Boc Hong Kong (holdings) Limited · HKEX:2388

Boc Hong Kong (holdings) — 1H2022 Earnings Presentation

35 slides from Boc Hong Kong (holdings)'s earnings presentation, August 2022

  1. Slide 1: Interim Results August 2022

    nterim Results © CP SRS 28 (12) AR A ugust 2022 a

  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

    Strategy Review Financial & Business Results Outlook

  4. Slide 4: Strategy Review

    PERS re (12 BR) A PR AB] BOC HONG KONG (HOLDINGS) LIMITED Stratecocv Review

  5. Slide 5: Restoring Growth in Earnings and Returns through Solid Operating Results

    Restoring Growth in Earnings and Returns through Solid Operating Results Profit after Taxation ROE Total Capital Ratio HK$14.4bn 8.84% 21.88% +6.1% +0.42ppt +0.44ppt YoY YoY YTD 5

  6. Slide 6: Committed to Local Market Development through Enhanced Integrated Service Capability

    Committed to Local Market Development through Enhanced Integrated Service Capability Personal Banking Corporate Banking Financial Markets • in new residential mortgage loans • HK/Macao syndicated loans: for 17 • Pre-tax profit of treasury business: consecutive years • in trading income, further • %

  7. Slide 7: Cemented Cross-border Finance Advantages by Optimising Customer Experience

    Cemented Cross-border Finance Advantages by Optimising Customer Experience Cross-border Mid to high-end Customers Bucked market trends to achieve growth in cross- border personal customers % of mid to high-end cross-border customers: Asiamoney Financial Intermediation GBA corporate loans: Loans to i

  8. Slide 8: Deepening SEA Business Development by Leveraging Regional Synergies

    Deepening SEA Business Development by Leveraging Regional Synergies Laos Myanmar HK$ 67.3bn HK$ 54.3bn Thailand Philippines +6.8% YTD +3.0% YTD Cambodia Customer Deposits Customer Loans Vietnam HK$ 1.51bn 2.53 % Brunei +22.8% YoY +0.14ppt YTD Malaysia Net Operating Income Non-performing Loan Ratio N

  9. Slide 9: Tapping Market Potential to Drive RMB Business Growth

    Tapping Market Potential to Drive RMB Business Growth + 42% + 153% RMB transaction volume RMB 192 tn +7.6% Cross-border RMB HK’s total RMB clearing volume* accounted settlement volume of treasury business for over 70% of global offshore total Capturing business opportunities Nurturing the SEA market

  10. Slide 10: Reinforcing Technological Foundations to Advance Digitalisation

    Reinforcing Technological Foundations to Advance Digitalisation 10

  11. Slide 11: Driving Product and Service Innovation to Lead Green Transformation

    Driving Product and Service Innovation to Lead Green Transformation • Became a cornerstone member of the initiated by International Finance Corporation (IFC) and the HKMA • Signed with Guangzhou Emissions Exchange Asiamoney to explore carbon finance opportunities in the GBA • Completed first transac

  12. Slide 12: Financial & Business Results

    PERS re (12 BR) A PR AB] BOC HONG KONG (HOLDINGS) LIMITED Financial & Rusiness Results

  13. Slide 13: Profit after Taxation up 6.1% Year-on-Year

    Profit after Taxation up 6.1% Year-on-Year HK$m 14,417 13,591 (+8.7%) (-22.7%) (+106.9%) (+3.2%) (+45.0%) (+545.5%) (+17.2%) 1H2021 Net Net Fee Other Operating Impairment Revaluation Taxation 1H2022 Profit after Interest Income Non- Expenses Allowances Loss of & Others Profit after Taxation Income*

  14. Slide 14: Steady Expansion in Customer Deposits

    Steady Expansion in Customer Deposits Customer Deposits up 3.0% Continual Increase in Market Share HK$m 2,400,609 Market Share 15.68% 2,331,155 up 0.43 ppt CASA Balance: -2.6% 65.3% 61.7% Deposits Market Share 2021.12 2022.06 Time and Current and Saving CASA Ratio Other Deposits Deposits (CASA) 14

  15. Slide 15: Balanced Growth in Customer Loans

    Balanced Growth in Customer Loans Customer Loans up 5.1% to HK$1.68tn Continuous Gains in Market Share HK$m Loans for Use in HK - 622,924 Corporate +7.1% Market Share 14.80% Loans for Use in HK - 513,155 up 0.62 ppt Individuals +2.3% Loans for Use 463,911 Outside HK +4.9% Trade Financing 81,060 +10.

  16. Slide 16: Net Interest Margin Bottoming Out

    Net Interest Margin Bottoming Out NIM* Improves on Rising Market Interest Rates Steady AIEA Growth 1H21:1.10% 2H21: 1.08% 1H22: 1.13% HK$m 2.0% 3,139,822 1.5% 2,977,664 1.19% 1.11% 1.09% 1.11% 1.06% 1.08% +5.4% 1.0% 17,663 16,254 0.5% +8.7% 0.0% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 1H2021 1H2022 NIM* 1M LI

  17. Slide 17: Continuous Headwind on Net Fee Income

    Continuous Headwind on Net Fee Income 淨 利Income Net Fee 息收入 增 長22.7% down X % YoY Traditional Business Fees Broadly Recovered in 2Q HK$m 6,657 5,144 Growth rate QoQ 5,215 8,116 6,687 6,823 Insurance 19.8% 1,793 953 1,769 Currency Exchange 17.5% 3,441 2,716 2,265 Bills Commissions 9.6% 2,882 3,018 2,

  18. Slide 18: Notable Improvement in Cost Efficiency

    Notable Improvement in Cost Efficiency Stable Operating Expenses Market-beating Cost-to-Income Ratio HK$m 54.7%* 10 11 51.9% 216 7 7,826 7,582 30.3% 28.7% 1H2021 Staff Premises & Depre- Others 1H2022 Costs Equipment ciation 1H2021 1H2022 & Amorti- sation Market Average BOCHK Market data source: HKMA

  19. Slide 19: Consistently Solid Asset Quality

    Consistently Solid Asset Quality NPL Ratio below Market Average Provision Remains Sufficient HK$m 0.21% 0.15% 0.98% * 0.88% 1,726 1,197 0.46% 1,051 0.27% 733 316 504 359 (40) 2021.12 2022.06 1H2021 1H2022 Net Charge 19 of Impairment Allowances Market Average BOCHK - Advances and Other Accounts Credi

  20. Slide 20: Enhanced Capital and Liquidity Position

    Enhanced Capital and Liquidity Position Stable Capital Ratios Enhanced Liquidity Ratios Total 21.88% 159.34% Capital Ratio +0.44ppt 140.72% Tier 1 19.55% Capital Ratio +0.44ppt 134.15% 126.44% 126.88% 121.70% CET 1 17.73% Capital Ratio +0.43ppt 1H21 2H21 1H22 2021.12 2022.06 Average NSFR Average LCR

  21. Slide 21: Outlook

    PERS re (12 BR) A PR AB] BOC HONG KONG (HOLDINGS) LIMITED Outlook

  22. Slide 22: Second Half Outlook

    Second Half Outlook Challenges Opportunities Rapidly evolving international political High-quality development momentum and economic landscape maintained in mainland economy Increasing financial market volatility Stabilising economic growth in Hong Kong Global supply chain pressures Bright business

  23. Slide 23: Bridge China and the World for the Common Good

    Bridge China and the World for the Common Good 23

  24. Slide 24: Appendices

    PERS re (12 BR) A PR AB] BOC HONG KONG (HOLDINGS) LIMITED Appendices

  25. Slide 25: Income statement summary

    Income statement summary (HK$m) 1H2022 1H2021 Change Net interest income* 17,663 16,254 8.7% Net fee and commission income 5,144 6,657 -22.7% Other non-interest income* 4,425 2,139 106.9% Net operating income before impairment allowances 27,232 25,050 8.7% Operating expenses (7,826) (7,582) 3.2% Pre

  26. Slide 26: Average balances and yields

    (HK$m) / % 1H2022 1H2021 Assets Average balance Average yield Average balance Average yield Balances and placements with banks 412,493 0.72% 385,213 0.80% and other financial institutions Debt securities investments and other debt instruments 1,082,644 1.30% 970,458 1.27% Debt securities investments

  27. Slide 27: Fee and commission income breakdown

    HK$m 1H2022 1H2021 Change Loan commissions 1,769 1,793 -1.3% Securities brokerage 1,388 2,189 -36.6% Credit card business 903 996 -9.3% Insurance 556 734 -24.3% Payment services 360 374 -3.7% Trust and custody services 341 374 -8.8% Funds distribution 295 417 -29.3% Bills commissions 262 321 -18.4%

  28. Slide 28: Operating expenses breakdown

    HK$m 1H2022 1H2021 Change Staff costs 4,605 4,389 4.9% Premises & equipment expenses 589 579 1.7% Depreciation and amortisation 1,526 1,515 0.7% Others 1,106 1,099 0.6% Total operating expenses 7,826 7,582 3.2% 2022.06 2021.06 Change Full-time staff headcount 14,220 14,462 -1.7% 28

  29. Slide 29: Deposits from customers

    HK$m 2022.06 2021.12 Change Total deposits from customers 2,400,609 2,331,155 3.0% CASA 1,481,441 1,521,328 -2.6% Demand deposits and current accounts 296,744 327,234 -9.3% Savings deposits 1,184,697 1,194,094 -0.8% Time, call and notice deposits 919,168 809,827 13.5% 29

  30. Slide 30: Loans for use in Hong Kong breakdown

    HK$m 2022.06 2021.12 Change Loans for use in Hong Kong - industrial, commercial and financial 622,924 581,799 7.1% Property development 184,971 166,208 11.3% Property investment 85,751 78,125 9.8% Financial concerns 23,824 23,392 1.8% Stockbrokers 1,919 3,070 -37.5% Wholesale and retail trade 31,055

  31. Slide 31: Advances by loan stage and grade

    2022.06 2021.12 HK$m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Advances to customers 1,647,766 24,655 7,810 1,680,231 1,561,306 33,457 4,321 1,599,084 Pass 1,643,813 18,520 - 1,662,333 1,558,267 25,138 - 1,583,405 Special mention 3,953 6,135 - 10,088 3,039 8,319 - 11,358 Substandar

  32. Slide 32: Mainland-related exposure

    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 296,461 78,931 76,259 372,720 35,856 408,576 entities and their subsidiaries and joint ventures

  33. Slide 33: Loans to Chinese real-estate developers

    ■ As at the end of June 2022, loans to Chinese real-estate (CRE) (-2.7%) developers amounted to HK$102.9bn, down 2.7% from the end of HK$bn 2021; accounting for 6.1% of Group’s total loans, down 0.5ppt. CRE impairment allowances/total CRE loans was 2.3% 105.8 102.9 ■ The property corporate customers

  34. Slide 34: Exposure to industries affected by COVID-19

    As of end of June 2022, customer loan exposure to industries severely affected by COVID-19 (including trading, retail, aviation, tourism(incl. hospitality), F&B, entertainment) amounted to HK$144.4bn, an increase of HK$3.54bn from the end of 2021; accounting for 8.59% of total loans, a decrease of 0

  35. Slide 35: BOC Life

    HK$m 1H2022 1H2021 Change MOODY’S A1 Standard new premiums 6,604 6,286 5.1% Value of new business 964 524 84.0% STANDARD A Total assets 201,741 (2022.06) 197,906 (2021.12) 1.9% &POOR’S #1 in life insurance and RMB insurance Leading position maintained in e-channel and QDAP sales Overall market ◼ In

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