Hang Seng Bank Posts Solid 2016 Results

Hang Seng Bank

Hang Seng Bank (HKG:0011), a Hong Kong-based banking and financial services firm, returned solid results for 2016 amidst a challenging operating conditions, the company said in a disclosure to the Hong Kong Stock Exchange.

The bank said operating profit excluding loan impairment charges and other credit risk provisions was down 1% to HKD20.347 billion due mainly to a reduction in wealth management income and subdued investment environment.

Operating profit was HKD19.034 billion, down 2% compared with 2015, reflecting higher loan impairment charges. The HKD10.636 billion gain on the partial disposal of Industrial Bank in 2015 saw profit attributable to shareholders fall by 41% to HKD16.212 billion in 2016.

Net interest income increased by HKD1.089 billion, or 5%, to HKD22.254 billion, underpinned by the 4% rise in average interest-earning assets.

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The growth in average interest-earning assets was mainly supported by the 3% increase in average customer deposits.

“International uncertainties and economic deleveraging on the Mainland continued to present challenging operating conditions. Investor caution resulted in subdued investment market activity and soft demand for loans during the year,” Hang Seng Bank Chairman Raymon Ch’ien said.

Hang Seng Bank Posts Respectable Results

Against this backdrop, Hang Seng Bank leveraged its competitive strengths to record
respectable results for 2016 and strengthen its platform for achieving long-term growth, he added.

“Uncertainties over global trade, the evolving credit conditions and economic adjustment on the Mainland will continue to create challenges for business. Supported by our strong market position, large client base and sustainable growth strategy, we will invest resources in enhancing efficiency, acting swiftly on new business opportunities and deepening customer relationships to increase value for shareholders,” Ch’ien said.

Against the first half of 2016, the Hang Seng Bank continued to make good progress and achieved sustainable growth in revenues to return solid results for the second half.

Attributable profit grew by HKD202 million, or 3%, driven by increases in net interest income and net fee income and a reduction in loan impairment charges.

Net Interest Income Up 2%

Net interest income grew by HKD248 million, or 2%, due mainly to the increase in average interest earning assets, more calendar days in the second half and a stable net interest margin despite continuous downward pressure in the challenging operating environment.

Non-interest income decreased by HKD83 million, or 2%. There was an improvement in investment income, with higher income from retail investment funds, cards, brokerage and structured investment products.

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These were more than offset by lower insurance income, reflecting an unfavourable change in market conditions from discount rate update.

Operating expenses increased by 6%, mainly reflecting an increase in general and
administrative expenses that was partly offset by reduced staff costs.

Loan impairment charges decreased by 18%, reflecting lower individually assessed impairment charges. – BusinessNewsAsia.com