Hang Seng Bank (11) H2 2024 earnings summary

Executive summary

• Operating profit rose 8% year-over-year to HK$21.6bn, with profit attributable to shareholders up 3% to HK$18.4bn and EPS up 4% to HK$9.33.

• Non-interest income surged 26% to HK$10.8bn, offsetting a 5% decline in net interest income to HK$30.8bn due to subdued loan demand and narrowing net interest margin.

• Total dividend per share increased 4.6% to HK$6.80, with a HK$3bn share buyback program executed.

• Strong growth in affluent and mainland China customer segments, with new-to-bank affluent customers up 75% and new account openings for mainland customers up 81%.

• 2024 was marked by geopolitical and macroeconomic challenges, leading to slower economic growth and subdued trade and retail sectors.

Financial highlights

• Net operating income before credit losses grew 2% to HK$41.5bn.

• Net fee income rose 8% to HK$5.3bn, driven by a 39% increase in retail investment funds and 19% growth in securities broking income.

• Life insurance-related income increased 17% to HK$3.1bn, and investment services income rose 28%.

• Cost efficiency ratio increased to 36.6% from 35.8% in 2023.

• Gross advances decreased 5% to HK$832bn, while customer deposits grew 7% to HK$1,267bn.

Outlook and guidance

• Continued investment in digital solutions, infrastructure, and community initiatives, with a focus on sustainable growth and supporting SMEs and green finance.

• Prudent and forward-looking risk management will continue amid ongoing economic uncertainties.

• Commitment to maintaining a steady and healthy dividend policy supported by strong capital position.

• Net interest income is sensitive to interest rate changes, with a 100bp parallel increase expected to boost NII by HK$1.8bn in 2024.

• Management highlights strong capital and liquidity positions to support future growth.