Boc Hong Kong (holdings) Limited · HKEX:2388
Boc Hong Kong (holdings) — FY2005 Earnings Presentation
41 slides from Boc Hong Kong (holdings)'s earnings presentation, Mar 23, 2006
Slide 1: Moving Forward With A Strategy For Broader Frontiers: 2005 Annual Results
Moving Forward With A Strategy For Broader Frontiers 2005 Annual Results Presentation 23 March 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 Overview of Strategic Plan from 2006 to 2011 3
Slide 5: Key Performance Highlights
Ch Eh Be ee (32 Hx) A BR ZS BOC HONG KONG (HOLDINGS) LIMITED
Slide 6: Record High Attributable Profit & Dividend
Record High Attributable Profit & Dividend – 3rd Consecutive Year of Double-Digit Growth Profit ProfitAttributable Attributableto toShareholders Shareholders Dividend Dividendper perShare Share HK$ m HK$ CAAGGR R CAAGGR R C C 300..22% % 2 5 5 ..33% % ++3 ++ 2 0.808 13,494 0.715 11,963 7,963 0.515 20
Slide 7: Operating Environment
Operating Environment External External Robust economy – 2nd consecutive year of strong growth ¾ Ç Merchandize exports ¾ Ç Domestic consumption Æ Higher demand for credit & banking services ¾ Ç Fixed asset investment Narrowing of HKD & USD interest rate differential ¾ Æ Higher NIM for banks with
Slide 8: Strong Growth of Operating Income & Operating Profit
Strong Growth of Operating Income & Operating Profit HK$ m 2005 2005 2004 2004 Operating income 17,896 15,857 Pre-provision profit 12,166 10,352 Operating profit 14,811 11,980 ROE (%) 18.24 18.58 ROA (%) 1.66 1.56 7
Slide 9: High Growth of Interest / Non-Interest Income & Improved Net Interest Margin
High Growth of Interest / Non-Interest Income & Improved Net Interest Margin Net NetInterest Interest Income Income Non NonInterest InterestIncome Income HK$ m HK$ m .0022% % 88% % 5 . 6 ++115 7 ++7..6 5, 022 12,874 4, 664 11,193 2004 2005 2004 2005 NIM: 1.55% 1.71% 8
Slide 10: Greatly Improved Asset Quality
Greatly Improved Asset Quality Impaired ImpairedLoan Loan//Impaired Impaired Loan Loan Ratio Ratio HK$ bn 40 11.48% 35 30 -10 .20 7.98% pp t 25 20 5.82% 15 2.95% 10 1.28% 5 0 2001 2002 2003 2004 2005 Impaired Loan Impaired Loan Ratio 9
Slide 11: Highlights of Broad-Based Business Growth
Highlights of Broad-Based Business Growth Healthy growth in total advances to customers (+6.6%) ¾ SME loans (+9.1%) ¾ Trade finance & bills (+21.1%) ¾ Advances made in Mainland branches (+61.4%) Market leader in loan syndication Market leader in residential mortgage Expansion of wealth manag
Slide 12: Financial Results
Ch Eh Be ee (32 Hx) A BR ZS BOC HONG KONG (HOLDINGS) LIMITED
Slide 13: New Accounting Standards
New Accounting Standards The new and revised Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards became effective from 1 January 2005. Some of the 2005 figures are not directly comparable to corresponding figures in the previous year. 12
Slide 14: Condensed Profit and Loss Account
Condensed Profit and Loss Account Increased operating income, effective cost management and net release of loan impairment allowances contributed to net profit growth HK$ m 2005 2005 2004 2004 % %YoY YoY Net interest income 12,874 11,193 ↑ 15.02 Non-interest income 5,022 4,664 ↑ 7.68 Operating incom
Slide 15: Condensed Profit and Loss Account: 2H vs 1H 2005
Condensed Profit and Loss Account: 2H vs 1H 2005 Strong growth in pre-provision profit in 2H attributable to significant increase in net interest income HK$ m 2H 2H2005 2005 1H 1H2005 2005 % %HoH HoH Net interest income 7,013 5,861 ↑ 19.66 Non-interest income 2,658 2,364 ↑ 12.44 Operating income 9,6
Slide 16: Financial Impacts of New Accounting Standards
Financial Impacts of New Accounting Standards HKFRS HKFRS Comparable Comparable 2005 2005 impacts impacts 2005 2005 2004 2004 % %YoY YoY HK$ m Net interest income 12,874 257 13,131 11,193 17.3% Non interest income 5,022 (559) 4,463 4,664 -4.3% Operating Income 17,896 (302) 17,594 15,857 11.0% Operat
Slide 17: Higher Net Interest Income and Improved NIM
Higher Net Interest Income and Improved NIM Improved NII and NIM underpinned by higher market rates, active asset liability management and active pricing strategy HK$ m 2005 2005 2004 2004 Interest Income 25,875 15,678 Interest Expense 13,001 4,485 Net Interest Income 12,874 11,193 Net Interest Inco
Slide 18: Non-interest Income
Non-interest Income Increase in net trading income outweighed moderate decline in net fees and commission income Non-interest Income Non-interest Income Wealth Wealth Management Management Income Income HK$ m HK$ m 5,022 1,361 4,664 1,243 295 233 320 183 98 1,674 120 1,123 194 226 3,221 3,053 836 71
Slide 19: Effective Cost Management
Effective Cost Management Cost-to-income ratio improved due to strong growth of operating income and modest increase in operating expenses Operating Operating Expenses Expenses Branch Branch Number Number HK$ m (283)* 5,730 298 301 (286)* 5,505 951 904 566 585 Dec 2004 Dec 2005 743 725 *Branches in
Slide 20: Loan Impairment Release
Loan Impairment Release Net release of loan impairment underpinned by lower new allowances charges, higher releases and strong recoveries HK$ m 2005 2005 2004 2004 Loan impairment release/(charge) - New allow ances (1,315) - - Releases 2,321 - - Recoveries of loans previously w ritten off 1,639 - Sp
Slide 21: Significant Improvement in Asset Quality
Significant Improvement in Asset Quality Impaired loan ratio declined to historic low of 1.28%* Impaired Impaired Loan Loan Ratio Ratio Migration Migration of of Impaired Impaired Loans Loans % HK$ bn 5.82 --11. .6677 ppp +1.7 pttY YooY Y 2.95 -1.2 1.28 9.2 -3.8 -1.1 -0.5 4.3 Dec 03 Dec 04 Dec 05 En
Slide 22: Condensed Balance Sheet
Condensed Balance Sheet Enhanced asset mix by shifting lower-yield inter-bank placements to higher yield lendings and securities HK$ m 31.12.2005 31.12.2005 31.12.2004 31.12.2004 % % Change Change Total assets 822,105 796,776 ↑ 3.18 Cash and short-term funds 115,575 102,647 ↑ 12.60 Inter-bank placem
Slide 23: Broad-based Loan Growth
Broad-based Loan Growth Growth in all loan segments, especially strong growth in trade finance and loans for use outside Hong Kong HK$ m 30.12.2005 30.12.2005 31.12.2004 31.12.2004 % %Change Change Loans Loans by by currency currency mix mix Loans for use in HK - corporate 151,903 145,979 + 4.1 Loan
Slide 24: Deposits from Customers
Deposits from Customers The increase in Fixed and Structured Deposits offset the fall in Savings Types Types of of deposits deposits Deposits Deposits by by currency currency mix mix 5.1% 4.5% 12% 33.9% 47.0% 21% 61.6% 47.9% 67% Dec 2004 Dec 2005 HKD USD Others 631,330 639,464 HK$ m Fixed & Structur
Slide 25: Business Segment Contribution
Business Segment Contribution Profit growth in Retail Banking driven by widening fixed deposit spread Segment Contribution to Operating Income Pre-tax Profit Retail HK$ m 26% 7% 1,223 19% Treasury 40% 74% 3,173 29% 6,503 Corporate 5,469 22% 71% 34% Retail Corporate Treasury Others 78% Net Interest I
Slide 26: Mainland Branches Continued to Deliver Good Results
Mainland Branches Continued to Deliver Good Results Substantial improvement in profitability and asset quality Combined Combined profit profit and and loss loss account account of of 14 14 Mainland Mainland branches branches HK$ m 2005 2005 2004 2004 % % Change Change Operating income 454 264 + 72.0
Slide 27: Outlook
Ch Eh Be ee (32 Hx) A BR ZS BOC HONG KONG (HOLDINGS) LIMITED
Slide 28: Outlook
Outlook Global economy expected to grow at modest pace Growth momentum of local economy likely to continue Local banks to benefit from growth of Mainland China despite softening credit demand and trade finance Private consumption remains upbeat Property market expected to experience a turn
Slide 29: Overview of Strategic Plan 2006-2011
Overview of Strategic Plan 2006-2011
Slide 30: Objective: Top-Quality Financial Services Group
Objective: Top-Quality Financial Services Group To be a top-quality financial services group with a powerful base in Hong Kong, a solid presence in China and a strategic foothold in the region 29
Slide 31: Strategic Focus: Five Focus Areas for Value Creation
Strategic Focus: Five Focus Areas for Value Creation Strengthening Strengtheningthe theLeading LeadingPosition Position in inHong HongKong Kong Higher HigherReturn Returnto to Shareholders Shareholders Developing DevelopingNew NewCapabilities Capabilitiesin in / /Investors Investors Product Manufact
Slide 32: Focus 1: Strengthening the Leading Position in Hong Kong
Focus 1 Strengthening the Leading Position in Hong Kong Leverage strong customer base and well-positioned traditional core businesses for growth Strong and loyal customer base: ¾ 2.5 million retail customers ¾ 250,000 corporate customers Market leader in major commercial banking businesses, such
Slide 33: Focus 1: Implementation Strategy (1)
Focus 1- Strengthening the Leading Position in Hong Kong: Implementation Strategy (1) Strengthening Strengthening Introducing Introducing aa New Optimizing Optimizing Workflow Workflow & & Customer Customer Relationship Relationship New Product Product Management Channels Channels Management Managem
Slide 34: Focus 1: Implementation Strategy (2)
Focus 1- Strengthening the Leading Position in Hong Kong: Implementation Strategy (2) To drive organic growth by boosting ROE lucrative segments, including wealth management, consumer lending, cash management, treasury and SME loans through cross-selling, customization, product innovation and custom
Slide 35: Focus 1: Implementation Strategy (2) (cont.)
Focus 1- Strengthening the Leading Position in Hong Kong: Implementation Strategy (2) (cont.) Corporates ¾ Support corporate clientele with a superior corporate cash management platform ¾ Build up strength in treasury functions to offer customized treasury solutions (products, services, advisory f
Slide 36: Focus 2: Developing New Capabilities in Product Manufacturing & Distribution
Focus 2 - Developing New Capabilities in Product Manufacturing & Distribution: Implementation Strategy To move up the value chain and raise overall profit margin by building up BOCHK’s full-service model Enter new business lines by building up new capabilities or acquiring from outside ¾ Life insu
Slide 37: Focus 3: Building a Stronger Presence in China
Focus 3 - Building a Stronger Presence in China: Implementation Strategy Geographical presence Expand in the Pearl River Delta, Yangzi River Delta, and coastal cities Seek out opportunities for M&A, including the acquisition of local banking assets Growth of customer base by focusing on 3 key ni
Slide 38: Focus 4: Seeking Opportunities for Regional Expansion
Focus 4 - Seeking Opportunities for Regional Expansion : Implementation Strategy To seek out and explore expansion opportunities in Asia Aim To expand into Asia for new growth opportunities by ¾ capturing regional business opportunities ¾ enhancing business and geographical diversification To fo
Slide 39: Focus 5: Core Values & Core Competencies
Focus 5 Core Values & Core Competencies Social responsibility Respect Core Core Values Values -- Performance Innovation SPIRIT SPIRIT Integrity Teamwork Broad and loyal customer base and extensive branch network Strong capital base and second largest deposit franchise Superior mana
Slide 40: Conclusion
Conclusion With the objective and the strengths we possess, the Strategic Plan 2006-2011 will give clear guidance to us as we move forward to: Achieve healthy business growth with a broader range of top-quality financial services; Deepen our presence in China and gain a strategic foothold in the
Slide 41: Moving Forward With A Strategy For Broader Frontiers: 2005 Annual Results
Moving Forward With A Strategy For Broader Frontiers 2005 Annual Results Presentation 2006.3.23
BOC Hong Kong (Holdings) — FY2005 Earnings Presentation on 6ix