2025-07-30 07:47Financial Data and Key Metrics Changes - In the first half of 2025, revenue grew by 6% to $35.4 billion, and profit before tax increased by 5% to $18.9 billion, with an annualized return on tangible equity of 18.2%, up 1.2% year on year [2][4][22] - The second quarter revenue was $17.7 billion, reflecting a 5% year-on-year growth driven by fee and other income [21][25] - The annualized return on tangible equity for the second quarter was 17.7% [21] Business Line Data and Key Metrics Changes - The Hong Kong home market business attracted 100,000 new customers monthly, with deposits growing by 9% year on year [3][24] - The UK loan book grew by $6 billion over the quarter, with a 4% year-on-year increase [3][25] - Commercial Banking saw a recovery in lending growth, with loans increasing by $3.5 billion [4] - Wealth business fee and other income grew by 22% year on year, with net new invested assets of $22 billion in the quarter [25][31] Market Data and Key Metrics Changes - Deposits increased by $83 billion year on year, reflecting a 5% growth [5][35] - The Hong Kong dollar's sensitivity to interest rates was highlighted, with expectations for HIBOR to rise gradually above 2% in the third quarter [27][28] Company Strategy and Development Direction - The company is focused on organizational simplification, aiming for $1.5 billion in cost savings by 2026, with $400 million expected in 2025 [8][34] - The strategy includes exiting non-strategic activities to reinvest in priority growth areas, particularly in Asia [9][10] - Investments are being made in wealth centers and enhancing capabilities in key markets like Hong Kong and the UK [11][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position amid economic uncertainty, emphasizing strong customer relationships and financial strength [4][17] - The outlook for Hong Kong's commercial real estate remains cautious, with expectations for stabilization in residential development but ongoing challenges in office space [70][71] Other Important Information - A second interim dividend of $0.10 per share was announced, alongside a share buyback of up to $3 billion [4][23] - The company is modernizing operations through AI and automation to improve productivity [16][85] Q&A Session Questions and Answers Question: Banking NII guidance and HIBOR assumptions - The banking NII guidance of $42 billion includes market expectations of HIBOR above 2% in the third quarter, with a $100 million monthly impact from HIBOR at 1% [41][44] Question: Impact of tariffs on revenues - The company noted a 5% impact on revenues from tariffs, but trade fees and other income grew by 4%, indicating resilience in trade business [49][53] Question: Impairments and Hong Kong CRE outlook - Management indicated that while there are short-term pressures in Hong Kong's commercial real estate, they remain optimistic about the medium to long-term outlook [70][72] Question: Noninterest income sustainability - The company highlighted strong performance in noninterest income driven by wealth management and FX, but acknowledged the volatility based on market conditions [95][100]