HSBC Holdings PLC HSBA Hang Seng Bank Limited 2012 Interim Results

  HSBC Holdings PLC (HSBA) - Hang Seng Bank Limited 2012 Interim Results

RNS Number : 7533I
HSBC Holdings PLC
30 July 2012
 



 

 

 

 

 

 

 

 

 

 

 

 

30 July 2012

 

                            HANG SENG BANK LIMITED

                      2012 INTERIM RESULTS - HIGHLIGHTS

 

·    Attributable profit up 14% to HK$9,302m (HK$8,160m for the first half of
2011).

 

·    Profit before tax up 14% to HK$10,659m (HK$9,354m for the first half of
2011).

 

·    Operating profit up 13% to HK$8,034m (HK$7,129m for the first half of
2011).

 

·    Operating profit excluding loan impairment charges up 14% to HK$8,283m

      (HK$7,287m for the first half of 2011).

 

·    Return on average shareholders' funds of 22.9% (22.8% for the first half
of 2011).

 

·    Earnings per share up 14.1% to HK$4.87 per share (HK$4.27 per share for
the first half of

2011).

 

·    Second interim dividend of HK$1.10 per share; total dividends of HK$2.20
per share for the first half of 2012 (HK$2.20 per share for the first half of
2011).

 

·    Capital adequacy ratio of 13.9% (14.3% at 31 December 2011); core capital
ratio of 11.7% (11.6% at 31 December 2011).

 

·    Cost efficiency ratio of 33.0% (34.6% for the first half of 2011).

 

 

Within this document, the Hong Kong Special Administrative Region of the
People's Republic of China has been referred to as 'Hong Kong'.

 

The abbreviations 'HK$m' and 'HK$bn' represent millions and billions of Hong
Kong dollars respectively.

Contents

  

 

        The financial information in this news release is based on the
        unaudited consolidated financial statements of Hang Seng Bank Limited
        ('the bank') and its subsidiaries ('the group') for the six months
        ended 30 June 2012.

 

1          Highlights of Results

2          Contents

4          Chairman's Comment

6          Chief Executive's Review

9          Results Summary

12        Segmental Analysis

19        Consolidated Income Statement

20        Consolidated Statement of Comprehensive Income

21        Consolidated Balance Sheet

22        Consolidated Statement of Changes in Equity

24        Consolidated Cash Flow Statement

25        Financial Review

25        Net interest income

27        Net fee income

28        Trading income

29        Net income/(loss) from financial instruments designated at fair
value

29        Other operating income

30        Analysis of income from wealth management business

32        Loan impairment charges

33        Operating expenses

34        Gains less losses from financial investments and fixed assets

34        Tax expense

35        Earnings per share

35        Dividends per share

35        Segmental analysis

38        Cash and balances with banks

38        Placings with and advances to banks

39        Trading assets

40        Financial assets designated at fair value

41        Advances to customers

41        Loan impairment allowances against advances to customers

42        Impaired advances and allowances

43        Overdue advances

43        Rescheduled advances

            44        Segmental analysis of advances to customers by
geographical area

            45        Gross advances to customers by industry sector

47        Financial investments

49        Interest in associates

49        Intangible assets

49        Other assets

50        Current, savings and other deposit accounts

50        Certificates of deposit and other debt securities in issue

51        Trading liabilities

51        Other liabilities

52        Subordinated liabilities

53        Shareholders' funds

54        Capital resources management

56        Liquidity ratio

57        Reconciliation of cash flow statement

58        Contingent liabilities, commitments and derivatives

62        Statutory accounts and accounting policies

62        Comparative figures

63        Property revaluation

63        Foreign currency positions

65        Ultimate holding company

65        Register of shareholders

65        Proposed timetable for the remaining 2012 quarterly dividends

65        Code on corporate governance practices

66        Board of Directors

66        News release

 

Comment by Raymond Ch'ien, Chairman

 

Hang Seng Bank's good results for the first half of 2012 reflect success with
leveraging our strengths to maintain broad-based business momentum amid global
economic instability.

 

Faced with an uncertain environment, customers continued to value our trusted
brand. In line with our service-driven approach, we worked hard to anticipate
their needs - helping them to achieve greater financial peace of mind and stay
on track towards their wealth management goals. Our strong balance sheet
enabled us to offer additional support through prudent expansion of lending.

 

Capitalising on our rapid time-to-market capabilities and extensive
distribution network, we launched new products to penetrate under-tapped
segments and attract new business, with a particular focus on increasing our
share of mainland China customers.

 

Innovative service initiatives and strong connectivity between our Hong Kong
and Mainland operations have been instrumental in winning us more cross-border
and renminbi-related business and will serve us well as these important
sectors continue to grow.

 

We expanded the scope and reach of our Mainland proposition through Hang Seng
Bank (China) Limited, driving increases in the customer base and deposits that
will provide valuable support for future business growth.

 

Profit attributable to shareholders rose to HK$9,302m - up 14% and 7% compared
with the first and second halves of 2011 respectively. Earnings per share grew
by 14% compared with a year earlier to reach HK$4.87.

 

Return on average shareholders' funds was 22.9%, compared with 22.8% and 22.6%
for the first and second halves of last year respectively.

 

The Directors have declared a second interim dividend of HK$1.10 per share,
bringing the total distribution for the first half of 2012 to HK$2.20 per
share - the same as in the first half of 2011. We remain committed to a
dividend policy that serves the interests of shareholders over the long term
by striking a good balance between distributions and investing in future
growth.

 

Economic Environment

 

Global economic activity remained subdued in the first half of 2012. The
intensification of the eurozone's sovereign debt crisis and fears of further
debt contagion weighed heavily on investor and consumer sentiment. Signs of
recovery in the US economy at the start of the year were losing steam by the
second quarter, compounded by the persistence of high unemployment and
fragility in the housing market.

 

Weak external demand led to a marked deceleration in Hong Kong's
outward-facing economy, with the fall in net exports dragging GDP growth down
to just 0.4% in the first quarter of the year. Depressed global export
activity will remain a constraining factor in the second half of 2012,
although this will be partly offset by resilient domestic demand on the back
of the tight employment market and continued investment in fixed capital
formation - albeit at a slower pace. We expect Hong Kong's GDP growth for the
year to decline to around 2%.

 

On the Mainland, economic real GDP growth was 7.8% in the first half of 2012 -
its slowest rate in almost three years. While conditions in the external
sector pose a significant challenge, recent monetary easing initiatives should
help sustain domestic demand, with real GDP growth expected to moderate to
about 8% for the year. Reduced inflationary pressures may provide room for
further policy easing and supportive fiscal measures in the months ahead,
although such steps are likely to be modest in nature given continuing
concerns over speculation in the property sector.

 

With economic uncertainty in many major industrialised nations creating
substantial downside risk, our operating environment will remain challenging
in the second half of 2012.

 

At the same time, recent Central Government measures in support of Hong Kong's
further development as a centre for offshore renminbi financial services and
to promote closer economic integration with the Mainland will open up new
opportunities for business growth.

 

Against this backdrop, we will continue to capitalise on the advantages
offered by our well-respected brand to maintain our market share in key lines
of banking. We will leverage our strong early-mover capabilities and strategic
Greater China network to expand in sectors with good future growth potential.
The deepening of relationships with new and existing customers will provide a
stable pipeline for deposits acquisition. Service excellence will remain at
the heart of our actions as we work to achieve increased value for
shareholders.

 

Review by Rose Lee, Vice-Chairman and Chief Executive

 

Hang Seng Bank ('Hang Seng') produced encouraging results in the first half of
2012. We achieved a 14% rise

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