Hang Seng Bank (11) investor relations material

Executive summary

• Net operating income before ECL grew 3% year-on-year, driven by a 34% increase in fee and other income, now 31.6% of total revenue.

• Profit before tax declined 28% year-on-year to HKD 8.1 billion, mainly due to higher credit provisions and ECL charges, especially in the commercial real estate sector.

• Earnings per share dropped 34% to HKD 3.34; return on average equity was 7.9%.

• Strong capital base with CET1 ratio at 21.3% as of June 2025 supports both customer growth and shareholder returns.

• Declared a second interim dividend of HKD 1.30 per share, bringing first-half total to HKD 2.60 per share, up 8% year-on-year; share buyback of up to HKD 3 billion announced.

Financial highlights

• Net interest income fell 7% year-on-year to HKD 14,339 million, while fee and other income rose 34% year-on-year.

• Net income from financial instruments at fair value through profit or loss surged 280% to HKD 10,716 million, driven by insurance and trading gains.

• Operating expenses rose 1% to HKD 7,565 million, with cost efficiency ratio improving to 36.1%.

• Non-performing loans increased to 6.69% as of June 2025, up from 6.12% at year-end 2024.

• Change in expected credit losses and other credit impairment charges increased by HKD 3,361 million to HKD 4,861 million, mainly from the Hong Kong CRE sector.

Outlook and guidance

• Management expects continued pressure on credit costs in the second half, particularly in the commercial real estate sector, with ECL likely to remain elevated.

• Early signs of recovery are seen in capital markets and the residential property sector, but uncertainties remain due to macroeconomic factors.

• Focus remains on revenue diversification, digital transformation, and prudent risk management.

• Ongoing investment in people and technology, with positive income-to-cost jaws and disciplined cost management.

• Vigilance on trade tariffs, property market dynamics, and interest rate movements continues.