Financial Performance - Net profit attributable to shareholders decreased by 33% to HKD 9.143 billion, with earnings per share down 34% to HKD 4.64[7]. - Operating income before expected credit loss changes decreased to HKD 19.187 billion from HKD 22.409 billion, a decline of approximately 14%[4]. - The average return on ordinary shareholders' equity was 10.7%, down from 17.0% in the previous year[7]. - Operating income decreased by 20% to HKD 17.427 billion[20]. - Operating profit fell by 28% to HKD 11.134 billion, with a 20% decline before expected credit loss adjustments[20]. - Total operating income decreased to HKD 27,259 million for the half-year ended June 30, 2020, down 19% from HKD 33,800 million in the same period of 2019[31]. - Profit attributable to shareholders decreased by 33% to HKD 9,143 million, down from HKD 13,656 million year-on-year[31]. - Non-interest income dropped by 33% to HKD 4.395 billion, with net service fee income down by 9%[22]. - Wealth management income dropped by 38%, primarily due to weak customer trading activity[32]. - The company’s pre-tax profit from wealth management and personal banking decreased by 33% to HKD 55.57 billion[57]. Asset and Capital Management - Total assets increased to HKD 1,732.021 billion from HKD 1,676.991 billion, reflecting a growth of approximately 3.3%[4]. - The common equity tier 1 capital ratio was 16.3%, down from 16.9% at the end of 2019[26]. - Shareholders' equity decreased by HKD 3 billion, or 2%, to HKD 176 billion compared to the end of 2019[71]. - The liquidity coverage ratio was 193.8%, down from 205.9%[4]. - The average liquidity coverage ratio as of June 30, 2020, was 198.0%, compared to 181.6% as of March 31, 2020[166]. - The average stable funding ratio as of June 30, 2020, was 151.0%, up from 146.0% as of March 31, 2020[168]. Credit Risk and Provisions - Expected credit loss provisions increased to HKD 1.76 billion from HKD 0.51 billion year-on-year, reflecting the impact of the pandemic[22]. - The expected credit loss provision for customer loans at amortized cost was $4,551 million as of June 30, 2020, up from $3,513 million at the end of 2019, indicating a rise of about 29.5%[100]. - The total expected credit loss across all financial instruments was $5,044 million as of June 30, 2020, compared to $3,754 million at the end of 2019, indicating an increase of approximately 34.2%[100]. - The expected credit loss for corporate and commercial loans was $2,036 million, with a coverage ratio of 0.35%[108]. - The expected credit loss for personal loans was $1,391 million, with a coverage ratio of 0.41%[108]. Economic Outlook and Market Conditions - Economic outlook predicts a contraction of 4% to 7% for Hong Kong's economy in 2020 due to the impact of the COVID-19 pandemic[8]. - The global GDP is expected to contract by -3.9% in 2020, followed by a recovery to 4.8% in 2021, indicating a V-shaped recovery[115]. - Unemployment rates in major markets are projected to rise significantly in 2020, with an average rate of 4.6% in Hong Kong and 4.5% in mainland China[118]. - The average growth rate of local GDP in Hong Kong is projected to be -4.8% in 2020 and 4.2% in 2021, while mainland China is expected to grow by 1.4% in 2020 and 8.1% in 2021[118]. Operational Resilience and Technology Investment - The company continues to invest in technology and employee development to enhance customer service and operational resilience[6]. - Approximately 210 new digital innovation services and features were launched in the first half of the year, significantly exceeding the 150 launched in the entire year of 2019[16]. - The company plans to continue investing in technology, new markets, and new customer segments to support long-term growth[31]. - The bank has implemented a business continuity plan, maintaining service levels despite increased remote work arrangements, with no significant impact on third-party service providers[84]. Customer Support and Relief Measures - The company provided temporary relief measures for customers affected by the COVID-19 pandemic, assisting clients in Hong Kong, China, and Macau[156]. - The group implemented various relief measures for personal customers affected by the COVID-19 pandemic, including a six-month principal repayment deferral for mortgage loans[161]. - The customer relief program for wholesale loans included 1.6 thousand customers, with a total loan withdrawal amount of HKD 78,777 million, accounting for 12.9% of total wholesale loans of HKD 611,456 million[157]. Risk Management and Compliance - The bank is actively managing risks related to the COVID-19 pandemic and its impact on customers and operations[74]. - The bank continues to closely monitor the evolving situation, particularly in light of geopolitical tensions and their effects on the business environment in Hong Kong[86]. - The company has developed a global method to incorporate forward economic guidance into expected credit loss calculations, affecting both probability of default (PD) and loss given default (LGD) estimates[128]. - The company’s credit risk management includes a breakdown of loans into three stages, with 755,265 million in Stage 1, 199,706 million in Stage 2, and 3,029 million in Stage 3[151].

Financial Performance - Profit attributable to shareholders fell by 33% to HKD 9,143 million, with earnings per share decreasing by 34% to HKD 4.64[6]. - The average return on ordinary shareholders' equity was 10.7%, down from 17.0% in 2019[6]. - Operating profit fell by 28% to HKD 11,134 million, with a 20% decline before expected credit loss adjustments[11]. - Total operating income for the first half of 2020 was HKD 27,259 million, a decrease of 19% compared to HKD 33,800 million in the same period of 2019[16]. - The company reported a net loss of HKD 4.28 billion from property revaluation, compared to a net gain of HKD 1.87 billion in the same period last year[27]. - The total comprehensive income for the first half of 2020 was HKD 7,203 million, a decrease of 54.0% from HKD 15,655 million in the same period of 2019[121]. Income and Revenue - Net interest income decreased by 7% to HKD 14.792 billion, down HKD 1.061 billion from HKD 15.853 billion in the same period last year[11]. - Non-interest income dropped by 33% to HKD 4.395 billion[11]. - Wealth management business revenue decreased by 38% due to weak customer trading activity[17]. - The net service fee income decreased by HKD 310 million, or 9%, to HKD 3,175 million, with credit card service fee income down 26%[20]. - The company’s cost-to-income ratio was 32.8%, lower than the local industry average[12]. Credit Loss Provisions - Expected credit loss provisions increased to HKD 1.76 billion from HKD 510 million in the same period last year[12]. - The total impaired loans increased by HKD 958 million, or 46%, to HKD 3,031 million, with an impaired loan ratio of 0.32% as of June 30, 2020[25]. - The expected credit loss provision for the year was recorded as a total of 1,780 million, reflecting a net change in expected credit losses[77]. - The expected credit loss provisions increased significantly to 1,760 million for the six months ended June 30, 2020, compared to 510 million in the same period of 2019, indicating a rise of 245.1%[143]. Assets and Liabilities - Total assets increased to HKD 1,732,021 million from HKD 1,676,991 million, reflecting a growth of 3.3%[5]. - Total liabilities as of June 30, 2020, were HKD 1,555,906 million, compared to HKD 1,498,074 million at the end of 2019, marking an increase of around 3.8%[122]. - Customer loans (net of expected credit loss provisions) rose by HKD 11 billion, or 1%, to HKD 953 billion[36]. - Financial investments increased by HKD 56 billion, or 12%, to HKD 518 billion, reflecting a reallocation of surplus funds[36]. Dividends and Shareholder Returns - The bank declared an interim dividend of HKD 1.90 per share, down from HKD 2.80 in the previous year[6]. - The total dividend for the first half of 2020 was HKD 1.90 per share, down from HKD 2.80 per share in the first half of 2019, which is a decrease of about 32.1%[147]. - The company aims to maintain a stable dividend policy, considering profitability, regulatory requirements, and business opportunities[116]. Economic Outlook and Market Conditions - Economic outlook predicts a contraction of 4% to 7% for Hong Kong's economy in 2020 due to the pandemic[7]. - The COVID-19 pandemic has led to a deterioration in local GDP, with increased expected credit losses particularly affecting sectors such as oil and gas, transportation, retail, and dining[42]. - The expected global GDP contraction for 2020 is projected at -3.9%, followed by a strong recovery of 4.8% in 2021[60]. Risk Management - The bank's risk management strategy remains consistent, focusing on credit risk, liquidity risk, and market risk[38]. - The company continues to monitor market conditions closely and regularly reviews its credit portfolio to identify and mitigate potential risks[25]. - The company has implemented business continuity plans and maintained service level agreements despite increased remote work arrangements[43]. Digital Innovation and Customer Engagement - The company launched approximately 210 new digital innovation services and enhancements in the first half of the year, exceeding the 150 launched in the entire previous year[10]. - The number of registered personal online banking users and active users of the personal mobile finance app increased by one-third compared to the same period last year[10]. - Active users of the personal mobile banking app increased by 47% year-on-year, reflecting strong digital service adoption during the COVID-19 pandemic[32]. Regulatory and Compliance - The company is closely monitoring regulatory changes and assessing their impact on capital requirements, particularly concerning Basel III reforms[110]. - The auditor issued an unqualified opinion on the statutory financial statements as of December 31, 2019, without any matters to draw attention to[196]. - The financial statements include a consolidated balance sheet and income statement for the six months ended June 30, 2020, in compliance with Hong Kong Accounting Standards[196].

Financial Performance - The profit attributable to shareholders increased by 3% to HKD 24.84 billion, with earnings per share rising by 2% to HKD 12.77[27]. - The average return on ordinary shareholders' equity was 15.2%, down from 16.0% in 2018[27]. - The average return on total assets was 1.5%, compared to 1.6% in the previous year[27]. - The bank's net operating income before expected credit loss changes increased by 6% to HKD 43.514 billion in 2019, while operating profit rose by 2% to HKD 28.610 billion[38]. - The bank's net interest income increased by 7% to HKD 32.255 billion, driven by a 7% rise in average earning assets and improved deposit spreads[38]. - Non-interest income grew by 1% to HKD 11.259 billion, supported by new and optimized retirement and medical protection products[38]. - Total operating income for the year was HKD 63.341 billion, up from HKD 55.432 billion in 2018[88]. - Operating profit increased by 2% to HKD 28.610 billion, with profit attributable to shareholders rising by 3% to HKD 24.840 billion[89]. Asset and Equity Growth - The total assets as of December 31, 2019, amounted to HKD 1,676.99 billion, an increase from HKD 1,571.30 billion in 2018[9]. - The bank's total equity reached HKD 178.81 billion, up from HKD 162.08 billion in 2018[9]. - Shareholders' equity increased by HKD 17 billion, or 10%, to HKD 179 billion, with retained earnings rising by HKD 10 billion, or 8%[150]. - The bank's average interest-earning assets for the bank were HKD 1,422.968 billion, compared to HKD 1,328.533 billion in 2018[97]. Customer Deposits and Loans - Customer deposits increased by 5% year-on-year, reaching HKD 1,249.8 billion[60]. - Total customer loans grew by 8%, amounting to HKD 946.4 billion[60]. - Customer deposits increased by HKD 59 billion, or 5%, to HKD 1,250 billion, with a loan-to-deposit ratio of 75.4% as of December 31, 2019[146]. - The bank's mortgage loan balance grew by 11% year-on-year, with a market share of 16% in new mortgage business, ranking among the top three in Hong Kong[70]. Cost and Efficiency - The cost-to-income ratio for 2019 was 30.0%, compared to 29.5% in 2018[11]. - The bank's cost-to-income ratio was 30.0%, remaining one of the lowest in the industry despite a 7% increase in operating expenses to HKD 13.057 billion[39]. - Operating expenses rose by HKD 8.89 billion, or 7%, to HKD 130.57 billion, reflecting continued investment in employees, technology, and operations[115]. Risk Management - The bank's risk management approach emphasizes prudent risk levels to ensure sustainable growth while protecting stakeholders[154]. - The bank employs a comprehensive risk management framework to monitor and manage significant financial and non-financial risks[159]. - The risk management culture is reinforced by the bank's values, ensuring employee behavior aligns with risk tolerance levels[160]. - The board is ultimately responsible for effective risk management and approving the group's risk tolerance levels[165]. - The bank conducts operational risk self-assessments for new services and products before their launch[166]. - The group has implemented a comprehensive stress testing program to assess capital strength and resilience against external shocks, supported by a dedicated team and infrastructure[177]. Economic Environment - Hong Kong's economy contracted by 1.2% in 2019, following a growth of 2.9% in 2018, with expectations of moderate contraction in 2020 due to external and local factors[28]. - Mainland China's GDP growth slowed to 6.1% in 2019 from 6.7% in 2018, with further slowdown anticipated in 2020 due to trade activity decline and the impact of the coronavirus outbreak[29]. - The economic outlook for Hong Kong anticipates a technical recession in the second half of 2019, with GDP expected to record its first annual negative growth since 2009[183]. Digital Innovation and Customer Service - The bank launched over 100 digital innovations and service enhancements in 2019, including mobile cash withdrawal services at ATMs[33]. - The bank is focusing on digital innovation to enhance customer service and operational efficiency[42]. - The company continues to enhance digital services and physical service points to improve customer experience and satisfaction[133]. COVID-19 Response - The bank has implemented various relief measures for customers facing difficulties due to the COVID-19 pandemic[44]. - The group is actively monitoring the impact of the COVID-19 pandemic on economic conditions, which may affect expected credit loss calculations[182]. - The bank has implemented a continuous operation plan to ensure employee safety and well-being while maintaining the ability to support customers and sustain business operations[183].

Financial Performance - Shareholders' profit increased by 8% to HKD 13.656 billion, with earnings per share rising by 5% to HKD 6.98[4] - Pre-tax profit grew by 7% to HKD 15.894 billion, and net operating income before expected credit loss increased by 9% to HKD 16.071 billion[5] - Operating profit rose by 6% to HKD 15.561 billion, while pre-tax profit increased by 7% to HKD 15.894 billion[10] - Net interest income grew by 11% to HKD 15.853 billion, driven by a 6% increase in average earning assets and improved net interest margin[17] - Non-interest income increased by 2% to HKD 6.556 billion, with wealth management income rising by 7%[10] - The cost-to-income ratio improved to 28.2%, compared to 31.3% in the previous half-year[10] - Total operating income reached HKD 33,800 million, representing a 14.9% growth compared to HKD 29,595 million in the same period last year[93] - Net profit for the period was HKD 13,646 million, an increase of 8.0% from HKD 12,637 million in the prior year[95] Assets and Liabilities - Total assets reached HKD 1,656.652 billion, up from HKD 1,571.297 billion in the previous year[4] - Total liabilities reached HKD 1,483,814 million, up from HKD 1,409,190 million, marking a 5.3% increase[97] - Customer loans (net of expected credit losses) increased by HKD 45 billion, or 5%, to HKD 920 billion, with growth in both personal and property development loans[36] - Customer deposits increased by HKD 49 billion, or 4%, to HKD 1,241 billion, driven by higher growth in time deposits due to rising market interest rates[37] - The bank's equity increased by HKD 11 billion, or 7%, to HKD 173 billion, with retained earnings rising by HKD 4 billion, or 3%[37] Dividends and Shareholder Returns - The company announced an interim dividend of HKD 2.80 per share, an increase from HKD 2.60 per share in the previous year[5] - The company declared dividends totaling HKD 6.883 billion for the fourth interim dividend of 2018 and HKD 2.677 billion for the first interim dividend of 2019[99] - The company declared an interim dividend of HKD 1.40 per share, totaling HKD 2,677 million, an increase from HKD 1.30 per share or HKD 2,485 million in the previous year[127] Credit Quality and Risk Management - Expected credit loss provisions increased by HKD 272 million, representing a 114% rise, totaling HKD 510 million[25] - Total impaired loans decreased by HKD 137 million, or 6%, to HKD 2.023 billion, with the impaired loan ratio remaining stable at 0.22%[25] - The expected credit loss (ECL) provision for customer loans as of June 30, 2019, was HKD 2,908 million, compared to HKD 2,678 million as of December 31, 2018, representing an increase of approximately 8.6%[45] - The company adopted a three-stage model for credit risk assessment, with expected credit loss calculations reflecting changes in default risk over the remaining term of financial instruments[48] - The company regularly reviews economic conditions to determine if adjustments to credit loss provisions are necessary, particularly in light of significant economic changes[48] Technology and Innovation - The company is focusing on integrating online and physical banking services to enhance customer experience[6] - New service offerings include "Hang Seng One Collect" for electronic payment solutions, which has received multiple innovation awards[8] - The bank plans to enhance digital services through collaboration with fintech experts, aiming to innovate banking services[13] Economic Outlook - The company anticipates Hong Kong's GDP growth to be between 1% and 1.5% for 2019, down from 3% in 2018[6] - The bank anticipates a challenging operating environment in the second half of the year due to global economic slowdown and geopolitical uncertainties[12] Employee and Operational Metrics - The number of full-time employees increased to 10,371 as of June 30, 2019, from 10,092 a year earlier[28] - Employee compensation and benefits totaled HKD 3,118 million, up from HKD 2,866 million, reflecting an 8.8% increase[123] - Business and administrative expenses amounted to HKD 6,328 million, compared to HKD 5,722 million, indicating an increase of 10.6%[124] Regulatory Compliance and Governance - The company has complied with all provisions of the Corporate Governance Code and most of the recommended best practices[194] - The company’s audit committee reviewed the interim results for the six months ended June 30, 2019[194] - The company has established various committees, including the Audit Committee chaired by Li Jiaxiang and the Risk Committee chaired by Li Yunlian[197]

Financial Performance - Shareholders' profit increased by 8% to HKD 13.656 billion, with earnings per share rising by 5% to HKD 6.98[7]. - Pre-tax profit grew by 7% to HKD 15.894 billion, and operating income net of expected credit loss changes increased by 9%[10]. - The company reported a net profit attributable to shareholders of HKD 13.656 billion for the first half of 2019, an increase of 8% compared to the same period in 2018[18]. - Total operating income reached HKD 33.8 billion, up from HKD 29.595 billion year-on-year, reflecting a strong growth trajectory[17]. - Operating profit rose by 6% to HKD 15.56 billion, with a pre-provision operating profit increase of 8% to HKD 16.07 billion[13]. - The company achieved a pre-tax profit of HKD 15.894 billion, reflecting a 7% increase from the previous year[18]. - The pre-tax profit for the first half of 2019 was HKD 15,894 million, an increase of 6.9% compared to HKD 14,864 million in the same period of 2018[96]. - Net interest income increased by 11%, reaching HKD 15.85 billion, primarily due to a 6% increase in average earning assets and improved deposit interest margins[13]. Asset and Liability Management - Total assets reached HKD 1,656.652 billion, up from HKD 1,571.297 billion at the end of 2018[6]. - Customer loans reached HKD 919,845 million, an increase of 5.2% from HKD 874,456 million at the end of 2018[91]. - The total liabilities as of June 30, 2019, were 1,483,814 million, compared to 1,409,190 million at the end of 2018, marking an increase of about 5.3%[131]. - The company’s total liabilities increased to HKD 1,483,814 million from HKD 1,409,190 million, reflecting a rise of 5.3%[91]. - The total amount of loans to customers, including loan commitments and financial guarantees, was 1,266,530 million, with an ECL provision of (996) million[52]. Capital and Equity - The bank's capital ratios remained strong, with a common equity tier 1 capital ratio of 16.4%[6]. - The bank's total capital ratio was 20.4%, slightly up from 20.2% at the end of the previous year[14]. - Shareholders' equity increased by HKD 11 billion, or 7%, to HKD 173 billion, with retained earnings rising by HKD 4 billion, or 3%[38]. - The bank's Common Equity Tier 1 Capital ratio decreased to 16.0% after considering the proposed interim dividend for 2019[83]. - The bank's additional Tier 1 capital before and after regulatory deductions was 11,744 million as of June 30, 2019, compared to 6,981 million on December 31, 2018[80]. Income Sources - Non-interest income increased by 2% to HKD 6.56 billion, with wealth management income rising by 7%[13]. - Net service fee income decreased by HKD 504 million, or 13%, to HKD 3.485 billion, with notable declines in retail investment fund income[21]. - Wealth management business income grew by 7%, although insurance-related income was partially offset by declines in securities brokerage and retail investment fund revenues[18]. - Insurance income surged by 51%, supported by improved investment returns and new product launches[32]. Operational Efficiency - The bank's operating expenses rose by 11% to HKD 6.33 billion, reflecting increased investments in technology and services[14]. - The cost-to-income ratio was 28.2%, slightly up from 27.7% in the previous year, indicating a focus on operational efficiency[28]. - The company remains committed to sustainable growth and enhancing the working environment for employees to foster creativity and resilience[16]. Risk Management - The bank continues to enhance its risk management framework, focusing on operational risk management and financial crime risk management capabilities[40]. - The transition from Ibor rates to alternative risk-free rates remains a key area of focus, with significant operational and financial risks associated with this process[41]. - The expected credit loss (ECL) for customer loans as of June 30, 2019, was 2,908 million, compared to 2,678 million as of December 31, 2018, indicating an increase of about 8.6%[46]. Customer Engagement and Digital Services - The bank is focusing on integrating online and physical banking services to enhance customer experience[10]. - The number of personal online banking customers increased by 8%, while active mobile banking users rose by 40%[33]. - The company launched new digital services and enhanced existing ones to improve customer experience[34]. Corporate Governance - The company maintained high standards of corporate governance, complying with all provisions of the Corporate Governance Code and most recommended best practices[190]. - The company confirmed compliance with its own securities trading code by all directors during the reporting period[175]. - Changes in director information were disclosed, including resignations and new appointments, ensuring transparency in governance[176]. Shareholder Communication - The company emphasizes the importance of shareholder engagement and communication[197]. - Shareholders can contact the company via email for any inquiries regarding their communication preferences[197]. - The interim report reflects the company's ongoing commitment to transparency[197].

Financial Performance - The company's profit attributable to shareholders for the year ended December 31, 2018, was HKD 24,211 million, a 21% increase from HKD 20,018 million in 2017[9]. - The pre-tax profit for 2018 was HKD 28,432 million, up from HKD 23,674 million in 2017, representing a growth of 20%[9]. - The basic earnings per share for 2018 was HKD 12.48, compared to HKD 10.30 in 2017, marking a 21.2% increase[9]. - Shareholder profit increased by 21% to HKD 24.211 billion, with earnings per share rising to HKD 12.48, also a 21% increase[20]. - Operating profit rose by 19% to HKD 27.947 billion, while pre-tax profit increased by 20% to HKD 28.432 billion[24]. - Total operating income for 2018 was HKD 55.43 billion, up from HKD 50.08 billion in 2017, representing an increase of 10%[51]. - Profit attributable to shareholders rose by HKD 4.19 billion, or 21%, to HKD 24.21 billion, while pre-tax profit increased by HKD 4.76 billion, or 20%, to HKD 28.43 billion[51]. Asset and Capital Management - The total assets as of December 31, 2018, reached HKD 1,571,297 million, compared to HKD 1,478,418 million in 2017, indicating an increase of 6.3%[9]. - The total capital ratio for 2018 was 20.2%, slightly up from 20.1% in 2017, indicating stable capital management[9]. - The bank's common equity tier 1 capital ratio stood at 16.6% as of December 31, 2018, maintaining strong capital strength[24]. - The bank issued HKD 6.981 billion in perpetual capital instruments, contributing to its capital base under Basel III[85]. - The bank's retained earnings increased by HKD 10 billion, or 9%, reflecting profits after the distribution of the mid-year dividend[84]. - The bank's total equity increased by HKD 10 billion, or 7%, to HKD 162.1 billion as of December 31, 2018[84]. Operational Efficiency - The cost-to-income ratio improved to 29.5% in 2018 from 30.5% in 2017, showing enhanced operational efficiency[9]. - The average return on equity for ordinary shareholders was 16.0%, up from 14.2% in 2017, while average return on total assets increased to 1.6% from 1.4%[20]. - The bank's operations in mainland China showed strong profit growth, driven by increased non-interest income and effective credit quality management[23]. Customer Engagement and Technology - The bank operates approximately 280 service outlets, serving over 3.5 million customers in Hong Kong[5]. - The bank's investment in technology and operational foundations aims to enhance customer service and maintain market leadership[23]. - New digital services, including a one-stop payment platform, have been launched to provide flexible digital payment solutions for retail and commercial banking customers[23]. - The introduction of AI assistants and a new digital payment service enhances customer engagement and service efficiency[43]. - The bank continues to invest in fintech and digital banking services, enhancing customer engagement through AI assistants and new digital payment platforms[74]. Risk Management - The group employs a range of tools to identify, monitor, and manage risks, including a risk appetite statement that outlines acceptable risk types and amounts for achieving long-term strategic goals[89]. - Key risks associated with banking operations include credit risk, liquidity and financing risk, and market risk, with specific measures in place to manage each type[94]. - The group conducts stress testing and scenario analysis to assess capital plan sensitivity and resilience under adverse macroeconomic events, ensuring capital adequacy[92]. - The group maintains a credit risk management framework that includes approval processes, monitoring, and independent assessments for significant credit exposures[101]. Economic Outlook - Hong Kong's GDP growth forecast for 2019 is 2.7%, down from 3.3% in 2018, reflecting a slowdown in economic conditions[21]. - The future operating environment is expected to remain challenging due to increased market volatility and geopolitical concerns, with global growth anticipated to slow in 2019[24]. - The consensus central scenario anticipates an average GDP growth rate of 2.6% in Hong Kong from 2019 to 2023, slightly above the average growth rate of 2.5% from 2013 to 2017[116]. Credit Quality and Provisions - The expected credit loss provisions were HKD 996 million, slightly down from HKD 1,042 million in 2017[61]. - The ratio of total impaired loans to total customer loans was 0.25% as of December 31, 2018, compared to 0.24% as of December 31, 2017[65]. - The expected credit loss for personal loans was HKD 1,023 million, while for corporate and commercial loans, it was HKD 1,613 million[104]. - The expected credit loss coverage ratio for Stage 2 loans is 44.52%, indicating a strong reserve against potential losses[107]. Liquidity Management - The liquidity coverage ratio was 214.7% in 2018, down from 232.3% in 2017, reflecting changes in liquidity management[9]. - The group maintained a strong liquidity position, with a liquidity coverage ratio requirement of at least 100% effective from January 1, 2019[174]. - The average liquidity coverage ratio for the group in 2018 ranged from 207.0% to 209.6%, with a ratio of 214.7% as of December 31, 2018, compared to 232.3% on December 31, 2017[175]. Market Risk Management - The market risk management framework is supported by risk limits approved by the risk monitoring director, allocated to various business units and legal entities within the group[183]. - The Value at Risk (VaR) is calculated based on a 99% confidence level and a 1-day holding period, with stress testing also incorporated to assess potential losses under extreme market conditions[186][188]. - The average trading VaR for the year was HKD 34 million, compared to HKD 24 million in 2017, indicating an increase of approximately 41.67% year-over-year[191].