[Financial Statements Overview](index=1&type=section&id=Financial%20Statements) [Condensed Consolidated Income Statement](index=1&type=section&id=Condensed%20Consolidated%20Income%20Statement) The Group achieved a turnaround to a net profit of **HKD 2.57 million** for the six months ended June 30, 2025, driven by a 12.7% increase in net interest income and a 31.1% rise in net fee and commission income | Metric | Six Months Ended June 30, 2025 (HKD thousands) | Six Months Ended June 30, 2024 (HKD thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Net Interest Income | 530,513 | 470,710 | +12.7% | | Net Fee and Commission Income | 138,802 | 105,872 | +31.1% | | Operating Income | 685,161 | 593,909 | +15.4% | | Operating Expenses | (465,183) | (432,844) | +7.5% | | Credit Loss Expense | (155,870) | (164,303) | -5.1% | | Profit/(Loss) Before Tax | 17,956 | (27,605) | Turnaround to Profit | | **Profit/(Loss) for the Period** | **2,567** | **(34,493)** | **Turnaround to Profit** | | Basic Earnings Per Share (HKD) | 0.002 | (0.031) | Turnaround to Profit | [Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive income for the period significantly improved to **HKD 59.8 million** from a loss of **HKD 61.06 million** in the prior year, driven by the period's profit turnaround and positive changes in debt securities and exchange differences - Other comprehensive income for the period recorded **HKD 57.23 million**, compared to a loss of **HKD 26.57 million** in the prior year, due to improved net gains on debt securities investments and exchange differences[4](index=4&type=chunk) - Total comprehensive income attributable to owners turned from a loss of **HKD 61.06 million** in the prior year to a gain of **HKD 59.8 million**, combining profit for the period and other comprehensive income[4](index=4&type=chunk) [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets increased by 1.7% to **HKD 43.59 billion**, driven by growth in customer loans and debt securities, with total liabilities also rising to **HKD 35.85 billion** due to increased customer deposits | Key Balance Sheet Items | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Customer Loans and Advances | 24,615,452 | 24,192,793 | +1.7% | | Debt Securities Investments | 8,389,808 | 6,624,576 | +26.6% | | **Total Assets** | **43,589,772** | **42,843,996** | **+1.7%** | | Customer Deposits | 33,229,927 | 32,173,517 | +3.3% | | **Total Liabilities** | **35,851,219** | **35,143,279** | **+2.0%** | | **Total Equity** | **7,738,553** | **7,700,717** | **+0.5%** | [Condensed Consolidated Statement of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total shareholders' equity slightly increased to **HKD 7.74 billion** as of June 30, 2025, primarily due to the period's profit and other comprehensive income, partially offset by declared dividends - Dividends declared during the period amounted to **HKD 21.96 million**[7](index=7&type=chunk) - Shareholders' equity increased by approximately **0.5%** from **HKD 7.70 billion** at the beginning of the period to **HKD 7.74 billion** at the end of the period[7](index=7&type=chunk) [Notes to the Interim Financial Statements](index=7&type=section&id=Notes%20to%20the%20Interim%20Financial%20Statements) [Note 5: Segment Information](index=12&type=section&id=Note%205%3A%20Segment%20Information) The Group's primary business segments are Retail and Commercial Banking, Wealth Management, and Other Businesses, with Retail and Commercial Banking contributing **87.7%** of operating income, while wealth management and securities services saw significant growth | Operating Segment | Operating Income (H1 2025, HKD thousands) | Operating Income (H1 2024, HKD thousands) | Profit/(Loss) Before Tax (H1 2025, HKD thousands) | Profit/(Loss) Before Tax (H1 2024, HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Retail and Commercial Banking | 601,019 | 536,807 | 26,432 | (30,611) | | Wealth Management Services, Stockbroking and Securities Management | 73,025 | 46,643 | 33,849 | 22,326 | | Other Businesses | 11,117 | 10,459 | (42,325) | (19,320) | | **Total** | **685,161** | **593,909** | **17,956** | **(27,605)** | - Geographically, Hong Kong contributed the vast majority of revenue, accounting for **94.7%** of the total[26](index=26&type=chunk) [Note 10: Credit Loss Expense](index=19&type=section&id=Note%2010%3A%20Credit%20Loss%20Expense) Credit loss expense for the period decreased by **5.1%** to **HKD 156 million**, primarily driven by credit losses on customer loans, with a significant portion attributed to credit-impaired (Stage 3) loans | Financial Instrument | Credit Loss Expense (H1 2025, HKD thousands) | Credit Loss Expense (H1 2024, HKD thousands) | | :--- | :--- | :--- | | Customer Loans | 155,558 | 139,835 | | Others | 312 | 24,468 | | **Total** | **155,870** | **164,303** | [Note 12: Dividends](index=22&type=section&id=Note%2012%3A%20Dividends) The Board declared an interim dividend of **HKD 0.02** per ordinary share for the year ending December 31, 2025, with no interim dividend paid in the prior corresponding period - An interim dividend of **HKD 0.02** per share was declared, totaling **HKD 21.96 million**[39](index=39&type=chunk) - The dividend will be paid on August 1, 2025[68](index=68&type=chunk) [Note 14: Customer Loans and Advances](index=23&type=section&id=Note%2014%3A%20Customer%20Loans%20and%20Advances) Total customer loans and advances increased by **1.9%** to **HKD 25.01 billion**, but asset quality deteriorated with credit-impaired loans significantly rising from **HKD 546 million** to **HKD 772 million**, increasing their proportion of total loans from **2.23%** to **3.10%** | Loan Status | June 30, 2025 (HKD thousands) | December 31, 2024 (HKD thousands) | | :--- | :--- | :--- | | Neither Past Due Nor Impaired | 23,565,407 | 23,356,203 | | Past Due But Not Impaired | 659,257 | 622,579 | | Credit Impaired | 789,434 | 563,254 | | **Total** | **25,014,098** | **24,542,036** | - The proportion of total past due and credit-impaired customer loans to total customer loans increased from **2.23%** to **3.10%**[44](index=44&type=chunk) - Total loans classified as 'non-performing' (substandard, doubtful, loss) based on internal credit ratings increased from **HKD 563 million** to **HKD 789 million**[54](index=54&type=chunk) [Note 17: Off-balance-sheet Exposures](index=38&type=section&id=Note%2017%3A%20Off-balance-sheet%20exposures) As of June 30, 2025, the Group's total contractual amount of contingent liabilities, commitments, and derivative instruments remained stable at approximately **HKD 3.30 billion**, with unconditionally cancellable commitments forming the largest portion at **HKD 2.61 billion** | Item | June 30, 2025 (Contractual Amount, HKD thousands) | December 31, 2024 (Contractual Amount, HKD thousands) | | :--- | :--- | :--- | | Contingent Liabilities and Commitments | 35,210 | 132,190 | | Derivatives Held for Trading | 547,292 | 744,108 | | Other Commitments | 2,714,337 | 2,422,395 | | **Total** | **3,296,839** | **3,298,693** | [Management Discussion and Analysis](index=42&type=section&id=Management%20Discussion%20and%20Analysis) [Overview and Financial Review](index=42&type=section&id=Overview%20and%20Financial%20Review) Despite a challenging economic environment in Hong Kong, the Group achieved a turnaround to a post-tax profit of **HKD 2.6 million** in H1 2025, driven by a **12.7%** increase in net interest income and a **25.5%** rise in non-interest income, though asset quality remains under pressure - The Group operated cautiously amidst a challenging environment characterized by slow economic recovery and rising business closures and bankruptcies[69](index=69&type=chunk) - The Group turned from a loss of **HKD 34.5 million** in the prior year to a profit of **HKD 2.6 million**[71](index=71&type=chunk) - Key drivers for improved performance included a **HKD 59.8 million** (**+12.7%**) increase in net interest income and a **HKD 31.4 million** (**+25.5%**) rise in non-interest income[71](index=71&type=chunk) [Business Review](index=44&type=section&id=Business%20Review) The Group's core subsidiaries showed mixed performance, with Public Bank (Hong Kong) achieving loan and deposit growth and a profit turnaround despite a significant rise in impaired loans, while Public Finance experienced a sharp profit decline due to increased credit losses on unsecured personal loans [Public Bank (Hong Kong)](index=44&type=section&id=Public%20Bank%20%28Hong%20Kong%29) - Total customer loans grew by **2.9%** to **HKD 19.35 billion**, and customer deposits increased by **4.1%** to **HKD 29.08 billion**[76](index=76&type=chunk) - The ratio of impaired customer loans to total customer loans significantly increased from **1.95%** to **3.02%**[76](index=76&type=chunk) - A profit of **HKD 38.4 million** was recorded, compared to a loss of **HKD 4.1 million** in the prior year[76](index=76&type=chunk) [Public Finance](index=44&type=section&id=Public%20Finance) - Total customer loans decreased by **1.5%** to **HKD 5.11 billion**, and customer deposits fell by **2.2%** to **HKD 4.18 billion**[77](index=77&type=chunk) - Profit decreased by **69.1%** to **HKD 2 million**, primarily due to increased credit loss expense on unsecured personal loans[77](index=77&type=chunk) [Funding and Capital Management](index=46&type=section&id=Funding%20and%20Capital%20Management) The Group maintains a robust funding and capital position, primarily relying on internal capital growth and customer deposits, with Public Bank (Hong Kong) Group's consolidated Common Equity Tier 1 and total capital ratios at **26.8%** and **27.6%** respectively, well above regulatory requirements - The Group primarily relies on internal capital growth, customer deposits, and deposits from financial institutions to fund its operations[83](index=83&type=chunk) - The asset-to-liability ratio (bank loans/equity) is at a healthy level of **0.20x**[83](index=83&type=chunk) | Capital Adequacy Ratios (Public Bank (Hong Kong) Group) | June 30, 2025 | | :--- | :--- | | Consolidated Common Equity Tier 1 Capital Ratio | 26.8% | | Total Capital Ratio | 27.6% | [Asset Quality and Credit Management](index=46&type=section&id=Asset%20Quality%20and%20Credit%20Management) The Group's asset quality is under pressure due to a challenging operating environment and weak asset prices, with the ratio of impaired customer loans to total customer loans increasing from **2.2%** to **3.1%**, necessitating continued prudent credit risk management - The ratio of impaired customer loans to total customer loans increased by **0.9** percentage points from **2.2%** as of December 31, 2024, to **3.1%** as of June 30, 2025[85](index=85&type=chunk) [Outlook](index=47&type=section&id=Outlook) Management anticipates slow economic recovery with uncertain prospects due to geopolitical and trade issues, limiting loan growth, while the Group will pursue prudent capital and risk management, seek profitable loan growth, diversify income through fee-based businesses, and advance digital transformation - Slow economic recovery is anticipated, but the outlook remains highly uncertain due to geopolitical and international trade issues, which will limit loan growth[88](index=88&type=chunk) - Strategic priorities include: prudent capital and liquidity risk management; seeking profitable loan growth while managing funding costs; diversifying income through fee-based businesses like stockbroking and insurance; and advancing digital transformation to enhance efficiency, such as launching an upgraded mobile banking application[88](index=88&type=chunk)[89](index=89&type=chunk) - The Group has set sustainability goals: achieving Scope 1 and Scope 2 carbon neutrality by 2030, and net-zero carbon emissions by 2050[89](index=89&type=chunk) [Corporate Governance and Other Information](index=48&type=section&id=Corporate%20Governance%20%26%20Other%20Information) [Corporate Governance and Audit Committee Review](index=48&type=section&id=Corporate%20Governance%20and%20Audit%20Committee%20Review) The company confirmed compliance with the Corporate Governance Code during the reporting period, and the unaudited interim results were reviewed by the Audit Committee, comprising three independent non-executive directors and two non-executive directors - During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed shares[91](index=91&type=chunk) - The Board confirmed compliance with the Corporate Governance Code as set out in Appendix C1 of the Listing Rules[92](index=92&type=chunk) - These interim results have been reviewed by the Audit Committee[93](index=93&type=chunk)

Core Insights - The data indicates significant trading volume increases for various companies, suggesting heightened investor interest and potential market movements [1][2][3][4][5] Group 1: Companies with Notable Volume Increases - 阳光能源 (00757) reported a volume ratio of 2.35, indicating strong trading activity [2] - 长城汽车 (02333) had a volume ratio of 2.21, reflecting increased investor engagement [2] - 郑煤机 (00564) showed a volume ratio of 1.92, suggesting a notable rise in trading [2] Group 2: Additional Companies with Increased Trading Activity - 万国数据-SW (09698) recorded a volume ratio of 1.83, indicating significant market interest [2] - 映恩生物-B (09606) had a volume ratio of 1.78, reflecting heightened trading activity [2] - 超盈国际控股 (02111) reported a volume ratio of 1.71, suggesting increased investor focus [2] Group 3: Companies with Moderate Volume Ratios - 中国能源建设 (03996) had a volume ratio of 1.70, indicating a solid level of trading activity [2] - 亚信科技 (01675) reported a volume ratio of 1.60, reflecting moderate investor interest [2] - 金宝通 (00320) showed a volume ratio of 1.53, suggesting a rise in trading volume [2] Group 4: Companies with Lower Volume Ratios - 中国水务 (00855) had a volume ratio of 1.52, indicating stable trading activity [2] - 广汽集团 (02238) reported a volume ratio of 1.52, reflecting consistent investor engagement [2] - 凯莱英 (06821) showed a volume ratio of 1.52, suggesting steady trading interest [2]

Company Overview - The company is incorporated in Bermuda with stock code 626[2] - The main office is located at 120 Des Voeux Road Central, Hong Kong[5] - The group structure includes 100% ownership of Public Bank (Hong Kong) Limited and Public Finance Limited, with a 73.2% stake in WINTON (B.V.I.) LIMITED[9] Financial Performance - The company reported a profit of HKD 500 million in 2024, a significant recovery from previous losses[24] - Total deposits reached HKD 50 billion in 2024, showing a steady increase from previous years[23] - Customer loans and trade bills totaled HKD 40 billion in 2024, reflecting a growth trend[23] - Total assets amounted to HKD 45 billion in 2024, indicating a robust financial position[23] - The equity increased to HKD 400 million in 2024, demonstrating improved financial health[24] - The company reported a net loss of HKD 999.4 million for the fiscal year 2024, including a goodwill impairment of HKD 810 million, compared to a net profit of HKD 14.4 million in the previous year[30] - Total operating income slightly decreased by HKD 2 million or 0.2% to HKD 1.24 billion, primarily due to a decrease in net interest income by HKD 21.7 million caused by rising funding costs[30] - Total operating expenses increased by HKD 857.9 million or 101.8% to HKD 1.7 billion, mainly due to goodwill impairment and increased employee costs related to talent retention strategies[30] Market and Growth Strategies - Future outlook indicates a projected revenue growth of 10% for the next fiscal year, driven by new product launches and market expansion strategies[12] - Market expansion efforts include the opening of 10 new branches in key regions, aiming to increase market penetration by 20%[14] - The company is investing in new technology development, allocating approximately $50 million towards R&D initiatives in the upcoming year[13] - The company plans to enhance its customer service capabilities by investing $5 million in training and technology upgrades[19] - The company is exploring potential mergers and acquisitions to strengthen its market position[19] - The company aims to optimize systems and human resources to improve operational cost efficiency and achieve internal cost synergies[49] Risk Management and Compliance - The company has established procedures to continuously identify, assess, and manage significant risks, including environmental, social, and governance risks[138] - The company has adopted a risk management framework that has been improved in response to the operating environment and regulatory requirements in Hong Kong and mainland China[141] - The company has a dedicated compliance department to handle anti-money laundering and compliance issues, ensuring adherence to regulatory requirements[160] - The company encourages all employees to report significant risk issues through its whistleblowing policy, promoting a culture of integrity and compliance[152][153] Corporate Governance - The board consists of eight directors, with three being independent non-executive directors, meeting the requirement of at least one-third independence[80] - The board emphasizes good corporate governance practices to enhance shareholder value through effective management[108] - The company has adopted a code of ethics to enhance corporate governance and corporate behavior standards[98] - The company has established mechanisms to ensure independent viewpoints are communicated to enhance decision-making effectiveness[79] Shareholder Engagement - The company has established multiple communication channels to maintain effective dialogue with shareholders[109] - Shareholders have the right to propose resolutions at the annual general meeting if they hold at least 5% of the total voting rights[178] - The company maintains effective communication with shareholders through various channels, ensuring timely dissemination of information[164] Social Responsibility and Community Engagement - The company has received the "Caring Company" logo from the Hong Kong Council of Social Service, recognizing its commitment to social responsibility[197] - The company organized various community service activities, including making handmade flower bouquets and care packages for the elderly[191] - The company emphasizes the importance of mental health through workshops and community engagement initiatives[193]

Financial Performance - Total interest income for the year ended December 31, 2024, was HKD 2,052,398,000, an increase of 4.8% from HKD 1,958,740,000 in 2023[2] - Net interest income decreased to HKD 983,291,000 from HKD 1,005,025,000, reflecting a decline of 2.2%[2] - The company reported a loss before tax of HKD 1,015,410,000 compared to a profit of HKD 40,631,000 in the previous year[3] - The net loss attributable to the company’s owners for the year was HKD 999,387,000, a significant decline from a profit of HKD 14,381,000 in 2023[3] - Total operating income decreased slightly to HKD 1,236,640,000 from HKD 1,238,629,000, reflecting a decline of 0.2%[46] - The company recorded a significant pre-tax loss of HKD 1,015,410,000 compared to a profit of HKD 40,631,000 in the previous year[46] - Basic loss per share for 2024 was HKD 0.91, compared to a profit of HKD 0.01 per share in 2023[67] - The company reported a net loss of HKD 999.4 million for the year ending December 31, 2024, compared to a net profit of HKD 14.4 million in the previous year, with a basic loss per share of HKD 0.91[108] Assets and Liabilities - Total assets increased to HKD 42,843,996,000 from HKD 40,954,692,000, representing a growth of 4.6%[9] - The company’s total liabilities increased to HKD 35,143,279,000 from HKD 32,276,268,000, marking an increase of 8.6%[9] - The company’s equity attributable to owners decreased to HKD 7,700,717,000 from HKD 8,678,424,000, a decline of 11.2%[9] - The total amount of financial liabilities for 2024 is HKD 35,821,727,000, resulting in a net working capital deficit of HKD 4,459,471,000[99] Customer Loans and Receivables - Customer loans and receivables rose to HKD 24,192,793,000, up from HKD 23,947,182,000, indicating a growth of 1.0%[9] - Total customer loans increased by HKD 2.9 billion or 1.2% to HKD 244.6 billion as of December 31, 2024, primarily due to the Hong Kong government's withdrawal of property cooling measures[113] - The total amount of customer loans and receivables as of December 31, 2024, is HKD 24,542,036, an increase from HKD 24,287,724 in 2023, representing a growth of approximately 1.05%[77] - The total amount of impaired customer loans was HKD 545,880, a reduction from HKD 885,192 in the previous year, showing a decline of about 38%[71] - The percentage of overdue customer loans over three months was 1.90%, down from 3.49% in 2023, indicating improved loan performance[71] Credit Loss and Impairment - Total expected credit loss for customer loans was HKD 469,452,000 in 2024, compared to HKD 319,634,000 in 2023, indicating a rise of 46.8%[62] - Credit loss expenses rose by HKD 174.7 million or 53.9% to HKD 499.1 million, driven by increased defaults and additional impairment provisions for certain corporate borrowers[112] - The expected credit loss provisions for the first stage increased to HKD 136,403 in 2024 from HKD 87,528 in 2023, reflecting a rise of approximately 55.8%[81] - The company recorded a goodwill impairment of HKD 810,000,000 in 2024, with no such impairment in 2023[59] Capital Management and Compliance - The group has complied with the capital regulations set by the Monetary Authority regarding capital base and capital adequacy ratios during the reporting period[19] - The required capital conservation buffer ratio for 2023 and 2024 is 2.5%, while the countercyclical capital buffer ratios are 1.0% and 0.5% respectively for the same years[21] - The group has maintained compliance with the minimum requirements set by the Securities and Futures Commission regarding liquidity and capital performance indicators[21] - The capital management plan must be submitted to the Monetary Authority if the group fails to comply with externally imposed capital requirements[19] Operational Highlights - The group plans to diversify revenue sources by developing fee-based businesses such as stock brokerage and insurance[131] - The group will continue to optimize existing products and services to expand its retail and commercial loan businesses[131] - The group aims to enhance operational efficiency and cost synergies through restructuring operational processes and increasing digitalization[131] - The group anticipates a slow economic recovery in Hong Kong and mainland China in 2025, with conservative risk appetite affecting loan growth[129] Economic Outlook - The overall economic outlook remains uncertain, with challenges particularly affecting SMEs and traditional businesses in Hong Kong[106] - The group expects that the amendments to the Hong Kong Financial Reporting Standards will not have a significant impact on its financial statements[35]

Financial Performance - Net interest income for the six months ended June 30, 2024, was HKD 470,710, a decrease of 7.2% from HKD 507,088 in the same period of 2023[16]. - Total operating income for the first half of 2024 was HKD 593,909, down from HKD 641,899 in the previous year, reflecting a decline of 7.5%[16]. - The company reported a loss of HKD 34,493 for the six months ended June 30, 2024, compared to a profit of HKD 113,753 in the same period of 2023, marking a significant turnaround[16]. - The company recorded a net loss of HKD 61,061 in total comprehensive income for the first half of 2024, compared to a total comprehensive income of HKD 141,903 in the same period of 2023[18]. - The basic and diluted loss per share for the first half of 2024 was HKD (0.031), compared to earnings of HKD 0.104 per share in the same period of 2023[16]. - The company reported a pre-tax loss of HKD 56,840,000 for the six months ended June 30, 2024, compared to a profit of HKD 29,235,000 in 2023[60]. - The company reported a net loss of HKD 34,493,000 for the six months ended June 30, 2024, compared to a profit of HKD 113,753,000 for the same period in 2023[64]. - The company reported a significant increase in the third stage expected credit loss due to credit risk changes, amounting to HKD 118,818,000[86]. Assets and Liabilities - Total assets increased to HKD 43,132,864 as of June 30, 2024, up from HKD 40,954,692 at the end of 2023, representing a growth of 5.3%[21]. - The company’s equity and liabilities totaled HKD 34,515,501, up from HKD 32,276,268 at the end of 2023, showing a growth of 6.9%[21]. - Total liabilities increased to HKD 34,515,501,000 as of June 30, 2024, compared to HKD 32,276,268,000 at the end of 2023[44]. - Total customer loans and receivables amounted to HKD 24,672,034,000 as of June 30, 2024, up from HKD 24,287,724,000 as of December 31, 2023[70]. - The total amount of impaired customer loans and receivables was HKD 921,279,000 as of June 30, 2024, compared to HKD 885,192,000 as of December 31, 2023[74]. - The total amount of loans and receivables from new loans/financing during the period was HKD 4,065,959,000[82]. Customer Deposits and Loans - Total deposits rose to HKD 31,746,368 as of June 30, 2024, compared to HKD 29,536,440 at the end of 2023, reflecting an increase of 7.5%[21]. - Customer loans and trade bills totaled HKD 24,417,904, an increase from HKD 23,947,182 at the end of 2023, indicating a growth of 2.0%[21]. - The percentage of overdue customer loans exceeding three months was 3.38% as of June 30, 2024, compared to 3.49% as of December 31, 2023[74]. - The total amount of overdue but not impaired customer loans was HKD 902,495,000 as of June 30, 2024, accounting for 3.67% of total customer loans, compared to HKD 923,613,000 or 3.82% as of December 31, 2023[81]. Operational Highlights - The company continues to focus on maintaining discipline and prudence in its operations, emphasizing ethics and integrity in its business practices[9]. - The company plans to continue expanding its retail and commercial banking operations and accelerate digital transformation[159]. - The group aims to pursue prudent capital management and liquidity risk management to maintain sufficient buffers against future challenges, while seeking reasonable loan growth to increase net interest income[167]. - The group plans to expand its retail and commercial banking businesses and consumer loan operations through its extensive branch network, focusing on appropriate marketing strategies[168]. Risk Management - The group faces multiple risks including interest rate, market, credit, liquidity, operational, cybersecurity, climate, and compliance risks[126]. - The group has established policies and procedures to control and monitor various financial risks[127]. - The group maintains a limited foreign exchange risk due to its primary assets and liabilities being denominated in HKD, USD, and RMB[131]. - The group’s credit risk management includes a credit policy that defines credit scope, measurement criteria, and approval processes[132]. Capital Management - The group is required to maintain a capital conservation buffer of 2.5% as part of its capital management strategy[148]. - The consolidated common equity tier 1 capital ratio for the Hong Kong bank was 23.9% as of June 30, 2024, down from 24.9% at the end of 2023[147]. - The group maintained a liquidity capital ratio exceeding 100% for both RMB and foreign currency at its mainland offices as of June 30, 2024[141]. Corporate Governance - The audit committee, composed of three independent non-executive directors, reviewed the interim report for 2024[175]. - The company has confirmed compliance with the Corporate Governance Code throughout the reporting period[175]. - The company expressed gratitude to the management team and employees for their contributions during the period[175].

Financial Performance Overview [Consolidated Statement of Income and Other Comprehensive Income](index=1&type=section&id=Consolidated%20Statement%20of%20Income%20and%20Other%20Comprehensive%20Income) The Group recorded a net loss of HKD 34.493 million for the six months ended June 30, 2024, primarily due to decreased net interest income and a significant increase in credit loss expense Consolidated Statement of Income and Other Comprehensive Income | Metric | Six Months Ended June 30, 2024 (HKD thousands) | Six Months Ended June 30, 2023 (HKD thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income | 470,710 | 507,088 | -7.2% | | Operating Income | 593,909 | 641,899 | -7.5% | | Credit Loss Expense | (164,303) | (79,851) | +105.8% | | (Loss)/Profit Before Tax | (27,605) | 143,382 | - | | (Loss)/Profit for the Period | (34,493) | 113,753 | - | | Basic (Loss)/Earnings per Share (HKD) | (0.031) | 0.104 | - | - Total comprehensive loss for the period was **HKD 61.061 million**, compared to a total comprehensive income of **HKD 141.9 million** in the prior period, primarily impacted by net loss and foreign exchange difference losses[73](index=73&type=chunk)[52](index=52&type=chunk) [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the Group's total assets increased by 5.3% to HKD 43.13 billion, while total liabilities grew and total equity slightly decreased Consolidated Statement of Financial Position | Metric | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 43,132,864 | 40,954,692 | +5.3% | | Customer Loans and Receivables | 24,417,904 | 23,947,182 | +2.0% | | Total Liabilities | 34,515,501 | 32,276,268 | +6.9% | | Customer Deposits | 31,746,368 | 29,536,440 | +7.5% | | Total Equity | 8,617,363 | 8,678,424 | -0.7% | [Consolidated Statement of Changes in Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Total shareholders' equity decreased to HKD 8.617 billion as of June 30, 2024, primarily due to the net loss and other comprehensive loss incurred during the period - Total equity at the beginning of the period was **HKD 8.678 billion**, decreasing to **HKD 8.617 billion** at the end of the period due to losses and other comprehensive losses[57](index=57&type=chunk) - The Group maintains regulatory reserves to meet the prudential regulatory requirements of the Hong Kong Banking Ordinance, with these reserves appropriated from retained profits[78](index=78&type=chunk) Notes to Financial Statements [Basis of Preparation and Accounting Policies](index=7&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim financial statements are prepared under HKAS 34, consistent with prior annual policies, with no significant impact from newly adopted revised standards - The interim financial statements are prepared in accordance with **Hong Kong Accounting Standard 34** and should be read in conjunction with the 2023 annual report[79](index=79&type=chunk)[59](index=59&type=chunk) - Revisions to **Hong Kong Accounting Standard 1** regarding liability classification were adopted this period, but after assessment, these revisions had no impact on the Group's liability classification[116](index=116&type=chunk)[69](index=69&type=chunk)[89](index=89&type=chunk) [Segment Information](index=11&type=section&id=Segment%20Information) The Group's operations are segmented into retail and commercial banking, wealth management, and other businesses, with most revenue and assets concentrated in Hong Kong [By Operating Segment](index=11&type=section&id=By%20Operating%20Segment) Retail and commercial banking generated most operating income but incurred a pre-tax loss, while wealth management services achieved a pre-tax profit - The Group's operating segments include: **retail and commercial banking**, **wealth management services** (including stock brokerage and securities management), and **other businesses** (including taxi trading/leasing and property investment)[15](index=15&type=chunk) Operating Segment Performance | Operating Segment | Operating Income (HKD thousands) | (Loss)/Profit Before Tax (HKD thousands) | | :--- | :--- | :--- | | Retail and Commercial Banking | 536,807 | (30,611) | | Wealth Management Services, etc. | 46,643 | 22,326 | | Other Businesses | 10,459 | (19,320) | | **Total** | **593,909** | **(27,605)** | Operating Segment Assets and Liabilities | Operating Segment | Segment Assets (June 30, 2024, HKD thousands) | Segment Liabilities (June 30, 2024, HKD thousands) | | :--- | :--- | :--- | | Retail and Commercial Banking | 42,113,392 | 34,208,146 | | Wealth Management Services, etc. | 430,593 | 245,091 | | Other Businesses | 501,035 | 6,906 | [By Geographical Area](index=14&type=section&id=By%20Geographical%20Area) The Group's operations are highly concentrated in Hong Kong, with the majority of external customer revenue and non-current assets derived from this region Segment Revenue by Region | Region | Segment Revenue from External Customers (HKD thousands) | | :--- | :--- | | Hong Kong | 542,586 | | Mainland China | 51,323 | Non-current Assets by Region | Region | Non-current Assets (June 30, 2024, HKD thousands) | | :--- | :--- | | Hong Kong | 4,246,447 | | Mainland China | 17,023 | [Notes on Key Financial Items](index=15&type=section&id=Notes%20on%20Key%20Financial%20Items) This section details key financial items, highlighting decreased net interest income, significantly increased credit loss expense, and no interim dividend declaration [Interest Income and Expense](index=15&type=section&id=Interest%20Income%20and%20Expense) Net interest income decreased in the first half of 2024 due to interest expense growing faster than interest income Interest Income and Expense Summary | Item | H1 2024 (HKD thousands) | H1 2023 (HKD thousands) | | :--- | :--- | :--- | | Interest Income | 1,013,752 | 950,446 | | Interest Expense | (543,042) | (443,358) | | **Net Interest Income** | **470,710** | **507,088** | [Net Fee and Commission Income](index=15&type=section&id=Net%20Fee%20and%20Commission%20Income) Net fee and commission income decreased by 8.6% to HKD 106 million in H1 2024, mainly from wealth management and brokerage services Net Fee and Commission Income Summary | Item | H1 2024 (HKD thousands) | H1 2023 (HKD thousands) | | :--- | :--- | :--- | | Fee and Commission Income | 106,788 | 116,911 | | Fee and Commission Expense | (916) | (1,013) | | **Net Fee and Commission Income** | **105,872** | **115,898** | [Operating Expenses](index=17&type=section&id=Operating%20Expenses) Total operating expenses slightly increased to HKD 433 million in H1 2024, primarily driven by a rise in staff costs Operating Expenses Summary | Item | H1 2024 (HKD thousands) | H1 2023 (HKD thousands) | | :--- | :--- | :--- | | Staff Costs | 276,772 | 266,820 | | Other Operating Expenses | 156,072 | 158,416 | | **Operating Expenses Before Fair Value Changes of Investment Properties** | **432,844** | **425,236** | [Credit Loss Expense](index=18&type=section&id=Credit%20Loss%20Expense) Net credit loss expense surged by 105.8% to HKD 164 million in H1 2024, mainly due to increased Stage 3 provisions for customer loans - Net credit loss expense increased from **HKD 79.851 million** in the prior period to **HKD 164.3 million** this period[22](index=22&type=chunk)[34](index=34&type=chunk) - Credit loss expense for customer loans was **HKD 140 million**, a major component of total expense, with **Stage 3 (credit-impaired)** provisions amounting to **HKD 124 million**[22](index=22&type=chunk) [Taxation](index=20&type=section&id=Taxation) Despite a pre-tax loss, the Group incurred a tax expense of HKD 6.888 million due to taxable profits from Mainland China operations Taxation Summary | Item | H1 2024 (HKD thousands) | H1 2023 (HKD thousands) | | :--- | :--- | :--- | | (Loss)/Profit Before Tax | (27,605) | 143,382 | | Tax Expense | (6,888) | (29,629) | - Hong Kong operations recorded a pre-tax loss of **HKD 56.84 million**, while Mainland China operations recorded a pre-tax profit of **HKD 29.24 million**, resulting in a tax expense despite an overall loss[37](index=37&type=chunk) [Dividends](index=21&type=section&id=Dividends) The Board resolved not to declare an interim dividend for H1 2024, unlike the prior period's HKD 0.03 per share dividend - The Board resolved not to declare a **2024 interim dividend**[101](index=101&type=chunk)[40](index=40&type=chunk) - The interim dividend declared for the same period in 2023 was **HKD 0.03 per share**, totaling approximately **HKD 32.94 million**[40](index=40&type=chunk) [Earnings/(Loss) per Share](index=22&type=section&id=Earnings%2F%28Loss%29%20per%20Share) Basic loss per share was HKD 0.031 for H1 2024, a decline from basic earnings per share of HKD 0.104 in the prior period - Basic loss per share was **HKD 0.031**, calculated based on a loss of **HKD 34.493 million** for the period and a weighted average of **1,097,917,618 ordinary shares**[18](index=18&type=chunk)[49](index=49&type=chunk) - As of the end of the reporting period, the Group had no ordinary shares outstanding with potential dilutive effects[19](index=19&type=chunk) [Customer Loans and Receivables](index=22&type=section&id=Customer%20Loans%20and%20Receivables) Total customer loans and receivables slightly increased to HKD 24.67 billion, but credit quality deteriorated with a rise in overdue loans, while impairment allowances decreased due to write-offs Customer Loans and Receivables Summary | Item | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | Total Customer Loans and Receivables | 24,672,034 | 24,287,724 | | Credit-impaired Customer Loans and Receivables | 940,121 | 931,237 | | Total Impairment Allowances | (254,130) | (340,542) | - Total customer loans overdue by over three months amounted to **HKD 830 million**, representing **3.38%** of total loans[154](index=154&type=chunk) - The change in total impairment allowances was primarily influenced by write-offs of **HKD 294 million** in loans during the period[168](index=168&type=chunk)[96](index=96&type=chunk) [Debt Securities Investments](index=34&type=section&id=Debt%20Securities%20Investments) Total debt securities investments increased to HKD 7.99 billion, with over 90% holding an A3 or higher credit rating, indicating good credit quality Debt Securities Investments Summary | Item | June 30, 2024 (HKD thousands) | December 31, 2023 (HKD thousands) | | :--- | :--- | :--- | | Total Debt Securities Investments | 7,991,993 | 7,639,528 | - The investment portfolio primarily consists of debt securities issued by **banks and other financial institutions (HKD 4.52 billion)** and **central governments (HKD 2.78 billion)**[171](index=171&type=chunk) - Over **90%** of debt securities investments are rated **A3 or higher by Moody's**, with no impaired or overdue debt securities investments at period-end[200](index=200&type=chunk)[148](index=148&type=chunk) [Contingent Liabilities, Commitments and Derivatives](index=37&type=section&id=Contingent%20Liabilities%2C%20Commitments%20and%20Derivatives) Off-balance sheet risk exposure totaled HKD 2.45 billion, mainly from cancellable commitments and foreign exchange contracts, with HKD 20,000 in related expected credit loss provisions Off-Balance Sheet Risk Exposure | Item | Contract Amount (HKD thousands) | | :--- | :--- | | Direct Credit Substitutes | 27,805 | | Transaction-related Contingent Items | 18,590 | | Other Unconditionally Cancellable Commitments | 1,749,820 | | Foreign Exchange Contracts | 467,485 | - The corresponding expected credit loss for unaccepted off-balance sheet risk exposures was **HKD 20,000**[178](index=178&type=chunk) Management Discussion and Analysis [Financial Review](index=41&type=section&id=Financial%20Review) The Group reported a post-tax loss of HKD 34.5 million in H1 2024, a significant decline attributed to decreased net interest income and a surge in credit loss expense - The Group recorded a post-tax loss of **HKD 34.5 million**, a significant decrease of **HKD 148.3 million** compared to the profit in the prior period[128](index=128&type=chunk) - Net interest income decreased by **7.2%** to **HKD 470.7 million**, primarily due to increased interest costs on time deposits[184](index=184&type=chunk) - Credit loss expense increased by **105.8%** to **HKD 164.3 million**, primarily impacted by increased credit costs for hire purchase loans and unsecured personal loans[216](index=216&type=chunk) [Business Review](index=43&type=section&id=Business%20Review) Retail and commercial banking, despite high revenue contribution, incurred a pre-tax loss due to increased credit losses, while wealth management saw profit growth despite revenue decline - Retail and commercial banking business operating income accounted for **90.4%**, but recorded a pre-tax loss of **HKD 30.6 million**, primarily due to increased credit loss expense[191](index=191&type=chunk)[221](index=221&type=chunk) - Operating income from wealth management services, stock brokerage, and securities management businesses decreased by **15%** to **HKD 46.6 million**, but pre-tax profit increased by **47.7%** to **HKD 22.3 million** due to reduced operating costs[192](index=192&type=chunk) - The main subsidiary, Public Bank (Hong Kong), recorded a loss of **HKD 4.1 million** (compared to a profit of **HKD 65.3 million** in the prior period), primarily due to increased credit loss expense for hire purchase loans caused by falling license values in the taxi and public light bus industries[188](index=188&type=chunk) [Funding, Capital and Risk Management](index=45&type=section&id=Funding%2C%20Capital%20and%20Risk%20Management) The Group maintains strong capital ratios well above regulatory requirements, though asset quality faces challenges with a slight increase in impaired customer loans - Public Bank (Hong Kong) Group's consolidated **Common Equity Tier 1 capital ratio is 23.9%**, and its **total capital ratio is 24.7%**, indicating a robust capital position[196](index=196&type=chunk) - The ratio of impaired customer loans to total customer loans slightly increased from **3.7%** at the end of 2023 to **3.8%** as of June 30, 2024, reflecting a challenging operating environment[240](index=240&type=chunk) - The Group's primary funding sources are **internal capital growth**, **customer deposits**, and **financial institution deposits**, with the bank loan-to-equity ratio maintained at a healthy **0.18 times**[225](index=225&type=chunk)[238](index=238&type=chunk) [Outlook](index=47&type=section&id=Outlook) The Group anticipates an uncertain economic outlook for H2 2024, focusing on prudent risk management, customer base expansion, income diversification, and digital transformation - A slow economic recovery is expected in the second half of 2024, with a highly uncertain outlook and limited growth momentum for corporate loans[230](index=230&type=chunk) - The Group will continue to adopt prudent capital and liquidity risk management and seek loan growth with reasonable returns[244](index=244&type=chunk) - More resources will be allocated in the future to promote the **digitalization of financial services** and develop business through electronic channels to enhance efficiency and cost-effectiveness[244](index=244&type=chunk)[231](index=231&type=chunk) Corporate Governance and Other Information [Corporate Governance and Compliance](index=48&type=section&id=Corporate%20Governance%20and%20Compliance) The Board confirmed compliance with the Corporate Governance Code, the Audit Committee reviewed interim results, and no listed shares were purchased, sold, or redeemed - The Audit Committee has reviewed the unaudited interim results for the six months ended June 30, 2024[248](index=248&type=chunk) - The Board was not aware of any information indicating non-compliance with the code provisions of the Corporate Governance Code during the reporting period[247](index=247&type=chunk) - For the six months ended June 30, 2024, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed shares[246](index=246&type=chunk)

Financial Performance - The company reported a significant increase in revenue, achieving a total of $1.2 billion, representing a 15% year-over-year growth[12]. - The profit recorded by大众银行（香港） is HKD 70.9 million, yielding an investment return of 1.1%[122]. - The group’s operating income from retail and commercial banking decreased by HKD 158.8 million or 12.2% to HKD 1.14 billion, primarily due to a reduction in net interest income impacted by rising funding costs[148]. - The pre-tax profit from retail and commercial banking dropped by HKD 340.3 million or 84.6% to HKD 61.8 million, mainly due to increased credit loss expenses from a large commercial borrower and several lease loans[148]. - Total operating income for 2023 was HKD 1,238,629 thousand, down 9.8% from HKD 1,373,944 thousand in 2022[188]. - The net profit for the year was HKD 14,381 thousand, a decrease of 95.6% from HKD 328,697 thousand in the previous year[188]. - The total comprehensive income for 2023 was HKD 66,782 thousand, down 73.4% from HKD 250,939 thousand in 2022[189]. - The company's net interest income for 2023 was HKD 1,005,025 thousand, a decrease of 12.6% from HKD 1,150,913 thousand in 2022[188]. - The cash inflow from operating activities for 2023 was HKD 79,693 thousand, compared to a cash outflow of HKD 375,045 thousand in 2022[195]. - The basic and diluted earnings per share for 2023 were both HKD 0.013, down from HKD 0.299 in 2022[188]. Customer Metrics - User data showed a growth in active users to 5 million, up from 4 million in the previous year, indicating a 25% increase[12]. - Customer satisfaction ratings improved to 90%, reflecting a 5% increase from the previous year[12]. - Total customer loans of Public Financial Holdings decreased slightly from HKD 5.09 billion to HKD 5.08 billion, a decline of HKD 9 million or 0.2%[32]. - Customer deposits increased from HKD 4.29 billion to HKD 4.41 billion, an increase of HKD 112.5 million or 2.6%[32]. - The ratio of impaired loans to total customer loans rose from 1.44% to 1.63%, an increase of 0.19%[32]. Strategic Outlook - The company provided an optimistic outlook for the next quarter, projecting revenue growth of 10% to 12%[12]. - New product launches are expected to contribute an additional $200 million in revenue over the next fiscal year[12]. - Market expansion plans include entering two new regions, which are projected to increase market share by 5%[12]. - The company is considering strategic acquisitions to bolster its competitive position, with a budget of $100 million allocated for potential deals[12]. - The company plans to enhance its digital marketing strategy, expecting a 20% increase in online engagement[12]. - The company aims to maintain prudent capital management and liquidity risk management to retain sufficient buffers for future challenges[104]. - The company will continue to diversify its revenue sources by developing brokerage and insurance businesses[104]. - The company will allocate more resources to drive the digitalization of its financial services and improve operational efficiency[107]. - The company is committed to integrating sustainable development into its business plans and expanding its green finance initiatives[107]. Operational Efficiency - The management emphasized a focus on improving operational efficiency, aiming for a 3% reduction in costs by the end of the fiscal year[12]. - The company has implemented a compensation policy to encourage employee behavior that supports its risk management framework and long-term financial stability[92]. - The group plans to actively develop its business model to ensure high-quality service levels and prudent risk management[143]. - The company has a dedicated management team at each branch, enhancing customer service and operational efficiency[17]. Corporate Governance - The board of directors is committed to enhancing long-term shareholder value and aligning the group's objectives with current economic and market conditions[63]. - The board confirmed that the company maintains the required public float as per listing rules prior to the publication of the annual report[132]. - The board of directors has taken actions to ensure strict compliance with listing rules and corporate governance codes[110]. - The audit firm Ernst & Young will present a resolution for reappointment at the upcoming annual general meeting[134]. - The board of directors has undergone changes, with several members resigning or being appointed in early 2024[74]. Financial Position - Total assets decreased to HKD 40,954,692 thousand in 2023 from HKD 41,917,931 thousand in 2022, representing a decline of approximately 2.3%[172]. - Total liabilities decreased to HKD 32,276,268 thousand in 2023 from HKD 33,273,351 thousand in 2022, indicating a decline of about 3.0%[173]. - Total equity increased to HKD 8,678,424 thousand in 2023 from HKD 8,644,580 thousand in 2022, showing a slight increase of approximately 0.4%[173]. - The company has a significant amount of debt securities recorded at amortized cost, totaling HKD 7,639,528 thousand in 2023, compared to HKD 7,437,495 thousand in 2022[172]. - The company is required to test goodwill for impairment annually, with the current value of goodwill being a critical audit matter due to its significance in the financial statements[175]. Employee and Culture - As of December 31, 2023, the group had a total of 1,201 employees, with total employee-related costs amounting to HKD 532.9 million for the year[158]. - The group aims to maintain a strong corporate culture through values such as mutual care, discipline, and ethical conduct, which are reflected in employee policies and performance evaluations[130]. - The group is committed to providing competitive compensation and benefits to reward outstanding employees and support their career development[130]. - The group emphasizes the importance of effective communication channels to share inappropriate practices and disciplinary cases with employees[130]. Market Conditions - The outlook for Hong Kong and mainland China's economy is expected to continue a slow recovery in 2024, but loan growth will remain constrained due to high market interest rates and geopolitical factors[131]. - The market interest rates are expected to gradually decline in the second half of 2024, which may alleviate financing cost pressures for the group[131].

Financial Performance - For the year ended December 31, 2023, total operating income was HKD 1,238,629,000, a decrease of 9.8% from HKD 1,373,944,000 in 2022[4] - The pre-tax operating profit decreased to HKD 40,631,000 in 2023 from HKD 406,509,000 in 2022, representing a decline of 90%[4] - The company reported a profit for the year of HKD 14,381,000 in 2023, significantly down from HKD 328,697,000 in 2022[4] - The company's basic earnings per share for 2023 were HKD 0.013, a decrease from HKD 0.299 in 2022[30] - The group’s total comprehensive income for the year was HKD 66.78 million, down from HKD 250.94 million in the previous year[116] - The company's basic and diluted earnings per share for 2023 were HKD 0.013, down from HKD 0.299 in 2022, reflecting a decline of 95.6%[130] Assets and Liabilities - The total assets as of December 31, 2023, were HKD 40,954,692,000, down from HKD 41,917,931,000 in 2022, a decrease of 2.3%[7] - The total liabilities decreased to HKD 32,276,268,000 in 2023 from HKD 33,273,351,000 in 2022, a decline of 3%[7] - The total amount of customer loans and receivables, net of impairment provisions, amounted to HKD 23,947,182,000 in 2023, down from HKD 24,679,582,000 in 2022[33] - The total value of financial assets amounted to HKD 37.38 billion, with cash and short-term deposits totaling HKD 3.72 billion[1] - The total value of financial liabilities reached HKD 32.66 billion, with customer deposits accounting for HKD 29.54 billion[1] Income and Expenses - Net interest income for 2023 was HKD 1,958,740,000, up 30.5% from HKD 1,500,836,000 in 2022[11] - Total operating expenses for 2023 amounted to HKD 843,100,000, compared to HKD 823,618,000 in 2022, reflecting an increase in operational costs[20] - Employee costs, including salaries and other employee-related expenses, rose to HKD 507,041,000 in 2023 from HKD 485,198,000 in 2022[20] - Total rental income for 2023 was HKD 20,259,000, an increase from HKD 16,203,000 in 2022, resulting in a net rental income of HKD 20,186,000 compared to HKD 16,129,000 in the previous year[14] - The total amount of expected credit losses for the third stage was HKD 315,942,000 in 2023, indicating a substantial increase in credit impairment[23] Credit and Risk Management - The net credit loss expense for customer loans in 2023 was HKD 319,634,000, a significant increase from HKD 129,744,000 in 2022, indicating a rise in credit risk[23] - The overdue customer loans for 2023 totaled HKD 923,613,000, representing 3.82% of total customer loans, compared to HKD 1,238,856,000 or 5.00% in 2022[38] - The ratio of impaired loans to total customer loans increased to 3.66%, primarily due to one large commercial borrower's impairment[118] - The company strategically focused on the secured lending market to manage credit risk amid a challenging operating environment[107] - The company has seen a rise in the amount of loans that are overdue but not impaired, which stood at HKD 929,948 in 2023 compared to HKD 1,245,696 in 2022[47] Dividends and Shareholder Returns - The company declared an interim dividend of HKD 0.03 per share for 2023, down from HKD 0.05 in 2022, totaling HKD 32,938,000[28] - The company did not declare a second interim dividend or a final dividend for the year, reflecting a cautious approach due to operational uncertainties[108] Economic Environment and Future Outlook - The overall economic environment in Hong Kong remains challenging despite slight improvements due to the easing of pandemic measures and border reopening[66] - The company expects slow recovery in the Hong Kong and mainland China economies in 2024, with loan growth momentum continuing to be constrained[147] - The company aims to seek reasonable loan growth while managing funding costs to increase net interest income[149] - The company plans to enhance its retail and commercial banking business through its extensive branch network and optimize existing products and services[149] Regulatory Compliance and Financial Reporting - The group has complied with the capital regulations set by the Monetary Authority regarding capital base and capital adequacy ratios during the reporting period[164] - The group has adopted new and revised Hong Kong Financial Reporting Standards, including HKFRS 17 and HKAS 1, which impact the disclosure of accounting policies[174] - The group plans to apply the revised Hong Kong Financial Reporting Standards when they become effective, with no significant impact expected on the financial statements[179]

Financial Performance - For the six months ended June 30, 2023, net interest income was HKD 507,088,000, a decrease of 16.2% from HKD 605,972,000 for the same period in 2022[15]. - Total operating income for the six months ended June 30, 2023, was HKD 641,899,000, down 10.1% from HKD 714,106,000 in the previous year[15]. - The profit for the period attributable to the company's owners was HKD 113,753,000, representing a decline of 41.1% compared to HKD 193,319,000 in the same period of 2022[15]. - The basic and diluted earnings per share for the six months ended June 30, 2023, were both HKD 0.104, down from HKD 0.176 in the previous year[15]. - Total comprehensive income for the period was HKD 141,903,000, compared to HKD 150,452,000 in the previous year, reflecting a decline of 5.5%[48]. - The pre-tax operating profit for the six months ended June 30, 2023, was HKD 119,088,000, a decline of 48.4% compared to HKD 231,094,000 in 2022[119]. - The company reported a net profit of HKD 113,753,000 for the six months ended June 30, 2023, compared to HKD 193,319,000 in the previous year, reflecting a decline of 41.2%[119]. Credit Risk and Management - The group reported a credit loss expense of HKD 79,851,000 for the six months ended June 30, 2023, compared to HKD 61,852,000 in the same period of 2022, indicating an increase of 28.9%[15]. - The bank's credit committee monitors the quality of financial assets, focusing on those that are neither overdue nor impaired, using performance indicators such as loan-to-value ratios and debt service ratios[41]. - The risk management committee reviews and assesses the adequacy of the risk management framework to identify, measure, and monitor credit risks associated with existing and new products[41]. - The group manages credit risk through collateral provided by guarantors and loan securities, including customer deposits and properties[41]. - The total amount of overdue and impaired customer loans and receivables reached HKD 876,949, which is 3.59% of total customer loans, up from 1.23% in the previous period[198]. - The total amount of customer loans with credit impairment was HKD 876,949 as of June 30, 2023, reflecting an increase in credit risk[198]. Financial Position - As of June 30, 2023, total deposits amounted to HKD 50 billion, while customer loans and trade bills totaled HKD 45 billion, reflecting a stable financial position[32]. - The total value of financial assets amounted to HKD 36,259,770,000, while total financial liabilities were HKD 31,549,910,000, indicating a net current asset deficit of HKD 4,709,860,000[52]. - The company's equity attributable to owners decreased to HKD 8,753,545 thousand from HKD 8,644,580 thousand, reflecting a slight decline of 1.26%[66]. - The total liabilities decreased to HKD 31,207,938 thousand from HKD 33,273,351 thousand, a reduction of about 6.21%[65]. - The company's total classified assets as of June 30, 2023, were HKD 39,910,583,000, down from HKD 41,855,360,000 as of December 31, 2022[121]. Liquidity and Cash Flow - Cash and short-term deposits significantly decreased to HKD 1,911,364 thousand from HKD 3,406,271 thousand, a drop of about 43.83%[65]. - Net cash outflow from operating activities was HKD 1,416,606 thousand, compared to an inflow of HKD 474,292 thousand in the previous year[70]. - The total amount of cash and short-term deposits was HKD 754,534,000, with total customer loans and receivables amounting to HKD 640,638,000[52]. - The cash and cash equivalents at the end of the period were HKD 2,684,952 thousand, down from HKD 5,332,384 thousand, a decrease of about 49.73%[72]. Regulatory Compliance and Accounting Standards - The group has complied with the capital regulations set by the Monetary Authority regarding capital base and capital adequacy ratios during the interim reporting period[108]. - The group has adopted new and revised Hong Kong Financial Reporting Standards effective from January 1, 2023, which may impact financial reporting[112]. - The group expects no significant impact from the upcoming amendments to accounting standards effective January 1, 2024, based on preliminary assessments[142]. - The group has revised its accounting policy disclosures to ensure compliance with recent amendments, demonstrating commitment to transparency[140]. Revenue and Expenses - Retail and commercial banking business revenue for the six months ended June 30, 2023, was HKD 508,705,000, a decrease of 16.1% from HKD 606,033,000 for the same period in 2022[119]. - Wealth management services revenue for the same period was HKD 54,774,000, down 26.5% from HKD 74,000,000 in the previous year[119]. - Total operating expenses for the six months ended June 30, 2023, were HKD 425,236 thousand, compared to HKD 412,339 thousand in the same period of 2022, representing an increase of 3.1%[157]. - Employee costs for the six months ended June 30, 2023, amounted to HKD 266,820 thousand, an increase of 3.2% from HKD 257,998 thousand in the same period of 2022[157]. Market and Operational Insights - The financial services segment, including banking and securities brokerage, remains the primary business focus of the group[75]. - The group’s subsidiaries are primarily registered in Hong Kong, with a focus on local market operations[101]. - The group has no major customers contributing more than 10% of total revenue, ensuring a diversified revenue base[150]. - The group is currently evaluating the impact of new accounting standards on existing loan agreements, indicating proactive financial management[142].

Financial Performance - For the six months ended June 30, 2023, the company reported interest income of HKD 950,446, an increase from HKD 694,666 in the same period of 2022, representing a growth of approximately 36.8%[13]. - Net interest income for the same period was HKD 507,088, down from HKD 605,972, indicating a decrease of about 16.2%[13]. - The company recorded a profit of HKD 113,753 for the six months ended June 30, 2023, compared to HKD 193,319 for the same period in 2022, reflecting a decline of approximately 41.2%[18]. - The total operating income for the first half of 2023 was HKD 641,899, down from HKD 714,106 in the previous year, a decrease of about 10.1%[13]. - The company’s total comprehensive income for the period was HKD 141,903, down from HKD 150,452 in the same period of 2022, a decrease of about 5.7%[21]. - The company declared dividends of HKD 32,938 thousand during the period, compared to HKD 120,771 thousand in the previous period, a decrease of about 72.77%[27]. - The company reported a profit of HKD 113,753 thousand for the period, compared to HKD 193,319 thousand in the previous period, representing a decline of approximately 41.19%[27]. - The pre-tax operating profit decreased to HKD 119,088,000, a decline of 48.4% compared to HKD 231,094,000 in the previous year[52]. - The basic earnings per share for the period was HKD 0.104, based on a profit of HKD 113,753,000, compared to HKD 0.176 for the same period in 2022, which had a profit of HKD 193,319,000[90]. Asset and Liability Management - The company’s net financing lease investment value as of June 30, 2023, was HKD 5,053,166, slightly down from HKD 5,060,971 as of December 31, 2022[7]. - The company’s total liabilities as of June 30, 2023, were HKD 7,383,163, compared to HKD 7,284,902 at the end of 2022, indicating an increase of approximately 1.4%[7]. - Total assets decreased to HKD 39,961,483 thousand as of June 30, 2023, down from HKD 41,917,931 thousand as of December 31, 2022, representing a decline of approximately 4.66%[23]. - Total liabilities decreased to HKD 31,207,938 thousand as of June 30, 2023, down from HKD 33,273,351 thousand as of December 31, 2022, indicating a reduction of about 6.21%[23]. - Total equity attributable to owners increased to HKD 8,753,545 thousand as of June 30, 2023, compared to HKD 8,644,580 thousand as of December 31, 2022, reflecting an increase of approximately 1.26%[25]. - Cash and short-term deposits decreased to HKD 1,911,364 thousand as of June 30, 2023, from HKD 3,406,271 thousand as of December 31, 2022, a significant decline of approximately 43.73%[23]. Credit and Risk Management - The company’s credit loss expense for the period was HKD 79,851, compared to HKD 61,852 in the prior year, representing an increase of approximately 28.9%[18]. - The overdue customer loans exceeding three months totaled HKD 807,492,000, accounting for 3.30% of total customer loans as of June 30, 2023, compared to 1.07% for the same period in 2022[96]. - The expected credit loss for customer loans was HKD 79,519,000, a decrease from HKD 61,949,000 in the previous year[82]. - The provision for impairment of specific assessments increased to HKD 101,381,000 as of June 30, 2023, from HKD 84,823,000 as of December 31, 2022, reflecting a rise of approximately 19.43%[108]. - The group’s credit risk analysis indicates that as of June 30, 2023, the total amount of loans classified as normal is HKD 23,208,846,000, with no loans in the bad category[129]. Regulatory Compliance and Accounting Policies - The group has complied with the capital regulations set by the Monetary Authority regarding capital base and capital adequacy ratios during the interim reporting period[34]. - The required capital conservation buffer ratio for 2022 and 2023 is 2.5%, while the countercyclical capital buffer ratio is 1.0%[35]. - The group has adopted the capital standards of Basel III as per the Banking Ordinance and the Capital Rules[35]. - The group has revised its accounting policy disclosures to ensure consistency with the new and revised Hong Kong Financial Reporting Standards[41]. - There were no changes in accounting policies or estimates during the reporting period that would affect the interim financial statements[41]. Operational Insights - The company aims to maintain a capital adequacy ratio and manage key risks carefully while seeking reasonable loan growth to increase net interest income[171]. - The company plans to diversify its revenue sources by developing fee-based businesses such as stock brokerage and insurance[171]. - The company will continue to adopt prudent and flexible marketing strategies to expand its customer base and service channels[171]. - The company is focused on optimizing system resources to enhance service quality and efficiency in banking operations[171]. - The company plans to continue expanding its retail and commercial banking business and accelerate its digital transformation efforts[186].