HANG SENG BANK LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(Stock code: 11)
RESULTS FOR 2020
Net operating income before change in expected credit losses and other credit
impairment charges down by 17% to HK$36,068m (HK$43,514m in 2019).
Operating profit down 30% to HK$20,125m (HK$28,610m in 2019).
Profit before tax down by 33% to HK$19,414m (HK$28,813m in 2019).
Profit attributable to shareholders down by 33% to HK$16,687m (HK$24,840m in
2019).
Return on average ordinary shareholders' equity of 9.6% (15.2% in 2019).
Earnings per share down 35% to HK$8.36 per share (HK$12.77 per share in 2019).
Fourth interim dividend of HK$2.80 per share; total dividends of HK$5.50 per
share for 2020 (HK$8.20 per share in 2019).
Common equity tier 1 ('CET1') capital ratio of 16.8%, tier 1 ('T1') capital ratio of 18.5% and total capital ratio of 20.0% at 31 December 2020 (CET1 capital ratio of 16.9%, T1 capital ratio of 18.7% and total capital ratio of 20.8% at 31 December
2019).
Cost efficiency ratio of 36.6% (30.0% in 2019).
Within this document, the Hong Kong Special Administrative Region of the People's Republic of China has been referred to as 'Hong Kong'. The abbreviations 'HK$m' and 'HK$bn' represent millions and billions of Hong Kong dollars respectively.
ContentsThe financial information in this announcement is based on the audited consolidated financial statements of Hang Seng Bank Limited ('the Bank') and its subsidiaries ('the Group') for the year ended 31 December 2020.
1 Highlights of Results*
2 Contents
4 Chairman's Comment*
6 Chief Executive's Review*
10 Results Summary
17 Segmental Analysis
23 Consolidated Income Statement
24 Consolidated Statement of Comprehensive Income
25 Consolidated Balance Sheet
26 Consolidated Statement of Changes in Equity
28 Financial Review
28 Net interest income
29 Net fee income
29 Net income from financial instruments measured at fair value through profit or loss
30 Other operating income
30 Analysis of income from wealth management business
31 Change in expected credit losses and other credit impairment charges
31 Operating expenses
32 Tax expense
32 Earnings per share - basic and diluted
32 Dividends/Distributions
33 Segmental analysis
35 Trading assets
35 Financial assets designated and otherwise mandatorily measured at fair value through profit or loss
35 Loans and advances to customers
36 Reconciliation of gross exposure and allowances/provision for loans and advances to banks and customers including loan commitments and financial guarantees
37 Overdue loans and advances to customers
37 Rescheduled loans and advances to customers
38 Gross loans and advances to customers by industry sector
39 Financial investments
39 Intangible assets
40 Other assets
40 Current, savings and other deposit accounts
40 Trading liabilities
41 Financial liabilities designated at fair value
41 Certificates of deposit and other debt securities in issue
41 Other liabilities
42 Shareholders' equity
42 Capital management
45 Liquidity information
45 Contingent liabilities, contractual commitments and guarantees
Contents (continued)
46
Additional Information
46 Statutory financial statements and accounting policies
47 Future accounting standard development
47 Ultimate holding company
47 Register of shareholders
47 Corporate governance principles and practices
48 Board of Directors
48 Announcement and Annual Report
49 Other financial information
* Where possible, percentages in this section have been rounded to the nearest percentage point to facilitate easy reading. Percentage-based indicators remain at 1 or 2 decimal places as appropriate.
Chairman's Comment
Comment by Raymond Ch'ien, Chairman
The Covid-19 pandemic has had far-reaching economic and social consequences around the world. Challenges to the movement of goods and people have severely disrupted industrial and commercial activity and led to major shifts in patterns of consumer demand.
In terms of our business, non-interest income and net interest income were adversely affected by lower transaction volumes as commercial and personal banking customers stepped back from investment plans and spending activity. Low interest rates exerted growing pressure on the net interest margin. The weakened credit environment resulted in an overall increase in expected credit losses for the year and we recorded a net deficit on property revaluation, compared with a net surplus in 2019.
The combined impact of these factors affected our bottom line. Profit attributable to shareholders declined by 33% to HK$16,687m. Earnings per share were HK$8.36 per share. Return on average ordinary shareholders' equity was 9.6%. Return on average total assets was 1.0%.
While the difficult operating conditions in 2020 made it a challenging year for financial performance, there is positive progress in terms of our long-term strategy.
Our proactive steps to continuously improve agility and resilience enabled us to smoothly engineer our operations to ensure customers enjoyed uninterrupted access to convenient, reliable and safe banking services amid the pandemic environment. In traditional Hang Seng fashion, our dynamic approach also made it possible for us to go the extra mile and continue to roll out new service innovations, develop new markets and offer support to those in need. These achievements, which were accomplished while maintaining strong cost control and effective risk management, have further enhanced Hang Seng's institutional sustainability.
The Directors have declared a fourth interim dividend of HK$2.80 per share, bringing the total distribution for 2020 to HK$5.50 per share.
Economic Outlook
The near-term outlook for the global economy is closely tied to the world's ability to bring Covid-19 under control. While the development of vaccines, along with continuing policy support from major central banks, offer some hope for general global economic recovery in the second half of 2021, it is likely that the impacts of the pandemic will continue to reverberate beyond the end of the acute phase of this worldwide crisis. While financial markets have shown some vibrancy since the second half of last year, many real-economy uncertainties remain.
Although Hong Kong recorded an economic contraction for the whole of 2020, there was a return to the path of expansion in the second half. Further growth is potentially within view with the continuation of supportive government policy initiatives and the improvement in financial markets resulting from monetary easing by the US Federal Reserve. The situation remains fragile, however, with much depending on external variables and it may be some time before economic activity returns to its pre-recession level.
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Hang Seng Bank Ltd. published this content on 23 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 February 2021 05:01:01 UTC.
