BOC Hong Kong (Holdings) Limited (2388) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon. Welcome to the 2021 Annual Results Briefing of Bank of China Hong Kong Holdings Limited. This is Kenny Luo, Company Secretary of BOCHK. In light of the current COVID-19 situation, our presentation will be conducted via webcast and teleconference. We apologize for any inconvenience caused. Let's now kick off our results briefing. Firstly, I would like to introduce our senior executives with us today: Mr. Sun Yu, Chief Executive; Madam Jiang Xin, Chief Risk Officer; Madam Wang Qi, Deputy Chief Executive; Mr. Yuan Shu, Deputy Chief Executive; Mr. Zhong Xiangqun, Chief Operating Officer; Mr. Wang Bing, Deputy Chief Executive; Ms. An Kong, Deputy Chief Executive; Mr. Liu Chenggang, Chief Financial Officer. Today's meeting consists of 3 parts. Mr. Sun, our Chief Executive, will brief you on the implementation progress of the group's strategy. Then Mr. Liu, our Chief Financial Officer, will present the financials and business results for the period. Finally, will discuss our outlook and key priorities in 2022 before the Q&A session. Now I would like to hand over to CE Sun.

Ladies and gentlemen, good afternoon. First of all, I'm pleased to introduce our new CFO, Mr. Liu Chenggang, who just arrived in Hong Kong a few weeks ago. Mr. Liu served in various positions related to finance management and operations within BOC Group for a long time with abundant professional experience. Let's applause to welcome Mr. Liu to join our management team. Now I would like to brief you on the strategic review for 2021. Amid a challenging operating environment, Bank of China Hong Kong seized business opportunities while maintaining stringent risk management. Our new 5-year plan is off to a good start, with steady business progress and solid financial indicators. Profit after tax for the year was HKD 25 billion, with a reduced decline rate of 12.12% year-on-year. Total assets grew 9.6% to HKD 3.6 trillion. The Board has proposed a final dividend of $0.683 per share, including the interim dividend. Our dividend per share for the year will be HKD 1.13, representing a payout ratio of 52%, up 2.4 percentage points year-on-year. We deepened the development of Hong Kong core market and further consolidated our traditional competitive advantages. We maintained our leadership in areas such as new residential mortgages, made arrangement of syndicated loans in Hong Kong and Macau regions, IPO receiving bank and cash pooling business. We amassed new growth momentum. Our Private Wealth AUM grew by 35%. Assets under custody expanded to HKD 1.4 trillion, while our RMB-related client trading volume increased by 35%. We also issued the first HONIA-based certificate of deposit in Hong Kong dollar. We further enhanced our integrated service capabilities. UC Life ranked third in the market by standard new premium, while BOC Prudential Trustee and BOCHK Asset Management recorded steady business growth. We continually enhance our cross-border financial service capability to capitalize on new business opportunities in the Greater Bay area and achieved new breakthroughs. We took the lead in launching cross-border wealth management connect service and facilitating South Bank trading under Bond Connect program, establishing a leading market share. The customer base of GB account opening service grew by 41%, while of cross-border mortgage loan services were comprehensively enhanced. We also became the first bank to promote the Bay Area social security service to help customers enjoy their lives in the GBA. By tapping into corporates cross-border financial needs, we grew our GBA loans by 9.8%. And the loans to innovative technology companies grew by 8.3%. We further refined the Southeast Asian business layout by opening the Yangon branch in Myanmar and the Hanoi representative office in Vietnam, proactively driving our regional business integration. We strengthened client referrals and the mutual brand recognition of BOC Wealth Management, while promoting the mobile banking and IGTV platform. We continued to focus on serving large customers and major projects. Encouraging results were achieved through deepened collaboration with BOC institutions in the Asian Pacific region. Despite the recurring pandemic and political instability in certain countries, of Southeast Asia entities delivered solid growth. Customer deposits and loans increased by 16.4% and 2.1%, respectively. And the net operating income grew by 8.3%. NPL ratio was 2.39%, while overall risk remained manageable. We proactively optimized the RMB business management mechanism and stepped up product and service innovations to cement of RMB business advantages. We achieved strong growth in RMB deposits and loans and maintained a market-leading position. Our RMB clearing transaction accounted for over 70% of total global offshore volume. We launched the PBOC Bio repo business market-making mechanism in Hong Kong, serving as exclusive offshore market maker. We supported the local currency settlement framework between China and Indonesia and made the Takata branch market leader in related business. Our Manila branch and BOC Malaysia became direct participants of SIPS. In addition, of FX or e-trading platform came online and facilitated direct exchange between RMB and local currencies. We upheld a customer-centric principle and deepened digital transformation through constant innovation. We enhanced the development -- deployment of digital technologies, driving the growth in customer numbers and the transaction volumes on our mobile banking platform. We optimized online credit approval procedure for SME loans and launched an ERP cloud service. We also extended the application of blockchain technology to treat financing services, with related transaction amount doubled in the year. We deepened the construction of financial service ecosystems to build our open bank. BOCP customer base exceeded 1 million. BOCP settlement volume increased by 30%. Our virtual bank joint venture, Livi, has successfully acquired more than 200,000 customers. We promoted smart operations and fully leveraged the operating efficiency of our Nanyang regional operations center. We also adopted intelligent risk control and enhanced the efficiency and effectiveness of secure bank operations. Aligning with the carbon neutrality strategies of the nation and the SAR government, we formulated a 5-year sustainable development plan and start up ESG training, promotion and execution. We achieved fruitful results green finance during this year. The green and sustainable loans grew by 3.1x. Green deposits grew by 3.5x. And ESG bond underwriting amount increased by 1.7x. We also launched many innovative products such as Hong Kong's first retail green mortgage scheme first personal green time deposit scheme and the first RMB ESG fund. In this February, we launched the second tranche of sustainable and smart living in green bonds to meet clients' green demand. We strongly supported various financial relief and economic development programs of the local government. Facing a new wave for pandemic since early this year, we further increased our financial service support to SME customers by providing HKD 50 billion credit resources to fight the virus together with the society. We also extended the application period for loan moratoriums on personal mortgage services, cumulatively donated more than HKD 25 million for charitable purposes and provided a series of employee care measures. Morever, we proactively fulfilled our social responsibilities by implementing more than 70 charity projects and more than 90 volunteer events throughout the year. We issued commemorative bank notes of Beijing Winter Olympics, and all net proceeds from it will be donated to local charities. In 2021, we were upgraded to the highest AAA rating by MSCI ESG Research. This is a market recognition of all efforts. This concludes our strategic review. Next, our CFO, Mr. Liu, will walk you through our financial and business performance.

Thank you, CE Sun. It's my great pleasure to join in Bank of China Hong Kong, and I will do my best as the CFO. Now I would like to review on our performance. Our profit after tax for the year was HKD 25 billion, down 10.2%. This was mainly due to the low interest rate environment, which put pressure on margins and a higher base effect as we capture the opportunities to regain on data security disposal in 2020. In spite of this, we achieved solid growth in net fee income while maintaining prevalence in operating expenses at a steady level. We continue to consolidate our mid- to high-end customer base and deepened the business ties with large corporate and institutions through a wide range of services, including e-payment and collection, payroll, cash management and cash pooling businesses. Customer deposits grew by 6.8% to more than HKD 2.3 trillion, with our market share increasing 0.25 percentage points to 15.25%. CASA deposits grew by 4.3% to achieve an average proportion of 71%, up 7 percentage points year-on-year. We closely match the customer needs and strengthen collaboration with BOC growth to capture business opportunities in Hong Kong, cross-border and the Southeast Asian market. Customer loans increased 6.8% to HKD 1.6 trillion, and its market share [ rose ] by 0.42 percentage point to 14.18%, driven by rapid growth in corporate loans and residential mortgages in Hong Kong. Marketing interest rates remained at a low levels in 2021. Average 1-month HIBOR and LIBOR dropped to 75 and 42 basis points, respectively, winning on our margin. In response, we optimized the asset and the liability mix by introducing higher-yielding assets, resulting in 10.1% growth in average interest-earning assets. Excluding the swap impact, NIM for the year was 1.09%, down 24 basis points. It was largely stabilized in the second half of the year, heading down by 2 basis points half-on-half to 1.08%. Capitalizing on vibrant stock market sentiment in early 2021 and Hong Kong's gradual economic recovery throughout the year, we grew the net fee income by 9.5% to HKD 11.87 billion. Among these, investment on the insurance-related fee income increased by 7.3%, driven by securities brokerage and the insurance businesses. Traditional fee business broadly rebounded, with income from credit card, trust and the custody services and the low commission grew by 15.2%, 10.9% and 18.9%, respectively. We consistently enhanced cost management. We will pursue the low-carbon operations and the optimized business procedure to improve cost efficiency, while ensuring enough resources were available for strategic projects. During the year, our operating expenses increased only 0.4%, with cost-to-income ratio at 33.5%, outperforming local peers. We insisted on prudent risk management principles and the strengthened risk management foundation. Our asset quality remained solid. And the NPL ratio at 0.27%, changed from the end of 2020. Credit cost was 0.12%, down 4 basis points year-on-year. Overall provisions were allocated, and the NPL coverage ratio stood at 229%, a relatively high level in the market. Our capital and the liquidity remained adequate, standing about the levels required by the regulator. We properly managed our capital at a sound and a reasonable level, with CET1 ratio at 17.3% and the total capital ratio at 21.44%. Meanwhile, we prudent and dynamically managed the liquidity, achieved stable improvements to our OCR and NSFR. This concludes our results review. CE Sun will now share the group's perspective and the priorities of 2022. Thank you.

Thank you, CFO Liu. Looking into 2022, the international landscape is evolving rapidly and the global economic recovery remains uneven. Shifting monetary policy of major developed economies will benefit the banking sector earnings, but could also result in spillover risks. Despite the pressure of shrinking demand, disrupted supply and weakening expectations, the positive outlook of Chinese Mainland's long-term fundamental remains unchanged. Though the rapid spread of pandemic will create uncertainties for the city's economic recovery, Hong Kong is however expected to achieve continuous growth, driven by the National 14th's 5-year plan and GB development under the anti-pandemic initiatives launched by SAR government. Meanwhile, the RCEP has come into effect and will inject new impetus to regional economic growth. 2022 marks the 10th anniversary of BOC and 105th anniversary of its continuous operation in Hong Kong. At this fresh starting point, we will adhere to our strategic goal of building a first-class regional banking group, strengthen the strategic implementation, uphold strict risk management principle and capture market opportunities so as to achieve high-quality growth. At the same time, we will firmly support the anti-pandemic measures launched by SAR government and Hong Kong MA to enhance our financial services, while taking care of colleagues and ensuring customer safety. We will stand together with the society to navigate this tough times. Amid the challenging environment, we will strive to outperform the market in our core businesses, such as deposits and loans, maintain stable asset quality and the solid risk indicators, improve our margins and expand noninterest income, while enhancing cost efficiency. By achieving these targets, we'll create greater value for our stakeholders and contribute to the economic and the social prosperity and the stability of Hong Kong. That is the end of our presentation. Thank you. We will now open the floor for the Q&A session.

Thanks, CE Sun and CFO Liu. [Operator Instructions] Now like our operator to give us the first question.

Our first question comes from Yafei Kan from Citigroup.

[Interpreted] I see that there is still a downward pressure. How do you see the LIBOR, HIBOR situation? They seem to be increasing. How come there is still pressure for your NIM? And another question concerning the rate hike trend globally. For this year, it is possible that the U.S. will hike rates by 7x in Hong Kong, in raising rates and your NIM. And further, for the asset quality of your bank, it is very, very stable indeed. And it's different from your peers in the industry. Can you share with us about your asset quality, please, for this year?

Thank you for your 2 questions. The first question was about NIM. And I'm going to ask Mr. Liu to answer it. And the second question is about asset quality. I'm going to defer to one of my colleagues, too. Let me answer the first question. About NIM, so you have taken a very detailed look at our NIM. And during Q4, our NIM was 1.06%, a drop of 5 bp. And there were several fundamental reasons for it. Because during that quarter, that was a big demand for loans and also a lot of capital has flown in. And that's why it has really helped our NIM performance. And so we have a positive impact on our NIM. And when we look at our NIM, we have to look at the midterm and the long-term trend. And another point that you're concerned about is the interest rate hike and its impact on our NIM. And also in America, there is a lot of pressure for interest hike. And this is the greatest pressure that I've felt in 4 years. And so for several times, they have already increased their interest rate by several dozen basis points. If you look at Hong Kong situation, the Hong Kong interest rate is also following the increase of interest rate in the U.S. But still, the interest rate movement in Hong Kong depends on liquidity in Hong Kong. And Hong Kong's liquidity is very sufficient right now, whether it is Hong Kong's market interest rate or bank interest rate. And so in the near future, it is going to rise slowly. But on the whole, we believe that increase of interest rate and in -- net interest income as well as NIM performance of banks will be helped in Hong Kong. And if you look at the external factors, increase of interest rate definitely will have a best positive impact on our NIM. But exactly how much of an impact? We have to look at the rate of interest rate hike and also how closely the Hong Kong currency is following the U.S. currency in terms of interest rate hike. And if you look at the bank itself, NIM as well as net interest income actually is affected by our asset structure and our product structure and our asset quality and so on and so forth. If we look at our annual report, if you look at our chart, there is an assumption. There is going to be a certain movement of our net interest income. If you look at this simulated model, it is a static simulated model. And so this is a more -- though for our long-term performance. And assumptions actually could be inaccurate and so there could be differences. And because in Hong Kong, there are large flow wins of capital and so it has affected our NIM performance in Q4. Between 2016 and 2008 -- 2018, you can see that for HIBOR and LIBOR, actually, that has been an increase of 104 as well as 156 basis points. And also, there has been an increase of 25 bp for another category. And also, if U.S. interest rate is increasing very rapidly and definitely, its impact on our NIM and also net interest income will be realized within the year. And so we have to take advantage of the interest rate increase exercise in order to optimize our asset structure and also optimize our net interest income channels. so as to stabilize our expenditure items as well as to enhance our income performance from interest. So that against the backdrop of interest rate hike, we can really very steadily increase our performance for our NIM.

[Interpreted] As for the next question, I'm going to answer that, concerning our asset quality. Thank you very much for your concern of our asset quality. If you look at 2021, our asset quality has been stable and NPL has been 0.27. And the NPL coverage was 229%. And if you look at these 2 indicators, actually, we have outperformed the market. And the credit cost actually has come down by 4 basis points compared to same period last year. So that was the situation in 2021. If you look at 2022, from the beginning of the year to now, you can see that Hong Kong has been experienced the fifth wave of pandemic. And because of the restrictive policies, you can see that for retail and also for tourism, they have been impacted upon by the restrictive policies from pandemic. And also, because of geopolitical pressure and also because of tension between China and U.S.A. and also because of the quantitative easing by central banks, actually, all of these would impede economic recovery. And so we are very much concerned about the changes in credit quality as well as changes in the core performance of our customers. And so we have to increase our risk management. But on the whole, we are very confident that we can maintain NPL performance within market expectations. And also, we're going to take reference from external consultancies. And also, we'll look at our own models so that we can really meet all requirements. And we'll be very prudent and cautious. And for the whole year, we are going to strive to maintain our credit costs to be stable.

[Operator Instructions] Next question, please. We cannot hear you. Your voice is too low. We can't hear you. Please go ahead.

[Interpreted] From HSBC, my name is Gary. I've got 2 questions. Concerning loan costs. If you look at the second half of 2021, you can see that there has been some provision. However, against the backdrop of fifth wave of pandemic, are you going to revise the economic forecast downward? And will that create even more pressure into 2022? And also if you look at credit costs, especially for Stage 2 exposure, you can see that the exposure has increased. And also, in Southeast Asia, the ratio has increased. So can you analyze the credit quality changes towards the end of last year? And also, what is going to be the credit cost movement for this year? And earlier on, Madam Xin indicated that you have already negotiated several obstacles. However, for the Mainland state government, sometimes, the government would require banks to actually concede some of its gains. And so would that kind of request really put pressure on your loans? And would that create pressure on your profitability?

[Interpreted] Thank you very much, Gary, for your question. For question #1, Ms. Jiang will answer that question, and then I will answer the second question.

[Interpreted] Well, thank you. First of all, on loan costs, you had 3 questions. First of all, the ECL, especially for first stage changes. This really reflects last year our ECL modeling, its macroeconomics parameters and factors and our expectation recovery. There had been certain revisions. And in the first stage, there had been some write-back or putting back of the provisioning. So that is for the period. And for the entire last year, for macroeconomic expectations, our judgment on the basis of recovery, we have done. And for this year, as I have mentioned just now, starting from the beginning of the year, we have went through the impact of the new wave of COVID. And also, we see geopolitical tensions. And these hinder economic recovery. And we will continue to monitor the situation closely. And on the recovery of the macro economy and our judgment, we will look at our internal judgments and also external views. And then we may adjust our ECL modeling factors. And the provisions, there may be some changes to that. But overall, the loan cost will be stable for the whole year. As for your second point, that is Stage 2 changes, last year, there had been 2 areas. First of all, because of COVID impacted clients and also industries and the loans we have, after several rounds of lengthening the repayment period, we -- because out of risk management and prudent policies, we have done some arrangements, including alleviation of pressure. And therefore, that would include, for some of the loans, we have adjusted them to the second category. So for Stage 2, there had been new provisionings that has increased provisions. And also for some of the operations, they had come under negative impact. These clients have also been put into the Stage 2. And therefore, there had been some increase in Stage 2 because of these clients being impacted by the factors I've mentioned just now, including COVID. And these include clients or customers in the Southeast Asian regions. And it has to do with the Southeast Asian COVID situation as well as geopolitical tensions. And for the third point, for the entire year, we will be prudently putting in provisions, but we are confident that the loan costs will be kept at a relatively stable level. Thank you.

[Interpreted] First -- secondly, for your question about lowering fees and sharing of profits, now the Mainland and Hong Kong are different. The banks are definitely living up to those social responsibilities, but in different ways. For BOCHK, as I've mentioned, it's been 105 years of continuous operation in Hong Kong and listed bank in Hong Kong and very much a mainstream bank in Hong Kong. And we are steadfast in our social responsibilities and customer orientation. Since the fifth wave of COVID, we have been responding to a government in providing certain reliefs in living up to our social responsibility, and this is core to our ESG policy. Thank you.

Thanks for the answers from CE and CRO. [Operator Instructions]

Our next question comes from Mr. Nick Lord from Morgan Stanley.

I have 2 questions actually. The first is just on costs. And I heard, I mean, obviously, a very good cost performance in 2021. And the commitment to keep costs well controlled in 2022. Could you just -- I think you spoke about efficiency. So could you just tell us -- I'm assuming you -- cost to income is relatively easy to control given what happens on margin. So if you could give us an indication as to what you can do in terms of absolute cost levels in 2022, especially in light of some of the inflationary pressures we're seeing across the world? That would be useful. And then my second question is just back on to that net interest margin. I see the disclosure that you've given in the report and accounts on the impact of a 100 basis point parallel increase and parallel decrease in the yield curve. When we're thinking about that, I guess it's pretty easy what we do with the Hong Kong dollar. I noticed that your benefit on the RMB seems to be the opposite. So you benefit from a move down in the yield curve in the RMB. So I wonder if you could just talk a little bit about that. And I guess in an environment where we've got Hong Kong dollar rising and RMB rates falling, how does that translate into what happens to your NIM?

[Foreign Language]

[Interpreted] Thank you for the questions. So you have mentioned 2 questions. One about cost. The other one about NIM. I'm going to defer this to Mr. Liu.

[Interpreted] Thank you for the question. And thank you for concern over our 2021 cost control and your recognition of it. Basically, last year, against the pressure of income reduction, we basically have instituted a lot of cost reduction policies. And so we have already transformed our net service points. And also, we have gone digital. And also, we have redeployed our branches and so on so that we can stabilize our costs. As for 2022, and we are continuing the strategy of sustainability in our development and in our growth. And basically, we are going to protect our fundamentals and we are going to keep our expenditures within our means. And so basically, on one hand, we have to invest more into digitalization. And that, of course, would compress some of our fees, traditional fees. And also for carbon neutrality measures, they will also increase our cost. But at the same time, we are going to optimize our savings and deposits in order to support increase in expenditure in other areas. Basically, we are going to go more digital. And also, we're going to streamline our procedures. And we are going to redeploy our net points and online points and also redeploy our branches and so and so forth in order to reduce cost. So that our investment as well as our output can continue to outperform the market so that we can continue to maintain our market-leading position. And in the long run, our cost is going to be kept within 35%. As for the other question, it's also about NIM again. And earlier on, I have already reported to you the interest hikes between USD as well as HKD. As for RMB, actually, there are 2 parts. And you can see that RMB's main feel is on the Mainland. And if you look at the People's Bank, its main concern really is to maintain liquidity and also to continue to maintain overall volume and also to continue to reduce financing costs overall. So that is the situation within the Mainland. However, there is an offshore part to it. For offshore, and there is going to be some different treatment because offshore RMB is going to be more affected by international market as well as geopolitical tension. And also, it will be more affected by USD as well as HKD interest movements. If you look at our interest sensitivity exposure analysis, you can see that if interest goes up, actually, it's going to help us because we are going to make use of various currencies in order to optimize our NIM performance. And also, our growth definitely will still continue to be better than USD as well as HKD's situation. The RMB still will outperform USD as well as HKD situation. And so we are going to optimize our NIM situation, using full advantage of that.

[Operator Instructions]

Our next question comes from Jemmy Huang from JPMorgan Taiwan.

[Interpreted] I've got 2 questions as well. Also about NIM and the other one is about market. I'd like to ask about USD NIM. Just now Mr. Liu said that he used a static analysis model. But how can we interpreted it properly? 2016, you said that it was a positive impact. But how come in 2022, it became a negative impact? And so what has accounted for this kind of difference? And so why you say that the impact has changed from positive to negative? As for asset quality, for Hong Kong, in Eastern Europe and also in Russia, you've got no operation. However, if you look at your corporate customers, is it possible that because of the tension in Eastern Europe, some of your corporate customers might be impacted on? And so if that is the case, has it been reflected in your ECL assumption? So if you look at individual corporate customers of yours, have you already taken into account a possible impact from Eastern Europe tension?

[Interpreted] Thank you, Jeremy, for your questions. Mr. Liu will answer the NIM question. As for asset quality, Ms. Jiang will answer that question.

[Interpreted] Well, thank you for your questions. The analysts are very deep in their perception of the issues. Now first of all, concerning the sensitivity analysis, as you have mentioned just now, there are certain factors and changes and impacts to that, including the rate hikes. It provides us with a space and opportunity, especially for assets. And our revenue thereof, it is a positive impact. In different periods of time, our asset structure would be adjusted and changed. For example, bonds investment, it would in terms of asset be an increase for us. Now rate hikes in terms of the NIM, we will have to look at the matching of the asset and liability. For example, our CASA deposits is the biggest part of us. And providing with basic deposits for our customers, the sensitivity actually would be different. And we have different sensitivity models for them. Out of prudence and regulatory requirements, for this kind of fixed deposits, we will change or adjust the interest rate according to the prevailing interest rates yearly. But actually, this may not be so. Some of the customers will change some of the deposits to fixed deposits to increase the income. And the sensitivity is actually not as sensitive as the market interest rates. So we have to be balanced in that approach. Of course, we have different assumptions. As we adjust the assumptions, it will yield different results for the analysis. So whether for Hong Kong dollar, for U.S. dollar, any rate hike is positive for us overall. But through different financial products and tools, we will be able to adjust well our configuration so as to maximize on any NIM opportunities.

[Interpreted] As for your second question, about asset quality, you talked about the geopolitical tensions and its impact on our business as well as some of our customers or credit customers impact. At present, from what we can see is that our credit risk is highly controllable. And for our customers, of course, things are changing, but the impact had been minimal. And we will continue to closely monitor how the geopolitical situations are affecting the market, and we'll put in the right measures. Where there are changes, we will adopt the relevant measures to meet those changes. Thank you for your question.

Our next question comes from [indiscernible] from CICC.

[Interpreted] situation in Hong Kong? And how does it impact your whole year expectations on loans? Secondly, on the property market of Hong Kong, as the U.S. increase interest rates, it may impact the local property market, its demand and its pricing. So for 2022, how do you think that this will be affected?

Thank you for your question. And the first question will be answered by Mr. Wang Bin. And the second question will be answered by Kung Yeung, Vice President.

[Interpreted] Last year, global economy was gradually recovering. And in Hong Kong, there has been a reversal of 2 years of continuous negative GDP growth. And so overall, there has been an improvement. And overall, the loan situation has improved by 3.8%. That has been an increase of 1%. And in doing our loans, we are very much concerned about our corporate performance as well, so our corporate structure changes. Most of our customers are from Hong Kong and also high-quality customers from Southeast Asia. And our situation in this regard actually has outperformed our peers. And also, we are maintaining market-leading position. And so far, the entire 2022, our loan performance is going to be great and the momentum is going to be back. Now for Q1, because we are already at the end of March, in Q1, our loan growth actually has maintained its good momentum. And for further details, I'm going to give them to you in our Q1 report. As for -- in 2022, the pandemic is still fluctuating and there is a geopolitical tension. And so pressure will continue. And we'll continue to pay attention to external environment changes. And also, we are going to do very good risk analysis. And earlier on, a mention has been made of our risk management measures. We believe that with Hong Kong's anti-pandemic measures taking effect, and especially with the vaccination rate going up very obviously, and also with the support from the Mainland government and the central government, and with this good performance, the banking sector will continue to benefit and will continue to improve its performance. And in Greater Bay Area, and assuming that we are able to manage our risk properly, we'll continue to outperform the market and we'll continue to maintain growth at a high to medium rate. As for external macro environment, indeed, it is fluctuating and uncertain. If you look at Mainland China, Mainland China is also exercising very prudent fiscal policies. And also, it has optimized its taxation structure and also increased investment in order to protect the growth of macroeconomic growth so as to maintain 5.5% growth so that it can maintain its steady growth. In Hong Kong, the financial budget has already been announced. And it's got $170 billion worth of economic boosting measures. And we believe that all of these are going to take effect and it's going to fuel economic recovery. In ASEAN, the pandemic is easing. And IMF forecast for ASEAN's growth in 2022 actually is still quite optimistic. And so the market prospect is looking good. And we believe that there are several market opportunities as far as offset development because it can ensure the enhancement of regional synergy being cultivated. And Hong Kong can continue to play a leading role so that we can achieve synergy with Southeast Asia. And also, we can work very closely with New Zealand, Sydney, Tokyo and Singapore so that we can interact with these territories and areas very well, and we can make use of asset impact and we can make use of the opportunities coming from cross-boundary investment so that we can further leverage business opportunities to develop our business in the market in Southeast Asia and in Hong Kong. And if you look at our 3 major economic areas, our Great Bay area as well as the Beijing, I believe that the [ northern populous ] area is going to bring about a lot of opportunities. And we can expect that there will be a lot of larger warehousing projects as well as infrastructural projects. And we're going to provide a lot of financing services for these. And the second opportunity is RMB business. And this is once again another advantage of ours. We are going to study the possibilities coming out of RMB business. And we are going to continue and enhance our cooperation with state enterprises as well as central government enterprises and to answer to customer needs and also to increase the scale as well as volumes or RMB alone. And certainly, we're going to increase our input into green economy as well green financing. Hong Kong is going to be a green financing capital. And so there are 4 major areas for low-carbon mode of operation. And so definitely, we are going to participate in that. And in terms of new materials and also new energy and also the relevant industry, we are going to provide a lot of financing services for these. And at the same time, we will continue to work very closely with relevant Hong Kong departments in order to study financing services for carbon market-related operations and businesses so that we can fully leverage the development of Hong Kong as a green and low-carbon business capital. And thirdly, we are going to grasp business opportunities coming out of digitalization. And we are going to make use of integrated circuit, the latest development in that area, so that we can fully leverage our advantages as a mainline mainstream bank. Also, we are going to optimize our services for SMEs. And also, we are going to work very closely with incubation businesses so that we can work very, very closely with potential customers. So we are very confident that in 2022 and 2021, we can still maintain a very high single-digit growth in loans.

Thank you very much again about the property market and the interest rate. Property market is very important for Hong Kong. The interest rate, of course, is an important element that affects market sentiment. But overall, what impacts the property market and our mortgage business is a combination of many factors as we don't know. The market in 2021 did very well in terms of price and volume. We saw a 3.3% increase in price and a transaction volume of over 96,000, which is 31% over the year before. This has led to a 12.4% growth in our mortgage business, which is faster than modest 9.8%, allowing us to maintain our #1 position. And that is also supported by other factors, which included the extended use of our instant valuation service through API and increased popularity of applications via electronic channels, which had gone up as a result of the introduction of our green mortgages as that is also paired up with our online applications. As for property prices, we've seen that during the past 2 years, the market had been affected by various factors, including some of that which were quite unforeseeable. And the range of price fluctuation has been within 7%. According to government's number, up to February, residential housing prices had dropped by about 2.9% versus last year and about 4% versus historical high, which happened last September. But against the end of 2020, there's still an increase of 0.6%. This indicates that the price continues to hover around a level that is close to the historic high range, rather resilient despite the various market conditions. Looking ahead, I think the property market will continue to see challenges from COVID, geopolitical issues, the Fed stepping up its pace on a monetary policy normalization and increased volatilities in global financial environment, et cetera. This would trigger risk conversion sentiment, which will negatively affect prices. At the same time, the market will also benefit from what the Hong Kong governance many measures to boost the economy, the plan to gradually ease the pandemic restrictions and the increase in maximum property value that is eligible for mortgage insurance program. In addition, we see that the short-term supply continues to be on the tight side. Now I mean, the supply for properties, residential properties. And given that there is ample liquidity in the Hong Kong's banking system, an expectation that the Hong Kong rate hike will lag the U.S. dollar interest rate hike cycle, the property market for 2020 is projected to be -- remain stable. And the transaction volume is expected to gradually pick up again. Now mortgage has always been one of our strategic businesses. We'll continue to upgrade our products, services and channels, including our Home Expert app, which connects to many other service providers in the home buying industry. We'll continue to enhance our cross-border mortgage services, too. And we aim to be customers' #1 choice. I hope that answers your question.

Thanks for the answers from DC Wang and Ann. Due to the time limit, I would like to give the last opportunity to online questions. I noticed that several analysts asked about the asset quality of China property-related loans. [Foreign Language]

[Interpreted] Yes. Let me talk about the Mainland asset quality for the property market. We have always been careful about the asset quality of the Mainland property market. We have always been prudent. And we have been closely monitoring the situation. And through the participation in syndications, we have been controlling the risk thereof. As of the end of 2021, our customers is, in total, 6.7% of our total loans to the tune of 106.5 billion. And according to the 3 red lines, all the greens would be 82%, yellow category, 18%. We have no red category customers. As for nature of company, 77% SOEs, and private companies, 23% of total. And investment category customers is 71%. And you can see that for our customers, overall, the businesses being in the coastal, first and second-tier cities and also the GBA area and the leader companies in the industry, these are the main profile of our customers. We have no delayed payments during the period. We will continue to closely monitor the operation situation of the sector and also the policies thereof. And we will be closely liaising with our parent company concerning the alignment of our loan policy for this sector. We will dynamically inspect our customers' credit situation so as to calibrate accurately our credit rating and take relevant measures where appropriate.

Today's annual result briefing has come to an end. Should you have any further questions, please contact our Investor Relations team. Thanks for your participation, and see you next time. Bye-bye. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]