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].

Financial Performance - Net interest income for the six months ended June 30, 2022, was HKD 605,972, a decrease of 4.9% from HKD 637,682 in the same period of 2021[8]. - Total operating income decreased to HKD 714,106, down 7.0% from HKD 767,939 year-on-year[8]. - Profit for the period was HKD 193,319, representing a decline of 21.5% compared to HKD 246,355 in the previous year[8]. - Total operating income for the six months ended June 30, 2022, was HKD 677,763,000, a decrease of 5.5% from HKD 717,577,000 in the same period of 2021[68]. - Pre-tax operating profit before credit loss expenses was HKD 231,094,000 for the six months ended June 30, 2022, down 15.6% from HKD 273,588,000 in 2021[68]. - Profit for the period was HKD 193,319,000 for the six months ended June 30, 2022, compared to HKD 246,355,000 in 2021, reflecting a decrease of approximately 21.5%[68]. Assets and Liabilities - Total assets as of June 30, 2022, amounted to HKD 43,241,991, a slight decrease from HKD 43,528,152 at the end of 2021[20]. - Total liabilities were HKD 34,577,127, down from HKD 34,958,844 at the end of the previous year[20]. - Non-current assets in Hong Kong as of June 30, 2022, were HKD 4,168,695,000, an increase from HKD 4,106,064,000 as of December 31, 2021[76]. - The total customer loans and receivables as of June 30, 2022, amounted to HKD 25,183,584,000, down from HKD 26,251,479,000 as of December 31, 2021, indicating a decrease of approximately 4.1%[109]. - The total cash and short-term deposits as of June 30, 2022, was HKD 4,341,109,000, slightly up from HKD 4,320,631,000 as of December 31, 2021[103]. Equity and Earnings - The company reported a basic and diluted earnings per share of HKD 0.176, compared to HKD 0.224 in the same period last year[8]. - The company’s total equity attributable to owners increased to HKD 8,664,864 from HKD 8,569,308 at the end of 2021[20]. - The interim dividend declared for the six months ended June 30, 2022, was HKD 0.05 per share, consistent with the dividend declared for the same period in 2021[97]. Cash Flow and Investments - The cash flow from operating activities for the six months ended June 30, 2022, was HKD 474,292,000, compared to HKD 8,780,000 in the previous year[35]. - The net cash outflow from investing activities was HKD 86,204,000, compared to HKD 12,423,000 in the previous year[37]. - The cash and cash equivalents at the end of the period were HKD 5,332,384,000, down from HKD 5,970,645,000 a year earlier[37]. Credit and Loans - The company experienced an increase in credit loss expenses for customer loans and receivables, amounting to HKD 9,608,000[35]. - The total amount of overdue but not impaired customer loans and receivables was HKD 507,112,000 as of June 30, 2022, compared to HKD 560,052,000 as of December 31, 2021, showing a decrease of approximately 9.4%[112]. - The total amount of overdue and impaired customer loans reached HKD 275,578,000, which is 1.10% of total customer loans, compared to HKD 234,512,000 (0.90%) in the previous year[113]. - The specific assessment impairment provision for customer loans and receivables was HKD 74,013,000 as of June 30, 2022, compared to HKD 65,752,000 in the previous year[121]. Regulatory Compliance and Standards - The company complies with the capital regulations set by the Monetary Authority, maintaining a capital adequacy ratio of 2.5% for the required buffer capital[55]. - The company has adopted revised Hong Kong Financial Reporting Standards effective from January 1, 2022, impacting its accounting policies[55]. - The amendments to Hong Kong Financial Reporting Standard No. 3 clarify the recognition principles for business combinations, introducing an exception to avoid potential "day two" gains or losses from liabilities under HKAS 37 or HK(IFRIC) Interpretation 21[57]. Operational Focus - The company plans to focus on enhancing operational efficiency and exploring new market opportunities in the upcoming periods[3].

Financial Performance - The company reported a significant increase in net profit for the year, reaching HKD 1.2 billion, representing a 15% growth compared to the previous year[12] - Revenue for the last quarter reached $1.2 billion, representing a 15% increase compared to the previous quarter[34] - The company reported a net profit margin of 20%, which is a 2% increase from the previous quarter[34] - The group recorded a net profit of HKD 496.5 million for the year ended December 31, 2021, an increase of HKD 99.5 million or 25.1% compared to the previous year[62] - The profit for the year was HKD 550 million, demonstrating a solid performance[41] - The basic earnings per share for the year was HKD 0.452, compared to HKD 0.362 in the previous year[50] - The group maintained a consolidated common equity tier 1 capital ratio of 22.6% and a total capital ratio of 23.3% as of December 31, 2021[79] User Growth and Market Expansion - User data showed a 20% increase in active accounts, totaling 1.5 million users by the end of the fiscal year[12] - The company is expanding its market presence, planning to open 10 new branches in Hong Kong and mainland China within the next year[12] - The company is expanding its market presence in Southeast Asia, targeting a 30% increase in market share by the end of the year[34] - The company plans to expand its branch network across Hong Kong Island and Kowloon, enhancing customer accessibility[38] - The total number of branches in the group reached 83, with 32 in Hong Kong and 5 in Shenzhen, China[74] Product Development and Innovation - New product launches are expected to contribute an additional HKD 300 million in revenue, with a focus on digital banking solutions[12] - New product launches are expected to contribute an additional $200 million in revenue over the next fiscal year[34] - New product offerings are expected to be launched in the upcoming quarter, aimed at increasing market share[38] - The company is investing in technology development to improve service efficiency and customer experience[38] - Research and development expenses increased by 25%, totaling HKD 150 million, to support innovation in financial products[12] - Research and development expenses increased by 10% to support new technology initiatives[34] Strategic Acquisitions - A strategic acquisition of a fintech startup was announced, aimed at enhancing technological capabilities and customer service[12] - The company is exploring potential acquisitions to enhance its product offerings, with a budget of $500 million allocated for this purpose[34] - Strategic acquisitions are being considered to bolster market presence and diversify service offerings[38] Customer Satisfaction and Engagement - Customer satisfaction ratings improved to 90%, reflecting a 5% increase from the previous year[34] - The company plans to enhance its digital marketing strategies to attract younger demographics, targeting a 30% increase in engagement[12] Operational Efficiency and Cost Management - The company plans to implement new strategies to enhance operational efficiency, aiming for a 15% reduction in costs by the end of the fiscal year[34] - The group will continue to optimize systems and human resources to enhance operational efficiency and cost-effectiveness[61] Governance and Compliance - The company ensures strict compliance with listing rules and corporate governance codes, regularly reviewing and updating existing practices to align with local and international standards[99] - The board comprises experienced non-executive directors with expertise in banking and finance, ensuring effective oversight and governance[100] - The company has adopted a code of ethics for its directors to enhance corporate governance and behavior standards, focusing on transparency, integrity, accountability, and sustainability[122] - The company has established a board diversity policy, emphasizing a balanced distribution of skills, experience, and backgrounds among board members[126] Risk Management - The company has established a risk management framework aligned with its strategic goals, with a focus on identifying and managing significant risks[190] - The Risk Management Committee is responsible for overseeing all risk management activities, including market, liquidity, credit, operational, cybersecurity, and compliance risks[192] - The group conducts a comprehensive risk assessment to ensure compliance evaluation and risk management infrastructure are in place[199] Future Outlook - The company provided a positive outlook for the next fiscal year, projecting a revenue growth of 10% to HKD 5 billion[12] - The group aims for reasonable loan growth while managing funding costs to increase net interest income[86] - The anticipated increase in U.S. interest rates may keep Hong Kong dollar interest rates low, with net interest margins expected to remain under pressure in 2022[85]

Financial Performance - Interest income for the six months ended June 30, 2021, was HKD 728,743,000, a decrease of 17% from HKD 876,347,000 in 2020[10] - Net interest income increased to HKD 637,682,000, up 6% from HKD 603,308,000 in the previous year[10] - Profit for the period was HKD 246,355,000, representing a 74% increase compared to HKD 141,125,000 in 2020[10] - Total comprehensive income for the period reached HKD 256,731,000, compared to HKD 121,001,000 in the same period last year[14] - Basic and diluted earnings per share for the period were both HKD 0.224, compared to HKD 0.129 in the previous year[10] - The company reported a pre-tax profit of HKD 300,920,000, compared to HKD 177,984,000 in the previous year, marking an increase of 68.8%[30] - The net profit for the period was HKD 246,355,000, compared to HKD 141,125,000 in the previous year, representing a growth of 74.5%[63] Assets and Liabilities - Total assets as of June 30, 2021, amounted to HKD 45,138,010,000, slightly down from HKD 45,438,323,000 at the end of 2020[23] - Total liabilities decreased to HKD 36,671,034,000 from HKD 37,173,182,000 in the previous year[23] - Equity attributable to owners of the company increased to HKD 8,466,976,000, up from HKD 8,265,141,000 at the end of 2020[23] - The group’s total assets amounted to HKD 45,138,010,000 as of June 30, 2021, compared to HKD 45,438,323,000 at the end of 2020[66] - The total liabilities were HKD 36,671,033,000 as of June 30, 2021, down from HKD 37,173,182,000 as of December 31, 2020[66] Cash Flow and Investments - Net cash inflow from operating activities decreased significantly to HKD 8,780,000, compared to HKD 393,951,000 in the previous year, a decline of 97.8%[30] - Cash and cash equivalents at the end of the period amounted to HKD 5,970,645,000, an increase from HKD 5,205,145,000 year-over-year, reflecting a growth of 14.7%[32] - The net cash outflow from investing activities was HKD 12,423,000, a decrease from HKD 32,071,000 in the previous year, indicating an improvement of 61.2%[32] - The company’s investment activities included purchasing property and equipment totaling HKD 12,592,000, down from HKD 32,323,000, a decrease of 61%[32] Dividends - The company declared dividends of HKD 54,896,000 during the period, an increase from HKD 32,938,000 in 2020[26] - The total dividend paid was HKD 131,750,000, compared to HKD 164,688,000 in the previous year, a reduction of 20%[32] - The interim dividend declared for the six months ended June 30, 2021, was HKD 0.05 per share, an increase from HKD 0.03 per share in 2020, with total dividends amounting to HKD 54,896,000 compared to HKD 32,938,000 in 2020[89] Credit Loss and Impairments - The company reported a credit loss expense of HKD 48,502,000, significantly lower than HKD 116,929,000 in the same period last year[10] - Credit loss expense for customer loans was HKD 48,225,000 for the six months ended June 30, 2021, compared to HKD 116,929,000 in 2020, showing a reduction of 59%[83] - The expected credit loss (ECL) for Stage 1 was HKD 96,623,000, for Stage 2 was HKD 30,213,000, and for Stage 3 was HKD 52,178,000, totaling HKD 179,014,000 as of June 30, 2021[128] Regulatory Compliance - The interim financial statements were prepared in accordance with the Hong Kong Stock Exchange Listing Rules and Hong Kong Financial Reporting Standards, ensuring compliance with applicable disclosure requirements[48] - The group has adhered to the capital regulations set by the Hong Kong Monetary Authority regarding capital base and capital adequacy ratios during the interim reporting period[51] - The group has adopted revised Hong Kong Financial Reporting Standards effective from January 1, 2021, including HKFRS 9 and HKAS 39, which may impact financial reporting[59] Revenue Generation - Retail and commercial banking business generated revenue of HKD 717,577,000 for the six months ended June 30, 2021, compared to HKD 690,625,000 for the same period in 2020, representing an increase of 1.4%[63] - Wealth management services and securities management reported revenue of HKD 43,367,000 for the six months ended June 30, 2021, up from HKD 35,819,000 in 2020, reflecting a growth of 21.4%[63] - The total operating income for the group was HKD 767,939,000 for the six months ended June 30, 2021, compared to HKD 733,748,000 in 2020, indicating an increase of 4.7%[63] Risk Management - The group is exposed to various risks including interest rate risk, market risk, credit risk, and liquidity risk[199] - The risk management framework is overseen by the risk management committee, ensuring compliance with established policies[200] - The group engages in derivative trading, primarily forward currency contracts, to manage operational currency risks[198] Employee Costs - Employee costs rose to HKD 271,747,000 in 2021 from HKD 265,740,000 in 2020, representing an increase of 2%[81] - Short-term employee benefits for key management personnel were HKD 3,641,000, down from HKD 4,064,000 in the previous year, indicating a reduction of about 10.4%[182]

Financial Performance - The company reported a total revenue of HKD 1.2 billion for the fiscal year 2020, representing a year-on-year increase of 15%[2]. - Revenue for the last quarter reached $500 million, representing a 15% increase compared to the previous quarter[23]. - The company's profit for the year was HKD 550 million, reflecting a positive financial outcome[32]. - The group recorded a net profit of HKD 397 million for the year ended December 31, 2020, a decrease of HKD 69.3 million or 14.9% compared to the previous year[54]. - Basic earnings per share for 2020 were HKD 0.36, down from HKD 0.42 in 2019[43]. - Total operating income decreased by HKD 47.5 million or 3.0% to HKD 1.56 billion, primarily due to reduced net interest income in a low-interest-rate environment[43]. - The group's return on equity remained stable at 4.9%, despite downward pressure on net interest margin due to the low-interest-rate environment[60]. - The cost-to-income ratio was maintained at a satisfactory level of 55.1%, influenced by increased costs related to regulatory compliance and information systems[60]. User Growth and Customer Metrics - User data showed an increase in active accounts by 20%, reaching a total of 1.5 million users[2]. - The company reported a significant increase in user data, with a year-over-year growth of 25% in active users[23]. - Customer satisfaction ratings improved to 85%, reflecting the effectiveness of recent service enhancements[2]. - Customer retention rates improved to 85%, up from 80% in the previous quarter[23]. Future Outlook and Growth Strategies - The company provided a future outlook, projecting a revenue growth of 10% for the next fiscal year, driven by new product launches and market expansion[2]. - The company has set a future outlook with a revenue guidance of $600 million for the next quarter, indicating a 20% growth expectation[23]. - The company plans to expand its market presence by opening 10 new branches in key urban areas over the next year[2]. - The company is expanding its market presence in Southeast Asia, targeting a 10% market share by the end of the next fiscal year[23]. - New product launches are expected to contribute an additional $50 million in revenue over the next fiscal year[23]. Investment and Technology Development - Investment in new technology development increased by 25%, focusing on enhancing digital banking services[2]. - Research and development expenses increased by 30% to support new technology initiatives[23]. - The company is investing in technology upgrades to improve operational efficiency and customer experience[28]. - The company plans to allocate more resources to drive digital banking services and electronic channel growth in the future[49]. Acquisitions and Strategic Initiatives - A strategic acquisition of a fintech startup was announced, expected to enhance the company's digital capabilities and customer service[2]. - The company is exploring potential acquisitions to enhance its product offerings, with a budget of $100 million allocated for this purpose[23]. - The company is exploring strategic acquisitions to bolster its market position and growth potential[28]. Operational Efficiency and Cost Management - The company aims to improve operational efficiency, targeting a reduction in costs by 5% through process optimization[2]. - The company aims to diversify revenue sources, improve net interest margins, enhance operational cost efficiency, and effectively reduce bad debts to seek profitability growth[79]. - The company plans to maintain reasonable loan yields in a low-interest-rate environment and reduce funding costs by increasing current and savings deposits[79]. Corporate Governance and Board Activities - The board emphasized the importance of ethical practices and disciplined governance in driving long-term growth[2]. - The board held nine regular meetings and one annual general meeting during the year[97]. - The average attendance rate for board meetings was 97%[100]. - The board is responsible for discussing business strategies, approving financial budgets, and monitoring financial and operational performance[101]. - The roles of the chairman and CEO are separated to ensure a balance of power and authority[102]. - The company has established a governance policy emphasizing effective board management, robust risk management, and high transparency and accountability[120]. Risk Management - The risk management committee oversees the overall management of all identified risks, including market, liquidity, credit, operational, cybersecurity, and compliance risks[188]. - The group has established an internal capital adequacy assessment process to evaluate the capital adequacy supporting its risk-taking activities[196]. - The risk appetite defines the amount and types of risk the group is willing to accept in pursuit of its business objectives, setting risk tolerance levels and limits[196]. - The risk management framework has been improved in response to the operating environment and regulatory requirements in Hong Kong and China[185]. Audit and Compliance - The audit committee is responsible for overseeing the integrity of the group's financial reporting process and ensuring compliance with accounting standards and regulatory requirements[177]. - The audit committee reviewed the financial performance and reports for the year ended December 31, 2019, and the six months ended June 30, 2020[152]. - The company established a whistleblowing policy to allow employees and stakeholders to report concerns confidentially[148]. - The audit committee reviewed the revised whistleblowing policy and procedures, including reported cases[160].

Financial Performance - Net interest income for the six months ended June 30, 2020, was HKD 603,308, a decrease of 12.5% from HKD 689,449 in 2019[11] - Total operating income for the same period was HKD 733,748, down 9.4% from HKD 809,870 in 2019[11] - Profit before tax decreased to HKD 177,984, a decline of 42.4% compared to HKD 309,022 in the previous year[11] - The net profit for the period was HKD 141,125, representing a 45.1% decrease from HKD 256,970 in 2019[11] - The total comprehensive income for the period was HKD 121,001, a decrease of 53.3% from HKD 259,743 in 2019[15] - The operating profit before changes in operating assets and liabilities decreased to HKD 128,784,000, down from HKD 310,984,000 in the previous year, representing a decline of approximately 58.7%[32] - Total operating income for the group was HKD 733,748,000 for the six months ended June 30, 2020, compared to HKD 809,870,000 in 2019, marking a decrease of around 9%[61] - The group reported a net profit of HKD 141,125,000 for the first half of 2020, significantly lower than HKD 256,970,000 in the same period of 2019, representing a decline of approximately 45%[61] Assets and Liabilities - Total assets as of June 30, 2020, were HKD 44,505,307, a slight decrease from HKD 45,222,840 at the end of 2019[23] - Total liabilities decreased to HKD 36,439,858 from HKD 37,245,454 in the previous year[23] - The total equity attributable to the owners of the company increased to HKD 8,065,449 from HKD 7,977,386 in 2019[23] - The company’s total liabilities decreased by HKD 632,072,000, compared to an increase of HKD 173,628,000 in the previous year, indicating a significant shift in financial position[32] - The total assets of the group as of June 30, 2020, were HKD 44,505,307,000, compared to HKD 45,222,840,000 as of December 31, 2019, showing a decrease of about 2%[64] - The total liabilities of the group were HKD 36,439,858,000 as of June 30, 2020, down from HKD 37,245,454,000 at the end of 2019, indicating a reduction of approximately 2%[64] Cash Flow and Investments - Net cash inflow from operating activities was HKD 393,951,000, a significant decrease from HKD 1,012,335,000 in the prior year, reflecting a decline of about 61.1%[35] - The net cash outflow from investing activities was HKD 32,071,000, compared to HKD 30,772,000 in the previous year, indicating a slight increase of 4.2%[35] - The total cash and cash equivalents at the end of the period increased to HKD 5,205,145,000, up from HKD 4,966,945,000, marking an increase of about 4.8%[35] Credit and Loans - The company reported a credit loss expense increase of HKD 14,416,000 for customer loans and receivables, compared to a credit loss expense of HKD 5,183,000 in the previous year, indicating a significant increase[32] - Customer loans amounted to HKD 27,250,353,000 as of June 30, 2020, down from HKD 28,720,607,000 at the end of 2019, reflecting a decrease of 5.1%[95] - The group reported a total of HKD 27,152,069,000 in customer loans and receivables after deducting impairment provisions, down from HKD 28,630,953,000 in 2019[99] - The total amount of overdue and impaired customer loans was HKD 205,935, representing 0.76% of total customer loans as of June 30, 2020, up from HKD 192,737 or 0.67% as of December 31, 2019[102] - The total expected credit loss for the first stage was HKD 6,263,707,000, while the total for the second and third stages was HKD 222,227,000 and HKD 183,401,000 respectively, leading to a total expected credit loss of HKD 6,263,707,000[126] Regulatory Compliance - The group has complied with the capital regulations set by the Hong Kong Monetary Authority regarding capital base and capital adequacy ratios during the interim reporting period[51] - The required capital conservation buffer (CCB) ratio for 2019 and 2020 is 2.5%, while the countercyclical capital buffer (CCyB) ratios are 2.0% and 1.0% respectively for those years[54] - The group has adopted the capital standards of the Basel III framework as outlined in the Banking Ordinance and the Banking (Capital) Rules[54] Employee and Operational Costs - Employee costs for the six months ended June 30, 2020, were HKD 265,740,000, down from HKD 278,372,000 in 2019, representing a decrease of 4.5%[77] - The company received government subsidies amounting to HKD 11,495,000 under the Employment Support Scheme to maintain employment during the COVID-19 pandemic[76] - The company’s total operating expenses before changes in the fair value of investment properties were HKD 427,104,000, compared to HKD 439,289,000 in 2019, showing a reduction of 2.8%[77] Dividends and Earnings - The company declared dividends of HKD 32,938 for the period, compared to HKD 54,896 in the previous year[28] - The interim dividend declared for 2020 was HKD 0.03 per share, down from HKD 0.05 per share in 2019, totaling HKD 32,938,000 compared to HKD 54,896,000 in the previous year[86] - Basic earnings per share for the six months ended June 30, 2020, were HKD 0.128, a decrease of 45.1% from HKD 0.234 in 2019[87] Real Estate and Investments - The fair value of investment properties as of June 30, 2020, was HKD 379,585,000, down from HKD 391,316,000 as of December 31, 2019[152] - The total minimum lease payments receivable as of June 30, 2020, were HKD 6,475,670,000, compared to HKD 6,027,092,000 as of December 31, 2019[141] - The average price per square meter for investment properties ranged from HKD 31,000 to HKD 563,000 as of June 30, 2020, with a weighted average of HKD 204,000[153] Contingent Liabilities and Commitments - The total amount of contingent liabilities and commitments as of June 30, 2020, was HKD 5,075,316,000, with a credit risk weighted amount of HKD 498,486,000[173] - The total amount of commitments for capital expenditures not yet recognized in the consolidated financial statements was HKD 9,880,000 as of June 30, 2020[173] - The company has no significant unrecognized contingent liabilities or commitments other than those disclosed[188]