2013 Annual Results

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.

Forward-looking Statements

2013 Annual Results

Business Overview

Loans & Deposits

HK & Other Businesses

Mainland Business

Financial Performance

Managing for Sustainable Growth

Business Overview

investments in technology, channels & network

Customer-driven strategy progressed through

Leading position in cross-border & offshore RMB

services reinforced

effective cross-selling & revenue diversification

swift response to dynamic market conditions

Business Overview

Expansion in Mainland continued

2013 Annual Results

Business Overview

Loans & Deposits

HK & Other Businesses

Mainland Business

Financial Performance

Managing for Sustainable Growth

HK$ Mn 2013 vs 2012

Operating profit

- excl. loan impairment charges

18,410

18,946

19%

19%

Profit before tax 28,496 30% (19%)

Profit attributable to shareholders 26,678 38% (19%)

Earnings per share (HK$) 13.95 38% (19%)

Dividends per share (HK$) (1) 5.5 0.2

(1) 4th interim dividend for 2013: HK$2.2/share Favourable Unfavourable

(excl. IB reclassification)

Financial Performance

HK$ Mn 2013 vs 2012

Net interest income 18,604 10%

Net interest margin (%) 1.89 4bp

Non-interest income 9,458 27%

Loan impairment charges 536 39%

Net operating income

- excl. loan impairment charges

27,526

28,062

15%

15%

Operating expenses 9,103 7%

Cost efficiency ratio (%) 32.4 2.5pp

Financial Performance

Favourable Unfavourable

HK$ Mn 2013 vs 2012

Non-interest income 9,458 27%

Net fee income 5,887 16%

incl. gross fee income from:

retail investment funds

cards

stockbroking & related services

insurance agency

trade services

remittances

1,548

2,142

1,073

441

585

348

37%

15%

14%

20%

8%

16%

Trading income 2,045 1%

Dividend income 1,014 note (1)

Financial Performance

Favourable Unfavourable

(1) incl. dividend from IB after de-recognition

HK$ Mn 2013 vs 2012

Net interest income 18,604 10%

Net interest margin (%) 1.89 4bp

Non-interest income 9,458 27%

Loan impairment charges 536 39%

Net operating income

- excl. loan impairment charges

27,526

28,062

15%

15%

Operating expenses 9,103 7%

Cost efficiency ratio (%) 32.4 2.5pp

Financial Performance

Favourable Unfavourable

2013 vs 2012

Return on average shareholders’ funds (%)

25.4 (17.6) 2.6pp (0.5pp)

Return on average total assets (%)

2.4 (1.5) 0.5pp (0.1pp)

Total assets (HK$ Bn) 1,144 6%

Financial Performance

(excl. IB reclassification)

Favourable Unfavourable

2013 vs 2012

Capital ratios under Basel III (%)

Common Equity Tier 1 capital ratio

Tier 1 capital ratio

Total capital ratio

13.8

13.8

15.8

-

-

-

Capital ratios under Basel II (%)

Core capital ratio

Capital adequacy ratio

-

-

12.2

14.0

Financial Performance

Favourable Unfavourable

2013 Annual Results

Business Overview

Loans & Deposits

HK & Other Businesses

Mainland Business

Financial Performance

Managing for Sustainable Growth

HK$ Bn 2013 vs 2012

Gross advances 587.7 9%

Impaired advances/gross advances (%) 0.22 3bp

Deposits (incl. CDs & other debt securities in issue)

869.7 6%

Loans & Deposits

Favourable Unfavourable

HK$ Bn 2013 vs 2012

Gross advances 587.7 9%

For use in HK 399.4 6%

Industrial, commercial & financial sectors 217.8 7%

incl. wholesale & retail trade

manufacturing

21.9

17.4

33%

14%

Individuals 181.6 5%

incl.

residential mortgages

credits cards

131.3

21.4

5%

5%

Trade finance 52.1 10%

For use outside HK 136.2 20%

Loans & Deposits

Favourable Unfavourable

HK$ Bn 2013 vs 2012

Gross advances 587.7 9%

Impaired advances/gross advances (%) 0.22 3bp

Deposits (incl. CDs & other debt securities in issue)

869.7 6%

Loans & Deposits

Favourable Unfavourable

2013 Annual Results

Business Overview

Loans & Deposits

HK & Other Businesses

Mainland Business

Financial Performance

Managing for Sustainable Growth

Retail Banking &

Wealth Management

HK & Other Businesses

HK$ Mn 2013 vs 2012

Net interest income 9,959 14%

Non-interest income - Net fee income

4,334 3,849

13% 16%

Net operating income - excl. loan impairment charges

13,811 14,293

13% 14%

Operating profit - excl. loan impairment charges

8,485 8,967

15% 16%

Profit before tax - excl. gain on disposal of general insurance business in 2012

8,939

14% 17%

Retail Banking & Wealth Management (RBWM)

HK & Other Businesses

Favourable Unfavourable

expanded Prestige & Preferred Centres

iPoint Centres

RQFII exchange-traded fund

contactless payment through smartphone

RBWM – Product & Service Innovations

HK & Other Businesses

RBWM – Wealth Management

Wealth management income 18%

Investment Services:

revenue

retail investment funds turnover

securities-related turnover

23%

43%

22%

HK & Other Businesses

RBWM – Wealth Management

Wealth management income 18%

Insurance Business:

total operating income

annualised new life insurance premiums

total life insurance policies in-force

14%

16%

4%

HK & Other Businesses

Total operating income 6%

spending 13%

RBWM – Credit Cards

HK & Other Businesses

RBWM – Mortgages

Lending 4%

Corporate &

Commercial Banking

HK & Other Businesses

HK$ Mn 2013 vs 2012

Net interest income 5,777 9%

Non-interest income - Net fee income

- FX & treasury income

2,356 1,802

505

12% 15%

13%

Net operating income - excl. loan impairment charges

8,087 8,133

9% 10%

Operating profit - excl. loan impairment charges

6,257 6,303

10% 12%

Profit before tax - excl. gain on disposal of general insurance business in 2012

6,263

7% 10%

Corporate & Commercial Banking

HK & Other Businesses

Favourable Unfavourable

deposits 12%

gross advances 11%

Corporate & Commercial Banking

HK & Other Businesses

HK$ Mn 2013 vs 2012

Net interest income 5,777 9%

Non-interest income - Net fee income

- FX & treasury income

2,356 1,802

505

12% 15%

13%

Net operating income - excl. loan impairment charges

8,087 8,133

9% 10%

Operating profit - excl. loan impairment charges

6,257 6,303

10% 12%

Profit before tax - excl. gain on disposal of general insurance business in 2012

6,263

7% 10%

Corporate & Commercial Banking

HK & Other Businesses

Favourable Unfavourable

HK & Other Businesses

Non-interest income 12%

investment services income

- revenue from investment fund

22%

48%

remittance income 28%

Corporate & Commercial Banking

growth in SME customer deposits

21% increase in SME non-interest income

51% are Mainland companies (41% in 2012)

Newly acquired customers

New customers as primary drivers of

HK & Other Businesses

new Business Banking Centres

upgrade on Business Mobile Banking platform

Enhancing accessibility & convenience by

Corporate & Commercial Banking

Treasury

HK & Other Businesses

HK$ Mn 2013 vs 2012

Net interest income 1,630 3%

Non-interest income - Trading income

1,118 1,123

16% 14%

Net operating income 2,748 4%

Operating profit 2,440 3%

Profit before tax 2,441 3%

Treasury

HK & Other Businesses

Favourable Unfavourable

2013 Annual Results

Business Overview

Loans & Deposits

HK & Other Businesses

Mainland Business

Financial Performance

Managing for Sustainable Growth

Mainland Business

gross advances 19%

deposits 17%

Hang Seng China’s infrastructure

product & service offerings

Enhancement in

Good growth momentum

Mainland Business

HK$ Mn 2013 vs 2012

Net interest income 1,459 6%

Non-interest income - Trading income

236 131

4% 15%

Total operating income 1,695 4%

Operating expenses 1,479 8%

Operating profit 208 38%

Profit before tax 8,469 56%

Favourable Unfavourable

Mainland Business

new branch in Chengdu

new sub-branches in Fuzhou, Shantou,

Qianhai & Shanghai Free Trade Zone

50 outlets

Mainland Business

2013 Annual Results

Business Overview

Loans & Deposits

HK & Other Businesses

Mainland Business

Financial Performance

Managing for Sustainable Growth

maintain quality & sustainable growth through customer-focused strategy

increase cross-border collaboration to capture opportunities from closer Mainland-Hong Kong integration & policy relaxation

invest in Mainland network expansion, service platform & infrastructure

uphold high standards of corporate governance & risk management

Managing for Sustainable Growth

increase operational efficiency

enhance analytics, branch network, other service delivery channels, proposition & people development to drive wealth income