Group 1 - The company has signed a sales agreement with Hang Seng Bank (China) Limited to start selling the Invesco Great Wall Jingyi Dual Benefit Bond Fund A class shares from March 31, 2025 [1] - The sales process, handling time, and methods will be subject to the regulations of Hang Seng Bank [1] - The announcement includes details about the applicable fund and the opening of fund business [1][2] Group 2 - Investors can apply for regular investment plans through the sales institution, which will automatically complete the deduction and fund purchase on the agreed date [2] - If the sales institution opens conversion services, investors must ensure that the funds are in a redeemable state before applying for conversion [2] - The sales institution may offer discounts on subscription fees for one-time purchases or regular investment plans, subject to their arrangements [2] Group 3 - From April 2, 2025, there will be a limit on the application amount for the C and F class shares of the fund, with a maximum of 10 million yuan per day per fund account [3][4] - If the conversion application fails, the original fund conversion request will also be partially or fully rejected [4] - Large subscriptions and conversion services for the C and F class shares will resume on April 7, 2025, without further announcements [4] Group 4 - The company emphasizes the importance of reading the fund contract and prospectus before investing [5] - The company has established standards and procedures for selecting securities firms for trading, focusing on financial health and compliance [6] - The company conducts regular evaluations of securities firms to determine their participation in trading activities [6]

Financial Performance - The bank reported a net profit attributable to shareholders of HKD 18,379 million for 2024, an increase from HKD 17,848 million in 2023, representing a growth of 3%[10] - The bank's operating profit for 2024 was HKD 21,558 million, up from HKD 19,946 million in 2023, reflecting a growth of 8%[10] - The bank's earnings per share increased to HKD 9.33 in 2024 from HKD 8.97 in 2023, reflecting a growth of 4%[10] - Profit before tax rose by 5% year-on-year to HKD 21.014 billion, and earnings attributable to shareholders increased by 3% to HKD 18.379 billion[40] - The company's total revenue for 2024 was HKD 41.54 billion, up from HKD 40.82 billion in 2023[59] Asset and Capital Management - The bank's total assets increased to HKD 1,795,196 million in 2024 from HKD 1,692,094 million in 2023, marking a growth of approximately 6%[11] - The bank's common equity tier 1 capital ratio was 17.7% in 2024, slightly down from 18.1% in 2023, indicating a stable capital position[11] - Shareholders' equity grew by HKD 10 billion, or 1%, from HKD 168.1 billion in 2023 to HKD 169.5 billion in 2024[106] - The bank's financial investments increased from HKD 405.8 billion in 2023 to HKD 541.2 billion in 2024, a growth of 33.3%[98] Income Sources - Non-interest income increased by 26% year-on-year, reaching HKD 10.753 billion, improving its share of total operating income from 21% in 2023 to 26% in 2024[38] - Wealth management income grew by 22% year-on-year, contributing to the overall non-interest income growth[31] - The bank's life insurance-related income rose by 17% to HKD 3.119 billion, driven by increased insurance service income[39] - The bank's commercial banking net operating income decreased by 4% to HKD 10.226 billion, while non-interest income grew by 9%[50] Loan and Deposit Trends - The bank's net interest income decreased by 5% to HKD 30.784 billion due to weak loan demand and interest rate cuts expected in the second half of 2024[39] - Customer loans (net of expected credit loss provisions) decreased by HKD 41 billion, or 5%, to HKD 819 billion[97] - Customer deposits increased by HKD 86 billion, or 7%, from HKD 1,180.6 billion in 2023 to HKD 1,267.0 billion in 2024[103] - The loan-to-deposit ratio improved from 72.9% in 2023 to 64.7% in 2024, indicating a stronger liquidity position[104] Risk Management - The bank's risk management framework emphasizes a culture of risk awareness and accountability across all levels of the organization[112] - The risk management tools include processes for identifying, assessing, monitoring, managing, and reporting risks to maintain them within acceptable levels[121] - The group conducts extensive stress testing to assess the impact of severe adverse events on financial stability and to enhance regulatory confidence[126] - The company has identified geopolitical and macroeconomic risks as primary emerging risks for 2024, particularly due to uncertainties surrounding the upcoming elections and changes in U.S. domestic and foreign policies[132] Credit Risk and Expected Credit Loss - The expected credit loss changes decreased by HKD 1.475 billion, or 24%, to HKD 4.773 billion, mainly due to reduced provisions for wholesale loan customers[73] - The total amount of loans classified under Stage 3, which indicates objective evidence of impairment, is 51,009 million, with an expected credit loss provision of 9,764 million, leading to a coverage ratio of 38.03%[189] - The expected credit loss coverage ratios for Stage 1, Stage 2, and Stage 3 loans are 0.06%, 2.84%, and 19.14% respectively, indicating a significant increase in credit risk as loans progress through the stages[189] - The company has measures in place for loans in financial difficulty, including modifications to repayment terms, which may classify loans as impaired[177] Strategic Initiatives - The bank plans to strengthen its cross-border business to better meet the banking service needs of retail and corporate clients in response to new economic policies in Hong Kong and mainland China[23] - The bank launched a HKD 33 billion SME Power Up financing fund to support local SMEs and an HKD 80 billion sustainable development financing fund for green transformation projects[36] - The company is focused on sustainable financing solutions to assist clients in transitioning to low-carbon operations[55] Customer Engagement and Digital Transformation - The bank serves nearly 4 million customers, leveraging its award-winning mobile banking application and extensive physical network of over 250 service points in Hong Kong[7] - Active users of mobile wealth management and online banking grew by 24% and 6% year-on-year, respectively[54] - The number of new retail accounts opened by mainland customers surged by 81% year-on-year[32] Market and Economic Outlook - Economic growth is expected to continue in major markets like the U.S. and U.K. in the second half of 2024, driven by expansionary fiscal and monetary policies[138] - The outlook for 2025 remains uncertain due to potential significant changes in U.S. economic and foreign policies, which could impact global economic growth and inflation forecasts[139] - The real estate market in mainland China and Hong Kong remains sluggish despite multiple government policies aimed at supporting recovery, with no significant signs of revival observed[140]

Financial Performance - The net operating income before expected credit loss changes and other credit impairment provisions for 2024 was HKD 41,537 million, an increase of 1.75% from HKD 40,822 million in 2023[6]. - Operating profit for 2024 reached HKD 21,558 million, up 8.0% from HKD 19,946 million in 2023[6]. - Profit attributable to shareholders for 2024 was HKD 18,379 million, representing a 2.97% increase from HKD 17,848 million in 2023[6]. - The average return on ordinary shareholders' equity remained stable at 11.3% for both 2024 and 2023[6]. - The cost-to-income ratio for 2024 was 36.6%, slightly higher than 35.8% in 2023[6]. - Earnings per share for 2024 increased to HKD 9.33 from HKD 8.97 in 2023, reflecting a growth of 4.02%[6]. - Pre-tax profit rose by 5% year-on-year to HKD 21.014 billion, with earnings per share growing by 4% to HKD 9.33[32]. - The bank's total operating expenses increased to HKD 15.193 billion from HKD 14.624 billion year-on-year[53]. Asset and Liability Management - Total assets as of December 31, 2024, were HKD 1,795,196 million, an increase from HKD 1,692,094 million in 2023[6]. - The bank's total liabilities for 2024 were HKD 1,625,600 million, compared to HKD 1,523,900 million in 2023[8]. - Customer loans decreased to $819,136 million in 2024 from $860,406 million in 2023, a decline of 4.8%[185]. - Financial investments increased significantly to $536,745 million in 2024 from $401,732 million in 2023, an increase of 33.6%[185]. - Customer deposits grew by HKD 86 billion, or 7%, to HKD 1,267 billion, with the loan-to-deposit ratio decreasing to 64.7% from 72.9%[101][102]. Income Sources - Non-interest income increased by 26% year-on-year, reaching HKD 10.753 billion, improving its share of total operating income from 21% in 2023 to 26% in 2024[30]. - Net interest income decreased by 5% due to weak market loan demand, with a net interest margin maintained at a healthy level of 2.20%[23]. - Life insurance-related income increased by 17% to HKD 31.19 billion, with insurance service income rising[31]. - Non-interest income in the global capital markets business grew by 33% to HKD 3.214 billion, with a 55% increase in net interest income[49]. Customer Growth and Engagement - The number of affluent customers grew by 15%, with new affluent customers increasing by 75% year-on-year[23]. - The number of new retail accounts from mainland customers increased significantly by 81% year-on-year[23]. - Active users of mobile wealth management and online banking increased by 24% and 6% year-on-year, respectively[45]. - The bank established 9 cross-border wealth management centers in major cities of the Greater Bay Area, with new account openings for mainland customers increasing by 81% year-on-year[80]. Risk Management - The bank's risk management framework is regularly reviewed by the board to ensure alignment with strategic objectives[106]. - The bank employs a three lines of defense model for risk management, with clear accountability and responsibilities defined[116]. - The bank's risk management approach includes proactive identification, assessment, monitoring, and reporting of risks[116]. - The company has identified geopolitical and macroeconomic risks as primary and emerging risks for 2024, particularly due to uncertainties surrounding the upcoming elections and subsequent government transitions in the U.S.[129]. Economic Outlook - The central scenario reflects lower economic growth expectations across major markets, with Hong Kong's GDP projected to grow by 1.7% in 2025[193]. - The unemployment rate in Hong Kong is forecasted to rise to 3.3% in 2025 and 3.7% in 2026, with China's unemployment rate expected to be 5.2% and 5.4% for the same years[198]. - Housing prices in Hong Kong are anticipated to decline by 0.5% in 2025 and 5.9% in China, with a gradual recovery expected in subsequent years[198]. - The commercial real estate sector in major markets is facing challenges, particularly in office space demand, leading to valuation declines[196].

Investment Rating - The investment rating for Hang Seng Bank is maintained at NEUTRAL [1][2]. Core Views - The report highlights a narrowing net interest margin (NIM) and an increase in the non-performing loan (NPL) ratio, indicating potential challenges in profitability and asset quality [1][4][5]. Financial Performance Summary - For the year 2024, revenue, pre-provision operating profit, and net profit attributable to equity holders increased by +1.8%, +0.6%, and +3.0% respectively [4][14]. - The dividend per share rose from HKD 6.5 to HKD 6.8, marking a year-on-year increase of 4.6% [4][14]. - The return on assets (ROA) increased by 0.1 percentage points to 1.1%, while the return on equity (ROE) remained stable at 13.0% [4][14]. - The common equity tier 1 (CET1) ratio decreased by 0.4 percentage points to 17.7% [4][14]. Interest Income and Margin - The net interest margin for 2024 was reported at 2.20%, down by 10 basis points year-on-year [5][16]. - Net interest income decreased by 4.7% year-on-year, influenced by weak loan demand, which saw total loans decline by 4.8% [5][16]. Non-Interest Income - Non-interest income increased by 26.1% year-on-year, primarily driven by an 82.5% rise in trading gains [6][16]. - Net fee income grew by 8.0%, with retail investment fund income increasing by 39.5% [6][16]. Asset Quality - The non-performing loan ratio rose to 6.12%, an increase of 0.8 percentage points from the first half of 2024, attributed to cash flow pressures in the Hong Kong commercial real estate sector [5][16]. - The credit cost decreased by 13 basis points to 56 basis points, with the provision coverage ratio remaining stable at 1.56% [5][16]. Future Earnings Forecast - The forecast for net profit attributable to equity holders for 2025 is expected to decline by 8.8% year-on-year, followed by a recovery of 3.0% in 2026 [3][12]. - The target price for 2025 is set at HKD 101.38, based on a price-to-book ratio of 1.10 times [3][12].

Financial Performance - For the fiscal year 2024, the operating profit increased by 8% to HKD 21.558 billion, compared to HKD 19.946 billion in 2023[3]. - Non-interest income surged by 26% to HKD 10.753 billion, up from HKD 8.527 billion in 2023[6]. - The bank's net interest income decreased by 5% to HKD 30.784 billion, down from HKD 32.295 billion in 2023, with a net interest margin narrowing by 10 basis points to 2.20%[6]. - The bank's earnings per share increased by 4% to HKD 9.33, compared to HKD 8.97 in 2023[6]. - The total dividend for 2024 is HKD 6.80 per share, reflecting a year-on-year increase of 4.6%[6]. - Operating profit rose by 8% year-on-year, with pre-tax profit increasing by over HKD 900 million[16]. - The group's net operating income increased by 2% to HKD 41.537 billion, while non-interest income rose by 26%, offset by a 5% decrease in net interest income[28]. - The pre-tax profit for the year ending December 31, 2024, is reported at HKD 21,014 million, an increase from HKD 20,105 million in 2023, reflecting a growth of 4.5%[90]. - The total operating income before expected credit loss for 2024 is HKD 41,537 million, up from HKD 40,822 million in 2023, marking a growth of 1.7%[92]. Customer Base and Growth - The number of newly acquired affluent customers rose by 75%, contributing to an overall 15% increase in the affluent customer base[3]. - The bank's affluent customer base grew by 15%, with new affluent customers increasing by 75% year-on-year[16]. - The number of new accounts opened by mainland clients increased by 81% year-on-year, following the launch of a fast account opening service[55]. - Active users of mobile wealth management and online banking increased by 24% and 6% year-on-year, respectively[61]. Risk Management and Credit Quality - The bank has actively reduced the risk in its loan portfolio to maintain growth momentum and create significant value for stakeholders[3]. - The bank's non-performing loan ratio was 6.12% as of the end of 2024, with 90% of unsecured loans rated as investment grade[18][26]. - Total impaired loans increased from HKD 24.7 billion at the end of 2023 to HKD 51 billion by the end of 2024, reflecting downgrades in ratings of certain impaired corporate loans[37]. - Expected credit loss provisions decreased by HKD 1.475 billion, or 24%, to HKD 4.773 billion, mainly due to reduced provisions for wholesale loan customers[36]. - The expected credit loss ratio remains stable at 1.56% for both 2024 and 2023, indicating consistent credit quality management[96]. Capital and Liquidity - The common equity tier 1 capital ratio stood at 17.7% as of December 31, 2024, compared to 18.1% in 2023[6]. - The bank's liquidity coverage ratio stood at 301.0% as of December 31, 2024[25]. - The liquidity coverage ratio as of December 31, 2024, was 301.0%, compared to 260.7% at the end of 2023[47]. - The total capital ratio decreased to 20.8% in 2024 from 21.4% in 2023, reflecting a reduction of approximately 0.9 percentage points after accounting for the proposed fourth interim dividend for 2024[116]. - The leverage ratio improved to 8.0% in 2024 from 8.5% in 2023[118]. Expenses and Efficiency - The cost-to-income ratio was reported at 36.6%, slightly up from 35.8% in 2023[6]. - Operating expenses grew by HKD 569 million, or 4%, to HKD 15.193 billion, driven by increases in intangible asset amortization and IT-related expenses[37]. - Employee compensation and benefits increased to HKD 6,802 million in 2024 from HKD 6,492 million in 2023, representing a growth of 4.78%[82]. - Total operating expenses rose to HKD 15,193 million in 2024, up from HKD 14,624 million in 2023, marking an increase of 3.90%[82]. Investments and Financial Instruments - Financial investments rose significantly to HKD 541,155 million in 2024, compared to HKD 405,792 million in 2023, marking an increase of approximately 33.3%[68]. - The bank's financial instruments measured at fair value through profit or loss increased to HKD 164,557 million in 2024 from HKD 156,872 million in 2023, indicating a growth of 4.3%[95]. - Total income from financial instruments measured at fair value through profit or loss decreased to HKD 7,681 million in 2024, down 32.5% from HKD 11,330 million in 2023[78]. Shareholder Returns and Dividends - The bank declared a fourth interim dividend of HKD 3.20 per share, totaling HKD 6.80 per share for 2024, a 4.6% increase year-on-year[22]. - The bank declared dividends totaling HKD 12,923 million for the year, which includes the fourth interim dividend for 2023 and the first three interim dividends for 2024[70]. - The total dividend distribution for 2024 was HKD 6.80 per share, totaling HKD 12,828 million, compared to HKD 6.50 per share and HKD 12,427 million in 2023, representing an increase of 3.22%[86]. Corporate Governance and Compliance - The bank has fully complied with the corporate governance principles and codes as per the Stock Exchange's requirements for the fiscal year 2024[134]. - The bank emphasizes the importance of corporate governance and aims to enhance reporting efficiency and quality[134]. - The bank has established a "Regulatory Disclosure" section on its website to comply with banking industry disclosure regulations[138].

Financial Performance - Net operating income before expected credit loss changes and other credit impairment provisions increased to HKD 20,431 million, up from HKD 19,940 million year-on-year, representing a growth of 2.5%[3] - Profit before tax rose to HKD 11,307 million, compared to HKD 10,961 million in the previous year, reflecting a year-on-year increase of 3.2%[3] - The bank's net interest income for the first half of 2024 increased by 2% year-on-year to HKD 15.48 billion, with a net interest margin improvement of 20 basis points to 2.29%[10] - The bank's pre-tax profit increased by 3% year-on-year to HKD 11.31 billion, while net profit attributable to shareholders rose by 1% to HKD 9.89 billion[12] - Total operating income net of expected credit loss changes was HKD 18,931 million, an increase from HKD 18,016 million year-over-year, representing a growth of 5.1%[133] - The company reported a profit for the period of HKD 9,888 million, slightly up from HKD 9,822 million in the previous year, indicating a growth of 0.7%[133] Customer Growth and Engagement - The number of new affluent customers increased by 147% year-on-year, while new private banking accounts grew by 15%[6] - Active retail customers engaging in investment transactions rose by 41% year-on-year, driven by the launch of the "Wealth Master" feature[22] - The affluent customer base grew by 14% year-on-year, with newly acquired affluent customers increasing by 147%[21] - The number of new accounts opened by mainland customers increased by 166% year-on-year, reflecting the demand for wealth management services in the Greater Bay Area[21] Asset and Liability Management - The bank's total assets increased to HKD 1,708,453 million, up from HKD 1,692,094 million year-on-year[3] - Customer deposits rose by 2%, driven primarily by growth in time deposits[10] - Total liabilities increased to HKD 1,542,086 million from HKD 1,523,910 million[136] - The bank's equity decreased by HKD 2 billion, or 1%, to HKD 166 billion, impacted by a slight reduction in retained earnings[28] Non-Interest Income - The bank's non-interest income grew by 4% year-on-year, with retail investment fund fee income increasing by 20% and insurance services rising by 16%[6] - Non-interest income grew by 4%, mainly due to increased trading activities and retail investment fund performance[13] - Net service fee income decreased by HKD 102 million, or 4%, to HKD 2.564 billion, primarily due to a decline in credit facilitation service fees offsetting a 20% increase in retail investment fund income[15] Credit Risk and Provisions - The non-performing loan ratio increased to 5.32%, but the impact on financial performance is minimal due to collateral backing most loans[6] - The expected credit loss provisions decreased by 22% to HKD 1.5 billion, reflecting improved credit quality in the commercial real estate loan portfolio[10] - Total impaired loans increased from HKD 25 billion to HKD 46 billion, with the impaired loan ratio rising from 2.83% to 5.32%[17] - The expected credit loss provisions for customer loans as of June 30, 2024, amount to $15,258 million, an increase from $13,633 million on December 31, 2023[42] Capital and Risk Management - The bank's total capital ratio stood at 19.7% as of June 30, 2024, indicating a strong capital position to withstand unforeseen risks[10] - The Common Equity Tier 1 (CET1) capital ratio decreased to 16.6% as of June 30, 2024, down from 18.1% at the end of 2023, indicating a reduction in capital adequacy[102] - The company continues to monitor and identify risks, with key risks including credit risk, market risk, and regulatory compliance risk[29] - The risk management framework emphasizes the importance of safeguarding clients, business, employees, shareholders, and the community while supporting strategic growth[31] Dividends and Shareholder Returns - The bank declared a second interim dividend of HKD 1.20 per share, totaling HKD 2.40 per share for the first half of 2024, representing a 9% increase compared to the same period last year[9] - The bank's total shareholder return, including a share buyback plan of HKD 3 billion, reached HKD 7.6 billion, an 80% increase year-on-year[9] - The company announced a share buyback program of up to HKD 3 billion, expected to be completed by September 2024, with HKD 1 billion remaining as of June 30, 2024[138] Economic Outlook - The GDP growth rate for Hong Kong is projected to be 2.9% in 2024, while for mainland China it is expected to be 4.9%[53] - The unemployment rate is anticipated to remain at 3.0% for Hong Kong and rise slightly to 5.2% for mainland China in 2024[53] - Housing prices in Hong Kong are expected to decline by an average of 8.7% in 2024, while mainland China is projected to see a decrease of 5.7%[53] - The consensus downside scenario highlights risks from geopolitical tensions, which could lead to inflation and interest rate increases, potentially causing a global recession[56] Operational Efficiency - Operating expenses increased by HKD 367 million, or 5%, to HKD 7.523 billion, driven by higher processing service fees and continued investment in digital capabilities[17] - The cost-to-income ratio increased by 0.9 percentage points to 36.8% for the first half of 2024[18] - The company reported a total of HKD 7,523 million in expenses for the six months ended June 30, 2024, compared to HKD 7,156 million for the same period in 2023, reflecting a growth of 5.1%[155] Digital Transformation and Innovation - The bank is actively promoting digital transformation and green development through partnerships, including the establishment of an innovation lab for SMEs[8] - The bank's digital platform enhancements led to a 172% year-on-year increase in investment account openings via mobile devices[22] - The bank launched a HKD 33 billion SME Power Up financing fund to support the growth and digital transformation of SMEs[7]

Financial Performance - Net operating income before expected credit loss changes and other credit impairment charges increased to HKD 20,431 million, up from HKD 19,940 million year-on-year [3]. - Profit before tax rose by 3% to HKD 11,307 million, compared to HKD 10,961 million in the previous year [7]. - Earnings attributable to shareholders reached HKD 9,893 million, slightly up from HKD 9,827 million year-on-year [3]. - Return on average ordinary shareholders' equity was 12.4%, down from 12.8% in the previous year [3]. - Net interest income grew by 2% year-on-year, while non-interest income increased by 4% [7]. - The board declared a second interim dividend of HKD 1.20 per share, totaling HKD 2.40 per share for the first half of 2024, a 9% increase from the same period last year [10]. - The total amount returned to shareholders reached HKD 7.6 billion, an 80% increase compared to the previous year [10]. - The company reported a 25% increase in operating profit, amounting to HKD 23.08 billion, compared to the second half of 2023 [22]. - Pre-tax profit for wealth management and personal banking increased by 2% to HKD 7.16 billion, with net interest income growing by 4% year-on-year [24]. - The company reported a net gain of HKD 2,822 million from financial instruments measured at fair value through profit or loss, down from HKD 6,110 million in the previous year [124]. Credit Quality and Risk Management - The non-performing loan ratio increased to 5.32%, reflecting pressures on cash flow for some commercial real estate clients [7]. - Expected credit losses decreased by 22% year-on-year due to improved risk management in mainland commercial real estate [7]. - The expected credit loss provisions decreased by 22% to HKD 1.5 billion, reflecting improved credit quality in the commercial real estate loan portfolio [11]. - Total impaired loans increased to HKD 46 billion, with an impaired loan ratio of 5.32%, up from 2.83% at the end of 2023 [19]. - The group continues to monitor and identify risks, with key risks including credit risk, market risk, and regulatory compliance risk [33]. - The group has adjusted expected credit losses to reflect uncertainties from inflation and interest rate fluctuations, with a model redevelopment planned for implementation by the end of 2024 [33]. - The expected credit loss model reflects significant risks and uncertainties, with adjustments made by management when necessary [51]. - The company is closely monitoring credit risks, particularly in the real estate sector, where challenges persist due to funding pressures and rising default rates [40]. - The expected credit loss for personal loans is 399,907 million, with a coverage ratio of 0.43% for Stage 3 [50]. - The expected credit loss for corporate and commercial loans is 443,853 million, with a coverage ratio of 2.68% for Stage 3 [50]. Business Growth and Client Engagement - The number of new affluent clients rose by 147% year-on-year, with new private banking accounts increasing by 15% [7]. - Premium income from new life insurance increased by 80% year-on-year, ranking third in Hong Kong [9]. - The "Wealth Management Connect" product offerings increased to over 320, leading to a fourfold increase in southbound investment product sales [9]. - Digital account openings via mobile devices increased by 172% year-on-year, reflecting enhanced digital platform capabilities [26]. - Active retail clients engaging in investment transactions rose by 41% year-on-year, driven by the introduction of the "Wealth Master" feature [25]. - The bank's new life insurance business premiums surged by 80% year-on-year, securing the third position in the life insurance market [25]. - The bank launched a HKD 33 billion SME Power Up financing fund to support growth and digital transformation of SMEs [9]. Capital and Liquidity Management - The bank's common equity tier 1 capital ratio stood at 16.6% as of June 30, 2024, indicating a strong capital position [12]. - The bank aims to maintain strong capital to support business development while complying with regulatory capital requirements [88]. - The average liquidity coverage ratio as of June 30, 2024, is 277.2%, up from 260.6% as of December 31, 2023, significantly exceeding the regulatory requirement [108]. - The stable funding ratio as of June 30, 2024, is 168.2%, compared to 171.7% as of March 31, 2024, and 161.4% as of June 30, 2023 [111]. - The bank's total equity as of June 30, 2024, was reported at 149,659 million, a decrease from 166,320 million as of December 31, 2023 [93]. - The bank's retained earnings and other reserves are crucial for maintaining a prudent balance in capital allocation to subsidiaries [91]. Economic Outlook and Market Conditions - Economic outlook for most markets has improved compared to December 31, 2023, but key macroeconomic and regulatory issues remain [33]. - The consensus central scenario predicts a GDP growth rate of 2.9% for Hong Kong and 4.9% for mainland China in 2024, both lower than in 2023 [54]. - The unemployment rate is expected to remain at 3.0% in Hong Kong and 5.2% in mainland China for 2024, with slight increases projected in subsequent years [55]. - The company expects inflation rates to decline, with a return to central bank targets by 2025, driven by easing service sector inflation and wage growth [54]. - The company is closely monitoring the economic environment and will adjust its credit loss estimates based on evolving macroeconomic conditions [56]. - The company anticipates that policy interest rates have peaked and will begin to decline in 2024, although they are expected to remain above pre-pandemic levels in the long term [54]. Operational Efficiency and Cost Management - Operating expenses rose by HKD 367 million, or 5%, to HKD 7,523 million, driven by increased service fees and investments in digital capabilities [20]. - The cost-to-income ratio increased by 0.9 percentage points to 36.8% [22]. - The company reported a significant increase in operating expenses totaling (7,523) million, impacting overall profitability [155]. - The total operating expenses, excluding costs directly related to insurance business, amounted to HKD 3,159 million for the half-year ending June 30, 2024, compared to HKD 2,971 million in the previous year, reflecting an increase of about 6.3% [148]. Regulatory Compliance and Risk Management - The group has enhanced risk management in response to macroeconomic and geopolitical uncertainties, maintaining net interest income stability despite anticipated interest rate volatility [37]. - A comprehensive regulatory reporting plan is progressing, aimed at strengthening processes and improving consistency in regulatory reporting controls [37]. - The company continues to engage with regulatory bodies to address compliance and reputational risks arising from stricter data privacy and national security laws [39]. - The bank employs advanced internal rating-based approaches for calculating credit risk for most non-securitized exposures [91]. Investment and Market Strategy - The bank issued Hang Seng S&P 500 Index ETF and Hang Seng Japan TSE 100 Index ETF, expanding its global business [4]. - The bank's investment management arm launched Hong Kong's first S&P 500 Index ETF in April 2024, expanding its ETF offerings [26]. - The company plans to continue expanding its market presence and investing in new technologies to drive future growth [126]. - The company continues to focus on expanding its business segments, including commercial banking and global capital markets, to enhance overall performance and market presence [154].

Financial Performance - Pre-tax profit increased by 3% year-on-year to HKD 11.307 billion, with a return on equity of 12.4%[3] - Operating profit increased by 5% to HKD 11.396 billion, reflecting strong business performance[3] - For the first half of 2024, the pre-tax profit increased by 24% compared to the second half of 2023, primarily due to a 65% reduction in expected credit loss changes and strong growth in non-interest income[14] - The profit attributable to shareholders for the period was HKD 9,888 million, up from HKD 9,822 million in the prior year, indicating a year-on-year increase of about 0.7%[37] - Basic and diluted earnings per share increased to HKD 5.04 from HKD 4.99, representing a growth of 1.0%[35] Income and Revenue - Net interest income grew by 2% to HKD 15.483 billion, with a net interest margin widening by 20 basis points to 2.29%[3] - Non-interest income rose by 4% year-on-year, contributing to overall revenue growth[2] - Non-interest income grew by 4% year-on-year, driven by a 20% increase in retail investment fund fees and a 16% increase in insurance services[7] - Operating income before expected credit loss changes increased by 2% year-on-year to HKD 20.43 billion, with non-interest income up by 4% due to increased retail investment fund and insurance business revenues[14] - Wealth management business revenue increased by HKD 58 million, or 2%, to HKD 3.177 billion, supported by strong growth in retail investment funds and life insurance income[16] Dividends and Shareholder Returns - Total shareholder capital return, including a HKD 3 billion share buyback plan, increased by 80% to HKD 7.6 billion[3] - The second interim dividend declared is HKD 1.20 per share, totaling HKD 2.40 per share for the first half of 2024, up 9% from the previous year[3] - The board declared an interim dividend of HKD 1.20 per share, totaling HKD 2.40 for the first half of 2024, a 9% increase from the previous year[10] - The board declared dividends totaling HKD 4,687 million for the first half of 2024, which includes HKD 2,282 million from the first interim dividend and HKD 2,835 million from the fourth interim dividend of 2023[39] Capital and Ratios - The common equity tier 1 capital ratio stands at 16.6%, down from 18.1% at the end of 2023[3] - The bank's capital ratios remain strong, with a Common Equity Tier 1 capital ratio of 16.6% and a total capital ratio of 19.7%[12] - Total Capital Ratio declined to 19.7% as of June 30, 2024, down from 21.4% as of December 31, 2023[68] - Leverage Ratio decreased to 8.1% as of June 30, 2024, from 8.5% as of December 31, 2023[70] Customer and Market Growth - The number of new affluent clients increased by 147% year-on-year, with new private banking accounts growing by 15% and new accounts from mainland clients rising by 166%[7] - Total customer deposits increased by 2%, mainly driven by growth in time deposits[11] - The affluent customer base grew by 14% year-on-year, with a 147% increase in newly acquired affluent customers[29] - Active foreign exchange trading customers increased by 15%, contributing to a 17% year-on-year growth in non-HKD deposits[29] Loans and Credit Quality - The bank's non-performing loan ratio increased to 5.32%, primarily due to the downgrade of the Hong Kong commercial real estate loan portfolio, but most loans are secured[12] - Total impaired loans increased from HKD 25 billion at the end of 2023 to HKD 46 billion by June 30, 2024, with the impaired loan ratio rising to 5.32%[18] - Customer loans (net of expected credit loss provisions) decreased by HKD 11 billion, or 1%, to HKD 850 billion, reflecting weak credit demand in a rising interest rate environment[22] - The expected credit loss for loans and other financial assets was HKD 1,500 million for the six months ending June 30, 2024, down from HKD 1,924 million in the previous year, indicating a reduction of 22%[45] Operating Expenses and Efficiency - The cost-to-income ratio is reported at 36.8%, compared to 35.9% in the previous year[3] - Operating expenses rose by HKD 3.67 billion, or 5%, totaling HKD 75.23 billion, driven by increased processing service fees and investments in digital capabilities[18] - Total operating expenses for the six months ending June 30, 2024, were HKD 7,523 million, an increase from HKD 7,156 million in the same period of 2023, resulting in a cost-to-income ratio of 36.8%, up from 35.9%[45] Strategic Initiatives - The bank continues to support SMEs with new initiatives and received recognition as the "Best Partner for SMEs" by the Hong Kong SME Association[5] - The bank launched a HKD 33 billion SME Power Up financing fund and an HKD 80 billion sustainable development financing fund to support business growth and green transformation[9] - The bank is expanding its global ETF business, launching new products and partnerships to strengthen Hong Kong's position as an ETF hub[5] Regulatory and Governance - The bank has fully complied with the corporate governance principles and codes as of June 30, 2024[84] - The board of directors includes independent non-executive directors and non-executive directors, ensuring diverse governance[85] - The bank has established a regulatory disclosure section on its website to comply with banking disclosure regulations[87] Forward-Looking Statements - The bank's forward-looking statements may involve significant assumptions and uncertainties, which could lead to actual results differing materially[88] - Important factors that may lead to significant differences between actual performance and the announcement are detailed in the 2023 annual report and the 2024 interim report[89]

Financial Performance - The bank's profit attributable to shareholders for 2023 was HKD 17.848 billion, a significant increase from HKD 11.286 billion in 2022, representing a growth of 58.5%[6]. - The bank's net operating income before expected credit losses was HKD 40.822 billion, up from HKD 34.399 billion in 2022, marking an increase of 18.5%[6]. - The return on average ordinary shareholders' equity improved to 11.3% in 2023 from 7.2% in 2022[6]. - Earnings per share rose to HKD 8.97 in 2023, compared to HKD 5.53 in 2022, an increase of 62.5%[6]. - The bank declared a total dividend of HKD 6.50 per share for 2023, up from HKD 4.10 in 2022, representing a 58.5% increase[6]. - The company's pre-tax profit increased by 57% year-on-year, reaching HKD 20.1 billion, with a return on equity rising by 4.1 percentage points to 11.3%[19]. - Operating profit increased by 55% to HKD 19.95 billion in 2023, compared to HKD 12.90 billion in 2022[45]. - The company reported a pre-tax profit of HKD 20.10 billion, up 57% from HKD 12.78 billion in the previous year[45]. Capital and Assets - The bank's total assets as of December 31, 2023, were HKD 1,692.094 billion, a decrease from HKD 1,854.446 billion in 2022[6]. - The common equity tier 1 capital ratio increased to 18.1% in 2023 from 15.2% in 2022, indicating stronger capital adequacy[6]. - The bank's average return on total assets improved to 1.0% from 0.6% year-on-year[71]. - As of December 31, 2023, total equity increased by HKD 8 billion, or 5%, to HKD 168.13 billion, driven by retained earnings growth of HKD 8 billion, or 7%[75]. - The loan-to-deposit ratio increased slightly to 72.9% as of December 31, 2023, compared to 72.4% at the end of 2022[74]. Operational Efficiency - The cost-to-income ratio improved to 35.8% in 2023 from 40.1% in 2022, reflecting better operational efficiency[6]. - Operating expenses increased by 6% to HKD 14.62 billion, mainly due to higher data processing and administrative service costs[43]. - The cost-to-income ratio rose by 4.3 percentage points to 35.8% in 2023[55]. Wealth Management and Banking Services - Wealth management and personal banking business net operating income increased by 26% to HKD 23.64 billion, driven by a 34% rise in net interest income[21]. - The number of affluent clients grew by 17%, with new private banking accounts increasing by 116%[22]. - The annual premium income from new insurance products surged by 157% to HKD 5.6 billion, exceeding pre-pandemic levels[19]. - The company opened six cross-border wealth management centers in major cities in the Greater Bay Area, with plans for a seventh center in Guangzhou by January 2024[60]. Risk Management - The risk management framework emphasizes a culture of risk awareness and accountability across the organization[80]. - The company has identified geopolitical and macroeconomic risks as primary emerging risks, particularly due to sanctions and trade restrictions affecting operations in China and the U.S.[93]. - The risk management committee reviews the actual risk tolerance status and reports to the board, including compliance comments[87]. - The company is actively monitoring the impact of the ongoing Russia-Ukraine war and the Israel-Hamas conflict on geopolitical and economic conditions[94]. - The company continues to face challenges related to data privacy and cybersecurity laws in China, impacting cross-border data sharing and compliance responsibilities[94]. Credit Risk and Expected Credit Losses - The expected credit loss provisions decreased by HKD 1.446 billion, or 19%, to HKD 6.248 billion in 2023[50]. - The total expected credit loss provision for the financial instruments as of December 31, 2022, was 13,615 million, indicating a slight increase in provisions year-over-year[127]. - The expected credit loss coverage ratio for Stage 2 and Stage 3 loans reflects the significant increase in credit risk since initial recognition[128]. - The total expected credit loss for the commercial real estate sector in mainland China was broken down into various quality categories, with the highest amount in the "已信貸減值" category at HKD 14,374 million[190]. Digital Innovation and Sustainability - The company is committed to achieving net-zero carbon emissions by 2030 and has received a gold certification from the International WELL Building Institute for its headquarters[14]. - The company launched the Hang Seng A-Share Low Carbon Index ETF, marking Hong Kong's first low-carbon themed A-share ETF[20]. - The bank's sustainable development initiatives include the issuance of the first social responsibility loan for community development projects and partnerships for green accounts receivable financing[36]. - The company is embedding climate factors into its risk policies and developing indicators to monitor and manage climate risks[92]. Awards and Recognition - The company received a total of 16 awards in 2023 from various institutions, recognizing its efforts in digital banking and financial services[35]. - The bank received the "Best Local Trade Finance Bank in Hong Kong" award from Asian Banking and Finance in 2023[65].

Financial Performance - The net operating income before expected credit loss changes and other credit impairment provisions for 2023 was HKD 40,822 million, an increase of 19% from HKD 34,399 million in 2022[5]. - Operating profit for 2023 reached HKD 19,946 million, representing a 55% increase from HKD 12,899 million in 2022[5]. - Profit attributable to shareholders for 2023 was HKD 17,848 million, up 58% from HKD 11,286 million in 2022[5]. - The average return on ordinary shareholders' equity for 2023 was 11.3%, compared to 7.2% in 2022[5]. - The cost-to-income ratio improved to 35.8% in 2023 from 40.1% in 2022[5]. - Earnings per share for 2023 increased to HKD 8.97, a 62% rise from HKD 5.53 in 2022[5]. - The company's pre-tax profit increased by 57% year-on-year, reaching HKD 20.1 billion[15]. - Return on equity rose by 4.1 percentage points to 11.3%[15]. - The bank's total loans decreased by 7% compared to December 31, 2022, due to strategic measures to reduce credit risk[21]. - The bank declared a fourth interim dividend of HKD 3.20 per share, totaling HKD 6.50 per share for the full year, a 59% increase year-on-year[16]. Asset and Equity Management - The total assets as of December 31, 2023, were HKD 1,692,094 million, a decrease of 9% from HKD 1,854,446 million in 2022[5]. - The total equity attributable to shareholders was HKD 168,131 million, up 5% from HKD 159,933 million in 2022[5]. - The common equity tier 1 capital ratio improved to 18.1% in 2023 from 15.2% in 2022[5]. - The liquidity coverage ratio for 2023 was 260.7%, down from 281.3% in 2022[5]. - The bank's capital ratios remain strong, with a Common Equity Tier 1 capital ratio of 18.1% and a total capital ratio of 21.4%[22]. Risk Management - The company remains vigilant regarding risks, particularly in the uncertain recovery of the mainland commercial real estate sector[41]. - The risk management framework is based on a three-line defense model, which helps in identifying, assessing, managing, and reporting risks effectively[66]. - The board of directors is ultimately responsible for managing risks and approving the risk tolerance levels of the group[67]. - The company conducts regular risk assessments to retain key personnel and ensure effective operations[64]. - The company has implemented a comprehensive stress testing program to assess the impact of severe adverse events on its financial stability[72]. - The company is embedding climate factors into its risk policies and developing indicators to monitor and manage climate risks[74]. Credit Risk and Provisions - The expected credit loss for Stage 3 increased by HKD 975 million to HKD 7.319 billion, primarily due to risks associated with the mainland commercial real estate sector[43]. - The total expected credit loss increased by HKD 2.4 billion to HKD 4.324 billion in the second half of 2023, reflecting higher provisions for impaired credit risks[48]. - The total impaired loans rose from HKD 24.2 billion at the end of 2022 to HKD 24.7 billion at the end of 2023, reflecting downgrades and write-offs in the commercial real estate sector[43]. - The expected credit loss provision for personal loans was 6.05%, while for corporate and commercial loans it was 2.22%[106]. - The expected credit loss for wholesale loans in Hong Kong was HKD 2.533 billion as of December 31, 2023, with a central scenario of HKD 2.362 billion[137]. Customer and Market Engagement - New accounts opened by non-Hong Kong residents increased by 342% due to the expansion of the Greater Bay Area business[15]. - The number of affluent clients grew by 17%, with new private banking accounts increasing by 116%[17]. - Monthly active users of the bank's liquidity management services increased by 16% year-on-year, while retail transaction volumes rose by 115%[29]. - The bank opened six cross-border wealth management centers in major cities in the Greater Bay Area, with a seventh center in Guangzhou set to open in January 2024[26]. - The bank's investment services and insurance business revenue recorded a 17% increase, with new annualized premiums for insurance rising by 174%[27]. Regulatory Compliance and Governance - The company is committed to maintaining dialogue with regulatory bodies regarding the impact of legal and regulatory responsibilities on its business and customers[75]. - The company is actively managing compliance with evolving economic sanctions and trade restrictions, particularly those targeting Russia[76]. - The company has focused on maintaining adequate levels of capital, liquidity, and foreign exchange risk to align with its business strategy and regulatory requirements[176]. - The group is closely monitoring regulatory changes, including the implementation of Basel III reforms expected to positively impact capital ratios upon full implementation[184]. Technology and Innovation - The bank launched the innovative electronic trade financing platform "Hang Seng TradePay" to streamline financing and payment processes[30]. - The bank's new mobile app features a one-stop rewards platform, enhancing customer engagement and experience[25]. - The company is investing resources in advanced analytics and artificial intelligence to combat financial crime and enhance fraud monitoring measures[80]. - The bank launched the Hang Seng A-Share Low Carbon Index ETF, marking Hong Kong's first low-carbon themed A-share ETF[16]. Economic Outlook - The central scenario reflects low economic growth predictions for major markets, with GDP growth in Hong Kong expected to be 2.6% in 2024, which is lower than the average growth rate prior to the pandemic[116]. - The management anticipates that fiscal policy will significantly expand in 2024, introducing more credit easing measures to support the economy[116]. - The economic outlook for 2023's fourth quarter remains stable compared to the previous quarter, despite geopolitical uncertainties[115]. - The unemployment rate in Hong Kong is expected to rise slightly but remain at low levels compared to historical standards[116].