HANG SENG BANK(00011)2024-03-27 08:34Financial 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].