BOC HONG KONG(02388)2024-08-29 08:31Financial Performance - The net operating income before impairment provisions for the first half of 2024 was HKD 35.336 billion, an increase of 14.6% compared to HKD 30.838 billion in the same period of 2023[3]. - Operating profit for the period reached HKD 25.134 billion, up from HKD 21.817 billion year-on-year[3]. - Profit attributable to shareholders was HKD 20.040 billion, representing a 13.2% increase from HKD 17.694 billion in the previous year[5]. - Basic earnings per share increased to HKD 1.8954, compared to HKD 1.6077 in the same period last year[5]. - The total profit for the first half of 2024 was HKD 20.463 billion, an increase of HKD 2.381 billion or 13.2% compared to the previous year[9]. - The pre-tax profit for the six months ending June 30, 2024, was HKD 24,716 million, an increase of 15.9% compared to HKD 21,523 million for the same period in 2023[179]. Operational Efficiency - The cost-to-income ratio improved to 22.98%, down from 25.46% year-on-year, indicating better operational efficiency[6]. - The average return on equity was 12.39%, up from 10.81% in the previous year[5]. - Operating expenses for the first half of 2024 totaled HKD 8.12 billion, an increase of HKD 2.69 billion or 3.4% year-on-year, with a cost-to-income ratio of 22.98%[19]. - Operating expenses in personal banking rose by 3.0%, primarily due to increased personnel costs[36]. Asset and Liability Management - The total capital ratio stood at 22.17%, with a common equity tier 1 capital ratio of 20.05%[7]. - The liquidity coverage ratio averaged 223.79% in Q1 and 250.58% in Q2, exceeding regulatory requirements[7]. - Total assets reached HKD 399.82 billion as of June 30, 2024, an increase of HKD 12.95 billion or 3.3% from the end of the previous year[25]. - Customer deposits reached HKD 2,649,697 million, an increase of HKD 1,458.56 million or 5.8% compared to the end of 2023[30]. Credit and Impairment - The impairment loan ratio was 1.06%, remaining better than the market average[6]. - Net impairment provisions for loans and other accounts amounted to HKD 2.067 billion in the first half of 2024, an increase of HKD 842 million or 68.7% year-on-year[21]. - The annualized credit cost for customer loans and other accounts was 0.25%, up 0.11 percentage points from the same period last year[21]. - The total impairment provision for loans measured at amortized cost increased from HKD 14,724 million as of December 31, 2023, to HKD 16,346 million as of June 30, 2024[107]. Market and Economic Environment - The overall economic environment in Hong Kong showed moderate growth, supported by improved external trade and a rebound in visitor numbers[9]. - The market anticipates that the Federal Reserve may begin to lower interest rates as early as September 2024, which could positively impact the banking sector's development in Hong Kong[9]. Wealth Management and Customer Services - The company plans to enhance its wealth management services, focusing on fund distribution and insurance products, which saw increases of 27.2% and 10.1% respectively[14]. - The number of mobile banking customers and related transaction volumes steadily increased, with online mortgage applications rising by 29.3 percentage points year-on-year to 80.7% of total mortgage applications[38]. - The company launched the "Cross-Border Wealth Management Connect 2.0" service, with a steady increase in cross-border customer numbers and transaction volumes[40]. Risk Management - The company emphasizes the importance of risk management as a key element for success, balancing risk control with business development[62]. - The risk management framework covers all business development processes to ensure effective management and control of various risks[63]. - The group actively manages liquidity risk by ensuring stable and sufficient cash sources to meet liquidity demands under normal and stressed conditions[74]. Awards and Recognition - The company received the "Best Wealth Management Bank" award at the 2024 Asian Banker Excellence in Retail Financial Services and Technology Innovation Awards[39]. - The group was recognized as the "Best Cash Management Bank in Hong Kong" for the tenth time and the "Best Trade Bank in Hong Kong" for the sixth time by The Asian Banker[43]. Digital Transformation - The group successfully launched mobile banking UnionPay QR code payment services in multiple Southeast Asian branches, enhancing local customer online payment experiences[41]. - The company is actively participating in the digital RMB ecosystem, launching a dedicated section in BoC Pay for digital RMB services[57]. Financial Instruments and Investments - The total fair value of financial assets measured at level 3 includes HKD 8,348 million for funds and HKD 835 million for loans and other receivables as of June 30, 2024[159]. - The total amount of interest accrued on customer loans was HKD 57.81 billion as of June 30, 2024, compared to HKD 57.31 billion as of December 31, 2023[190].