Financial Performance - Shareholders' funds decreased to HK$29,520 million in 2022 from HK$30,192 million in 2021[11] - Total deposits increased to HK$202,804 million in 2022 from HK$201,512 million in 2021[11] - Advances to customers (excluding trade bills) decreased to HK$136,530 million in 2022 from HK$144,313 million in 2021[11] - Profit attributable to shareholders decreased to HK$1,171 million in 2022 from HK$1,308 million in 2021[11] - Total dividend distribution increased to HK$364 million in 2022 from HK$339 million in 2021[11] - Basic earnings per share decreased to HK$3.67 in 2022 from HK$4.09 in 2021[11] - Dividends per share increased to HK$1.14 in 2022 from HK$1.06 in 2021[11] - Total assets increased to HK$259,847 million in 2022, up from HK$250,312 million in 2021[12] - Basic earnings per share for 2022 was HK$5.72, compared to HK$4.09 in 2021[12] - Dividends per share (excluding special dividend) rose to HK$3.62 in 2022 from HK$1.06 in 2021[12] - Profit attributable to shareholders decreased by 10% to HK$1,171 million for the year ended 31 December 2022, primarily due to a gain on the termination of the previous insurance distribution agreement and a larger-than-usual impairment charge on the investment in Bank of Chongqing[41][42] - Excluding the two large items, profit attributable to shareholders would have been HK$1,235 million, a decrease of 6%[41][42] - Net interest income grew by 11% due to improved net interest margin and higher balances of interest-earning assets, despite subdued demand in core loan markets[44] - Operating profit before impairment charges of the banking business increased by 61%, largely driven by the gain on the termination of the previous insurance distribution agreement[44] - Excluding the gain on the termination of the insurance distribution agreement, operating profit before impairment increased by 2%, while non-interest income decreased by 27%[44] - Gross premiums written for the insurance business increased by 12%, despite challenging market conditions in Hong Kong and Macau[43] - Credit impairment losses increased by 115% to HK$803 million, primarily due to deteriorating credit quality in the corporate banking sector, especially in mainland China's real estate industry[45] - Retail banking loan balances remained stable, with average loan volume increasing by 4% in 2022 compared to 2021[45] - Net interest margin increased by 13 basis points due to efforts to control funding costs and faster repricing of asset yields compared to deposit costs[45] - Overall loan balances contracted by 5%, mainly driven by a 9% contraction in corporate banking loan balances[45] - Overall loan balances contracted by 5%, driven mainly by a 9% decline in corporate banking loan balances, while retail banking loan balances grew by 4%[46] - Net interest margin increased by 13 basis points due to controlled funding costs and faster asset yield repricing compared to deposit costs[46] - Non-interest income decreased by 27% excluding gains from the termination of an insurance distribution agreement, with FX-related revenues remaining stable but wealth management revenues weakened[47] - Credit impairment losses surged by 115% to HK$803 million, primarily due to exposures in Mainland China's real estate sector[48] - The company's share of net profit from its associate, Bank of Chongqing, decreased to HK$657 million, with a total impairment charge of HK$1,683 million for the year[49][52] - Gross premium income for non-life insurance business increased by 12%, despite poor economic conditions in Hong Kong and Macau[50][53] - The total return of the combined insurance and group investment portfolios was negative 10.6% for the year[50][53] - Dah Sing Bank's Common Equity Tier 1 ratio improved to 15.2%, up 1% from 2021, and its consolidated capital adequacy ratio reached 19.3%[51][54] - Dah Sing Bank maintained a Liquidity Maintenance Ratio of 50.4%, well above the minimum requirement of 25%[51][54] - Operating profit before credit impairment losses increased by 55.0% to HK$3,829.5 million in 2022 compared to 2021[70] - Profit attributable to shareholders decreased by 10.5% to HK$1,171.4 million in 2022[70] - Total assets grew by 1.3% to HK$259,847 million in 2022[70] - Net interest margin improved to 1.85% in 2022 from 1.72% in 2021[74] - Operating income increased by 26.8% to HK$6,826.3 million in 2022[74] - Customer loans decreased by 5.4% to HK$136,530 million in 2022[74] - Total deposits increased by 6.4% to HK$204,021 million in 2022[74] - Cost to income ratio improved to 44.2% in 2022 from 56.1% in 2021[74] - Profit attributable to shareholders decreased by 2.9%, while operating income increased by 26.8% driven by higher net interest income and asset yields[75] - Net fee and commission income surged by 87.8% due to the one-off recognition of unamortised fee from the termination of the HKDA with Tahoe Life[75] - Credit impairment charges increased by 115.1% year-on-year, primarily due to higher provisions for credit losses in the China property developer sector[76] - DSBG's return on shareholders' funds decreased from 5.7% in 2021 to 5.4% in 2022, while the cost-to-income ratio improved from 56.1% to 44.2%[76] - The consolidated Common Equity Tier 1 ratio strengthened to 15.2% in 2022, up from 14.2% in 2021, with an overall capital adequacy ratio of 19.3%[76] - Personal Banking deposits grew mildly in 2022, with VIP Banking customer base achieving double-digit growth[78][82] - Outstanding personal loans increased by 3% compared to the end of 2021, supported by digital platform growth and improved credit approval processes[81] - Digital transaction volume surged by 46% year-on-year, driven by the launch of enhanced e-banking platforms and video banking services[83] - The company completed the digitization of branch network customer processes, achieving a "paperless" banking workflow by the end of 2022[83] - The bank maintained a network of 41 retail branches in Hong Kong, including 27 VIP Banking centers and 11 SME centers as of December 2022[83] - Digital transactions surged by 46% year-on-year by the end of 2022[84] - The company recognized a one-time fee and commission income of HK$1,394 million due to the termination of the HKDA with Tahoe Life, significantly boosting Personal Banking's operating income and net profit[86][88] - Corporate Banking reported a net decrease in loan balances, with shortfalls mainly in trade finance and term loans, partially offset by an increase in syndicated loans[90] - Treasury and Global Markets division's attributable profit increased by 19% to HK$598 million, with net interest income growing by 23% to HK$918 million and net interest margin rising from 0.94% to 1.03%[94][95] - The company completed the digitalization of customer processes across its branch network, achieving a 'paperless' banking process[85] - Corporate Banking's net interest income was slightly lower than the prior year due to a contraction in loan volume, partially offset by an improved deposit margin[91] - Loan impairment charges substantially increased, with higher provisions made largely against exposures to the Mainland real estate sector[91] - The company continued to collaborate with DSB China, enabling corporate customers in China to open Hong Kong bank accounts without traveling across the border[91] - Investment in digital solutions and upgrading the digital banking platform DS-Direct remained a priority, enhancing customer experience[91] - The company was awarded the "Best SME's Partner Award" for the 10th consecutive year and won the Gold Award this year[93] - Treasury revenue increased by HK$14.3 million to HK$100.1 million, with credit impairment charges rising to HK$36.4 million from HK$15.5 million due to a higher credit investment portfolio[96][98] - The average Liquidity Maintenance Ratio for the Treasury improved to 50%, up from 47% in the previous year[99] - Banco Comercial de Macau (BCM) saw a 15.1% year-on-year growth in customer deposits, outperforming the market, while loan balances decreased by 2.4%[102][103] - BCM's net interest income increased by 4.9% compared to 2021, driven by higher Prime Rates and an enlarged treasury portfolio, but non-interest income dropped by 27.2%[104] - BCM's loan impairment charges increased significantly due to additional provisions for a China property developer customer group and other non-performing loans[104] - BCM successfully onboarded a significant number of new-to-bank customers and VIP Banking customers, positioning it well for future opportunities[104] - BCM maintained operational efficiency during COVID-19 disruptions, including branch renovations and the establishment of a Streamlining Task Force[105] - BCM implemented customer-centric initiatives, such as experience exchanges and staff recognitions, resulting in positive staff reception and customer satisfaction[107] - DSB China maintained robust capital levels despite challenging conditions, including city-wide lockdowns and rising interest rates, preparing for economic recovery in 2023[108] - DSB China maintained a net interest margin of 1.8% in 2022, close to the 2021 level, despite challenging market conditions and intensified competition[111][112] - DSB China's loan and deposit balances decreased due to difficult market conditions, leading to a reduction in operating profit compared to 2021[111][112] - DSB China's non-performing loans increased in 2022, driven by higher credit risk in the real estate sector and weaker asset quality across multiple industries[111][112] - DSB China successfully re-established its Shenzhen Branch and became the first Hong Kong-incorporated bank to obtain a dual banking license, supporting future growth in the Greater Bay Area[111][113] - Bank of Chongqing's profit attributable to shareholders increased by 4.4% in 2022, with loan and deposit growth of 10.9% and 13.0% respectively[114][115] - Bank of Chongqing's non-performing loan ratio increased to 1.38% at the end of 2022, compared to 1.30% at the end of 2021, while its non-performing loan coverage ratio decreased to 211% from 274%[114][115] - Bank of Chongqing issued A-share convertible corporate bonds and undated capital bonds in 2022, raising a total of RMB13 billion and RMB4.5 billion respectively to strengthen its capital base[114][115] - The Group's share of Bank of Chongqing's net profit was HK$657 million in 2022, but a total impairment charge of HK$1,683 million was recognized due to a lower Value in Use assessment[116][117] - The Group's general insurance business recorded a net profit of HK$14 million in 2022, down from HK$65 million in 2021, with net insurance premium and other income decreasing to HK$484 million from HK$500 million[120] - The company's general insurance business recorded a 12% year-on-year increase in gross premiums written in 2022, while net premium earned saw a mild decline due to cautious underwriting decisions[121] - The general insurance business incurred an overall investment loss of HK$393 million in 2022, largely recognized as other comprehensive loss, correlating with market performance[121] - The net asset value of the general insurance business dropped by 9% in 2022, following steady growth in the prior two years, primarily due to negative investment returns[124][125] - DSI (Dah Sing Insurance) achieved a 25% growth in topline revenue in 2022, driven by improved operational efficiency and digitalization efforts[128] - DSI maintained a strong solvency ratio of 1,549% in 2022, up from 1,327% in 2021, supporting continued business growth in Hong Kong and Macau[124][125] - MIC (Macau Insurance) reported a solvency ratio of 1,167% in 2022, slightly down from 1,205% in 2021, but remained robust[124] - The company's general insurance business reduced operating expenses by 3% in 2022, despite higher staffing and marketing costs, due to investments in IT platforms and systems[121] - DSI's A.M. Best Financial Strength Rating of "A-" (Excellent) and Long-Term Issuer Credit Rating of "A-" were reaffirmed in 2022, with a stable outlook[130] - Macau general insurance and pension fund operations saw a contraction in premium turnovers due to economic recession and city lockdowns, impacting both operating and investment performance in 2022[131][132] - Gross premiums through agency channels grew by 18% year-on-year despite the recessionary environment[133] - The combined ratio for Macau insurance remained healthy at 91% due to disciplined underwriting and proactive claims management[133] - Macau insurance's solvency ratio was reaffirmed with an "A-" (Excellent) Financial Strength Rating and Long-Term Issuer Credit Rating by A.M. Best[134] - Pension management business saw a 7% contraction in Assets Under Management and a 17% shortfall in net profit due to weaker investment markets[134] - The Group implemented Expected Credit Loss (ECL) models to assess impairment provisions, considering macroeconomic factors and forward-looking elements[138] - The Group strengthened internal controls by establishing dedicated control officers in major divisions and conducting end-to-end process reviews[140] - An internal training program was launched in 2022 to enhance staff awareness on climate risk and green and sustainable banking initiatives[141] - The Group's banking subsidiaries maintained a Common Equity Tier 1 capital base of HK$26,268 million in 2022, up from HK$24,354 million in 2021[142] - The Common Equity Tier 1 capital adequacy ratio increased to 15.2% in 2022 from 14.2% in 2021[142] - The total capital base after deductions rose to HK$33,227 million in 2022, compared to HK$31,106 million in 2021[142] - The liquidity maintenance ratio averaged 50.4% in 2022, up from 46.9% in 2021[142] - The Group's total number of employees increased from 3,014 in 2021 to 3,047 by the end of 2022[149] - The Group launched its first 'Culture Week' in June 2022 to promote its 'Culture & Values'[147] - A culture survey was conducted in October 2022, with encouraging participation and responses[147] - The Group introduced an independent rating for non-financial performance in 2019, in addition to financial performance ratings[148] - The Group provided various support arrangements for employees during the COVID-19 pandemic, including flexible working hours and one-off anti-pandemic subsidies[150] - The Group's Employee Value Proposition (EVP) was rolled out in 2019, with the motto "NOT JUST A BANK, A HOME"[148] - The Board of Directors is responsible for setting and overseeing the objectives and strategies of the Group, approving annual budgets and business plans, and monitoring performance and execution of plans[158] - The Board ensures effective risk governance, internal control systems, and ESG-related strategy and risk management[158] - As of 31 December 2022, the Board comprised 9 Directors and 1 Alternate Director, including Executive Directors, Non-Executive Directors, and Independent Non-Executive Directors to ensure independence and objectivity in decision-making[159] - The Board has delegated day-to-day responsibilities to Management and certain matters to committees, while retaining oversight of key areas such as senior management appointments and major acquisitions or disposals[158] - The Company has applied and complied with the Corporate Governance Code under the Hong Kong Listing Rules, except for code provision F.2.2, as explained in the relevant section[155] - The company has 1 Non-Executive Director (NED) and 5 Independent Non-Executive Directors (INEDs), all of whom have confirmed their independence as required under Rule 3.13 of the Listing Rules[165] - The Chairman and Chief Executive roles are held separately by Mr. David Shou-Yeh Wong and Mr. Hon-Hing Wong (Derek Wong) respectively, ensuring a clear distinction between leadership and day-to-day management[164] - Board meetings are held at least 4 times each year at approximately quarterly intervals, with additional meetings as necessary[165] - The Chairman meets with INEDs annually without the presence of other Directors and management staff to facilitate open and frank discussions[170] - Directors may seek independent professional advice at the company's expense, and such requests will not be unreasonably denied[168] - The company maintains appropriate insurance cover for legal action against its Directors[168] - The governance framework and mechanisms are regularly reviewed to ensure effectiveness in maintaining a strong independent element on the Board[169] - INEDs are selected based on criteria including time commitment, cultural and educational background, professional experience, and qualifications[169] - Dissenting views of Directors on any matters discussed at Board/committees' meetings are properly recorded in the minutes[170] - The company has complied with Rule 3.10(1) and (2) and 3.10A, ensuring a sufficient number of INEDs with appropriate professional qualifications and experience[165] - The Board reviewed and discussed the Corporate Governance Report of 2021 and the Environmental, Social, and Governance (ESG) Report of 2021[171] - Management confirmed the effectiveness of the Group's risk management and internal control systems[171] - The Board reviewed amendments to the Corporate Governance Code and related action items[171] - The Board reviewed changes in the composition of the Board and Board Committees[171] - The Board reviewed the Group's progress in ESG development and strategy[171] - The Company adopted a Directors' Dealing Code, and all Directors confirmed compliance with the Model Code and the Directors' Dealing Code for the year ended 31 December 2022[177] - The Board conducted an annual review of the Board Governance Policy and Procedures, Shareholders Communication Policy, and updated the Board Diversity Policy[176

Financial Performance - Total interest income for the year ended December 31, 2022, was HK$7,007,942 thousand, an increase of 35.3% from HK$5,176,672 thousand in 2021[3] - Net interest income after interest expenses was HK$4,431,408 thousand, up from HK$3,954,225 thousand, reflecting a growth of 12.0%[3] - Service fee and commission income rose to HK$2,431,505 thousand, a significant increase of 72.5% compared to HK$1,407,589 thousand in the previous year[3] - Operating income for the year was HK$7,314,737 thousand, compared to HK$6,014,079 thousand in 2021, marking an increase of 21.6%[3] - The company reported a net profit of HK$1,583,705 thousand for 2022, down 8.7% from HK$1,734,752 thousand in 2021[4] - Basic earnings per share decreased to HK$3.67 from HK$4.09, reflecting a decline of 10.5%[3] - The proposed final dividend for the year is HK$258,856 thousand, compared to HK$233,290 thousand in the previous year, representing an increase of 11.0%[3] Credit and Impairment - Credit impairment losses increased significantly by 116.0% to HK$804,112 thousand from HK$372,305 thousand in 2021[3] - The company reported credit impairment losses of HK$372,305 for the year, reflecting a cautious approach to credit risk management[11] - Credit impairment losses surged by 116% to HKD 840 million, largely due to risks associated with the corporate banking sector and the real estate industry in mainland China[38] - Credit impairment losses amounted to HKD 804,112, with corporate banking facing the highest losses at HKD 468,865[10] - The credit impairment ratio for loans and advances increased to 1.86% in 2022 from 0.97% in 2021, indicating a rise in credit risk[26] Assets and Liabilities - Total assets increased to HKD 259,846,686 thousand in 2022, up from HKD 256,530,989 thousand in 2021, representing a growth of 0.9%[5] - Total liabilities amounted to HKD 222,692,138 thousand, an increase from HKD 218,704,642 thousand, which is a rise of 1.1%[5] - The company's equity totaled HKD 37,154,548 thousand, down from HKD 37,826,347 thousand, indicating a decrease of 1.8%[5] - Total customer loans and advances as of December 31, 2022, amounted to HKD 136,530,235, a decrease of 5.4% from HKD 144,313,339 in 2021[23] - The total amount of other assets after impairment provisions was HKD 5,276,429, down from HKD 6,180,818 in the previous year[23] Operational Highlights - The total operating expenses for the year were HK$3,166,266 thousand, slightly reduced from HK$3,205,522 thousand in 2021, showing a decrease of 1.2%[3] - The total operating income after deducting insurance claims was HKD 6,995,788, reflecting a robust performance across various business segments[10] - The insurance business segment reported an operating income of HKD 152,532, with a net loss from investment properties and other fixed assets adjustments of HKD 64,543[10] - The company plans to enhance its market presence through strategic investments and product offerings in personal and corporate banking sectors[9] Market and Strategic Outlook - Future outlook includes continued focus on expanding overseas banking operations, particularly in Macau and China, to capture growth opportunities[9] - The company anticipates a gradual improvement in economic conditions in its core markets, although customer sentiment remains cautious[40] - The Shenzhen branch is expected to commence full operations within the year, positioning the company as the first non-mainland bank group to operate a branch and subsidiary bank in mainland China[40] - New partnerships and technology initiatives are being implemented to enhance service quality and attract new clients in the general insurance sector[40] Governance and Compliance - The company has adhered to the Corporate Governance Code, except for the provision F.2.2 regarding the attendance of the chairman at the annual general meeting due to COVID-19 restrictions[41] - The company has established a Securities Trading Code for directors, confirming compliance with the Standard Code throughout the year ending December 31, 2022[42] - The Audit Committee has reviewed the accounting standards and practices, including the consolidated financial statements for the year ending December 31, 2022[43] - There were no purchases, sales, or redemptions of the company's listed securities by the company or its subsidiaries during the year ending December 31, 2022[44] Dividend and Shareholder Information - The proposed final dividend for the year 2022 is HKD 0.81 per share, subject to approval at the annual general meeting[35] - Shareholders' profit attributable to the group decreased by 10% to HKD 1.171 billion for the year ended December 31, 2022, primarily due to the termination of the previous insurance distribution agreement and higher impairment provisions related to Chongqing Bank investments[37]

Financial Performance - For the six months ended June 30, 2022, net interest income increased by 3.0% to HK$2,027,699,000 compared to HK$1,968,209,000 in 2021[9]. - Net fee and commission income decreased by 25.2% to HK$475,194,000 from HK$635,574,000 in the previous year[9]. - Operating profit before impairment losses decreased by 20.4% to HK$969,991,000 compared to HK$1,218,130,000 in 2021[9]. - Profit for the period was HK$1,114,736,000, a decrease of 4.5% from HK$1,166,914,000 in the same period last year[11]. - Earnings per share (basic and diluted) decreased to HK$2.61 from HK$2.76 in 2021[9]. - Total comprehensive income for the period, net of tax, was a loss of HK$565,220,000 compared to a profit of HK$1,552,104,000 in the previous year[11]. - Operating expenses decreased by 3.9% to HK$2,766,213,000 from HK$2,878,982,000 in the previous year[9]. - The bank's total operating income net of insurance claims was HK$2,915,987,000, a decrease of 4.3% from HK$3,048,089,000 in the previous year[9]. Asset and Liability Management - Total assets as of June 30, 2022, increased to HKD 262,079,636 thousand, up from HKD 256,530,989 thousand as of December 31, 2021, representing a growth of approximately 2.1%[13]. - Total liabilities increased to HKD 225,138,117 thousand as of June 30, 2022, from HKD 218,704,642 thousand at the end of 2021, marking an increase of about 2.0%[13]. - The equity attributable to the company's shareholders decreased to HKD 29,365,120 thousand from HKD 30,192,382 thousand, a decline of approximately 2.7%[13]. - The company’s cash and balances with banks increased to HKD 22,711,422 thousand, up from HKD 12,791,862 thousand, showing a significant rise of approximately 77.5%[13]. - The total amount of debt securities included HKD 499,058 in treasury bills and HKD 2,318,406 in other treasury bills as of June 30, 2022[59]. Credit and Impairment - Credit impairment losses increased by 4.4% to HK$1,275,629,000 from HK$1,334,919,000 in 2021, reflecting a significant rise of 161.7% in the impairment loss ratio[9]. - New credit impairment losses for the six months ended June 30, 2022, were HKD 305,638 thousand, significantly higher than HKD 116,789 thousand in 2021, marking an increase of 161.5%[41]. - The total amount of recoveries of amounts previously written off was HKD 30,096 thousand in 2022, down from HKD 41,076 thousand in 2021, a decrease of 26.5%[41]. - The total expected credit loss (ECL) allowance was HKD 1,567,111 thousand, a decrease from HKD 1,491,551 thousand at January 1, 2022, representing a change of approximately 5.06%[82]. - The ECL allowance for Stage 3 increased significantly from HKD 547,609 thousand to HKD 756,499 thousand, an increase of around 37.9%[82]. Cash Flow and Liquidity - Cash flows from operating activities showed a significant improvement, with net cash from operating activities reaching HK$5,731,318, compared to a net cash used of HK$2,501,193 in the previous year[20]. - The total cash and cash equivalents at the end of the period increased to HK$21,731,658, up from HK$16,722,848 in 2021, reflecting a strong liquidity position[20]. - The Group's cash and balances with banks included HK$3,564,318 in cash and short-term deposits, slightly down from HK$3,845,125 in the previous year[20]. Market and Operational Strategy - The Group continues to explore opportunities for market expansion and new product development to enhance its competitive position in the financial services sector[24]. - The Group's insurance business includes a variety of insurance products and services offered through wholly-owned subsidiaries in Hong Kong and a 100% owned subsidiary in Macau[152]. - The corporate banking business includes the acceptance of deposits and the advancement of loans to commercial, industrial, and institutional customers, highlighting the Group's focus on business financing[151]. - The treasury and global markets activities primarily involve foreign exchange services and centralized cash management, indicating a strategic emphasis on managing liquidity and risk[151]. Risk Management - The Group focuses on managing various types of risks including credit risk, market risk, interest rate risk, liquidity risk, operational risk, reputation risk, and strategic risk[195]. - The Group's independent Risk Division is responsible for establishing policies and monitoring risk positions, ensuring financial risks are considered in product planning and pricing[199]. - The Group Credit Committee is responsible for approving significant credit limits, while the Credit Management Committee oversees loan and treasury business policies and risk controls[200]. - The Group continuously enhances its risk management capabilities to adapt to changing regulatory requirements and manage credit-related risks and returns confidently[199].

Financial Performance - Shareholders' funds increased to HK$30,192 million in 2021, up from HK$28,386 million in 2020, representing a growth of 6%[9] - Basic earnings per share for 2021 were HK$4.09, compared to HK$3.62 in 2020, reflecting a growth of 13%[9] - Profit attributable to shareholders increased by 13% to HK$1,308 million for the year ended December 31, 2021[40] - The company reported a significant increase in revenue, achieving a total of AUD 1.2 billion, representing a 15% year-over-year growth[20] - Operating profit after credit impairment losses rose by 12.5% to HK$1,989.7 million in 2021[69] - Total operating income for the banking business was HK$5,384.2 million, reflecting a 2.6% increase compared to 2020[69] - Overall operating income grew by 8% year-on-year, supported by robust growth in fee income[82] - The company provided an optimistic outlook, projecting a revenue growth of 10-12% for the next fiscal year[22] Deposits and Loans - Total deposits reached HK$201,512 million in 2021, an increase of 1% from HK$198,027 million in 2020[9] - Advances to customers (excluding trade bills) rose to HK$144,313 million in 2021, compared to HK$137,577 million in 2020, marking a growth of 5%[9] - Customer deposits increased by 3.0% to HK$196,135 million, while total deposits rose by 2.1% to HK$202,725 million[69] - Overall loan growth was 5%, with modest growth in both commercial and retail banking[44] Digital Banking and Technology - The launch of the Dah Sing Mobile Banking App positioned the company as one of Hong Kong's early digital banking players[6] - The company aims to enhance its digital banking services and expand its customer base through strategic initiatives[6] - Active mobile banking users increased by 40% by the end of 2021, with mobile payment transactions rising by 38%[85] - The company is investing AUD 50 million in research and development for new technologies aimed at improving customer experience[26] - The digital flagship branch opened in March 2021 aims to simplify transaction processes and improve customer service[88] - The company is committed to a broader digitalization program, including a paperless branch network to enhance operational efficiency and reduce costs[89] Corporate Governance - The Board of Directors consists of 9 Directors and 1 Alternate Director as of December 31, 2021, ensuring a strong independent element for objective decision-making[164] - The Company emphasizes a clear division of responsibilities between the Chairman and the Chief Executive Officer to maintain a balance of power[165] - The Company has established sound systems of risk management, internal control, and regulatory compliance[159] - The Board monitors the performance and execution of the business plan to ensure effective governance[162] - The Company is committed to maintaining high standards of corporate governance to enhance investor confidence and safeguard stakeholder interests[157] Risk Management and Compliance - The Group conducted a comprehensive review of its Expected Credit Loss (ECL) models at year-end to ensure adequate provisions for credit portfolios[144] - Cybersecurity remains a key focus, with ongoing monitoring and implementation of measures to safeguard against cyber threats[147] - The Group has engaged external consultants to enhance its anti-money laundering (AML) controls and is making progress in adopting Regtech solutions for better risk mitigation[149] - The risk profile of the banking business improved in 2021, resulting in better asset quality metrics compared to 2020[143] Market Expansion and Strategic Initiatives - The company is expanding its market presence in Southeast Asia, targeting a 25% increase in market share within the next two years[24] - The company established Dah Sing Bank (China) to expand its presence in the Greater China market[6] - The establishment of the cross-boundary Wealth Management Connect is expected to enhance Dah Sing Bank (China)'s retail customer base in the Greater Bay Area[118] Insurance Operations - Gross premium income from the insurance business rose by 2% despite challenging market conditions[42] - The net profit for Dah Sing Insurance was HK$65 million in 2021, a decrease from HK$99 million in 2020[125] - The general insurance business recorded a gross premium written increase of 2.1% year-on-year in 2021, while net premium earned experienced a mild decline[127] Employee Management and Development - The total number of employees decreased from 3,079 at the end of 2020 to 3,014 at the end of 2021, a reduction of 2.1% due to changing market conditions[154] - The Group launched various training programs to enhance digital literacy among employees, indicating a focus on technological advancement in HR management[154] - Continuous professional development and training were provided to all directors, covering areas such as corporate governance and macroeconomics[186] Financial Ratios and Capital Adequacy - The consolidated Common Equity Tier 1 ratio strengthened to 14.2% as of December 31, 2021, compared to 13.8% at the end of 2020[74] - The total capital adequacy ratio rose from 17.6% in 2020 to 18.1% in 2021, reflecting enhanced financial stability[150] - The liquidity maintenance ratio averaged 46.9% for the year, slightly down from 47.8% in 2020, demonstrating ongoing liquidity management[150]

Financial Performance - Shareholders' funds increased to HK$28,386 million in 2020, up from HK$26,805 million in 2019, representing a growth of approximately 5.4%[21] - Total deposits reached HK$198,027 million in 2020, an increase from HK$188,866 million in 2019, reflecting a growth of about 4.1%[21] - Profit attributable to shareholders decreased to HK$1,158 million in 2020, down from HK$1,708 million in 2019, indicating a decline of approximately 32.2%[21] - Basic earnings per share fell to HK$3.62 in 2020, compared to HK$5.28 in 2019, representing a decrease of around 31.4%[21] - Total dividend distribution for 2020 was HK$300 million, a significant drop from HK$470 million in 2019, reflecting a reduction of approximately 36.2%[21] - Operating income for the banking business declined by 3% compared to 2019, with net interest income down 9% due to a lower net interest margin[54] - Non-interest income increased by 18%, driven by strong trading income, despite net fee and commission income growing only 3%[56] - Overall loan growth was less than 1%, with modest growth in commercial and retail banking, while trade finance was negatively impacted by a slowdown in international trade[55] - Operating profit before credit impairment losses was HK$2,551.4 million, down 2.6% from HK$2,620.5 million[1] - Operating income fell by 2.6% to HK$5,248.8 million, mainly due to lower net interest income[86] - The cost to income ratio increased to 54.0% from 52.9% in 2019[85] - Credit impairment charges rose by 82% year-on-year, reflecting a more difficult market environment amid the COVID-19 pandemic[88] - The total impairment charge for the year was HK$531 million, an increase of HK$244 million compared to 2019[89] Asset and Capital Management - Total assets grew to HK$254,961 million in 2020, up from HK$250,312 million in 2019, indicating an increase of approximately 1.5%[21] - Common Equity Tier 1 capital increased to HK$22,799 million in 2020 from HK$21,292 million in 2019, representing a growth of 7.1%[137] - The Tier 1 capital rose to HK$23,697 million in 2020, up from HK$22,191 million in 2019, reflecting an increase of 6.8%[137] - The total capital base after deductions reached HK$29,118 million in 2020, compared to HK$28,454 million in 2019, marking a growth of 2.3%[137] - The consolidated capital adequacy level at year-end was 17.6%, down from 17.9% the previous year[64] - As of December 31, 2020, Dah Sing Bank's consolidated Common Equity Tier 1 ratio was 13.8%, slightly up from 13.4% at the end of 2019[64] - The liquidity maintenance ratio increased to 47.8% in 2020, up from 46.4% in 2019, indicating enhanced liquidity management[137] Governance and Leadership - Mr. David Shou-Yeh Wong has been the Chairman since 1987 and has over 55 years of experience in banking and finance[31] - The company has a diverse board with members holding significant positions in various financial institutions and organizations[31][32][34][35] - The board includes members with extensive backgrounds in auditing, risk management, and regulatory compliance[35] - The company emphasizes strong governance through its Audit and Nomination and Remuneration Committees led by experienced directors[32][35] - The board's composition reflects a commitment to industry expertise and regulatory knowledge, enhancing the company's strategic direction[34][35] - The company has maintained a stable leadership structure with long-serving members contributing to its strategic vision[31][32] - The Board of Directors consists of 10 Directors and 1 Alternate Director as of December 31, 2020, ensuring a strong independent element for objective decision-making[150] - The Company has complied with all code provisions of the Corporate Governance Code, with exceptions noted in provisions A.4.1 and E.1.2[147] - The roles of Chairman and Chief Executive Officer are held by different individuals to ensure a balance of power and authority within the Company[152] - The Company emphasizes sound corporate governance practices to enhance investor confidence and safeguard stakeholder interests[148] Risk Management - The Group's banking business risk profile moderately deteriorated in 2020, with key asset quality metrics worsening compared to 2019, although overall credit quality remained manageable[131] - The Group implemented a set of Expected Credit Loss (ECL) models to assess impairment provisions, considering macroeconomic factors and portfolio characteristics[132] - The Group took measures to strengthen risk management and control processes in preparation for the revised Supervisory Policy Manual on liquidity risk that took effect in 2020[133] - Cybersecurity remains a continuous focus for the Group, with ongoing monitoring and enhancements to safeguard against system attacks and data breaches[134] - The Group engaged an external consultant to review and enhance its anti-money laundering (AML) system and controls, applying technology solutions to sustain effectiveness[135] Digital Transformation and Customer Engagement - Over 50% of retail banking customers in Hong Kong are using digital channels, indicating a shift towards online and mobile interactions[68] - The number of digital banking users increased by 12% compared to 2019, with total digital payment transactions rising by 62%[98] - The eCorp mobile banking app was introduced in August 2020 to enhance digital banking capabilities for corporate customers[114] - The bank continued to invest in digital solutions and upgraded its digital banking channels to enhance customer experience[106] - The launch of various credit card programs and an integrated collection service for merchants aimed to promote online spending and customer acquisition[94] Insurance Operations - Net premium income for the insurance business grew by 6%, resulting in a profit increase of HK$26 million or 35%[61] - The Group's insurance business reported significantly higher profit than in 2019, with strong performance from investments[53] - The net insurance premium and other income for the Group's insurance business increased to HK$526 million in 2020 from HK$496 million in 2019[122] - Operating expenses for the insurance business rose to HK$139 million in 2020, compared to HK$129 million in 2019, impacting overall profitability[122] - The overall investment returns of the general insurance business were bolstered by fair value gains and increased trading income[123] Employee and Corporate Culture - The total number of employees decreased slightly from 3,097 at the end of 2019 to 3,079 at the end of 2020, a reduction of 0.6%[143] - The Group implemented various training programs in 2020 to support staff development and adapt to the COVID-19 pandemic, including virtual training courses[143] - The Group expanded its medical insurance benefits in 2020 to include all employees and their dependents, promoting employee wellness initiatives[143] Strategic Initiatives - The relocation to the new Dah Sing Financial Centre is set to be completed by the end of March 2021, marking a key milestone for the Group[72] - The Group anticipates that market conditions will recover in the long term, allowing for a return to a growth-focused strategy[70] - The financial markets in Hong Kong have remained buoyant so far in 2021, with the economy in Mainland China starting to rebound[67]

I. Financial Statements [Condensed Consolidated Income Statement](index=3&type=section&id=Condensed%20Consolidated%20Income%20Statement) For the six months ended June 30, 2020, the Group's profit for the period significantly decreased by 32.4% to HK$988 million, primarily due to reduced net interest income and a substantial increase in credit impairment losses | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Net interest income | 1,872,520 | 2,067,057 | (9.4) | | Net fee and commission income | 571,632 | 571,078 | 0.1 | | Net trading income | 131,786 | 38,673 | 240.8 | | Operating income after insurance claims | 2,751,094 | 2,837,837 | (3.1) | | Operating expenses | (1,469,948) | (1,434,343) | 2.5 | | Operating profit before impairment losses | 1,281,146 | 1,403,494 | (8.7) | | Credit impairment losses | (365,245) | (92,747) | 293.8 | | Profit before tax | 1,149,967 | 1,661,573 | (30.8) | | Profit for the period | 988,268 | 1,462,058 | (32.4) | | Earnings per share (basic and diluted) | HK$2.33 | HK$3.41 | (31.7) | [Condensed Consolidated Statement of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2020, the Group's total comprehensive income significantly decreased to HK$393 million, an 81.1% year-on-year reduction, mainly due to a shift from gain to loss in fair value changes of equity investments and expanded exchange differences on translation of overseas entities' financial statements | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Profit for the period | 988,268 | 1,462,058 | (32.4) | | Net fair value changes on equity investments (may be reclassified to profit or loss) | (540,090) | 346,370 | (256.0) | | Exchange differences on translation of overseas entities' financial statements | (128,579) | (18,228) | 605.4 | | Other comprehensive (loss) / income for the period after tax | (595,653) | 619,146 | (196.2) | | Total comprehensive income for the period after tax | 392,615 | 2,081,204 | (81.1) | [Condensed Consolidated Statement of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2020, the Group's total assets increased to HK$259.94 billion, a 3.8% rise from the end of 2019, with total liabilities also growing, and customer deposits remaining the primary source of liabilities | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total assets | 259,941,401 | 250,311,979 | 3.8 | | Advances and other accounts | 148,828,876 | 146,239,992 | 1.8 | | Financial assets at fair value through other comprehensive income | 48,162,614 | 45,511,057 | 5.8 | | Financial assets at amortised cost | 21,356,004 | 15,742,992 | 35.7 | | Total liabilities | 226,215,115 | 216,507,438 | 4.5 | | Customer deposits | 187,080,907 | 182,115,297 | 2.7 | | Certificates of deposit issued | 8,388,218 | 6,750,825 | 24.2 | | Subordinated notes | 3,860,820 | 5,510,181 | (29.9) | | Total equity | 33,726,286 | 33,804,541 | (0.2) | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2020, equity attributable to company shareholders slightly decreased, mainly due to reduced profit for the period and other comprehensive loss, partially offset by changes in retained earnings | Indicator | June 30, 2020 (HK$ thousand) | January 1, 2019 (HK$ thousand) | Change (2020 vs Jan 2019) (%) | | :--- | :--- | :--- | :--- | | Share capital | 4,248,559 | 4,248,559 | 0.0% | | Other reserves | 944,934 | 1,436,507 | (34.3)% | | Retained earnings | 21,570,453 | 21,120,164 | 2.1% | | Equity attributable to company shareholders | 26,763,946 | 26,805,230 | (0.2)% | | Non-controlling interests | 6,962,340 | 6,999,311 | (0.5)% | | Total equity | 33,726,286 | 33,804,541 | (0.2)% | - Profit for the period in the first half of 2020 was **HK$745 million**, a 33.1% year-on-year decrease from HK$1.114 billion in the same period of 2019[9](index=9&type=chunk) - Other comprehensive loss in the first half of 2020 was **HK$596 million**, compared to comprehensive income of HK$619 million in the same period of 2019[9](index=9&type=chunk) [Condensed Consolidated Cash Flow Statement](index=8&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) For the six months ended June 30, 2020, the Group's net cash inflow from operating activities significantly increased, but net cash outflow from financing activities substantially expanded, leading to a year-on-year decrease in net increase in cash and cash equivalents | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Net cash flows from operating activities | 3,158,913 | 2,602,913 | 21.4 | | Net cash flows used in investing activities | (51,204) | (43,847) | 16.8 | | Net cash flows used in financing activities | (2,453,418) | (1,319,767) | 85.9 | | Net increase in cash and cash equivalents | 654,291 | 1,239,299 | (47.2) | | Cash and cash equivalents at end of period | 26,571,978 | 17,708,943 | 49.9 | - Net cash outflow from financing activities significantly increased, primarily due to the repayment of **HK$1.747 billion** in subordinated notes and the distribution of **HK$345 million** in ordinary share dividends[13](index=13&type=chunk) II. Notes to the Financial Statements [2.1 General Information](index=9&type=section&id=2.1%20General%20Information) Dah Sing Financial Group Limited and its subsidiaries (the Group) primarily provide banking, insurance, financial, and other related services in Hong Kong, Macau, and Mainland China - The Group primarily provides banking, insurance, financial, and other related services in Hong Kong, Macau, and Mainland China[14](index=14&type=chunk) [2.2 Unaudited Financial Statements and Accounting Policies](index=9&type=section&id=2.2%20Unaudited%20Financial%20Statements%20and%20Accounting%20Policies) These condensed interim consolidated financial statements are prepared in accordance with HKAS 34 and adopt new revised standards effective January 1, 2020, including those related to interest rate benchmark reform, but the impact of HKFRS 17 Insurance Contracts has not yet been assessed - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[14](index=14&type=chunk) - New revised standards effective January 1, 2020, have been adopted, including amendments to HKAS 1 and HKAS 8 "Definition of Material", HKFRS 3 "Definition of a Business", the revised Conceptual Framework for Financial Reporting, and "Interest Rate Benchmark Reform" amendments to HKFRS 9, HKAS 39, and HKFRS 7[16](index=16&type=chunk) - HKFRS 17 "Insurance Contracts" will be effective for annual periods beginning on or after January 1, 2023, and the Group has not yet assessed its impact on the consolidated financial statements[19](index=19&type=chunk) [2.3 Net Interest Income](index=12&type=section&id=2.3%20Net%20Interest%20Income) For the six months ended June 30, 2020, net interest income decreased by 9.4% year-on-year to HK$1.873 billion, mainly due to reduced interest income, particularly from securities investments and advances and other accounts | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total interest income | 3,447,007 | 3,713,427 | (7.2) | | - Interest income from securities investments | 794,980 | 871,361 | (8.8) | | - Interest income from advances and other accounts | 2,486,604 | 2,569,434 | (3.2) | | Total interest expense | 1,574,487 | 1,646,370 | (4.4) | | Net interest income | 1,872,520 | 2,067,057 | (9.4) | [2.4 Net Fee and Commission Income](index=13&type=section&id=2.4%20Net%20Fee%20and%20Commission%20Income) For the six months ended June 30, 2020, net fee and commission income remained stable, slightly increasing by 0.1% to HK$572 million, with significant growth in securities brokerage commissions offsetting declines in credit card and credit-related service fees | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total fee and commission income | 675,271 | 723,941 | (6.7) | | - Securities brokerage commissions | 82,257 | 54,238 | 51.7 | | - Credit card related income | 125,480 | 173,850 | (27.8) | | - Credit related service fees and commissions | 83,576 | 95,446 | (12.4) | | Total fee and commission expense | 103,639 | 152,863 | (32.2) | | Net fee and commission income | 571,632 | 571,078 | 0.1 | [2.5 Net Trading Income](index=14&type=section&id=2.5%20Net%20Trading%20Income) For the six months ended June 30, 2020, net trading income surged by 240.8% to HK$132 million, primarily driven by significant increases in net gains from foreign exchange trading and net gains from derivative instruments held for trading purposes | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Net gains / (losses) from foreign exchange trading | 71,244 | (6,055) | (1276.8) | | Net gains / (losses) from derivative instruments held for trading purposes | 81,556 | (2,959) | (2855.6) | | Net trading income | 131,786 | 38,673 | 240.8 | [2.6 Other Operating Income](index=14&type=section&id=2.6%20Other%20Operating%20Income) For the six months ended June 30, 2020, other operating income slightly increased by 7.9% to HK$91.27 million, mainly from dividend income on equity instruments at fair value through other comprehensive income | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Dividend income from equity instruments at fair value through other comprehensive income | 52,429 | 47,242 | 10.9 | | Gross rental income from investment properties | 18,464 | 18,607 | (0.8) | | Total other operating income | 91,271 | 84,603 | 7.9 | [2.7 Operating Expenses](index=15&type=section&id=2.7%20Operating%20Expenses) For the six months ended June 30, 2020, operating expenses slightly increased by 2.5% year-on-year to HK$1.47 billion, primarily due to higher staff costs and benefits | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Staff costs and benefits | 1,033,359 | 986,935 | 4.7 | | Depreciation | 183,065 | 184,642 | (0.8) | | Total operating expenses | 1,469,948 | 1,434,343 | 2.5 | [2.8 Credit Impairment Losses](index=15&type=section&id=2.8%20Credit%20Impairment%20Losses) For the six months ended June 30, 2020, credit impairment losses significantly increased by 293.8% to HK$365 million, mainly due to a substantial rise in new provisions for customer loans | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | New provisions (net of reversals) | 408,006 | 124,593 | 227.5 | | Recoveries of amounts previously written off | (42,761) | (31,846) | 34.3 | | Total credit impairment losses | 365,245 | 92,747 | 293.8 | | - Customer loans | 336,289 | 87,342 | 285.0 | [2.9 Impairment Loss on Investment in an Associate](index=16&type=section&id=2.9%20Impairment%20Loss%20on%20Investment%20in%20an%20Associate) As of June 30, 2020, the Group recognized an additional impairment provision of HK$200 million on its investment in Bank of Chongqing, reducing its value to HK$3.841 billion, due to its fair value remaining below carrying amount - An additional impairment provision of **HK$200 million** was recognized on the investment in Bank of Chongqing as of June 30, 2020[39](index=39&type=chunk) - The investment value was adjusted down to **HK$3.841 billion**[39](index=39&type=chunk) - As of December 31, 2019, cumulative impairment provisions of **HK$1.735 billion** had been recognized[39](index=39&type=chunk) [2.10 Taxation](index=17&type=section&id=2.10%20Taxation) For the six months ended June 30, 2020, tax expense decreased by 19.0% year-on-year to HK$162 million, primarily due to lower Hong Kong profits tax and overseas tax | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Hong Kong profits tax | 144,162 | 176,239 | (18.2) | | Overseas tax | 9,211 | 19,084 | (51.7) | | Deferred tax | 8,326 | 4,192 | 98.6 | | Total taxation | 161,699 | 199,515 | (19.0) | [2.11 Basic and Diluted Earnings Per Share](index=17&type=section&id=2.11%20Basic%20and%20Diluted%20Earnings%20Per%20Share) For the six months ended June 30, 2020, basic and diluted earnings per share were HK$2.33, a 31.7% year-on-year decrease, mainly due to reduced profit for the period and a slight decrease in the weighted average number of ordinary shares outstanding | Indicator | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Earnings per share (basic and diluted) | HK$2.33 | HK$3.41 | (31.7) | | Profit for the period (HK$ thousand) | 744,768 | 1,113,821 | (33.1) | | Weighted average number of ordinary shares outstanding (shares) | 319,575,100 | 327,025,376 | (2.3) | [2.12 Trading Securities and Financial Assets at Fair Value Through Profit or Loss](index=18&type=section&id=2.12%20Trading%20Securities%20and%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2020, total trading securities and financial assets at fair value through profit or loss amounted to HK$7.553 billion, a 16.7% decrease from the end of 2019, primarily due to a significant reduction in financial assets at fair value through profit or loss | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Trading securities | 7,356,540 | 8,387,953 | (12.3) | | Financial assets at fair value through profit or loss | 196,032 | 680,731 | (71.2) | | Total | 7,552,572 | 9,068,684 | (16.7) | - Debt securities include **HK$3.043 billion** in treasury bills (cash equivalents) and **HK$4.237 billion** in other treasury bills[47](index=47&type=chunk) [2.13 Derivative Financial Instruments](index=19&type=section&id=2.13%20Derivative%20Financial%20Instruments) As of June 30, 2020, total derivative financial instrument assets increased to HK$611 million, and total liabilities increased to HK$2.948 billion, mainly driven by a substantial rise in interest rate swap liabilities designated for fair value hedging, with credit risk-weighted amounts also significantly increasing | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total derivative financial instrument assets | 611,292 | 577,930 | 5.8 | | Total derivative financial instrument liabilities | 2,947,777 | 1,093,028 | 169.7 | | - Interest rate swap liabilities designated for fair value hedging | 2,611,586 | 722,672 | 261.4 | | Total credit risk-weighted amount | 1,027,744 | 803,928 | 27.8 | [2.14 Advances and Other Accounts](index=22&type=section&id=2.14%20Advances%20and%20Other%20Accounts) As of June 30, 2020, total advances and other accounts increased to HK$148.829 billion, with total customer loans rising to HK$138.235 billion; impairment allowances significantly increased, and the percentage of credit-impaired loans to total customer loans rose to 1.02% | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total advances and other accounts | 148,828,876 | 146,239,992 | 1.8 | | Total customer loans | 138,234,951 | 136,946,773 | 0.9 | | Total impairment allowance | (1,172,256) | (1,008,586) | 16.2 | | Credit-impaired loans and advances | 1,410,390 | 1,049,226 | 34.4 | | Percentage of credit-impaired loans and advances to total customer loans and advances | 1.02% | 0.77% | 0.25pp | [2.14.1 Impaired, Overdue and Restructured Assets](index=23&type=section&id=2.14.1%20Impaired%2C%20Overdue%20and%20Restructured%20Assets) As of June 30, 2020, credit-impaired loans and advances increased to HK$1.41 billion, total overdue loans rose to HK$914 million, with a significant increase in loans overdue for over one year, and restructured loans also showed an upward trend | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Credit-impaired loans and advances | 1,410,390 | 1,049,226 | 34.4 | | Total overdue loans | 914,323 | 749,681 | 22.0 | | - Overdue for over one year | 519,620 | 318,703 | 63.0 | | Restructured loans (customer loans) | 386,030 | 270,909 | 42.5 | [2.14.2 Repossessed Collateral](index=26&type=section&id=2.14.2%20Repossessed%20Collateral) As of June 30, 2020, total repossessed collateral amounted to HK$271 million, a slight decrease from the end of 2019, with a reduction in repossessed properties but an increase in other collateral | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Repossessed properties | 244,708 | 287,397 | (14.8) | | Other repossessed collateral | 26,459 | 7,782 | 240.0 | | Total repossessed collateral | 271,167 | 295,179 | (8.2) | - Repossessed collateral is sold as soon as practicable, and the proceeds are used to reduce the borrower's outstanding debt[72](index=72&type=chunk) [2.15 Loss Allowance (ECL)](index=27&type=section&id=2.15%20Loss%20Allowance%20(ECL)) As of June 30, 2020, the Group's total Expected Credit Loss (ECL) allowance increased to HK$1.322 billion, a 14.2% rise from January 1, 2020, mainly due to increased Stage 1 and Stage 3 provisions, reflecting deteriorating credit risk | Indicator | June 30, 2020 (HK$ thousand) | January 1, 2020 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Stage 1 ECL allowance | 647,022 | 614,722 | 5.2 | | Stage 2 ECL allowance | 174,121 | 161,309 | 7.9 | | Stage 3 ECL allowance | 500,952 | 381,197 | 31.4 | | Total ECL allowance | 1,322,095 | 1,157,228 | 14.2 | | - Customer loans | 1,172,256 | 1,008,586 | 16.2 | | - Loan commitments and financial guarantees | 149,839 | 148,642 | 0.8 | - Transfers from Stage 1 to Stage 3 amounted to **HK$186 million**, and from Stage 2 to Stage 3 amounted to **HK$128 million**, indicating a deterioration in credit quality[76](index=76&type=chunk) [2.16 Financial Assets at Fair Value Through Other Comprehensive Income](index=29&type=section&id=2.16%20Financial%20Assets%20at%20Fair%20Value%20Through%20Other%20Comprehensive%20Income) As of June 30, 2020, total financial assets at fair value through other comprehensive income increased to HK$48.163 billion, a 5.8% rise from the end of 2019, driven by growth in debt securities and equity securities listed outside Hong Kong | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Debt securities | 44,096,176 | 42,155,937 | 4.6 | | Equity securities | 4,066,438 | 3,355,120 | 21.2 | | Total | 48,162,614 | 45,511,057 | 5.8 | - Debt securities include **HK$4.699 billion** in treasury bills (cash equivalents) and **HK$5.600 billion** in other treasury bills[81](index=81&type=chunk) [2.17 Financial Assets at Amortised Cost](index=30&type=section&id=2.17%20Financial%20Assets%20at%20Amortised%20Cost) As of June 30, 2020, total financial assets at amortised cost increased to HK$21.356 billion, a significant 35.7% rise from the end of 2019, primarily driven by debt securities listed in and outside Hong Kong | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Debt securities | 21,376,332 | 15,754,600 | 35.7 | | - Listed in Hong Kong | 7,591,927 | 4,531,678 | 67.5 | | - Listed outside Hong Kong | 9,156,033 | 6,534,167 | 40.1 | | Impairment allowance | (20,328) | (11,608) | 75.1 | | Total | 21,356,004 | 15,742,992 | 35.7 | [2.18 Property, Plant and Equipment](index=31&type=section&id=2.18%20Property%2C%20Plant%20and%20Equipment) As of June 30, 2020, the net book value of premises and other fixed assets slightly decreased to HK$2.123 billion, with right-of-use assets and lease liabilities also significantly reduced | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Net book value of premises and other fixed assets | 2,122,831 | 2,169,210 | (2.1) | | Right-of-use assets (properties) | 250,342 | 417,042 | (40.0) | | Lease liabilities | 267,931 | 434,681 | (38.4) | [2.18.1 Premises and Other Fixed Assets](index=31&type=section&id=2.18.1%20Premises%20and%20Other%20Fixed%20Assets) As of June 30, 2020, the net book value of premises and other fixed assets was HK$2.123 billion, with additions of HK$51.232 million and depreciation expense of HK$91.144 million during the period | Indicator | June 30, 2020 (HK$ thousand) | January 1, 2020 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Net book value at beginning of period | 2,169,210 | 2,083,070 (Jan 2019) | 4.1 | | Additions | 51,232 | 105,651 (2019) | (51.5) | | Depreciation expense | (91,144) | (192,221) (2019) | (52.6) | | Net book value at end of period | 2,122,831 | 2,169,210 (Dec 2019) | (2.1) | [2.18.2 Leases](index=32&type=section&id=2.18.2%20Leases) As of June 30, 2020, right-of-use assets (properties) amounted to HK$250 million and lease liabilities to HK$268 million, both showing significant decreases from the end of 2019 | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Right-of-use assets (properties) | 250,342 | 417,042 | (40.0) | | Lease liabilities | 267,931 | 434,681 | (38.4) | [2.19 Investment Properties](index=32&type=section&id=2.19%20Investment%20Properties) As of June 30, 2020, the book value of investment properties remained stable at HK$1.167 billion, consistent with the end of 2019, following a revaluation and fair value loss recorded in 2019 | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Book value at end of period | 1,166,842 | 1,166,842 | 0.0 | | Fair value loss on revaluation in 2019 | – | (75,717) | N/A | - Investment properties were revalued by independent professional chartered surveyors as of December 31, 2019[92](index=92&type=chunk) [2.20 Deposits from Customers](index=33&type=section&id=2.20%20Deposits%20from%20Customers) As of June 30, 2020, total customer deposits increased to HK$187.081 billion, a 2.7% rise from the end of 2019, with growth in both demand and current accounts and time deposits | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Demand and current accounts | 42,223,446 | 40,416,625 | 4.5 | | Savings deposits | 33,284,281 | 33,074,715 | 0.6 | | Time, notice and call deposits | 111,573,180 | 108,623,957 | 2.7 | | Total customer deposits | 187,080,907 | 182,115,297 | 2.7 | [2.21 Certificates of Deposit Issued](index=33&type=section&id=2.21%20Certificates%20of%20Deposit%20Issued) As of June 30, 2020, total certificates of deposit issued increased to HK$8.388 billion, a 24.2% rise from the end of 2019, primarily driven by a substantial increase in certificates of deposit at amortised cost | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | At fair value through profit or loss designated to hedge interest rate risk | 2,231,918 | 4,911,274 | (54.6) | | At amortised cost | 6,156,300 | 1,839,551 | 234.7 | | Total certificates of deposit issued | 8,388,218 | 6,750,825 | 24.2 | - The amount contractually payable by the Group at maturity for these certificates of deposit was **HK$2 million** higher than the carrying amount (HK$6 million higher at December 31, 2019)[96](index=96&type=chunk) [2.22 Subordinated Notes](index=34&type=section&id=2.22%20Subordinated%20Notes) As of June 30, 2020, total subordinated notes decreased to HK$3.861 billion, a 29.9% reduction from the end of 2019, mainly due to the full repayment of US$225 million fixed-rate subordinated notes maturing in 2020 | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | US$225 million fixed-rate subordinated notes due 2020 | – | 1,755,635 | (100.0) | | US$250 million fixed-rate subordinated notes due 2026 | 1,977,184 | 1,946,445 | 1.6 | | US$225 million fixed-rate subordinated notes due 2029 | 1,883,636 | 1,808,101 | 4.2 | | Total subordinated notes | 3,860,820 | 5,510,181 | (29.9) | - Dah Sing Bank fully repaid **US$225 million** fixed-rate subordinated notes due 2020 on February 11, 2020[100](index=100&type=chunk) - The amount contractually payable by the Group at maturity for these subordinated notes was **HK$179 million** lower than the carrying amount (HK$59 million lower at December 31, 2019)[105](index=105&type=chunk) [2.23 Other Accounts and Accruals](index=35&type=section&id=2.23%20Other%20Accounts%20and%20Accruals) As of June 30, 2020, total other accounts and accruals increased to HK$14.213 billion, a 13.6% rise from the end of 2019, primarily driven by an increase in amounts payable for securities purchased awaiting settlement | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Lease liabilities | 267,931 | 434,681 | (38.4) | | Amounts payable for securities purchased awaiting settlement | 4,324,882 | 3,383,281 | 27.8 | | Other liabilities and accruals | 9,620,668 | 8,698,832 | 10.6 | | Total | 14,213,481 | 12,516,794 | 13.6 | [2.24 Shareholders' Funds](index=36&type=section&id=2.24%20Shareholders'%20Funds) As of June 30, 2020, total shareholders' funds slightly decreased to HK$26.764 billion, with a significant reduction in investment revaluation reserve and an increase in retained earnings | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Share capital | 4,248,559 | 4,248,559 | 0.0 | | Investment revaluation reserve | 216,158 | 612,443 | (64.7) | | Exchange reserve | (371,030) | (275,321) | 34.8 | | Retained earnings | 21,570,453 | 21,120,164 | 2.1 | | Total shareholders' funds | 26,763,946 | 26,805,230 | (0.2) | - Dah Sing Bank is required to maintain regulatory reserves to comply with the Hong Kong Banking Ordinance and prudential supervision requirements, which restrict the amount distributable to shareholders[111](index=111&type=chunk) - As of June 30, 2020, Dah Sing Bank had designated **HK$531 million** as regulatory reserves (HK$1.127 billion at December 31, 2019)[111](index=111&type=chunk) [2.25 Contingent Liabilities and Commitments](index=37&type=section&id=2.25%20Contingent%20Liabilities%20and%20Commitments) As of June 30, 2020, the Group's total contingent liabilities and commitments amounted to HK$79.866 billion, a slight decrease from the end of 2019, with stable capital commitments, reduced credit commitments, and increased operating lease commitments | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total credit commitments | 79,865,760 | 81,245,184 | (1.7) | | - Commitments that can be unconditionally cancelled without prior notice | 73,730,734 | 74,428,118 | (0.9) | | Operating lease commitments (future minimum lease payments receivable) | 29,698 | 36,445 | (18.5) | | Total payable for uncommenced leases | 491,867 | 427,690 | 15.0 | [2.25.1 Capital Commitments](index=37&type=section&id=2.25.1%20Capital%20Commitments) As of June 30, 2020, capital expenditure contracted but not provided for amounted to HK$153 million, a slight increase from the end of 2019 | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Expenditure contracted but not provided for | 153,231 | 147,096 | 4.2 | [2.25.2 Credit Commitments](index=37&type=section&id=2.25.2%20Credit%20Commitments) As of June 30, 2020, the Group's total credit commitments amounted to HK$79.866 billion, a 1.7% decrease from the end of 2019, with credit risk-weighted amounts decreasing by 17.6% year-on-year to HK$1.478 billion | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total contractual amount | 79,865,760 | 81,245,184 | (1.7) | | - Commitments that can be unconditionally cancelled without prior notice | 73,730,734 | 74,428,118 | (0.9) | | Credit risk-weighted amount | 1,477,849 | 1,794,624 | (17.6) | [2.25.3 Pledged Assets](index=38&type=section&id=2.25.3%20Pledged%20Assets) As of June 30, 2020, pledged assets held for trading and financial investments amounted to HK$6.194 billion, a 34.6% increase from the end of 2019, with a corresponding increase in liabilities secured | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Pledged assets held for trading and financial investments | 6,194,006 | 4,600,158 | 34.6 | | - Of which: under repurchase agreements | 2,002,686 | 686,003 | 192.0 | | Amount of liabilities secured | 5,983,401 | 4,597,103 | 30.2 | | - Of which: under repurchase agreements | 1,987,201 | 671,153 | 196.1 | [2.25.4 Operating Lease Commitments](index=39&type=section&id=2.25.4%20Operating%20Lease%20Commitments) As of June 30, 2020, the Group, as lessor, had total future minimum lease payments receivable of HK$29.7 million, an 18.5% decrease from the end of 2019, while total payable for uncommenced leases as lessee increased to HK$492 million | Indicator | June 30, 2020 (HK$ thousand) | December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total future minimum lease payments receivable | 29,698 | 36,445 | (18.5) | | Total payable for uncommenced leases | 491,867 | 427,690 | 15.0 | [2.26 Maturity Analysis](index=40&type=section&id=2.26%20Maturity%20Analysis) As of June 30, 2020, the maturity analysis of the Group's total assets and liabilities shows a significant proportion of assets and liabilities due on demand and within one month, with a net liquidity gap of HK$33.726 billion | Indicator | On demand (HK$ thousand) | 1 month or less (HK$ thousand) | Over 1 month to 3 months (HK$ thousand) | Over 3 months to 1 year (HK$ thousand) | Over 1 year to 5 years (HK$ thousand) | Over 5 years (HK$ thousand) | Undated (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total assets | 12,298,437 | 40,914,479 | 29,729,754 | 32,317,998 | 73,489,325 | 57,369,179 | 13,822,229 | 259,941,401 | | Total liabilities | 84,401,336 | 88,435,524 | 22,350,950 | 16,808,081 | 10,008,239 | 2,745,655 | 1,465,330 | 226,215,115 | | Net liquidity gap | (72,102,899) | (47,521,045) | 7,378,804 | 15,509,917 | 63,481,086 | 54,623,524 | 12,356,899 | 33,726,286 | [2.27 Fair Value Hierarchy](index=42&type=section&id=2.27%20Fair%20Value%20Hierarchy) As of June 30, 2020, the Group's total assets measured at fair value were HK$56.326 billion, and total liabilities were HK$7.639 billion, with most financial instruments measured using Level 2 observable inputs, and Level 3 assets primarily comprising unlisted equity securities and debt investments | Indicator | Level 1 (HK$ thousand) | Level 2 (HK$ thousand) | Level 3 (HK$ thousand) | Total (HK$ thousand) | | :--- | :--- | :--- | :--- | :--- | | Total assets measured at fair value | 4,139,937 | 52,070,994 | 115,547 | 56,326,478 | | Total liabilities measured at fair value | 7,430 | 7,631,394 | – | 7,638,824 | - Level 3 assets primarily consist of unlisted equity securities and debt investments, whose fair values are close to cost[140](index=140&type=chunk) - For the six months ended June 30, 2020, and the year ended December 31, 2019, there were no transfers into or out of Level 3 of the fair value hierarchy for financial assets and liabilities[140](index=140&type=chunk) [2.28 Reconciliation of Operating Profit Before Gains and Losses on Certain Investments and Fixed Assets to Net Cash Flows from Operating Activities](index=44&type=section&id=2.28%20Reconciliation%20of%20Operating%20Profit%20Before%20Gains%20and%20Losses%20on%20Certain%20Investments%20and%20Fixed%20Assets%20to%20Net%20Cash%20Flows%20from%20Operating%20Activities) For the six months ended June 30, 2020, net cash inflow from operating activities was HK$3.159 billion, a 21.4% increase from the same period in 2019, with changes in operating assets and liabilities significantly impacting cash flow | Indicator | 2020 (HK$ thousand) | 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Operating profit before gains and losses on certain investments and fixed assets | 915,901 | 1,310,747 | (30.1) | | Net cash flows from operating activities | 3,158,913 | 2,602,913 | 21.4 | - Changes in operating assets and liabilities had a significant impact on cash flow, for example, trading securities increased by **HK$2.467 billion**, and customer loans decreased by **HK$1.288 billion**[144](index=144&type=chunk) [2.29 Operating Segment Reporting](index=45&type=section&id=2.29%20Operating%20Segment%20Reporting) The Group's operating segments include personal banking, commercial banking, treasury, overseas banking, insurance, and others; for the six months ended June 30, 2020, personal and commercial banking were major profit contributors, but overseas banking recorded a loss - The Group's main operating segments include personal banking, commercial banking, treasury, overseas banking, insurance, and others[147](index=147&type=chunk) | Segment | 2020 Profit/(Loss) before tax (HK$ thousand) | 2019 Profit before tax (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Personal Banking | 262,457 | 433,439 | (39.4) | | Commercial Banking | 350,891 | 495,955 | (29.2) | | Treasury | 316,676 | 229,210 | 38.1 | | Overseas Banking | 190,088 | 404,337 | (53.0) | | Insurance Business | 56,124 | 53,880 | 4.2 | | Others | (26,269) | 44,752 | (158.7) | | Total | 1,149,967 | 1,661,573 | (30.8) | - As of June 30, 2020, Personal Banking segment assets were **HK$53.477 billion**, Commercial Banking segment assets were **HK$67.582 billion**, and Treasury segment assets were **HK$93.772 billion**[155](index=155&type=chunk) [2.30 Additional Analysis on Claims and Exposures](index=49&type=section&id=2.30%20Additional%20Analysis%20on%20Claims%20and%20Exposures) The Group's additional analysis of total customer loans, Mainland China exposures, and international claims shows that commercial and industrial loans and personal loans in Hong Kong are major components, with Mainland China exposures and international claims also holding significant shares - Total customer loans are categorized by industry and region, with an analysis of collateral coverage percentages[161](index=161&type=chunk) - Exposures to Mainland China include on-balance sheet and off-balance sheet exposures to central government, local governments, Mainland Chinese nationals, and other entities[172](index=172&type=chunk) - International claims are disclosed by the ultimate country of risk, primarily concentrated in offshore centers and developing Asia-Pacific regions[186](index=186&type=chunk) [2.30.1 Total Customer Loans by Industry](index=49&type=section&id=2.30.1%20Total%20Customer%20Loans%20by%20Industry) As of June 30, 2020, total customer loans for use in Hong Kong amounted to HK$94.069 billion, with property investment and loans for purchasing other residential properties being major components, and generally high collateral coverage percentages | Industry Classification | June 30, 2020 Outstanding Balance (HK$ thousand) | Percentage Secured by Collateral (%) | December 31, 2019 Outstanding Balance (HK$ thousand) | Percentage Secured by Collateral (%) | | :--- | :--- | :--- | :--- | :--- | | Total loans for use in Hong Kong | 94,068,936 | 75.2 | 92,274,834 | 75.6 | | - Property investment | 16,518,677 | 94.6 | 15,972,169 | 97.0 | | - Loans for purchasing other residential properties | 30,712,053 | 100.0 | 29,864,112 | 100.0 | | Trade finance | 8,701,810 | 59.5 | 8,815,573 | 62.9 | | Loans for use outside Hong Kong | 35,464,205 | 61.3 | 35,856,366 | 66.0 | | Total customer loans | 138,234,951 | 70.7 | 136,946,773 | 72.3 | - As of June 30, 2020, for loans used outside Hong Kong, credit-impaired loans (Stage 3) amounted to **HK$457 million**, and loans overdue for more than 3 months amounted to **HK$448 million**[168](index=168&type=chunk) [2.30.2 Exposures to Mainland China](index=52&type=section&id=2.30.2%20Exposures%20to%20Mainland%20China) As of June 30, 2020, the Group's total exposures to Mainland China amounted to HK$44.836 billion, with on-balance sheet exposures of HK$42.280 billion, representing 17.89% of the total assets of Dah Sing Bank and its Mainland banking subsidiaries after allowances | Indicator | June 30, 2020 Total Exposure (HK$ thousand) | December 31, 2019 Total Exposure (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Central government and related entities | 9,865,265 | 10,877,982 | (9.2) | | Local governments and related entities | 1,559,719 | 1,398,737 | 11.5 | | Mainland Chinese nationals or other entities | 15,218,598 | 15,184,555 | 0.2 | | Institutions incorporated outside Mainland China, with loans used in Mainland China | 12,749,810 | 12,318,139 | 3.5 | | Total exposure | 44,836,260 | 44,886,753 | (0.1) | - As of June 30, 2020, on-balance sheet exposures represented **17.89%** of the total assets of Dah Sing Bank and its Mainland banking subsidiaries after allowances[173](index=173&type=chunk) [2.30.3 Total Customer Loans and Overdue Loans by Geographical Area](index=54&type=section&id=2.30.3%20Total%20Customer%20Loans%20and%20Overdue%20Loans%20by%20Geographical%20Area) As of June 30, 2020, total customer loans in Hong Kong amounted to HK$116.184 billion, accounting for 84% of the Group's total, with an increase in impaired and overdue loans in Mainland China and Macau | Region | June 30, 2020 Total Customer Loans (HK$ thousand) | Impaired Customer Loans (Stage 3) (HK$ thousand) | Overdue Customer Loans (HK$ thousand) | | :--- | :--- | :--- | :--- | | Hong Kong | 116,183,769 | 1,079,098 | 580,093 | | Mainland China | 6,596,783 | 62,662 | 62,662 | | Macau | 14,039,137 | 266,294 | 266,294 | | Others | 1,415,262 | 2,336 | 5,274 | | Total | 138,234,951 | 1,410,390 | 914,323 | - The geographical analysis of customer loans is classified by the location of the counterparty after considering risk transfer[180](index=180&type=chunk) [2.30.4 International Claims](index=55&type=section&id=2.30.4%20International%20Claims) As of June 30, 2020, the Group's total international claims amounted to HK$225.606 billion, primarily concentrated in offshore centers (HK$177.025 billion, of which Hong Kong is HK$157.480 billion) and developing Asia-Pacific (HK$48.581 billion, of which Mainland China is HK$35.658 billion) | Region | June 30, 2020 Total Claims (HK$ million) | December 31, 2019 Total Claims (HK$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Offshore centers | 177,025 | 171,096 | 3.5 | | - Of which: Hong Kong | 157,480 | 151,672 | 3.8 | | Developing Asia-Pacific | 48,581 | 46,856 | 3.7 | | - Of which: Mainland China | 35,658 | 35,631 | 0.1 | - International claims disclose the ultimate country of risk exposure to foreign counterparties after considering risk transfer[186](index=186&type=chunk) [2.31 Related-Party Transactions](index=56&type=section&id=2.31%20Related-Party%20Transactions) The Group engages in various ongoing related-party transactions with fellow subsidiaries and companies controlled by shareholders or directors, all conducted on normal commercial terms and within Listing Rules annual caps - The Group conducts ongoing related-party transactions with fellow subsidiaries and companies directly or indirectly controlled or significantly influenced by shareholders or directors[191](index=191&type=chunk) - All ongoing related-party transactions are conducted on fair and reasonable terms, in accordance with the Group's normal business, relevant agreements, general commercial terms and practices, and comply with the annual caps under the Listing Rules[191](index=191&type=chunk)[192](index=192&type=chunk) - There were no significant changes in credit facilities and deposit balances provided to key management personnel and their close relatives in the first half of 2020[192](index=192&type=chunk) [2.32 Risk Management](index=57&type=section&id=2.32%20Risk%20Management) The Group effectively manages various risks, including credit, market, interest rate, liquidity, operational, reputational, and strategic risks, through a robust management structure, with its risk management framework covering both banking and insurance segments and independent oversight from internal audit - The Group's banking segment risk management covers credit risk, market risk, interest rate risk, liquidity risk, operational risk, reputational risk, and strategic risk[194](index=194&type=chunk) - The Board of Directors is responsible for all risk management, and the Risk Management and Compliance Committee (RMCC) oversees the management of different types of risks[199](index=199&type=chunk)[200](index=200&type=chunk) - The Internal Audit Department, as an independent unit, is responsible for improving and maintaining sound internal controls across the Group[343](index=343&type=chunk) [2.32.1 Group Banking Segment](index=57&type=section&id=2.32.1%20Group%20Banking%20Segment) The banking group's risk management encompasses credit, market, liquidity, operational, reputational, and strategic risks, adhering to Basel III capital standards, and ensuring risks are controlled through independent risk management departments, credit committees, and asset and liability management committees - The Group's banking segment risk management covers credit risk, market risk, interest rate risk, liquidity risk, operational risk, reputational risk, and strategic risk[194](index=194&type=chunk) - The Group has complied with all externally imposed capital requirements by the HKMA and adheres to Basel III capital standards[306](index=306&type=chunk) [2.32.1.1 Group Risk Management Structure](index=58&type=section&id=2.32.1.1%20Group%20Risk%20Management%20Structure) The Board of Directors bears overall responsibility for all risk management, approving strategies and policies, while the Risk Management and Compliance Committee (RMCC) oversees and guides the management of various risks - The Board of Directors is responsible for all risk management, including approving strategies and policies, and monitoring through operational and administrative control systems[199](index=199&type=chunk) - The Risk Management and Compliance Committee (RMCC) is authorized to oversee and guide risks managed by the Group Risk Department (GRD) and various functional committees[200](index=200&type=chunk) [2.32.1.2 Group Risk Department](index=58&type=section&id=2.32.1.2%20Group%20Risk%20Department) The independent Group Risk Department (GRD) is responsible for formulating overall Group policies and responsibilities, monitoring and reporting risk status to the Board, establishing financial risk management standards, and continuously developing risk management capabilities - The independent Group Risk Department (GRD) is responsible for formulating overall Group policies and responsibilities, and monitoring and reporting risk status to the Board[201](index=201&type=chunk) - GRD establishes standards for financial risk and data integrity management, and ensures financial risks are adequately considered in product planning and pricing[201](index=201&type=chunk) - The Group continuously develops its risk management capabilities and increases focus on the impact of risk strategies on risk-return and return on capital[203](index=203&type=chunk) [2.32.1.3 Credit Committees](index=59&type=section&id=2.32.1.3%20Credit%20Committees) The Group has a Group Credit Committee (GCC) for approving significant credit limits, and a Credit Management Committee (CMC) and Treasury and Investment Risk Committee (TIRC) responsible for policies, limits, and risk control in lending and treasury businesses, respectively - The Group Credit Committee (GCC) is responsible for approving significant credit limits[203](index=203&type=chunk) - The Credit Management Committee (CMC) and Treasury and Investment Risk Committee (TIRC) are responsible for approving and recommending policies, limits, and risk control responsibilities for lending and treasury businesses[203](index=203&type=chunk) [2.32.1.4 Application of Financial Instrument Strategies](index=59&type=section&id=2.32.1.4%20Application%20of%20Financial%20Instrument%20Strategies) The Group earns interest spread income by accepting customer deposits, making loans, and investing, and uses derivative instruments to manage market and interest rate risks, including interest rate swaps for fair value hedging - The Group earns interest spread income by accepting fixed or floating rate customer deposits and investing in various assets[203](index=203&type=chunk) - The Group trades financial instruments (including derivatives) through exchanges and over-the-counter markets to profit from short-term market fluctuations[207](index=207&type=chunk) - The Group uses interest rate swaps and other interest rate derivatives to mitigate interest rate risk arising from fair value decreases in fixed-rate assets or fair value increases in fixed-rate term liabilities due to interest rate changes[208](index=208&type=chunk) [2.32.1.5 Credit Risk](index=60&type=section&id=2.32.1.5%20Credit%20Risk) The Group's primary credit risk is the failure of borrowers or counterparties to meet repayment obligations, which is strictly managed through credit policies, internal ratings, collateral, and Expected Credit Loss (ECL) models, with ECL measurement adjusted for the COVID-19 pandemic - The Group's primary credit risk is the failure of borrowers or counterparties to meet their repayment obligations to the Group[209](index=209&type=chunk) - The Group uses external credit assessment institutions (ECAIs) such as Standard & Poor's, Moody's, and Fitch to assess credit risk, and also has internal rating methodologies[215](index=215&type=chunk) - The Group uses cash deposits, real estate properties, equipment, and vehicles as collateral to mitigate credit risk[223](index=223&type=chunk) - As of June 30, 2020, total customer loans amounted to **HK$138.235 billion**, of which credit-impaired loans (Stage 3) were **HK$1.41 billion**[246](index=246&type=chunk) [2.32.1.6 Market Risk](index=70&type=section&id=2.32.1.6%20Market%20Risk) Market risk primarily arises from changes in interest rates and prices, managed by the Group through Board-approved risk limits, VaR models, stress tests, and sensitivity analysis, with foreign exchange and interest rate risks managed separately in trading and banking books - Market risk is the risk of losses arising from changes in market interest rates and prices on assets, liabilities, and off-balance sheet positions[253](index=253&type=chunk) - The Group uses the VaR (Value-at-Risk) method to measure market risk and conducts stress tests to assess potential losses under extreme scenarios[262](index=262&type=chunk)[268](index=268&type=chunk) | Indicator | Average Daily VaR for 6 months ended June 30, 2020 (HK$ thousand) | Average Daily VaR for 12 months ended December 31, 2019 (HK$ thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Foreign exchange risk | 2,246 | 2,666 | (15.8) | | Interest rate risk | 1,338 | 1,525 | (12.3) | | Total risk | 2,672 | 3,280 | (18.5) | - Market risk in the banking book primarily stems from debt and equity securities holdings, managed through limits, guidelines, sensitivity analysis, and stress tests, without using the VaR method[275](index=275&type=chunk) [2.32.1.7 Liquidity Risk](index=75&type=section&id=2.32.1.7%20Liquidity%20Risk) Liquidity risk, the Group's inability to fund assets or meet payment obligations on time, is managed by maintaining high Liquidity Maintenance Ratio (LMR) and Core Funding Ratio (CFR), diversifying funding sources, and conducting cash flow forecasts and stress tests - Liquidity risk is the risk that the Group is unable to fund new assets or meet payment obligations for maturing financial liabilities without incurring unacceptable losses[285](index=285&type=chunk) - The Group maintains Liquidity Maintenance Ratio (LMR) and Core Funding Ratio (CFR) well above the statutory minimum requirements (25% and 75% respectively)[285](index=285&type=chunk) - The Group manages liquidity through diversified and stable funding sources (including customer deposits, certificates of deposit, and medium-term notes) and regular cash flow forecasts and stress tests[289](index=289&type=chunk)[290](index=290&type=chunk)[292](index=292&type=chunk) [2.32.1.8 Operational Risk](index=78&type=section&id=2.32.1.8%20Operational%20Risk) The Group manages operational risk through its management structure, operational risk policies, incident reporting systems, and self-assessment tools, with backup sites and operational recovery plans in place to address system failures - Operational risk management is conducted through senior management, independent risk management teams, operational risk personnel, policies, risk toolkits, incident reporting systems, and self-assessment tools[297](index=297&type=chunk) - The Group maintains backup sites, operational recovery policies, and plans, and conducts tests to mitigate the impact of system failures or disasters on business operations[298](index=298&type=chunk) [2.32.1.9 Reputational Risk](index=78&type=section&id=2.32.1.9%20Reputational%20Risk) The Group manages reputational risk by maintaining high standards of corporate governance, internal controls, risk management, and compliance, as well as effectively handling customer complaints - The Group manages reputational risk by emphasizing the importance of internal controls, risk management, compliance, and combating money laundering and terrorist financing[299](index=299&type=chunk) - The Group mitigates reputational risk through appropriate staff training and supervision, staff awareness of compliance matters, proper handling of customer complaints, and sound business practices[299](index=299&type=chunk) [2.32.1.10 Strategic Risk](index=79&type=section&id=2.32.1.10%20Strategic%20Risk) The Board of Directors is directly responsible for managing strategic risk, setting strategic objectives and key policies, overseeing strategic development and execution, and ensuring appropriate resource allocation to achieve Group goals - The Board of Directors is directly responsible for managing strategic risk and formulating strategic objectives and key policies consistent with the Group's corporate mission[301](index=301&type=chunk) - The Board oversees strategic development and execution, ensures appropriate change management, and reviews business performance to respond to market changes[301](index=301&type=chunk) [2.32.1.11 Compliance with Basel III Capital Standards](index=79&type=section&id=2.32.1.11%20Compliance%20with%20Basel%20III%20Capital%20Standards) The Group complies with Basel III capital standards, including minimum ratios for Common Equity Tier 1, Tier 1, and total capital, with the HKMA having reduced Hong Kong's countercyclical capital buffer to 1.0% - Basel III capital rules set minimum ratios for Common Equity Tier 1, Tier 1, and total capital at **4.5%**, **6%**, and **8%** respectively[301](index=301&type=chunk) - As of June 30, 2020, the HKMA had reduced Hong Kong's Countercyclical Capital Buffer (CCyB) from **2.0%** to **1.0%**[301](index=301&type=chunk) - The Group has complied with all externally imposed capital requirements by the HKMA[306](index=306&type=chunk) [2.32.1.12 Fair Value of Financial Assets and Liabilities](index=81&type=section&id=2.32.1.12%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) The Group determines the fair value of financial instruments through a control framework, independent valuations, and widely accepted valuation methods such as present value and option pricing models, maximizing the use of observable inputs - The Board of Directors is responsible for ensuring appropriate valuation governance and control procedures, and authorizes the Treasury and Investment Risk Committee to oversee the valuation process for financial instruments[309](index=309&type=chunk) - The Group uses valuation methods such as present value and standard option pricing models, maximizing the use of relevant observable inputs (e.g., interest rates, exchange rates, volatility, credit spreads)[311](index=311&type=chunk) - The Group uses external quotes and its own credit spreads to determine the present value of financial liabilities[313](index=313&type=chunk) [2.32.1.13 Capital Management](index=82&type=section&id=2.32.1.13%20Capital%20Management) The Group aims to comply with regulatory capital requirements, safeguard its ability for continuous development, maximize shareholder returns, and maintain a strong capital base, regularly monitoring the capital adequacy of its subsidiary banks in Hong Kong, Macau, and Mainland China - The Group's capital management objectives include complying with regulatory capital requirements, safeguarding its ability for continuous development, maximizing shareholder returns, and maintaining a strong capital base[313](index=313&type=chunk) - Dah Sing Bank must comply with Basel III ratios for Common Equity Tier 1, Tier 1, and total capital to risk-weighted assets, with minimum requirements of **4.5%**, **6.0%**, and **8.0%** respectively[316](index=316&type=chunk) - Banco Comercial de Macau and Dah Sing Bank (China) are required to maintain a capital adequacy ratio of not less than the statutory minimum of **8%**[323](index=323&type=chunk) [2.32.1.14 Fiduciary Activities](index=84&type=section&id=2.32.1.14%20Fiduciary%20Activities) The Group provides custody, fiduciary, wealth management, and advisory services involving the allocation and trading decisions of financial instruments, with assets held in a fiduciary capacity not included in the Group's financial statements - The Group provides custody, fiduciary, wealth management, and advisory services to third parties[324](index=324&type=chunk) - Assets held in a fiduciary capacity are not included in the Group's financial statements, but these services may expose the Group to risks of mismanagement[324](index=324&type=chunk) [2.32.1.15 Launch of New Products or Services](index=85&type=section&id=2.32.1.15%20Launch%20of%20New%20Products%20or%20Services) The Group has a new product approval process requiring business and support units to review, assess risks, and allocate resources before launching new products or services, with significant impacts reported to the Board - The new product approval process requires business and support units to review key provisions, risk assessments, and resource allocation plans before launching new products or services[331](index=331&type=chunk) - New products or services with a significant impact on the Group's risk profile must be reported to the Board or its authorized committee before launch[331](index=331&type=chunk) [2.32.2 Group Insurance Segment](index=85&type=section&id=2.32.2%20Group%20Insurance%20Segment) The insurance group's risk management covers insurance, product, investment, and business risks, aiming to maintain profitability and soundness, managed through reinsurance, product approval processes, and conservative investment strategies - The insurance business faces insurance risk, product risk, investment risk, and business risk[332](index=332&type=chunk) - The Group manages insurance risk through reinsurance, catastrophe compensation arrangements, and external actuarial assessments[333](index=333&type=chunk) - New products and significant modifications require a product approval process, with profitability assessed by internal and external actuaries[334](index=334&type=chunk) [2.32.2.1 Insurance Risk](index=85&type=section&id=2.32.2.1%20Insurance%20Risk) The Group manages insurance risk by setting maximum sums insured, reinsurance, and catastrophe compensation arrangements, with external independent actuaries assessing the adequacy of insurance reserves - The Group manages underwriting risk by setting maximum sums insured, reinsurance, and catastrophe compensation arrangements[333](index=333&type=chunk) - External independent actuaries are responsible for assessing the adequacy of insurance reserves[333](index=333&type=chunk) [2.32.2.2 Product Risk](index=85&type=section&id=2.32.2.2%20Product%20Risk) New products and significant modifications to existing products must undergo a product approval process, including profitability review and actuarial assessment - New products and significant modifications to existing products must undergo a product approval process[334](index=334&type=chunk) - The approval process includes a review of profitability and assessment by internal and external independent actuaries[334](index=334&type=chunk) [2.32.2.3 Investment Risk](index=86&type=section&id=2.32.2.3%20Investment%20Risk) The insurance group's investment strategy aims to balance assets and policy liabilities in terms of returns, duration, and currency, maintaining investment value through a conservative portfolio - The investment strategy aims to balance the returns, duration, and currency matching of insurance business assets and policy liabilities[336](index=336&type=chunk) - The Group strives to maintain investment value with a conservative investment portfolio, considering relevant risks, taxes, and regulatory requirements[336](index=336&type=chunk) [2.32.2.4 Business Risk](index=86&type=section&id=2.32.2.4%20Business%20Risk) The Group's Hong Kong and Macau insurance subsidiaries assess business risks, including contingency plans and staff training, in accordance with Group policies and local regulations - Dah Sing Insurance (1976) Limited, the Hong Kong insurance subsidiary, assesses business risks, including contingency and business continuity plans, and provides training for staff and agents[337](index=337&type=chunk) - Banco Comercial de Macau (Insurance) Limited adheres to local regulations in assessing business risks[337](index=337&type=chunk) [2.32.2.5 Capital Management](index=86&type=section&id=2.32.2.5%20Capital%20Management) Insurance subsidiaries must comply with local insurance regulators' minimum capital requirements and solvency regulations, with appropriate tests embedded to ensure continuous compliance - Insurance subsidiaries must comply with the minimum capital amounts and types prescribed by local insurance regulatory authorities[338](index=338&type=chunk) - The Group has embedded appropriate tests within its asset and liability management framework to ensure continuous and full compliance with solvency regulations[338](index=338&type=chunk) [2.32.3 Role of Internal Audit Department](index=86&type=section&id=2.32.3%20Role%20of%20Internal%20Audit%20Department) The Group's Internal Audit Department is an independent, objective advisory unit focused on improving and maintaining sound internal controls across the Group's business and support units, reporting to the Group Audit Committee - The Internal Audit Department is an independent, objective, and advisory unit focused on improving and maintaining sound internal controls across the Group's business and support units[343](index=343&type=chunk) - The department functionally reports to the Group Audit Committee, chaired by an independent non-executive director[343](index=343&type=chunk) III. Corporate and Business Overview [3.1 Highlights](index=88&type=section&id=3.1%20Highlights) In the first half of 2020, the Group's profit attributable to shareholders decreased by 33.1% to HK$745 million, primarily due to a significant decline in the banking group's performance, while insurance and investment activities remained relatively stable | Indicator | H1 2020 (HK$) | Change (%) | | :--- | :--- | :--- | | Profit attributable to shareholders | 745 million | (33.1) | | Interim dividend per share | HK$0.27 | N/A | - The banking group's profit attributable to shareholders decreased by **30.2%**, mainly due to increased impairment charges for loans and the investment in Bank of Chongqing[347](index=347&type=chunk) [3.2 Business and Financial Review](index=88&type=section&id=3.2%20Business%20and%20Financial%20Review) Banking business performance was weak, with net interest income down 9% and net interest margin contracting by 24 basis points to 1.66%; net fee and commission income was flat, while trading income significantly increased; credit impairment charges surged to HK$365 million, and the investment in Bank of Chongqing was impaired by another HK$200 million; insurance business net profit was similar to the prior year - Net interest income decreased by approximately **9%**, and net interest margin contracted by **24 basis points** to **1.66%**[348](index=348&type=chunk) - Net fee and commission income remained flat, with good performance in wealth management and foreign exchange income[349](index=349&type=chunk) - Net credit impairment charges increased from **HK$93 million** to **HK$365 million**, with an additional **HK$200 million** impairment on the investment in Bank of Chongqing[349](index=349&type=chunk) - Net premium income from Hong Kong and Macau general insurance business grew by **10.1%**, with overall net profit similar to the prior year[350](index=350&type=chunk) | Indicator | June 30, 2020 | | :--- | :--- | | Annualized return on assets | 0.8% | | Return on equity | 5.6% | | Dah Sing Bank's consolidated Common Equity Tier 1 capital adequacy ratio | 13.1% | | Dah Sing Bank's total consolidated capital adequacy ratio | 16.9% | [3.3 Prospects](index=90&type=section&id=3.3%20Prospects) The Group anticipates continued difficult economic and business conditions in the second half of the year, with no expectation of significant improvement; low interest rates and deteriorating credit quality are unfavorable, but the Group will maintain prudent management and resilience, with general insurance business growth prospects slightly better than core banking - The Group does not expect significant economic improvement in the remaining months of the year, anticipating continued difficult economic and business conditions in the second half[351](index=351&type=chunk) - Low interest rates and deteriorating credit quality are unfavorable to business, but the Group's business, funding, and liquidity remain sound[351](index=351&type=chunk) - The Group is keen to continue expanding premium income from its general insurance business, which has slightly better growth prospects than core banking[351](index=351&type=chunk) IV. Corporate Governance and Other Information [4.1 Interim Dividend](index=91&type=section&id=4.1%20Interim%20Dividend) The Board declared an interim dividend of HK$0.27 per share for 2020, payable on September 21, 2020, to shareholders registered on September 15, 2020 - The Board declared an interim dividend of **HK$0.27** per share for 2020[353](index=353&type=chunk) - The dividend will be paid on **September 21, 2020**, to shareholders registered on **September 15, 2020**[353](index=353&type=chunk) [4.2 Closure of Register of Shareholders](index=91&type=section&id=4.2%20Closure%20of%20Register%20of%20Shareholders) To determine eligibility for the interim dividend, the register of shareholders will be closed from September 11 to September 15, 2020, with the share transfer deadline at 4:30 p.m. on September 10, 2020 - The register of shareholders will be closed from **Friday, September 11, 2020**, to **Tuesday, September 15, 2020**[354](index=354&type=chunk) - The deadline for share transfers is **4:30 p.m. on Thursday, September 10, 2020**[354](index=354&type=chunk) [4.3 Interests of Directors and Chief Executive](index=92&type=section&id=4.3%20Interests%20of%20Directors%20and%20Chief%20Executive) As of June 30, 2020, directors and the chief executive held interests in the company's and its associated corporations' shares, underlying shares, and share options, with Mr. David Shou-Yeh Wong holding a 42.96% interest in the Company | Director | Total Interest in the Company (shares) | Percentage of Total Issued Shares | Total Interest in Dah Sing Bank Gro

Financial Performance - Profit attributable to shareholders decreased from HK$1,915 million in 2018 to HK$1,708 million in 2019, a decline of 10.8%[4] - Basic earnings per share decreased from HK$5.72 in 2018 to HK$5.28 in 2019, a decline of 7.7%[4] - Operating income from the banking business declined by 6% compared to 2018[73] - Operating profit before credit impairment losses decreased by 15.3% to HK$2,620.5 million in 2019 from HK$3,093.5 million in 2018[112] - Profit attributable to shareholders fell by 10.8% to HK$1,707.8 million in 2019 compared to HK$1,915.2 million in 2018[112] - The cost to income ratio rose to 53.2% in 2019 from 47.6% in 2018, indicating increased operational costs[112] - The return on equity decreased from 9.8% to 8.5%, indicating reduced profitability[127] Asset and Deposit Growth - Total assets increased from HK$237,301 million in 2018 to HK$250,312 million in 2019, marking a growth of 5.5%[4] - Total deposits rose from HK$178,945 million in 2018 to HK$188,866 million in 2019, an increase of 5.4%[4] - Advances to customers (excluding trade bills) grew from HK$128,628 million in 2018 to HK$136,947 million in 2019, reflecting a growth of 6.5%[4] - Current and savings deposit balances rose by 19% year-on-year, driven by efforts to acquire new customers and deepen existing relationships[139] - Outstanding loans increased by 8%, with mortgage growth of 10% for the year[142] Insurance and Investment Performance - Net insurance premium and other income grew by 38% to HK$472 million for the year[83] - Total comprehensive income from insurance and investment operations was HK$687 million, supported by improved underwriting and investment results[83] - The insurance business reported a net profit of HK$73 million in 2019, up from HK$35 million in 2018, with net insurance premiums and other income increasing to HK$496 million[197] - The overall investment performance of the insurance business improved significantly, turning from a net loss of HKD 5.9 billion in 2018 to a net income of HKD 319 million in 2019[200] Capital Adequacy and Liquidity - The consolidated Common Equity Tier 1 ratio of Dah Sing Bank was 13.4%, slightly up from 13.1% at the end of 2018[84] - The consolidated total capital adequacy ratio at year-end was 17.9%, similar to the prior year[84] - Average Liquidity Maintenance Ratio during the year was 46%, well above the minimum requirement of 25%[84] - The capital adequacy ratio remained stable at 17.9%, with a common equity tier 1 capital ratio of 13.4%[127] Leadership and Governance - The company has a strong board with members holding significant experience in finance, banking, and regulatory affairs[30] - The Audit Committee is chaired by Mr. Sze, ensuring oversight of financial reporting and compliance[27] - The Nomination and Remuneration Committee is actively involved in governance and board member selection[30] - The company is focused on maintaining high standards of corporate governance and risk management practices[34] - The leadership team includes members with qualifications from prestigious institutions, contributing to the company's strategic direction and governance[62] Market Presence and Strategic Focus - The company continues to focus on expanding its market presence and enhancing its product offerings to drive future growth[4] - The company plans to return to a growth-focused strategy when the economic conditions stabilize[107] - The company is focused on maintaining its competitive position in the banking industry through strategic management and governance[56] Economic Environment - The unemployment rate increased by 0.5% to 3.3% by the end of 2019, reflecting economic challenges faced during the year[113] - The overall inflation rate rose to 2.9% by the end of 2019, indicating rising cost pressures in the economy[113] - The company continues to provide full banking services in Hong Kong, Mainland China, and Macau despite the economic downturn[95] Digital Initiatives and Customer Engagement - The bank launched a mobile banking app with biometric solutions in November 2019 to enhance customer experience[174] - The "YOU Banking" service attracted a 26% increase in customer numbers, with 69% being new customers[139] - The e-Express bank account opening initiative recorded a positive response, with 81% of new customers being new-to-bank[148]