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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
