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

Ladies and gentlemen, good afternoon. Welcome to the 2022 Annual Results briefing of BOC Hong Kong Holdings Limited. I'm Kenny Luo, Company Secretary of BOCHK. To...

[Foreign Language].

We have with us today. Mr. Sun Yu, Chief Executive.

May I stand up?

Madam Jiang Xin, Chief Risk Officer; Mr. Liu Chenggang, Chief Financial Officer; Mr. Xu Haifeng, Deputy Chief Executive; Mr. Chan Man, Deputy Chief Executive; Mr. Xing Guiwei, Deputy Chief Executive-Designate. Today's meeting consists of 3 parts. Mr. Sun, our Chief Executive will brief on the implementation progress of the group's strategy in 2022. Then Mr. Liu, our Chief Financial Officer, will present our financial and business results. Finally, CE Sun will wrap up with our 2023 outlook and key priorities before the Q&A session. Now I would like to hand over to CEO, Sun.

Hello. Okay. So good afternoon, ladies and gentlemen. Thank you for joining us today. After 3 years of pandemic, I'm so pleased to meet our analysts face to face without wearing a mask. First of all, I would like to take this opportunity to introduce our new Deputy Chief Executives, Mr. Xu Haifeng and Mr. Xing Guiwei. Both of them have served on various important managerial positions of Bank of China Group in the Mainland and abroad for a long time. I believe that the abundant banking experience will further strengthen our management team. Now I would like to brief you about the strategic execution review for year 2022. Amid the complex operating environment of last year, we continue to pursue progress while ensuring stability. We strive to stabilize profitability, refine of infrastructure development and manage all types of risk. These efforts were rewarded with multiple improvements in financial performance and steady enhancement in growth quality. Profit after taxation for the year reached HKD 29 billion, up 16.2%. The Board has proposed final dividend of HKD 0.91 per share. Including the interim dividend, the dividend per share for the year will be HKD 1.357 increasing by 20.1%. The payout ratio is 53%, up 1 percentage point. We continue to strengthen our integrated service capabilities and made fresh contributions to Hong Kong's economy. We further cemented our traditional business advantages in the residential mortgage, syndicated loan, cash pooling, IPO receiving bank and RMB businesses. We also deepened the transformation of retail banking and enhanced the cooperation with government entities. Our Private Wealth customer base grew by 32%, and the Private Banking AUM increased by 13%. We captured opportunities in financial market business to grow our RMB transaction volume of treasury business by 51%, while enhancing our green financing service capabilities. BOC Life retained its market-leading position of integrated service businesses such as asset management and trust and custody services, all achieved solid results. Cross-border finance leadership is our core strength and the foundation for the GBA business development. We continued to optimize relevant products and services, including GBA account opening, Wealth Management Connect, GBA loan for home purchases and GBA payments. The cumulative number of new accounts under GBA account opening scheme grew by 22%. We also led the market in cross-boundary Wealth Management Connect business in terms of both total accounts opened and the volume of funds remitted. We facilitated Hong Kong's development into our international innovation and technology hub, growing our GBA corporate loans by 4.7% and a step up of support to innovative tech companies with loan growth of 6%. Through actively promoting financial connectivity we established a leading market position in terms of Bond Connect trading volume and the Stock Connect settlement volume. We deepened of development as a regional headquarter, enhanced the differentiated management model of our Southeast Asian entities and captured opportunities from [ ASP ] to strengthen regional synergies and collaboration. During the year, our Southeast Asian entities made solid business progress and enlarged their contribution to the group, growing customers' deposits, customer loans and net operating income by 13.8%, 0.4% and 27.6%, respectively. Overall risk remained manageable with NPL ratio standing at 2.49%. We continue to build our regional brand and enhance customer referrals, while driving digitalization and improving effects. The transaction volume of RMB-related treasury business rose by 65%, while the number of mid- to high-end personal customers grew by 6%. We continue to consolidate our RMB franchise by strengthening internal collaboration and seizing business opportunities. We maintained leading positions in RMB deposit and loan businesses, RMB funds number and newly underwritten RMB insurance policies. We saw rapid growth in cross-border RMB settlement volume and RMB-related treasury business transactions and further sharpened our competitive advantage as an RMB market maker. We consolidated the market leadership of RMB clearing business in Hong Kong. Meanwhile, BOC Malaysia and our Manila branch, grew their RMB clearing volume by 42% and 15%, respectively. To enrich of RMB products and supporting services, we launched the RMB One promotion on the integrated wealth management product. In addition, we played the active role in researching digital currency applications and took the lead in launching e-CNY exclusive experience events. We reinforced our tech foundations and promoted the building of smart platforms, data platforms, open platforms and cloud platforms. As great believers in the concept of openness and sharing, we deepened the development of financial ecosystems for home purchase, education and wealth to improve our online service capabilities. Transaction volume of our mobile banking and corporate online platforms rose by 10% and 17%, respectively. The customer base of BOC Pay increased by 20%, while the settlement volume of BOC Bill went up by 6%. Our virtual banking joint venture Livi actively rolled out insurance agency, SME and wealth management businesses. We deepened our intelligent operations by promoting digitalized automated and smart reform of the operations flow while further expanding the capacity of our regional operations center in Nanyang. We promoted sustainable development through innovation and collaboration and step up financial support to green industries such as clean energy, green buildings and green transportation assisting our customers in low carbon upgrading and transformation. Our green and sustainable loans increased by 155% where new green deposits rose by 31%. Always seeking to create win-win results, we became a cornerstone member of the alliance for Green commercial banks, signed a strategic cooperation agreement with Guangzhou Emissions Exchange and were invited to be an inaugural member of the Hong Kong International Carbon Market Council. We have a set of target of carbon-neutral operations by 2030. Putting BOC values into action, we provided financial support to ease the difficulties faced by SME customers and launched extensive charitable activities to serve people from grassroots communities with a focus on disadvantaged groups and used development. During the year, we received the AAA ESG rating from MSCI for the second consecutive year and were named market leader for ESG and CSR in Hong Kong by Euromoney. This concludes our strategic review. Next, our CFO, Mr. Liu, will walk you through our financial and business performance, please.

Thank you, CEO Sun, good afternoon, everybody. In 2022, our profit after taxation increased 16.2% to HKD 29 billion. We do advantage of rising market interest rates and favorable financial market conditions to grow our net interest income and net trading gain. Thanks to stringent risk management, our impairment charges remained stable. In respond to the market trend of time deposit migration, we deepened the product and service innovation, actively expand our e-payment collection casual cash management and cash pooling and strengthen the customer interaction. We continually refined our pressing mechanism and struck a balance between deposit rate and volume. As a result, our customer deposits grew by 2% to HKD 2.38 trillion increasing our local market share to 15.4%, up 15 bps. Our capital deposit ratio was 52%. We [indiscernible] on opportunities in the Hong Kong, GBA, Southeast Asia and overseas markets by strengthening internal collaboration and meeting diverse customer demands with integrated services. Our customer loans increased 3.2% to HKD 1.65 trillion, taking our market share to 15.11%, up 93 bps. Within this, corporate loans for use in Hong Kong grew by 10.2%, while loans for individuals increased by 6.2%. Riding on the REIT hike cycle, we proactively managed our assets and liabilities in order to expand the loan to deposit spread and enhance the yield on fixed income bonds. Adjusted for swaps impact, our net interest income increased by 28.6% to HKD 42.4 billion. Our NIM widened 27bps to 1.36%. Specifically, the second half NIM reached 1.59%, up 46 bps up on half, a weaker economic environment with our net fee income, which dropped by 19.9% to HKD 9.5 billion. In the second half, as the pandemic control measures were oddly relaxed, our fee income from insurance credit cards currency exchange and trust and custody recorded a good recovery. We efficiently allocated resources by optimizing our cost base and pursue low-carbon operations to meet the basic operating needs and ensure strategic implementation. As a result, our cost-to-income ratio declined by 2.2 percentage points to 31.3 percentage, continuing to outperform local peers. We remain committed to strict risk control and strengthen risk management foundations, maintaining solid asset quality. The NPL ratio was 0.53%, up 7 bps from the end of June. Credit cost for the full year was 0.15%, up 3 bps year-on-year. Total loan impairment allowances accounted for 0.7% of total customer loans, up 8 bps. It further increased our capability to withstand potential risks. Our capital position was further strengthened by profit growth. The CET1 ratio and the total capital ratio increased to 17.55% and 21.56% respectively. We maintained the healthy liquidity with steady improvement to our LCR and SFR with an average of 164% and 130% in the second half of the year. This concludes our 2022 annual results review. CE Sun will now share the group's outlook and the priorities for this year. Thank you.

Thank you, Mr. Liu. Looking into 2023, slowing global economic growth, potentially lingering geopolitical conflicts and more volatile financial markets, we imposed challenges for banks risk management. At the same time, the Chinese government will implement stronger pro-growth policies and achieve economic recovery. The national opening up strategies such as Belt and Road initiative, RMB internationalization and the development of the GBA will be further deepened. Moreover, the Hong Kong subgovernment will strive to enhance Hong Kong's comprehensive competitiveness and leverage its strengths to serve the needs of the country. Hong Kong will play a more prominent role as a super connector in regional economic development and collaboration within the ASAP framework. In addition, the full reopening of the border will boost economic interactions between the Mainland and Hong Kong, creating opportunities for the local banking industry. 2023 marks the crucial midpoint of our 5-year development plan. Staying true to our strategic goals, we will strive to pursue a sustainable development in a solid manner with a focus on building up of corporate culture and talent base. We will continue to consolidate our core competitiveness, enhance our regional and integrated service capabilities and push for high-quality profit growth. We will strengthen infrastructure construction, buildup of digital capabilities and endeavor to make new breakthroughs in optimizing of customer and business mixes. We will further reinforce the overall risk management and firmly uphold the risk bottom line so as to safeguard of operations. We strongly believe that with the support of our constitutions of society and the concerted efforts of our entire staff, Bank of China, Hong Kong will record achievements in the journey towards building a first-class regional banking group and further contribute to Hong Kong's economic prosperity and the improvement of people's livelihood. This is the end of presentation. Thank you. You are welcome to make any questions.

[Interpreted][Operator Instructions]. Next, we will have a Q&A session. and we will be conducting this part in Chinese. Shall we start? Ladies first, the second row, the lady over there.

[Interpreted]. Winnie Wu from Merrill Lynch. A couple of questions. First of all, concerning the worry in the international financial market and that is Credit Suisse in Europe and some of the U.S. banks would be situation seep over to Hong Kong. And also, what about the mark-to-market loss U.S. dollar bonds, how would that impact our balance sheet and to what extent? And also, whether it is in Hong Kong or overseas, Southeast Asian business, would they be affected by rate hikes? Will there be any quality of asset impact, please?

[Interpreted] Thank you for your question. So I will ask my colleagues to respond to your question. First, about the fluctuations in the banking systems globally and also about the Southeast Asian market. I will ask our Madam Jiang Xin to respond. And the second question will be answered by Mr. Liu.

[Interpreted] We have noticed a very high interest environment, and there are a lot of fluctuations in the financial assets. And also, there is instability in liquidity globally. And we have also seen some measures taken by the regulators to make sure that the liquidity level is safe for the banking system. And we can see that the orders of the banking system has been recovered. And we can see that the situation in Hong Kong and the neighboring market, as we know, that we always adopt a very prudent policy, especially for the liquidity and asset quality. And the regulator also require a minimum percentage for our capital. And we have reserved enough buffer to respond to the risks. And all the risk control mechanism is very mature in Hong Kong. And for BOC, Hong Kong, our credit line as well as our asset allocation in the region are within our risk control mechanism and our risk exposure, mainly focused on Asia market. And most of our clients are major enterprises with very stable financial situation, and the risk is within our control. But of course, we will keep a close eye on the market situation and identify any potential risks to make sure that we can have a stable operation. For Southeast Asia, our asset exposure accounts for a very limited part of our total asset. And for our asset quality in Southeast Asia market, we pay more attention to those clients who suffer from the cancellation of COVID-supporting policies. For some countries, they will cancel their allowance and supporting policies for their companies. And we would say that the overall risk is still within control. So for 2023, we will see some pressures for the asset quality in Southeast Asia, but overall, it's within control. Next is about debt investment. In the year 2022, interest rate hike has been a key word and is a coin with 2 sides. First, our NIM and interest income continue to enhance. And at the same time, it poses a pressure for our existing assets. And as you have mentioned, we have seen some incidents coming from the European banks and U.S. banks. But we have a very mature mechanism. Actually, in the year beginning, our Board has already assessed the risk of the interest rate hike. And we have prepared ourselves well. There are 2 parts: the first one is to reduce risk; and the second one is to stabilize the market considering the fluctuations. Our debt investment scale actually has been reduced. We have reduced also the credit investment. And we can see that the 1/4 of our investment focus on the government bonds, and we have also reduced our interest swap and foreign currency swap size. We had done some hedging, and we have also reduced the size. So our interest risk and the credit risk have been under control, and we have controlled the impact of risk on -- based on the size of our investment in debt. And our investment accounts for HKD 1 trillion. RMB accounts for 29% of the total investment. And we can see that our yields rose by 73 basis points. Our duration of investment has been reduced. And if we look at the total market, our duration is within 1 year. And our capital sufficient rate is 21.5%, up by 12 basis points. So we can say that we have undertaken the risk in the recent accidents and turned it into the interest income increase. And for the first half of the year, we believe that the interest hike would be coming to an end, and the bond investments will be stabilized. And now the yields for data portfolio investment is standing at a very high level, which is beneficial to us. No matter how volatile the interest rate is, it is very important for us to strike a balance between the asset and debt. And we have learned from the lessons of other banks, and this is the way for us to control the risk and to enhance the returns. So we believe that for 2023, we will continue to see a stable increase for our debt securities investment.

[Interpreted] Gentlemen in the second row?

[Interpreted] My name is [indiscernible] from HSBC. I have 2 questions. The first one is about the dividend payout ratio has risen to 53%. And we believe for 2023, the overall prospect is better than that of 2022. And -- but we have not seen a recovery for loans demand. So how do we see the capital lease? And what is the overall prospect for the enhancement of our dividend payout when compared to the major banks in Hong Kong or in the rest of the world? I can see that the dividend payout is already higher. And secondly, about the opening up of the Chinese market and also with the rest of the world. So do we see any substantial inflow of capital? Or does that stimulate loan demand and also for wealth management products.

[Interpreted] So 2 questions. First of all, on dividend payout. My colleague will answer that question. And then the next question, I will help answer that -- the next question, I will help answer that question.

[Interpreted] Yes, concerning dividend payout, we have always been very steadfast in our dividend payout policy. We want there to be a long-term return for our shareholders. And as mentioned just now, in the 2022 rate hike cycle and with our profitability rising and at the same time, we were able to control our risk, and we were able to increase our capital returns. And final dividend was HKD 0.91. And it is a 20.1% rise. For the whole year, it is HKD 1.35. So we have lived up to that dividend promise. And it is 53% payout ratio, and it is 1% up from before. As mentioned, our policy for dividend payout is stable, and it is between 40% to 60% band for our payout ratio. And at the same time, we are cognizant of regulatory requirements and also our own situation as well as future business growth because we -- given that there are jitters and volatility in the market, we have to keep our capital adequacy. With good capital adequacy, it would raise our capability to withstand risks. And that, at the same time, we will be raising our profitability and at the same time to live up to our promise to our shareholders to raise returns. Now for macro situation, 2022 was a difficult situation. But from a bank's point of view, we have been proactively making all sorts of preparations. Case in point, for example, for ETF Connect and other connects, we have been making measures as well. We have been optimizing our products. And with 1,400 new accounts opening and also with validation of the identities of opening up of these accounts, even though 2022 was a difficult year. But in GBA, we were be able to grow our business. Now with the border opening this year, we have had a series of promotions and marketing campaigns from the customers' point of view. We have grasped certain opportunities. From January to end of February of this year, for cross-border payment, it was 100% growth. For credit card expenditure, it was 75% growth. And cross-border customers, it was an increase of 3x for insurance policies. And for GBA account opening service and cross-border customers increased by 1.4x and 1.3x month-on-month, respectively, with -- and also, there was a -- in the first 2 months, it was already a restoration to pandemic levels in terms of cross-border accounts opening numbers. So these figures show you that there is synergistic activity and also optimal allocation of our resources as well as products and service innovation and also synergistic efficiency. And we continuously expand the business scale and market consolidate our position as a first choice cross-border bank. We continue to provide products such as Wealth Management Connects, GBA accounts opening, GBA loan and mortgages and on 3 major service scenarios, including transportation, shopping and F&B. We drive cross-border business volume with our payment service for -- payment service-first strategy and enrich our RMB product choices [indiscernible] the leading-edge capability in the GBA area. And we use a cross-border finance, our key product for our corporate business development in GBA. And we actively participate in the construction of Northern Metropolis of Hong Kong as well we have a one-stop integrated service platform for our debt financing, equity and capital market. We built a green plus product system to meet the demand of GBA customers for green financing to expand our business in the GBA. So in the first 2 months, you see for our customers, there had been a business volume, there had been an increase. And this year, even though the market will have certain challenges, but overall sentiment is better than last year. As mentioned, the border is now open. And a number of businesses with benefit: one, insurance, trading and also credit card and also in management of balances. So all these will bring on better revenue and profits. So this will be helpful. Now Gary just now asked about apart from people traffic. What about capital flow. Now our observation is, as the border opens, visitors to Hong Kong, it had increased. And also cross-border trading had also increased and also cross-border accounts opening had also increased significantly. So for the different commercial activities of our customers for their capital flow, we provide services to them very closely. Our business there is, as mentioned, growing normally. At present, we do not see any abnormal inflow of capital into Hong Kong. We don't see that.

[Interpreted] Next question. In the middle there, the gentleman in the suit.

JPMorgan, Jemmy. I have 2 questions in the main, first question concerning loans. Last year, it was about 3% growth. And that seems to be lower than the mid-single-digit growth expectation it seems. And secondly, after the border opening, there had been going back to normalcy for a lot of businesses. So how do you see the loans grow for this year? And the growth for this year would come from domestic Hong Kong or would it be the weaker sectors last year? Do you see some rebound in those sectors for this year bringing on growth? And then second question concerning asset quality. Just now we saw there may be certain deterioration of asset quality. But compared to peers, it is still in a good position. But at the same time, we see certain supportive measures in the Mainland and also the situation of our own customers. How do you see this year? Do you see that this will be, compared to 2022, more or less the same in asset quality?

[Interpreted] Jerry (sic) [ Jemmy ], thank you for your question. For the loan growth, Mr. Xu can answer. And for asset quality, Madam Jiang Xin can respond to that one.

[Interpreted] Thank you, Jerry, for your question. For the year 2022, we have experienced the downturn of the global economy, and the banking sector has been faced with a lot of challenge. For Hong Kong, the overall loan growth was negative 3%. And for BOC Hong Kong, we have actively responded to the market changes, and we have a very strong clientele base and also a very good market presence. And we have realized 3.2% of loan growth. Our market share has been further enhanced. And for our new loans, mainly comes from high-quality enterprises and also personal residential mortgage loans. And for the year 2023, we can say that there is a mix of uncertainties and challenges. But we believe that the Chinese economy will continue to enjoy great prospect. As I have mentioned that Hong Kong has resumed the exchange with China and also the rest of the world, and we have enhanced lots of economic activities. And in the recent government report, the government has also mentioned about a series of measures to facilitate infrastructure projects. And we believe that the local economy will be greatly boosted. And the banking environment will also become better, and we expect good growth for our loan growth this year. And we will focus on the Hong Kong, Greater Bay area as well as Southeast Asia market. And we will expand our lending business under controllable control. And we tried to outperform the market loan growth and to capture market opportunities to realize a loan growth. So we will focus on local economy and strengthen our partnership with local enterprises and offer with them a diversified solutions. At the same time, we focus on the green economy and China -- and build Hong Kong into a green economic hub. And we will also seize the opportunity of a digital economy. At the same time, we will focus on the opportunities brought by Shanghai area and provide financing and comprehensive solutions for the key customers. And we will actively participate in the construction of Northern Metropolis region in Hong Kong and also continued to provide financing for high-tech industry and provide support for high-tech companies. And we will also actively expand our presence in overseas market in Southeast Asia and utilize the opportunity of the internationalization of RMB, so that we can have a stable development for our facility and loan growth. Next, about asset quality. By the end of December, our NPL ratio was 0.3%, up by 26 basis points, and it's mainly because we have seen some deterioration for some of our real property clients in China. And some of our Southeast Asian countries have also experienced an adjustment for COVID support. However, our overall asset quality is still better than the average of the Hong Kong market. So I would say there is no systematic risk for our debt portfolio, and the overall credit quality is within our control. And our credit cost was 0.15%, up by 3 basis points. And is -- mainly because within the year, we expect a adjustment for our credit loss modeling. And we have optimized the overall modeling. And for those clients with low credit ranking, we have strengthened the requirements. And as I have mentioned, some of the clients have seen a lowering of the credit rating, and we have added a provision for these clients. For 2023, we can see that the market has returned to normal. And we have seen positive signals coming from the policy side. And at the same time, we will follow closely the interest -- high interest environment, geopolitical challenges, which might have a negative impact on our clients' asset quality. And we will also follow up closely the real property clients in China and see whether they can recover and also the clients in Southeast Asia and see whether they can undergo the pressure attributable to the cancellation of COVID-supporting measures. I would say that the overall provision is quite sufficient and the risk is within control.

[Interpreted] Next question. The gentlemen in the third row.

[Interpreted] from CICC. I have 2 questions. As management has mentioned, 2023, we'll see an end of the interest hike. And after several banking incidents, the fact expectation have been actually strengthened. So we believe that the interest rate will be reduced in the second half of the year. So will that have any impact on our NIM? And what is our forecast for the NIM in the rest of the year and also 2024? And in last year, there was a lot of competition in terms of deposit in Hong Kong. We have absorbed a lot of high interest deposit. What is the duration currently? And do you think that this kind of competition for deposit have been released? And also what is the CASA expectation?

[Interpreted] Thank you, Mr. [indiscernible], for the questions. First of all, about NIM and also the deposit let's have our Finance Director to answer the questions.

[Interpreted] Thank you for the questions. First of all, for the third expectations, whether they will cut or high rates, there is a divergence of views. Now for our bank, of course, raising of rates would be overall beneficial. Now for last year, the NIM had increased by 27 basis points year-on-year and 46 half year. And for quarterly, it was 11 basis points increase. So in that sense, we actually are outperforming the market. And also, we have 73 basis points up for debt investment. And also because of our efforts, we have had a loan-to-deposit ratio or spread by 31% -- 31 basis points for the year. Now going forward, the NIM growth will be moderated and there will be certain challenges. And it's hard to say whether in the second half that it will be reversing its path. So we believe that there will be a lowering of growth of loans. As you know, last year, it was a rare decrease in loan growth. And at the same time, there will be more competition. So for CASA, it will be lower CASA deposit. We should be at par with the market. It should -- it will be going down to 51.7%, but still, it would be higher than the market at that rate. And after that, going into the future, there will be good news and bad news for challenges. First of all, for this year for Hong Kong dollar interest rate, there should be an earlier fall drop than U.S. dollars. And also, there will be a further widening of the spread for Hong Kong dollars. For the first quarter, it would be the repricing impact on our deposits and time deposits will be reflected in the first quarter. And also with the CASA and also time deposit we -- the duration is about 3 months. And last year, at the end of last year, because of the high interest rates, therefore, there is a delayed effect for us. And for loans, we have to look at the situation closely. There had been 7 months continuous negative growth in this. But there are some positives as well in the sense that the existing loans, especially in the fourth quarter, it had come up -- it had been a higher cost situation. But as the interest rate, the HIBOR dropping, so for our new loans, it had also been adjusted lower according to the market. For the first month, overall for the Hong Kong market, it was 1.3% rise overall for loans. And this is also something good for us in terms of NIM as a trend. And for our NIM, whether it is high or low, if you -- we have to look at the external market and the trends as well. It's highly related. And internally, it will depend on our rational structure of our loan to deposit and our CASA at 51.7%. This will be a positive for our NIM. And we will try our very best to balance our loan to deposit and also to delay the tipping point. And also the tipping point of our NIM, and we will strive to achieve steady growth in net interest income and NIM for the full year.

[Interpreted] Next, we will have the last question on site, and then we will answer questions online. The third row in the middle, the gentleman over there, please.

[Interpreted] Jefferies, Sam Wong. I have 2 questions. First, about cost management. For operating costs, compared to second half of last year and the whole year, it has decreased significantly. And what challenges have you felt from that? And secondly, there had been some SOE reforms from the central government. So SOEs will be undergoing some new regulations or management. So there may be some buybacks and also in dividends payout, it will be more proactive. So concerning your bank, do you think -- do you have any thoughts about this?

[Interpreted] The first question is about expenses and spending. And the second one is about dividend. Maybe Mr. Liu Chenggang, can answer these 2 questions.

[Interpreted] Actually, our cost to income ratio has always been our strength. Our cost-to-income ratio was 31.34%, down by 2.16 percentage points, and this is a very good level compared to the local peers. And thank you for noticing that our operating expenses has increased last year, up by 8.8%. And in terms of the spending and expenses, we should see it from 2 dimensions: the first one is that we will give priorities to key projects and business developments for example for IT projects; on the other hand, we will pursue the low-carbon operations, refined management and optimize our operating layout and processes, and we will enable internal resources to support growth. For example, last year, we have promoted transformation for our outlets and also simplify our spending. And we have saved more than HKD 30 million. And at the same time, our e-billing penetration rate has reached 75%. And at the same time, we have a low carbon emission operations, and we have saved HKD 7 million. And as you have noticed that there is an increase of expenses for our operations, mainly because we have seized the opportunities for economic recovery, and we have prepared ourselves for the business as mentioned before the border was open. And we have some one-off business expenses such as personnel expenses, IT, promotion and COVID measures. For 2023, we will continue to adhere our cost management principle and optimize resources allocation mechanism and support incremental business growth by refining existing cost base and exploring internal resources through digital transformation. And we believe that we will continue to maintain a relatively stable cost-to-income ratio. And in the long term, we will keep our cost income ratio below 35%. I'm not so sure if I have understood your second question greatly. But I would say that we continue maintain our dividend payout policy. From our interim dividend payout, we will continue to help maximize the interest and return to our shareholders and continue to pay attention to the returns to our shareholders as well.

[Interpreted] We have questions from Goldman Sachs, which is about NIM and also several other questions, which have been responded by our management. So there are no more questions from our online audience. And this would mark the end of today's meeting. So if you have any further questions, please feel free to contact our investor relationship team. Thank you very much for attending our press conference. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]