东亚银行(00023) - 2023 - 年度财报

Financial Performance - Total consolidated assets reached HK$860.4 billion (US$110.1 billion) as of December 31, 2023[5] - Profit attributable to owners of the parent increased by 29.6% to HK$11,314 million in 2023 compared to HK$8,730 million in 2022[10] - Total assets decreased by 3.1% to HK$532,484 million in 2023 from HK$549,543 million in 2022[10] - Total customers' deposits and certificates of deposit issued decreased by 2.5% to HK$656,216 million in 2023 from HK$680,755 million in 2022[10] - Basic earnings per share remained stable at HK$1.32 in 2023, while dividends per share decreased by 33.3$0.54 from HK$0.81 in 2022[10] - The impaired loan ratio increased to 2.69$108,326 million, showing a slight increase from HK$106,346 million in 2022[13] - Total deposits in 2023 decreased to HK$656,216 million from HK$680,755 million in 2022[13] - Loans and advances to customers in 2023 were HK$532,111 million, down from HK$549,014 million in 2022[13] - Total assets in 2023 were HK$860,361 million, a decrease from HK$882,825 million in 2022[13] - Profit attributable to owners of the parent in 2023 was HK$4,118 million, a 5.5% decline year-on-year[17] - The Bank generated a pre-provision operating profit of HK$11,314 million in 2023, a 29.6$4,118 million, with basic earnings per share unchanged at HK$1.32[40] - Net interest income increased by HK$3,366 million (24.9%) to HK$16,874 million, with net interest margin widening by 49 basis points to 2.14$4.118 billion, with basic earnings per share remaining flat at HK$1.32[42] - Net interest income increased by 24.9$16.874 billion, with net interest margin expanding by 49 basis points to 2.14%[42] - Net fee and commission income decreased by 4.1% to HK$2.64 billion, while non-interest income fell by 12.9$3.872 billion[43][47] - Total operating income increased by 15.5% to HK$20.746 billion, with operating expenses rising by 2.2$9.432 billion[48][49] - Impairment losses on financial instruments decreased by 7.4% to HK$5.483 billion, with the impaired loan ratio rising to 2.69$532.111 billion, while total deposits from customers fell by 3.0% to HK$628.598 billion[51] - The loan-to-deposit ratio stood at 81.1$366 million and announced a new budget of HK$500 million for the continuation of the share buyback program[52][54] - Total capital ratio, tier 1 capital ratio, and common equity tier 1 capital ratio remained solid at 22.0$3,463 million in 2023[65] - Net interest income rose by 41.1%, contributing to a 38.9% increase in pre-provision operating profit[65] - The net interest margin (NIM) expanded by 62 basis points due to higher interbank interest rates[65] - Fee income was impacted by reduced customer investment activity but offset by higher income from private banking product sales and bancassurance[65] - Hong Kong operations' pre-tax profit increased by 9.9% to HK$3.463 billion, driven by a 41.1$3.949 billion due to additional provisions for Mainland property developers' liquidity issues[70] - Operating expenses grew only 2.1% despite technology investments, as digital transformation initiatives improved efficiency[70] - Wholesale banking operating income increased 1.4% year-on-year, with non-interest income up 2.9% driven by syndicated loan fees[75] - Customer loan balance in Hong Kong declined slightly due to proactive de-risking measures, while deposits were closely managed to optimize funding costs[70] - Mortgage lending and credit card spending drove a 3.7% increase in retail customer loan balance[70] - BEA's green lending in the wholesale banking portfolio increased from 9.5% to 12.2% in 2023[78] - Private Banking non-interest income increased by 14.5% year-on-year, with overall operating income rising by 6.5%[78] - The number of Private Banking relationship managers increased by 11.5% compared to December 2022, driving double-digit growth in new client intake[78] - BEA China's pre-provision operating profit grew by 13.3% to HK$1,742 million, with impairment losses on financial instruments falling by 20.6$1,657 million[80] - BEA China's net interest income rose by 2% to HK$4,072 million, with NIM expanding by 22 basis points to 2.07$2,076 million due to widened NIM[91] - Net profit after tax surged by 50.5% to HK$1,588 million, driven by ECL write-backs and model changes[92] - Cost-to-income ratio improved to 26.9$7 billion as of December 31, 2023[102] - Managed and advisory assets reached $7 billion as of December 31, 2023[106] Business Operations and Strategy - The Bank operates one of the largest retail networks in Hong Kong and has outlets in 38 cities across Mainland China[6][7] - The Bank employs over 8,000 employees worldwide and maintains around 130 outlets globally[7] - BEA launched a new regional headquarters in the Qianhai Shenzhen-Hong Kong Cooperation Zone to enhance GBA services[22] - The Bank refreshed its brand in December 2023, focusing on a more dynamic and customer-centric approach[24] - BEA aims to achieve net zero emissions in its operations by 2030 and in its financed activities by 2050[24] - The Bank has been recognized as one of the top performers in the GBA sustainability index[24] - BEA opened its landmark BEA Tower in Qianhai on January 12, 2024, as a strategic hub for the Greater Bay Area[26] - The bank aims to achieve operational net-zero emissions by 2030 and business activity net-zero emissions by 2050, becoming the first Chinese bank to join the Net-Zero Banking Alliance[27] - BEA upgraded its mobile platform in 2023, offering a streamlined, personalized view of daily banking and investment holdings, with new features to be rolled out in 2024[32] - The bank plans to strengthen wealth management services and cross-boundary services following the opening of BEA Tower in Qianhai[34] - BEA's core profits improved due to a widened net interest margin and efforts to develop new revenue streams and enhance operational efficiency[38] - The bank's return on average assets remained stable at 0.4%, while return on average equity decreased by 0.1 percentage point to 3.6%[40] - BEA's transformation journey focuses on becoming a high-efficiency, high-asset-utilization, and digitally-led bank[26] - The bank's Guangzhou service center has significantly reduced processing times for multiple services and improved service quality and cost efficiency[26] - The bank upgraded its mobile banking and investment trading infrastructure in 2023, enhancing functionality and user experience[70] - BEA Union Investment joined Climate Action 100+ and launched the BU Asia Impact Bond Fund in June 2023[103] - Joined "Climate Action 100+" as a participating investor, aligning with global efforts to reduce greenhouse gas emissions[107] - Launched the East Asia Positive Impact Bond Fund in June 2023 to focus on sustainable investments[107] - Expanded recruitment strategy to Mainland China, focusing on digital and specialist business expertise[112] - Introduced a new Group Management Trainee Programme in July 2023 to develop future leaders across Hong Kong, Mainland China, and overseas[113] - Centralized and streamlined operations in 2023 using new technology and data science, improving staff satisfaction and productivity[113] - Employee pulse survey showed a 98% response rate, with most employees feeling proud to work for the company and positive about its transformation journey[113] - Held a bank-wide sports carnival in January 2024 to celebrate the company's 105th anniversary, attracting over 4,000 employees and their families[114] - The Group has formulated a five-year strategic plan to set strategic goals and objectives, evaluating strategic positions according to the changing external environment[151] - The Group has expanded green and sustainable lending to support customers' transition to a low-carbon economy, aligning with its Sustainability Vision and Mission Statements[166] Risk Management and Compliance - The Group is committed to maintaining operational resilience to ensure critical operations continue through disruptions such as pandemics, cyber incidents, technology failures, and natural disasters[122] - The Group is strengthening cybersecurity capabilities, including identification, prevention, detection, and response, to protect critical information assets and systems from external malicious attacks[129] - The Group has established a robust risk governance and management framework to ensure effective oversight and accountability for risk management[133] - The Group manages risk on a Group-wide basis within an Enterprise Risk Management (ERM) framework, optimizing the balance between risk and return[134] - The Group's ERM framework promotes risk awareness and facilitates better operational and strategic decision-making, ensuring operations align with stakeholders' risk tolerance[136] - The Board of Directors has ultimate responsibility for risk management, approving risk appetite, policies, procedures, and limits[136] - The Group has adopted the "Three Lines of Defence" risk management structure to clearly define roles and responsibilities for risk management[142] - The Group faces a variety of principal risks that could affect its franchise, operations, and financial health, with specific management strategies in place[144] - The Group is committed to managing and mitigating environmental, social, and governance (ESG) risks, including climate risk, in alignment with its Sustainability Vision and Mission Statements[133] - The Group ensures compliance with all applicable legal and regulatory requirements and promotes a sound corporate culture to incentivize proper staff behavior[127] - The Group has established control limits, delegated lending authorities, and underwriting criteria to manage Credit Risk, with internal rating structures and recovery procedures in place[145] - The Group conducts cash-flow analysis to monitor funding needs and has a contingency funding plan to address Liquidity Risk[145] - The Group has implemented a three-line defense risk management framework, with the first line being risk owners, the second line being risk monitors, and the third line being the audit department[146][147] - The Group has developed an Operational Resilience Framework to manage critical operations, tolerance for disruption, and severe but plausible scenarios[157] - The Group has allocated additional resources for the management of special assets and credit monitoring to proactively identify and mitigate risks in the loan book[156] - The Group has strengthened cybersecurity awareness through comprehensive training programs and implemented control measures to mitigate Technology Risk[152][158] - The Group has enhanced anti-fraud controls by collaborating with stakeholders and participating in initiatives like the Anti-Deception Alliance[165] - The Group has established comprehensive policies and guidelines to manage Legal and Compliance Risks, with a risk-based approach to complement compliance risk management[152][158] - The Group has systematically identified, assessed, monitored, and mitigated Reputation Risk through specific procedures and guidelines for timely communication with stakeholders[150][158] - The Group continues to enhance data backup arrangements and perform regular testing to address the risk of destructive cyberattacks, as proposed by the HKMA and HKAB[166] - The Group is closely monitoring its portfolios and managing risk exposure, including enhanced credit control on loan exposures and stress testing on capital adequacy and loan-loss allowances[167] - The Group is reducing credit exposure to the Mainland property sector and closely monitoring commercial real estate exposure in Hong Kong, the US, and the UK[167] - The Bank is assessing market trends, managing exposures, and performing hedging scenario analysis and stress-testing to mitigate market and interest rate risks[170] - The Bank is enhancing cybersecurity measures, including engaging external consultants, performing iCAST testing, and improving staff training and incident response management[171] - The Bank is closely monitoring the development of relevant sanction regimes to mitigate compliance risk exposure[170] - The company has implemented multiple measures to enhance cybersecurity, including hiring external consultants, conducting risk-based cyber defense assessments, and improving employee training programs[173] - The company has refined its Green and Sustainable Finance (GSF) framework to manage risks in "brown sectors" and support customers' transition to a low-carbon economy[177] - A second round of climate risk stress testing has been conducted to assess the company's exposure to climate-related risks[177] - The company has introduced quantitative and qualitative risk appetite statements to monitor ESG and climate risk performance[177] - A climate risk heat map framework has been developed to assess and monitor physical and transition risks in vulnerable industries[177] - ESG and climate risk considerations have been integrated into the internal Pillar 2 capital requirement calculations[177] - The company has strengthened its compliance framework, including anti-money laundering (AML) and counter-financing of terrorism (CFT) measures[178] - The company is prepared to meet evolving regulatory demands, including those related to digital environments, customer protection, and personal data protection[178] - The company has established a comprehensive compliance risk management framework, supported by risk and compliance functions across business units[181] - The company regularly reports significant compliance issues, including AML and CFT, to the Risk Committee and Board of Directors[181] Leadership and Governance - Sir David Li Kwok-po stepped down as Chief Executive and was re-designated as Executive Chairman on 1st July, 2019[184] - Sir David Li Kwok-po is the Chairman of BEA China and The Bank of East Asia Charitable Foundation Limited[184] - Professor Arthur Li Kwok-cheung is the Deputy Chairman, Non-executive Director, and a member of the Nomination Committee and the Remuneration Committee[188] - Professor Arthur Li Kwok-cheung has been a Member of the Executive Council of the HKSAR from 2002 to June 2007 and from July 2012 to present[189] - Dr. Allan Wong Chi-yun is the Deputy Chairman, Independent Non-executive Director, Chairman of the Nomination Committee, and a member of the Audit Committee, the Remuneration Committee, and the Risk Committee[191] - Dr. Allan Wong Chi-yun is the Chairman and Group Chief Executive Officer of VTech Holdings Limited (listed in Hong Kong)[192] - Dr. Allan Wong Chi-yun holds a Bachelor of Science degree in electrical engineering from the University of Hong Kong and a Master of Science degree in electrical and computer engineering from the University of Wisconsin[192] - Mr. Aubrey LI Kwok-sing holds an ScB in Civil Engineering from Brown University and an MBA from Columbia University, with extensive experience in investment banking, merchant banking, and capital markets[197] - Mr. Aubrey LI Kwok-sing serves as an Independent Non-executive Director for Café de Coral Holdings Limited, Kowloon Development Co. Ltd,