia (BEA) on Thursday said it has been closely monitoring risks related to its exposure to the Hong Kong property sector as there was a slight uptick in so-called "bad loans" last year.

At a press conference reviewing the bank's annual financial results, co-chief executive Adrian Li said about 6 percent of BEA's HK$61.4 billion Hong Kong property loans were non-performing in 2024, up from about 3 percent the year before.

Much of these loans were in the commercial real estate sector, he said, adding that credit ratings for some of the bank's local clients were downgraded which in turn prompted the bank to significantly increase provision for its local property loans to over HK$1.2 billion, up from HK$380 million.

The proportion of local property loans to the group's total loans, meanwhile, dropped to 11.5 percent at the end of last year, from 13.7 percent at the end of 2023, as the bank gradually reduced its exposure to Hong Kong property due to "relatively high risks" on the commercial side.

However, Li struck a more optimistic tone when it comes to the mainland, saying the risk of bad loans there is stable.

"The unwinding of the interest rate cycle should ease pressure on the Chinese real estate sector in the medium term, provided that rates continue their downward trajectory. With the impact of stimulus packages beginning to manifest, confidence is gradually returning improving investors, sentiment and activities," he said.

Li's remarks came as the bank delivered a 12 percent increase in its overall net profits in the past financial year, rising to HK$4.6 billion from the HK$4.2 billion in 2023 on the back of US interest rate reductions as well as stimulus measures from Beijing and the SAR government.

The bank declared a second interim dividend of HK$0.38 per share, more than double that of the year before, bringing the total annual dividend to HK$0.69 per share, up over 27 percent year-on-year.

Separately, Brian Li, the bank's co-chief executive, said the lender has seen a significant increase in demand from mainland customers for wealth management services in the SAR, with the number of mainland clients jumping 60 percent year-on-year.

That, he said, helped boost revenue from relevant investment products by 28 percent year-on-year.