Company Analysis
TAI SANG BANK LTD
THE REAL MEANING OF A FAMILY BANK
Tai Sang Bank Ltd is not much more than the personal ‘vault' for the Ma Family, with the bank, and its subsidiary, being run, used, and owned by the Ma clan.
Tai Sang Bank posted a mediocre result for 1987, but the Family seems happy to let this situation go on, and on, and on, and on, and on.
Tai Sang Bank is very much a family affair, with the Directors and members of the management all having the
same christian name, ‘Ma'.
This is not surprising as the issued shares and control of the bank are also in the hands of the Ma Family.
The Ma Family's involvement does not end here, as a large portion of Tai Sang Bank's loans, made throughout 1987, were to members of the Ma Family's companies, or to persons connected with the Ma Family.
However, this is to be expected as most of the money deposited in Tai Sang Bank belongs to the Ma Family anyway!
Tai Sang Bank posted a Profit After Tax of $HK7.81 million for Financial 1987. This compared to $HK7.76 million in the 1986 Year, ended December 31.
Had it not been for a change in accounting policy in 1987,
the Bank's Profit for the 1987 Financial Year would have
been less than the Profit posted in 1986.
Profits for 1987 were boosted by $HK770,774 by a change in an accounting policy, while in 1986, the effect on the previous Year's Profit was an increase of $HK406,381.
Therefore, the 1987 Profits of the Bank were artificially boosted by $HK364,393.
Profits from Tai Sang Bank's operations and its subsidi- ary, Tai Sang Finance Ltd, decreased 15.41 percent, from $HK6.92 million in 1986 to $HK5.85 million in 1987.
The profits from associated companies increased ap- proximately 133 percent, from $HK842,931 in 1986 to $HK1.96 million in 1987.
The Profit of $HK6.88 million from the banking opera- tions were generated on Shareholders' Funds of $HK201.67 million and deposits in Tai Sang Bank of $HK106.87 million.
Tai Sang Bank had $HK308.54 million of funds at its disposal in 1987, and one would assume that Tai Sang Bank's
Turnover for the Year would have been in excess of this
figure.
Therefore, the Net Operating Profit Margin of Tai Sang Bank for the 1987 Financial Year must have been very low, somewhere in the vicinity of 2.5 percent.
Had the Shareholders' Funds of the banking operations, $HK201.67 million, been placed on fixed deposit for the Year at an interest rate of 6.5 percent, revenue of $HK13.11 million would have been generated.
And assuming a Return of 2.5 percent over the cost of the funds deposited with the banking operations in 1987, $HK2.67 million could have been earned.
It is, therefore, not out of the question that a revenue of at least $HK16 million could easily have been generated by the banking operations in 1987, based on the funds which Tai Sang Bank had at its disposal.
However, one must remember that Tai Sang Bank is a private bank, and a family one at that. Therefore, there is no need to be overly generous with the taxman.
During the course of 1987, approximately $HK32 million was lent to companies and people connected to the bank's officials.
However, according to the accounts, as at December 31, 1987, all but $HK216,253 was repaid.
But one wonders how the accounts look today: Will the Ma Family dip into the pot again?
Advances to customers still outstanding as at December
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