Boc Hong Kong (holdings) Limited · HKEX:2388
Boc Hong Kong (holdings) — FY2002 Earnings Presentation
33 slides from Boc Hong Kong (holdings)'s earnings presentation, Mar 20, 2003
Slide 1: 2002 Annual Results
2002 Annual Results March 20, 2003
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, proje
Slide 3: Key Performance Highlights
Key Performance Highlights “Delivering on our IPO Promises” Dr. Liu Jinbao Chief Executive
Slide 4: Delivering on Our Promises: Exceeding Profit Forecast
Delivering on Our Promises Exceeding Profit Forecast Net profit exceeded our profit forecast of HK$6.3 billion and grew 141% from 2001 Profit Profit Attributable Attributable to to Shareholders Shareholders EPS EPS (HK$ mm) (HK$) 6,673 0.63 2,768 0.26 2001 2002 2001 2002
Slide 5: Delivering on Our Promises: Meeting Medium-Term Targets
Delivering on Our Promises Meeting Medium-Term Targets ROAA ROAA ROAE ROAE 12.23% 0.91% 7.31% 0.36% 2001 2002 2001 2002
Slide 6: Delivering on Our Promises: Dividends to Shareholders
Delivering on Our Promises Dividends to Shareholders Dividend Dividend per per Share Share (HK$) (HK$) Maintaining a dividend payout ratio of 60% - 70% 0.398 Maximizing returns to shareholders 0.215 0.183 Achieving optimal capital structure (1) June 2002 Dec 2002 2002 (1) One- One-time special
Slide 7: Improving Net Interest Margin
Delivering on Our Promises #1 #1 Improving Net Interest Margin NIM NIM (%) (%) Increased investment in debt 1.98% securities 1.95% Lowered cost of funding Improved asset quality 2001 2002
Slide 8: Increasing Net Fees and Commission Income
Delivering on Our Promises #2 #2 Increasing Net Fees and Commission Income Net Net Fees Fees and and Commission Commission Income Income Consumer banking and personal financial services (HK$ mm) 2,948 Loan syndications 2,696 Payment services Service fees on low-balance deposits 2001 2002
Slide 9: Improving Efficiency
Delivering on Our Promises #3 #3 Improving Efficiency Cost -Cutting Cost-Cutting (HK$ mm) Reduced headcount by 284 to 3,796 3,578 13,439 892 803 Consolidated business 2001 2002 operations Staff Costs Premises and Equipment Expense Branch Branch Rationalization Rationalization Downsized branch
Slide 10: Enhancing Asset Quality
Delivering on Our Promises #4 #4 Enhancing Asset Quality NPL NPL Ratio Ratio (%) (%) Reduced new NPL formation Achieved recovery of HK$9.55 bn 10.99% 8.97% 7.99% Reduced high risk loan exposure Disposed HK$7 bn NPL in June 2002 Dec 2001 Jun 2002 Dec 2002
Slide 11: 2002 Financial and Operating Results
2002 Financial and Operating Results “Staying on course to meet our financial targets”
Slide 12: 2002: Challenging Environment
2002: Challenging Environment Challenges Challenges BOCHK BOCHK Initiatives Initiatives Strengthened liability management Increased efforts on fee income Slow GDP and loan growth business Lower loan yields and reduction in net Enhanced cross-selling interest income Increased investment-g
Slide 13: Profit & Loss Account
Profit & Loss Account HK$6.7 billion in net profit, up 141%, on back of much lower provisions HK$ mm 2002 2002 2001 2001 Operating Income 18,114 19,009 Operating Expenses 6,025 5,847 Operating Profit before Provisions 12,089 13,162 Charge for Bad & Doubtful Debts 2,855 7,412 Operating Profit after P
Slide 14: Balance Sheet
Balance Sheet 3% loan growth (ex. loan carve-out) Reduced inter-bank placements Increased investments in higher yielding, investment grade securities HK$ mm 2002 2002 2001 2001 Total Assets 735,489 766,140 Inter-bank Placements & 178,526 254,877 Short-term Funds Securities Investments 190,232
Slide 15: Improved Net Interest Margin
Improved Net Interest Margin Proactive ALCO initiatives raised NIM despite margin compression HK$ mm 2002 2002 2001 2001 Initiatives Initiatives Shift from inter- Interest Income 21,463 38,307 bank lending to highly-rated, high- Interest Expenses (7,521) (23,320) yielding debt securities Net Inter
Slide 16: Continued Revenue Diversification
Continued Revenue Diversification Increased fee based income sources Fees Fees from from Asset Asset Management Management // HK$ mm 2002 2002 2001 2001 Trust Trust Services Services (HK$ mm) 178 Net Fees & Commission Income 2,948 2,696 109 Net Gain from FX Activities 824 816 2001 2002 Other Income
Slide 17: Stringent Cost Controls
Stringent Cost Controls Maintained a low cost to income ratio through rationalization initiatives HK$ mm 2002 2002 2001 2001 Staff Costs 3,578 3,796 Premises and Equipment Expenses 803 892 Depreciation 632 460 Other Operating Expenses 994 676 Total Operating Expenses 6,025 5,847 Cost to Income 33.26
Slide 18: Lower Provisioning Charges
Lower Provisioning Charges Improved credit risk management and recovery efforts led to lowered new provisions and higher NPL recoveries HK$ mm 2002 2002 2001 2001 Specific Provisions New Provisions 4,519 10,649 Releases (582) (645) Recoveries (904) (530) 3,033 9,474 General Provisions (178) (2,062)
Slide 19: Enhanced Provisioning and Collateral Coverage
Enhanced Provisioning and Collateral Coverage LLR LLR Ratio Ratio SP SP and and Collateral Collateral Coverage Coverage 90.1% 85.6% 58.5% 48.2% 2001 2002 2001 2002
Slide 20: Strengthened Loan Portfolio
Strengthened Loan Portfolio As As of of Dec Dec 2001 2001 As As of of June June 2002 2002 As As of of Dec Dec 2002 2002 Total Total Loan Loan Book Book HK$323.0 bn HK$317.6 bn HK$321.0 bn NPL NPL Ratio Ratio (%) (%) 10.99% 8.97% 7.99% Pass Pass 83.0% 84.4% 87.2% Special Special Mention Mention 5.5%
Slide 21: Maintained Sound Credit Control
Maintained Sound Credit Control Low Low Charge-off Rates Charge-off Rates in in Credit Credit Cards Cards 13.25% 12.33% BOCHK Industry
Slide 22: Improved Loan Mix
Improved Loan Mix Retail Retail Loans Loans Corporate Corporate Loans Loans Increasing Increasing Retail Retail Loan Loan Mix Mix Reducing Reducing Corporate Corporate Classified Classified Loans Loans 11.48% Retail Retail 7.98% 33% 34% 10.92% Corporate Corporate 7.26% 67% 66% 2001 2002 2001 2002 Co
Slide 23: Staying On Course
Staying On Course ROE 9 ROA 9 NIM 9 Non-interest Income 9 Efficiency Ratio 9 NPL Ratio 9 Provisioning and Collateral Coverage 9
Slide 24: Outlook and Strategic Focus
Outlook and Strategic Focus “Moving towards the future”
Slide 25: 2003 Hong Kong Economic Outlook
2003 Hong Kong Economic Outlook Key Key Trends Trends BOCHK BOCHK Outlook Outlook GDP Moderate growth of 2.8% Interest rate Stable Loans Marginal growth Credit card delinquency Stabilizing
Slide 26: Outlook and Strategic Focus
Outlook and Strategic Focus #1 #1 Retail #4 #4 Operating Efficiency #2 #2 Corporate / Treasury #5 #5 Asset Quality #3 #3 China Opportunities #6 #6 Financial Management
Slide 27: Outlook and Strategic Focus: Retail
Outlook and Strategic Focus #1 #1 Retail Customer segmentation and cross-selling Wealth management Product customization Channel diversification Tiered pricing
Slide 28: Outlook and Strategic Focus: Corporate/Treasury
Outlook and Strategic Focus #2 #2 Corporate/Treasury Maintain leading role in syndicated lending (#1 arranger in 2002) Increase non-interest income by strengthening trade finance business Reinforce SMEs business Enhance cash management services to corporate customers Customer-driven treasu
Slide 29: Outlook and Strategic Focus: China Opportunities
Outlook and Strategic Focus #3 #3 China Opportunities Expand scale and revenue contribution to become one of the best overseas bank in the Mainland China Product Product Initiatives Initiatives Great Wall Credit Cards Increase customer spending and number of cards Merchant Acquisition Furthe
Slide 30: Outlook and Strategic Focus: Operating Efficiency
Outlook and Strategic Focus #4 #4 Operating Efficiency Continue to effect gains from ¾ Branch rationalization ¾ E-channel migration ¾ Back office consolidation and automation ¾ Staff rightsizing ¾ Workflow reengineering ¾ Training Infrastructure in place to launch advanced CRM Established dive
Slide 31: Outlook and Strategic Focus: Asset Quality
Outlook and Strategic Focus #5 #5 Asset Quality Strict compliance with new credit policies and procedures Optimize customer, asset and product mixes Comprehensive, independent and real-time monitoring system in place Dedicated NPL recovery Increased training on credit culture and practices
Slide 32: Outlook and Strategic Focus: Financial Management
Outlook and Strategic Focus #6 #6 Financial Management Optimize capital structure Adopt consistent dividend policy to return excess capital to shareholders Focus on increasing yield and maintaining adequate liquidity Focus on earnings protection
Slide 33: 2002 Annual Results
2002 Annual Results March 20, 2003
BOC Hong Kong (Holdings) — FY2002 Earnings Presentation on 6ix