Boc Hong Kong (holdings) Limited · HKEX:2388
Boc Hong Kong (holdings) — FY2006 Earnings Presentation
36 slides from Boc Hong Kong (holdings)'s earnings presentation, Mar 22, 2007
Slide 1: 2006 Annual Results
Committed to Building a Better Tomorrow － Achieving Growth, Quality and Excellence 2006 Annual Results 22 March 2007
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
EMCO AEE HEIN 20 PNR Key Performance Highlights Oh SR ee re (12 AR) APR By BOC HONG KONG (HOLDINGS) LIMITED J
Slide 6: Solid Growth in Operating Income & Profit
Solid Growth in Operating Income & Profit Net NetOperating OperatingIncome Income Operating OperatingProfit Profit before beforeLoan LoanImpairment ImpairmentAllowances Allowances before beforeLoan LoanImpairment ImpairmentAllowances Allowances HK$ m HK$ m Y YooYY .22% % YooYY ++1177. .99% % Y ++118
Slide 7: Improved ROE & ROA
Improved ROE & ROA ROE ROE ROA ROA before before impairment impairment allowances allowances before before impairment impairment allowances allowances pppYYooYY 255p ++11..2 pppYYooYY 122p ++00..1 17.92% 16.67% 1.49% 1.61% 1905年 6月 27日 1905年 6月 28日 1905年 6月 27日 1905年 6月 28日 2005 2006 2005 2006 ROE R
Slide 8: Consistent Growth in Profit Attributable to Shareholders & Dividend
Consistent Growth in Profit Attributable to Shareholders & Dividend Profit ProfitAttributable Attributableto toShareholders Shareholders Dividend Dividendper perShare Share HK$ HK$ m Y YooYY 0%% ooYY ++33..0 0%% Y Y ++55..0 0.848 1 3 ,5 9 6 1 4 ,0 0 7 0.808 2005 1905年6月27日 2006 1905年6月28日 2005 2006
Slide 9: Operating Environment
Operating Environment External External Robust economy – 3rd consecutive year of above-trend GDP growth driven by z Investment z Domestic consumption z External trade z Financial market boom fueled by active stock trading and IPOs z Low unemployment rate and rising wages z Mild inflation Widened
Slide 10: Broad-Based Growth in Core Earnings
Broad-Based Growth in Core Earnings Net Net Interest Interest Income Income Non-interest Non-interest Income Income HK$ m HK$ m Y YooYY .77% % YYooYY ++2200. % 4% ++88..4 15, 835 13, 124 5, 474 5, 050 2005 2006 2005 2006 9
Slide 11: Other Business Highlights
Other Business Highlights Growth Growth in in customer customer deposits deposits (+10.1%) (+10.1%) Growth Growth in in loans loans and and advances advances (+3.9%) (+3.9%) led led by by broad -based broad-based rebound rebound in in 2H 2H z SME z SME loans loans (+10.5%) (+10.5%) z Loans z
Slide 12: Further Improvement in Asset Quality
Further Improvement in Asset Quality Classified Classified Loan Loan Ratio Ratiofell fellto to historical historicallow low of of 0.57% 0.57% HK$ bn 40 11.48% 35 7.98% 30 5.82% 25 2.95% 20 1.28% 15 0.57% 10 5 0 2001 2002 2003 2004 2005 2006 Classified Loan Classified Loan Ratio Note : Classified loa
Slide 13: Healthy Capital Strength
Healthy Capital Strength CAR* CAR*remained remainedat at healthy healthylevel level of of 13.99% 13.99% Lower LowerCAR CARin in2006 2006was wasdue dueto to increase increase in in risk -weighted assets risk-weighted assets Total Total Tier Tier 11 15.37% 1 4 .6 9 % 13.99% 1 3 .3 9 % 1905年6月27日 1905年
Slide 14: Financial Results
Financial Results naseiemamag GO. BOC HONG KONG (HOLDINGS) LIMITED He x —
Slide 15: Condensed Income Statement
Condensed Income Statement Strong growth in both net interest income and non-interest income leading to record high net operating income and profit HK$ m 2006 2006 2005 2005 % %YoY YoY Net interest income 15,835 13,124 ↑ 20.7 Net fees and commission income 3,717 2,945 ↑ 26.2 Other operating income 8
Slide 16: Key Financial Ratios
Key Financial Ratios 2006 2006 2005 2005 Market Market** ROE before impairment allowances 17.92% 16.67% N.A. ROE 17.02% 18.27% N.A. ROA before impairment allowances 1.61% 1.49% N.A. ROA 1.56% 1.67% N.A. Net interest margin 1.90% 1.72% 1.80% Non-interest income ratio 25.69% 27.79% 38.30% Cost-to-inco
Slide 17: Higher Net Interest Income and Improved NIM
Higher Net Interest Income and Improved NIM Improved NII underpinned by rising market interest rates, increase in average interest-earning assets and effective asset-liability management 2006 2006 2005 2005 % %YoY YoY HK$ m Interest income 40,271 26,177 ↑ 53.8 Interest expense 24,436 13,053 ↑ 87.2 N
Slide 18: Steady Rise in Non-interest Income
Steady Rise in Non-interest Income Non-interest income increased with higher net fee income and net trading income Non-interest Income Non-interest Income 2006 2006 2005 2005 % %YoY YoY HK$ m Net fee income 3,717 2,945 ↑ 26.2 Other operating income 8,412 5,467 ↑ 53.9 Net trading income 1,888 1,446 ↑
Slide 19: Robust Growth of Investment & Insurance Business
Robust Growth of Investment & Insurance Business Segment growth driven by hefty increase in stock brokerage and asset management fee as well as income from BOC Life Investment Investment & & Insurance Insurance Business Business 2006 2006 2005 2005 % %YoY YoY HK$ m Investment and insurance fee incom
Slide 20: Effective Cost Management
Effective Cost Management Cost efficiency maintained despite higher HR costs; Cost-to-income ratio improved further due to strong income growth Operating Operating Expenses Expenses Branch Branch Number Number HK$ m 3 0 1 (286)* (286)* 3 0 2 (287)* (287)* 6,558 5,771 1,015 970 671 Others 568 868 Dep
Slide 21: Release of Loan Impairment Allowances
Release of Loan Impairment Allowances Reduction in releases partially offset by strong recoveries together with low new allowances HK$ m Loan impairment release/(charge) 2006 2006 2005 2005 Individual assessment - New allowances (647) (1,304) - Releases 313 1,042 - Recoveries 2,053 1,639 Collective
Slide 22: Significantly Improved Asset Quality
Significantly Improved Asset Quality Classified loan ratio declined to record low of 0.57% Classified Classified Loan Loan Ratio Ratio Migration Migration of of Classified Classified Loans Loans % HK$ bn 1.28 1.09 +0.9 -0.3 0.57 -2.0 4.3 -0.8 -0.1 2.0 Dec 05 Jun 06 Dec 06 End-2005 Dow ngrade Upgrade
Slide 23: Condensed Balance Sheet
Condensed Balance Sheet Total assets expanded; asset deployment optimized through diversification into securities with higher yield HK$ m 31.12.2006 31.12.2006 31.12.2005 31.12.2005 % % YoY YoY Total assets 928,953 831,002 ↑ 11.8 Cash and balances with banks and other financial institutions 30,973 3
Slide 24: Advances to Customers Rising Steadily
Advances to Customers Rising Steadily Loans for use outside HK and credit card advances showing double-digit growth YoY; Broad-based rebound in 2H HK$ m 31.12.2006 31.12.2006 31.12.2005 31.12.2005 % %YoY YoY % %HoH HoH Loans Loans by bycurrency currencymix mix Loans for use in HK - corporate 148,780
Slide 25: Customer Deposits Growing with Better Mix
Customer Deposits Growing with Better Mix Higher proportion of demand and savings deposits 31.12.2006 31.12.2006 31.12.2005 31.12.2005 % %YoY YoY % %HoH HoH Deposits Deposits by bycurrency currencymix mix HK$ m Demand deposits and current accounts 30,979 28,948 + 7.0 + 8.9 9% Saving deposits 256,653
Slide 26: Profit Contribution by Business Segment
Profit Contribution by Business Segment Double-digit growth in operating profit for all segments Operating profit before impairment Segment contribution to pre-tax profit HK$ m 16 .7% + 2.68% 459 6,352 5,444 .0% .5% +11 +45 26.66% 36.80% 4,571 3,990 4,569 6,307 3,596 3,141 5,804 33.86% Retail Corpor
Slide 27: Insurance Business – Synergy with BOC Life
Insurance Business – Synergy with BOC Life Significant growth in net insurance premium HK$ m 2006 2006 2005 2005 % % YoY YoY Net interest income 473 318 + 48.7 Net insurance premium income 6,195 3,630 + 70.7 Net trading income/(loss) 420 (305) --- Other income 6 23 - 73.9 Total operating income 7,09
Slide 28: Mainland Business Growing
Mainland Business Growing Strong growth in operating profit before impairment, total advances and customer deposits; asset quality improved Combined Combined profit profit and and loss loss account account of of 14 14 Mainland Mainland branches branches HK$ m 2006 2006 2005 2005 % % YoY YoY O perati
Slide 29: Outlook
Outlook naseiemamag GO. BOC HONG KONG (HOLDINGS) LIMITED He * —
Slide 30: Outlook
Outlook Local Local economy economy likely likely to to maintain maintain its its growth growth momentum momentum with with increased increased investment, investment, internal internal demand demand and and mild mild inflation inflation US US interest interest rate rate cut cut possible pos
Slide 31: Strategic Focuses Going Forward
Strategic Focuses Going Forward Business Growth China Expansion Implementation of RPC (Relationship-Product-Channel) (Relationship-Product-Channel) Model Business Capabilities Enhancement 30
Slide 32: Strategic Focus – Business Growth
Strategic Focus – Business Growth Driving growth through diversification and boosting high-margin segments high-margin Wealth Wealth management management andand insurance insurance :: focus focus on on product product innovation innovation with with more more customer -oriented approach custome
Slide 33: Strategic Focus – China Expansion
Strategic Focus – China Expansion China Strategy Dualistic Dualistic model model to to develop develop retail retail and and wholesale wholesale banking banking simultaneously simultaneously ¾ Retail ¾ Retail banking banking :: Nanyang Nanyang Commercial Commercial Bank Bank (NCB) (NCB) applied
Slide 34: Strategic Focus – RPC Model
Strategic Focus – RPC Model Implementation of RPC Model to enhance operational efficiency and competitiveness Focus Focus on on products products and and services services development development tailored tailored to to the the needs needs of of different different customer customer segments seg
Slide 35: Strategic Focus – Business Capabilities Enhancement
Strategic Focus – Business Capabilities Enhancement In pursuit of expansion opportunities Target Target companies companies oror business business operations operations that that are are complementary complementary toto the the Group ’s business Group’s business model model and and can can enhan
Slide 36: 2006 Annual Results
Committed to Building a Better Tomorrow － Achieving Growth, Quality and Excellence 2006 Annual Results 22 March 2007
BOC Hong Kong (Holdings) — FY2006 Earnings Presentation on 6ix