东亚银行(00023) - 2020 - 年度财报

Financial Performance - Total consolidated assets of HK$884.4 billion (US$114.1 billion) as of 31st December 2020[6] - Operating profit before impairment losses decreased by 15.4% to HK$8,347 million in 2020 compared to HK$9,864 million in 2019[7] - Profit attributable to owners of the parent increased by 10.8% to HK$3,614 million in 2020 from HK$3,260 million in 2019[7] - Total assets grew by 0.9% to HK$884,420 million in 2020 from HK$865,198 million in 2019[7] - Total customers' deposits and certificates of deposit issued increased by 2.2% to HK$650,054 million in 2020 from HK$647,586 million in 2019[7] - Basic earnings per share rose by 9.0% to HK$0.97 in 2020 from HK$0.89 in 2019[7] - Dividends per share decreased by 13.0% to HK$0.40 in 2020 from HK$0.46 in 2019[7] - Common Equity Tier 1 capital ratio improved to 16.5% in 2020 from 15.6% in 2019[7] - Total capital ratio increased to 21.9% in 2020 from 20.4% in 2019[7] - Total equity increased to HK$113,796 million in 2020, up from HK$109,638 million in 2019[12] - Total deposits grew to HK$650,054 million in 2020, compared to HK$647,586 million in 2019[12] - Loans and advances to customers rose to HK$513,929 million in 2020, up from HK$509,105 million in 2019[12] - Total assets reached HK$884,420 million in 2020, an increase from HK$865,198 million in 2019[12] - Profit attributable to owners of the parent was HK$3,614 million in 2020, compared to HK$3,260 million in 2019[12] - Earnings per share improved to HK$0.97 in 2020, up from HK$0.89 in 2019[12] - Dividends per share decreased to HK$0.40 in 2020, down from HK$0.46 in 2019[12] - BEA's profit attributable to owners of the parent increased by HK$354 million or 10.8% to HK$3,614 million in 2020 compared to 2019[23] - Pre-provision operating profit decreased by HK$1,517 million or 15.4% to HK$8,347 million in 2020[23] - Net charge for impairment losses on financial instruments fell sharply from HK$7,253 million in 2019 to HK$4,674 million in 2020, mainly due to a reduction in impairment losses recorded by Mainland China operations[23] - Net fee and commission income rose by HK$47 million or 1.6% to HK$2,922 million in 2020[23] - Total operating income decreased by 12.4% to HK$17,310 million in 2020[23] - Total operating expenses fell by 9.4% to HK$8,963 million in 2020, mainly due to declines in staff costs and internet platform charges[23] - Cost-to-income ratio for 2020 was 51.8% versus 50.1% in 2019[23] - Net profit attributable to shareholders increased by HKD 354 million or 10.8% to HKD 3,614 million in 2020 compared to HKD 3,260 million in 2019[24] - Impairment losses on financial instruments decreased significantly from HKD 7,253 million in 2019 to HKD 4,674 million in 2020, primarily due to reduced impairment losses in mainland China[24] - Net interest income decreased by HKD 3,016 million or 20.7% to HKD 11,550 million, with net interest margin narrowing from 1.86% to 1.48%[24] - Total customer deposits increased by 2.7% to HKD 589,202 million, with savings deposits growing by HKD 48,160 million or 34.5%[26] - The loan-to-deposit ratio stood at 79.1% at the end of December 2020, compared to 78.6% at the end of 2019[26] - Total capital ratio, Tier 1 capital ratio, and Common Equity Tier 1 capital ratio were 21.9%, 19.4%, and 16.5% respectively as of December 31, 2020[26] - The average liquidity coverage ratio for the quarter ended December 31, 2020 was 183.8%, well above the statutory minimum of 100%[26] - Operating expenses decreased by 9.4% to HKD 8,963 million, primarily due to reduced staff costs and internet platform expenses[24] - The cost-to-income ratio was 51.8% in 2020, compared to 50.1% in 2019[24] - BEA's customer loans in Hong Kong increased by 2.1% to HK$295,768 million, and customer deposits rose by 3.8% to HK$391,071 million by the end of December 2020[36] - Profit before tax for Hong Kong operations declined to HK$3,413 million, with a 23.5% decrease in Net Interest Income (NII) due to significant drops in interbank rates[36] - Non-interest income increased by 19.4%, partially offsetting the decline in NII, driven by successful efforts to grow fees and commissions[36] - Operating income declined by 8.7% year-on-year, with credit costs trending upwards, particularly in the corporate portfolio, though impairment losses did not reach worst-case projections[36] - The Bank's net interest income in Hong Kong decreased by 23.5%, and the net interest margin narrowed by 41 basis points due to the impact of COVID-19[37] - Fee and commission income grew by 19.4%, partially offsetting the decline in net interest income, while overall operating income fell by 8.7% year-on-year[37] - Operating income decreased by 16.7% compared to 2019, primarily due to a decline in net interest income[41] - Operating income rose by 2.3%, led by higher non-interest income, with strong growth in fees from treasury and insurance products[44] - Private Banking's non-interest income increased by 35.5%, offsetting a decline in NII, with overall operating income growing by 2.5% year-on-year[46] - BEA China's NII decreased by 23.2% to HK$4,112 million due to a shrinking NIM in the low interest rate environment[51][54] - BEA China's non-interest income from syndicated loans grew by 74.2% year-on-year[51][54] - BEA China reported a net loss of HK$818 million for 2020, an improvement from 2019[51][54] - Retail wealth management non-interest income increased by 75.9% year-on-year, driven by a significant rise in high-net-worth customers[56] - The Bank's total operating expenses dropped slightly year-on-year, with the cost-to-income ratio edging up from 35.2% in 2019 to 36.7% in 2020[56] - BEA China reduced its cost-to-income ratio to 62.7% in 2020, down by 2.2 percentage points year-on-year[56] - Overseas branches achieved modest loan growth of 3.7% in 2020, despite challenging conditions[56] - The Bank's UK operations delivered positive growth in both loans and pre-provision operating profit in 2020[56] Digital Transformation and Innovation - The company accelerated digital transformation and shifted resources to fee-based services, improving business performance in 2020 despite the pandemic[14] - The company is expanding its ability to generate revenue with less capital, particularly by increasing fee-based income through a broader range of services[20] - The company is streamlining work practices and seeking cost-savings, with immediate cost savings achieved in 2020 and plans for further automation and efficiency improvements over the next three years[20] - BEA plans to invest in new technology and streamline business processes over the next three years[21] - Digital adoption accelerated, with online and mobile financial transactions increasing by 23.1%, and digital investment transactions more than doubling[39] - Digital channel usage accelerated, with financial transactions via online and mobile platforms increasing by 23.1%, and investment transactions via digital channels more than doubling[41] - The Bank's SupremeGold accounts grew by 13.7% in 2020, and a new premium service, SupremeGold Private, was launched in November[39] - The SupremeGold Private service was launched, targeting premium affluent clients with sophisticated financial planning and wealth management solutions[41] - BEA's MPF schemes' total membership grew to 836,000, with AUM rising to HK$31.8 billion, and digital usage increased by 35%[51][53] - BEA Union Investment introduced two fixed maturity funds in 2020, which received overwhelming response from retail investors[59] - BEA Union Investment's wholly-owned subsidiary in Shenzhen launched its first private fund for professional investors in Mainland China in mid-2020[64] - BEA revamped its intranet to feature more timely and in-depth content, promoting core values through staff stories and encouragement from General Managers[62] - BEA implemented a peer review system and linked financial and non-financial performance metrics to the company's shared purpose to enhance performance management[65] Risk Management - Common Equity Tier 1 capital ratio improved to 16.5% in 2020 from 15.6% in 2019[7] - Total capital ratio increased to 21.9% in 2020 from 20.4% in 2019[7] - The Group's non-performing loan ratio increased from 1.22% at the end of 2019 to 1.26% at the end of 2020, with Hong Kong's ratio rising from 0.25% to 0.75% and mainland China's ratio decreasing from 3.80% to 3.10%[24] - The impaired loan ratio dropped by 71 basis points to 3.10% at the end of 2020, compared to the end of 2019[56] - BEA's Risk Committee ensures the Group's risk appetite is reflected in policies and procedures adopted by Senior Management[68] - BEA maintains a robust risk governance framework, with the Board of Directors having ultimate responsibility for effective risk management[68] - BEA's Enterprise Risk Management framework focuses on optimizing the balance between risk and return across multiple risk types[68] - The Group has adopted the "Three Lines of Defence" risk management structure, with the First Line comprising Risk Owners, the Second Line consisting of Risk Controllers, and the Third Line being the Internal Audit Division[71][72] - The Group manages Credit Risk through control limits, delegated lending authorities, underwriting criteria, and internal rating structures[74] - Interest Rate Risk is managed by assessing gap risk, basis risk, and options risk through monitoring repricing mismatches and the impact of interest rate changes[74] - Market Risk is monitored by measuring potential losses due to adverse price movements and market volatility, in line with comprehensive policies and guidelines[74] - Liquidity Risk is managed through cash flow analysis and a contingency funding plan to meet liquidity needs in crisis situations[74] - Operational Risk is controlled via a framework that defines standards and processes, using various tools and systems[74] - Reputation Risk is systematically identified, assessed, monitored, and mitigated, with specific procedures in place for effective stakeholder communication[74] - Strategic Risk is managed by annually updating a five-year strategic plan to align with external and internal changes[78] - The Group proactively manages the Capital Adequacy Ratio (CAR) and conducts regular reviews of Internal Capital Adequacy Assessment Processes[79] - Technology Risk is mitigated through comprehensive training programs and the implementation of control measures to strengthen cybersecurity awareness[81] - The global economic recovery from the COVID-19 contraction remains uncertain, with major economies (China, Europe, and the US) showing mixed consumer and manufacturing indicators[88][93] - The Group conducts regular stress tests to assess the impact of hypothetical scenarios on profitability and Capital Adequacy Ratio (CAR)[88][94] - The Group has implemented measures to tackle cyber security risks, including engaging external consultants and monitoring global threats[89][98] - Political risks, particularly US-China tensions, have intensified due to COVID-19, impacting trade, national security, and technology[89][94] - The Group manages political risks through stress testing capital adequacy, monitoring liquidity coverage, and enhancing credit control on loans affected by US-China trade tensions[90][96] - The Group has strengthened its risk and compliance culture by formulating an accountability framework and enhancing performance management[90][99] - The transition from Interbank Offered Rate (IBOR) to Alternative Reference Rates (ARRs) poses legal, operational, and financial risks, with the Group forming a global cross-functional team to manage the transition[101][103] - The Group has started publishing IBOR transition information and communicating potential impacts to affected customers[103] - The Group is developing ARR product capabilities, with interest rate swaps referencing Sterling Overnight Index Average starting in 2020 and more ARR products planned for 2021[104] - The Group maintains a comprehensive compliance risk management framework, addressing anti-money laundering, counter-financing of terrorism, and other regulatory requirements[105][106] - The Bank of East Asia established a global cross-departmental LIBOR reform project team in late 2019 to develop and implement a transition plan for LIBOR across Hong Kong, mainland China, and overseas operations[109] - The bank began publishing information on LIBOR reform transition on its official website in 2020 to keep investors and the public informed[110] - The bank initiated SONIA-referenced interest rate swap transactions in 2020 and plans to offer more alternative reference rate products in 2021[110] - The bank is committed to maintaining the highest standards of corporate governance and compliance across all jurisdictions where it operates[111] - The bank has a comprehensive compliance risk management framework, with risk and compliance officers embedded in various business, functional, and operational departments[111] - The bank is prepared to meet evolving regulatory requirements, including those related to anti-money laundering, counter-terrorist financing, and data protection[111] Corporate Governance and Leadership - Professor Arthur LI Kwok-cheung, aged 75, was re-appointed as a Director in 2008 and appointed as Deputy Chairman in 2009[115] - Professor Li is an Independent Non-executive Director of Shangri-La Asia Limited and Nature Home Holding Company Limited, both listed in Hong Kong[115] - Dr. Allan WONG Chi-yun, aged 70, was appointed as a Director in 1995 and as Deputy Chairman in 2009[118] - Dr. Wong is the Chairman and Group Chief Executive Officer of VTech Holdings Limited, listed in Hong Kong[118] - Mr. Aubrey LI Kwok-sing, aged 71, was appointed as a Director in 1995 and is Chairman of IAM Family Office Limited[122] - Mr. Li is an Independent Non-executive Director of Café de Coral Holdings Limited, Kowloon Development Co. Ltd, and Pokfulam Development Company Limited, all listed in Hong Kong[122] - Mr. Winston LO Yau-lai, aged 79, was appointed as a Director in 2000 and is the Executive Chairman of Vitasoy International Holdings Limited, listed in Hong Kong[125] - Mr. Lo holds a Bachelor of Science degree in Food Science from the University of Illinois and a Master of Science degree in Food Science from Cornell University[125] - Mr. Adrian David LI Man-kiu, aged 47, was appointed Co-Chief Executive in July 2019, responsible for the overall management and control of the Bank Group, with a particular focus on its Hong Kong Business[131] - Mr. Li holds a Master of Management Degree from Kellogg School of Management, Northwestern University, and a Master of Arts Degree and Bachelor of Arts Degree in Law from the University of Cambridge[135] - Mr. Li is a Member of the Anhui Provincial Committee of the Chinese People's Political Consultative Conference and a Counsellor of the Hong Kong United Youth Association[135] - Mr. Li serves as Chairman of The Chinese Banks' Association and Vice President of The Hong Kong Institute of Bankers' Council[135] - Mr. Li is a Board Member of The Community Chest of Hong Kong and serves on its Executive Committee[135] - Mr. Li is a Member of the Advisory Board of The Salvation Army, Hong Kong and Macau Command[135] - Mr. Li is a Trustee of The University of Hong Kong's occupational retirement schemes[135] - Mr. Li is a Member of the Election Committees responsible for electing the Chief Executive of the Hong Kong Special Administrative Region and deputies of the HKSAR to the 13th National People's Congress[135] - Mr. Li is a Member of the Judging Panel of the BAI Global Innovation Awards[135] - Mr. Li is a Member of The Law Society of England and Wales, The Law Society of Hong Kong, and the Hong Kong Academy of Finance[135] - Mr. Brian David LI Man-bun, aged 46, was appointed Co-Chief Executive in July 2019, responsible for the overall management of the Bank Group, with a focus on China and international businesses[137] - Mr. Li holds an MBA from Stanford University and a BA from the University of Cambridge, and is a Fellow of the Hong Kong Institute of Certified Public Accountants[137] - Dr. Daryl NG Win-kong, aged 42, was appointed a Non-executive Director in 2015 and holds a Bachelor of Arts in Economics and a Master of Science in Real Estate Development from Columbia University[140] - Dr. Ng is the Chairman and Non-independent Non-executive Director of Yeo Hiap Seng Limited, listed in Singapore[140] - Dr. Ng is a member of the Global Leadership Council of Columbia University and holds an Honorary Doctor of Humane Letters from Savannah College of Art and Design[140] - Mr. Masayuki Oku, aged 76, was appointed as a Director in 2015 and serves as an Independent Non-executive Director for multiple Japanese-listed companies including Chugai Pharmaceutical Co., Ltd., Rengo Co., Ltd., and The Royal Hotel, Limited[142] - Mr. Oku is the Honorary Advisor of Sumitomo Mitsui Financial Group, Inc. (SMFG), which owns a