Boc Hong Kong (holdings) Limited · HKEX:2388
Boc Hong Kong (holdings) — FY2003 Earnings Presentation
30 slides from Boc Hong Kong (holdings)'s earnings presentation, Mar 22, 2004
Slide 1: Growing with Stronger Foundations: 2003 Annual Results
Growing with Stronger Foundations 2003 Annual Results 22 March 2004
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, proj
Slide 3: Agenda
Agenda Key Performance Highlights Financial Results and Operating Performance Strategic Focus and Outlook in 2004 2
Slide 4: Market Analysis & Key Performance Highlights
Market Analysis & Key Performance Highlights
Slide 5: Key Challenges in 2003
Key Challenges in 2003 Consumer spending & corporate lending SARS impact seriously impacted Weak property market Significant Average I-month HIBOR fell to 0.99% in drop in 2003 from 1.81% in 2002 HIBOR Pressure on NII and NIM Reduced consumer loan demand and card Subdued loan receivables i
Slide 6: Positive Signs in Second Half of 2003
Positive Signs in Second Half of 2003 Signing of CEPA Implementation of individual visit scheme Stabilizing property prices Gradual return of investor and consumer confidence Improved employment figures Personal RMB banking services 5
Slide 7: Strong Bottom Line Growth
Strong Bottom Line Growth Bottom line growth benefiting from increase in wealth management income, cost reduction and significant decrease in charge for bad and doubtful debts Profit Profit Attributable Attributable to to Shareholders Shareholders Dividend Dividend per per Share Share (HK$ mm) (cent
Slide 8: Higher ROE & ROA
Higher ROE & ROA ROE ROE ROA ROA (%) (%) 1 0 bps bps 1 14 13.62 1.08 12.52 0.94 2002 2003 2002 2003 7
Slide 9: Solid Results Despite Pressure on NII
Solid Results Despite Pressure on NII Net interest income down by 7.7% Other operating income up by 5.0% Cost to income ratio improved to 32.8% Operating profit before provisions down by 4.1% Credit charge reduced by 41.5% NPL ratio improved to 5.78% (end-2002: 7.99%) 8
Slide 10: Stronger Foundations - Corporate Governance
Stronger Foundations - Corporate Governance Reforming corporate governance & management structure Progress of implementing Special Committee’s recommendations Corporate Governance Reform of Board Committees: Audit Committee; Risk Management Committee; Nomination & Remuneration Committee; Credi
Slide 11: Stronger Foundations - Continuing Reforms & IT Investment
Stronger Foundations - Continuing Reforms & IT Investment Continuing Redefining corporate culture Reforms Remuneration reforms IT blueprint is on course Leveraging IT Investment Realigning the IT module to support business development 10
Slide 12: Financial Results and Operating Performance
Financial Results and Operating Performance
Slide 13: Profit & Loss Account (1)
Profit & Loss Account (1) Strong growth in profit attributable to shareholders & significant decrease in credit charges reflecting improved credit quality 2003 2003 2002 2002 % % Change Change (HK$ mm) Operating income 17,253 18,114 (4.8) Operating expenses (5,658) (6,025) (6.1) Operating profit bef
Slide 14: Profit & Loss Account (2)
Profit & Loss Account (2) (HK$ mm) 2H03 2H03 1H03 1H03 2H02 2H02 1H02 1H02 Operating income 8,417 8,836 9,213 8,901 Operating expenses (2,961) (2,697) (3,126) (2,899) Operating profit before provision 5,456 6,139 6,087 6,002 Charge for bad and doubtful debts (2) (1,669) (1,089) (1,766) Operating pro
Slide 15: Balance Sheet
Balance Sheet Continued re-deployment of funds from lower yielding interbank placements to securities investment (HK$ mm) 31 Dec 2003 31 Dec 2002 % change Total Assets 762,587 735,536 4% Cash & Short-term Funds 134,106 115,075 17% Inter-bank Placements 78,240 80,159 -2% CDs Held 18,776 17,528 7% Inv
Slide 16: Key Financial Ratios
Key Financial Ratios 31 31 Dec Dec 2003 2003 30 30 June June 2003 2003 31 31 Dec Dec 2002 2002 30 30 June June 2002 2002 (%) ROE 13.6 10.6 12.5 13.0 ROAA 1.08 0.82 0.94 0.94 Cost to Income Ratio 32.8 30.5 33.3 32.6 NPL Ratio 5.78 7.80 7.99 8.97 Loan / Deposit 51.4 54.9 53.4 52.0 Average Liquidity Ra
Slide 17: Narrowing Net Interest Margin
Narrowing Net Interest Margin The combined effect of intense competition, weak loan demand and low interest rates (HK$ mm) 2003 2003 2002 2002 Challenges Challenges Interest Income 17,759 21,463 Impact of the Interest Expense 4,885 7,521 significant fall in HIBOR (2003: 0.99%; Net Interest Income
Slide 18: Strong Growth in Income from Wealth Management & Treasury Products
Strong Growth in Income from Wealth Management & Treasury Products Other Other Operating Operating Income Income Income Income from from Wealth Wealth Management Management HK$’ HK$’m 5.0% HK$’ HK$’m 211 Agency % commission on .1 464 120 68 479 sale of funds 745 918 23% 123 and retail bonds 45 733 L
Slide 19: Satisfactory Progress in Bank-Wide Efficiency Program
Satisfactory Progress in Bank-Wide Efficiency Program Better cost management & higher efficiency Operating Operating Expenses Expenses Reduction Reduction in in Premise Premise and and Equipment Equipment Cost Cost (HK$ m) Cost- Cost-to- to-Income Ratio Branch Network Rationalization 33.3% 32.8% 365
Slide 20: Improved Loan Portfolio
Improved Loan Portfolio Improved loan mix through shifting of emphasis to areas with higher profitability and growth potential (HK$ mm) 31 Dec 2003 31 Dec 2002 % change Loans for use in HK 277,050 292,635 -5.3% Property development 23,162 26,591 -12.9% Property investment 46,754 50,992 -8.3% Wholesa
Slide 21: Significant Improvement in Asset Quality
Significant Improvement in Asset Quality Achieved an NPL ratio of 5.78%, lowest since IPO NPL NPL Ratio Ratio Asset Asset Quality Quality (%) 8.97 31 9.0 31 Dec Dec 31 31 Dec Dec 2003 2003 2002 2002 7.99 7.80 8.0 General Provisions 5,406 6,363 7.0 6.0 5.78 Specific Provisions 5,507 8,650 5.0 NPLs 17
Slide 22: Satisfactory Performance of Mainland Branches
Satisfactory Performance of Mainland Branches China business improving in volume and quality Gross Gross Advances Advances to to Customers Customers Net Net Profit Profit (HK$ mm) (HK$ mm) 157 21% 6, 108 138 13 % 5, 036 2002 2003 Dec 02 Dec 03 PRC branches Classified Classified loan loan ratio rat
Slide 23: Superior Position in RMB and Mainland-related Business
Superior Position in RMB and Mainland-related Business The only RMB Clearing Bank in HK Issuance of Great Wall International Card and Great Wall RMB Card up 122% and 159% respectively. Related cardholder-spending increased by 62% and 104% respectively BOC Prestige Banking jointly launched with
Slide 24: Strategic Focus and Outlook
Ch ihe a re (32 Ax) APR A ol BOC HONG KONG (HOLDINGS) LIMITED
Slide 25: Strategic Focus in 2004
Strategic Focus in 2004 Business Corporate Strategies Culture Delivering Growth Business Risk Model Management 24
Slide 26: Aligning Business Model to Support Growth (1)
Aligning Business Model to Support Growth (1) Continue branch rationalization – 2nd phase in progress Centralize processing function and re-deploy staff to generate business especially in Retail Banking growth areas Model Centralize the processing of customer mortgage business and manage custo
Slide 27: Aligning Business Model to Support Growth (2)
Aligning Business Model to Support Growth (2) Strengthen Customer Relations Team to anticipate and meet customers’ needs Product Managers Team to develop products Corporate in need Banking Model Fine-tune customer segmentation Improve loan portfolio Move toward portfolio approach in managi
Slide 28: Aligning Business Model to Support Growth (3)
Aligning Business Model to Support Growth (3) RMB Capitalize on early entry Banking Make use of Mainland network resources for cross Model selling Leverage customer base in Hong Kong to promote products/services China Re-organize China Business Department to become Business extension of Reta
Slide 29: Growing with Stronger Foundations
Growing with Stronger Foundations Cautiously optimistic despite low interest rates and acute competition 2004 – a year of new opportunities Growing with stronger foundations 28
Slide 30: Growing with Stronger Foundations 2003 Annual Results
Growing with Stronger Foundations 2003 Annual Results 22 March 2004
BOC Hong Kong (Holdings) — FY2003 Earnings Presentation on 6ix