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].

Financial Performance - Shareholder profit increased by 58% to HKD 17.848 billion, with earnings per share rising by 62% to HKD 8.97[3] - The bank's profit before tax increased by 57% year-on-year to HKD 20.1 billion, with return on equity rising by 4.1 percentage points to 11.3%[11] - Operating profit grew by 55%, amounting to HKD 19.946 billion, while profit before tax increased by 57% to HKD 20.105 billion[22] - The total comprehensive income for the year ended December 31, 2023, was HKD 19,053 million, compared to HKD 8,956 million for the previous year[49] - The net profit for the year was HKD 17,838 million, an increase from HKD 11,272 million in the previous year[49] Income and Revenue - Net interest income grew by 26% to HKD 32.295 billion, with net interest margin widening by 55 basis points to 2.30%[3] - Wealth management and personal banking business operating income before expected credit loss changes increased by 26% to HKD 23.64 billion[15] - The bank's new insurance annual premium income surged by 157% to HKD 5.6 billion, exceeding pre-pandemic levels[11] - The bank's investment services and insurance business revenue rose by 17%, driven by strong performance in structured investment products, while new annualized premiums for insurance increased by 174% compared to the previous year[42] - The total operating income before expected credit loss changes was HKD 40,822 million, with HKD 38,248 million generated from Hong Kong[66] Cost Management - The cost-to-income ratio improved to 35.8% from 40.1% in the previous year[3] - The bank's cost-to-income ratio improved by 4.3 percentage points to 35.8% due to strict cost control measures[11] - Operating expenses increased by HKD 0.829 billion, or 6%, to HKD 14.624 billion, mainly due to ongoing technology investment costs[28] Capital and Liquidity - The Common Equity Tier 1 capital ratio was 18.1%, up from 15.2% in the previous year[3] - The liquidity coverage ratio as of December 31, 2023, was 260.7%, down from 281.3% in 2022, but still well above the regulatory requirement of 100%[36] - The capital base as of December 31, 2023, was HKD 144.233 billion, an increase from HKD 138.676 billion as of December 31, 2022[80] - The total capital ratio rose to 21.4% as of December 31, 2023, from 18.1% as of December 31, 2022[82] Customer and Market Activity - Non-Hong Kong resident account openings increased by 342% year-on-year, driven by the bank's focus on expanding its Greater Bay Area business[11] - The number of affluent clients grew by 17%, with new private banking account openings rising by 116%[15] - Monthly active users of mobile wealth management services increased by 16% year-over-year, and retail transactions conducted digitally surged by 115%[43] - The bank opened six cross-border wealth management centers in major cities in the Greater Bay Area, with plans to open a seventh center in Guangzhou in January 2024[41] Sustainable Development - The bank aims to achieve net-zero carbon emissions by 2030 and has received a gold certification from the International WELL Building Institute[7] - The bank launched sustainable financing products to assist clients in enhancing their social and environmental performance[7] - The bank has actively provided sustainable development-linked loans to assist clients in transitioning to a low-carbon economy[46] Regulatory and Governance - The bank has fully complied with the corporate governance principles and codes as per the Hong Kong Stock Exchange's listing rules for the year 2023[107] - The board of directors includes independent non-executive directors and non-executive directors, ensuring a diverse governance structure[108] - The bank has established a regulatory disclosure section on its website to comply with banking disclosure regulations[110] Credit and Risk Management - The expected credit loss decreased by HKD 1.446 billion to HKD 6.248 billion, indicating a net reversal of HKD 1.071 billion in the first two phases of risk[22] - Total impaired loans increased from HKD 24.2 billion at the end of 2022 to HKD 24.7 billion at the end of 2023, reflecting downgrades in certain impaired corporate loans[28] - The total expected credit loss provisions for the year included a net remeasurement of expected credit losses of HKD 13.568 million[71] Future Outlook - The bank plans to continue investing in technology and data analytics to enhance service standards and customer experience[21] - Forward-looking statements may involve significant assumptions and uncertainties, and actual results may differ materially from those projected[111] - The bank does not undertake any obligation to update or revise forward-looking statements based on changes in management's beliefs or expectations[111]

Financial Performance - Net operating income before expected credit loss changes increased by 29% year-on-year to HKD 19,940 million[2]. - Profit attributable to shareholders rose by 79% year-on-year to HKD 9,827 million[2]. - Profit before tax increased by 71% year-on-year to HKD 10.961 billion, while profit attributable to shareholders rose by 79% to HKD 9.827 billion, and earnings per share increased by 83% to HKD 4.99[20]. - The company reported a net profit of HKD 9,822 million for the six months ending June 30, 2023, compared to HKD 5,497 million for the same period in 2022, representing an increase of 78.5%[145]. - Total operating income for the first half of 2023 reached HKD 18,016 million, up 35.5% from HKD 13,309 million in the first half of 2022[143]. Income and Revenue Growth - Net interest income recorded a strong growth, with net interest margin increasing by 62 basis points to 2.09%[8]. - Non-interest income increased by 55%, driven by strong performance in equity-related wealth sales and new revenue sources from structured products[13]. - Wealth management business revenue increased by 10% year-on-year and 40% compared to the second half of the previous year[8]. - Wealth management and personal banking business pre-tax profit increased by 100% to HKD 7.043 billion, driven by a 68% growth in net interest income[32]. - The company reported a net service fee income of HKD 2,666 million, slightly up from HKD 2,746 million in the same period of 2022[143]. Customer and Market Engagement - Wealth management and personal banking services saw a 25% year-on-year increase in the number of high-end, mass-market, and emerging affluent customers[11]. - Digital service usage among new customers reached 98%, with active users of mobile wealth management and digital banking growing by 59% and 22% year-on-year, respectively[12]. - The number of new SME clients increased by 15% year-on-year, with new mainland clients more than doubling compared to the previous year[12]. - The wealthy customer base increased by 25% year-on-year, with the establishment of four cross-border wealth management centers in the Greater Bay Area[33]. Capital and Liquidity Management - The capital adequacy ratio improved, with the common equity tier 1 capital ratio at 16.8%, up from 15.2%[2]. - The liquidity coverage ratio decreased to 230.6% from 281.3% year-on-year[2]. - Customer deposits decreased by 8%, but the liquidity coverage ratio stood at 230.6%, significantly above the regulatory requirement of 100%[15]. - The bank's common equity tier 1 capital ratio was 16.8%, the tier 1 capital ratio was 18.5%, and the total capital ratio was 20.0% as of June 30, 2023[16]. Risk Management and Economic Outlook - The company continues to monitor risks in the commercial real estate sector, maintaining a cautious approach due to ongoing economic uncertainties[26]. - The company is committed to investing in IT systems and service resilience to support business operations and mitigate potential disruptions[42]. - The company has identified major macro-financial risks, including rising inflation and geopolitical tensions, as significant downside risks to the economic outlook[67]. - The expected credit loss estimates involve significant judgments and assumptions, particularly in light of rapidly changing economic conditions and the distribution of economic outlooks[79]. Sustainability and Digital Initiatives - The company aims to achieve net-zero carbon emissions by 2030 and has received recognition for its sustainable development efforts[6]. - The company is actively involved in the digital currency pilot program, with three use cases selected for the Hong Kong Monetary Authority's digital Hong Kong dollar initiative[4]. - The company launched Hong Kong's first NFT wallet, HS3, and introduced a low-carbon themed A-share ETF[9]. - The company has been recognized as one of the top 1% in the S&P Global 2022 ESG ratings for Chinese enterprises[6]. Dividends and Shareholder Returns - The company announced a second interim dividend of HKD 1.10 per share, totaling HKD 2.20 per share for the first half of 2023[10]. - The company declared dividends totaling HKD 5,927 million, which includes HKD 3,824 million from the fourth interim dividend of 2022 and HKD 2,103 million from the first interim dividend of 2023[149]. Operational Efficiency - Operating expenses rose by HKD 340 million, or 5%, to HKD 7.156 billion, reflecting continued investment in technology and increased marketing expenses[27]. - The cost-to-income ratio improved by 8.3 percentage points to 35.9% due to a 29% increase in net operating income before expected credit loss provisions[28]. - The company continues to monitor regulatory compliance and conduct risk related to the transition from LIBOR to alternative benchmarks[53].

Financial Performance - Net operating income for the first half of 2023 reached HKD 19,940 million, a 29.1% increase from HKD 15,409 million in the same period of 2022[3] - Profit attributable to shareholders rose to HKD 9,827 million, up 78.3% from HKD 5,505 million year-on-year[3] - The average return on ordinary shareholders' equity improved to 12.8%, compared to 7.1% in the previous year[3] - Profit before tax increased by 71% year-on-year to HKD 10.961 billion, while profit attributable to shareholders rose by 79% to HKD 9.827 billion[22] - Earnings per share increased by 83% to HKD 4.99, with a return on average ordinary shareholders' equity of 12.8%, up from 7.1% in the same period last year[22] - The company reported a net profit of HKD 9,822 million for the first half of 2023, representing a 78.5% increase from HKD 5,497 million in the same period of 2022[147] - Total comprehensive income for the period was HKD 9,809 million, significantly up from HKD 4,017 million in the previous year[149] Asset and Liability Management - The bank's total assets stood at HKD 1,694,707 million as of June 30, 2023, down from HKD 1,854,446 million at the end of 2022[3] - Customer deposits decreased by 8%, but the liquidity coverage ratio stood at 230.6%, well above the regulatory requirement of 100%[18] - The loan-to-deposit ratio increased to 75.1% as of June 30, 2023, up from 72.4% at the end of 2022[42] - The total liabilities as of June 30, 2023, were HKD 169,809 million, up from HKD 166,741 million at the end of 2022, indicating a rise of 1.3%[145] - The company's total liabilities decreased to HKD 1,531,131 million from HKD 1,694,448 million, a reduction of 9.7%[150] Capital and Risk Management - The bank's common equity tier 1 capital ratio increased to 16.8% from 15.2% year-on-year[3] - Shareholders' equity increased by 2% to HKD 164 billion, reflecting retained earnings growth of 3% after dividend distributions[43] - The total capital ratio was 20.0% as of June 30, 2023, up from 18.1% at the end of 2022[116] - The group continues to monitor and identify risks, with key risks including credit risk, market risk, and regulatory compliance risk[44] - The group is committed to enhancing risk management practices, including third-party risk policies and climate risk assessments[50] Credit Quality and Impairment - Expected credit losses and other credit impairment provisions decreased by 8% year-on-year to HKD 1.924 billion, and decreased by 66% compared to the second half of the previous year[19] - The ratio of total impaired loans to total customer loans increased to 2.85% as of June 30, 2023, compared to 1.92% and 2.56% at the end of June and December 2022, respectively[19] - The expected credit loss provisions related to the third stage increased to HKD 31.91 billion in the first half of 2023, compared to HKD 28.91 billion in the same period of 2022[28] - The expected credit loss coverage ratio for Stage 1 loans was 0.10%, for Stage 2 was 2.99%, and for Stage 3 was 32.63%[67] Revenue Streams - Net interest income grew significantly, with a net interest margin improvement of 62 basis points to 2.09%[10] - Wealth management revenue increased by 10% year-on-year and by 40% compared to the second half of last year[10] - Non-interest income rose by 55%, driven by strong performance in equity-related wealth sales and new revenue from interest rate structured products[16] - Service fee income from credit card services increased by 27%, while service fee income from credit financing and trade decreased by 17% and 33%, respectively[19] Digital Innovation and Sustainability - The bank is actively promoting innovation and has been recognized with the "Outstanding Partnership Award" at the HKMA/HKT Global Innovation Awards 2022/23[5] - The bank aims to achieve net-zero carbon emissions by 2030 and has received recognition for its sustainable development efforts, ranking in the top 1% of S&P Global's 2022 ESG ratings for Chinese enterprises[8] - The bank plans to launch two digital Hong Kong dollar simulation tests in Q3 2023 as part of its central bank digital currency initiatives[5] - The bank is developing more sustainable financial products and services to meet increasing customer demand, diversifying its loan portfolio[21] Employee and Operational Adjustments - The number of full-time employees decreased from 9,123 on June 30, 2022, to 8,630 on June 30, 2023, reflecting operational adjustments[30] - Operating expenses increased by 5% year-on-year to HKD 7.156 billion, while the bank continues to focus on cost control[19] - The company continues to invest in IT systems and service resilience to support various business areas and minimize service disruptions[45] Economic Outlook - As of June 30, 2023, the management confirmed an improvement in the economic outlook for most markets, restoring the weight of the central scenario to the standard 75%[68] - The consensus central scenario predicts a GDP growth rate of 4.5% for Hong Kong and 5.4% for mainland China in 2023, with expectations of a gradual decline in inflation[72] - The unemployment rate is expected to average 3.3% in Hong Kong and 5.2% in mainland China for 2023, with a downward trend anticipated as economic recovery continues[72] - The ongoing Russia-Ukraine conflict has led to significant sanctions and trade restrictions, with the global economic impact stabilizing, but further sanctions could pose regulatory and market risks[52]

Financial Performance - Shareholder profit increased by 79% to HKD 9.827 billion, compared to HKD 5.505 billion in the first half of 2022[1] - Pre-tax profit rose by 71% to HKD 10.961 billion, up from HKD 6.397 billion in the same period last year[1] - Operating profit increased by 67% to HKD 10.858 billion, compared to HKD 6.491 billion in the first half of 2022[1] - Net operating income before expected credit loss changes increased by 29% to HKD 19.940 billion, from HKD 15.409 billion in the previous year[1] - Return on average ordinary shareholders' equity was 12.8%, up from 7.1% in the first half of 2022[1] - Earnings per share rose by 83% to HKD 4.99, compared to HKD 2.73 in the same period last year[1] - The company declared an interim dividend of HKD 1.10 per share, totaling HKD 2.20 per share for the first half of 2023, compared to HKD 1.40 per share in the previous year[1] - The expected credit loss and other credit impairment charges decreased by 8% year-on-year to HKD 1.924 billion, and by 66% compared to the second half of the previous year[18][21] - The average return on common equity increased to 12.8%, up from 7.1% in the same period last year[19] - The total comprehensive income for the period was HKD 9,814 million, which includes a dividend payout of HKD 5,927 million[45] Income and Revenue Growth - Operating income before expected credit loss changes increased by 29% year-on-year, while profit attributable to shareholders rose by 79%[10] - Net interest income showed strong growth, with a net interest margin increase of 62 basis points to 2.09%[10] - Wealth management income grew by 10% year-on-year and increased by 40% compared to the second half of last year[10] - Non-interest income rose by 55%, driven by strong performance in equity-related wealth sales and new income sources from structured products[16] - Total operating income from wealth management and personal banking in the Greater Bay Area increased by 20%[17] - The company recorded a gain of HKD 6.110 billion from financial instruments measured at fair value, compared to a loss of HKD 18.196 billion in the same period last year[24] - Income from insurance business assets and liabilities measured at fair value reached HKD 5.773 billion, a significant recovery from a loss of HKD 18.545 billion in the previous year[24] - The company reported a significant increase in financial instrument income, netting HKD 6,110 million[34] - The bank's service fee income rose to HKD 4,056 million, an increase of 4.7% from HKD 3,873 million in 2022[42] Cost and Efficiency - The cost-to-income ratio improved to 35.9%, compared to 44.2% in the first half of 2022[1] - The cost-to-income ratio improved by 8.3 percentage points year-on-year, now at 35.9%[10] - Operating expenses increased by HKD 340 million, or 5%, to HKD 7.156 billion, primarily due to continued investment in technology and marketing[27] - The bank aims to enhance operational efficiency and customer experience through ongoing investments in technology[22] Customer and Market Growth - The number of high-end, mass-market, and emerging affluent clients increased by 25% year-on-year[13] - Digital service usage among new customers reached 98%, with active users of mobile finance and digital banking growing by 59% and 22% respectively[15] - The affluent customer base grew by 25% year-on-year, supported by enhanced customer programs and promotional activities[36] - Monthly active users of mobile wealth management services increased by 16% year-on-year, with retail transactions conducted digitally rising by 173%[38] Risk and Credit Quality - The expected credit loss provisions decreased by HKD 1.76 billion to HKD 19.24 billion, reflecting a favorable change in economic outlook and a reduction in total loan balances[22] - The ratio of total impaired loans to total customer loans increased to 2.85% as of June 30, 2023, compared to 1.92% and 2.56% at the end of June and December 2022, respectively[18] - Total impaired loans increased by HKD 1.7 billion to HKD 25.9 billion, with the impaired loan ratio rising to 2.85% from 2.56% at the end of 2022[27] - The expected credit loss ratio on total customer loans increased to 1.59% as of June 30, 2023, compared to 1.42% at the end of 2022[64] Capital and Liquidity - As of June 30, 2023, the common equity tier 1 capital ratio was 16.8%, up from 15.2% at the end of 2022[1] - The liquidity coverage ratio stood at 230.6%, significantly above the regulatory requirement of 100%[18] - The net stable funding ratio was 161.4% as of June 30, 2023, significantly above the regulatory requirement of 100%[32] - The total capital ratio as of June 30, 2023, was 20.0%, up from 18.1% in December 2022[76] Strategic Initiatives - The bank aims to achieve net-zero carbon emissions by 2030 and has launched sustainable finance solutions to assist clients in transitioning to a low-carbon economy[8] - The bank is set to open six cross-border wealth management centers in major cities in the Greater Bay Area, enhancing its service offerings and customer base[20] - The bank launched a new +FUN Dollars credit card rewards program and a simplified mobile wealth management app to enhance customer experience and attract new business[20] - The bank's strategy focuses on strengthening customer relationships and promoting deposit growth amid competitive market conditions[36] Regulatory and Governance - The company adhered to the corporate governance guidelines set by the Hong Kong Monetary Authority and complied with the majority of the best practices outlined in the Corporate Governance Code as of June 30, 2023[101] - The board of directors consists of 10 members, including 6 independent non-executive directors and 4 non-executive directors as of August 1, 2023[102] - The mid-year report for 2023 will be published on the company's website and sent to shareholders by the end of August 2023[103]

Financial Performance - The bank reported a profit attributable to shareholders of HKD 33,972 million for 2022, a 2.4% increase from HKD 33,182 million in 2021[12]. - Earnings per share fell to HKD 4.95 in 2022, down from HKD 6.93 in 2021, reflecting a decrease of 28.5%[12]. - Shareholder profit decreased by 27% year-on-year due to adverse market conditions affecting the life insurance investment portfolio, with a negative adjustment of HKD 3.1 billion[25]. - Pre-tax profit decreased by 30% to HKD 11.44 billion, with earnings per share down 29% to HKD 4.95[32]. - The bank's profit attributable to shareholders increased by 16% in the second half of 2022 compared to the first half, reflecting positive impacts from the bank's actions[33]. Asset and Capital Management - The bank's total assets reached HKD 1,893,805 million, up from HKD 1,820,185 million in 2021, representing a growth of 4%[12]. - The bank maintained a common equity tier 1 capital ratio of 15.2%, down from 15.9% in 2021, indicating a slight decline in capital strength[13]. - As of December 31, 2022, the bank's Common Equity Tier 1 capital ratio was 15.2%, Tier 1 capital ratio was 16.8%, and total capital ratio was 18.1%[33]. - The bank's equity remained stable at HKD 183.9 billion, with a slight decrease in total reserves[91]. Income and Revenue Streams - Net interest income rose by 35%, with a net interest margin increase of 48 basis points to 2.00%[25]. - Non-interest income grew by 31%, driven by a doubling of revenue from foreign exchange and options trading[30]. - Operating income, excluding expected credit loss changes, grew by 12% year-on-year, indicating positive effects from long-term business transformation strategies[25]. - The bank's total operating income before expected credit loss changes increased by 2% to HKD 339.72 billion[32]. - The board declared a fourth interim dividend of HKD 2.00 per share, totaling HKD 4.10 per share for the year, representing 77% of profit attributable to shareholders[26]. Risk Management and Credit Losses - The bank's expected credit loss provisions increased significantly by 172% year-on-year, primarily related to risks in the mainland commercial real estate sector[25]. - Expected credit loss provisions increased by HKD 48.19 billion year-on-year, totaling HKD 76.26 billion[32]. - The ratio of expected credit losses to total customer loans rose to 1.42% as of December 31, 2022, compared to 0.69% in 2021[68]. - Total impaired loans increased by HKD 138 billion, reaching HKD 242 billion, with the impaired loan ratio at 2.56% as of December 31, 2022, up from 1.04% in 2021[67]. Customer Engagement and Digital Transformation - The bank serves over 350 million customers, leveraging its extensive network of over 260 service points in Hong Kong and nearly 20 cities in mainland China[10]. - The bank is actively expanding its digital services to enhance customer experience and meet the growing demand for seamless online and offline banking solutions[10]. - The number of target customers in Hong Kong recorded a double-digit growth due to new service offerings and simplified account opening procedures[26]. - Monthly active users of mobile wealth management services rose by 11% year-on-year, while online transactions for deposits, foreign exchange, and loans increased by 98%[80]. - The bank launched over 460 digital innovation services and enhancements in 2022, emphasizing its commitment to digital transformation[80]. Sustainability and Community Initiatives - The bank aims to achieve net-zero carbon emissions in its operations by 2030 and supports the HSBC Group's goal of net-zero emissions in its financing portfolio by 2050[20]. - The bank is committed to supporting community initiatives, focusing on sustainable finance and enhancing financial literacy among the youth[10]. - The bank's green loans and sustainable performance-linked financing saw strong year-on-year growth in Hong Kong[49]. - The company revised its energy policy in December 2022 to gradually phase out coal and is working with clients to transition to cleaner energy alternatives[126]. Economic Outlook and Market Conditions - The Greater Bay Area's GDP is projected to reach USD 2.8 trillion by 2027, growing nearly USD 1 trillion from 2021[16]. - The economic growth forecast for Hong Kong and mainland China is expected to improve in 2023, with GDP growth projected at 2.7% over the next five years, higher than the average growth rate prior to the pandemic[163]. - Geopolitical risks, including the ongoing Russia-Ukraine conflict, continue to pose significant challenges to the economic outlook, impacting credit risk assessments[162]. - The unemployment rate in Hong Kong is forecasted to average 3.4% from 2023 to 2027, compared to 5.0% for mainland China[164].

Financial Performance - Hang Seng Bank reported a net operating income of HKD 33,972 million for 2022, an increase from HKD 33,182 million in 2021, representing a growth of 2.4%[5] - The bank's operating profit decreased to HKD 11,557 million in 2022, down 29% from HKD 16,231 million in 2021[5] - Profit attributable to shareholders fell to HKD 10,165 million, a decline of 27% compared to HKD 13,960 million in the previous year[5] - The average return on ordinary shareholders' equity was 5.5% in 2022, down from 7.7% in 2021[5] - Total assets increased by 4% to HKD 1,893,805 million as of December 31, 2022, compared to HKD 1,820,185 million in 2021[5] - The bank's cost-to-income ratio increased to 43.5% in 2022, compared to 42.6% in 2021, reflecting rising operational costs[5] - The bank's tier 1 capital ratio was 15.2% in 2022, down from 15.9% in 2021, indicating a slight decrease in capital adequacy[5] - Shareholder profit decreased by 27% year-on-year, reflecting the challenging operating environment due to the pandemic and geopolitical tensions[18] - Total operating income, excluding expected credit loss changes, increased by 2% to HKD 33.972 billion, with a 27% increase in the second half compared to the first half of the previous year[25] Liquidity and Capital Management - The bank's liquidity coverage ratio improved to 281.3% in 2022, up from 192.7% in 2021, indicating stronger liquidity management[5] - Customer deposits increased by HKD 50 billion, or 4%, to HKD 1,389 billion, driven by growth in time deposits despite a decrease in current and savings accounts[29] - The loan-to-deposit ratio decreased from 74.5% at the end of 2021 to 67.1% at the end of 2022[75] - As of December 31, 2022, shareholders' equity stood at HKD 184 billion, remaining roughly stable compared to the end of 2021[77] Credit Risk and Provisions - The company reported a significant increase in expected credit loss provisions, rising by 172% year-on-year, primarily related to risks in the mainland commercial real estate sector[18] - Expected credit loss provisions increased by HKD 4.819 billion year-on-year to HKD 7.626 billion, with the ratio of total impaired loans to total customer loans at 2.56%[26] - Total impaired loans increased by HKD 13.8 billion to HKD 24.2 billion, with the impaired loan ratio to total customer loans rising to 2.56% from 1.04% in 2021[52] - The expected credit loss ratio to total customer loans increased to 1.42% from 0.69% in 2021[52] - The expected credit loss provision for personal loans was 0.06%, while for corporate and commercial loans it was 0.12%[132] Business Segments and Growth - The bank's asset management business grew by 75% year-on-year, bolstered by the appointment as the new manager of the largest ETF in Hong Kong[31] - The number of target customers in wealth management and personal banking increased by 16% year-on-year, with customer loans rising by 2% and customer deposits growing by 6%[20] - Net premium income increased by 44% year-on-year, with digital policy sales rising by 135% and active users of the Hang Seng Olive health management app growing by 29%[21] - The commercial banking business reported a net operating income of HKD 9.625 billion, an increase of 8% year-on-year, while operating profit before tax decreased by 81% to HKD 775 million[34] Digital Transformation and Innovation - Digital transformation remains a key strategy, with over 460 digital innovation services launched in 2022, including mobile ticketing and green receipt services[32] - The company is actively participating in digital currency initiatives and has launched various fintech services, including mobile ticketing and US stock-linked investment services[19] - Monthly active users of mobile wealth management services increased by 11% year-on-year, demonstrating enhanced customer engagement[32] Risk Management - The company emphasizes a robust risk management culture, with all employees responsible for risk management and the board holding ultimate accountability[78] - The risk management framework includes a three-line defense model to support risk management efforts across the organization[81] - The company actively manages climate-related risks and integrates them into internal and client risk management considerations[78] - The risk management committee oversees the stress testing program, with results reported to the Risk Management Meeting and the Board[92] Economic Outlook and Challenges - The company acknowledges significant uncertainty in economic forecasts, particularly due to ongoing geopolitical risks such as the Russia-Ukraine conflict and U.S.-China tensions[143] - The expected credit loss estimation involves significant judgment and estimation, utilizing various economic forecasts and external predictions[142] - The company anticipates that fiscal support related to COVID-19 will diminish as economic activity restrictions are lifted, impacting future fiscal expenditures[144] - The ongoing geopolitical risks include the escalation of the Russia-Ukraine war and long-term tensions between the US and China, which may impact market sentiment and global economic activity[149] Sustainability and ESG Initiatives - The company aims to achieve net-zero carbon emissions in its operations by 2030 and supports the group’s goal of net-zero emissions in its financing portfolio by 2050[15] - The company has established a dedicated task force to oversee climate-related risk management and is actively communicating with stakeholders regarding these risks[106] - The company is committed to enhancing its climate risk management capabilities across four key areas: regulatory compliance, risk management, stress testing, and information disclosure[106]