ENP Newswire - 21 August 2014
Release date- 19082014 - BOC Hong Kong (Holdings) Limited ('the Company', stock code '2388'; ADR OTC Symbol: 'BHKLY') today announced its 2014 interim results.
The Company and its subsidiaries ('the Group') recorded new interim heights for its revenues and profits. Net operating income before impairment allowances increased by 9.4% year-on-year to HK$21,649 million. Profit attributable to the equity holders increased by 7.4% year-on-year to HK$12,083 million. Encouraging growth was recorded in both loans and deposits. All key financial ratios were maintained at sound levels. The financial results reflected the Group's proactive asset allocation strategy and consistent progress in building its franchise in core businesses. These promising developments lay a good foundation to support the Group's future growth.
Comments by Mr TIAN Guoli, Chairman
'The Group's profitability once again achieved an interim high, mainly driven by the sustained good performance of core revenue. During the period, we took advantage of business opportunities while adhering to stringent risk control. The Group continued to enhance the competitiveness of its offshore RMB service capabilities, further reinforcing its market leadership. Our collaboration with parent bank, Bank of China, and its overseas branches continued to deepen as we capitalised on opportunities that arose from Mainland enterprises going global and foreign enterprises investing in China. The Group maintains an ongoing commitment to proactively manage capital, assets and liabilities as well as liquidity, while strengthening control on all types of risk. We will continue to offer quality products and premium services to our customers to sustain the growth of the Group and to maximise value for our shareholders.'
Comments by Mr HE Guangbei, Vice Chairman and Chief Executive
'The development of the offshore RMB market has provided the Group with favourable conditions to further diversify its business by customer, geography and product. Over the past few years, we have taken significant steps to build new business capabilities and enhance operating efficiency to better serve customer needs. Going forward, we will continue to focus our investments on the Group's key strategic areas to support sustainable growth and ensure efficient use of resources. While striving to capture market opportunities, we will continue to exercise stringent risk management to safeguard asset quality. We will also focus on allocating capital efficiently to support our business needs, meet the regulatory requirements and generate solid returns for our shareholders. By capitalising on our unique competitive edge in offshore RMB and cross-border businesses, we will continue to enhance our total solution capabilities to better serve our customers in Hong Kong, the Mainland of China and other parts of the world. With our strong franchise and financial position, I truly believe that the Group will continue to be well positioned to capture quality growth opportunities ahead.'
Key profit and loss figures
Net operating income before impairment allowances increased by 9.4% year-on-year to HK$21,649 million, which was mainly driven by the increase in net interest income.
Operating profit before impairment allowances increased by 9.5% to HK$15,433 million.
Profit attributable to the equity holders increased by 7.4% year-on-year to HK$12,083 million; earnings per share of HK$1.1428.
Interim dividend of HK$0.545 per share, same as the first half of 2013.
Return on average total assets (ROA) and return on average shareholders' equity (ROE) were 1.20% and 14.75% respectively, compared to 1.27% and 14.87% for the first half of 2013.
Net interest income rose by 17.4% year-on-year to HK$15,656 million, driven by the expansion in both average interest-earning assets and net interest margin. Net interest margin widened by 7 basis points year-on-year to 1.74%.
Net fee and commission income grew by 2.9% to HK$4,815 million, mainly driven by commission income from funds distribution and loans. Commission income from credit cards, bills, trust and custody services as well as currency exchange also recorded satisfactory growth.
Net trading gain decreased by 7.8% to HK$1,329 million. The decrease was mainly attributable to the mark-to-market changes of certain foreign exchange products and equity instruments.
Key balance sheet figures
As at 30 June 2014, total assets amounted to HK$2,085.2 billion, up 1.9% compared to the end of 2013. The growth was driven by higher deposits from customers, which rose by 8.5%, but was largely offset by the lower deposit balance the participating banks placed with the RMB Clearing Bank.
The overall loan portfolio grew by 10.5% as at the end of June 2014. The Group continued to adopt stringent risk management and credit control to deliver quality growth. Overall loan quality remained healthy. Classified or impaired loan ratio stayed at a low level of 0.31%, compared to 0.28% at the end of 2013.
The Group expanded its deposit base by 8.5% to support the expansion of its lending business. The loan to deposit ratio stayed at a solid level of 65.87%, up 1.24 percentage points from the end of 2013.
Total capital ratio at 30 June 2014 was 16.90%, up 1.10 percentage points from that at the end of 2013. Tier 1 capital ratio improved to 11.84%, up 1.17 percentage points. The improvement was underpinned by the Group's conscious efforts to reserve capital and optimise the management of risk-weighted assets.
Average liquidity ratio for the first half of 2014 was 39.58%, compared to 38.70% for the same period last year.
Personal Banking's net operating income before impairment allowances grew by 1.7% to HK$6,953 million. Due to higher expense growth, profit before taxation dropped by 5.2% to HK$3,388 million. The Group continued to maintain market leadership in its core businesses including residential mortgage, UnionPay International merchant acquiring business and card issuing business in Hong Kong. With the launch of Enrich Banking and enhancement of Wealth Management Service, the Group successfully acquired new customers and increased product penetration for the mid- and high-end segments. Private Banking business advanced well in expanding its customer base, further strengthening its business platform and increasing its brand awareness. Sales of funds and insurance products did particularly well as the product range was broadened to meet customers' investment needs.
Corporate Banking's net operating income before impairment allowances increased by 6.6% to HK$8,285 million. Profit before taxation grew by 8.6% to HK$6,379 million. The Group further enhanced its position as a prominent loan arranger in Hong Kong and recorded satisfactory loan growth. It also expanded the customer coverage to overseas financial institutions and central banks. Riding on the opportunities from the Shanghai Free Trade Zone, the Group successfully helped corporates set up cross-border funding pools in RMB and other foreign currencies. It also provided cross-border RMB loans to corporates established in the Shanghai Free Trade Zone.
Treasury segment's net operating income before impairment allowances grew by 36.1% to HK$6,054 million. Profit before taxation increased by 37.0% to HK$5,367 million. The Group took a proactive but prudent approach in managing its banking book investments to enhance return. In view of the RMB exchange rate fluctuation, we provided value-preservation solutions to customers and received positive response. In bond underwriting business, the business volume soared as we successfully captured opportunities from increasing market demand.
Mainland business's net operating income increased by 35.8% year-on-year, driven by the strong growth in net interest income and net fee income. The Group remained focused on managing its asset quality through strict adherence to prudent credit policy and close monitoring on the credit situation. The slower economic growth on the Mainland posed pressure on certain industries, resulting in an increase in the amount of new classified or impaired loans in the first half of 2014. During the period, Nanyang Commercial Bank (China) obtained approval to establish the Suzhou Branch and Shanghai Free Trade Zone Sub-branch in addition to the Group's existing 41 outlets. These two outlets have already commenced business in July.
Insurance business recorded robust growth in net insurance premiums in the first half of the year. However, net operating income before impairment allowances and profit before taxation dropped year-on-year by 40.3% and 50.7% to HK$411 million and HK$278 million respectively. The decline was mainly caused by a higher provision for insurance liabilities as a result of declining market interest rates. The Group maintained its leading position in the RMB insurance market. It actively explored new distribution channels and established partnerships with brokerage houses to promote insurance products.
About BOC Hong Kong (Holdings) Limited
BOC Hong Kong (Holdings) Limited ('the Company') was incorporated in Hong Kong on 12 September 2001 to hold the entire equity interest in Bank of China (Hong Kong) Limited ('BOCHK'), its principal operating subsidiary. The Company is a subsidiary of Bank of China Limited (HK Stock Code: '3988') which holds approximately 66.06% equity interest in the Company.
The Company and its subsidiaries ('the Group') are a leading listed commercial banking group in Hong Kong. With over 260 branches, more than 600 ATMs and other distribution channels in Hong Kong, the Group offers 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. In addition, the Group and its subsidiaries have 43 branches and sub-branches in the Mainland of China to provide cross-border banking services to customers in Hong Kong and the Mainland. BOCHK is appointed by the People's Bank of China as the Clearing Bank for Renminbi (RMB) business in Hong Kong and is authorised as the Clearing Bank of RMB banknotes business for the Taiwan region.
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'.