HANG SENG BANK(00011)2023-03-23 08:32Financial Performance - The bank reported a profit attributable to shareholders of HKD 33,972 million for 2022, a 2.4% increase from HKD 33,182 million in 2021[12]. - Earnings per share fell to HKD 4.95 in 2022, down from HKD 6.93 in 2021, reflecting a decrease of 28.5%[12]. - Shareholder profit decreased by 27% year-on-year due to adverse market conditions affecting the life insurance investment portfolio, with a negative adjustment of HKD 3.1 billion[25]. - Pre-tax profit decreased by 30% to HKD 11.44 billion, with earnings per share down 29% to HKD 4.95[32]. - The bank's profit attributable to shareholders increased by 16% in the second half of 2022 compared to the first half, reflecting positive impacts from the bank's actions[33]. Asset and Capital Management - The bank's total assets reached HKD 1,893,805 million, up from HKD 1,820,185 million in 2021, representing a growth of 4%[12]. - The bank maintained a common equity tier 1 capital ratio of 15.2%, down from 15.9% in 2021, indicating a slight decline in capital strength[13]. - As of December 31, 2022, the bank's Common Equity Tier 1 capital ratio was 15.2%, Tier 1 capital ratio was 16.8%, and total capital ratio was 18.1%[33]. - The bank's equity remained stable at HKD 183.9 billion, with a slight decrease in total reserves[91]. Income and Revenue Streams - Net interest income rose by 35%, with a net interest margin increase of 48 basis points to 2.00%[25]. - Non-interest income grew by 31%, driven by a doubling of revenue from foreign exchange and options trading[30]. - Operating income, excluding expected credit loss changes, grew by 12% year-on-year, indicating positive effects from long-term business transformation strategies[25]. - The bank's total operating income before expected credit loss changes increased by 2% to HKD 339.72 billion[32]. - The board declared a fourth interim dividend of HKD 2.00 per share, totaling HKD 4.10 per share for the year, representing 77% of profit attributable to shareholders[26]. Risk Management and Credit Losses - The bank's expected credit loss provisions increased significantly by 172% year-on-year, primarily related to risks in the mainland commercial real estate sector[25]. - Expected credit loss provisions increased by HKD 48.19 billion year-on-year, totaling HKD 76.26 billion[32]. - The ratio of expected credit losses to total customer loans rose to 1.42% as of December 31, 2022, compared to 0.69% in 2021[68]. - Total impaired loans increased by HKD 138 billion, reaching HKD 242 billion, with the impaired loan ratio at 2.56% as of December 31, 2022, up from 1.04% in 2021[67]. Customer Engagement and Digital Transformation - The bank serves over 350 million customers, leveraging its extensive network of over 260 service points in Hong Kong and nearly 20 cities in mainland China[10]. - The bank is actively expanding its digital services to enhance customer experience and meet the growing demand for seamless online and offline banking solutions[10]. - The number of target customers in Hong Kong recorded a double-digit growth due to new service offerings and simplified account opening procedures[26]. - Monthly active users of mobile wealth management services rose by 11% year-on-year, while online transactions for deposits, foreign exchange, and loans increased by 98%[80]. - The bank launched over 460 digital innovation services and enhancements in 2022, emphasizing its commitment to digital transformation[80]. Sustainability and Community Initiatives - The bank aims to achieve net-zero carbon emissions in its operations by 2030 and supports the HSBC Group's goal of net-zero emissions in its financing portfolio by 2050[20]. - The bank is committed to supporting community initiatives, focusing on sustainable finance and enhancing financial literacy among the youth[10]. - The bank's green loans and sustainable performance-linked financing saw strong year-on-year growth in Hong Kong[49]. - The company revised its energy policy in December 2022 to gradually phase out coal and is working with clients to transition to cleaner energy alternatives[126]. Economic Outlook and Market Conditions - The Greater Bay Area's GDP is projected to reach USD 2.8 trillion by 2027, growing nearly USD 1 trillion from 2021[16]. - The economic growth forecast for Hong Kong and mainland China is expected to improve in 2023, with GDP growth projected at 2.7% over the next five years, higher than the average growth rate prior to the pandemic[163]. - Geopolitical risks, including the ongoing Russia-Ukraine conflict, continue to pose significant challenges to the economic outlook, impacting credit risk assessments[162]. - The unemployment rate in Hong Kong is forecasted to average 3.4% from 2023 to 2027, compared to 5.0% for mainland China[164].