Boc Hong Kong (holdings) Limited · HKEX:2388

Boc Hong Kong (holdings) — H1 2020 Earnings Presentation

31 slides from Boc Hong Kong (holdings)'s earnings presentation, Aug 31, 2020

  1. Slide 1: 2020 Interim Results

    2020 Interim Results 31 August 2020

  2. Slide 2: Disclaimer

    Disclaimer 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, project, target, may

  3. Slide 3: Agenda

    Agenda Strategy Review Financial Performance Outlook 3

  4. Slide 4: Strategy Review

    aa sh SR a (18) ©! Strategy Review

  5. Slide 5: Financial Indicators Remained Stable through Active Responses to External Challenges

    Financial Indicators Remained Stable through Active Responses to External Challenges Profit after tax was HK$16.2 bn ROE was 10.43% HK$m 18,276 12.53% (426) (573) (61) 109 16,161 10.52% 10.43% (1,164) 1.25% 1.05% 1.04% 1H2019 Net operating Loan Operating Net gain/(loss) Others 1H2020 1H2019 2H2019 1

  6. Slide 6: Enhancing Local Market Commitment by Constantly Strengthening our Service Capabilities

    Enhancing Local Market Commitment by Constantly Strengthening our Service Capabilities • No. of mid-to-high end customers: +15.5%; private bank’s AUM: +4.6% • Maintained top market position in total number of new residential mortgage loans Personal • BOC Life became 3rd largest player in 1Q in terms

  7. Slide 7: Stable Development in Southeast Asian Network and Business

    Stable Development in Southeast Asian Network and Business BOCHK Pre-provisions Customer Loans Net Operating Income Vietnam Philippines Laos HK$1.304bn HK$53.4bn Thailand Myanmar +6.0% Customer Deposits Non-performing Loan Ratio HK$60.4bn 1.94% +6.7% Overall controllable Malaysia Brunei • Preliminar

  8. Slide 8: Facilitating Inter-connectivity in the GBA and Strengthening Featured Cross-border Services

    Facilitating Inter-connectivity in the GBA and Strengthening Featured Cross-border Services No. of customers of Cross-border Cross-border Loans to attestation services mortgage service Wealth Management Connect technology startups ＞100k Launched in Preparation +9.1% The Opinions on Financial Support

  9. Slide 9: Accelerating Digital Transformation in a Customer-centric Philosophy

    Accelerating Digital Transformation in a Customer-centric Philosophy Payment-led Transformation Won the bidding for numbers of e-payment and collection projects BoC Bill: covering a wide range of industries closely related to people’s daily lives No. of BoC Pay customers: +44% Focusing on Mobile Ser

  10. Slide 10: Coordinating Relief Efforts against Pandemic while Fulfilling our Social Responsibility

    Coordinating Relief Efforts against Pandemic while Fulfilling our Social Responsibility Supporting our Customers • First to launch Five Financial Support Initiatives • Full support to Special 100% Loan Guarantee Scheme, accounting for around 1/3 of market share • Full support to Pre-approved Princip

  11. Slide 11: Financial Performance

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  12. Slide 12: Improvement in Deposit Structure

    Improvement in Deposit Structure Customer Deposits Grew by 6.5% Market Share Consistently Widened HK$m 2,140,436 Market Share: 15.16% 2,009,273 Expanded by 0.60 ppt Balance: +16.5% 55.1% 60.2% 2019.12 2020.06 Time and Other Deposits Current and Saving Deposits Deposit Market Share (CASA) 12

  13. Slide 13: Solid Growth in Customer Loans

    Solid Growth in Customer Loans Customer Loans Grew by 7.7% Market Share Constantly Increased Loans for use in HK - 565,927 Market Share: 13.56% corporate +9.8% Expanded by 0.59 ppt Loans for use in HK - 427,219 individuals +4.4% Loans for use 428,531 outside HK +8.4% Trade financing 82,074 +8.3% HK$

  14. Slide 14: Net Interest Margin Declined along with Market Interest Rates

    Net Interest Margin Declined along with Market Interest Rates Net Interest Margin at 1.50% Net Interest Income Decreased by 6.1% HK$m 1H19: 1.69% 2H19: 1.69% 1H20: 1.50% 2,651,178 3% 2,580,805 2,521,282 2% 1.67% 21,978 21,109 1.71% 1.72% 1.66% 19,818 1.61% 1.39% 1% 0% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 1

  15. Slide 15: Net Fee Income Impacted by Market Environment

    Net Fee Income Impacted by Market Environment Net Fee & Commission Income down by 10% YoY 6,046 HK$m 4,873 5,435 8,120 1,623 6,882 6,798 Net Fee and Commission Income 1,052 1,389 Credit related business - 2,717 loan commissions 2,408 2,722 Investment and Insurance Traditional business - 3,780 3,422

  16. Slide 16: Cost Efficiency Outperformed the Market Average

    Cost Efficiency Outperformed the Market Average Stable Operating Expenses Cost to Income Ratio Better than Peers HK$m 39.80% * 127 38.00% 120 7,589 7,528 (102) (84) 26.40% 25.81% 1H2019 Staff Premises & Depre- Others 1H2020 1H2019 1H2020 costs equipment ciation Market Average BOCHK Market data sourc

  17. Slide 17: Asset Quality Remained Stable

    Asset Quality Remained Stable Solid Asset Quality Sufficient Impairment Allowance 0.38% 0.38% 0.40% 0.18% 0.16% 0.11% 0.25% 1,311 0.23% 1,135 0.20% 408 717 719 453 903 264 416 2019.06 2019.12 2020.06 1H19 2H19 1H20 Net charge of impairment allowances Special Mention Classified or Impaired Credit cos

  18. Slide 18: Solid Capital and Liquidity Positions

    Solid Capital and Liquidity Positions Steady Capital Ratios Sufficient Liquidity Total 23.11% 150.45% Capital Ratio + 0.22 ppt 146.53% 142.85% 131.38% Tier 1 20.52% Capital Ratio + 0.62 ppt 116.47% 118.00% 116.60% 117.49% CET 1 18.52% Capital Ratio + 0.76 ppt 3Q2019 4Q2019 1Q2020 2Q2020 2019.12 2020

  19. Slide 19: Outlook

    © thee ew AAS Outlook

  20. Slide 20: Outlook: Challenges and Opportunities

    Outlook Challenges Opportunities • Chinese mainland took lead in economy recovery, and solid long-term growth foundations • Severe recession of worldwide economy • Long term growth momentum for emerging markets in Asia Pacific remains strong • Growing complexities in geopolitical landscape • New opp

  21. Slide 21: 2020 Second Half Priorities

    2020 Second Half Priorities • Preventing the pandemic and strengthening risk management to realise stable business operation • Supporting local commercials clients and key development projects to enhance commitment to the Hong Kong market • Unleashing synergies in Southeast Asia and achieving broad

  22. Slide 22: Appendices

    Hp SR Be ee (12 AR) A PR BOC HONG KONG (HOLDINGS) LIMITED. Appendices

  23. Slide 23: Income Statement and Balance Sheet Summary

    Income Statement and Balance Sheet Summary Income statement summary (HK$m) 1H2020 1H2019 Change Net interest income 18,636 19,903 -6.4% Net fee and commission income 5,435 6,046 -10.1% Other non-interest income 4,672 3,220 45.1% Net operating income before impairment allowances 28,743 29,169 -1.5% O

  24. Slide 24: Average Balances and Average Interest Rates

    Average Balances and Average Interest Rates (HK$m) / % 1H2020 1H2019 Assets Average balance Average yield Average balance Average yield Balances and placements with banks and other financial institutions 305,597 1.09% 334,982 1.82% Debt securities investments and other debt instruments 839,362 2.04%

  25. Slide 25: Fee and Commission Income

    Fee and Commission Income HK$m 1H2020 1H2019 Change Securities brokerage 1,567 1,093 43.4% Loan commissions 1,389 1,623 -14.4% Credit card business 924 1,635 -43.5% Insurance 713 1,160 -38.5% Funds distribution 442 464 -4.7% Payment services 358 339 5.6% Trust and custody services 322 309 4.2% Bills

  26. Slide 26: Operating Expenses

    Operating Expenses HK$m 1H2020 1H2019 Change Staff costs 4,384 4,264 2.8% Premises & equipment expenses 550 652 -15.6% Depreciation 1,529 1,402 9.1% Others 1,126 1,210 -6.9% Total operating expenses 7,589 7,528 0.8% Full-time staff headcount 14,867 13,964 6.5% 26

  27. Slide 27: Customer Deposits

    Customer Deposits HK$m 2020.06 2019.12 Change Demand deposits and current accounts 293,328 207,013 41.7% Saving deposits 996,215 900,009 10.7% Time, call and notice deposits 850,893 902,251 -5.7% Total deposits from customers 2,140,436 2,009,273 6.5% CASA 1,289,543 1,107,022 16.5% 27

  28. Slide 28: Advances to Customers

    Advances to Customers HK$m 2020.06 2019.12 Change Loans for use in Hong Kong - industrial, commercial and financial 565,927 515,548 9.8% Property development 139,340 137,663 1.2% Property investment 64,716 49,073 31.9% Financial concerns 27,217 28,353 -4.0% Stockbrokers 6,147 815 654.2% Wholesale an

  29. Slide 29: Gross Advances and Other Accounts by Internal Credit Grade and Stage Classification

    Gross Advances and Other Accounts by Internal Credit Grade and Stage Classification 2020.06 2019.12 HK$m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Advances to customers 1,494,491 5,443 3,817 1,503,751 1,388,453 4,213 3,217 1,395,883 Pass 1,491,529 2,322 - 1,493,851 1,385,770 1,592

  30. Slide 30: Non-bank Mainland Exposures

    Non-bank Mainland Exposures On-balance sheet exposure Off-balance Total Total loans and O/W: for use in Debt securities sheet Subtotal exposure HK$m advances Chinese Mainland and others exposure Central government, central government-owned 282,891 87,669 69,027 351,918 34,077 385,995 entities and th

  31. Slide 31: Customer Loans in Vulnerable Sectors

    Customer Loans in Vulnerable Sectors As of 30 June, 2020, customer loans in industries which are more affected by the impact of COVID-19 (including Trading, Retail, Aviation, Tourism (including hospitalism), Catering, Entertainment) amounted to HK$160.6 billion, accounting for 10.68% of total loans,

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