BOC HONG KONG HOLDINGS LTD
28 August 2015
BOC Hong Kong (Holdings) Limited ("the Company", stock code "2388"; ADR OTC Symbol: "BHKLY") today announced its 2015 interim results. By focusing on its growth strategies, the core businesses of the Company and its subsidiaries ("the Group") achieved satisfactory results while key financial indicators stayed at solid levels.
Both income and profits reached record highs for the first half of 2015. Our net operating income before impairment allowances rose by 9.4% year-on-year to HK$23,688 million. Profit attributable to the equity holders increased by 10.8% to HK$13,387 million. Earnings per share was HK$1.2662. Return on average shareholders' equity was 14.78%, up by 3 basis points year-on-year. The Board has declared an interim dividend of HK$0.5450 per share, the same as last year and representing a pay-out ratio of 43%.
The Group's total asset size continued to expand with key financial ratios staying at healthy levels. Customer loans and deposits outperformed market growth. Compared with the last year end, our customer loans grew by 7.3%, which was well supported by deposit growth of 8.9%. The loan to deposit ratio remained at a healthy level of 63.87%. By maintaining stringent risk management and prudent credit monitoring, our loan quality remained sound with a low classified or impaired loan ratio at 0.27%. In addition, we adopted proactive measures to manage capital and optimise the risk weights of our assets. Our total capital ratio was 17.26%, while the Tier 1 capital ratio was 12.41%. The average value of liquidity coverage ratio was above the regulatory requirement, at a solid level of 109.89% in the second quarter.
During the period, the Group proactively captured market opportunities by leveraging our collaborative relationship with Bank of China ("BOC"), our parent bank. We strived to increase overall profitability by optimising our product mix, expanding cross-border collaboration and upgrading our service capabilities. As a result, the Group achieved satisfactory results in key business segments. With favourable investment sentiment and the growing number of stock transactions arising from the Shanghai-Hong Kong Stock Connect, we stepped up our marketing and promotion efforts and closely followed changes in customer needs. We introduced more products to meet customer demand, launched themed and bundled promotion campaigns, enriched the functionality of our e-channels, and strengthened our manpower support. We also promoted our wealth management business and major business platforms. During the period, our capital-light net fee and commission income rose substantially by 31.4%. Income from securities brokerage rose 97.9%, currency exchange increased 42.9%, funds distribution grew
31.8%, insurance was up 20.8%, and loan commissions rose 17.3%. Following the successful
introduction of the Mainland-Hong Kong Mutual Recognition of Funds, we selected a number of funds with growth potential in preparation for the comprehensive fund investment services we will be offering.
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During the first half of the year, the offshore RMB business in Hong Kong developed steadily. Through various initiatives, we continuously enriched our total RMB services, enhanced our RMB fund deployment capabilities and expanded our financing channels to capture market opportunities. We also captured business opportunities arising from the development of new Free Trade Zones in Guangdong, Fujian and Tianjin. Through close collaboration within the BOC Group, we have taken the lead by signing loan contracts with a number of corporate customers and offering them cross-border RMB loans. We also provided customers with comprehensive and innovative cross-border financial products and services.
The Group achieved record interim results in the first half of 2015 with satisfactory performance in core businesses. Going forward, the Group will remain focused on our strategic goal of Serving Society, Delivering Excellence. We will capitalise on business opportunities associated with the One Belt, One Road initiative, the internationalisation of the RMB, Mainland enterprises going global, and the enhancement of Hong Kong's status as a major hub for international financial services, trade, shipping, and the offshore RMB business. To better serve our customers, we will continue to enhance our traditional businesses while exploring new business frontiers and steadily moving forward in our regional development, which will provide impetus for the Group's long-term sustainable development.
Being the largest overseas institution within the BOC Group and having served the Hong Kong community for nearly 100 years, BOCHK plays a unique role in the Group's overall strategy. For our regional business development, we will act as a bridgehead for the internationalisation and diversification of the BOC Group, in particular in the ASEAN region. We will develop our major business platforms by increasing our customer base, product innovation and professional expertise.
In the RMB business, as the sole clearing bank for RMB business in Hong Kong, we will enhance our role as the main channel for overseas RMB clearing services. We will also respond to policy and market changes in a more timely manner with a more diversified selection of RMB products and services. We will strive to solidify our position as the premier RMB bank for institutional, corporate and personal clients in the Mainland, Hong Kong and overseas.
We will also continue to strengthen our multi-dimensional collaboration within the BOC Group, optimise our business structure and diversify our products. We will cultivate the local market in Hong Kong and leading corporates in Southeast Asia, while striving to better serve quality Mainland customers and the World's Top 500 enterprises through cooperation with our parent bank. These initiatives will help us expand our customer coverage and enhance our service.
In addition, we will develop our wealth management business, including our asset management, insurance and Private Banking businesses. Riding on our Family Banking service platform, we will deepen our relationships with existing customers while developing the mid to high-end segment. We will expand the scale of our mortgage business and deliver banking services to the mass retail segment. And we will continue to extend the New Concept Branch model in core and strategic districts of Hong Kong. To that end, we will enhance the integrated servicing
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capabilities of the network and further increase the coverage of our automated self-service network for the convenience of our customers.
The BOC Group has announced the potential restructuring and transfer of the banking businesses and assets owned by BOC in certain ASEAN countries to us. Expanding into the ASEAN market will transform us from a local bank in Hong Kong into a regional bank with cross-border operations. We will carefully manage the planning and implementation of this regional transformation. In preparation for this new era, we are drawing up a new plan for setting up a proper operational mechanism, management structure, business strategy, support systems, and so on. Against the backdrop of One Belt, One Road initiative, the internationalisation of the RMB, and Hong Kong's unique strategic advantages, we have the opportunity to make our strategic transformation and regional development a reality and create a promising new future for BOCHK. We have confidence in this strategy and believe that our efforts will be highly recognised by the market.
With the gradual implementation of the Basel III guidelines and various regulatory requirements, BOCHK, as one of the Domestic Systemically Important Authorised Institutions in Hong Kong, will remain focused on prudent risk and capital management as our primary consideration in the Group's business development. We will be proactive in managing our capital and liquidity and will continually optimise our balance sheet mix. We will also continue to focus on strengthening the Group's capital position for our business development needs. Our goal is to balance business growth, follow the regulatory requirements and achieve stable shareholder returns. To maintain our asset quality at a level better than the industry average, we will strengthen our credit risk management and adhere strictly to our prudent credit policy. We are also committed to enhancing the management of our market risk, operational risk, reputational risk and cyber security risk, while stepping up our efforts in anti-money laundering in accordance with the regulatory requirements. Furthermore, we will improve our internal controls in order to support the sustainable and healthy development of the Group. In view of the recent volatility in the financial markets, we will stay alert and adopt appropriate measures so that we can respond to developments in a timely manner.
Riding on our solid foundation and strong franchise, the Group will be proactive in taking advantage of new opportunities to create greater value for our customers, shareholders, staff and the community, while making every effort to contribute to the enhancement of Hong Kong as an international financial hub and the prosperity of its economy.
• Net operating income before impairment allowances increased by 9.4% year-on-year to
HK$23,688 million, driven by growth in net fee and commission income.
• Operating profit before impairment allowances rose by 10.9% to HK$17,112 million.
• Profit attributable to the equity holders reached a new high for the interim period, increasing by 10.8% year-on-year to HK$13,387 million; earnings per share was HK$1.2662.
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• An interim dividend of HK$0.5450 per share will be paid out, the same as last year and representing a pay-out ratio of 43%.
• Return on average total assets (ROA) and return on average shareholders' equity (ROE)
were 1.22% and 14.78% respectively.
• Net interest income was broadly unchanged at HK$15,672 million. Average interest- earning assets increased by 9.9%. Net interest margin was 1.59%.
• Net fee and commission income grew by 31.4% to HK$6,325 million, mainly driven by fee
and commission income from securities brokerage, loans, funds distribution and insurance.
• Total operating expenses increased by 5.8% to HK$6,576 million. Cost to income ratio was
27.76%, which was still among the lowest in the local banking sector.
Total assets amounted to HK$2,367,685 million, up 8.1% compared with the last year end.
Customer loans and deposits outperformed market growth. Compared with the last year end, customer loans and deposits grew by 7.3% and 8.9% respectively.
The loan to deposit ratio was maintained at a healthy level of 63.87%.
Loan quality remained sound, with the classified or impaired loan ratio staying at a low level of 0.27%, a slight drop of 4 basis points.
Our capital position remained solid. The total capital ratio was 17.26%, while the Tier 1
capital ratio was 12.41%.
The average value of liquidity coverage ratio in the second quarter was 109.89%, above the regulatory requirement.
For details of the 2015 interim results, please click here for the Company's announcement.
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BOC Hong Kong (Holdings) Limited ("the Company") holds the entire equity interest in Bank of China (Hong Kong) Limited ("BOCHK"), its principal operating subsidiary. Bank of China Limited (HK Stock Code: "3988") holds a 66.06% equity interest in the Company through BOC Hong Kong (BVI) Limited, an indirect wholly-owned subsidiary of Bank of China Limited.
BOCHK is a leading listed commercial banking group in Hong Kong. With about 260 branches and efficient e-channels including over 1,000 self-service machines, internet and mobile banking services, BOCHK and its subsidiaries offer a comprehensive range of financial products and services to personal and corporate customers. BOCHK is one of the three note issuing banks in Hong Kong and also the Clearing Bank for Renminbi business in Hong Kong. In addition, the BOCHK Group (comprising BOCHK, Nanyang Commercial Bank and Chiyu Banking Corporation) and its subsidiaries have 42 branches and sub-branches in the Mainland of China to provide cross-border banking services to customers in Hong Kong and the Mainland.
The Company began trading on the main board of the Stock Exchange of Hong Kong on 25 July 2002, with stock code "2388", ADR OTC Symbol: "BHKLY".
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