Hang Seng Bank (11) investor relations material

Executive summary

• Profit before tax fell 15% year-over-year to HK$17,908m, mainly due to lower net interest income and higher credit impairment charges.

• Net operating income before credit losses rose slightly to HK$42,254m, supported by strong fee and trading income.

• Operating expenses increased 3% to HK$15,586m, reflecting continued investment in people and technology.

• The cost efficiency ratio edged up to 36.9%.

• Profit attributable to shareholders was HK$15,762m, with EPS at HK$7.94.

Financial highlights

• Net interest income declined 6% to HK$28,844m due to lower market rates and margin compression.

• Net fee income rose 19% to HK$6,331m, driven by securities broking and retail investment funds.

• Net income from financial instruments at fair value surged 169% to HK$20,698m, mainly from insurance business gains.

• Insurance service results increased 24% to HK$2,806m.

• Credit impairment charges rose 69% to HK$8,049m, mainly from Hong Kong commercial real estate.

• Gross loans and advances to customers fell 3% to HK$807bn; customer deposits rose 1% to HK$1,283bn.

• Advances-to-deposits ratio improved to 61.4%.

• Total shareholders’ equity increased 2% to HK$173bn.

Outlook and guidance

• Management expects gradual improvement in Hong Kong and mainland China economic conditions, with continued pressure in commercial real estate.

• Interest rate cuts and positive wealth effects are expected to support recovery, but liquidity and valuation pressures may persist.

• The Group will continue to invest in technology, risk management, and sustainable finance.