2017 Annual Results
Forward-looking Statements This presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Hang Seng. These forward-looking statements represent Hang Seng s expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance cannot be relied on as a guide to future performance.
2017 Annual Results Business Overview Financial Performance Loans and Deposits Engaging For Future Growth
Business Overview
Business Overview Achieved strong results and record-high operating profit in 2017 Attained healthy and balanced expansion in lending and deposits Acquired customers and grew wealth management income by effective use of data analytics Strengthened client engagement through modernising, diversifying and digitising distribution channels Hang Seng China recorded balanced loan and deposit growth and enhanced overall credit quality Hang Seng Qianhai Fund Management Company launched first public fund Rolled out initiatives to engage staff more effectively and improve their well-being
2017 Annual Results Business Overview Financial Performance Loans and Deposits Engaging For Future Growth
Financial Performance HK$ Mn 2017 vs 2016 Net interest income - net interest margin (%) 24,577 1.94 10% 9 bp Non-interest income 10,780 29% Net operating income before loan impairment charges 35,357 16% Loan impairment charges 1,042 21% Net operating income 34,315 17% Operating expenses 10,768 5% Operating profit - excl. loan impairment charges 23,547 24,589 24% 21% Profit before tax 23,674 24% Profit attributable to shareholders 20,018 23% Earnings per share (HK$) 10.30 24% Dividends per share (HK$)* 6.70 0.6 Cost efficiency ratio (%) 30.5 3.0 pp *4th interim dividend for 2017: HK$3.10/share Favourable Unfavourable
Financial Performance HK$ Mn 2017 vs 2016 Non-interest income 10,780 29% Net fee income 6,755 14% including gross fee from: Cards 2,742 10% Retail investment funds 1,894 20% Securities broking and related services 1,673 42% Remittances 540 12% Credit facilities 463 18% Net trading income 2,384 41% including trading income from: Foreign exchange-related 2,084 33% Favourable Unfavourable
Financial Performance 2017 vs 2016 Return on average ordinary shareholders equity (%) 14.2 2.1 pp Return on average total assets (%) 1.4 0.2 pp HK$ Bn 2017 vs 2016 Total assets 1,478 7% 31 Dec 17 vs 31 Dec 16 Capital ratio under Basel III (%) Common Equity Tier 1 capital ratio 16.5 0.1 pp Tier 1 capital ratio 17.7 0.2 pp Total capital ratio 20.1 0.7 pp Favourable Unfavourable
2017 Annual Results Business Overview Financial Performance Loans and Deposits Engaging For Future Growth
Loans and Deposits HK$ Bn 31 Dec 17 vs 31 Dec 16 Gross advances 808 15% For use in HK 596 16% Businesses 345 19% Individuals 250 11% Trade finance 47 9% For use outside HK 165 16% Impaired advances / gross advances (%) 0.24 0.22 pp HK$ Bn 31 Dec 17 vs 31 Dec 16 Deposits (incl. CDs and other debt securities in issue) 1,115 8% Current and Savings 875 11% Favourable Unfavourable
2017 Annual Results Business Overview Financial Performance Loans and Deposits Engaging For Future Growth
Retail Banking and Wealth Management
Retail Banking and Wealth Management HK$ Mn 2017 vs 2016 Net interest income 13,667 12% Non-interest income 5,678 55% Net operating income before loan impairment charges 19,345 22% Operating profit - excl. loan impairment charges 12,961 37% Operating profit 12,471 43% Profit before tax 12,459 41% Gross advances Customer Deposits 31 Dec 17 vs 31 Dec 16 9% 8% Favourable Unfavourable
Retail Banking and Wealth Management Customer segmentation Enhanced customer satisfaction and strengthened position as a preferred brand Tailored needs-based wealth management solutions for different client segments leveraging data analytics Achieved 24% year-on-year growth in Prestige Signature customer base Digital platforms Drove upward trend in digital engagement and year-on-year growth in the use of e-services Extended product scope and functionality of online platform Implemented Face, Touch and Voice ID for mobile and phone banking service channels Launched convenient network of new foreign exchange ATMs in high-traffic locations
Retail Banking and Wealth Management 2017 vs 2016 Wealth management income 34% Investment services income 27% - Securities turnover 58% - Securities income 39% - Investment services revenue excluding securities 21% Insurance income - New annualised life insurance premiums grew by 11% - Higher returns from life insurance investment portfolio 41% Favourable Unfavourable
Retail Banking and Wealth Management Mortgage 31 Dec 17 vs 31 Dec 16 Strengthened mortgage distribution capabilities in strategic locations to provide more customers with onestop home loan solutions Gross advances in Hong Kong Rank among top three for new Hong Kong mortgage business 8% Unsecured lending 31 Dec 17 vs 31 Dec 16 Card receivables Personal lending in Hong Kong 8% 13% Favourable Unfavourable
Commercial Banking
Commercial Banking HK$ Mn 2017 vs 2016 Net interest income 7,030 15% Non-interest income 2,679 21% Net operating income before loan impairment charges 9,709 16% Operating profit - excl. loan impairment charges 6,893 18% Operating profit 6,349 21% Profit before tax 6,349 21% Gross advances Customer Deposits 31 Dec 17 vs 31 Dec 16 15% 14% Favourable Unfavourable
Commercial Banking 2017 vs 2016 Non-interest income 21% - Remittances and account-related services 15% - Foreign exchange 20% Wealth management income - Investment services income 43% - Insurance income 14% Invested in digital channels and physical outlet infrastructure Continued to expand scope and functionality of digital services Enhanced ease and efficiency of service delivery at Business Banking Centres Grew SME-related operating profit excluding loan impairment charges by 28% year-on-year Favourable Unfavourable
Global Banking and Markets
Global Banking and Markets HK$ Mn 2017 vs 2016 Net interest income 3,953 1% Non-interest income 1,777 3% Net operating income before loan impairment charges 5,730 Operating profit - excl. loan impairment charges 4,763 1% Operating profit 4,755 1% Profit before tax 4,755 1% Gross advances Customer Deposits* 31 Dec 17 vs 31 Dec 16 27% 5% *excluding CDs Favourable Unfavourable
Global Banking Achieved solid growth in loans and deposits Capitalised on upturn in loan demand during second half to reach 27% year-on-year lending growth Attained 5% and 34% year-on-year growth in customer deposits and current and savings account deposits respectively with continuing efforts to promote transactional banking services Global Markets Achieved growth in net interest income and non-fund income Recorded 1% increase in net interest income through achieving yield enhancement Achieved 5% growth in non-interest income through close cross-business collaboration and strengthening product capabilities Grew vanilla foreign exchange income by 27% year-on-year Invested in infrastructure to capture new and future Mainland business Continued to uphold high standards of compliance while delivering service excellence
2017 Annual Results Business Overview Financial Performance Loans and Deposits Engaging For Future Growth
Engaging For Future Growth Provide financial services that are efficient, add value and are convenient to use to build a strong pipeline for future growth Reinforce competitive strengths trusted brand, extensive distribution and large customer base Strengthen client engagement by extending service reach, enhancing efficiency and diversifying wealth management solutions Launch fintech initiatives that align with customer-centric business strategy to promote a new era of smart banking Maintain growth momentum and capitalise on new opportunities on the Mainland with sharper focus of Mainland business and highly integrated cross-border infrastructure Improve staff engagement to help employees reach their potential, enjoy job satisfaction and become great brand ambassadors