HANG SENG BANK(HK:00011)2021-04-20 08:30Financial Performance - The bank reported a profit attributable to shareholders of HKD 16,687 million, down from HKD 24,840 million in 2019, representing a decrease of approximately 32.8%[14]. - The bank's pre-tax profit was HKD 19,414 million, compared to HKD 28,813 million in 2019, reflecting a decline of about 32.5%[14]. - The bank's operating profit was HKD 20,125 million, down from HKD 28,610 million in 2019, indicating a decrease of approximately 29.5%[14]. - The average return on ordinary shareholders' equity was 9.6%, down from 15.2% in 2019[14]. - Operating income decreased by 20% to HKD 33.33 billion[26]. - Total operating income for 2020 was HKD 54,322 million, a decrease of 14.2% from HKD 63,341 million in 2019[69]. - Profit attributable to shareholders was HKD 16,687 million, a decline of 32.8% compared to HKD 24,840 million in 2019[69]. - Earnings per share decreased to HKD 8.36 from HKD 12.77 in 2019[69]. Asset and Liability Management - The bank's total assets increased to HKD 1,759,787 million, up from HKD 1,676,991 million in 2019, representing a growth of about 4.9%[14]. - The bank's total liabilities rose to HKD 1,576.6 billion in 2020, compared to HKD 1,498.1 billion in 2019[15]. - Customer deposits rose by 4% to HKD 1,304 billion, supported by the issuance of certificates of deposit in Hong Kong and mainland China[48]. - The loan-to-deposit ratio improved to 72.4% as of December 31, 2020, down from 75.4% at the end of 2019[106]. - Shareholders' equity rose by HKD 4 billion, or 2%, to HKD 183 billion as of December 31, 2020, compared to HKD 178.81 billion at the end of 2019[109]. Credit Risk and Provisions - Expected credit losses increased by 49% compared to the previous year, totaling HKD 2.738 billion, although the second half of the year saw a 44% reduction in provisions[24]. - The expected credit loss provision for retail unsecured revolving loans, such as overdrafts and credit cards, is recognized unless the total expected credit loss exceeds the total carrying amount of the financial asset[157]. - The total expected credit loss for financial instruments under the application of HKFRS 9 was $(5,548) million as of December 31, 2020[157]. - The expected credit loss coverage ratio for Stage 2, where credit risk has significantly increased, includes lifetime expected credit losses[158]. - The total expected credit loss for the year ended December 31, 2020, was (2,639) million, reflecting a significant adjustment in provisions[197]. Digital Transformation and Innovation - Digital banking services transactions increased by 124% year-on-year, reflecting a significant shift towards online banking during the pandemic[9]. - The bank launched approximately 475 digital innovation services in 2020, more than three times the number launched in 2019[25]. - The company launched approximately 350 new digital service offerings in 2020, enhancing customer engagement and convenience[52]. - The bank's digital financial services received multiple industry awards, including "Best API Project" and "Best Payment Bank in Hong Kong" at the Wholesale Banking Awards 2020[58]. - The bank launched a digital account opening service for commercial clients, allowing them to open accounts anytime and anywhere[55]. Community Support and Corporate Responsibility - The bank donated HKD 10 million to support underprivileged families during the pandemic, highlighting its commitment to community support[11]. - The bank has established an Environmental, Social, and Governance (ESG) Steering Committee to address community issues and global ecological challenges[22]. - The bank actively supported SMEs during the pandemic by launching an online application platform for the SME Financing Guarantee Scheme[62]. Risk Management - The bank emphasizes a robust risk management culture to support sustainable growth and protect stakeholders[114]. - The risk management framework includes a "three lines of defense" model to clarify roles and responsibilities in risk management[117]. - The group conducts extensive stress testing as part of its risk management and capital planning, assessing the impact of adverse events[121]. - The company has identified geopolitical and macroeconomic risks, including the impact of the COVID-19 pandemic, as primary emerging risks[124]. - The company continues to invest in advanced analytics and artificial intelligence as key elements in combating financial crime[125]. Economic Outlook - The short-term economic outlook remains uncertain, dependent on the global control of the COVID-19 pandemic[20]. - The anticipated economic growth for mainland China in 2021 is projected to be between 6% and 8%[22]. - The management acknowledges significant risks including geopolitical tensions and the impact of COVID-19 on economic recovery[176]. - The consensus central scenario predicts a GDP growth rate of -6.4% for Hong Kong in 2020, followed by a recovery to 4.3% in 2021[173]. - The company anticipates that economic activities will gradually recover in 2021, contingent on effective pandemic control and the willingness of households and businesses to return to pre-crisis consumption levels[133].