Boc Hong Kong (holdings) Limited · HKEX:2388

Boc Hong Kong (holdings) — FY2020 Earnings Presentation

35 slides from Boc Hong Kong (holdings)'s earnings presentation, Mar 30, 2021

  1. Slide 1: 2020 Annual Results

    2020 Annual Results oh ER rs (42 AR) A PR BOC HONG KONG (HOLDINGS) LIMITED y

  2. Slide 2: 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 or will, o

  3. Slide 3: Strategy Review, Financial & Business Results, Outlook

    01 02 03 Strategy Review Financial & Business Results Outlook

  4. Slide 4: Strategy Review

    PERS (12) ARAB] BOC HONG KONG (HOLDINGS) LIMITED : © Va Strategy Review

  5. Slide 5: Deposit and loan growth outpaced the market

    Deposit and loan growth outpaced the market Profit for the Year HK$bn +8.7% HK$28.5bn 2,183.7 +7.3% 2,009.3 Return on Average Shareholders’ Equity 1,497.9 1,395.9 9.05% Total Capital Ratio Customer deposits Customer loans 22.10% 2019 2020 5

  6. Slide 6: Personal Banking, Corporate Banking, Financial Markets

    Personal Banking • Double digit growth in number of mid to high-end customers • Ranked 1st in the market by total number of new residential mortgage loans underwritten • Notable growth in online transaction volume of key investment products such as equities & funds Corporate Banking • Remained top i

  7. Slide 7: Southeast Asia expansion

    Setup of Hanoi Vietnam Representative Office Laos Customer deposits approved by regulator Myanmar CAGR Thailand Philippines +9.4% HK$ 57.3bn Cambodia +1.2% YoY Yangon Branch officially opened Brunei Malaysia Customer loans Jakarta Branch’s Indonesia CAGR upgrade to BUKU3* approved by regulator +16.7

  8. Slide 8: GBA Account Opening and Cross-border Mortgage Service

    GBA Account Cross-border Opening Service Mortgage Service Optimised functions; Underwriting loans on a cumulative number of pilot basis while new accounts: 120k, enhancing customer up 40% during the year experience Innovative technology Support new economy enterprises Deepened cross-border Provided

  9. Slide 9: Proactive RMB business development in Southeast Asia

    Proactive RMB business development in Southeast Asia • BOC Malaysia: reappointed as local RMB clearing bank RMB clearing • Manila Branch: officially launched RMB clearing bank business in Jan 2021 transaction value • Jakarta Branch: processed 57% of local RMB clearing volume • Launched the market-ma

  10. Slide 10: Digital transformation and daily life banking

    ▪ Meet the basic needs of daily life ▪ Mobile banking users: +30% ▪ Percentage of property valuation using including food, clothing, housing, ▪ iGTB platform rolled out to Southeast Blockchain: 97% / +13ppt transport & consumption Asian entities ▪ Led the market in completing first batch ▪ Launched

  11. Slide 11: ESG

    MSCI ESG Research LLC • Fully supported HKSAR Government and HKMA’s initiatives on green financing Rated AA for 5 consecutive years • Successfully issued green deposits; green loans grew by 63% • Achieved stable growth in ESG bond underwriting business and distributed multiple green funds Hang Seng

  12. Slide 12: Financial relief, Caring for society, Charity support

    Financial relief Caring for society Charity support Five financial support initiatives Full support to HKSAR Government’s First bank to make donations to local charities approved business deals over 5,000 Employment Support Scheme and fighting the pandemic, totalling HK$15 million Cash Payout Scheme

  13. Slide 13: Financial & Business Results

    02 Financial & Business Results

  14. Slide 14: Earnings under Pressure in Prevailing Market Conditions

    Earnings under Pressure in Prevailing Market Conditions Profit for the year: HK$28.5 bn HK$m 28,468 (3,970) (685) 320 (1,904) 633 34,074 Net operating Impairment Operating Net gain/(loss) Taxation 2020 2019 income before allowances Expenses from disposal & Others impairment of/fair value allowances

  15. Slide 15: Continued Improvement in Deposit Composition

    Continued Improvement in Deposit Composition Customer deposits up 8.7% Continuous gain in market share HK$m 2,009,273 2,183,709 Market Share: 15.00% Up 0.44 ppt CASA Balance: 66.8% +31.8% 55.1% 2019 2020 Current and saving deposits Time and other deposits Deposit market share (CASA) 15

  16. Slide 16: Solid Growth in Customer Loans

    Solid Growth in Customer Loans Customer loans up 7.3% Steady increase in market share Loans for use in HK - 539,633 corporate Market share: 13.76% +4.7% up 0.79 ppt Loans for use in HK - 451,824 individuals +10.4% Loans for use 439,910 outside HK +11.3% Trade financing 66,497 -12.2% HK$m 2019 2020 L

  17. Slide 17: Moderating Pace of Margin Decline

    Moderating Pace of Margin Decline Margin under pressure from market interest rates Steady growth in AIEA 2019: 1.69% 2020: 1.33%* HK$m 2,737,726 3% 2,551,288 up 7.3% 43,087 2% 36,374 1.67% 1.71% 1.72% 1.66% 1.61% 1% 1.39% 1.17% 1.16% 0% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 Average interest- Net i

  18. Slide 18: Net Fee Income Relatively Stable

    Net Fee Income Relatively Stable Flat net fee income Capturing every growth opportunity HK$m 10,919 10,842 15,002 Strong stock market activities in 2020 13,515 2,675 HK stocks’ average daily turnover: +48.6% 2,310 BOCHK’s securities brokerage commission: +68.8% 5,125 5,736 Capitalised on business op

  19. Slide 19: Constantly Enhanced Cost Management

    Constantly Enhanced Cost Management Operating expenses down 1.9% Cost to income ratio outperformed market HK$m 44.3% * 39.5% 16,667 97 (307) 159 (269) 30.0% 16,347 28.5% 2019 Staff Premises & Depre- Others 2020 2019 2020 costs equipment ciation Market average BOCHK Data source: HKMA *For 1-3Q 2020 1

  20. Slide 20: Solid Asset Quality

    Solid Asset Quality Stable asset quality Adequate impairment allowances HK$m 0.14% 0.16% 229.64% 218.68% 2,489 0.27% 1,852 837 0.23% 1,172 1,652 680 2019 2020 2019 2020 Net charge of impairment allowances NPL provision - advances & other accounts NPL ratio coverage ratio Credit cost Stage 1 & Stage

  21. Slide 21: Sound Capital and Liquidity Positions

    Sound Capital and Liquidity Positions Well-capitalised at all levels Solid liquidity 140.92% 131.87% Total 22.10% 120.31% Capital Ratio - 0.79 ppt 117.05% Tier 1 19.67% Capital Ratio - 0.23 ppt CET 1 17.75% Capital Ratio - 0.01 ppt Average LCR Average NSFR 2019 2020 1H2020 2H2020 21

  22. Slide 22: Outlook

    BOC HONG KONG (HOLDINGS) LIMITED © PHF8 BH ARAS Outlook

  23. Slide 23: Outlook: geopolitical situation and economic recovery

    New economic landscape underpinned by the nation’s dual circulation development International geopolitical situation pattern as well as high-level opening-up remains challenging GBA development moving forward in an orderly fashion, alongside with deepening Global economic recovery continues of mutua

  24. Slide 24: Focusing on key markets, improving capabilities, strengthening supports

    Focusing on key markets Improving capabilities Strengthening supports 24

  25. Slide 25: Appendices

    PERS (12) ARAB] BOC HONG KONG (HOLDINGS) LIMITED Appendices

  26. Slide 26: Income Statement and Balance Sheet Summary

    Income Statement and Balance Sheet Summary Income statement summary (HK$m) 2020 2019 Change Net interest income 34,738 40,523 -14.3% Net fee and commission income 10,842 10,919 -0.7% Other non-interest income 8,894 7,002 27.0% Net operating income before impairment allowances 54,474 58,444 -6.8% Ope

  27. Slide 27: Average Balances and Average Interest Rates

    Average Balances and Average Interest Rates (HK$m) / % 2020 2019 Assets Average balance Average yield Average balance Average yield Balances and placements with banks and 351,515 0.88% 319,492 1.76% other financial institutions Debt securities investments and other debt instruments 849,401 1.76% 864

  28. Slide 28: Fee and Commission Income

    Fee and Commission Income HK$m 2020 2019 Change Securities brokerage 3,567 2,113 68.8% Loan commissions 2,310 2,675 -13.6% Credit card business 1,859 2,975 -37.5% Insurance 1,272 2,111 -39.7% Funds distribution 897 901 -0.4% Payment services 740 716 3.4% Trust and custody services 689 651 5.8% Bills

  29. Slide 29: Operating Expenses

    Operating Expenses HK$m 2020 2019 Change Staff costs 9,461 9,364 1.0% Premises & equipment expenses 1,235 1,542 -19.9% Depreciation 3,040 2,881 5.5% Others 2,611 2,880 -9.3% Total operating expenses 16,347 16,667 -1.9% Full-time staff headcount 14,915 14,668 1.7% 29

  30. Slide 30: Customer Deposits

    Customer Deposits HK$m 2020.12 2019.12 Change Demand deposits and current accounts 310,226 207,013 49.9% Saving deposits 1,149,035 900,009 27.7% Time, call and notice deposits 724,448 902,251 -19.7% Total deposits from customers 2,183,709 2,009,273 8.7% CASA 1,459,261 1,107,022 31.8% 30

  31. Slide 31: Advances to Customers

    Advances to Customers HK$m 2020.12 2019.12 Change Loans for use in Hong Kong - industrial, commercial and financial 539,633 515,548 4.7% Property development 132,966 137,663 -3.4% Property investment 64,768 49,073 32.0% Financial concerns 24,110 28,353 -15.0% Stockbrokers 1,656 815 103.2% Wholesale

  32. Slide 32: Gross Advances by Internal Credit Grade and Stage Classification

    Gross Advances and Other Accounts by Internal Credit Grade and Stage Classification 2020.12 2019.12 HK$m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Advances to customers 1,470,492 23,378 3,994 1,497,864 1,388,453 4,213 3,217 1,395,883 Pass 1,466,646 20,352 - 1,486,998 1,385,770 1,59

  33. Slide 33: Non-bank Mainland Exposures

    Non-bank Mainland Exposures On-balance sheet exposure Off-balance Total HK$m Total loans and O/W: for use in Debt securities Subtotal sheet exposure exposure advances Mainland and others Central government, central government-owned 268,513 83,364 80,892 349,405 36,110 385,515 entities and their subs

  34. Slide 34: Loan Exposure to Vulnerable Sectors

    Loan Exposure to Vulnerable Sectors As of 31 December 2020, customer loan exposure to industries (incl. trading, retail, aviation, tourism(incl. hospitality), F&B, entertainment) severely affected by Covid-19 amounted to HK$150.9bn, accounting for 10.07% of total loans, a decrease of HK$9.7 bn, or 0

  35. Slide 35: BOC Life Business Development

    BOC Life Business Development HK$m 2020 2019 Change MOODY’S A1 Gross premium 28,013 25,366 10.4% Profit before tax 854 701 21.8% STANDARD A Total assets 179,865 153,116 17.5% &POOR’S Rose to 3rd in the market Top E-channel* player ◼ BOC Life’s standard new premium ◼ BOC Life’s e-channel market 14.3%

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