FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of March, 2008
HSBC Holdings plc
42nd Floor, 8 Canada
Square, London E14 5HQ, England
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form 20-F X Form 40-F ......
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934).
Yes....... No X
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ..............)
HANG SENG BANK LIMITED
2007 RESULTS - HIGHLIGHTS
- Operating profit up 41.5 per cent to HK$17,789 million (HK$12,576
million in 2006).
- Operating profit excluding loan impairment charges and other credit risk
provisions up 43.0 per cent to HK$18,365 million (HK$12,840 million in
2006).
- Profit before tax up 49.2 per cent to HK$21,471 million (HK$14,395
million in 2006).
- Attributable profit up 51.5 per cent to HK$18,242 million (HK$12,038
million in 2006).
- Return on average shareholders' funds of 35.4 per cent (27.4 per cent in
2006).
- Assets up 11.5 per cent to HK$746.0 billion (HK$669.1 billion at 31
December 2006).
- Earnings per share up 51.4 per cent to HK$9.54 per share (HK$6.30 per
share in 2006).
- Fourth interim dividend of HK$3.00 per share; total dividends of HK$6.30
per share for 2007 (HK$5.20 per share in 2006).
- Capital adequacy ratio^ of 11.2 per cent (13.6 per cent at 31 December
2006); core capital ratio^ of 8.4 per cent (10.7 per cent at 31 December
2006).
- Cost efficiency ratio of 26.6 per cent (29.0 per cent in 2006).
^The capital adequacy and core capital ratios at 31 December 2007 were
calculated in accordance with Basel II which became effective on 1 January 2007,
while those at 31 December 2006 were calculated in accordance with Basel I.
Within this document, the Hong Kong Special Administrative Region of the
People's Republic of China has been referred to as 'Hong Kong'.
Comment by Raymond Ch'ien, Chairman
Hang Seng produced excellent results in 2007, achieving attributable profit of
HK$18,242 million, an increase of 51.5 per cent, or HK$6,204 million. Earnings
per share grew 51.4 per cent to HK$9.54. Operating profit per full-time employee
rose to HK$1.94 million, up from HK$1.49 million in 2006.
This growth reflects an impressive performance by our wealth management
business, successful income diversification efforts by Treasury in an improved
operating environment, further development of Commercial Banking and increased
contribution from our mainland associate, Industrial Bank Co., Ltd.
Net operating income before loan impairment charges and other credit risk
provisions rose by 38.3 per cent to HK$25,015 million. This increase
considerably outpaced the 26.9 per cent rise in operating expenses, contributing
to our improved cost efficiency ratio of 26.6 per cent - a reduction of 2.4
percentage points compared with 2006.
Operating profit excluding loan impairment charges increased by 43.0 per cent to
HK$18,365 million. Operating profit was up HK$5,213 million at HK$17,789
million.
Profit before tax increased by 49.2 per cent to HK$21,471 million, in part
reflecting the unrealised gain of HK$1,465 million on the dilution of our
investment in Industrial Bank Co., Ltd following its listing in February 2007.
Return on average shareholders' funds was 35.4 per cent, up from 27.4 per cent
in 2006. Excluding the gain on dilution, return on average shareholders' funds
was 32.6 per cent.
On 31 December 2007, our capital adequacy ratio and core capital ratio were 11.2
per cent and 8.4 per cent respectively, as calculated in accordance with new
rules for the implementation of Basel II.
After careful consideration of capital requirements for investment in future
business growth, particularly on the Mainland, the Directors have declared a
fourth interim dividend of HK$3.00 per share, payable on 28 March 2008. This
brings the total distribution for 2007 to HK$6.30 per share, up HK$1.10 compared
with 2006. We remain committed to a policy of paying a steady but rising
dividend that is in the best interests of all shareholders.
Outlook
Hong Kong should maintain good growth momentum in 2008, underpinned by buoyant
private consumption and solid business spending in the domestic sector and
sustained economic strength on the Mainland.
Challenges include the risk of a further slowdown in the US economy, which will
continue to cloud the outlook for the export performance. Within Hong Kong,
strong domestic demand looks set to continue, supported by the tight labour
market and positive consumer sentiment. Along with low interest rates and the
growing strength of the renminbi against the US dollar, this points to rising
inflation risk.
Overall, we are cautiously optimistic for the year ahead. Economic fundamentals
in Hong Kong and on the Mainland remain sound and domestic demand is now a major
impetus for growth.
We will continue to develop our key growth drivers, particularly wealth
management services, Commercial Banking and mainland business. Using our strong
brand, leading market position and solid financial fundamentals as a
springboard, we will pursue new opportunities to expand our business in Hong
Kong and on the Mainland.
It was my honour to be appointed Chairman of Hang Seng in August 2007. I wish to
express sincere appreciation to my fellow Directors and Bank senior management
for their valuable support.
On behalf of the Board, I would like to thank staff at all levels for their hard
work and commitment to exceeding expectations. I have always admired the culture
of professionalism and loyalty that exists at Hang Seng, the strength of which
is reflected in this year's outstanding results.
I must also convey the Board's deep gratitude to customers and shareholders for
their continued support, which provides inspiration and encouragement as we
strive to achieve new heights of success.
Today, as we mark our 75th anniversary, our aim remains to achieve sustainable
growth for our shareholders and other key stakeholders.
Review by Raymond Or, Vice-Chairman and Chief Executive
Hang Seng's strong results for 2007 reflect good progress with our roadmap for
growth, supported by favourable economic conditions.
We enhanced our top-tier wealth management platform, recording significant
success with our Private Banking, investment and insurance businesses. In
mainland China, we established a wholly owned subsidiary bank and expanded the
scope and reach of our services. Commercial Banking made pleasing progress with
growth initiatives including the further development of corporate wealth
management business and offering 'joined-up' services to customers with
operations in Hong Kong and on the Mainland. Treasury benefited from an improved
operating environment and additional efforts to diversify income.
Customer Groups
Personal Financial Services achieved a 54.8 per cent increase in operating
profit excluding loan impairment charges to HK$12,139 million. Profit before tax
was up 54.2 per cent at HK$11,918 million.
Our wealth management business achieved impressive growth, with income rising
HK$4,330 million, or 100.4 per cent, to HK$8,643 million. We capitalised on
positive investor sentiment, rolling out effective marketing campaigns and
convenient new trading channels to achieve strong increases in
securities-related income and customer base. We launched several innovative
investment funds, including Hong Kong's first Securities and Futures
Commission-authorised Islamic fund, and enjoyed independent recognition of our
fund management performance. Investment fund income increased to a record
HK$1,676 million. We expanded our structured product offerings, enjoying
particularly strong sales of equity-linked instruments.
Private Banking built on its good growth momentum by further enhancing its
relationship management team and range of services. In 2006 we set a target to
double Private Banking's 2005 profit before tax in five years. We have achieved
this in just two years, with profit before tax up 122.7 per cent at HK$1,239
million.
Hang Seng Life was Hong Kong's number one provider in terms of annualised new
premiums for regular-pay (non-linked) insurance in the first three quarters of
the year. In September 2007, we completed the acquisition of the outstanding 50
per cent of Hang Seng Life from the HSBC Group. This move has created a more
effective vehicle for continued insurance business growth.
Strong consumer demand saw personal loans and card receivables enjoy good
growth. Despite intense competition in the residential mortgage sector, the
enhancement of our e-mortgage services helped us to maintain our position as a
market leader.
Commercial Banking's operating profit excluding loan impairment charges grew by
10.4 per cent to HK$2,210 million. Profit before tax increased by 19.4 per cent
to HK$2,701 million.
Net interest income rose by 16.1 per cent. Growth in trade finance and factoring
helped drive a 22.1 per cent increase in average customer advances, while
efforts to further strengthen customer relationships saw average customer
deposits rise by 20.9 per cent. Initiatives to grow non-interest income achieved
pleasing results, with increases in corporate wealth management income and card
merchant-acquiring business. Our Octopus merchant services proved a valuable
tool in attracting new customers. Hong Kong and Mainland Commercial Banking
teams stepped up cooperative efforts with the aim of providing 'one-stop'
banking services.
The improving interest rate environment, closer collaboration with other
customer groups and increased use of e-channels, as well as success with
expanding non-interest income from proprietary trading and customer-driven
business, supported a 72.9 per cent increase in Treasury's operating profit
excluding loan impairment charges to HK$1,534 million. Profit before tax, taking
into account the increase in share of profits from associates, rose by 74.0 per
cent. With no exposure to mortgage-backed securities, collaterised debt
obligations or structured investment vehicles, Treasury was not directly
affected by the sub-prime crisis.
Corporate Banking recorded growth of 10.1 per cent in operating profit excluding
loan impairment charges to HK$598 million. Increases in average customer
deposits and average customer advances saw net interest income rise by 15.4 per
cent. With strong liquidity continuing to put downward pressure on loan margins,
Corporate Banking took effective steps to diversify its income, resulting in
growth in trade services and credit facilities fees. Profit before tax fell by
14.7 per cent to HK$475 million, affected by increased loan impairment charges
related to a single large customer.
Mainland Business
We reached several important milestones in the development of our mainland
business. Our subsidiary bank, Hang Seng Bank (China) Limited ('HACN'),
commenced operations in May, providing significant new opportunities for growth.
Since the beginning of 2007, HACN has opened two branches and seven
sub-branches, taking our mainland network to 25 outlets across 10 cities. In
August, we obtained approval to provide full renminbi services to local
residents, broadening our service scope. To support our expansion and strengthen
our sales and marketing capabilities, we increased our number of full-time staff
on the Mainland by 436 during 2007 to 1,097. These moves underpinned good growth
in lending and deposits, with total operating income rising by 69.4 per cent.
Including our share of profit from Industrial Bank, mainland business
contributed 6.5 per cent to our profit before tax, compared with 6.1 per cent in
2006.
On 31 January 2008, we signed an agreement to subscribe for 20 per cent of the
enlarged share capital of Yantai City Commercial Bank (YTCCB) - one of the
largest city commercial bank in Shandong Province - for a total consideration
of RMB800 million.
Upon completion of the acquisition, which is subject to relevant regulatory and
YTCCB shareholder approvals, we will become YTCCB's largest shareholder. This
strategic investment in the rapidly developing Bohai Economic Rim region
supports our two-pronged strategy for growth and will complement our existing
foothold on the Mainland.
Following the acquisition, Hang Seng's total mainland investment will increase
to about RMB7.3 billion, including the capital injected into HACN.
Building On Our Achievements
Hang Seng's 2007 results are a testament to the strength of the strategy for
growth we set out in March 2006 and the dedicated efforts of our staff to
achieve its challenging goals.
We will further leverage our leading market position, brand strength and
comprehensive wealth management portfolio to attract new customers and deepen
relationships with existing ones.
With a strong focus on small and medium-sized enterprise customers, we will
enhance our reputation for 'one-stop' commercial banking through closer
collaboration between relationship management teams in Hong Kong and on the
Mainland and the further development of corporate wealth management, trade
finance and business loan services.
We will strengthen the competitiveness of our Treasury business by exploring
emerging opportunities on the Mainland and streamlining our service delivery,
particularly through greater use of online channels.
We will work to broaden and diversify Corporate Banking's customer base,
focusing on higher-margin business.
We will also continue to develop our Mainland business using our two-pronged
strategy for growth. Through Hang Seng China we will continue to pursue new
business opportunities and expand our customer base. We will open new outlets in
cities with high-growth potential, expand our renminbi service offerings and
strengthen our brand-building initiatives.
An enduring element of Hang Seng's success has been our willingness to
continually set higher objectives. Despite the challenging external environment,
we remain firmly focused on generating long-term business growth.
Results summary
Hang Seng Bank Limited ('the bank') and its subsidiaries and associates ('the
group') reported an audited profit attributable to shareholders of HK$18,242
million for 2007, a rise of 51.5 per cent over 2006. The record results also
boosted earnings per share to HK$9.54, up HK$3.24 from 2006. Attributable profit
to shareholders for the second half of 2007 increased by HK$508 million, or 5.7
per cent, when compared with the first half.
- Operating profit excluding loan impairment charges and other credit risk
provisions rose by HK$5,525 million, or 43.0 per cent, to HK$18,365 million.
This was underpinned by strong asset and deposit growth, net interest margin
expansion and record-breaking growth of the wealth management business on the
back of a sharp rise in equity market activity, which contributed to the 25.9
per cent increase in net interest income and 61.2 per cent in non-interest
income as highlighted below.
- Net interest income increased by HK$3,025 million, or 25.9 per cent, with an
increase of 14.3 per cent in average interest-earning assets. The rise in net
interest income was supported by the 10.4 per cent growth in average customer
advances and the 10.4 per cent rise in average customer deposits. Net interest
margin improved by 21 basis points to 2.23 per cent, benefiting from improved
deposit spreads, better yields on Treasury balance sheet management portfolios
and contribution from net free funds.
- Net fees and commissions rose by HK$3,389 million, or 96.9 per cent, driven by
strong business growth and favourable investment market sentiment. Fees income
from stockbroking and related services rose by 146.6 per cent with the buoyant
stock market driving increased transaction activity and a 19.7 per cent growth
in customer base. Remarkable growth was also recorded in income from sales of
retail investment funds (110.6 per cent), sales of third-party structured
investment products (603.2 per cent) and private banking investment services
(202.1 per cent). Card services income increased by 21.9 per cent, supported by
a rise of 8.9 per cent in the number of cards issued as well as a 21.1 per cent
increase in cardholder spending.
- Trading income improved by 26.2 per cent to HK$1,679 million. Foreign exchange
income declined by 26.9 per cent, affected by the exchange loss on forward
contracts used in 'funding swap' activities in the balance sheet management
portfolios and on the revaluation of certain US dollar capital funds against the
renminbi. These US dollar funds are maintained in our mainland subsidiary bank
and are subject to regulatory controls on their conversion into renminbi.
Excluding these unfavourable factors, foreign exchange income actually rose by
16.5 per cent, attributable to the balanced growth achieved by expanding
proprietary trading and customer-driven business. Securities, derivatives and
other trading rose by HK$666 million, benefiting from the improvement in trading
results and the growth in sales volume driven by strong customer demand for
equity-linked investment products.
- Income from insurance business, including net earned insurance premiums, net
interest income, net fee income and net income from financial instruments
designated at fair value, the change in present value of in-force business, and
after deducting net insurance claims incurred and movement in policyholders'
liabilities, increased by 33.9 per cent to HK$2,403 million. Life insurance
income rose by 39.2 per cent to HK$2,055 million, reflecting strong growth in
new annualised premiums and investment returns on insurance funds.
- Net operating income before loan impairment charges and other credit risk
provisions increased by HK$6,934 million, or 38.3 per cent, to HK$25,015 million
with encouraging growth in all core banking income lines.
- Operating expenses rose by HK$1,409 million, or 26.9 per cent, to HK$6,650
million. Headcount increased by 8.6 per cent as sales and support functions were
strengthened to support business growth in Hong Kong and on the Mainland. The
bank's mainland operations accounted for HK$309 million, or 21.9 per cent, of
the increase in operating expenses, reflecting the establishment of the bank's
wholly-owned subsidiary bank HACN, the expansion of mainland network from 15 to
25 outlets and the rise in net headcount from 661 to 1,097 during 2007.
Excluding performance-related pay and mainland operations, operating expenses
increased by HK$416 million, or 9.0 per cent, due mainly to the addition of 285
staff in Hong Kong and rises in marketing and rental expenses.
- Operating profit was up HK$5,213 million, or 41.5 per cent, at HK$17,789
million, after accounting for the moderate increase of HK$312 million in loan
impairment charges and other credit risk provisions under the continued benign
credit environment.
- Profit before tax was up 49.2 per cent at HK$21,471 million after taking the
following items into account:
- a gain on dilution of investment in an associate of HK$1,465 million
related to the listing of Industrial Bank;
- an increase of 18.1 per cent in net surplus on property revaluation;
- a rise of 71.3 per cent in share of profits from associates, mainly
contributed by Industrial Bank; and
- a fall of 15.1 per cent in profit on disposal of fixed assets and
financial investments, mainly from the disposal of properties.
Balance sheet and key ratios
Total assets increased by HK$76.9 billion, or 11.5 per cent, to HK$746.0
billion. Customer advances rose by 10.4 per cent. In line with the bank's
strategy to diversify its loan portfolio, encouraging growth was recorded in
mainland lending, commercial lending, mortgages, trade finance, cards and
personal loans. The 9.3 per cent increase in customer deposits funded the growth
in interbank placing and money market instruments. At 31 December 2007, the
advances-to-deposits ratio was 52.2 per cent, compared with 51.7 per cent at the
end of 2006.
Shareholders' funds (excluding proposed dividends) grew by HK$7,372 million, or
17.0 per cent, to reach HK$50,720 million as at 31 December 2007. Retained
profits rose by HK$3,829 million, reflecting the growth in attributable profit
and the HK$1,465 million gain on the dilution of the bank's investment in an
associate. The available-for-sale investments reserve also rose.
The return on average total assets was 2.6 per cent, compared with 1.9 per cent
for 2006. The return on average shareholders' funds was 35.4 per cent (27.4 per
cent in 2006).
On 31 December 2007, the capital adequacy ratio was 11.2 per cent and the core
capital ratio was 8.4 per cent, as calculated in accordance with the Banking
(Capital) Rules issued by the Hong Kong Monetary Authority ('HKMA') for the
implementation of the Basel II . The capital adequacy ratio and core capital
ratio on 31 December 2006 under the Basel I capital regime were 13.6 per cent
and 10.7 per cent respectively.
The bank maintained a strong liquidity position. The average liquidity ratio for
2007 was 52.9 per cent (calculated in accordance with the Fourth Schedule of the
Hong Kong Banking Ordinance), compared with an average liquidity ratio of 51.9
per cent for 2006.
The cost efficiency ratio for 2007 was 26.6 per cent, compared with 29.0 per
cent for 2006.
Dividends
The Directors have declared a fourth interim dividend of HK$3.00 per share,
which will be payable on 28 March 2008 to shareholders on the register of
shareholders as of 18 March 2008. Together with the interim dividends for the
first three quarters, the total distribution for 2007 will amount to HK$6.30 per
share, an increase of HK$1.10 per share over 2006.
Customer group performance
Personal Inter-
Financial Commercial Corporate segment
Figures in HK$m Services Banking Banking Treasury Other elimination Total
Year ended 31Dec07
Net interest income 8,701 2,364 719 1,312 1,623 _ 14,719
Net fee income/(expense) 5,726 1,005 109 (25) 71 _ 6,886
Trading income/(loss) 1,086 173 9 468 (57) _ 1,679
Net income/ (expense) from
financial unstruments
designated at fair value 1,901 2 _ 4 _ _ 1,907
Dividend income 14 1 _ _ 37 _ 52
Net earned insurance
premiums 9,519 181 2 _ _ _ 9,702
Other operating
income/(expense) 543 47 _ (3) 160 _ 747
Inter-segment income _ _ _ _ 373 (373) _
Total operating income 27,490 3,773 839 1,756 2,207 (373) 35,692
Net insurance claims
incurred and movement
in policyholders'
liabilities (10,584) (92) (1) _ _ _ (10,677)
Net operating income
before loan impairment
charges and other
credit risk provisions 16,906 3,681 838 1,756 2,207 (373) 25,015
Loan impairment charges
and other credit risk
provisions (277) (165) (134) _ _ _ (576)
Net operating income 16,629 3,516 704 1,756 2,207 (373) 24,439
Total operating expenses^ (4,442) (1,437) (234) (214) (323) _ (6,650)
Inter-segment expenses (325) (34) (6) (8) _ 373 _
Operating profit 11,862 2,045 464 1,534 1,884 _ 17,789
Gain on dilution of
investment in associate _ _ _ _ 1,465 _ 1,465
Profit on disposal of
fixed assets and
financial investments 4 1 11 _ 700 _ 716
Net surplus on property
revaluation _ _ _ _ 379 _ 379
Share of profits from
associates 52 655 _ 295 120 _ 1,122
Profit before tax 11,918 2,701 475 1,829 4,548 _ 21,471
Share of profit before tax 55.5% 12.6% 2.2% 8.5% 21.2% _ 100.0%
Operating profit
excluding inter-segment
transactions 12,187 2,079 470 1,542 1,511 _ 17,789
Operating profit
excluding loan
impairment charges and
other credit risk
provisions 12,139 2,210 598 1,534 1,884 _ 18,365
^Depreciation/amortisation
included in operating
expenses (118) (21) (5) (3) (234) _ (381)
At 31Dec07
Total assets 190,696 80,479 79,419 358,306 37,099 _ 745,999
Total liabilities 459,756 100,857 53,373 42,486 33,071 _ 689,543
Investments in associates 201 2,520 _ 1,138 2,318 _ 6,177
Capital expenditure
incurred during the
year 226 76 21 3 215 _ 541
Personal Inter-
Financial Commercial Corporate segment
Figures in HK$m Services Banking Banking Treasury Other elimination Total
Year ended 31Dec06
Net interest income 7,428 2,036 623 481 1,126 _ 11,694
Net fee income/(expense) 2,576 809 86 (24) 50 _ 3,497
Trading income 517 150 7 628 28 _ 1,330
Net income/(expense) from
financial instruments
designated at fair value 910 _ _ (11) _ _ 899
Dividend income 8 5 _ _ 34 _ 47
Net earned insurance
premiums 7,671 174 1 _ _ _ 7,846
Other operating
income/(expense) 542 26 _ (4) 281 _ 845
Inter-segment income _ _ _ _ 378 (378) _
Total operating income 19,652 3,200 717 1,070 1,897 (378) 26,158
Net insurance claims
incurred and movement
in policyholders'
liabilities (8,014) (63) _ _ _ _ (8,077)
Net operating income
before loan impairment
(charges)/releases and
other credit risk
provisions 11,638 3,137 717 1,070 1,897 (378) 18,081
Loan impairment
(charges)/releases and
other credit risk
provisions (165) (101) 14 _ (12) _ (264)
Net operating income 11,473 3,036 731 1,070 1,885 (378) 17,817
Total operating expenses^ (3,472) (1,098) (168) (175) (328) _ (5,241)
Inter-segment expenses (326) (38) (6) (8) _ 378 _
Operating profit 7,675 1,900 557 887 1,557 _ 12,576
Profit on disposal of
fixed assets and
financial investments 26 _ _ _ 817 _ 843
Net surplus on property
revaluation _ _ _ _ 321 _ 321
Share of profits from
associates 29 362 _ 164 100 _ 655
Profit before tax 7,730 2,262 557 1,051 2,795 _ 14,395
Share of profit before tax 53.7% 15.7% 3.9% 7.3% 19.4% _ 100.0%
Operating profit
excluding inter-segment
transactions 8,001 1,938 563 895 1,179 _ 12,576
Operating profit
excluding loan
impairment (charges)/
releases and other
credit risk provisions 7,840 2,001 543 887 1,569 _ 12,840
^Depreciation/amortisation
included in operating
expenses (106) (11) (4) (2) (210) _ (333)
At 31Dec06
Total assets 167,241 69,633 76,619 326,181 29,390 _ 669,064
Total liabilities 429,667 82,340 41,959 38,609 27,791 _ 620,366
Investments in associates 141 1,775 _ 801 771 _ 3,488
Capital expenditure
incurred during the
year 159 44 11 8 157 _ 379
Personal Financial Services ('PFS') reported a growth of 54.2 per cent in profit
before tax to HK$11,918 million, representing 55.5 per cent of the group's total
profit before tax. Operating profit excluding loan impairment charges rose by
54.8 per cent, reflecting strong growth in wealth management, private banking,
card and personal lending businesses.
Non-interest income was nearly double that of 2006, due mainly to the booming
investment market and the continued success of PFS's wealth management business,
which delivered the following record achievements:
-Gross subscriptions of investment funds achieved significant growth of
149.5 per cent over 2006;
-Stock trading turnover was up by 148.4 per cent and securities customer
base increased by 19.7 per cent, supported by the launch of new mobile phone
trading services and the first TV trading platform in Hong Kong;
-Equity-linked structured instruments registered year-on-year growth of
172.0 per cent in sales volume;
-Our life insurance business ranked number one in Hong Kong in terms of
new regular premiums on non-linked insurance products for the first three
quarters of 2007.
Private banking also sustained its outstanding growth momentum with total
operating income up by 109.8 per cent. Profit before tax rose by 122.7 per cent
to HK$1,239 million, triple that of 2005 and comfortably exceeding its five-year
target of doubling its 2005 profit before tax.
Net interest income rose by 17.1 per cent, due mainly to the 6.9 per cent growth
in average customer deposits and the widening of deposit spreads. Higher growth
was recorded in savings accounts, reflecting a customer preference to preserve
liquidity for investment.
The contraction in Government Home Ownership Scheme mortgages notwithstanding,
PFS's loan portfolio grew by 9.9 per cent. Amid the upward trend of the property
market, residential mortgage business remained competitive. Nevertheless, the
bank sustained its position as one of the market leaders.
Card business maintained steady growth in 2007. The launch of new credit cards
coupled with a series of promotional campaigns successfully brought the number
of cards in issue to 1.53 million and boosted card spending by 21.1 per cent
over 2006. Personal lending also registered impressive growth with a 43.0 per
cent increase in loan balance.
Hang Seng's life insurance business maintained its leading market position.
Annualised new regular premiums grew by 33.5 per cent with the launch of new
annuities and health protection products tailored for the needs of pre-retirees
and retirees. As a result, life insurance reported a rise of 34.2 per cent in
operating income, driven by growth of 17.0 per cent in the number of policies in
force.
Commercial Banking ('CMB') achieved an increase of 10.4 per cent in operating
profit excluding loan impairment charges, driven by balanced and sustained
growth in both net interest income and net fee income. Profit before tax rose by
19.4 per cent to HK$2,701 million, contributing 12.6 per cent of the group's
total profit before tax.
Net interest income recorded good growth of 16.1 per cent. Average customer
advances rose by 22.1 per cent over 2006 as a result of balanced growth in trade
and factoring, and advances to the manufacturing and wholesale and retail
sectors.
Corporate wealth management income contributed 9.9 per cent of CMB's total
operating income in 2007, up from 7.9 per cent in 2006. Investment and treasury
business accelerated in the second half of 2007, recording a 125.8 per cent
growth in income.
CMB continued its strategy of providing customer-centric solutions to retailers.
Net fee income from card merchant-acquiring business achieved strong growth of
16.7 per cent. Octopus merchant services continued to provide an important
competitive advantage in acquiring new customers. Around 75 per cent of Octopus
merchants acquired during 2007 were new customers for the bank. The number of
new commercial customers acquired in 2007 outperformed 2006 by 22.0 per cent.
In addition to corporate wealth management and card merchant-acquiring business,
CMB also achieved satisfactory growth in trade and remittance services income.
Net fees and commissions grew by 24.2 per cent.
Average customer deposits increased by 20.9 per cent, driven primarily by
dedicated relationship management and customer segmentation initiatives that
improved the management of non-borrowing SME customers.
CMB business continued to grow rapidly on the Mainland. Hong Kong and mainland
teams joined up to provide one-stop banking services to commercial customers
with cross-border financial needs. Average customer deposits and average
customer advances rose by 75.2 per cent and 89.0 per cent respectively. This
underpinned the 113.0 per cent growth in net interest income on the Mainland in
2007.
Business e-Banking enjoyed strong growth. As of 31 December 2007, over 51,000
customers had registered for Business e-Banking services, a year-on-year
increase of 33.5 per cent. The number of online business banking transactions
grew by 44.5 per cent.
Corporate Banking ('CIB') achieved an increase of 10.1 per cent in operating
profit excluding loan impairment charges, driven by satisfactory growth of 15.4
per cent in net interest income and 26.7 per cent in net fee income. Average
customer deposits rose by 31.7 per cent and deposit spreads widened. Average
customer advances increased by 5.1 per cent, mainly in lending to property
investment, securities and information technology companies. Profit before tax
fell by HK$82 million to HK$475 million, affected by an increase in loan
impairment charges.
Strong liquidity in Hong Kong continued to exert pressure on corporate loan
margins. CIB remained focused on better yield transactions and continued to
target business sectors such as investment holding companies, mid-tier property
developers and securities firms. CIB was active in financing mainland projects
of Hong Kong-based corporations during 2007 and continued to expand its mainland
customer base.
Treasury ('TRY') reported a 72.9 per cent growth in operating profit excluding
loan impairment charges. Profit before tax, taking into account the increase in
share of profits from associates, rose by 74.0 per cent to HK$1,829 million and
contributed 8.5 per cent to the group's total profit before tax.
Balance sheet management portfolios reversed their downward trend and recorded
growth of HK$831 million, or 172.8 per cent, in net interest income. Including
the net increase of HK$357 million in funding swap^ costs (described below) -
which were recognised as foreign exchange losses - net interest income rose by
HK$474 million, or 125.7 per cent. Benefiting from the aggressive rate cuts in
the United States and Hong Kong, as well as the growth in portfolios and gradual
re-pricing of lower yield investments, Treasury is now better positioned to
capture yield enhancement opportunities and deliver further profit growth.
Trading income fell by HK$160 million, or 25.5 per cent, due mainly to the
mirror effect of the 'funding swap' activities^ in the balance sheet management
portfolios which reported a loss of HK$461 million in 2007 (loss of HK$104
million in 2006). Excluding the impact of 'funding swap' activities^ , trading
income increased by HK$197 million, or 26.9 per cent. Securities and other
derivatives trading, including the provision of structured products to personal
and corporate customers, recorded encouraging growth.
^Treasury from time to time employs foreign exchange swaps for its funding
activities, which in essence involve swapping a currency ('original currency')
into another currency ('swap currency') at the spot exchange rate for short-term
placement and simultaneously entering into a forward exchange contract to
convert the funds back to the original currency on maturity of the placement. In
accordance with HKAS39, the exchange difference of the spot and forward
contracts is required to be recognised as foreign exchange gain/loss, while the
corresponding interest differential between the original and swap funding is
reflected in net interest income.
Mainland business
The opening of the bank's mainland subsidiary, HACN, in May 2007 marked the
start of a new era of business growth for the bank. This landmark event was
given a further boost in August when HACN obtained permission to begin offering
comprehensive renminbi banking services to mainland residents. At the end of
2007, HACN, which is headquartered in Shanghai, operated a network of 23 outlets
in Beijing, Shanghai, Guangzhou, Dongguan, Shenzhen, Fuzhou, Nanjing, Hangzhou
and Ningbo. The Hangzhou Branch, Ningbo Branch and seven sub-branches (three in
Shanghai, two in Guangzhou, one in Beijing and another one in Shenzhen) were
opened in 2007. The bank has a branch in Shenzhen for foreign currency wholesale
business and a representative office in Xiamen. HACN will continue to strengthen
the bank's strategic positioning by opening new outlets in high-potential areas,
focusing particularly on the Pearl River Delta, Yangtze River Delta and Bohai
Economic Rim regions, which offer excellent prospects for expanding the bank's
PFS and CMB businesses. HACN aims to grow its mainland network to over 50
outlets by 2010.
With sustained economic growth on the Mainland, HACN extended its range of
financial services, including renminbi services, and pursued new opportunities
to grow its business. Total operating income rose by 69.4 per cent, benefiting
from impressive increases in both net interest income and non-interest income,
supported by strong growth of 63.8 per cent in customer advances and 188.6 per
cent in customer deposits. Profit before tax fell by 77.5 per cent, affected by
the cost of establishing HACN as well as investment in human resources and
branch network, an exchange loss on US dollar capital funds upon revaluation
against the renminbi and an increase in loan impairment charges.
In terms of customer groups, mainland PFS successfully focused on the affluent
and mass affluent segment, capturing more business to record a 131.2 per cent
increase in Mainland Prestige Banking accounts during the year. Leveraging the
bank's well-established corporate customer base in Hong Kong, HACN's CMB and CIB
teams collaborated closely with their Hong Kong counterparts to serve customers'
business needs on the Mainland and in Hong Kong, helping to enlarge HACN's
mainland corporate customer base. TRY continued to manage the funding positions
of the branches and develop structured products to meet the investment needs of
customers.
Including the bank's share of profit from Industrial Bank Co., Ltd, mainland
business contributed 6.5 per cent of total profit before tax, compared with 6.1
per cent in 2006.
Contents
The financial information in this news release is based on the audited
consolidated financial statements of Hang Seng Bank Limited ('the bank') and its
subsidiaries and associates ('the group') for the year ended 31 December 2007.
...Highlights of Results
...Chairman's Comment
...Chief Executive's Review
...Results Summary
...Customer Group Performance
...Mainland Business
...Contents
...Consolidated Income Statement
...Consolidated Balance Sheet
...Consolidated Statement of Recognised Income and Expense
...Consolidated Cash Flow Statement
...Financial Review
.....Net interest income
.....Net fee income
.....Trading income
.....Net income from financial instruments designated at fair value
.....Other operating income
.....Analysis of income from wealth management business
.....Loan impairment charges and other credit risk provisions
.....Operating expenses
.....Profit on disposal of fixed assets and financial investments
.....Gains on dilution of investment in associate
.....Tax expense
.....Earnings per share
.....Dividends per share
.....Segmental analysis
.....Analysis of assets and liabilities by remaining maturity
.....Cash and balances with banks and other financial institutions
.....Placings with and advances to banks and other financial institutions
.....Trading assets
.....Financial assets designated at fair value
.....Advances to customers
.....Loan impairment allowances against advances to customers
.....Impaired advances and allowances
.....Overdue advances
.....Rescheduled advances
.....Segmental analysis of advances to customers by geographical area
.....Gross advances to customers by industry sector
.....Financial investments
.....Amount due from/to immediate holding company and fellow subsidiary companies
.....Investments in associates
.....Intangible assets
.....Other assets
.....Current, savings and other deposit accounts
.....Certificates of deposit and other debt securities in issue
.....Trading liabilities
.....Other liabilities
.....Subordinated liabilities
.....Shareholders' funds
.....Capital resources management
.....Liquidity ratio
.....Reconciliation of cash flow statement
.....Contingent liabilities, commitments and derivatives
.....Statutory accounts and accounting policies
.....Comparative figures
.....Acquisition
.....Property revaluation
.....Foreign currency positions
.....Post balance sheet event
.....Ultimate holding company
.....Register of shareholders
.....Proposed timetable for 2008 quarterly dividends
.....Code on corporate governance practices
.....Board of directors
.....News release
Consolidated Income Statement
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Interest income 34,406 29,262
Interest expense (19,687) (17,568)
Net interest income 14,719 11,694
Fee income 7,682 4,074
Fee expense (796) (577)
Net fee income 6,886 3,497
Trading income 1,679 1,330
Net income from financial instruments
designated at fair value 1,907 899
Dividend income 52 47
Net earned insurance premiums 9,702 7,846
Other operating income 747 845
Total operating income 35,692 26,158
Net insurance claims incurred and
movement in policyholders' liabilities (10,677) (8,077)
Net operating income before loan impairment
charges and other credit risk provisions 25,015 18,081
Loan impairment charges and other credit risk
provisions (576) (264)
Net operating income 24,439 17,817
Employee compensation and benefits (3,585) (2,694)
General and administrative expenses (2,684) (2,214)
Depreciation of premises, plant and equipment (348) (323)
Amortisation of intangible assets (33) (10)
Total operating expenses (6,650) (5,241)
Operating profit 17,789 12,576
Gain on dilution of investment in associate 1,465 _
Profit on disposal of fixed assets and financial
investments 716 843
Net surplus on property revaluation 379 321
Share of profits from associates 1,122 655
Profit before tax 21,471 14,395
Tax expense (2,865) (2,049)
Profit for the year 18,606 12,346
Profit attributable to shareholders 18,242 12,038
Profit attributable to minority interests 364 308
18,606 12,346
Dividends 12,045 9,942
Earnings per share (in HK$) 9.54 6.30
With effect from 2006, interest income and interest expense for all
interest-bearing financial instruments are reported in 'Interest income' and
'Interest expense' respectively in the income statement. The change from the
HSBC Group presentation described below has been made principally to match the
interest expense arising from trading liabilities with the interest income from
non-trading assets. This facilitates the comparison of Hang Seng's net interest
income and net interest margin with peer banks in Hong Kong.
The HSBC Group reports interest income and interest expense arising from
financial assets and financial liabilities held for trading as 'Net trading
income' and arising from financial instruments designated at fair value through
profit and loss as 'Net income from financial instruments designated at fair
value' (other than for debt securities in issue and subordinated liabilities,
together with derivatives managed in conjunction with them).
The table below presents the interest income and interest expense of Hang Seng,
as included within the HSBC Group accounts:
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Interest income 33,701 28,639
Interest expense (17,343) (15,000)
Net interest income 16,358 13,639
Net interest income and expense reported as 'Net
trading income' (1,753) (2,039)
Net interest income and expense reported as 'Net
income from financial instruments designated at
fair value' 114 94
Consolidated Balance Sheet
Figures in HK$m At 31Dec07 At 31Dec06
Assets
Cash and balances with banks and
other financial institutions 16,864 9,390
Placings with and advances to banks and
other financial institutions 113,029 99,705
Trading assets 10,390 12,467
Financial assets designated at fair
value 13,892 8,280
Derivative financial instruments 4,702 1,887
Advances to customers 308,356 279,353
Financial investments 244,294 227,710
Investments in associates 6,177 3,488
Investment properties 2,581 2,732
Premises, plant and equipment 6,794 6,516
Interest in leasehold land held for own use
under operating lease 565 580
Intangible assets 2,889 2,070
Other assets 15,466 14,886
745,999 669,064
Liabilities
Current, savings and other deposit
accounts 546,653 482,821
Deposits from banks 19,736 17,950
Trading liabilities 48,151 60,093
Financial liabilities designated at fair
value 1,498 1,562
Derivative financial instruments 4,683 1,531
Certificates of deposit and other
debt securities in issue 5,685 7,595
Other liabilities 17,850 16,123
Liabilities to customers under insurance
contracts 33,089 22,975
Deferred tax and current tax liabilities 2,844 2,716
Subordinated liabilities 9,354 7,000
689,543 620,366
Capital resources
Minority interests _ 1,717
Share capital 9,559 9,559
Retained profits 32,873 29,044
Other reserves 8,288 4,745
Proposed dividends 5,736 3,633
Shareholders' funds 56,456 46,981
56,456 48,698
745,999 669,064
Consolidated Statement of Recognised Income and Expense
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Unrealised surplus on revaluation of premises,
net of tax 443 519
Tax on realisation of revaluation surplus on
disposal of premises 45 106
Available-for-sale investments reserve, net of tax:
- fair value changes taken to equity 1,594 1,232
- fair value changes transferred to income statement
-- on impairment _ 12
-- on hedged items (181) 21
-- on disposal (444) (325)
Cash flow hedges reserve, net of tax:
- fair value changes taken to equity 146 (179)
- fair value changes transferred to income statement 218 442
Actuarial (losses)/gains on defined benefit plans,
net of tax (1,243) 218
Exchange differences on translation of financial
statements of overseas branches, subsidiaries and
associates 527 184
Net income recognised directly in equity 1,105 2,230
Profit for the year 18,606 12,346
Total recognised income and expense for the year 19,711 14,576
Attributable to shareholders 19,347 14,268
Attributable to minority interests 364 308
19,711 14,576
Consolidated Cash Flow Statement
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Net cash inflow from operating activities 21,070 53,541
Cash flows from investing activities
Dividends received from associates 207 33
Purchase of available-for-sale investments (90,693) (101,258)
Purchase of held-to-maturity debt securities (504) (351)
Proceeds from sale or redemption of
available-for-sale investments 91,813 69,279
Proceeds from sale or redemption of
held-to-maturity debt securities 43 38
Purchase of fixed assets and intangible assets (540) (379)
Proceeds from sale of fixed assets and assets held
for sale 1,130 3,130
Interest received from available-for-sale
investments 9,756 6,557
Dividends received from available-for-sale
investments 49 45
Net cash outflow from increase in stake of
subsidiaries (2,409) _
Net cash inflow/(outflow) from investing activities 8,852 (22,906)
Cash flows from financing activities
Dividends paid (9,942) (9,942)
Interest paid for subordinated liabilities (473) (332)
Proceeds from subordinated liabilities 2,342 3,489
Net cash outflow from financing activities (8,073) (6,785)
Increase in cash and cash equivalents 21,849 23,850
Cash and cash equivalents at 1 January 90,275 65,513
Effect of foreign exchange rate changes 1,350 912
Cash and cash equivalents at 31 December 113,474 90,275
Financial Review
Net interest income
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Net interest income/(expense) arising from:
- financial assets and liabilities that are
not at fair value through profit and loss 16,404 13,689
- trading assets and liabilities (1,753) (2,039)
- financial instruments designated at fair
value 68 44
14,719 11,694
Average interest-earning assets 661,469 578,588
Net interest spread 1.84% 1.66%
Net interest margin 2.23% 2.02%
Net interest income rose by HK$3,025 million, or 25.9 per cent, to HK$14,719
million with a 14.3 per cent increase in average interest-earning assets.
Average customer advances rose 10.4 per cent, with notable increases in mainland
loans, higher yielding card advances, personal loans and trade finance. Ample
liquidity in Hong Kong continued to exert downward pressure on corporate loan
margins. Although activity in the local property market increased, intense
market competition continued to drive down mortgage pricing. Overall, the total
loan portfolio contributed HK$427 million to the growth in net interest income.
Deposit products contributed HK$1,017 million of the increase in net interest
income, benefiting from the 10.4 per cent growth in average customer deposits,
mainly in low cost savings balances, as well as improved deposit spreads.
The contribution from net free funds added HK$468 million to the increase in net
interest income, arising mainly from increases in both market interest rates and
the level of free funds (including non-interest-bearing account balances and net
shareholders' funds).
The debt securities portfolio of life insurance fund investments grew by 41.2
per cent, adding HK$283 million to net interest income. Treasury balance sheet
management income improved as lower-yielding securities gradually matured and
were replaced by higher-yielding securities, which resulted in an HK$830 million
increase in net interest income.
Net interest margin rose by 21 basis points to 2.23 per cent. Net interest
spread increased by 18 basis points to 1.84 per cent, benefiting from wider
deposit spreads and better yields on Treasury balance sheet management
portfolios. The contribution from net free funds rose by three basis points to
0.39 per cent. Including the net increase of HK$357 million in funding swap
costs-which were recognised as foreign exchange losses under trading income- net
interest income increased by HK$2,668 million, or 23.0 per cent, and net
interest margin improved by 16 basis points to 2.16 per cent.
Compared with first half of 2007, net interest income in the second half
recorded encouraging growth of HK$1,327 million, or 19.8 per cent, with a 6.8
per cent growth in average interest-earning assets. Net interest margin improved
by 22 basis points.
The HSBC Group reports interest income and interest expense arising from
financial assets and financial liabilities held for trading as 'Net trading
income'. That arising from financial instruments designated at fair value
through profit and loss is reported as 'Net income from financial instruments
designated at fair value' (other than for debt securities in issue and
subordinated liabilities, together with derivatives managed in conjunction with
them).
The table below presents the net interest income of Hang Seng, as included
within the HSBC Group accounts:
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Net interest income 16,358 13,639
Average interest-earning assets 643,655 564,027
Net interest spread 1.98% 1.83%
Net interest margin 2.54% 2.42%
Net fee income
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
- Stockbroking and related services 1,985 805
- Retail investment funds 1,676 796
- Structured investment products 661 94
- Insurance 115 108
- Account services 284 274
- Private banking 1,000 331
- Remittances 193 161
- Cards 1,048 860
- Credit facilities 110 111
- Trade services 406 380
- Other 204 154
Fee income 7,682 4,074
Fee expense (796) (577)
6,886 3,497
Net fee income rose by HK$3,389 million, or 96.9 per cent, compared with 2006,
to HK$6,886 million. In the second half of 2007, net fee income was HK$1,162
million, or 40.6 per cent, higher than in the first half.
Investment services expanded significantly, capturing the opportunities provided
by the buoyant stock market and favourable investment market sentiment in Hong
Kong. Stockbroking and related services income rose 146.6 per cent, reflecting
the higher transaction volume, and the customer base grew by 19.7 per cent.
Income from retail investment funds increased by 110.6 per cent to reach a
record HK$1,676 million, achieved in large part through the launch of new funds,
particularly those focusing on China stocks. Fund turnover reached a record
HK$68.5 billion. Income from sales of structured investment products grew by
603.2 per cent, mainly reflecting sales of equity-linked instruments. Private
banking investment services income achieved strong results and rose by 202.1 per
cent.
Card services income grew by 21.9 per cent, due to the 8.9 per cent increase in
the number of cards in circulation and the 21.1 per cent rise in cardholder
spending. Remittance, trade services and account services fees grew by 19.9 per
cent, 6.8 per cent and 3.6 per cent respectively.
Trading income
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Trading income:
- foreign exchange 861 1,178
- securities, derivatives
and other trading activities 818 152
1,679 1,330
Trading income rose by HK$349 million, or 26.2 per cent, to HK$1,679 million,
compared with 2006. The HK$317 million fall in foreign exchange income was
attributable mainly to two specific items not related to normal foreign exchange
trading. First, an exchange loss of HK$461 million was incurred in 2007 (HK$104
million in 2006) on forward contracts used in 'funding swap' activities^ in the
balance sheet management portfolios. Second, capital funds of HACN injected in
US dollars pending approval to convert into renminbi were recorded at historical
rate. The subsequent revaluation loss of the US dollar funds against the
renminbi, amounting to HK$171 million in 2007, was recognised as a foreign
exchange loss. Excluding these two items, efforts to expand proprietary trading
and customer-driven business saw normal foreign exchange trading rise by HK$211
million, or 16.5 per cent.
Income from securities, derivatives and other trading grew significantly by
HK$666 million, or 438.2 per cent, attributable to the improvement in trading
results and the growth in trading volume. Profit earned on equity-linked
products structured for customers accounted for HK$470 million of the growth.
For the second half of 2007, trading income grew by HK$511 million, or 87.5 per
cent, to HK$1,095 million, attributable mainly to the rise in normal foreign
exchange profit and profit earned on equity-linked structured products.
^Treasury from time to time employs foreign exchange swaps for its funding
activities, which in essence involve swapping a currency ('original currency')
into another currency ('swap currency') at the spot exchange rate for short-term
placement and simultaneously entering into a forward exchange contract to
convert the funds back to the original currency on maturity of the placement. In
accordance with HKAS39, the exchange difference of the spot and forward
contracts is required to be recognised as foreign exchange gain/loss, while the
corresponding interest differential between the original and swap funding is
reflected in net interest income.
Net income from financial instruments designated at fair value
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Net income on assets designated at fair
value which back insurance and
investment contracts 1,903 910
Net change in fair value of other financial
instruments designated at fair value 4 (11)
1,907 899
Financial instruments designated at fair value reported a net income of HK$1,907
million, compared with HK$899 million in 2006, reflecting the remarkable
investment performance and growth of the life insurance fund portfolios.
Other operating income
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Rental income from investment properties 139 186
Movement in present value of in-force long-term
insurance business 397 363
Other 211 296
747 845
Analysis of income from wealth management business
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Investment income:
- retail investment funds 1,676 796
- structured investment products^ 1,492 513
- private banking^^ 1,009 340
- securities broking and related services 1,985 805
- margin trading and others 78 65
6,240 2,519
Insurance income:
- life insurance 2,055 1,476
- general insurance and others 348 318
2,403 1,794
Total 8,643 4,313
^Income from structured investment products includes income reported under net
fee income on the sales of third-party structured investment products. It also
includes profit generated from the selling of structured investment products in
issue, reported under trading income.
^^Income from private banking includes income reported under net fee income on
investment services and profit generated from selling of structured investment
products in issue, reported under trading income.
Wealth management income increased by an impressive 100.4 per cent to HK$8,643
million. Investment services income grew by 147.7 per cent, reflecting record
investment product sales and a high level of stock market activity, while
insurance business income rose by 33.9 per cent.
The buoyant stock market stimulated demand for investment fund sales, which
reached a record HK$68.5 billion, representing a 149.5 per cent increase over
2006. This achievement was facilitated by the bank's efforts to offer a wide
choice of funds from both Hang Seng Investment Management and third-party
providers - ranging from high-growth China and emerging market equity funds to
fixed-income funds - to meet the various investment strategies and risk
appetites of different customers. The successful launch of new funds under the
Hang Seng investment fund series (for example, the Hang Seng Consumer Sector
FlexiPower Fund, which was the first consumer sector fund focusing on the
Mainland and Hong Kong securities which are listed on the Stock Exchange of
Hong Kong) and the good performance of existing thematic funds, particularly the
Hang Seng China Equity Fund, also boosted investment fund income. Funds under
management (excluding private banking) rose by 32.3 per cent to HK$82.1 billion
compared with 2006 year-end. As a result of this outstanding performance,
investment fund income (including sales commission and management fees) rose a
significant 110.6 per cent to reach a record HK$1,676 million.
The bank continued to make good progress with sourcing and distributing
competitive structured products packaged by both Hang Seng and third-party
providers, registering a 12.1 per cent rise in turnover and a record 190.8 per
cent increase in structured investment product income, primarily related to
equity-linked instruments.
The bank continued to expand its e-service channels and mobile communication
services to better cater for the needs of customers. A mobile phone trading
service was launched during the year to capture more business opportunities and
help customers to manage their securities investment portfolios more easily and
effectively in the buoyant investment conditions. Riding on a spate of IPO
activity in Hong Kong, the bank further enhanced its IPO subscription services
to meet customers' needs and participated in certain IPO activities by
leveraging its extensive network, customer base and funding capabilities.
Through effective marketing campaigns and personalised services, the bank grew
its number of securities accounts by 19.7 per cent and successfully boosted its
trading volume by 148.4 per cent. The positioning of the bank's business
increased stockbroking and related service income by 146.6 per cent to HK$1,985
million.
Private banking continued to make remarkable progress, supported by the further
strengthening of its relationship management team and investment services
support. Investment services income for 2007 was more than double that reported
for 2006. Customer base and assets under management rose by 19.8 per cent and
39.8 per cent respectively.
Life insurance registered encouraging income growth of 39.2 per cent to reach
HK$2,055 million (analysed in the table below). Life insurance business ranked
number one in Hong Kong in terms of new regular premiums on non-linked insurance
products for the first three quarters of 2007 and premium income grew by 24.7
per cent. The bank advanced its strategy to capture a greater share of the
retirement planning market by expanding its product range, launching the
'Critical Illness Life Insurance Plan' and 'Flexi-Income Life Insurance Plan'
during the year. Investment returns were higher, reflecting the growing
portfolio size and higher equity returns from the buoyant stock market. The
increase in movement in policyholders' liabilities is largely in line with the
increase in premium income.
General insurance income also increased by 9.4 per cent to HK$348 million, due
mainly to the growth in premiums earned from general accident protection.
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Life insurance:
- net interest income and fee income 943 665
- investment returns on life insurance funds 1,903 910
- net earned insurance premiums 9,394 7,534
- claims, benefits and surrenders paid (1,285) (1,014)
- movement in policyholders' liabilities^ (9,315) (6,991)
- reinsurers' share of claims incurred and
movement in policyholders' liabilities 18 9
- movement in present value of in-force
long-term insurance business 397 363
2,055 1,476
General insurance and others 348 318
Total 2,403 1,794
^Including premium and investment reserves
Loan impairment charges and other credit risk provisions
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Loan impairment (charges)/releases:
- individually assessed (250) (107)
- collectively assessed (326) (145)
(576) (252)
Of which:
- new and additional (702) (423)
- releases 64 106
- recoveries 62 65
(576) (252)
Other provision _ (12)
Loan impairment charges and other
credit risk provisions (576) (264)
Loan impairment charges and other credit risk provisions increased by HK$312
million, or 118.2 per cent, to HK$576 million. There was an increase of HK$143
million in individually assessed provisions, due mainly to higher charges and
lower releases for several commercial customers.
Of the collectively assessed charges, HK$253 million was made on the card and
personal loan portfolio, representing a rise of 82.0 per cent over 2006 but due
mainly to the 34.2 per cent growth of this portfolio. The delinquency rate and
level of loan losses continued to be satisfactory. A charge of HK$73 million was
made on advances not identified individually as impaired, compared with a charge
of HK$6 million made in 2006, reflecting the 10.4 per cent growth in gross
advances to customers and the update of the historical loss rates used for 2007.
Operating expenses
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Employee compensation and benefits:
- salaries and other costs 2,443 2,188
- performance-related pay 1,095 382
- retirement benefit costs 47 124
3,585 2,694
General and administrative expenses:
- rental expenses 379 267
- other premises and equipment 820 829
- marketing and advertising expenses 601 447
- other operating expenses 884 671
2,684 2,214
Depreciation of business premises and equipment 348 323
Amortisation of intangible assets 33 10
6,650 5,241
Cost efficiency ratio 26.6% 29.0%
Staff numbers^ by region At 31 Dec07 At 31Dec06
Hong Kong 8,033 7,748
Mainland 1,097 661
Others 60 55
Total 9,190 8,464
^Full-time equivalent
Operating expenses rose by HK$1,409 million, or 26.9 per cent, compared with
2006. Of the 33.1 per cent increase in employee compensation and benefits,
salaries and other costs increased by 11.7 per cent, in line with the increase
in headcount and annual salary increment. The important contributions of Bank
staff in achieving significant growth in total operating income led to a 186.6
per cent increase in performance-related pay. General and administrative
expenses increased by 21.2 per cent. Rental expenses rose due to increases in
rents for branches in Hong Kong and new branches on the Mainland, as well as
additional rental costs after the disposal of the Hang Seng Building in May 2006
and the renting of the new 'megasite' back office centre. Marketing expenditure
was higher, with increased promotion of credit cards and investment and
insurance products as well as brand-building initiatives both in Hong Kong and
on the Mainland. Depreciation charges rose by 7.7 per cent, mainly the result of
the increase in fair value of business premises. The bank's mainland operations,
which expanded its network from 15 to 25 outlets and its staff from 661 to 1,097
members during 2007, also contributed to the increase in operating expenses.
The number of full-time equivalent staff rose by 726 compared with 2006
year-end. New staff in Hong Kong accounted for 39.3 per cent of the increase in
headcount, with new talent hired to further expand private banking's financial
advisory team and PFS and CMB's relationship management and wealth management
teams as well as to support IT systems development and enhancement. The number
of staff at mainland branches accounted for 60.1 per cent of the rise in
headcount, attributable mainly to the establishment of HACN and expansion of its
network of outlets.
The cost efficiency ratio for 2007 was 26.6 per cent, compared with 29.0 per
cent in 2006.
Profit on disposal of fixed assets and financial investments
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Profit on disposal of available-for-sale securities 449 338
Profit less loss on disposal of fixed assets 267 505
716 843
Profit on disposal of available-for-sale financial investments was HK$111
million higher than in 2006. Profit on disposal of fixed assets, mainly
properties, fell to HK$267 million, due to the non-recurring gain made on the
disposal of the Hang Seng Building at 77 Des Voeux Road Central in 2006.
Gain on dilution of investment in associate
During the year, the bank's associate, Industrial Bank Co., Ltd ('Industrial
Bank') issued new shares. The bank did not subscribe for any additional shares
issued under this offer and, as a result, its interest in Industrial Bank's
equity decreased from 15.98 per cent to 12.78 per cent.
The net assets of Industrial Bank increased substantially when it received the
proceeds from the new issue. After the new issue, the group's share of the net
assets of Industrial Bank increased by HK$1,465 million compared to the share of
the net assets immediately before the IPO. This increase in the group's share of
net assets was regarded as a gain arising from deemed disposal of part of its
interests in Industrial Bank and has been presented in the consolidated income
statement.
The gain resulting from the dilution of the group's investment in Industrial
Bank was HK$1,465 million. The dilution of the interest does not affect the
classification of the group's investment as an investment in an associate.
Tax expense
Taxation in the consolidated income statement represents:
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Current tax - provision for Hong Kong profits tax
Tax for the year 2,771 2,188
Current tax - taxation outside Hong Kong
Tax for the year 29 36
Deferred tax
Origination and reversal of temporary differences 65 (175)
Total tax expense 2,865 2,049
The current tax provision is based on the estimated assessable profit for 2007,
and is determined for the bank and its subsidiaries operating in Hong Kong by
using the Hong Kong profits tax rate of 17.5 per cent (the same rate as in
2006). For subsidiaries and branches operating in other jurisdictions, the
appropriate tax rates prevailing in the relevant countries are used.
Earnings per share
The calculation of earnings per share in 2007 is based on earnings of HK$18,242
million (HK$12,038 million in 2006) and on the weighted average number of
ordinary shares in issue of 1,911,842,736 shares (unchanged from 2006).
Dividends per share
Year ended Year ended
31Dec07 31Dec06
HK$ HK$m HK$ HK$m
per share per share
First interim 1.10 2,103 1.10 2,103
Second interim 1.10 2,103 1.10 2,103
Third interim 1.10 2,103 1.10 2,103
Fourth interim 3.00 5,736 1.90 3,633
6.30 12,045 5.20 9,942
Segmental analysis
Segmental information is presented in respect of business and geographical
segments. Business by customer group information, which is more relevant to the
group in making operating and financial decisions, is chosen as the primary
reporting format.
For the purpose of segmental analysis, the allocation of revenue reflects the
benefits of capital and other funding resources allocated to the customer groups
or geographical segments by way of internal capital allocation and funds
transfer-pricing mechanisms. Cost allocation is based on the direct costs
incurred by the respective customer groups and apportionment of management
overheads. Rental charges at market rates for usage of premises are reflected as
inter-segment income for the 'Other' customer group and inter-segment expenses
for the respective customer groups.
(a) By customer group
The group's business comprises five customer groups. Personal Financial Services
provides banking (including deposits, credit cards, mortgages and other retail
lending) and wealth management services (including private banking, investment
and insurance) to personal customers. Commercial Banking manages middle market
and smaller corporate relationships and specialises in trade-related financial
services. Corporate Banking handles relationships with large corporate and
institutional customers. Treasury engages in balance sheet management and
proprietary trading. Treasury also manages the funding and liquidity positions
of the group and other market risk positions arising from banking activities.
'Other' mainly represents management of shareholders' funds and investments in
premises, investment properties and equity shares.
Profit before tax contributed by the customer groups in 2007 compared with 2006
is set out in the table below. More customer group analysis and discussions are
set out in the 'Customer group performance' section.
Personal
Financial Commercial Corporate
Figures in HK$m Services Banking Banking Treasury Other Total
Year ended 31Dec07
Profit before tax 11,918 2,701 475 1,829 4,548 21,471
Share of profit before tax 55.5% 12.6% 2.2% 8.5% 21.2% 100.0%
Year ended 31Dec06
Profit before tax 7,730 2,262 557 1,051 2,795 14,395
Share of profit before tax 53.7% 15.7% 3.9% 7.3% 19.4% 100.0%
(b) By geographical region
The geographical regions in this analysis are classified by the location of the
principal operations of the subsidiary companies or, in the case of the bank
itself, by the location of the branches responsible for reporting the results or
advancing the funds.
Figures in HK$m Hong Kong Americas Mainland Total
and other
Year ended 31Dec07
Income and expense
Total operating income 33,259 1,782 651 35,692
Profit before tax 17,150 1,748 2,573 21,471
Capital expenditure incurred
during the year 432 _ 109 541
At 31Dec07
Total assets 630,989 71,082 43,928 745,999
Total liabilities 663,333 4,020 22,190 689,543
Contingent liabilities and
commitments 200,462 _ 15,007 215,469
Year ended 31Dec06
Income and expense
Total operating income 24,449 1,295 414 26,158
Profit before tax 12,380 1,262 753 14,395
Capital expenditure incurred
during the year 335 _ 44 379
At 31Dec06
Total assets 573,067 65,997 30,000 669,064
Total liabilities 603,636 4,180 12,550 620,366
Contingent liabilities and
commitments 165,541 _ 8,701 174,242
Analysis of assets and liabilities by remaining maturity
The maturity analysis is based on the remaining period at the balance sheet date
to the contractual maturity date, with the exception of the trading portfolio
that may be sold before maturity and is accordingly recorded as 'Trading'.
One month Three
Repayable or less One month months One year Over No
on but not on to three to one to five five contractual
Figures in HK$m demand demand months year years years Trading maturity Total
Assets
Cash and balances
with banks and
other financial
institutions 16,864 _ _ _ _ _ _ _ 16,864
Placings with and
advances to banks
and other financial
institutions 30,427 62,943 18,374 1,285 _ _ _ _ 113,029
Trading assets _ _ _ _ _ _ 10,390 _ 10,390
Financial assets
designated at
fair value _ _ 305 146 2,481 4,963 _ 5,997 13,892
Derivative financial
instruments 5 115 210 392 210 3 3,767 _ 4,702
Advances to
customers 19,863 15,111 24,885 50,290 93,575 104,632 _ _ 308,356
Financial investments 300 19,371 22,458 55,071 126,395 16,462 _ 4,237 244,294
Investments in
associates _ _ _ _ _ _ _ 6,177 6,177
Investment properties _ _ _ _ _ _ _ 2,581 2,581
Premises, plant and
equipment _ _ _ _ _ _ _ 6,794 6,794
Interest in leasehold
land held for own
use under operating
lease _ _ _ _ _ _ _ 565 565
Intangible assets _ _ _ _ _ _ _ 2,889 2,889
Other assets 6,476 4,200 2,630 1,492 262 8 _ 398 15,466
At 31Dec07 73,935 101,740 68,862 108,676 222,923 126,068 14,157 29,638 745,999
At 31Dec06 49,310 85,492 60,275 94,143 224,420 119,110 13,841 22,473 669,064
Liabilities
Current,savings and
other deposit
accounts 312,427 177,361 42,612 13,055 913 285 _ _ 546,653
Deposits from banks 1,791 12,994 2,640 2,311 _ _ _ _ 19,736
Trading liabilities _ _ _ _ _ _ 48,151 _ 48,151
Financial liabilities
designated at fair
value 41 _ _ _ 997 _ _ 460 1,498
Derivative financial
instruments _ 7 11 25 47 58 4,535 _ 4,683
Certificate of deposit
and other debt
securities in issue _ 8 _ 2,857 2,820 _ _ _ 5,685
Other liabilities 8,433 4,996 1,718 1,352 124 12 _ 1,215 17,850
Liabilities to
customers under
insurance contracts _ _ _ _ _ _ _ 33,089 33,089
Deferred tax and
current tax liabilities _ _ _ 1,479 _ _ _ 1,365 2,844
Subordinated liabilities _ _ _ _ 9,354 _ _ _ 9,354
At 31Dec07 322,692 195,366 46,981 21,079 14,255 355 52,686 36,129 689,543
At 31Dec06 299,827 167,289 38,767 11,800 15,845 154 61,407 25,277 620,366
Cash and balances with banks and other financial institutions
Figures in HK$m At 31Dec07 At 31Dec06
Cash in hand 3,308 4,920
Balances with central banks 6,004 357
Balances with banks and other financial
institutions 7,552 4,113
16,864 9,390
Placings with and advances to banks and other financial institutions
Figures in HK$m At 31Dec07 At 31Dec06
Placings with and advances to banks and
other financial institutions maturing
within one month 93,370 75,722
Placings with and advances to banks and
other financial institutions maturing
after one month 19,659 23,983
113,029 99,705
Trading assets
Figures in HK$m At 31Dec07 At 31Dec06
Treasury bills 6,303 6,071
Certificates of deposit _ 212
Other debt securities 4,058 6,109
Debt securities 10,361 12,392
Equity shares 2 16
Total trading securities 10,363 12,408
Other^ 27 59
Total trading assets 10,390 12,467
Debt securities:
- listed in Hong Kong 2,564 3,124
- listed outside Hong Kong 796 1,123
3,360 4,247
- unlisted 7,001 8,145
10,361 12,392
Equity shares:
- listed in Hong Kong 2 16
- unlisted _ _
2 16
Total trading securities 10,363 12,408
Debt securities:
Issued by public bodies:
- central governments and central banks 9,061 8,969
- other public sector entities 387 926
9,448 9,895
Issued by other bodies:
- banks and other financial institutions 562 1,555
- corporate entities 351 942
913 2,497
10,361 12,392
Equity shares:
Issued by corporate entities 2 16
Total trading securities 10,363 12,408
^This represents amount receivable from counterparties on trading transactions
not yet settled.
Financial assets designated at fair value
Figures in HK$m At 31Dec07 At 31Dec06
Certificates of deposit 52 232
Other debt securities 7,860 4,587
Debt securities 7,912 4,819
Equity shares 5,980 3,461
13,892 8,280
Debt securities:
- listed in Hong Kong 1,113 505
- listed outside Hong Kong 1,377 309
2,490 814
- unlisted 5,422 4,005
7,912 4,819
Equity shares:
- listed in Hong Kong 1,976 1,202
- listed outside Hong Kong 1,600 1,300
3,576 2,502
- unlisted 2,404 959
5,980 3,461
13,892 8,280
Debt securities:
Issued by public bodies:
- central governments and central banks 2,004 870
- other public sector entities 395 285
2,399 1,155
Issued by other bodies:
- banks and other financial institutions 4,682 3,535
- corporate entities 831 129
5,513 3,664
7,912 4,819
Equity shares:
Issued by corporate entities 5,980 3,461
13,892 8,280
Financial assets are designated at fair value, usually together with the related
liabilities or derivative financial instruments, primarily for the purpose of
eliminating or significantly reducing the accounting mismatch. The figures also
include those financial assets of life insurance funds designated at fair value
for backing policyholders' liabilities.
Advances to customers
Figures in HK$m At 31Dec07 At 31Dec06
Gross advances to customers 309,409 280,277
Less:
Loan impairment allowances:
- individually assessed (417) (406)
- collectively assessed (636) (518)
308,356 279,353
Included in advances to customers are:
- trade bills 3,690 3,907
- loan impairment allowances (14) (16)
3,676 3,891
Loan impairment allowances against advances to customers
Individually Collectively
Figures in HK$m assessed assessed Total
At 1Jan07 406 518 924
Amounts written off (242) (249) (491)
Recoveries of advances
written off in previous years 21 41 62
New impairment allowances
charged to income statement 335 367 702
Impairment allowances released
to income statement (85) (41) (126)
Unwinding of discount of loan
impairment allowances
recognised as 'interest income' (18) _ (18)
At 31Dec07 417 636 1,053
Total loan impairment allowances as a percentage of gross advances to customers
are as follows:
At 31 Dec07 At 31Dec06
% %
Loan impairment allowances:
- individually assessed 0.13 0.15
- collectively assessed 0.21 0.18
Total loan impairment allowances 0.34 0.33
Total loan impairment allowances as a percentage of gross advances to customers
were 0.34 per cent at 31 December 2007, 0.1 percentage point higher than last
year. Individually assessed allowances as a percentage of gross advances fell by
0.02 percentage points to 0.13 per cent, reflecting recoveries from doubtful
accounts and the writing off of irrecoverable balances against impairment
allowances. The percentage of collectively assessed allowances increased by 0.03
percentage point to 0.21 per cent, reflecting higher impairment allowances made
on the card and personal loan portfolio and the increase in impairment
allowances made on advances not identified as impaired as a result of the growth
in gross advances to customers and the update of the historical loss rates used
for 2007.
Impaired advances and allowances
Figures in HK$m At 31Dec07 At 31Dec06
Gross impaired advances 1,261 1,387
Individually assessed allowances (417) (406)
Net impaired advances 844 981
Individually assessed allowances as a
percentage of gross impaired advances 33.1% 29.3%
Gross impaired advances as a percentage of
gross advances to customers 0.4% 0.5%
Impaired advances are those advances with objective evidence of impairment as
assessed on an individual basis. Impairment allowances are made to write down
the carrying value of the advances to the discounted value of future recoverable
amounts, including the realisation of collateral.
Gross impaired advances fell by HK$126 million, or 9.1 per cent, to HK$1,261
million, due mainly to the write-off of irrecoverable balances against
impairment allowances and customer repayments, although there was a downgrade of
certain commercial accounts. Gross impaired advances as a percentage of gross
advances to customers stood at 0.4 per cent, compared with 0.5 per cent at the
end of 2006.
Overdue advances
Advances to customers that are more than three months overdue and their
expression as a percentage of gross advances to customers are as follows:
At 31Dec07 At 31Dec06
HK$m % HK$m %
Gross advances to customers
which have been overdue
with respect to either principal
or interest for periods of:
- six months or less but
over three months 329 0.1 504 0.2
- one year or less but
over six months 312 0.1 263 0.1
- over one year 112 _ 173 _
753 0.2 940 0.3
Advances with a specific repayment date are classified as overdue when the
principal or interest is overdue and remains unpaid at year-end. Advances
repayable by regular instalments are treated as overdue when an instalment
payment is overdue and remains unpaid at year-end. Advances repayable on demand
are classified as overdue either when a demand for repayment has been served on
the borrower but repayment has not been made in accordance with the demand
notice, or when the advances have remained continuously outside the approved
limit advised to the borrower for more than the overdue period in question.
Overdue advances fell by 19.9 per cent to HK$753 million at 31 December 2007,
attributable to the write-off of overdue advances against impairment allowances.
Overdue advances as a percentage of gross advances to customers stood at 0.2 per
cent, compared with 0.3 per cent at the end of 2006.
Rescheduled advances
Rescheduled advances and their expression as a percentage of gross advances to
customers are as follows:
At 31Dec07 At 31Dec06
HK$m % HK$m %
Rescheduled advances to customers 352 0.1 357 0.1
Rescheduled advances are those that have been rescheduled or renegotiated for
reasons related to the borrower's financial difficulties. This will normally
involve the granting of concessionary terms and resetting the overdue account to
non-overdue status. A rescheduled advance will continue to be disclosed as such
unless the debt has been performing in accordance with the rescheduled terms for
a period of six to 12 months. Rescheduled advances that have been overdue for
more than three months under the rescheduled terms are reported as overdue
advances.
Rescheduled advances decreased by HK$5 million, or 1.4 per cent, to HK$352
million at 31 December 2007, representing 0.1 per cent of gross advances to
customers (same level as the previous year-end).
Segmental analysis of advances to customers by geographical area
Advances to customers by geographical area are classified according to the
location of the counterparties after taking into account the transfer of risk.
In general, risk transfer applies when an advance is guaranteed by a party
located in an area which is different from that of the counterparty. At 31
December 2007, over 90 per cent of the group's advances to customers, including
related impaired advances and overdue advances, were classified under Hong Kong,
a position unchanged from that at 31 December 2006.
Gross advances to customers by industry sector
The analysis of gross advances to customers by industry sector based on
categories and definitions used by the HKMA is as follows:
Figures in HK$m At 31Dec07 At 31Dec06
Gross advances to customers for
use in Hong Kong
Industrial, commercial and financial sectors
Property development 20,431 18,051
Property investment 54,676 48,096
Financial concerns 3,232 2,103
Stockbrokers 524 234
Wholesale and retail trade 6,034 6,360
Manufacturing 8,311 7,670
Transport and transport equipment 9,368 11,145
Recreational activities 218 210
Information technology 913 478
Other 21,396 22,099
125,103 116,446
Individuals
Advances for the purchase of flats under
the Government Home Ownership
Scheme, Private Sector Participation
Scheme and Tenants Purchase Scheme 18,437 20,078
Advances for the purchase of other
residential properties 85,923 83,616
Credit card advances 11,354 9,448
Other 13,155 8,813
128,869 121,955
Total gross advances for use in Hong Kong 253,972 238,401
Trade finance 22,995 19,684
Gross advances for use outside Hong Kong 32,442 22,192
Gross advances to customers 309,409 280,277
Gross advances to customers rose HK$29.1 billion, or 10.4 per cent, to HK$309.4
billion when compared with the previous year-end.
In the strong economic conditions, lending to the property development, property
investment and financial concerns sectors recorded satisfactory growth,
benefiting from the active investment and property markets. Lending to the
manufacturing sector grew by 8.4 per cent and advances to the information
technology and telecom sector rose by 91.0 per cent due to a new drawdown by a
large information technology company. Lending to the wholesale and retail sector
and 'Other' sector fell by 5.1 per cent and 3.2 per cent respectively, due
mainly to repayments by large corporate customers.
Trade finance recorded strong growth of 16.8 per cent, reflecting CMB's
achievement in broadening its range of product and service offerings for small
and medium-sized enterprise ('SME') customers. CMB also enlarged its servicing
teams and expanded delivery channels to strengthen the bank's position as a
preferred bank for SMEs in Hong Kong.
Lending to individuals recorded a rise of 5.7 per cent. Excluding the fall in
Government Home Ownership Scheme ('GHOS') mortgages, lending to individuals grew
by 8.4 per cent. Residential mortgages to individuals rose by 2.8 per cent and
the bank maintained its position as one of the market leaders amid intense
market competition. Mortgages under the GHOS fell at a slower pace of 8.2 per
cent (compared with 12.2 per cent in 2006) as there were new loans drawdown
following the Housing Authority's re-launch of GHOS flat sales earlier 2007.
With the improved economic environment and strong consumer spending, card
advances grew by 20.2 per cent, supported by a rise of 8.9 per cent in the
number of cards issued and a 21.1 per cent increase in cardholder spending.
Lending to the 'Other' sector, including mainly personal loans and overdrafts,
increased by 49.3 per cent, due in part to a series of successful promotional
initiatives.
Loans for use outside Hong Kong increased by HK$10,250 million, or 46.2 per
cent, compared with the end of 2006. This was due largely to the 63.8 per cent
expansion of mainland loan portfolios, which had reached HK$26.0 billion at 31
December 2007. Strong growth was recorded in corporate lending, driven by
renminbi loans. Trade finance rose significantly by 110.4 per cent, benefiting
from the bank's strong capabilities and experience, premium services, and broad
customer base in the Pearl River Delta region. Residential mortgage business
also grew strongly by 79.3 per cent.
Financial investments
Figures in HK$m At 31Dec07 At 31Dec06
Available-for-sale at fair value:
- debt securities 220,998 209,463
- equity shares 4,299 2,110
Held-to-maturity debt securities at
amortised cost 18,997 16,137
244,294 227,710
Fair value of held-to-maturity debt securities 19,526 16,551
Treasury bills 3,089 1,088
Certificates of deposit 30,247 25,020
Other debt securities 206,659 199,492
Debt securities 239,995 225,600
Equity shares 4,299 2,110
244,294 227,710
Debt securities:
- listed in Hong Kong 5,234 6,672
- listed outside Hong Kong 71,997 70,905
77,231 77,577
- unlisted 162,764 148,023
239,995 225,600
Equity shares:
- listed in Hong Kong 3,449 1,702
- listed outside Hong Kong 188 150
3,637 1,852
- unlisted 662 258
4,299 2,110
244,294 227,710
Fair value of listed financial investments 80,898 79,442
Debt securities:
Issued by public bodies:
- central governments and central banks 8,526 8,321
- other public sector entities 5,688 7,044
14,214 15,365
Issued by other bodies:
- banks and other financial institutions 211,568 192,751
- corporate entities 14,213 17,484
225,781 210,235
239,995 225,600
Equity shares:
Issued by corporate entities 4,299 2,110
244,294 227,710
Available-for-sale investments include treasury bills, certificates of deposit,
other debt securities and equity shares intended to be held for an indefinite
period of time, but which may be sold in response to needs for liquidity or
changes in the market environment. Available-for-sale investments are carried at
fair value with the gains and losses from changes in fair value recognised
through equity reserves.
Held-to-maturity debt securities are stated at amortised cost. Where debt
securities have been purchased at a premium or discount, the carrying value of
the security is adjusted to reflect the effective interest rate of the debt
security taking into account such premium or discount.
Amounts due from/to immediate holding company and fellow subsidiary companies
At balance sheet dates, the amounts due from/to the bank's immediate holding
company and fellow subsidiary companies included in the assets and liabilities
balances of the consolidated balance sheet are as follows:
Figures in HK$m At 31Dec07 At 31Dec06
Amounts due from:
Cash and balances with banks and
other financial institutions 861 1,665
Placings with and advances to banks
and other financial institutions 5,777 4,573
Financial assets designated at fair value 3,672 2,842
Derivative financial instruments 386 194
Financial investments 909 1,023
Other assets 128 79
11,733 10,376
Amounts due to:
Customer accounts 1,930 199
Deposits from banks 3,471 5,724
Derivative financial instruments 1,773 333
Subordinated liabilities 2,028 2,022
Other liabilities 316 473
9,518 8,751
Investments in associates
Figures in HK$m At 31Dec07 At 31Dec06
Share of net assets 5,894 3,158
Goodwill 283 330
6,177 3,488
On 5 February 2007, Industrial Bank issued 1,001 million new shares in an IPO
for a total consideration of RMB15,996 million. The bank did not subscribe for
any additional shares and its interest in the equity of Industrial Bank
therefore decreased from 15.98 per cent to 12.78 per cent. The dilution of
investment resulted in a gain of HK$1,465 million, as represented in the
increase in the bank's share of the net assets of Industrial Bank which had
risen as a result of the issue of the new shares. The gain on dilution was
recognised in the bank's income statement in 2007.
The decrease of the bank's interest in the equity of Industrial Bank does not
affect the bank's influence over this associate, as there has been no change in
the composition of major shareholders in Industrial Bank or in the bank's
representation on its Board of Directors or Executive Committee. The bank will
continue to have the power to participate in the financial and operating policy
decisions of Industrial Bank, and will continue to account for its results using
the equity method.
Intangible assets
Figures in HK$m At 31Dec07 At 31Dec06
Present value of in-force long-term
insurance business 2,324 1,927
Internally developed software 212 129
Acquired software 24 14
Goodwill 329 _
2,889 2,070
Goodwill arising from the acquisition of the remaining 50 per cent of issued
capital of Hang Seng Life Limited amounted to HK$329 million as at 31 December
2007 and was recognised at group level.
Other assets
Figures in HK$m At 31Dec07 At 31Dec06
Items in the course of collection
from other banks 6,193 6,036
Prepayments and accrued income 4,433 3,520
Deferred tax assets 1 1
Assets held for sale 199 256
Acceptances and endorsements 3,294 2,855
Other accounts 1,346 2,218
15,466 14,886
Current, savings and other deposit accounts
Figures in HK$m At 31Dec07 At 31Dec06
Current, savings and other deposit accounts:
- as stated in consolidated balance sheet 546,653 482,821
- structured deposits reported as
trading liabilities 24,162 35,066
570,815 517,887
By type:
- demand and current accounts 34,130 29,594
- savings accounts 254,976 223,255
- time and other deposits 281,709 265,038
570,815 517,887
Certificates of deposit and other debt securities in issue
Figures in HK$m At 31Dec07 At 31Dec06
Certificates of deposit and
other debt securities in issue:
- as stated in consolidated balance sheet 5,685 7,595
- structured certificates of deposit
and other debt securities in issue
reported as trading liabilities 14,087 14,821
19,772 22,416
By type:
- certificates of deposit in issue 9,212 18,075
- other debt securities in issue 10,560 4,341
19,772 22,416
Customer deposits and certificates of deposit and other debt securities in issue
rose by 9.3 per cent to HK$590.6 billion, notably in Hong Kong dollar current
and savings accounts and time deposits.
In tandem with the expanding scope of renminbi banking services offered by HACN,
deposits from mainland branches registered impressive growth of 188.6 per cent.
HACN will continue to expand its number of outlets and provide premium customer
service and comprehensive renminbi services to grow its customer base. In order
to further grow our personal banking and wealth management business, a variety
of investment-linked deposit products are being offered to customers on the
Mainland.
Trading liabilities
Figures in HK$m At 31Dec07 At 31Dec06
Structured certificates of deposit and
other debt securities in issue 14,087 14,821
Structured deposits 24,162 35,066
Short positions in securities and other 9,902 10,206
48,151 60,093
Trading liabilities include customer deposits and certificates of deposit with
embedded options or other derivatives, the market risk of which is managed in
the trading book.
Other liabilities
Figures in HK$m At 31Dec07 At 31Dec06
Items in the course of transmission
to other banks 8,407 6,469
Accruals 3,836 2,641
Acceptances and endorsements 3,294 2,855
Other 2,313 4,158
17,850 16,123
Subordinated liabilities
Figures in HK$m At 31Dec07 At 31Dec06
Nominal value Description
Amount owed to third parties
HK$1,500 million Callable floating rate
subordinated notes due
June 2015 1,497 1,496
HK$1,000 million 4.125 per cent callable
fixed rate subordinated
notes due June 2015 989 987
US$450 million Callable floating rate
subordinated notes
due July 2016 3,497 3,483
US$300 million Callable floating rate
subordinated notes
due July 2017 2,332 _
Amount owed to HSBC Group undertakings
US$260 million Callable floating rate
subordinated loan debt
due December 2015 2,028 2,021
10,343 7,987
Representing:
- measured at amortised cost 9,354 7,000
- designated at fair value 989 987
10,343 7,987
During the year, the bank issued floating-rate subordinated notes amounting to
US$300 million that mature in July 2017 with a one-time call option exercisable
by the bank in July 2012. The notes were issued at the price of 99.868 per cent,
bearing interest at the rate of three-month US dollar LIBOR plus 0.25 per cent,
payable quarterly from the issue date to the call option date. Thereafter, if
the notes are not redeemed on the call option date, the interest rate will be
reset to three-month US dollar LIBOR plus 0.75 per cent payable quarterly. The
notes, which qualify as supplementary capital, serve to help the bank maintain a
more balanced capital structure and support business growth.
Shareholders' funds
Figures in HK$m At 31Dec07 At 31Dec06
Share capital 9,559 9,559
Retained profits 32,873 29,044
Premises revaluation reserve 3,639 3,491
Cash flow hedges reserve 144 (220)
Available-for-sale investments reserve 1,892 923
Capital redemption reserve 99 99
Other reserves 2,514 452
Total reserves 41,161 33,789
50,720 43,348
Proposed dividends 5,736 3,633
Shareholders' funds 56,456 46,981
Return on average shareholders' funds 35.4% 27.4%
Shareholders' funds (excluding proposed dividends) grew by HK$7,372 million, or
17.0 per cent, to HK$50,720 million at 31 December 2007. Retained profits rose
by HK$3,829 million, reflecting the growth in attributable profit during the
year. The premises revaluation reserve increased by HK$148 million, attributable
to the improved property market. The available-for-sale investments reserve rose
by HK$969 million, reflecting the buoyant equity market. Other reserves rose by
HK$2,062 million, due mainly to the gain on the dilution of investment in
Industrial Bank.
The return on average shareholders' funds was 35.4 per cent, compared with 27.4
per cent in 2006, reflecting the strong profit growth recorded for 2007.
Save for the issuance of subordinated notes of US$300 million, there was no
purchase, sale or redemption by the bank, or any of its subsidiaries, of the
bank's listed securities during 2007.
Capital resources management
Analysis of capital base and risk-weighted assets
Figures in HK$m At 31Dec07 At 31Dec06
Capital base
Core capital:
- Share capital 9,559 9,559
- Retained profits 29,437 25,823
- Classified as regulatory reserve (911) (518)
- Less: goodwill (283) (330)
- Less: 50 per cent of total
unconsolidated investments and
other deductions (5,875) _
- Total core capital 31,927 34,534
Supplementary capital:
- Fair value gains on the revaluation
of property 3,466 4,259
- Fair value gains on the revaluation
of available-for-sale investment and
equity 823 542
- Collective impairment allowances 636 518
- Regulatory reserve 911 518
- Term subordinated debt 10,354 7,988
- Less: 50 per cent of total
unconsolidated investments and
other deductions (5,875) _
- Total supplementary capital 10,315 13,825
Unconsolidated investments and
other deductions _ (4,242)
Total capital base after deductions 42,242 44,117
Risk-weighted assets
- Credit risk 342,798 321,677
- Market risk 2,166 2,330
- Operational risk 33,558 _
378,522 324,007
Capital adequacy ratio 11.2% 13.6%
Core capital ratio 8.4% 10.7%
Capital ratios at 31 December 2007 were compiled in accordance with the Banking
(Capital) Rules ('the Capital Rules') issued by the HKMA under section 98A of
the Hong Kong Banking Ordinance for the implementation of the Basel II, which
became effective on 1 January 2007. In accordance with the Capital Rules, the
bank has adopted the 'standardised approach' for the calculation of the
risk-weighted assets for credit risk and operational risk and the 'internal
models approach' for the calculation of market risk. The bank has also obtained
approval from the HKMA to adopt the 'foundation internal ratings-based approach'
to calculate the risk-weighted assets for credit risk effective 1 January 2008.
The basis of consolidation for calculation of capital ratios under the Capital
Rules follows the basis of consolidation for financial reporting with the
exclusion of subsidiaries which are 'regulated financial entities' (e.g.
insurance and securities companies) as defined by the Capital Rules.
Accordingly, the investment costs of these unconsolidated regulated financial
entities are deducted from the capital base.
The capital ratios at 31 December 2006 were compiled in accordance with the now
repealed Third Schedule of the Hong Kong Banking Ordinance ('the Third
Schedule') under the Basel I capital accord. As there are significant
differences between the Capital Rules and the Third Schedule on requirements in
the scope of consolidation and the calculation of capital base and risk weighted
assets, the capital ratios are not directly comparable.
In accordance with the HKMA guideline Impact of the New Hong Kong Accounting
Standards on Authorised Institutions' Capital Base and Regulatory Reporting, the
group has earmarked a 'regulatory reserve' of HK$911 million from retained
profits. This regulatory reserve is included as supplementary capital together
with the group's collective impairment allowances.
Liquidity ratio
The average liquidity ratio for the year, calculated in accordance with the
Fourth Schedule of the Hong Kong Banking Ordinance, is as follows:
Year ended Year ended
31Dec07 31Dec06
The bank and its subsidiaries
designated by the HKMA 52.9% 51.9%
Reconciliation of cash flow statement
(a) Reconciliation of operating profit to net cash flow from operating
activities
Year ended Year ended
Figures in HK$m 31Dec07 31Dec06
Operating profit 17,789 12,576
Net interest income (14,719) (11,694)
Dividend income (52) (47)
Loan impairment charges and other
credit risk provisions 576 264
Depreciation 348 323
Amortisation of intangible assets 33 10
Amortisation of available-for-sale investments (838) (532)
Amortisation of held-to-maturity debt
securities (1) 2
Advances written off net of recoveries (429) (336)
Interest received 25,530 22,232
Interest paid (19,208) (16,693)
Operating profit before changes in working
capital 9,029 6,105
Change in treasury bills and certificates of
deposit with original maturity more than
three months (5,958) 5,077
Change in placings with and advances to banks
maturing after one month 4,324 (9,035)
Change in trading assets 1,160 4,252
Change in financial assets designated at fair
value 362 (56)
Change in derivative financial instruments 349 (433)
Change in advances to customers (29,150) (18,589)
Change in other assets (11,612) (6,427)
Change in financial liabilities designated at
fair value 2 20
Change in current, savings and other deposit
accounts 63,832 51,826
Change in deposits from banks 2,056 5,637
Change in trading liabilities (11,942) 14,289
Change in certificates of deposit and
other debt securities in issue (1,910) (2,428)
Change in other liabilities 10,963 8,458
Elimination of exchange differences
and other non-cash items (7,892) (3,707)
Cash generated from operating activities 23,613 54,989
Taxation paid (2,543) (1,448)
Net cash inflow from operating activities 21,070 53,541
(b) Analysis of the balances of cash and cash equivalents
Figures in HK$m At 31Dec07 At 31Dec06
Cash and balances with banks and
other financial institutions 16,864 9,390
Placings with and advances to banks and other
financial institutions maturing within
one month 89,895 74,072
Treasury bills 4,114 5,158
Certificates of deposit 2,601 1,655
113,474 90,275
Contingent liabilities, commitments and derivatives
Credit Risk-
Contract equivalent weighted
Figures in HK$m amount amount amount
At 31Dec07
Direct credit substitutes 4,651 4,651 3,638
Transaction-related contingencies 812 406 398
Trade-related contingencies 10,274 2,055 2,045
Forward asset purchases 115 115 115
Undrawn formal standby facilities,
credit lines and other commitments
to lend:
- not more than one year 20,253 4,051 4,051
- more than one year 15,973 7,986 6,752
- unconditionally cancellable 145,641 _ _
197,719 19,264 16,999
Exchange rate contracts:
Spot and forward foreign exchange 580,889 7,606 2,196
Other exchange rate contracts 25,957 803 189
606,846 8,409 2,385
Interest rate contracts:
Interest rate swaps 189,703 2,121 520
Other interest rate contracts 312 _ _
190,015 2,121 520
Other derivative contracts 26,709 2,294 1,263
Credit Risk-
Contract equivalent weighted
Figures in HK$m amount amount amount
At 31Dec06
Contingent liabilities:
Guarantees 4,150 3,877 3,679
Commitments:
Documentary credits and short-term
trade-related transactions 8,717 1,745 1,738
Undrawn formal standby facilities,
credit lines and other commitments
to lend:
- under one year 142,463 _ _
- one year and over 18,719 9,360 8,696
Other 193 193 193
170,092 11,298 10,627
Exchange rate contracts:
Spot and forward foreign exchange 267,822 2,715 591
Other exchange rate contracts 64,377 499 110
332,199 3,214 701
Interest rate contracts:
Interest rate swaps 162,969 1,376 295
Other interest rate contracts 2,350 2 _
165,319 1,378 295
Other derivative contracts 5,668 382 90
The tables above give the nominal contract, credit equivalent and risk-weighted
amounts of off-balance-sheet transactions. The credit equivalent amounts are
calculated for the purposes of deriving the risk-weighted amounts. The nominal
contract amounts, credit equivalent amounts, risk-weighted amounts and the
consolidation basis at 31 December 2007 were calculated in accordance with the
Banking (Capital) Rules issued by the HKMA, which became effective on 1 January
2007. The corresponding amounts at 31 December 2006 were calculated in
accordance with the now repealed Third Schedule of the Hong Kong Banking
Ordinance.
For the above analysis, contingent liabilities and commitments are
credit-related instruments that include acceptances and endorsements, letters of
credit, guarantees and commitments to extend credit. The risk involved is
essentially the same as the credit risk involved in extending loan facilities to
customers. These transactions are, therefore, subject to the same credit
origination, portfolio maintenance and collateral requirements as for customers
applying for loans. As the facilities may expire without being drawn upon, the
total of the contract amounts is not representative of future liquidity
requirements.
Derivative financial instruments are held for trading or designated as either
fair value hedges or cash flow hedges. The following table shows the nominal
contract amounts and marked-to-market value of assets and liabilities by class
of derivatives.
At 31Dec07 At 31Dec06
Figures in HK$m Trading Hedging Trading Hedging
Contract amounts:
Interest rate contracts 129,861 60,232 105,001 60,318
Exchange rate contracts 725,862 _ 332,199 _
Other derivative contracts 43,983 _ 5,668 _
899,706 60,232 442,868 60,318
Derivative assets:
Interest rate contracts 703 935 435 513
Exchange rate contracts 2,512 _ 866 _
Other derivative contracts 552 _ 73 _
3,767 935 1,374 513
Derivative liabilities:
Interest rate contracts 777 148 573 217
Exchange rate contracts 2,073 _ 722 _
Other derivative contracts 1,685 _ 19 _
4,535 148 1,314 217
The above derivative assets and liabilities, being the positive or negative
marked-to-market value of the respective derivative contracts, represent gross
replacement costs, as none of these contracts are subject to any bilateral
netting arrangements.
Additional information
1. Statutory accounts and accounting policies
The information in this news release does not constitute statutory accounts.
Certain financial information in this news release is extracted from the
statutory accounts for the year ended 31 December 2007 ('2007 accounts'), which
will be delivered to the Registrar of Companies and the HKMA. The auditors
expressed an unqualified opinion on those statutory accounts in their report
dated 3 March 2008.
Disclosures required by the Banking (Disclosure) Rules issued by the HKMA are
contained in the bank's Annual Report which will be published on the websites of
The Stock Exchange of Hong Kong Limited and the bank on the date of the issue of
this news release.
The 2007 accounts and this news release have been prepared on a basis consistent
with the accounting policies adopted in the 2006 accounts.
2. Comparative figures
Certain comparative figures have been reclassified to conform with the current
year's presentation.
3. Acquisition
On 22 June 2007, the bank announced that its wholly-owned subsidiary, Hang Seng
Insurance Company Limited ('HSIC'), had entered into a conditional agreement to
acquire 50 per cent of the issued share capital of Hang Seng Life Limited
('HSLL') from HSBC Insurance (Asia-Pacific) Holdings Limited, an indirect
wholly-owned subsidiary of HSBC Holdings plc, for a consideration of HK$2,400
million. The bank owns the remaining 50 per cent of the issued capital of HSLL
and is accounting for the results of HSLL as a subsidiary. Under the Listing
Rules, the acquisition constitutes a discloseable and connected transaction of
the bank and is subject to approval by the shareholders who are not related to
HSBC Group ('Independent Shareholders'). An Extraordinary General Meeting
('EGM') was convened on 1 August 2007 and approval from Independent Shareholders
for the acquisition was obtained by way of poll at the EGM. The acquisition was
completed on 25 September 2007 and the amount of goodwill arising from
acquisition at group level was HK$329 million.
4. Property revaluation
On 30 September 2007, the group's premises and investment properties were
revalued by DTZ Debenham Tie Leung Limited and were adjusted for material change
in the valuation as at 31 December 2007. The valuation was carried out by
qualified persons who are members of the Hong Kong Institute of Surveyors. The
basis of the valuation of premises was open market value for existing use and
the basis of valuation for investment properties was open market value. The
revaluation surplus for group premises amounted to HK$565 million of which HK$34
million was a reversal of revaluation deficits previously charged to the income
statement. The balance of HK$531 million was credited to the premises
revaluation reserve. Revaluation gains of HK$250 million on investment
properties were recognised through the income statement. The related deferred
tax provisions for group premises and investment properties were HK$99 million
and HK$44 million respectively.
The revaluation exercise also covered investment properties reclassified as
properties held for sale. In accordance with HKFRS 5, the revaluation gain of
HK$95 million was recognised through the income statement.
5. Foreign currency positions
Foreign currency exposures include those arising from trading, non-trading and
structural positions. At 31 December 2007, the US dollar (US$) and renminbi
(RMB) were the currencies in which the group had a non-structural foreign
currency position that exceeded 10 per cent of the total net position in all
foreign currencies.
Figures in HK$m At 31Dec07 At 31Dec06
US$ RMB US$ RMB
Non-structural position
Spot assets 227,698 26,160 205,544 14,422
Spot liabilities (184,258) (26,149) (189,232) (12,670)
Forward purchases 298,806 26,549 128,102 353
Forward sales (335,592) (28,330) (141,544) (1,904)
Net options position 32 _ 120 _
Net long/(short)
non-structural position 6,686 (1,770) 2,990 201
At 31 December 2007, the group's major structural foreign currency positions
were US$ and RMB.
At 31Dec07 At 31Dec06
% of % of
total net total net
structural structural
HK$m position HK$m position
Structural positions
US$ 286 2.5 1,430 26.8
RMB 10,752 95.8 3,760 70.5
6. Post balance sheet event
On 31 January 2008, Hang Seng Bank signed an agreement to subscribe for 20 per
cent of the enlarged share capital of Yantai City Commercial Bank ('YTCCB') in
mainland China for a total consideration of RMB800 million. Upon successful
completion of the share subscription, Hang Seng will become the largest
shareholder of YTCCB. The share subscription and the terms of the agreement are
subject to the approval of the China Banking Regulatory Commission, other
relevant regulatory authorities, and shareholders of YTCCB.
7. Ultimate holding company
Hang Seng Bank is an indirectly held, 62.14 per cent-owned, subsidiary of HSBC
Holdings plc.
8. Register of shareholders
The register of shareholders of Hang Seng Bank will be closed on Tuesday, 18
March 2008, during which no transfer of shares can be registered. In order to
qualify for the fourth interim dividend for 2007, all transfers, accompanied by
the relevant share certificates, must be lodged with the bank's registrars,
Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, for registration no
later than 4:30 pm on Monday, 17 March 2008. The fourth interim dividend will be
payable on 28 March 2008 to shareholders on the register of shareholders of the
bank on 18 March 2008.
9. Proposed timetable for 2008 quarterly dividends
First Second Third Fourth
interim interim interim interim
dividend dividend dividend dividend
Announcement 28Apr08 4Aug08 3Nov08 2Mar09
Book close and record date 20May08 20Aug08 20Nov08 18Mar09
Payment date 5Jun08 4Sep08 10Dec08 31Mar09
10. Code on Corporate Governance Practices
The bank follows all the code provisions set out in the Code on Corporate
Governance Practices contained in Appendix 14 of the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited throughout the year
ended 31 December 2007.
The Audit Committee of the bank has reviewed the results for the year ended 31
December 2007.
11. Board of Directors
As at 3 March 2008, the Board of Directors of the bank comprised Dr Raymond K F
Ch'ien^ (Chairman), Mr Raymond C F Or (Vice-Chairman and Chief Executive), Mr
Edgar D Ancona^^, Mr John C C Chan^, Mr Patrick K W Chan, Dr Y T Cheng^, Dr
Marvin K T Cheung^, Mr Alexander A Flockhart^^, Mr Jenkin Hui^, Mr Peter T C Lee
^, Dr Eric K C Li^, Dr Vincent H S Lo^^, Mr Joseph C Y Poon, Dr David W K Sin^,
Mr Richard Y S Tang^ and Mr Peter T S Wong^^.
^ Independent non-executive Director
^^ Non-executive Director
12. News release
Copies of this news release may be obtained from Legal and Company Secretarial
Services Department, Level 10, 83 Des Voeux Road Central, Hong Kong; or from
Hang Seng's website http://www.hangseng.com.
The 2007 Annual Report and Accounts are available from the same website on
Monday, 3 March 2008 and will also be published on the website of The Stock
Exchange of Hong Kong Limited in due course. Printed copies of the 2007 Annual
Report will be sent to shareholders in late March 2008.
Press enquiries to:
Walter Cheung Telephone: (852) 2198 4020
Cecilia Ko Telephone: (852) 2198 4227
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HSBC Holdings plc
By:
Name: P A Stafford
Title: Assistant Group Secretary
Date: 03 March 2008