30th Jul 2007 09:15
HSBC Holdings PLC30 July 2007 HANG SENG BANK LIMITED 2007 INTERIM RESULTS - HIGHLIGHTS • Operating profit up 22.4 per cent to HK$7,773 million (HK$6,353 million for the first half of 2006). • Operating profit excluding loan impairment charges and other credit risk provisions up 26.1 per cent to HK$8,053 million (HK$6,387 million for the first half of 2006). • Pre-tax profit up 36.0 per cent to HK$10,218 million (HK$7,513 million for the first half of 2006). • Attributable profit up 43.2 per cent to HK$8,867 million (HK$6,190 million for the first half of 2006). • Return on average shareholders' funds of 36.6 per cent (29.0 per cent for the first half of 2006). • Assets up 10.8 per cent to HK$741.3 billion (HK$669.1 billion at 31 December 2006). • Earnings per share up 43.2 per cent to HK$4.64 (HK$3.24 per share for the first half of 2006). • Second interim dividend of HK$1.10 per share; total dividends of HK$2.20 per share for the first half of 2007 (HK$2.20 per share for the first half of 2006). • Total capital ratio of 12.3 per cent (13.6 per cent at 31 December 2006); tier 1 capital ratio of 8.9 per cent (10.7 per cent at 31 December 2006). • Cost efficiency ratio of 26.6 per cent (26.8 per cent for the first half of 2006). Within this document, the Hong Kong Special Administrative Region of thePeople's Republic of China has been referred to as 'Hong Kong'. Comment by Raymond Or, Chief Executive Hang Seng Bank's record results for the first half of 2007 reflect excellentprogress with our long-term growth strategy, supported by buoyant economicconditions. Attributable profit increased by 43.2 per cent compared with the first half of2006 to reach HK$8,867 million. Earnings per share were up 43.2 per cent atHK$4.64. Operating profit excluding loan impairment charges and other credit riskprovisions rose by 26.1 per cent to HK$8,053 million. We increased our range ofproduct offerings and further enhanced our service delivery channels, drivingstrong growth in our personal wealth management and Commercial Bankingbusinesses. Operating profit was up HK$1,420 million at HK$7,773 million. Pre-tax profit rose by 36.0 per cent, in part reflecting an unrealised gain ofHK$1,465 million on dilution of our investment in our strategic mainland Chinapartner, Industrial Bank Co., Ltd ('Industrial Bank') following its listing inFebruary this year. Increases in average customer deposits and average customer advances helpedunderpin a 20.8 per cent rise in net interest income to HK$6,696 million. Netinterest margin was up 10 basis points at 2.11 per cent, supported byimprovements in deposit spreads and contribution from net free funds. Operating expenses rose by 24.6 per cent to HK$2,914 million, due largely toinvestments in our mainland business - including the establishment of ourwholly-owned subsidiary bank Hang Seng Bank (China) Limited - as well asincreases in performance-related pay and marketing costs. However, net operatingincome before loan impairment charges grew by 25.7 per cent. With this positivedifferential of 1.1 percentage points, our cost efficiency ratio compared withthe first half of 2006 was 0.2 percentage points lower at 26.6 per cent. Personal Financial Services achieved a 35.9 per cent increase in operatingprofit excluding loan impairment charges to HK$5,380 million. Wealth managementbusiness reached new heights - income grew by 58.2 per cent to HK$3,429 million,with securities turnover and sales of investment funds and structured productsbreaking all previous highs. Further development of our retirement planning proposition drove a 37.1 per centgrowth in life insurance income for the first half of 2007 and made us HongKong's number one provider in terms of annualised new premiums for regular-pay(non-linked) insurance during the first quarter of the year. Commercial Banking's operating profit excluding loan impairment charges rose by15.3 per cent to HK$1,076 million. Continued service enhancements strengthenedour position as the preferred bank for small and medium-sized enterprises. Wecapitalised on upbeat business sentiment to expand our lending portfolio. Year-on-year, average customer deposits and average customer advances includingtrade finance grew by 19.5 per cent and 22.7 per cent respectively. Net interestincome rose by 21.6 per cent. We implemented new measures to diversify and grow non-interest income. Closercollaboration between commercial relationship managers and treasury andinvestment service teams saw an encouraging increase in corporate wealthmanagement business. Successful promotion of our comprehensive banking solutionfor retailers helped us grow our market share in this key segment and supportedstrong growth in card merchant-acquiring business. Along with growth in tradeservices and remittances, these developments yielded a 20.8 per cent increase innet fee income. Corporate Banking recorded a 16.0 per cent increase in operating profitexcluding loan impairment charges to reach HK$298 million, underpinned by a 23.9per cent rise in customer deposits and the 8.4 per cent increase in outstandingloan balances. With strong liquidity in Hong Kong continuing to put pressure on corporate loanmargins, we intensified income diversification efforts. Net fee income was up35.0 per cent, reflecting encouraging growth in trade services and creditfacilities fees. The improved interest rate environment in the first half of 2007 saw Treasury'soperating profit increase by 2.7 per cent to HK$456 million. Net operatingincome rose by 5.1 per cent, with the improvement in yields on balance sheetmanagement portfolios. To further grow customer-driven business, we stepped upcross-customer group cooperation and put additional resources into structuredproduct development. Such actions have placed Treasury in a better position todeliver profit growth. Our mainland subsidiary bank commenced operation in late May, marking the startof a new era of business growth. A 21.3 per cent increase in loans and a 42.7per cent rise in deposits helped total operating income grow by 86.0 per cent.Including our share of profit from Industrial Bank, the pre-tax profit of ourmainland business contributed 5.9 per cent to total pre-tax profit, comparedwith 4.3 per cent a year earlier. Economic growth in Hong Kong will maintain good momentum during the second halfof the year. The economy will continue to benefit from the improving labourmarket, a favourable interest rate environment and strong growth on theMainland. Potential challenges include rising inflation risks created by the weakening USdollar and appreciating renminbi, which may put upward pressure on costs. Theprospects of further macro-economic policy tightening on the Mainland may alsoadd volatility to the performance of its economy and financial markets. We will build on the significant progress made in the first half of 2007 byfurther developing our core business drivers. In Hong Kong, we will leverage ourbrand, leading market position and wide product range to further grow our wealthmanagement and Commercial Banking businesses. With continuing strong economicgrowth on the Mainland, we will take full advantage of the new businessopportunities provided by the establishment of our subsidiary bank and itsexpanding network of outlets. Results summary Hang Seng Bank Limited ('the bank') and its subsidiaries and associates ('thegroup') reported an unaudited profit attributable to shareholders of HK$8,867million for the first half of 2007, a rise of 43.2 per cent over the first halfof 2006. Earnings per share were HK$4.64, up 43.2 per cent from the first halfof 2006. Operating profit excluding loan impairment charges and other credit riskprovisions rose by HK$1,666 million, or 26.1 per cent, to HK$8,053 million,underpinned by strong growth in wealth management and Commercial Bankingbusinesses, contributing to rises of 20.8 per cent in net interest income and34.1 per cent in non-interest income as highlighted below. - Net interest income rose by HK$1,155 million, or 20.8 per cent, with a 15.1per cent increase in average interest-earning assets. Average customer depositsand average customer advances grew by 10.0 per cent and 9.7 per centrespectively over the same time last year. Net interest margin rose by 10 basispoints to 2.11 per cent, with improvements in deposit spreads, Treasury'sbalance sheet management portfolio yields and contribution from net free funds. - Net fees and commissions increased by HK$1,080 million, or 60.6 per cent,highlighting strong growth in income from stockbroking and related services(+85.4 per cent), retail investment funds (+50.4 per cent), sales of third-partystructured products (+678.1 per cent), mainly equity-linked instruments, andprivate banking investment services (+108.1 per cent) in the buoyant investmentmarket. Income from card services, remittances and account services rose by 19.9per cent, 21.3 per cent and 19.0 per cent respectively. - Income from insurance business, including net earned insurance premiums, netinterest income, net fee income and net income from financial instrumentsdesignated at fair value, the change in present value of in-force business andafter deducting net insurance claims incurred and movement in policyholders'liabilities, increased by 27.2 per cent. Life insurance income was up 37.1 percent, driven by strong growth in new annualised premiums and investment returnson insurance funds. - Trading income fell by HK$75 million, or 11.4 per cent. Securities trading andspreads earned on option-linked and other structured products provided tocustomers recorded satisfactory growth. Foreign exchange income was, however,affected by the exchange loss on forward contracts used in 'funding swap'activities in the balance sheet management portfolios. - Net operating income before loan impairment charges and other credit riskprovisions rose by HK$2,242 million, or 25.7 per cent, to HK$10,967 million. - Operating expenses increased by HK$576 million, or 24.6 per cent, comparedwith the first half of 2006. The cost efficiency ratio was lower by 0.2percentage points at 26.6 per cent. The bank's mainland operations accounted forHK$121 million, or 21.0 per cent, of the increase in operating expenses, mainlyattributable to the establishment of wholly-owned subsidiary bank Hang Seng Bank(China) Limited and the expansion of its branch network. Excluding mainlandoperations, operating expenses were up 20.3 per cent, or HK$455 million,attributable mainly to performance-based staff remuneration and marketing costs. Operating profit was up HK$1,420 million, or 22.4 per cent, at HK$7,773 million,after accounting for loan impairment charges and other credit provisions ofHK$280 million, compared with HK$34 million in the first half of 2006, whichbenefited from a substantial recovery from a commercial banking account. Profit before tax was up HK$2,705 million, or 36.0 per cent, to HK$10,218million after taking into account: • a decrease of HK$300 million in profit on disposal of fixed assets and financial investments; • a gain on dilution of investment in an associate of HK$1,465 million on the listing of Industrial Bank; • a decrease of HK$52 million in net surplus on property revaluation; and • an increase of HK$172 million in share of profits from associates, mainly contributed by Industrial Bank. Balance sheet and key ratios Total assets grew by HK$72.3 billion, or 10.8 per cent, during the first half of2007 to HK$741.3 billion. Customer advances rose by HK$31.6 billion, or 11.3 percent, including HK$26.9 billion in financing customers for subscription ofshares in initial public offerings ('IPOs'). Encouraging growth was recorded inlending on the Mainland, trade finance, card advances and personal loans.Customer deposits rose by 3.4 per cent, mainly in current and savings accounts.At 30 June 2007, the advances-to-deposits ratio was 55.7 per cent, compared with51.7 per cent and 52.8 per cent at the end of December 2006 and June 2006respectively. Shareholders' funds (excluding proposed dividends) increased by HK$5,580million, or 12.9 per cent, to HK$48,928 million, mainly reflecting the HK$3,662million increase in retained profits and the HK$1,465 million gain on thedilution of investment in an associate. The return on average total assets was 2.5 per cent, compared with 2.1 per centfor the first half year of 2006. The return on average shareholders' funds was36.6 per cent (29.0 per cent in the first half of 2006). At 30 June 2007, the total capital ratio was 12.3 per cent and the tier 1 ratiowas 8.9 per cent, calculated in accordance with the Banking (Capital) Rulesissued by the Hong Kong Monetary Authority ('HKMA') for implementation of theBasel II capital accord. The total capital ratio and tier 1 ratio at 31 December2006 under the Basel I capital regime were 13.6 per cent and 10.7 per centrespectively. The bank maintained a strong liquidity position. The average liquidity ratio forthe first half of 2007 was 52.9 per cent (calculated in accordance with theFourth Schedule of the Hong Kong Banking Ordinance), compared with an averageliquidity ratio of 50.9 per cent for the same period in 2006. Dividends The Directors have declared a second interim dividend of HK$1.10 per share,which will be payable on 30 August 2007 to shareholders on the register ofshareholders as of 21 August 2007. Together with the first interim dividends,the total distribution for the first half of 2007 will amount to HK$2.20 pershare, the same as in the first half of 2006. Customer group performance Personal Inter- Financial Commercial Corporate segmentFigures in HK$m Services Banking Banking Treasury Other elimination Total Half-year ended 30Jun07 Net interest income 4,142 1,119 339 407 689 - 6,696Net fee income/(expense) 2,307 476 54 (11) 36 - 2,862Trading income 358 74 4 163 (15) - 584Net income/(expense) from financial instruments designated at fair value 689 - - (3) - - 686Dividend income 6 - - - 20 - 26Net earned insurance premiums 4,741 79 1 - - - 4,821Other operating income 300 25 - - 72 - 397Inter-segment income - - - - 187 (187) -Total operating income 12,543 1,773 398 556 989 (187) 16,072Net insurance claims incurred and movement in policyholders' liabilities (5,061) (44) - - - - (5,105)Net operating income before loan impairment charges and other credit risk provisions 7,482 1,729 398 556 989 (187) 10,967Loan impairment charges and other credit risk provisions (122) (45) (113) - - - (280)Net operating income 7,360 1,684 285 556 989 (187) 10,687Total operating expenses^ (1,939) (636) (97) (96) (146) - (2,914)Inter-segment expenses (163) (17) (3) (4) - 187 -Operating profit 5,258 1,031 185 456 843 - 7,773Profit on disposal of fixed assets and financial investments - - 7 - 267 - 274Gain on dilution of investment in associate - - - - 1,465 - 1,465Net surplus on property revaluation - - - - 266 - 266Share of profits from associates 20 254 - 115 51 - 440Profit before tax 5,278 1,285 192 571 2,892 - 10,218Share of profit before tax 51.7% 12.6% 1.8% 5.6% 28.3% - 100.0% Operating profit excluding inter-segment transactions 5,421 1,048 188 460 656 - 7,773 Operating profit excluding loan impairment charges and other credit risk provisions 5,380 1,076 298 456 843 - 8,053 ^Depreciation/amortisation included in total operating expenses (56) (8) (2) (1) (113) - (180) At 30Jun07 Total assets 191,312 74,766 82,688 353,011 39,545 - 741,322Total liabilities 432,416 93,988 51,983 70,109 39,878 - 688,374Investments in associates 155 1,951 - 880 2,293 - 5,279Capital expenditure incurred during the period 135 43 8 3 29 - 218 Personal Inter- Financial Commercial Corporate segmentFigures in HK$m Services Banking Banking Treasury Other elimination Total Half-year ended 30Jun06 (restated) Net interest income 3,549 920 293 216 563 - 5,541Net fee income/(expense) 1,334 394 40 (13) 27 - 1,782Trading income 252 70 4 333 - - 659Net income/(expense)from financial instruments designated at fair value 44 - - (7) - - 37Dividend income 3 - - - 28 - 31Net earned insurance premiums 3,872 81 1 - - - 3,954Other operating income 273 15 - - 104 - 392Inter-segment income - - - - 191 (191) -Total operating income 9,327 1,480 338 529 913 (191) 12,396Net insurance claims incurred and movement in policyholder liabilities (3,641) (30) - - - - (3,671)Net operating income before loan impairment (charges)/releases and other credit risk provisions 5,686 1,450 338 529 913 (191) 8,725Loan impairment(charges)/ releases and other credit risk provisions (74) 26 14 - - - (34)Net operating income 5,612 1,476 352 529 913 (191) 8,691Total operating expenses^ (1,561) (498) (78) (81) (120) - (2,338)Inter-segment expenses (165) (19) (3) (4) - 191 -Operating profit 3,886 959 271 444 793 - 6,353Profit on disposal of fixed assets and financial investments - - - - 574 - 574Net surplus on property revaluation - - - - 318 - 318Share of profits from associates 11 137 - 62 58 - 268Profit before tax 3,897 1,096 271 506 1,743 - 7,513Share of profit before tax 51.9% 14.6% 3.6% 6.7% 23.2% - 100.0% Operating profit excluding inter-segment transactions 4,051 978 274 448 602 - 6,353 Operating profit excluding loan impairment (charges)/releases and other credit risk provisions 3,960 933 257 444 793 - 6,387 ^Depreciation/amortisation included in total operating expenses (51) (4) (2) (1) (96) - (154) At 30Jun 06 Total assets 160,551 59,758 72,230 305,126 30,624 - 628,289Total liabilities 399,620 71,670 39,398 48,950 23,653 - 583,291Investments in associates 131 1,649 - 745 742 - 3,267Capital expenditure incurred during the period 69 10 3 3 57 - 142 Personal Inter- Financial Commercial Corporate segmentFigures in HK$m Services Banking Banking Treasury Other elimination Total Half-year ended 31Dec06 Net interest income 3,879 1,116 330 265 563 - 6,153Net fee income/(expense) 1,242 415 46 (11) 23 - 1,715Trading income 265 80 3 295 28 - 671Net income/(expense) from financial instruments designated at fair value 866 - - (4) - - 862Dividend income 5 5 - - 6 - 16Net earned insurance premiums 3,799 93 - - - - 3,892Other operating income 269 11 - (4) 177 - 453Inter-segment income - - - - 187 (187) -Total operating income 10,325 1,720 379 541 984 (187) 13,762Net insurance claims incurred and movement in policyholders' liabilities (4,373) (33) - - - - (4,406)Net operating income before loan impairment charges and other credit risk provisions 5,952 1,687 379 541 984 (187) 9,356Loan impairment charges and other credit risk provisions (91) (127) - - (12) - (230)Net operating income 5,861 1,560 379 541 972 (187) 9,126Total operating expenses^ (1,911) (600) (90) (94) (208) - (2,903)Inter-segment expenses (161) (19) (3) (4) - 187 -Operating profit 3,789 941 286 443 764 - 6,223Profit on disposal of fixed assets and financial investments 26 - - - 243 - 269Net surplus on property revaluation - - - - 3 - 3Share of profits from associates 18 225 - 102 42 - 387Profit before tax 3,833 1,166 286 545 1,052 - 6,882Share of profit before tax 55.7% 16.9% 4.2% 7.9% 15.3% - 100.0% Operating profit excluding inter-segment transactions 3,950 960 289 447 577 - 6,223 Operating profit excluding loan impairment charges and other credit risk provisions 3,880 1,068 286 443 776 - 6,453 ^Depreciation/amortisation included in total operating expenses (55) (7) (2) (1) (114) - (179) At 31Dec06 Total assets 167,241 69,633 76,619 326,181 29,390 - 669,064Total liabilities 429,667 82,340 41,959 38,609 27,791 - 620,366Investments in associates 141 1,775 - 801 771 - 3,488Capital expenditure incurred during the period 90 34 8 5 100 - 237 Personal Financial Services ('PFS') reported a growth of 35.4 per cent in profitbefore tax to HK$5,278 million and contributed 51.7 per cent to the group'stotal profit before tax. Operating profit excluding loan impairment charges roseby 35.9 per cent, reflecting strong growth in wealth management, privatebanking, card and personal lending businesses. Non-interest income grew by 56.3 per cent, driven primarily by the continuedsuccess of PFS's wealth management business, which reported the following recordachievements: • Investment funds: record sales with a significant 88.6 per cent growth over the first half of 2006; • Stock trading: record turnover with growth of 78.4 per cent and increase in customer base (17.2 per cent growth year-on-year); • Equity-linked structured instruments: record turnover with growth of 234.4 per cent; and • Life insurance: number one ranking in terms of new regular-pay (non-linked) life insurance premiums for the first quarter of 2007. This achievement was attributable to the offering of a diverse range of retirement solutions - from wealth accumulation to health protection - to meet customers' needs of all life stages. Private banking sustained its outstanding performance trends with totaloperating income up by 60.7 per cent. Profit before tax rose by 62.4 per cent toHK$459 million. Net interest income rose by 16.7 per cent, contributed mainly by the 7.8 percent growth in average customer deposits and the widening of deposit spreads.Higher growth was recorded in savings accounts, reflecting a customer preferencefor maintaining liquidity for investment activities. The impressive year-on-year growth in card advances and personal lending of 29.3per cent and 48.8 per cent respectively offset the contraction in the GovernmentHome Mortgage Scheme mortgage portfolio. Amid intense market competition,residential mortgages fell slightly by 0.8 per cent with continued pressure onloan margins. The bank maintained its position as one of the market leaders bypromoting one-stop e-mortgage services as a key area of differentiation. A series of promotional activities and strong consumer market sentiment helped card business grow steadily in the first half of 2007. Cards in issue reached1.44 million, up from 1.40 million at the end of 2006. Card spending increasedby 22.3 per cent. Commercial Banking ('CMB') achieved an increase of 15.3 per cent in operatingprofit excluding loan impairment charges, driven by strong growth in both netinterest income and net fee income. Profit before tax rose by 17.2 per cent toHK$1,285 million, contributing 12.6 per cent of the group's total. Net interest income recorded good growth of 21.6 per cent. Average customeradvances rose by 22.7 per cent over the first half of 2006 as a result ofbalanced growth in trade and factoring, advances to the manufacturing andwholesale and retail sectors, and IPO-related financing. Corporate wealth management income contributed 9.0 per cent of CMB's totaloperating income in the first half of 2007, up from 7.9 per cent in 2006. Inparticular, investment and treasury income achieved robust growth of 73.2 percent. CMB continued its strategy of providing customer-centric solutions to retailers.Net fee income from card merchant-acquiring business achieved strong growth of40.9 per cent. To enhance our competitive position, Octopus merchant serviceswere launched in June 2007 to help SME retailers improve their cash management. In addition to corporate wealth management and card merchant-acquiring business,CMB also achieved satisfactory growth in trade and remittances services income.Net fees and commissions grew by 20.8 per cent. Average customer deposits increased by 19.5 per cent, driven primarily bycustomer segmentation initiatives that improved the management of non-borrowingSME customers. CMB business continued to grow rapidly on the Mainland, with intensifiedcollaboration between the Hong Kong and mainland teams. Net interest income onthe Mainland grew by 144.9 per cent in the first half of 2007. In early July,the bank became the first foreign bank to provide renminbi services to corporatecustomers in Dongguan, further strengthening its competitive position in thePearl River Delta region. Business e-Banking enjoyed strong growth. At 30 June 2007, over 44,000 customershad registered for Business e-Banking services, a year-on-year increase of 34.5per cent. The number of online business banking transactions grew by 46.2 percent. Corporate Banking ('CIB') achieved an increase of 16.0 per cent in operatingprofit excluding loan impairment charges, underpinned by satisfactory growth of15.7 per cent in net interest income and 35.0 per cent in net fee income.Average customer deposits rose by 28.9 per cent and deposit spreads widened.Average customer advances increased by 2.3 per cent, mainly in lending toproperty investment, securities and information technology companies. Profit before tax fell by HK$79 million to HK$192 million, affected by anincrease in loan impairment charges. Strong liquidity in Hong Kong continued to exert pressure on corporate loanmargins. CIB remained focused on better yield transactions and continued totarget business sectors such as investment holding companies and securitiesfirms. CIB was active in financing mainland projects of Hong Kong-basedcorporates and continued to expand its mainland customer base. Encouraging progress with income diversification saw solid growth in tradeservices, while credit facilities fees increased on the back of an activerefinancing market. Overall, net fee income increased by 35.0 per cent. Treasury ('TRY') reported a 2.7 per cent growth in operating profit excludingloan impairment charges. Profit before tax, taking into account the increase inshare of profits from associates, rose by 12.8 per cent to HK$571 million andcontributed 5.6 per cent to the group's total profit before tax. Balance sheet management portfolios reversed their downward trend and recordedgrowth of HK$191 million, or 88.4 per cent, in net interest income. Excludingthe HK$149 million favourable impact of 'funding swap' activities^ (describedbelow), net interest income rose by HK$42 million, or 23.6 per cent. With thegrowth in portfolios and gradual re-pricing of lower yield investments, Treasuryis now better positioned to capture yield enhancement opportunities and deliverprofit growth. Trading income fell by HK$170 million, or 51.1 per cent, due mainly to the fallof HK$218 million in foreign exchange profit. Apart from lower foreign exchangetrading profit, the bulk of the decline came from the 'funding swap' activities^in the balance sheet management portfolios which were reported as a loss ofHK$187 million in the first half of 2007 (loss of HK$38 million in the firsthalf of 2006). Securities and other derivatives trading, including the provisionof structured products to personal and corporate customers, recordedsatisfactory growth. ^Treasury from time to time employs foreign exchange swaps for its fundingactivities, which in essence involve swapping a currency ('original currency')into another currency ('swap currency') at the spot exchange rate for short-termplacement and simultaneously entering into a forward exchange contract toconvert the funds back to the original currency on maturity of the placement. Inaccordance with HKAS39, the exchange difference of the spot and forwardcontracts is required to be recognised as foreign exchange gain/loss, while thecorresponding interest differential between the original and swap funding isreflected in net interest income. Mainland business The opening of the bank's mainland subsidiary, Hang Seng Bank (China) Limited('HACN') on 28 May 2007 marked a new era in the bank's mainland business.Headquartered in Shanghai, HACN has a network of 17 branches and sub-brancheswith three new sub-branches (two in Shanghai and one in Guangzhou) opened sincethe beginning of the year. The bank has a branch in Shenzhen for foreigncurrency wholesale business and a representative office in Xiamen. Benefiting from continuing strong economic growth on the Mainland, customeradvances and deposits recorded impressive growth of 21.3 per cent and 42.7 percent respectively over the end of 2006. Year-on-year, advances and deposits wereup 50.4 per cent and 93.9 per cent respectively. Total operating income rose by86.0 per cent to HK$225 million. Profit before tax was down HK$40 million,affected by the cost of establishing HACN, an increase in loan impairmentcharges and the exchange loss of capital funds maintained in US dollars uponrevaluation against the renminbi. By customer group, mainland PFS continued to focus on the Prestige Bankingsegment and the provision of wealth management services. CMB and CIB teamsfurther stepped up their efforts to join-up with the bank's Hong Kong teams toserve customers' business needs on the Mainland and in Hong Kong. TRY continuedto manage the funding positions of the branches and develop structuredinvestment products to meet customers' needs. Including the bank's share of profit from Industrial Bank (but excluding thegain on dilution of investment), mainland business contributed 5.9 per cent oftotal profit before tax, compared with 4.3 per cent in the first half of 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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