Boc Hong Kong (holdings) Limited · HKEX:2388
Boc Hong Kong (holdings) — H1 2006 Earnings Presentation
30 slides from Boc Hong Kong (holdings)'s earnings presentation, Aug 29, 2006
Slide 1: 2006 Interim Results
2006 Interim Results 29.8.2006
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: 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 2
Slide 4: Agenda
Agenda Key Performance Highlights Financial Results Outlook 3
Slide 5: Key Performance Highlights
Ch ihe ae ree (32 Ax) A PR] BOC HONG KONG (HOLDINGS) LIMITED
Slide 6: Another Record High Interim Attributable Profit & Dividend
Another Record High Interim Attributable Profit & Dividend Profit ProfitAttributable Attributableto toShareholders Shareholders Dividend Dividendper perShare Share HK$ m HK$ YYooYY Y YooY Y % 4% 3 .3 % % ++88..4 ++2222. 0.401 7 ,0 9 3 0.328 7 ,0 5 0 0.320 6 ,5 4 6 1H 2005 2H2005 1H2006 1H 2004 1H 20
Slide 7: Operating Environment
Operating Environment External External Buoyant economy driven by investment & domestic spending Active stock market and robust export trade Lackluster residential property market Continuous widening of Prime and HIBOR spread Benign credit environment Internal Internal Commencement of St
Slide 8: Strong Growth in Operating Results
Strong Growth in Operating Results HK$ m 1H 1H 2006 2H 2006 2H 2005 2005 1H 1H 2005 2005 N et o p e ra tin g In c o m e b efo re lo an im p airm e n t a llo w an ce s 10,5 17 9,863 8 ,311 O p eratin g p ro fit b efo re lo an im p airm en t a llo w an ce s 7,546 6 ,785 5,618 O p eratin g profit 8,188
Slide 9: Broad Based Revenue Growth
Broad Based Revenue Growth Net Net Interest Interest Income Income Non -interest Income Non-interest Income HK$ m HK$ m % YYooYY .22% ++2266. % YYooYY .44% ++2277. 7, 573 7, 191 2, 944 6, 001 2, 672 2, 310 1H 2005 2H2005 1H2006 1H 2005 2H2005 1H2006 8
Slide 10: Further Improvement in Asset Quality
Further Improvement in Asset Quality Impaired ImpairedLoan Loan//Impaired Impaired Loan Loan Ratio Ratio HK$ bn 40 11.48% 35 7.98% 30 5.82% 25 2.95% 20 1.28% 15 1.09% 10 5 0 2001 2002 2003 2004 2005 1H2006 Impaired Loan Impaired Loan Ratio 9
Slide 11: Other Business Highlights
Other Business Highlights Growth in customer deposits (+1.9%) Strong growth in net fee income (+21.2%) Expansion of wealth management customer base (+24.7%) and assets under management (+20.1%) Leading position in HK RMB business maintained Successful acquisition of BOC Life 10
Slide 12: Financial Results
Ch ihe ae ree (32 Ax) A PR] BOC HONG KONG (HOLDINGS) LIMITED
Slide 13: Condensed Income Statement
Condensed Income Statement Continued growth in both net interest income and non-interest income leading to strong operating results HK$ m 1H 1H2006 2006 2H 2H2005 2005 1H 1H2005 2005 % %YoY YoY % %HoH HoH Net interest income 7,573 7,191 6,001 ↑ 26.20 ↑ 5.31 Net fees and commission income 1,761 1,493
Slide 14: Higher Net Interest Income and Improved NIM
Higher Net Interest Income and Improved NIM Improved NII and NIM (YoY +23 bps) underpinned by rising market interest rates, funding cost control and active asset-liability management HK$ m 1H 1H2006 2006 2H 2H2005 2005 1H 1H2005 2005 Interest income 19,403 15,980 10,197 Interest expense 11,830 8,789
Slide 15: Non-interest Income
Non-interest Income Strong growth in net fees and commission income and net insurance premium income Non-interest Income Non-interest Income HK$ m 1H 1H2006 2006 2H 2H2005 2005 1H 1H2005 2005 Net fees and commission income 1,761 1,493 1,453 Net trading income 606 666 699 Net insurance premium income
Slide 16: Investment & Insurance Business
Investment & Insurance Business Substantial growth in stockbrokerage, asset management fee, and insurance income of BOC Life Investment Investment & & Insurance Insurance Business Business HK$ m 1H 1H2006 2006 2H 2H2005 2005 1H 1H2005 2005 Investment and insurance fee income Securities brokerage (St
Slide 17: Effective Cost Management
Effective Cost Management Cost-to-income ratio improved despite considerable investment in HR and IT Operating Operating Expenses Expenses Branch Branch Number Number HK$ m 301 (286)* (286)* 302 (287)* (287)* 3,078 2,971 2,693 550 Others 451 419 282 323 D ec 2005 Jun 2006 Depreciation 287 *Branches
Slide 18: Release of Loan Impairment Allowances
Release of Loan Impairment Allowances Net release of loan impairment as a result of improved asset quality and effective collection HK$ m 1H 1H 2006 2006 2H 2H 2005 2005 1H 1H 2005 2005 Loan impairment release/(charge) Individual assessment - New allowances (366) (609) (695) - Releases 99 834 208 -
Slide 19: Continued Improvement in Asset Quality
Continued Improvement in Asset Quality Impaired loan ratio declined to historic low of 1.09% Impaired Impaired Loan Loan Ratio Ratio Migration Migration of of Impaired Impaired Loans Loans % 1.89 HK$ bn +0.4 -0.2 1.28 1.09 -0.7 -0.1 -0.1 4.3 3.6 Jun 05 Dec 05 Jun 06 End-2005 Downgrade Upgrade Collec
Slide 20: Condensed Balance Sheet
Condensed Balance Sheet Continued to enhance asset mix by shifting short-term funds to higher yield securities HK$ m 30.06.2006 30.06.2006 31.12.2005 31.12.2005 % % Change Change Total assets 860,335 831,002 ↑ 3.5 Cash and short-term funds 80,391 108,955 ↓ 26.2 Inter-bank placements 55,993 47,611 ↑
Slide 21: Advances to Customers
Advances to Customers Growth in total corporate loan offset by decline in residential mortgages due to sluggish property market HK$ m 30.06.2006 30.06.2006 31.12.2005 31.12.2005 % % Change Change Loans Loans by by currency currency mix mix Loans for use in HK - corporate 153,300 151,903 + 0.9 3% Loa
Slide 22: Deposits from customers
Deposits from customers Steady growth and stable mix of deposits Types Types of of deposits deposits Deposits Deposits by by currency currency mix mix 4.5% 4.4% 33.9% 34.4% 11% 22% 61.6% 61.2% 67% 31.12.2005 30.06.2006 HKD USD Others Fixed & Structured Savings Demand HK$ m 639,031 650,994 21
Slide 23: Business Segment Contribution
Business Segment Contribution All businesses reported increasing operating profit before impairment Segment contribution to Operating profit before impairment HK$ m pre-tax profit 433 .5% +16 4.99% 6 9 .5% 5% +1 3,156 +9. 36.77% 30.05% 3,189 2,606 2,710 2,606 1,841 1,681 2,445 967 28.19% Retail Corp
Slide 24: Successful Acquisition of BOC Life
Successful Acquisition of BOC Life Enhances capability in insurance business and solidifies client base Insurance Insurance Segment Segment HK$ m 1H2006 1H2006 1H2005 1H2005 % % Change Change Net interest income 208 141 + 47.5 Net insurance premium income 3,478 1,775 + 95.9 Other operating income (5
Slide 25: Mainland branches
Mainland branches Growth in total operating income and operating profit before impairment Combined Combined profit profit and and loss loss account account of of 14 14 Mainland Mainland branches branches HK$ m 1H2006 1H2006 1H2005 1H2005 % % Change Change Total operating income 242 206 + 17.5 Operat
Slide 26: Outlook and Strategy
Ch ihe ae ree (32 Ax) A PR] BOC HONG KONG (HOLDINGS) LIMITED
Slide 27: Outlook
Outlook Signs of US interest rate hike peaking out Uncertainty over oil prices and geopolitical conflicts may dampen trade and investment Local economic climate expected to stay positive Property market may resume up trend Fierce competition in the banking sector 26
Slide 28: Strategies Going Forward (1)
Strategies Going Forward (1) Forge ahead with Strategic Plan 2006-2011 ¾To drive organic growth by focusing on higher- yielding segments. ¾To seek out new expansion opportunities after acquisition of BOC Life. ¾To build a stronger presence in the Mainland. ¾To continue with corporate culture build
Slide 29: Strategies Going Forward (2)
Strategies Going Forward (2) Enhance RPC Model to drive organic growth ¾To strengthen Customer Relationship Management ¾To introduce new Product Management System ¾To optimize Workflow & Channels Invest in infrastructure to prepare for QDII and CIBM 28
Slide 30: 2006 Interim Results
2006 Interim Results 29.8.2006
BOC Hong Kong (Holdings) — H1 2006 Earnings Presentation on 6ix