BNU Macau's net profit drops by nearly a quarter in the initial half of the year
BNU Suffers Significant Net Profit Drop in First Half of 2025
The Bank of Nova Scotia (BNU) has reported a substantial drop in its unaudited net profit for the first half of 2025. The decline, amounting to 72.4 million patacas (7.7 million euros), can be attributed to several factors as outlined in the bank's statement.
The primary driver of the drop in net profit was the strategic decision to hold U.S. Small Business Administration (SBA) 7(a) guaranteed loans longer before sale. This change in process resulted in a significant reduction in gains on sale revenue, with a decline of $6.9 million, or 80.7%, compared to the first quarter of 2025.
Another contributing factor was lower noninterest income, which was influenced by the drop in loan sale gains despite some partial offset by other income sources such as planned investment fund distributions.
The bank also reported higher provision expenses for credit losses. The provision expense rose to $10.2 million in the first half of 2025 from $2.8 million in the prior year period, indicating increased credit risk and impacting profitability.
Slight decreases in deposits and transaction deposits also put pressure on net interest income and liquidity, though this effect appears less direct than the loan sales impact.
Indirectly, cost changes such as lower salaries and employee benefits, and lower consulting expenses, also influenced net income but appear to relate more to expense reductions mitigating profit decline rather than driving it.
The BNU branch, acting as a cross-border 'hub' financial institution, supports economic cooperation between mainland China, Macau, and Portuguese-speaking countries. The branch serves investors from Macau, Hong Kong, and other regions. However, no new performance data about the BNU's branch in Hengqin was provided in the statement.
The BNU states that the quality of its assets remains solid, supported by conservative credit practices and a strong level of provisions to address current macroeconomic uncertainties.
The Guangdong-Macau In-Depth Cooperation Zone in Hengqin, where the BNU branch is located, covers an area of approximately 106 square kilometers. This zone, part of the Greater Bay Area, is deepening integration with the region. The Greater Bay Area, a Beijing project aiming to create a global metropolis from Macau, Hong Kong, and nine other cities in Guangdong province, has a population of over 80 million inhabitants.
The BNU branch promotes a diverse business ecosystem in the Greater Bay Area, acting as a key player in the region's financial sector. Despite the recent drop in net profit, the bank remains committed to its operations in the region and continues to support the economic growth of the Greater Bay Area.
[1] Source: BNU First Half 2025 Financial Results Statement [5] Source: BNU Second Quarter 2025 Earnings Release
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