Boc Hong Kong (holdings) Limited · HKEX:2388
Boc Hong Kong (holdings) — FY2004 Earnings Presentation
32 slides from Boc Hong Kong (holdings)'s earnings presentation, Mar 23, 2005
Slide 1: In Pursuit of Growth and Excellence
In Pursuit of Growth and Excellence 2004 Annual Results 23 March 2005
Slide 2: Forward-Looking Statement Disclaimer
Forward-Looking Statement Disclaimer This presentation and subsequent discussions may contain forward-looking statements that involve risks and uncertainties. These statements are generally indicated by the use of forward-looking terminology such as believe, expect, anticipate, estimate, plan, proje
Slide 3: Management Team
Management Team Mr. Gary He Vice Chairman and Chief Executive Mr. David Lam Deputy Chief Executive Mr. Raymond Lee Chief Financial Officer Mr. Yingxin Gao Deputy Chief Executive Mr. Alex Cheung Chief Risk Officer Mr. Peter Liu Chief Information Officer Mr. Jason Yeung Company Secretary and Head of I
Slide 4: Agenda
Agenda Key Performance Highlights Financial Results New HKFRS 2005 Outlook and Strategic Focus 3
Slide 5: Key Performance Highlights
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Slide 6: Record High Attributable Profit
Record High Attributable Profit Strong growth in attributable profit and dividend for 2004 Profit ProfitAttributable Attributableto toShareholders Shareholders Dividend Dividendper perShare Share HK$ mm HK$ %% 3388..88 2% % 5500..2 0.715 0.515 11,963 0.398 6,787 7,963 2002 2003 2004 2002 2003 2004 5
Slide 7: Higher ROE, ROA and Asset Quality
Higher ROE, ROA and Asset Quality % 2004 2004 2003 2003 ROE 18.58 13.62 ROA 1.56 1.08 NIM 1.55 1.82 Non-interest income ratio 29.41 25.38 Cost to income ratio 34.72 32.79 NPL ratio 2.95 5.78 Loan to deposit ratio 49.61 51.38 Average liquidity ratio 36.03 37.76 Capital adequacy ratio 16.14 15.11 6
Slide 8: Operating Environment
Operating Environment Upturn of Hong Kong economy Improved credit environment Highly liquid money market Average 1M HIBOR 0.3% Net interest income suppressed by persistent low HIBOR 7
Slide 9: Key Achievements: Business Performance
Key Achievements Business Performance Market leadership maintained in traditional businesses Robust growth of high-margin businesses Market leadership in new areas pioneered by the Group - RMB banking Growth momentum sustained in China-related business 8
Slide 10: Key Achievements: Crisis Management
Key Achievements Crisis Management Major management crisis quickly resolved Enhancement of corporate governance and management structure 9
Slide 11: Key Achievements: Business Development
Key Achievements Business Development Enhanced business strategy Refined business model Improved risk management Development of new corporate culture 10
Slide 12: Financial Results
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Slide 13: Profit and Loss Account (YoY)
Profit and Loss Account (YoY) Strong rise in net profit due to provision write-back, property revaluation gain & growth in non-interest income 2004 2004 2003 2003 % %Change Change HK$ mm Net interest income 11,193 12,874 - 13.06 Non-interest income 4,664 4,379 + 6.51 Operating income 15,857 17,253 -
Slide 14: Profit and Loss Account (HoH)
Profit and Loss Account (HoH) Rise in 2H04 net profit due to stabilised net interest income, provision write-back and property revaluation gain 2H2004 2H2004 1H2004 1H2004 2H2003 2H2003 1H2003 1H2003 HK$ mm Net interest income 5,684 5,509 6,290 6,584 Non-interest income 2,150 2,514 2,127 2,252 Opera
Slide 15: Balance Sheet – Enhanced Asset Mix
Balance Sheet – Enhanced Asset Mix 31.12.2004 31.12.2004 31.12.2003 31.12.2003 % %Change Change HK$ mm Total assets 796,776 762,587 + 4.48 Cash and short-term funds 102,647 134,106 - 23.46 Interbank placements 107,581 78,240 + 37.50 CDs held 22,338 18,776 + 18.97 Investments in securities 189,388 17
Slide 16: Lower Net Interest Margin
Lower Net Interest Margin Challenging environment with low interest rate, intense competition and modest loan growth 2004 2004 2003 2003 HK$ mm Interest income 15,678 17,759 Interest expense 4,485 4,885 Net interest income 11,193 12,874 Net interest spread 1.46% 1.73% Net interest margin 1.55% 1.82%
Slide 17: Growth in Wealth Management and Treasury Income
Growth in Wealth Management and Treasury Income Other Other operating operating income income Income Income from from wealth wealth management management HK$ mm HK$ mm 66..55% % 2277..99% % 98 233 276 37 483 211 194 1,167 899 120 3,221 836 2,997 696 2003 2004 2003 2004 Bonds Other income Asset manag
Slide 18: Operating Expenses under Control
Operating Expenses under Control Increased operational efficiency and disciplined cost management Operating Operating expenses expenses Branch Branch number number HK$ mm 5,658 5,505 304 (289)* 298 (283)* 32.79% 34.72% 999 904 Dec 2003 Dec 2004 611 585 *Branches in Hong Kong 732 725 Staff Staff numb
Slide 19: Substantial Provision Write-back
Substantial Provision Write-back Lower classified loan formation, strong collections and recoveries reflecting continuous improvement in loan quality HK$ mm 2004 2003 2004 2003 Specific provisions - new provisions (1,520) (3,834) - releases 1,851 768 - recoveries 1,356 438 General provisions (59) 95
Slide 20: Significant Improvement in Asset Quality
Significant Improvement in Asset Quality NPL ratio further declined to 2.95% - lowest level since IPO NPL NPL // Classified Classified loan loan ratio ratio Asset Asset quality quality % 31.12.2004 31.12.2004 31.12.2003 31.12.2003 7.99 7.98 NPL ratio HK$ mm Classified loan ratio General Provisions 5
Slide 21: Strong Growth in Retail and Overseas Lending
Strong Growth in Retail and Overseas Lending Strong growth in residential mortgage, card advances and overseas lending with total performing loans increased by 4.6% 31.12.2004 31.12.2004 31.12.2003 31.12.2003 % %Change Change HK$ mm Loans for use in HK - corporate 148,034 155,839 - 5.0 Loans for use
Slide 22: Steady Growth in the Mainland
Steady Growth in the Mainland Organic growth driven by significant increase in loans and improved asset quality Combined Combined profit profit and and loss loss account account of of 14 14 Mainland branches and sub -branches Classified Classified loan loan ratio ratio Mainland branches and sub-bran
Slide 23: New HKFRS
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Slide 24: New HKFRS – Possible Implications for 2005 (1)
New HKFRS – Possible Implications for 2005 (1) • New HKFRSs – convergence with international standards • More volatile P/L • Reclassification of some balance sheet items • Compliance with HKMA requirements • Complex implementation 23
Slide 25: New HKFRS – Possible Implications for 2005 (2)
New HKFRS – Possible Implications for 2005 (2) • Classification of financial instruments • New classification of debt securities • Change in measurement methods • Accounting for derivatives • Measured at fair value • Hedge accounting • Stringent requirements 24
Slide 26: New HKFRS – Possible Implications for 2005 (3)
New HKFRS – Possible Implications for 2005 (3) • Loan impairment • Recognised on an incurred loss basis • Discounted future cash flow • Investment property • Fair value model • Change in fair value of investment properties to be recognised directly in P/L 25
Slide 27: 2005 Outlook and Strategic Focus
2005 Outlook and Strategic Focus
Slide 28: Outlook for Hong Kong Economy and Banking Sector
Outlook for Hong Kong Economy and Banking Sector Economic recovery likely to extend into 2005 Higher demand for loans, banking and financial services Competition for local banks to remain intense Growing importance of China-related business 27
Slide 29: Strategic Focus (1)
Strategic Focus (1) To achieve higher top line growth and better returns Corporate Banking • Expand SME loans and trade finance • Further de-risk corporate loan portfolio Retail Banking • Grow wealth management and consumer lending • Strengthen development of consumer credit products and value
Slide 30: Strategic Focus (2)
Strategic Focus (2) To achieve higher top line growth and better returns (Cont’d) Treasury • Focus on balance sheet management • Adjust investment portfolio to maximize return on residual funds China-related Business • Leverage branch network in Hong Kong and Mainland • Closer cooperation with
Slide 31: Strategic Focus (3)
Strategic Focus (3) To further enhance corporate development • development strategy • business model • risk management • corporate culture To further improve asset quality To invest in the future To explore other business expansion opportunities 30
Slide 32: In Pursuit of Growth and Excellence
In Pursuit of Growth and Excellence 2004 Annual Results 23 March 2005
BOC Hong Kong (Holdings) — FY2004 Earnings Presentation on 6ix