Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
Dah Sing Banking Group Limited
The holding company of Dah Sing Bank, Limited
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
(Stock code: 2356)
ANNOUNCEMENT OF 2020 INTERIM RESULTS
The Directors of Dah Sing Banking Group Limited (the "Company") are pleased to present the interim results and condensed consolidated financial statements of the Company and its subsidiaries (collectively the "Group") for the six months ended 30 June 2020. The unaudited profit attributable to shareholders after non-controlling interests for the six months ended 30 June 2020 was HK$946.0 million.
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
The unaudited 2020 interim condensed consolidated financial statements of the Group have been prepared in accordance with Hong Kong Accounting Standard No. 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants.
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June
Variance | |||||
HK$'000 | Note | 2020 | 2019 | % | |
Interest income | 3 | 3,432,752 | 3,691,459 | ||
Interest expense | 3 | (1,576,156) | (1,650,793) | ||
Net interest income | 1,856,596 | 2,040,666 | (9.0) | ||
Fee and commission income | 4 | 677,348 | 726,492 | ||
Fee and commission expense | 4 | (99,134) | (149,849) | ||
Net fee and commission income | 578,214 | 576,643 | 0.3 | ||
Net trading income | 5 | 147,419 | 8,463 | ||
Other operating income | 6 | 35,895 | 35,105 | ||
Operating income | 2,618,124 | 2,660,877 | (1.6) | ||
Operating expenses | 7 | (1,391,957) | (1,371,513) | 1.5 | |
Operating profit before impairment losses | 1,226,167 | 1,289,364 | (4.9) | ||
Credit impairment losses | 8 | (365,193) | (91,360) | 299.7 | |
Operating profit before gains and losses on certain | |||||
investments and fixed assets | 860,974 | 1,198,004 | (28.1) | ||
Net loss on disposal of other fixed assets | (2,867) | (2,521) | |||
Net gain/ (loss) on disposal of financial assets at fair value | |||||
through other comprehensive income | 11,594 | (24) | |||
Share of results of an associate | 411,759 | 410,860 | |||
Impairment loss on investment in an associate | 9 | (200,000) | (70,000) | ||
Share of results of jointly controlled entities | 13,580 | 12,499 | |||
Profit before taxation | 1,095,040 | 1,548,818 | (29.3) | ||
Taxation | 10 | (149,087) | (194,259) | ||
Profit for the period | 945,953 | 1,354,559 | (30.2) | ||
Loss attributable to non-controlling interests | 37 | 18 | |||
Profit attributable to Shareholders of the Company | 945,990 | 1,354,577 | (30.2) | ||
Interim dividend | 112,460 | 182,748 | |||
Earnings per share | |||||
Basic and diluted | 11 | HK$0.67 | HK$0.96 |
- 1 -
Dah Sing Banking Group Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June
HK$'000 | 2020 | 2019 | ||
Profit for the period | 945,953 | 1,354,559 | ||
Other comprehensive income for the period | ||||
Items that may be reclassified to the consolidated income | ||||
statement: | ||||
Investments in securities | ||||
Net change in fair value of debt instruments at fair value | ||||
through other comprehensive income | (540,825) | 344,162 | ||
Net change in allowance for expected credit losses of debt | ||||
instruments at fair value through other comprehensive income | 4,414 | 5,959 | ||
Net (gain)/ loss realised and transferred to income statement | ||||
upon: | ||||
- Disposal of debt instruments at fair value through other | ||||
comprehensive income | (11,594) | 24 | ||
Deferred income tax related to the above | 88,937 | (45,626) | ||
(459,068) | 304,519 | |||
Exchange differences arising on translation of the financial | ||||
statements of foreign entities | (128,605) | (18,228) | ||
Items that will not be reclassified to the consolidated income | ||||
statement: | ||||
Net change in fair value of equity instruments at fair value | ||||
through other comprehensive income | 4,181 | 1,842 | ||
Deferred income tax related to the above | 1,603 | (300) | ||
5,784 | 1,542 | |||
Other comprehensive (loss)/ income for the period, net of tax | (581,889) | 287,833 | ||
Total comprehensive income for the period, net of tax | 364,064 | 1,642,392 | ||
Attributable to: | ||||
Non-controlling interests | (37) | (18) | ||
Shareholders of the Company | 364,101 | 1,642,410 | ||
Total comprehensive income for the period, net of tax | 364,064 | 1,642,392 |
- 2 -
Dah Sing Banking Group Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at | As at | |||
HK$'000 | Note | 30 Jun 2020 | 31 Dec 2019 | |
ASSETS | ||||
Cash and balances with banks | 17,800,395 | 17,642,248 | ||
Placements with banks maturing between one and twelve | ||||
months | 6,207,624 | 5,494,972 | ||
Trading securities | 12 | 7,356,540 | 8,387,953 | |
Financial assets at fair value through profit or loss | 12 | - | 328,768 | |
Derivative financial instruments | 13 | 602,904 | 567,816 | |
Advances and other accounts | 14 | 147,514,130 | 145,046,748 | |
Financial assets at fair value through other comprehensive | ||||
income | 15 | 44,109,885 | 42,163,280 | |
Financial assets at amortised cost | 16 | 21,288,105 | 15,653,025 | |
Investment in an associate | 9 | 3,841,036 | 3,888,775 | |
Investments in jointly controlled entities | 109,943 | 96,363 | ||
Goodwill | 811,690 | 811,690 | ||
Intangible assets | 58,252 | 58,252 | ||
Premises and other fixed assets | 1,898,554 | 1,942,740 | ||
Investment properties | 1,208,639 | 1,208,639 | ||
Current income tax assets | - | 2 | ||
Deferred income tax assets | 194,903 | 115,216 | ||
Total assets | 253,002,600 | 243,406,487 | ||
LIABILITIES | ||||
Deposits from banks | 4,697,208 | 2,465,069 | ||
Derivative financial instruments | 13 | 2,940,347 | 1,093,028 | |
Trading liabilities | 4,691,047 | 5,516,558 | ||
Deposits from customers | 187,715,921 | 182,628,806 | ||
Certificates of deposit issued | 8,388,218 | 6,750,825 | ||
Subordinated notes | 3,860,820 | 5,510,181 | ||
Other accounts and accruals | 17 | 12,368,758 | 10,765,814 | |
Current income tax liabilities | 286,558 | 470,834 | ||
Deferred income tax liabilities | 17,114 | 20,559 | ||
Total liabilities | 224,965,991 | 215,221,674 | ||
EQUITY | ||||
Non-controlling interests | 15,349 | 15,386 | ||
Equity attributable to the Company's shareholders | ||||
Share capital | 6,894,438 | 6,894,438 | ||
Other reserves (including retained earnings) | 20,228,235 | 20,376,402 | ||
Shareholders' funds | 18 | 27,122,673 | 27,270,840 | |
Additional equity instruments | 898,587 | 898,587 | ||
Total equity | 28,036,609 | 28,184,813 | ||
Total equity and liabilities | 253,002,600 | 243,406,487 |
- 3 -
Dah Sing Banking Group Limited
Note:
-
General information
Dah Sing Banking Group Limited (the "Company") is a bank holding company. Its principal subsidiary is Dah Sing Bank, Limited ("DSB"), which is a licensed bank in Hong Kong. The Company together with its subsidiaries (collectively the "Group") provide banking, financial and other related services. - Unaudited financial statements and accounting policies
The information set out in this interim results announcement does not constitute statutory financial statements.
Certain financial information in this interim results announcement is extracted from the statutory financial statements for the year ended 31 December 2019 (the "2019 financial statements") which have been delivered to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance, and the Hong Kong Monetary Authority ("HKMA").
The auditor's report on the 2019 financial statements was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under section 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.
Basis of preparation and accounting policies
Except as described below, the accounting policies and methods of computation used in the preparation of the 2020 interim condensed consolidated financial statements are consistent with those used and described in the
Group's annual audited financial statements for the year ended 31 December 2019. New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current reporting period, and the Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.
The following amendments to accounting standards are applicable for annual reporting periods commencing on or after 1 January 2020: - Definition of Material - amendments to Hong Kong Accounting Standard ("HKAS") 1 and HKAS 8
- Definition of a Business - amendments to Hong Kong Financial Reporting Standard ("HKFRS") 3
- Revised Conceptual Framework for Financial Reporting
- Interest Rate Benchmark Reform - amendments to HKFRS 9, HKAS 39 and HKFRS 7
Amendments made to HKFRS 9, "Financial Instruments", HKAS 39, "Financial Instruments: Recognition
and Measurement" and HKFRS 7, "Financial Instruments: Disclosures" provide certain reliefs in relation to interest rate benchmark reform. The reliefs relate to hedge accounting and have the effect that the reforms should not generally cause hedge accounting to terminate. However, any hedge ineffectiveness should continue to be recorded in the income statement. Given the pervasive nature of hedges involving interbank offered rates (IBOR)-based contracts, the reliefs will affect companies in all industries.
There are no other HKFRSs or interpretations that are effective from 1 January 2020 or not yet effective that would be expected to have a material impact on the Group.
The interim condensed consolidated financial statements are presented in thousands of Hong Kong dollars (HK$'000), unless otherwise stated, and were approved by the Board of Directors for issue on 26 August 2020.
These interim condensed consolidated financial statements have not been audited.
- 4 -
Dah Sing Banking Group Limited
3. | Net interest income | ||||
For the six months ended 30 June | |||||
HK$'000 | 2020 | 2019 | |||
Interest income | |||||
Cash and balances with banks | 153,399 | 255,189 | |||
Investments in securities | 792,749 | 866,836 | |||
Advances and other accounts | 2,486,604 | 2,569,434 | |||
3,432,752 | 3,691,459 | ||||
Interest expense | |||||
Deposits from banks/ Deposits from customers | 1,376,863 | 1,351,906 | |||
Certificates of deposit issued | 68,984 | 75,280 | |||
Subordinated notes | 84,762 | 149,997 | |||
Lease liabilities | 5,653 | 7,065 | |||
Others | 39,894 | 66,545 | |||
1,576,156 | 1,650,793 | ||||
Included within interest income | |||||
- Trading securities and financial assets at fair value through profit | |||||
or loss | 47,621 | 70,048 | |||
- Financial assets at fair value through other comprehensive income | 604,044 | 1,017,066 | |||
- Financial assets at amortised cost | 2,781,087 | 2,604,345 | |||
3,432,752 | 3,691,459 | ||||
Included within interest expense | |||||
- Financial liabilities not at fair value through profit or loss | 1,538,303 | 1,594,970 |
- 5 -
Dah Sing Banking Group Limited
4. | Net fee and commission income | ||
For the six months ended 30 June | |||
HK$'000 | 2020 | 2019 | |
Fee and commission income | |||
Fee and commission income from financial assets and liabilities |
not at fair value through profit or loss | |||
- Credit related fees and commissions | 83,576 | 95,446 | |
- Trade finance | 36,214 | 44,040 | |
- Credit card | 125,713 | 174,101 | |
Other fee and commission income | |||
- Securities brokerage | 82,436 | 54,460 | |
- Insurance distribution and others | 161,294 | 167,827 | |
- Retail investment and wealth management services | 126,052 | 131,446 | |
- Bank services and handling fees | 32,335 | 32,517 | |
- Other fees | 29,728 | 26,655 | |
677,348 | 726,492 | ||
Fee and commission expense | |||
Fee and commission expense from financial assets and liabilities | |||
not at fair value through profit or loss | |||
- Handling fees and commission | 94,059 | 138,109 | |
- Other fees paid | 5,075 | 11,740 | |
99,134 | 149,849 |
The Group provides custody, trustee, corporate administration, and investment management services to third parties. Those assets that are held in a fiduciary capacity are not included in these financial statements.
5. | Net trading income | |||
For the six months ended 30 June | ||||
HK$'000 | 2020 | 2019 | ||
Net gain/ (loss) arising from dealing in foreign currencies | 120,507 | (3,291) | ||
Net gain on trading securities | 9,147 | 7,346 | ||
Net loss from derivatives entered into for trading purpose | (2,024) | (2,959) | ||
Net gain arising from financial instruments subject to fair value hedge | 12,669 | 6,029 | ||
Net gain on financial instruments at fair value through profit or loss | 7,120 | 1,338 | ||
147,419 | 8,463 |
- 6 -
Dah Sing Banking Group Limited
6. Other operating income
For the six months ended 30 June | |||||
HK$'000 | 2020 | 2019 | |||
Dividend income from investments in equity instruments at fair value | |||||
through other comprehensive income, held at the end of the period | |||||
- Listed investments | 1,410 | 1,154 | |||
- Unlisted investments | 2,891 | 2,910 | |||
Gross rental income from investment properties | 13,333 | 13,509 | |||
Other rental income | 7,446 | 6,538 | |||
Others | 10,815 | 10,994 | |||
35,895 | 35,105 | ||||
7. | Operating expenses | ||||
For the six months ended 30 June | |||||
HK$'000 | 2020 | 2019 | |||
Employee compensation and benefit expenses (including directors' | |||||
remuneration) | 990,482 | 944,342 | |||
Premises and other fixed assets expenses, excluding depreciation | 84,915 | 89,149 | |||
Depreciation | |||||
- Premises and other fixed assets | 87,182 | 93,981 | |||
- Right-of-use properties | 91,180 | 90,402 | |||
Advertising and promotion costs | 41,739 | 44,671 | |||
Printing, stationery and postage | 21,435 | 22,829 | |||
Others | 75,024 | 86,139 | |||
1,391,957 | 1,371,513 | ||||
8. | Credit impairment losses | ||||
For the six months ended 30 June | |||||
HK$'000 | 2020 | 2019 | |||
New allowances net of allowance releases | 407,954 | 123,206 | |||
Recoveries of amounts previously written off | (42,761) | (31,846) | |||
365,193 | 91,360 | ||||
Attributable to: | |||||
- Advances to customers | 336,289 | 87,342 | |||
- Other financial assets | 27,708 | 8,826 | |||
- Loan commitments and financial guarantees | 1,196 | (4,808) | |||
365,193 | 91,360 |
- 7 -
Dah Sing Banking Group Limited
9. Impairment loss on investment in an associate
At 30 June 2020, the fair value of the Group's investment in Bank of Chongqing ("BOCQ") had been below the carrying amount for approximately 6.5 years. On this basis, the Group continues to perform impairment test on the carrying amount of the investment in BOCQ to assess the recoverable amount.
The impairment test is performed by comparing the recoverable amount of BOCQ, determined by a value in use ("VIU") calculation, with the carrying amount of the investment. The VIU calculation uses discounted cash flow projections based on management's estimates of BOCQ's earnings and dividends to be paid in future, and the estimated probable exit value in future after considering the growth of BOCQ and its net asset value for the medium and longer term. The discount rate applied to the VIU calculation was estimated with reference to BOCQ's cost of equity, which is publicly available in the market.
In performing the VIU calculation to arrive at the recoverable amount of the investment, the Group considers all relevant factors including market views and qualitative factors to ensure that the inputs to the VIU calculation are appropriate. Adjustments need to be made to reflect the latest situation affecting BOCQ and also market outlook for the medium and longer term that are relevant in projecting BOCQ's future performance. Significant management judgement is required in estimating the future cash flows of BOCQ.
Based on the assessment conducted for the position up to 31 December 2019, the recoverable amount, as determined by the VIU calculation and after considering all relevant factors and valuation assumptions, remained below the carrying amount, and a cumulative impairment charge at HK$1,735 million had been recognised. The latest impairment test performed by the Group for the position as at 30 June 2020 concludes that the recoverable amount, based on the VIU calculation, is assessed as lower than the carrying amount, after deducting the cumulative impairment allowance made up to 31 December 2019 of HK$1,735 million, by HK$200 million. As a result, an additional impairment charge of HK$200 million was recognised in the first half of 2020 to reduce the value of the investment to HK$3,841 million.
The calculation of DSB's capital adequacy does not include the retained earnings from this investment (the "Investment"), except for BOCQ cash dividend received by DSB. Provided that the Investment continues to be held at or above the original cost of the investment of HK$1,213 million, impairment made on the
Investment does not affect DSB's capital adequacy.
- 8 -
Dah Sing Banking Group Limited
10. Taxation
Hong Kong profits tax has been provided at the rate of 16.5% (2019: 16.5%) on the estimated assessable profit for the period. Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.
Deferred taxation is calculated in full on temporary differences under the liability method at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised.
For the six months ended 30 June | |||
HK$'000 | 2020 | 2019 | |
Current income tax | |||
- Hong Kong profits tax | 137,793 | 174,755 | |
- Overseas taxation | 5,510 | 15,312 | |
Deferred income tax | 5,784 | 4,192 | |
- Origination and reversal of temporary differences | |||
Taxation | 149,087 | 194,259 |
11. Basic and diluted earnings per share
The calculation of basic earnings per share and fully dilutive earnings for the six months ended 30 June 2020 is based on earnings of HK$945,990,000 (2019: HK$1,354,577,000) and the weighted average number of 1,405,752,132 (2019: 1,405,720,460) ordinary shares in issue during the period. The share options outstanding during the period ended have no dilutive effect on the weighted average number of ordinary shares.
- 9 -
Dah Sing Banking Group Limited
12. Trading securities and financial assets at fair value through profit or loss
As at | As at | ||||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | |||
Trading securities | |||||
Debt securities: | |||||
- Listed in Hong Kong | 98,037 | 20,681 | |||
- Unlisted | 7,258,503 | 8,367,272 | |||
7,356,540 | 8,387,953 | ||||
Financial assets at fair value through profit or loss | |||||
Debt securities: | |||||
- Unlisted | - | 328,768 | |||
Total | 7,356,540 | 8,716,721 | |||
Included within debt securities are: | |||||
- Treasury bills which are cash equivalents | 3,042,551 | 1,606,484 | |||
- Other treasury bills | 4,236,698 | 6,781,469 | |||
- Other debt securities issued by: | |||||
- Corporate entities | 77,291 | 328,768 | |||
7,356,540 | 8,716,721 |
As at 30 June 2020 and 31 December 2019, there were no certificates of deposit held included in the above balances.
- 10 -
Dah Sing Banking Group Limited
13. Derivative financial instruments
The notional principal amounts of outstanding derivatives contracts and their fair values as at 30 June 2020 were as follows:
Contract/ | |||||||
notional | Fair values | ||||||
HK$'000 | amount | Assets | Liabilities | ||||
1) Derivatives held for trading | |||||||
a) | Foreign exchange derivatives | ||||||
Forward and futures contracts | 122,764,772 | 326,101 | (260,017) | ||||
Currency options purchased and written | 13,675,852 | 18,949 | (18,650) | ||||
b) | Interest rate derivatives | ||||||
Interest rate swaps | 4,755,158 | 48,169 | (42,817) | ||||
Interest rate options purchased and written | - | - | - | ||||
c) | Equity derivatives | ||||||
Equity options purchased and written | 269,125 | 7,277 | (7,277) | ||||
Total derivative assets/ (liabilities) held for trading | 141,464,907 | 400,496 | (328,761) | ||||
2) Derivatives held for hedging | |||||||
a) Derivatives designated as fair value hedges | |||||||
Interest rate swaps | 41,132,372 | 202,408 | (2,611,586) | ||||
Total derivative assets/ (liabilities) held for hedging | 41,132,372 | 202,408 | (2,611,586) | ||||
Total recognised derivative financial assets/ (liabilities) | 182,597,279 | 602,904 | (2,940,347) |
- 11 -
Dah Sing Banking Group Limited
13. Derivative financial instruments (Continued)
The notional principal amounts of outstanding derivatives contracts and their fair values as at 31 December
2019 were as follows:
Contract/ | |||
notional | Fair values | ||
HK$'000 | amount | Assets | Liabilities |
- Derivatives held for trading
- Foreign exchange derivatives
Forward and futures contracts | 85,980,290 | 427,242 | (346,656) | |||||
Currency options purchased and written | 8,583,805 | 11,034 | (10,733) | |||||
b) | Interest rate derivatives | |||||||
Interest rate swaps | 4,476,095 | 17,185 | (10,537) | |||||
Interest rate options purchased and written | 674,220 | - | (240) | |||||
c) | Equity derivatives | |||||||
Equity options purchased and written | 265,264 | 2,191 | (2,190) | |||||
Total derivative assets/ (liabilities) held for trading | 99,979,674 | 457,652 | (370,356) | |||||
2) Derivatives held for hedging | ||||||||
a) Derivatives designated as fair value hedges | ||||||||
Interest rate swaps | 38,285,505 | 110,164 | (722,672) | |||||
Total derivative assets/ (liabilities) held for hedging | 38,285,505 | 110,164 | (722,672) | |||||
Total recognised derivative financial assets/ (liabilities) | 138,265,179 | 567,816 | (1,093,028) |
The credit risk weighted amounts of the above off-balance sheet exposures, before taking into account the effect of bilateral netting arrangements that the Group entered into, are as follows:
As at | As at | ||
30 Jun 2020 | 31 Dec 2019 | ||
Exchange rate contracts | 916,972 | 721,770 | |
Interest rate contracts | 88,634 | 64,608 | |
Other contracts | 13,310 | 8,854 | |
1,018,916 | 795,232 |
The contract amounts of these instruments indicate the volume of transactions outstanding as at the end of the reporting period, they do not represent the amounts at risk.
The credit risk weighted amounts are the amounts that have been calculated with reference to the Banking (Capital) Rules issued by the HKMA. The amounts calculated are dependent upon the status of the counterparty and the maturity characteristics of each type of contract.
- 12 -
Dah Sing Banking Group Limited
14. Advances and other accounts
As at | As at | ||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | |
Gross advances to customers | 138,234,951 | 136,946,773 | |
Less: impairment allowances | |||
- Stage 1 | (503,033) | (474,635) | |
- Stage 2 | (168,271) | (152,754) | |
- Stage 3 | (500,952) | (381,197) | |
(1,172,256) | (1,008,586) | ||
137,062,695 | 135,938,187 | ||
Trade bills | 3,115,022 | 3,393,863 | |
Less: impairment allowances | |||
- Stage 1 | (3,251) | (1,982) | |
- Stage 2 | (27) | (7) | |
(3,278) | (1,989) | ||
3,111,744 | 3,391,874 | ||
Right-of-use assets | 246,818 | 413,967 | |
Other assets | 7,116,925 | 5,321,281 | |
Less: impairment allowances | |||
- Stage 1 | (10,180) | (8,496) | |
- Stage 2 | (728) | (598) | |
- Stage 3 | (13,144) | (9,467) | |
(24,052) | (18,561) | ||
7,092,873 | 5,302,720 | ||
Advances and other accounts | 147,514,130 | 145,046,748 |
- 13 -
Dah Sing Banking Group Limited
14. Advances and other accounts (Continued)
- Impaired, overdue and rescheduled assets
(i) | Impaired loans | |||||
As at | As at | |||||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | ||||
Gross loans and advances | 138,234,951 | 136,946,773 | ||||
Less: total impairment allowances | (1,172,256) | (1,008,586) | ||||
Net | 137,062,695 | 135,938,187 | ||||
Credit-impaired loans and advances | 1,410,390 | 1,049,226 | ||||
Less: Stage 3 impairment allowances | (500,952) | (381,197) | ||||
Net | 909,438 | 668,029 | ||||
Fair value of collateral held * | 829,723 | 590,496 | ||||
Credit-impaired loans and advances as a % of total loans | ||||||
and advances to customers | 1.02% | 0.77% |
- Fair value of collateral is determined at the lower of the market value of collateral and outstanding loan balance.
- Gross amount of overdue loans
As at 30 Jun 2020 | As at 31 Dec 2019 | |||||||
Gross | Gross | |||||||
amount of | amount of | |||||||
overdue | overdue | |||||||
loans | % of total | loans | % of total | |||||
Gross advances to customers which | ||||||||
have been overdue for: | ||||||||
- six months or less but over three | ||||||||
months | 115,125 | 0.08 | 180,317 | 0.13 | ||||
- one year or less but over six | ||||||||
months | 279,578 | 0.20 | 250,661 | 0.18 | ||||
- over one year | 519,620 | 0.38 | 318,703 | 0.23 | ||||
914,323 | 0.66 | 749,681 | 0.54 | |||||
Represented by: | ||||||||
- Secured overdue advances | 676,567 | 578,446 | ||||||
- Unsecured overdue advances | 237,756 | 171,235 | ||||||
Market value of securities held against | ||||||||
the secured overdue advances | 1,003,393 | 885,515 | ||||||
Stage 3 impairment allowances | 327,084 | 226,415 |
Collateral held mainly represented pledged deposits, mortgages over properties and charges over other fixed assets such as equipment.
- 14 -
Dah Sing Banking Group Limited
14. Advances and other accounts (Continued)
- Impaired, overdue and rescheduled assets (Continued)
- Rescheduled advances net of amounts included in overdue advances shown above
As at | As at | ||||||
HK$'000 | 30 Jun 2020 | % of total | 31 Dec 2019 | % of total | |||
Advances to customers | 386,030 | 0.28 | 270,909 | 0.20 | |||
Stage 3 impairment allowances | 136,762 | 112,734 |
(iv) | Trade bills | |||
As at | As at | |||
30 Jun 2020 | 31 Dec 2019 | |||
Trade bills which have been overdue for: | ||||
- one year or less but over six months | - | 11,907 | ||
- over one year | 7,894 | - | ||
7,894 | 11,907 | |||
Stage 3 impairment allowances | - | - | ||
The overdue trade bills are fully secured. |
- Repossessed collateral
Repossessed collateral held is as follows:
As at | As at | ||
30 Jun 2020 | 31 Dec 2019 | ||
Nature of assets | |||
Repossessed properties | 244,708 | 287,397 | |
Others | 26,459 | 7,782 | |
271,167 | 295,179 |
Repossessed collaterals are sold as soon as practicable with the proceeds used to reduce the outstanding indebtedness of the borrowers concerned.
Certain other properties in the Mainland China with a total estimated realisable value of HK$58,045,000 (31 December 2019: HK$59,274,000), which had been foreclosed and repossessed by the Group pursuant to orders issued by courts in the Mainland China, represent assets held by the Group for resale and have been reported under "Other assets". The relevant loans had been derecognised.
- 15 -
Dah Sing Banking Group Limited
15. Financial assets at fair value through other comprehensive income
As at | As at | ||||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | |||
Debt securities: | |||||
- Listed in Hong Kong | 15,688,913 | 16,470,818 | |||
- Listed outside Hong Kong | 17,681,762 | 16,609,379 | |||
- Unlisted | 10,637,164 | 8,970,096 | |||
44,007,839 | 42,050,293 | ||||
Equity securities: | |||||
- Listed in Hong Kong | 19,607 | 30,277 | |||
- Unlisted | 82,439 | 82,710 | |||
102,046 | 112,987 | ||||
Total | 44,109,885 | 42,163,280 | |||
Included within debt securities are: | |||||
- Certificates of deposit held | 343,035 | 114,099 | |||
- Treasury bills which are cash equivalents | 4,699,034 | 4,496,472 | |||
- Other treasury bills | 5,600,087 | 5,599,844 | |||
- Government bonds | 123,315 | 118,594 | |||
- Other debt securities | 33,242,368 | 31,721,284 | |||
44,007,839 | 42,050,293 | ||||
Financial assets at fair value through other comprehensive income | |||||
are analysed by categories of issuers as follows: | |||||
Debt securities: | |||||
- Central governments and central banks | 10,422,436 | 10,214,910 | |||
- Public sector entities | 135,894 | 143,655 | |||
- Banks and other financial institutions | 7,978,389 | 6,224,854 | |||
- Corporate entities | 25,471,045 | 25,466,799 | |||
- Others | 75 | 75 | |||
44,007,839 | 42,050,293 | ||||
Equity securities: | |||||
- Corporate entities | 102,046 | 112,987 | |||
44,109,885 | 42,163,280 |
- 16 -
Dah Sing Banking Group Limited
16. | Financial assets at amortised cost | |||||
As at | As at | |||||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | ||||
Debt securities: | ||||||
- Listed in Hong Kong | 7,591,927 | 4,531,678 | ||||
- Listed outside Hong Kong | 9,156,033 | 6,534,167 | ||||
- Unlisted | 4,560,363 | 4,598,713 | ||||
21,308,323 | 15,664,558 | |||||
Less: impairment allowance | ||||||
- Stage 1 | (20,218) | (11,533) | ||||
Total | 21,288,105 | 15,653,025 | ||||
Included within debt securities are: | ||||||
- Certificates of deposit held | 1,263,481 | 1,451,302 | ||||
- Treasury bills | 1,957,793 | 2,225,843 | ||||
- Government bonds | 248,450 | 301,957 | ||||
- Other debt securities | 17,838,599 | 11,685,456 | ||||
21,308,323 | 15,664,558 | |||||
Financial assets at amortised cost are analysed by categories of | ||||||
issuers as follows: | ||||||
- Central governments and central banks | 2,206,243 | 2,527,800 | ||||
- Public sector entities | 108,519 | 75,294 | ||||
- Banks and other financial institutions | 7,102,845 | 5,954,650 | ||||
- Corporate entities | 11,879,627 | 7,095,725 | ||||
- Others | 11,089 | 11,089 | ||||
21,308,323 | 15,664,558 | |||||
17. | Other accounts and accruals | |||||
As at | As at | |||||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | ||||
Lease liabilities | 264,375 | 431,600 | ||||
Amount payable arising from purchase of securities pending for | ||||||
settlement | 4,285,942 | 3,383,281 | ||||
Other liabilities and accruals | 7,818,441 | 6,950,933 | ||||
12,368,758 | 10,765,814 |
- 17 -
Dah Sing Banking Group Limited
18. | Shareholders' funds | |||
As at | As at | |||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | ||
Share capital | 6,894,438 | 6,894,438 | ||
Consolidation reserve | (220,986) | (220,986) | ||
Premises revaluation reserve | 270,120 | 270,120 | ||
Investment revaluation reserve | (52,111) | 415,027 | ||
Exchange reserve | (498,344) | (369,739) | ||
General reserve | 700,254 | 700,254 | ||
Reserve for share-based compensation | 3,873 | 3,393 | ||
Retained earnings | 20,025,429 | 19,578,333 | ||
27,122,673 | 27,270,840 | |||
Proposed dividend/ dividend paid included in retained earnings | 112,460 | 492,013 |
DSB as a locally incorporated bank in Hong Kong is required to maintain minimum impairment provisions in excess of those required under HKFRS in the form of regulatory reserve. The regulatory reserve, which also covers Banco Comercial de Macau, S.A. ("BCM") and Dah Sing Bank (China) Limited ("DSB China"), is maintained to satisfy the provisions of the Hong Kong Banking Ordinance and local regulatory requirements for prudential supervision purposes. The regulatory reserve restricts the amount of reserves which can be distributed to shareholders. Movements in the regulatory reserve are made directly through equity reserve and in consultation with the HKMA.
As at 30 June 2020, DSB has earmarked a regulatory reserve of HK$531,353,000 (31 December 2019: HK$1,127,403,000) first against its consolidated general reserve; and for any excess amount, the balance is earmarked against its consolidated retained earnings.
- 18 -
Dah Sing Banking Group Limited
19. Contingent liabilities and commitments
- Capital commitments
Capital expenditure in respect of projects and acquisition of fixed assets at the end of the reporting period but not yet incurred is as follows:
As at | As at | ||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | |
Expenditure contracted but not provided for | 153,231 | 147,096 |
- Credit commitments
The contract and credit risk weighted amounts of the Group's off-balance sheet financial instruments that commit it to extend credit to customers are as follows:
Contract amount | |||||||||||
As at | As at | ||||||||||
30 Jun 2020 | 31 Dec 2019 | ||||||||||
Direct credit substitutes | 610,847 | 563,882 | |||||||||
Transaction-related contingencies | 502,052 | 527,442 | |||||||||
Trade-related contingencies | 772,772 | 967,813 | |||||||||
Commitments that are unconditionally cancellable without | |||||||||||
prior notice | 73,730,734 | 74,428,118 | |||||||||
Other commitments with an original maturity of: | |||||||||||
- under 1 year | 3,824,253 | 3,999,906 | |||||||||
- 1 year and over | 409,447 | 758,023 | |||||||||
Forward forward deposits placed | 15,655 | - | |||||||||
79,865,760 | 81,245,184 | ||||||||||
Credit risk weighted amount | |||||||||||
As at | As at | ||||||||||
30 Jun 2020 | 31 Dec 2019 | ||||||||||
Contingent liabilities and commitments | 1,477,849 | 1,794,624 | |||||||||
(c) | Assets pledged | ||||||||||
As at | As at | ||||||||||
30 Jun 2020 | 31 Dec 2019 | ||||||||||
Trading assets and financial investments pledged to secure | |||||||||||
liabilities | 6,194,006 | 4,600,158 | |||||||||
- of which: under repurchase agreements | 2,002,686 | 686,003 | |||||||||
Amount of liabilities secured | 5,983,401 | 4,597,103 | |||||||||
- of which: under repurchase agreements | 1,987,201 | 671,153 |
The table above shows assets where a charge has been granted to secure liabilities on a legal and contractual basis. These transactions are conducted under terms that are usual and customary to collateralized transactions including repurchase agreements and include assets pledged to cover short positions and to facilitate settlement processes with clearing houses.
- 19 -
Dah Sing Banking Group Limited
19. Contingent liabilities and commitments (Continued)
-
Operating lease commitments
Where a Group company is the lessor, the future minimum lease payments receivable under non- cancellable building operating leases are as follows:
As at | As at | ||
HK$'000 | 30 Jun 2020 | 31 Dec 2019 | |
Within 1 year | 14,643 | 24,891 | |
Between 1 and 2 years | 10,482 | 5,186 | |
Between 2 and 3 years | 2,790 | 2,253 | |
Between 3 and 4 years | 27 | - | |
27,942 | 32,330 |
In addition, the Group has, as a lessee, entered into a number of leases that have not yet commenced. The aggregate lease payments payable under these leases as at 30 June 2020 amount to HK$491,867,000 (31 December 2019: HK$435,610,000).
- 20 -
Dah Sing Banking Group Limited
20. Operating segment reporting
Segment reporting by the Group is prepared in accordance with HKFRS 8 "Operating Segments".
Information reported to the chief operating decision maker, including the Chief Executive and other Executive Committee members, for the purposes of resource allocation and performance assessment, is determined on the basis of personal banking, commercial banking, treasury and overseas banking business. Operating performances are analysed by business activities for local banking business, and on business entity basis for overseas banking business.
Considering the customer groups, products and services of local businesses, the economic environment and regulations, the Group splits the operating segments of the Group into the following reportable segments:
- Personal banking business includes the acceptance of deposits from individual customers and the extension of residential mortgage lending, personal loans, overdraft, vehicle financing and credit card services, and the provision of insurance sales and investment services.
- Commercial banking business includes the acceptance of deposits from and the advance of loans and working capital finance to commercial, industrial and institutional customers, and the provision of trade financing.
- Treasury activities are mainly the provision of foreign exchange services and centralised cash management for deposit taking and lending, interest rate risk management, management of investment in securities and the overall funding of the Group.
- Overseas banking businesses include personal banking, commercial banking business activities provided by overseas subsidiaries in Macau and China, and the Group's interest in a commercial bank in China.
- Others include results of operations not directly identified under other reportable segments, corporate investments and debt funding (including subordinated notes).
For the purpose of segment reporting, revenue derived from customers, products and services directly identifiable with individual segments are reported directly under respective segments, while revenue and funding cost arising from inter-segment funding operation and funding resources are allocated to segments by way of transfer pricing mechanism with reference to market interest rates. Transactions within segments are priced based on similar terms offered to or transacted with external parties. Inter-segment income or expenses are eliminated on consolidation.
All direct costs incurred by different segments are grouped under respective segments. Indirect costs and support functions' costs are allocated to various segments and products based on effort and time spent as well as segments' operating income depending on the nature of costs incurred. Costs related to corporate activities that cannot be reasonably allocated to segments, products and support functions are grouped under Others as unallocated corporate expenses.
- 21 -
Dah Sing Banking Group Limited
20. Operating segment reporting (Continued)
For the six months ended 30 June 2020
Personal | Commercial | Overseas | Inter- | ||||||||||
HK$'000 | Banking | Banking | Treasury | Banking | Others | segment | Total | ||||||
Net interest income/ (expenses) | 806,614 | 564,334 | 307,145 | 243,251 | (64,748) | - | 1,856,596 | ||||||
Non-interest income/ (expenses) | 494,781 | 89,338 | 104,806 | 54,467 | 18,634 | (498) | 761,528 | ||||||
Total operating income/ (loss) | 1,301,395 | 653,672 | 411,951 | 297,718 | (46,114) | (498) | 2,618,124 | ||||||
Operating expenses | (811,981) | (254,547) | (88,540) | (246,094) | 8,707 | 498 | (1,391,957) | ||||||
Operating profit/ (loss) before credit | |||||||||||||
impairment losses | 489,414 | 399,125 | 323,411 | 51,624 | (37,407) | - | 1,226,167 | ||||||
Credit impairment losses | (224,128) | (48,234) | (18,329) | (73,264) | (1,238) | - | (365,193) | ||||||
Operating profit/ (loss) after credit | |||||||||||||
impairment losses | 265,286 | 350,891 | 305,082 | (21,640) | (38,645) | - | 860,974 | ||||||
Net loss on disposal of other fixed assets | (2,829) | - | - | (31) | (7) | - | (2,867) | ||||||
Net gain on disposal of financial assets | |||||||||||||
at fair value through other | |||||||||||||
comprehensive income | - | - | 11,594 | - | - | - | 11,594 | ||||||
Impairment loss on investment in an | |||||||||||||
associate | - | - | - | (200,000) | - | - | (200,000) | ||||||
Share of results of an associate | - | - | - | 411,759 | - | - | 411,759 | ||||||
Share of results of jointly controlled | |||||||||||||
entities | - | - | - | - | 13,580 | - | 13,580 | ||||||
Profit/ (loss) before taxation | 262,457 | 350,891 | 316,676 | 190,088 | (25,072) | - | 1,095,040 | ||||||
Taxation (expenses)/ credit | (43,057) | (58,067) | (52,230) | (4,448) | 8,715 | - | (149,087) | ||||||
Profit/ (loss) after taxation | 219,400 | 292,824 | 264,446 | 185,640 | (16,357) | - | 945,953 | ||||||
For the six months ended 30 June 2020 | |||||||||||||
Depreciation and amortisation | 37,549 | 7,774 | 3,533 | 27,855 | 101,651 | - | 178,362 | ||||||
As at 30 June 2020 | |||||||||||||
Segment assets | 53,477,062 | 67,581,580 | 93,771,649 | 39,357,075 | 5,438,676 | (6,623,442) | 253,002,600 | ||||||
Segment liabilities | 112,139,092 | 44,990,447 | 25,518,628 | 31,594,036 | 17,347,230 | (6,623,442) | 224,965,991 |
- 22 -
Dah Sing Banking Group Limited
20. Operating segment reporting (Continued)
For the six months ended 30 June 2019
Personal | Commercial | Overseas | Inter- | ||||||||||
HK$'000 | Banking | Banking | Treasury | Banking | Others | segment | Total | ||||||
Net interest income/ (expenses) | 869,560 | 620,672 | 359,078 | 248,834 | (57,478) | - | 2,040,666 | ||||||
Non-interest income/ (expenses) | 477,896 | 92,784 | (40,949) | 69,248 | 21,730 | (498) | 620,211 | ||||||
Total operating income/ (loss) | 1,347,456 | 713,456 | 318,129 | 318,082 | (35,748) | (498) | 2,660,877 | ||||||
Operating expenses | (794,974) | (253,510) | (83,810) | (251,145) | 11,428 | 498 | (1,371,513) | ||||||
Operating profit/ (loss) before credit | |||||||||||||
impairment (losses)/ written back | 552,482 | 459,946 | 234,319 | 66,937 | (24,320) | - | 1,289,364 | ||||||
Credit impairment (losses)/ written back | (116,498) | 36,009 | (5,085) | (3,484) | (2,302) | - | (91,360) | ||||||
Operating profit/ (loss) after credit | |||||||||||||
impairment (losses)/ written back | 435,984 | 495,955 | 229,234 | 63,453 | (26,622) | - | 1,198,004 | ||||||
Net (loss)/ gain on disposal of other | |||||||||||||
fixed assets | (2,545) | - | - | 24 | - | - | (2,521) | ||||||
Net loss on disposal of financial assets | |||||||||||||
at fair value through other | |||||||||||||
comprehensive income | - | - | (24) | - | - | - | (24) | ||||||
Impairment loss on investment in an | |||||||||||||
associate | - | - | - | (70,000) | - | - | (70,000) | ||||||
Share of results of an associate | - | - | - | 410,860 | - | - | 410,860 | ||||||
Share of results of jointly controlled | |||||||||||||
entities | - | - | - | - | 12,499 | - | 12,499 | ||||||
Profit/ (loss) before taxation | 433,439 | 495,955 | 229,210 | 404,337 | (14,123) | - | 1,548,818 | ||||||
Taxation (expenses)/ credit | (71,554) | (81,758) | (37,806) | (3,617) | 476 | - | (194,259) | ||||||
Profit/ (loss) after taxation | 361,885 | 414,197 | 191,404 | 400,720 | (13,647) | - | 1,354,559 | ||||||
For the six months ended 30 June 2019 | |||||||||||||
Depreciation and amortisation | 40,258 | 8,519 | 3,270 | 31,927 | 100,409 | - | 184,383 | ||||||
As at 31 December 2019 | |||||||||||||
Segment assets | 53,809,806 | 66,154,676 | 84,671,487 | 38,406,836 | 5,478,972 | (5,115,290) | 243,406,487 | ||||||
Segment liabilities | 108,290,918 | 44,136,433 | 19,835,415 | 30,335,062 | 17,739,136 | (5,115,290) | 215,221,674 |
- 23 -
Dah Sing Banking Group Limited
20. Operating segment reporting (Continued) Geographical information
Geographical segment information is based on the domicile of the legal entities within the Group with business dealing and relationship with, and services to external customers. For the six months ended 30 June 2020 and 2019, no single country or geographical segment other than Hong Kong contributed 10% or more of the Group's assets, liabilities, operating income, or profit before taxation.
- 24 -
Dah Sing Banking Group Limited
21. Additional analysis on claims and exposures
- Gross advances to customers by industry sector classified according to the usage of loans and analysed by percentage covered by collateral
HK$'000 | As at 30 Jun 2020 | As at 31 Dec 2019 | ||||||
% of gross | % of gross | |||||||
advances | advances | |||||||
Outstanding | covered | Outstanding | covered | |||||
balance | by collateral | balance | by collateral | |||||
Loans for use in Hong Kong | ||||||||
Industrial, commercial and financial | ||||||||
- Property development | 5,084,415 | 62.5 | 4,700,618 | 64.6 | ||||
- Property investment | 16,518,677 | 94.6 | 15,972,169 | 97.0 | ||||
- Financial concerns | 6,880,646 | 4.0 | 6,057,400 | 3.0 | ||||
- Stockbrokers | 1,010,334 | 42.9 | 1,585,717 | 28.6 | ||||
- Wholesale and retail trade | 6,341,304 | 91.3 | 6,455,795 | 90.1 | ||||
- Manufacturing | 1,916,351 | 58.9 | 1,978,378 | 59.5 | ||||
- Transport and transport equipment | 2,598,546 | 82.2 | 3,496,770 | 71.9 | ||||
- Recreational activities | 99,736 | 99.9 | 103,724 | 99.8 | ||||
- Information technology | 59,724 | 77.2 | 52,976 | 70.5 | ||||
- Others | 5,733,108 | 74.0 | 4,464,895 | 79.6 | ||||
46,242,841 | 71.3 | 44,868,442 | 72.1 | |||||
Individuals | ||||||||
- Loans for the purchase of flats in Home | ||||||||
Ownership Scheme, Private Sector | ||||||||
Participation Scheme and Tenants | ||||||||
Purchase Scheme | 563,471 | 100.0 | 584,349 | 100.0 | ||||
- Loans for the purchase of other residential | ||||||||
properties | 30,712,053 | 100.0 | 29,864,112 | 100.0 | ||||
- Credit card advances | 3,644,439 | - | 3,761,021 | - | ||||
- Others | 12,906,132 | 50.5 | 13,196,910 | 52.8 | ||||
47,826,095 | 79.0 | 47,406,392 | 78.9 | |||||
Loans for use in Hong Kong | 94,068,936 | 75.2 | 92,274,834 | 75.6 | ||||
Trade finance (Note (1)) | 8,701,810 | 59.5 | 8,815,573 | 62.9 | ||||
Loans for use outside Hong Kong (Note (2)) | 35,464,205 | 61.3 | 35,856,366 | 66.0 | ||||
138,234,951 | 70.7 | 136,946,773 | 72.3 |
Note:
-
Trade finance shown above represents loans covering finance of imports to Hong Kong, exports and re-exports from Hong Kong and merchandising trade classified with reference to the relevant guidelines issued by the HKMA.
Trade finance loans not involving Hong Kong (including trade finance extended by the overseas subsidiary banks of DSB) totalling HK$247,855,000 (31 December 2019: HK$294,310,000) are classified under "Loans for use outside Hong Kong". - "Loans for use outside Hong Kong" include loans extended to customers located in Hong Kong with the finance used outside Hong Kong.
- 25 -
Dah Sing Banking Group Limited
21. Additional analysis on claims and exposures (Continued)
- Gross advances to customers by industry sector classified according to the usage of loans and analysed by percentage covered by collateral (Continued)
For each industry sector reported above with loan balance constituting 10% or more of the total balance of advances to customers, the attributable amount of impaired loans, overdue loans, Stage 3, and Stage 1 and Stage 2 impairment allowances are as follows:
HK$'000 | As at 30 Jun 2020 | ||||||||
Gross | |||||||||
advances | Stage 1 and | ||||||||
Impaired | overdue for | Stage 3 | Stage 2 | ||||||
Outstanding | loans | over 3 | impairment | impairment | |||||
balance | (Stage 3) | months | allowances | allowances | |||||
Loans for use in Hong Kong | |||||||||
Industrial, commercial and financial | |||||||||
- Property investment | 16,518,677 | 49,289 | 43,387 | 3,773 | 89,642 | ||||
Individuals | |||||||||
- Loans for the purchase of other | |||||||||
residential properties | 30,712,053 | 69,804 | 51,450 | 10,763 | 31,472 | ||||
Loans for use outside Hong Kong | 35,464,205 | 456,548 | 448,423 | 199,542 | 133,341 | ||||
As at 31 Dec 2019 | |||||||||
Gross | |||||||||
advances | Stage 1 and | ||||||||
Impaired | overdue for | Stage 3 | Stage 2 | ||||||
Outstanding | loans | over | impairment | impairment | |||||
balance | (Stage 3) | 3 months | allowances | allowances | |||||
Loans for use in Hong Kong | |||||||||
Industrial, commercial and financial | |||||||||
- Property investment | 15,972,169 | 45,985 | 44,910 | 4,721 | 79,461 | ||||
Individuals | |||||||||
- Loans for the purchase of other | |||||||||
residential properties | 29,864,112 | 44,204 | 33,772 | 7,537 | 21,934 | ||||
Loans for use outside Hong Kong | 35,856,366 | 256,544 | 373,852 | 129,588 | 131,693 |
- 26 -
Dah Sing Banking Group Limited
21. Additional analysis on claims and exposures (Continued)
- Mainland activities exposures
The analysis of Mainland activities exposures is based on the categories of non-bank counterparties and the type of direct exposures defined by the HKMA under the Banking (Disclosure) Rules with reference to the HKMA Return of Mainland Activities, which includes the Mainland activities exposures extended by DSB and its Mainland subsidiary bank only.
HK$'000 | ||||
On-balance | Off-balance | |||
As at 30 June 2020 | sheet exposure | sheet exposure | Total exposures | |
1. | Central government, central government-owned entities and | |||
their subsidiaries and joint ventures ("JV"s) | 9,745,738 | 119,527 | 9,865,265 | |
2. | Local governments, local government-owned entities and | |||
their subsidiaries and JVs | 1,283,239 | 276,480 | 1,559,719 |
3. PRC nationals residing in Mainland China or other entities incorporated in Mainland China and their subsidiaries and
JVs | 13,852,168 | 1,366,430 | 15,218,598 | |||
4. | Other entities of central government not reported in item 1 | |||||
above | 2,727,239 | 41,565 | 2,768,804 | |||
5. | Other entities of local governments not reported in item 2 | |||||
above | 1,228,297 | 283,752 | 1,512,049 | |||
6. | PRC nationals residing outside Mainland China or entities | |||||
incorporated outside Mainland China where the credits | ||||||
are granted for use in Mainland China | 12,280,914 | 468,896 | 12,749,810 | |||
7. | Other counterparties where the exposures are considered to | |||||
be non-bank Mainland China exposures | 1,162,015 | - | 1,162,015 | |||
42,279,610 | 2,556,650 | 44,836,260 | ||||
Total assets of DSB and its Mainland subsidiary bank after | ||||||
provision | 236,281,063 | |||||
On-balance sheet exposures as percentage of total assets | 17.89% |
Note:
The balances of exposures reported above include gross advances and other balances of claims on the customers.
- 27 -
Dah Sing Banking Group Limited
21. Additional analysis on claims and exposures (Continued)
- Mainland activities exposures (Continued)
HK$'000 | |||||||
On-balance | Off-balance | ||||||
As at 31 December 2019 | sheet exposure | sheet exposure | Total exposures | ||||
1. | Central government, central government-owned | ||||||
entities and their subsidiaries and JVs | 10,376,553 | 501,429 | 10,877,982 | ||||
2. | Local governments, local government-owned | ||||||
entities and their subsidiaries and JVs | 1,075,406 | 323,331 | 1,398,737 | ||||
3. | PRC nationals residing in Mainland China or other | ||||||
entities incorporated in Mainland China and their | |||||||
subsidiaries and JVs | 13,873,770 | 1,310,785 | 15,184,555 | ||||
4. | Other entities of central government not reported in | ||||||
item 1 above | 2,397,774 | 49,341 | 2,447,115 | ||||
5. | Other entities of local governments not reported in | ||||||
item 2 above | 1,039,800 | 290,552 | 1,330,352 | ||||
6. | PRC nationals residing outside Mainland China or | ||||||
entities incorporated outside Mainland China | |||||||
where the credits are granted for use in Mainland | |||||||
China | 11,912,699 | 405,440 | 12,318,139 | ||||
7. | Other counterparties where the exposures are | ||||||
considered to be non-bank Mainland China | |||||||
exposures | 1,329,873 | - | 1,329,873 | ||||
42,005,875 | 2,880,878 | 44,886,753 | |||||
Total assets of DSB and its Mainland subsidiary bank | |||||||
after provision | 224,615,205 | ||||||
On-balance sheet exposures as percentage of total | |||||||
assets | 18.70% |
- 28 -
Dah Sing Banking Group Limited
21. Additional analysis on claims and exposures (Continued)
-
Analysis of gross advances to customers and overdue loans 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.
The following table analyses gross advances to customers, impaired advances to customers (Stage 3), overdue advances to customers, Stage 3, and Stage 1 and Stage 2 impairment allowances by geographical area.
As at 30 June 2020 | ||||||||||||||
Impaired | Stage 1 and | |||||||||||||
Gross | advances to | Overdue | Stage 3 | Stage 2 | ||||||||||
advances to | customers | advances to | impairment | impairment | ||||||||||
HK$'000 | customers | (Stage 3) | customers | allowances | allowances | |||||||||
Hong Kong | 116,183,769 | 1,079,098 | 580,093 | 393,528 | 609,126 | |||||||||
China | 6,596,783 | 62,662 | 62,662 | 16,742 | 42,585 | |||||||||
Macau | 14,039,137 | 266,294 | 266,294 | 89,687 | 13,606 | |||||||||
Others | 1,415,262 | 2,336 | 5,274 | 995 | 5,987 | |||||||||
138,234,951 | 1,410,390 | 914,323 | 500,952 | 671,304 | ||||||||||
As at 31 December 2019 | ||||||||||||||
Impaired | Stage 1 and | |||||||||||||
advances to | Overdue | Stage 3 | Stage 2 | |||||||||||
Gross advances | customers | advances to | impairment | impairment | ||||||||||
to customers | (Stage 3) | customers | allowances | allowances | ||||||||||
Hong Kong | 113,233,394 | 933,795 | 500,123 | 355,400 | 548,920 | |||||||||
China | 7,940,270 | 64,274 | 64,274 | 11,496 | 50,993 | |||||||||
Macau | 14,800,379 | 46,036 | 177,735 | 13,308 | 22,908 | |||||||||
Others | 972,730 | 5,121 | 7,549 | 993 | 4,568 | |||||||||
136,946,773 | 1,049,226 | 749,681 | 381,197 | 627,389 |
- 29 -
Dah Sing Banking Group Limited
21. Additional analysis on claims and exposures (Continued)
-
International claims
The information of international claims discloses exposures to foreign counterparties on which the ultimate risk lies, and is derived according to the location of the counterparties after taking into account any transfer of risk. In general, transfer of risk from one country to another is recognised if the claims against a counterparty are guaranteed by another party in a different country or if the claims are on an overseas branch of a bank whose head office is located in a different country. Only regions constituting 10% or more of the aggregate international claims after taking into account any recognised risk transfer are disclosed.
Non-bank private sector | |||||||||||||
Non- | |||||||||||||
Non-bank | financial | ||||||||||||
At 30 June 2020 | Official | financial | private | Total | |||||||||
In millions of HK$ | Banks | sector | institutions | sector | claims | ||||||||
Offshore centres | 6,471 | 18,593 | 11,301 | 140,660 | 177,025 | ||||||||
- of which: Hong Kong | 5,320 | 16,523 | 11,300 | 124,337 | 157,480 | ||||||||
Developing Asia and Pacific | 30,685 | 1,064 | 668 | 16,164 | 48,581 | ||||||||
- of which: Mainland China | 21,655 | 900 | 318 | 12,785 | 35,658 | ||||||||
Non-bank private sector | |||||||||||||
Non- | |||||||||||||
Non-bank | financial | ||||||||||||
At 31 December 2019 | Official | financial | private | Total | |||||||||
In millions of HK$ | Banks | sector | institutions | sector | claims | ||||||||
Offshore centres | 5,309 | 19,518 | 10,501 | 135,768 | 171,096 | ||||||||
- of which: Hong Kong | 4,560 | 17,167 | 10,500 | 119,445 | 151,672 | ||||||||
Developing Asia and Pacific | 28,110 | 1,377 | 877 | 16,492 | 46,856 | ||||||||
- of which: Mainland China | 20,533 | 1,297 | 524 | 13,277 | 35,631 |
- 30 -
Dah Sing Banking Group Limited
22. Currency concentrations
The following sets out the net foreign exchange position in USD and other individual currency that constitutes more than 10% of the total net position in all foreign currencies as at 30 June 2020 and the corresponding comparative balances.
The Group did not have any structural foreign exchange position as at 30 June 2020 and 31 December 2019. The net option position is calculated in the basis of the delta-weighted position of all foreign currency option contracts.
At 30 Jun 2020 | ||||||||||||||||
Other | Total foreign | |||||||||||||||
Macau | foreign | |||||||||||||||
US dollars | Pataca | currencies | currencies | |||||||||||||
Equivalent in HK$ millions | ||||||||||||||||
Spot assets | 77,710 | 11,049 | 28,077 | 116,836 | ||||||||||||
Spot liabilities | (56,192) | (12,267) | (25,004) | (93,463) | ||||||||||||
Forward purchases | 54,358 | - | 37,410 | 91,768 | ||||||||||||
Forward sales | (73,637) | - | (40,431) | (114,068) | ||||||||||||
Net options position | 40 | - | (40) | - | ||||||||||||
Net long/ (short) position | 2,279 | (1,218) | 12 | 1,073 | ||||||||||||
At 31 Dec 2019 | ||||||||||||||||
Other | Total | |||||||||||||||
Macau | foreign | foreign | ||||||||||||||
US dollars | Renminbi | Pataca | currencies | currencies | ||||||||||||
Equivalent in HK$ millions | ||||||||||||||||
Spot assets | 68,058 | 17,066 | 11,730 | 9,331 | 106,185 | |||||||||||
Spot liabilities | (48,362) | (15,453) | (11,963) | (8,965) | (84,743) | |||||||||||
Forward purchases | 38,334 | 20,312 | - | 3,906 | 62,552 | |||||||||||
Forward sales | (57,101) | (21,638) | - | (4,347) | (83,086) | |||||||||||
Net options position | (40) | - | - | 40 | - | |||||||||||
Net long/ (short) position | 889 | 287 | (233) | (35) | 908 |
- 31 -
Dah Sing Banking Group Limited
23. | Capital adequacy ratio | |||
As at | As at | |||
30 Jun 2020 | 31 Dec 2019 | |||
Capital adequacy ratio | ||||
- Common Equity Tier 1 | 13.1% | 13.4% | ||
- Tier 1 | 13.6% | 13.9% | ||
- Total | 16.9% | 17.9% |
The capital adequacy ratio as at 30 June 2020 and 31 December 2019 represents the consolidated position of DSB (covering BCM and DSB China) computed on Basel III basis in accordance with the Banking (Capital) Rules. This capital adequacy ratio takes into account market risk and operational risk.
DSB as a locally incorporated bank in Hong Kong is subject to the minimum capital adequacy ratio requirement under the Hong Kong Banking Ordinance. BCM is subject to Macau banking regulations and DSB China is subject to China banking regulations.
24. Liquidity maintenance ratio
Six months | Six months | ||||
ended | ended | Year ended | |||
30 Jun 2020 | 30 Jun 2019 | 31 Dec 2019 | |||
Liquidity maintenance ratio | 49.6% | 45.7% | 46.4% |
The liquidity maintenance ratio is calculated as the simple average of each calendar month's average consolidated liquidity maintenance ratio of DSB (covering BCM and DSB China) for the six/ twelve months of the financial year. The liquidity maintenance ratio is computed in accordance with the Banking (Liquidity) Rules.
DSB as a locally incorporated bank in Hong Kong is subject to the liquidity requirement under the Hong Kong Banking Ordinance. BCM is subject to Macau banking regulations and DSB China is subject to China banking regulations.
- 32 -
Dah Sing Banking Group Limited
FINANCIAL RATIOS | ||
Six months ended | Six months ended | |
30 Jun 2020 | 30 Jun 2019 | |
Net interest income/operating income | 70.9% | 76.7% |
Cost to income ratio | 53.2% | 51.5% |
Return on average total assets (annualised) | 0.8% | 1.2% |
Return on average shareholders' funds (annualised) | 7.0% | 10.7% |
Net interest margin | 1.66% | 1.90% |
As at 30 Jun 2020 | As at 31 Dec 2019 | |
Loan to deposit ratio | 70.5% | 72.3% |
INTERIM DIVIDEND
The Directors have declared an interim dividend of HK$0.08 per share for 2020 payable on Monday, 21 September 2020 to shareholders whose names are on the Register of Shareholders at the close of business on Tuesday, 15 September 2020.
CLOSURE OF REGISTER OF SHAREHOLDERS
For determining shareholders' entitlement to receive the interim dividend:
Closure dates of Register of Shareholders | 11 September 2020 (Friday) |
(both days inclusive) | to 15 September 2020 (Tuesday) |
Latest time to lodge transfers | 4:30 p.m. on 10 September 2020 (Thursday) |
Record date | 15 September 2020 (Tuesday) |
In order to qualify for the interim dividend, all transfer documents accompanied by the relevant share certificates must be lodged with the Company's share registrar, Computershare Hong Kong Investor Services Limited, Shops 1712- 1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong before the above latest time to lodge transfers.
- 33 -
Dah Sing Banking Group Limited
CORPORATE AND BUSINESS OVERVIEW
HIGHLIGHTS
Economic conditions in the first half of 2020 were the worst in many years. In the first and second quarters of 2020, Hong Kong real GDP contracted sharply by 9.1% and 9.0% respectively from the previous year. These quarterly contractions are the steepest on record. Exports of both goods and services plummeted. Domestic demand also weakened markedly, reflecting the serious disruptions caused by the outbreak of COVID-19 and subdued business sentiment. The Hong Kong Government's forecast for real GDP growth for 2020 as a whole has been revised downwards to -6% to -8%, as announced by the Government on 14 August, after taking into account the cushioning effects of the extensive relief measures rolled out by the Government. Mainland economic growth also slowed substantially to 3.2% in the second quarter, though this was much better than the slump in the first quarter with a 6.8% contraction, the first quarterly GDP decline in China for decades. Hong Kong's forecast rates of underlying and headline consumer price inflation for 2020 as a whole have been revised downwards to 1.8% and 0.8% respectively. The labour market continued to deteriorate in the second quarter of 2020, but stabilized somewhat in May and June. The launch by the Hong Kong Government of the Employment Support Scheme also helped counter the headwinds affecting the labour market. The seasonally adjusted unemployment rate increased by 0.3 percentage point from March
- May 2020 to 6.2% in April - June, the highest in more than 15 years.
After substantial falls in the first quarter of the year, financial markets globally stabilized in the second quarter, with US markets in particular staging a strong recovery. Interest rates have reduced substantially, with the Federal Reserve having cut the Fed Fund rate by 1.50% in March. Hong Kong rates, whilst generally moving lower, have been volatile, with HIBOR trading above LIBOR during the first half of the year, although with the gap in interest rates narrowing towards the mid-year.
Under these extremely difficult economic conditions, our profit attributable to shareholders fell by 30.2% to HK$946 million, mainly caused by higher impairment charges on both loans and on our investment in Bank of Chongqing. Underlying business performance weakened, both due to weaker credit performance, and due to a squeeze in net interest margin, with funding costs reduced more slowly than asset yields.
For the first half of the year, a dividend of HK$0.08 per share was declared.
BUSINESS AND FINANCIAL REVIEW
The performance of our banking business in the first half of the year was weaker than last year. Net interest income was materially lower. Net fee and commission income was flat, and trading income was significantly higher, mainly due to funding swap gains with higher Hong Kong dollar rates than US dollar rates in the first half of the year. The reduction in net interest income of around 9% was due mainly to funding costs reducing more slowly than asset yields as market interest rates dropped rapidly in the first half of the year, leading to a contraction in net interest margin of 24bps to 1.66% compared with 1.90% in the first half of 2019. Asset growth was modest, with small increases in the loan book and the securities investment portfolio. However, the benefit from volume growth was not sufficient to offset the decline in net interest margin.
Flat net fee and commission income for the period was encouraging amidst very difficult market conditions. Wealth management, including our broking business, and foreign exchange income, performed well. Growth in operating expenses was modest at 1.5%. Technology remains a major area of investment, and our work in improving our mobile and digital channels was of benefit during the first half due to lower customer mobility amidst the COVID-19 situation. Staff numbers remained relatively stable.
The performance of our wholly-owned banking subsidiary in Macau reported weaker performance in the first half of the year. The lower contribution was driven by a reduction in net interest margin and modest loan growth, as well as notably higher credit costs compared with the first half of last year. The performance of our China subsidiary was slightly better than the same period last year. Our associate company, Bank of Chongqing ("BOCQ"), delivered a similar result to that of the prior period.
- 34 -
Dah Sing Banking Group Limited
BUSINESS AND FINANCIAL REVIEW (Continued)
Amidst very difficult economic conditions in the first half of the year, credit quality deteriorated, with the net credit impairment charge increasing from HK$91 million to HK$365 million. Whilst this is a substantial increase, it should be noted that credit cost in the first half of last year continued to be at relatively low levels. Due to the local economic recession in the latter half of 2019, our credit impairment charge in the second half last year had increased to HK$265 million. In the period, we experienced higher credit cost in our retail banking business and had set aside additional provisions for credit losses for our lending to retail borrowers, and also for lending to small and medium sized companies in our commercial banking business, after reviewing the latest forward-looking forecast of economic outlook and other factors that may affect our credit losses. At this stage, overall credit cost remains manageable, and credit quality, whilst worsening, is still under control.
In addition, following a periodic review of the Value in Use of our investment in BOCQ, we again made an impairment charge against the value of this investment, in the amount of HK$200 million.
The Group generated an annualized return on assets of 0.8% and ROE of 7.0% for the period.
As at 30 June 2020, Dah Sing Bank's consolidated Common Equity Tier 1 ratio and total consolidated capital adequacy ratio were 13.1% and 16.9% respectively.
PROSPECTS
After enduring the very tough economic conditions in Hong Kong in the first half of the year, as we entered the second half of the year, it looked as though there could be some improvement, but at the date of writing we are still experiencing the "third wave" of COVID-19 in Hong Kong, so it is now more uncertain as to how things will develop during the rest of the year.
In any event, we are not expecting a strong recovery in the remaining part of the year. Neither low interest rates, nor deteriorating credit quality are good for our business, but as we demonstrated in the first half of the year, our business, capital and liquidity remain resilient despite the challenges that we have faced so far this year.
All of this makes us more cautious on the outlook for the second half of the year. We continue to expect difficult economic and business conditions in the second half of the year, and will do our best to ensure that our businesses are managed conservatively and remain resilient.
- 35 -
Dah Sing Banking Group Limited
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
During the six months ended 30 June 2020, the Company has applied the principles and complied with all the code provisions set out in the Corporate Governance Code ("CG Code") under Appendix 14 of the Listing Rules, with the exception of code provisions A.4.1 and E.1.2.
Pursuant to code provision A.4.1 of the CG Code, non-executive directors should be appointed for a specific term, subject to re-election. The Non-Executive Directors of the Company are not appointed for a specific term, but are subject to retirement by rotation and re-election at annual general meetings in accordance with the provisions of the Company's Articles of Association.
Pursuant to code provision E.1.2 of the CG Code, the chairman of the board should attend the annual general meeting. He should also invite the chairman of the audit, remuneration, nomination and any other committees (as appropriate) to attend. In light of COVID-19 pandemic and travel restrictions around the world, Mr. David Shou-Yeh Wong, the Chairman of the Board, was unable to attend the 2020 Annual General Meeting (the "2020 AGM") of the Company held in Hong Kong on 29 May 2020 as he was abroad at that time. Mr. Hon-Hing Wong (Derek Wong), Vice Chairman, Managing Director and Chief Executive of the Company, took the chair of the 2020 AGM. Due to the lockdown measures in view of the COVID-19, Mr. Seng-Lee Chan, Chairman of the Nomination and Remuneration Committee ("NRC") of the Company, was unable to come to Hong Kong to attend the 2020 AGM. A member of the NRC of the Company was present and available to answer questions from shareholders at the 2020 AGM.
CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted its own code of conduct for directors' securities dealing ("Directors' Dealing Code") on terms no less exacting than the prevailing required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers ("Model Code") under Appendix 10 of the Listing Rules. Following specific enquiry, the Directors of the Company confirmed that they had complied with the required standard set out in the Model Code and the Directors' Dealing Code throughout the six months ended 30 June 2020.
UNAUDITED FINANCIAL STATEMENTS
The financial information in this interim results announcement is unaudited and does not constitute statutory financial statements.
AUDIT COMMITTEE
The Audit Committee has reviewed with Management the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters including a review of the unaudited interim financial statements for the six months ended 30 June 2020.
REMUNERATION AND STAFF DEVELOPMENT
There have been no material changes to the information disclosed in the Company's 2019 Annual Report in respect of the remuneration of employees, remuneration policies and training schemes.
PURCHASE, SALE OR REDEMPTION OF SECURITIES
There was no purchase, sale or redemption by the Company, or any of its subsidiaries, of listed securities of the Company during the six months ended 30 June 2020.
INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT
This announcement is published on the websites of the Hong Kong Exchanges and Clearing Limited ("HKEX") at www.hkexnews.hk and Dah Sing Bank at www.dahsing.com.
The 2020 Interim Report of the Group containing all the information required by the Listing Rules will be published on the websites of HKEX and Dah Sing Bank in due course. Printed copies of the 2020 Interim Report will be sent to shareholders who have elected to receive printed versions of the Company's corporate communications before the end of September 2020.
- 36 -
Dah Sing Banking Group Limited
BOARD OF DIRECTORS
As at the date of this announcement, the Board of Directors of the Company comprises Messrs. David Shou-Yeh Wong (Chairman), Hon-Hing Wong (Derek Wong) (Vice Chairman, Managing Director and Chief Executive), Gary Pak- Ling Wang (Group Chief Financial and Operating Officer) and Nicholas John Mayhew (Deputy Chief Executive) as Executive Directors; Messrs. Robert Tsai-To Sze, Seng-Lee Chan, Yuen-Tin Ng and Blair Chilton Pickerell as Independent Non-Executive Directors.
By Order of the Board
Doris W. N. Wong
Company Secretary
Hong Kong, Wednesday, 26 August 2020
- 37 -
Attachments
- Original document
- Permalink
Disclaimer
Dah Sing Banking Group Limited published this content on 26 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 August 2020 04:06:18 UTC