The Bank of East Asia, Limited 2017 Interim Results - Highlights (for the six month ended 30 th June, 2017)

Transcription

1 Hong Kong, 25 th August, 2017 For Immediate Release The Bank of East Asia, Limited 2017 Interim Results - Highlights (for the six month ended 30 th June, 2017) Achieved strong recovery in earnings Asset quality turning a corner with a notable decrease in credit costs Delivering on our commitment to improve performance; 3-year cost saving programme on track Profit attributable to owners of the parent - representing an increase of 196.9% compared with the first half of 2016 Profit attributable to owners of the parent from continuing operations - representing an increase of 60.0% compared with the first half of 2016 HK$ Million 6,220 3,171 Return on average assets (annualised) 1.1% Return on average assets from continuing operations (annualised) 0.8% Return on average equity (annualised) 10.8% Return on average equity from continuing operations (annualised) 7.1% Net interest margin (annualised) 1.64% Basic earnings per share Basic earnings per share from continuing operations Interim dividend per share (with scrip option) HK$2.20 HK$1.08 HK$0.68 Dividend payout ratio 31.0% Total consolidated assets 788,456 Total loans and advances to customers and trade bills 480,770 Impaired loan ratio 1.5% Total deposits 585,665 Loan to deposit ratio 79.7% Average liquidity coverage ratio - second quarter 129.5% Common Equity Tier 1 capital ratio 12.3% Tier 1 capital ratio 14.2% Total capital ratio 17.5% 1

2 Speech by Dr. David K.P. Li, Chairman & Chief Executive of The Bank of East Asia, Limited ( BEA ) Economic conditions in Hong Kong and the Mainland improved during the first half of this year. Against this backdrop, and benefitting from the proactive measures that we have taken to realign our business, the Bank staged a strong recovery in earnings. For the first six months of this year, Profit Attributable to Owners of the Parent rose by 197% year-on-year to HK$6.2 billion. Basic earnings per share improved to HK$2.2. This result includes an extraordinary gain of HK$3 billion from the disposal of Tricor Group. For continuing operations, Profit Attributable to Owners of the Parent rose by 60% yearon-year and 108% half-on-half to HK$3.2 billion. Shareholders will receive an interim dividend of HK0.68 per share, compared to HK$0.28 one year ago. Our recovery was broad-based, reflecting strength across our business lines. Net interest income rose by 4.7% year-on-year, due to an increase in average interestearning assets and stronger net interest margin. Meanwhile, non-interest income rose by 14.7% year-on-year, lifted by the improving investment climate and higher income from sales of unit trusts to retail and privatebanking clients. The three key priorities that we set at the beginning of this year on costs; asset quality and digital transformation featured prominently in our recovery. First, we delivered on our commitment to cut costs. At the Group level, we drove operating costs for continuing operations down by 7.9% year-on-year. As a result, we are reporting a cost-to-income ratio of 51.2% for the January to June period, down from 59.4% for the same period last year and 53.2% for the July to December period. We are now half-way through our three-year, HK$700 million cost-reduction programme, and have achieved roughly two-thirds of the anticipated savings to date. Second, we are keeping a tight rein on asset quality. Impairment losses fell to HK$763 million in the first half of this year, down from HK$1.2 billion for the same period last year and HK$2.2 billion for the July to December period. The Group non-performing loan ratio stabilised at 1.49% at the end of June 2017, the same as at the end of December. 2

3 Third, our digital transformation initiative is progressing well. We are on track to convert all our branches in Hong Kong to our award-winning digital model by the end of this year. The digital branch provides an easy way for customers to complete their transactions electronically, providing accurate and helpful service quickly and efficiently. Digital services are available beyond normal operating hours, allowing our customers to conduct their banking business at their convenience. The Bank benefits from stronger customer loyalty, and a complete digital transaction trail. We are attracting a young, upwardly-mobile clientele to the Bank, and reducing the cost of transactions. We are pleased that our efforts are delivering results. However, that does not mean that we are satisfied. There is still room to improve our performance by deepening our commitment to our three key priorities. We also continue to pursue all efforts to unlock hidden value from within our organisation. Earlier this year, we established a new business division, the Strategic Partnership and Financial Institutions Division, to further enhance our relationships with our overseas banking partners. The new division will be the focal point for our business cooperation with CaixaBank and Sumitomo-Mitsui Banking Corporation, as well as our partner banks throughout Asia, Europe and North America. A growing share of our overseas business is now being channelled through these institutions. At the same time, we will closely monitor changing economic conditions and adjust our strategies accordingly. Companies across a broad range of industries are delivering good profits. As a bank, our mandate is to support our clients and facilitate business growth. With employment strong and growing personal wealth in our main markets, our retail and private banking units are sparing no effort to deliver timely and innovative services to meet client demand. As a local bank, we understand changing local needs. And as our clients grow, so do we. 3

4 Financial Performance For the first six months of 2017, the Group earned a profit attributable to owners of the parent of HK$6,220 million, representing an increase of HK$4,125 million or 196.9%, compared with the HK$2,095 million earned in the same period in The result includes a net profit of some HK$3 billion in respect of the disposal of Tricor Holdings Limited and its subsidiaries to Trivium Investment Limited, a wholly-owned subsidiary of global investment firm, Permira, for a total consideration of HK$6.47 billion, which the Bank has recorded under profits attributable to owners of the parent from discontinued operations. Excluding net profit from discontinued operations, profit attributable to owners of the parent from continuing operations amounted to HK$3,171 million, representing an increase of HK$1,190 million, or 60.0%, compared to the first half of Basic earnings per share from continuing operations rose from HK$0.65 in the first half of 2016 to HK$1.08 in the corresponding period in Incorporating discontinued operations, basic earnings per share rose from HK$0.69 in 2016 to HK$2.20 in Annualised return on average assets rose from 0.5% to 1.1%, while the annualised return on average equity rose from 4.8% to 10.8%. During the first six months of 2017, the Group s net interest income from continuing operations increased by HK$256 million, or 4.7%, to HK$5,739 million. Net interest margin increased from 1.59% to 1.64%, and average interest bearing assets increased by 1.9%. Net fee and commission income from continuing operations grew by HK$29 million, or 2.3%, to HK$1,282 million. Commission income from insurance, retail banking, and trust and fiduciary businesses grew, whereas income from trade finance and loans and guarantees declined. Net trading and hedging results from continuing operations increased by HK$219 million to HK$181 million. Overall, non-interest income from continuing operations grew by 14.7% to HK$1,890 million. Operating income from continuing operations increased by 7.0% to HK$7,629 million. Total operating expenses from continuing operations fell by 7.9% to HK$3,903 million. The cost-to-income ratio improved from 59.4% in the first half of 2016 to 51.2% in the first half of Operating profit before impairment losses from continuing operations stood at HK$3,726 million, an increase of HK$835 million, or 28.9%, when compared with the corresponding period in

5 Impairment losses on loans and receivables from continuing operations fell by 38.5% to HK$763 million. The Group s impaired loan ratio remained steady at 1.49% at the end of June 2017, the same as that at the end of December The impaired loan ratio for Hong Kong operations fell from 1.03% to 1.00%, while that for Mainland China operations fell from 2.87% to 2.79%. Operating profit after impairment losses from continuing operations amounted to HK$2,903 million, an increase of HK$1,253 million, or 75.9%. Net profit on the sale of available-for-sale financial assets from continuing operations increased by 437.3% to HK$215 million. Net profit on the disposal of assets held for sale from continuing operations included a net gain of HK$192 million for the sale of a property in Hong Kong. Valuation gains on investment properties from continuing operations increased to HK$229 million. The Group shared after-tax profits from associates of HK$224 million from continuing operations, an increase of HK$32 million, or 16.6% compared to the same period in After accounting for income taxes, profit after taxation from continuing operations rose to HK$3,188 million, an increase of 60.3% compared to the HK$1,989 million recorded in the first half of Financial Position Total consolidated assets of the Group stood at HK$788,456 million at the end of June 2017, an increase of 3.0% compared to HK$765,706 million at the end of Gross advances to customers rose by 2.7% to HK$466,574 million, while trade bills negotiated grew by 18.9% to HK$14,196 million. Total equity attributable to owners of the parent increased to HK$86,302 million, up 10.0%, mainly due to the net profit of HK$6,220 million earned during the first six months of Additional equity instruments increased to HK$8,894 million, up 77.3%, due to an issue of US$500 million in Additional Tier One Capital Instruments in May Total deposits from customers grew by 2.5% to HK$549,009 million. Of the total, demand deposits and current account balances increased by HK$3,713 million, or 5.0%; savings deposits increased by HK$3,961 million, or 3.1%; and time deposits increased by HK$5,546 million, or 1.7%. Total deposit funds, comprising deposits from customers and all certificates of deposit issued, rose by 3.7% to HK$585,665 million. 5

6 The loan-to-deposit ratio stood at 79.7% at the end of June 2017, compared to 80.4% at the end of As at 30 th June, 2017, the total capital ratio, tier 1 ratio, and common equity tier 1 ratio were 17.5%, 14.2%, and 12.3%, respectively. The average liquidity coverage ratio for the quarter ended 30 th June, 2017 was 129.5%, which was well above the statutory limit of 80% for the year About The Bank of East Asia, Limited Incorporated in 1918, BEA is Hong Kong s largest independent local bank, with total consolidated assets of HK$788.5 billion (US$101.0 billion) as of 30 th June, Listed on The Stock Exchange of Hong Kong, the Bank is a constituent stock of the Hang Seng Index. BEA offers customers a comprehensive range of corporate banking, personal banking, wealth management, and investment services through an extensive network of more than 210 outlets covering Hong Kong and the rest of Greater China, Southeast Asia, the United Kingdom, and the United States. For more information, please visit any BEA branch or the Bank s homepage at End Media enquiries: Mr. William Cheng General Manager & Group Chief Financial Officer The Bank of East Asia, Limited Tel.: (852) chengwcm@hkbea.com BEA Operator of one of the largest banking networks in Hong Kong 6