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

Okay. Ladies and gentlemen, good afternoon. Welcome to the 2023 interim results briefing of BOC Hong Kong Holdings Limited. I'm Kenny Luo, Company Secretary of BOCHK. To begin with our results briefing, I would like to introduce the senior executives with us today: Mr. Sun Yu, Chief Executive; Madam Jiang Xin, Chief Risk Officer; Mr. Liu Chenggang, Chief Financial Officer. Mr. Xu Haifeng, Deputy Chief Executive; Mr. Xing Guiwei, Deputy Chief Executive; and Mr. Chan Man, Deputy Chief Executive. Today's meeting consists of 3 parts: Mr. Sun, our Chief Executive, will first provide a briefing on implementation progress of the group's strategy in the first half of 2023. Then Mr. Liu, our Chief Financial Officer, will present our financial and business results. Finally, Yu Sun will share our outlook and key priorities for the second half before a Q&A session. Now I would like to hand over to Yu Sun. Mr. Sun, please.

Ladies and gentlemen, good afternoon, and welcome. Since early this year, we have continued to face a complex and a challenging environment, owing to downside risks in the global economy, ongoing geopolitical risks and a significant volatility in the U.S. and European financial systems. During the period, BOCHK continued to pursue progress while maintaining stability, upheld its risk bottom line and captured key opportunities from the normalization of the Mainland and Hong Kong's economies, as well as from the development of the Greater Bay Area, mutual market access schemes, RMB internationalization and RCEP. We promoted high-quality development, improved our financial indicators and steadily enhanced shareholder returns. Profit after tax was HKD 18.1 billion, up 38.7% year-on-year. ROE improved by 2.4 percentage points to 10.8%. Our total capital ratio increased by 1 percentage points to 23%. The Board has declared an interim dividend of HKD 0.527 per share, up 17.9% year-on-year. We strengthened our integrated service capabilities to comprehensively meet customers' demands, cementing of traditional competitive advantages. We maintained the market-leading positions in the residential mortgage, syndicated loan and the cash pooling businesses while enhancing our trust and custody service capability. We strive to expand our edges in cross-border business and was able to grow the relevant income from personal banking by 2.4x. We also refined our customer structure. The number of accounts opened by first time, young customers nearly doubled, and the number of private wealth customers grew by 10%. We cultivated new growth drivers and topped Bloomberg's global Hong Kong dollar bonds underwriting rankings for the first time. BOC Life led the market in RMB standard, new premiums while its cross-border proportion of total standard new premiums exceeded the pre-pandemic level. We actively supported mutual market access schemes and realized full coverage in products, services and channels for the Northbound trading under Swap Connect. Seizing opportunities from the post-pandemic economic recovery and the border reopening, we leveraged intragroup synergies to launch BOCHK Cross-Border GO for individual customers and tailored financial solutions for corporate customers, so as to accelerate the GBA business development. We continue to lead the market in Cross-Boundary Wealth Management Connect. This is both in terms of the total accounts opened and the volume of funds remitted. The cumulative accounts opened under GBA account opening surged by over 14% from the end of last year, while demand for GBA loan products for home purchases grew rapidly. We maintained our competitive advantages in mutual market access schemes such as Stock Connect, Bond Connect and Swap Connect. We also launched the Hong Kong Guangdong cross-border motor insurance service to support the policy of Northbound travel for Hong Kong vehicles. In addition, we fully supported the growth of innovative tech companies with related loans and the customer base increasing by 19% and 6%, respectively. We deepened integration in regional operations while promoting the differentiated management model of one branch one policy in order to sharpen the competitiveness of our Southeast Asia entities and increase their contribution to the group. Capitalizing on closer economic and trade ties with the Asia Pacific region and with a focus on Belt and Road going global projects, large regional corporates and RMB business. We leveraged our role as a group's regional syndicated loan center and developed a full range of integrated financial services. We also refined our wealth management brand in the region and optimized our regional network layout by leveraging digital innovation and our comprehensive mobile banking functions. We expanded the financial service scenario ecosystems for individual customers. During the first half, our Southeast Asia entities expanded their deposits and loans by 8.4% and 4.8%, respectively, exceeding the group's average growth rates. The net operating income grew by 40.7%, driven by a higher net interest margin. NPL ratio was 2.44%, down 5 basis points from the end of last year. We leveraged our RMB business advantages and digital innovation in the market, thus supporting the development of Hong Kong's role as an offshore RMB hub. We maintained leading market positions in various RMB businesses such as loans, deposits, trade finance, cross-border cash pooling, mutual market access schemes and insurance. Several of our Southeast Asia entities such as BOC Thailand, were granted direct participating bank status under CIPS, which helped to enhance our clearing capabilities. In support of the mutual market access schemes, we fully implemented the Northbound trading under Swap Connect and became one of the first listed companies that operate the Hong Kong dollar RMB Dual Counter Model. We also successfully completed the trial of digital RMB sandbox and launched several digital RMB experience events. Adhering to our customer-centric philosophy, we reinforced of technological foundations and delivered a digital transformation driven by scenario ecosystems, big data and AI. We further developed service scenario ecosystems based on customer needs in home purchasing, education and health. The number of registered open API partners reached 427. BoC Pay achieved 10% growth in customer numbers and 24% growth in transaction volume, while BoC Bill grew its settlement volume by 42%. We further optimized our digital channels, number of active mobile banking users rose by 10%, while registered SME users of BOC Connect increased by 8x. We advanced our smart operations using the data provided by a third-party platform. We simplified the loan approval process. We also skewed up the intensive operations of our regional operations center in Nanning to enhance operating efficiency. Virtual Bank Livi saw strong growth in customer loans and now boosts a customer base of over 300,000 with many of its innovative services gaining widespread popularity. We integrated the concept of green finance and sustainable development into our business and operations, providing diversified low-carbon products and services to meet customers' needs for green transformation. During the first half, we grew our green and sustainable loan balance by 56%, our green bond investment by 59% and the number of ESG funds available for sales by 19%. Serving a joint global coordinator, joint lead manager, joint book runner and custodian, we assisted the Hong Kong SAR government in issuing a tokenized green bond, the world's first such deal by a government issuer. We also completed the first green RMB reverse repo transaction and took part in the listing of the BOCHK Greater Bay area, climate transition ETF, which is Hong Kong's first ETF to track climate transition in the GBA. In addition, we shared our experience at the regional headquarters to further promote sustainable finance across our Southeast Asian entities. This concludes the strategic review. Next, our CFO, Mr. Liu, will walk you through our financial and business performance.

Thank you, Yu Sun. Since the start of the year, we have strived to capture the opportunities from interest rate rebound as well as the reopening of Hong Kong's borders provided income resources, meanwhile due to the enhanced cost control and risk management, our operations have become more efficient and our credit cost has remained stable. As a result, our tax profit in the first half grew by 39% year-on-year and 27% half-on-half to reach HKD 18.1 billion. In response to the time deposit migration trend, we expanded our e-payment, e-collection, payroll, cash management and cash pooling businesses, while strengthening customer interaction. Meanwhile, we capitalized on the border reopening and vigorously marketed cross-border businesses. We also stepped up digitalization and green product innovation and developed our wealth management business so as to expand our sources of low-cost funding. As of the end of June, our customer deposits reached HKD 2.46 trillion, up 3.6% from the end of last year. Taking our local market share to 15.9%, up 0.46 percentage points. Our average CASA ratio in the first half stood at a relatively good level of 50%. We further deepened the development of the Hong Kong GBA, Southeast Asia and other key overseas markets by enhancing intragroup collaboration, cultivating customer demand and strengthening our full-service capabilities. Our customer loans increased by 4.3% to HKD 1.72 trillion, with the market share rising by 0.73 percentage points to 15.8%. Among others, loans for use in Hong Kong increased by 6.7%, driven by stable growth in both corporate and individual loans. This effectively offset the impact of a decline in loans for use outside Hong Kong, caused by the negative interest rate spread between Mainland and the Hong Kong markets. Capitalizing on the interest rate rebound, we stepped up our asset liability management to widen the loan-to-deposit spread and the increased debt investment yield, adjusted for swap impact, net interest income increased by 42% year-on-year to HKD 25 billion in the first half. NIM expanded by 43 bps year-on-year to 1.56%. The second quarter NIM was 1.62%, up 12 bps from the previous quarter. With investor sentiment and subdued external trade and credit demand continues to weigh on our net fee income, which declined by 9.5% year-on-year to HKD 4.9 billion. On the bright side, fee income in our credit card and currency exchange businesses benefited from the stronger consumption and tourism recovery following the border reopening, driving a rebound in net fee income of 12.5% half-on-half. Within this, noncredit-related traditional fee income increased by 19.5% year-on-year and 10% half-on-half. Focusing on the group's strategic development priorities, we optimized results allocation and enhanced our cost efficiency. Our operating expenses increased by 5.9% year-on-year, mainly due to investment in human resources and technology. Cost-to-income ratio fell by 3.8 percentage points to 25.5%, outperforming local peers. The high-interest rate and orderly winding down of pandemic relief measures affected certain customers' financial conditions, leading to related -- loan-related downgrades. At the end of June, our NPL ratio was 0.73%, up 20 bps from the end of last year, still remaining stronger than the market average. We have formally upheld the risk bottom line, reinforced risk management foundation and enhanced risk mitigation measures so as to maintain solid asset quality and sufficient provision. Annualized credit cost in the first half improved by 7 bps year-on-year to 0.14%. Total loan impairment allowances accounted for 0.73% of total customer loans, up 3 bps from the end of last year. Our capability to withstanding potential risks was further enhanced. We have continued to strengthen capital management, enhanced our profitability and sensibly managed the scale of RWA to utilize capital more efficiently. At the end of June, our CET1 ratio and the total capital ratio increased to 19% and 23%, respectively. Liquidity remained abundant with average LCR at 189% and NSFR standing at 133%. This concludes our interim results review. Xi Sun will now share the group's outlook and priorities for the second half. Thank you.

Thank you, Mr. Liu. In the second half, worldwide geopolitical tensions will persist, where adjustment in the global economic structure will accelerate, potentially generating greater volatility in the financial markets. Meanwhile, investor sentiment and import-export trade will remain weak in Hong Kong. All of this will increase the difficulties and the complexities for banks to cope with potential risks. Despite the emerging challenges faced by the Chinese Mainland's economy, its favorable fundamentals will remain unchanged in the long term. The Chinese government will continue to steadily pursue a high-quality development and further deepen the implementation of the national opening strategies such as BRI, the development of GBA, RMB internationalization and the mutual market connectivity. These factors, together with ongoing policy dividends from the [ ASEAN ] will allow Hong Kong to maintain its unique position and special advantages as a super-connector thereby generating opportunities for the banking sector. In the second half, we will continue to pursue progress while ensuring stability. Remaining market-oriented and leveraging of distinctive advantages, we will push forward all major tasks to achieve profit growth, business development as well as some risk control and management. We'll deepen and refine the management of our sustainable development and solidly deliver on our ESG strategy, we'll actively diversify income resources and ensure outperformance in deposits and the loans through high-quality growth. We will promote business development in the GBA, stimulate new momentum in our Southeast Asian businesses and further enhance of comprehensive services. We also consolidate the advantages of RMB businesses while supporting the orderly advances in RMB internationalization. We will expedite digital transformation to enhance management and operating efficiency. Meanwhile, we'll step up of comprehensive risk management, reinforce management's resilience and effectiveness. We also steadily develop talent pools and built a robust corporate culture so as to fortify of long-term fundamental outlook. In sum, we will strive to achieve solid, sustainable and high-quality growth, serve national development and high-level opening up and promote the long-term prosperity and the stability of Hong Kong with a view to creating values for shareholders, customers, employees and different sectors of the society. This marks the end of my presentation. Thank you. You are very welcome to ask any questions. Thank you.

Okay. The Q&A session will be conducted in Mandarin with simultaneous interpretation and English questions will be translated into Mandarin. [Foreign Language]

[Operator Instructions].

Wei Lam from HSBC, 2 aspects of questions, if I may? Firstly, noting that your CET1 ratio and Tier 1 ratio probably has reached your own historical high, a level that is also materially higher than global G-SIBs. How do you see the risk asset growth potential into the rest of '23 or '24? If you do not see material demand from the market, should we be thinking about capital management measures, running down the Tier 1 ratio perhaps in one-off measures? If you judge that the weak loan demand is a temporary situation. How flexible are we? So that's question number one. Secondly, noting perhaps a more material increase in Stage 3 provisions in the second quarter. Can we better understand the underlying driver? Is it from China commercial real estate, Hong Kong real estate or investment-related? And how do you assess -- I guess the risk on China real estate is probably quite well known, but how do you assess the forward-looking perspective for the Hong Kong property market as well? including investment and development loans.

You asked more than 2 questions. Now first of all, the -- your first question concerning the market and also loans, we will have our Deputy CE, to answer the question, and then our CFO will answer the second question. And then Ms. Jiang, our CRO will answer the third question. [Interpreted] Now first of all, concerning the Hong Kong loan market. This is how we see it. First of all, in the first half, we see global growth has been slow and effective demand of corporate loans had reduced. And in particular, in terms of loan demand, there has been a reduction, partly because of the high interest rate environment affecting the demand from the loan side, and there had been some challenges. For our bank, based on our very good customer base and also our capability in professional service and our diversified market presence, we achieved a customer loan growth of 4.3% in the first half, which outperforms the market. And through our utilization of customer resources and service advantages, in particular, in completing our syndication loan deals as a ranger, as underwriter for large-sized projects of local major customers and proactively supporting the needs of customers' green finance, et cetera, we are overall in a good position. And overall, our asset quality was better than that of the market. Now looking forward, as mentioned by our President just now, the overall external environment, even though it is changing, but from the perspective of our own situation, we see that the China's economy's positive long-term fundamental remains unchanged. And in particular, the government has launched a series of policies to stimulate domestic demand and also to promote industry upgrades and so we believe that the Chinese economy will continue to be positive. And also with the border reopening, Hong Kong's labor market has continued to improve and the overall economy also has steadily recovered. And with the full implementation of RCEP, it further drives the economic and trade cooperation in Asia Pacific region. And also with cross-border GBA and South East Asia and overseas markets, we believe that there will be quality loan growth on a controllable risk basis. And we are confident that our full year loan growth will continue to outperform the market and make best efforts to achieve a mid-single-digit growth target set earlier this year. And also at the same time, we continue to deepen our core market of Hong Kong, leveraging our product and service advantages and strengthen our cooperation with local blue-chip companies and also leading players and financial institutions. And also, we will fully support SME development through enriching our digital products and professional service capabilities to meet high-quality SME loan demand. And at the same time, we are strongly positioned in the markets with synergy in the BOC branches and the GBA and follow the nation's policy guidance of modernized industry system, and we will continue to be focusing on these key sectors with advanced technology. And meanwhile, we will enhance our service model for innovative tech customers. And also in Southeast Asia, these are potential overseas markets, which we will continue to strengthen our drive in our -- from our regional headquarters and we will step up our support for the South East Asian entities in a number of areas and we will continue to collaborate with key Asia Pacific branches to provide multinational corporates and customers with going global efforts and also to work with Singapore BOC, Sydney, Tokyo, Seoul to explore potential of high-quality lending business. And just to answer your next question at the end of June, our CETI ratio and total capital ratio increased by 19% and 23%, respectively. Liquidity also remains abundant. I first of all, I want to say that our profits had promoted our capital adequacy. This is the main reason. And you have also asked about RWA. Compared to last year, it has dropped by a slight -- HKD 10.3 billion. And this is because it has lowered from 25% to 15%. And from business development, as Mr. Yu had mentioned, our loan growth has exceeded the market and RWA has increased by HKD 10.9 billion. And through our prudent management and flexibly allocating our capital, our RWA had increased and returning our profit. As for ROE, first half, it was 10.8%, which is an increase of 2.44% year-on-year. And this is a first time that we have exceeded 10%. And the main reason is because of profit growth attributable to shareholders was an increase of 32.9%, whereas the -- it was only 2.9%, otherwise. So profit increase has been the main reason for the growth. So this is our management future direction as well. And at the same time, we will continue to manage well our risks. Now you had other questions which you wanted to ask, including dividend payout. Well, I think everybody is very concerned about the dividend payout situation, we've always adopted a solid dividend policy, striving for maximizing shareholders' interest and supporting our long-term development. And we have been cautiously optimistic. And on this principle, we appropriately increase the interim dividend to HKD 0.527, which is up HKD 0.08 or 17.9% compared with the same period of last year and for the full year dividend for 2023, we will be looking at our operating performance in the second half, and the dividend payout ratio will be kept between 40% and 60%. We'll consider a number of factors, including regulatory requirements, our shareholders' expectations, external risk environment and changes in our capital structure and our long-term business development needs. We will strive to enhance our earnings capability while realizing continuous increase in dividend payout. Just to answer your third question about our provisions and also Hong Kong property loans. Now for the first half, the provisions cost have been HKD 1.25 billion, and the third stage is HKD 1.066 billion as our Mainland exposure is HKD 93.1 billion, which is HKD 6 billion less than last year. For nonperforming rate for the first half, it was for HKD 4.46 billion which is HKD 40 million more than last year. For overall, NPL has been stable for Stage 3 for Mainland Real estate, we have looked into the sustainability of our customers in the Mainland and there is an increase of HKD 1.1 billion. So for the third stage, the provisions increase had indeed come from our Mainland property sector. So that's for your first question. And the second question about the Hong Kong property situation. If we look at our overall property exposure, the -- it is our overall -- part of our overall 20% -- 20% of the total, which is slightly less than last year. So our sector, we have been managing this particular sector's exposure. And for the different regions, Hong Kong is 75%. Mainland is 18% of the whole, Southeast Asia is 3% and other places, 4%. So this is the contribution. Now for Hong Kong property loan exposure for our customers, most of them are major blue-chip customers. And this is the capital management situation and also the leverage levels are good. The local NPL is 0.13% so the situation is quite excellent. For these major blue-chip companies in terms of stability of the balance sheet and also the cash flow situation, we do not see any major risks in terms of any default.

The third row there?

My name is Gurpreet. I work with Goldman Sachs. I have one simple question. In the appendix, in the loan breakout, we do show loans for use in Hong Kong and property development. That part of the loan book has gone up by HKD 25 billion half-on-half. So can we check was there any Mainland-related China developer, which got higher loan exposure -- which we have higher loan exposure now versus December? So -- or in other words, what is the constitution of that HKD 25 billion increase?

Thank you for your question. We will DCE Xu to respond to this question.

[Interpreted] I will respond to this question for real estate loans. We have seen some increase. The increase mainly comes from the Hong Kong market. Actually, in Hong Kong, we have some syndicated loans underwriting business which is quite large, but we will distribute this amount. And this gives us a very high percentage. But in terms of Chinese real estate sector, we don't have any increase in terms of loans.

Next question, please.

[Interpreted] Hello, my name is Jemmy from JPMorgan. I have 2 questions. The first question is about credit costs. You estimated that for the whole year, you want to maintain a moderate or flat level for the credit cost compared to 2022. But because of the Chinese real estate sectors, defaults and also the home transactions has not yet recovered in Mainland China. So do we have any forecast? New forecast for the credit cost for the whole year? And the second question is about the Southeast Asia. In the year beginning, I believe that the management held a prudent attitude towards Southeast Asia's business and there was -- you didn't expect much development for Southeast Asia business. But I can see from the interim results that is much better than expected. So in terms of the operations, in the coming 6 to 12 months, what would be our strategy? Is there any updates?

For credit costs, we will ask Madam Jiang Xin to respond and Southeast Asia-related question DCE Xu.

[Interpreted] Thank you. For the first half credit cost annualized is 14 basis points is lower by 1 basis point from last year, and this is in keeping with our guidance in the beginning of the year. So you have mentioned just now concerning the market, the customers and their operation and their financial management for some of the industry's customers, they have some difficulties, in particular, in Mainland property sector. So we are closely monitoring the situation in the market our customer situation, including the domestic property sector in terms of their capability to repay loans and their progression in the market. Now overall, in terms of the pressure, it does come from the ability to repay loans by the domestic property customers. And we believe that there may be an increase in credit cost because of this particular reason. It is possible.

[Interpreted] Let me answer the second question about Southeast Asian business development. Since early this year, the Southeast Asian economies have been developing steadily. In the first quarter, the overall GDP growth was 3.8%. And also with RCEP cooperation scope expanding and China-ASEAN bilateral investments increasing solidly. But at the same time, we do see weak external demand continuing to present challenges to the economic growth. And in the first half, our bank has strengthened our integrated operation and differentiated management of one branch one policy in the Southeast Asian region, and we cemented the integrated competitiveness of our entities in Southeast Asia and enhance their contribution to the group customer deposits and loans increased by 8.4% and 4.8%, respectively, which is higher than the group's averages. Now driven by this margin improvement, the net operating income rose by 40.7%, which further increases the earnings contribution to the group. Credit risk was well managed with NPL ratio improving to 2.44%, which is down 5 basis from the end of 2022. And NPL provisions continues to be sufficient, coverage ratio was 124.08% and we continue to optimize our regional business layout and also accelerate our digital transformation and also we continue to relocate successfully our Thailand, Vietnam and Indonesia outlets and we promote IGTB platform, and we launched our regional e-commerce services as well and further with digitalization as well as mobile banking functions provision. At the same time, we provide better services and one-stop shopping for our customers with real-time payments, cross-border payment functions, et cetera. And we have been able to increase our RMB business. In the first half, transaction volume increased by 39% year-on-year on RMB treasury business, and we will continue to grow this. In the second half, we will further enhance our in-depth research of the markets, regulations, characteristics in the ASEAN countries, and we will continue to make steady and solid progress in Southeast Asia.

Next question.

[Interpreted] Well, thank you for the sharing. I am [indiscernible]. And I see for the first half, the performance, as you have mentioned. And in the second half, with this rather not optimal situation in terms of pricing, will there be any adjustments? What is the strategy for that, please? And next question about costs. For cost guidance, it was about 30%. But we see that in this high-interest rate environment, Apparently, we have exceeded our original guidance. So can you give us a more accurate and short-term guidance, please?

So Mr. Liu will answer this question.

[Interpreted] Thank you for your question. This is a very compressive question. Our deposit and NIM and our margin give us our profitability first. In terms of the pricing or in terms of NIM, our net NIM improved by 42%, up by [ 42 ] percentage points. And your many questions focus is on 2 aspects. The first one is about deposits and loan growth, we have actually overrun -- outperformed the market by 3.4 and 4.8 percentage points. On the asset side, we have optimized our high-quality bonds which accounts for 88%, up by 1.3 percentage point. Then in terms of structured debt, we need to control the term deposit balance. And of course, we need to make a lot of effort and the tenor management. And we have an advantage compared to our peers for our size of business volume development will decide our profitability for the second half of the year. Our deposits and loans will still need to outperform the market. For deposits, we also need to optimize the loan or interest -- 0 interest deposits and realize a better structure for the deposit. And Mr. Yu had already reported on the deposit grounds as well as the high-quality investment. And in terms of bonds, we need to manage the duration well, and in the environment of high interest, we need to manage the tenor. And for the NIM, and our business size, we continue to adopt a cautiously positive attitude. And in terms of cost and spending. For the first half of the year, our cost to income is 25.46%, down by 3.46 percentage points, relatively low compared to the peers. And there are 2 reasons. The first one is our income increased by a lot. In terms of spending we have also seen some increase, our spending up by 5.9 percentage point to 78.52%. And in terms of spending, our general direction is that first, we have priorities for digital transformation project, green finance and real estate transformation. We will invest more resources in these aspects. And at the same time, we will reduce the spending in certain aspects, which will focus on green workplace, energy consumption savings, et cetera. For the whole year, our cost income ratio will be lower than that of last year, and we believe that we will continue to be spending at a premium level compared to our peers at around 35%.

Next question.

[Interpreted] I'm' [ Sam, ] I have 2 questions. The first one is a follow-up question for costs. In quarter 4 last year, we have seen some increase -- evident increase of costs. Can you please share with us the cost for each quarter? Is it the same as last year? And the second question is that we have entered the post-COVID times for around 8 months. And for cross-border business and economic recovery were popular topics last time and 8 months have passed. Do you think that the economic recovery is in line with your expectations? Or is there any aspect that is not as good as expected?

Mr. Liu will answer the first question. As for -- and then we'll answer the cross-border question.

[Interpreted] Yes, as you mentioned, cost is something that we are very cognizant about. And starting from last year, in the U.S., there had been major hikes in interest rates, so our cost had significantly increased because of that. In the first half for our deposits, it is 2.6%, and it is a rise of 215 basis points. So compared to the same period of last year, there seems to be a stabilizing. Overall speaking, for 2023 compared to first quarter of 2022, there is a 0.4% rise and that was because the Fed had just started the rate hike cycle. Now compared to same period of last year, it is an increase of over 200 points. And first quarter -- second quarter, things seem to have stabilized a bit this year. Because the market's expectation for U.S. rate hikes, there seems to be a lowering, there will be less than 50% of another rate hike within the year. So the cost in the -- in its major increase, the likelihood of that is low. And through our good management and also with our growth in business and also the synergy among our different sectors, we will further stabilize our CASA and also our expenditure and costs. I am confident about that. For the first half, there has been a recovery in terms of visiting across the border and also in February in Shanghai, there have been the [ 30 ] measures and also, the government had also come up with over 115 measures concerning the extending of GBA living for Hong Kong residents and also about employment, et cetera, in Hong Kong. And also with this possibility of GBA in transportation, shopping, F&B and other personal finance service scenarios, we continue to rate the development of our cross-border business. And now our cross-border services is provided more than 180 branches, outlets across Hong Kong, and we have set up 9 cross-border service centers at major ports and airports, and we also have designated cross-border service ambassadors at 35 of our branch outlets, fully devoting our service at the staff and company level to provide the best service. In the first half, the income of our cross-border personal banking business increased 2.4x, accounting for 25% of our Personal Banking business income, up by more than 1x year-on-year in terms of contribution proportion and also exceeding the level achieved before the pandemic. During the period, the number of newly opened cross-border customer count increased by over 4x year-on-year, nearly 70% higher compared to the same period in 2019 before the pandemic. And at the end of June, the number of personal cross-border customers exceeded the 1 million mark and GBA account opening recorded nearly 40% growth and our BOC Pay recorded 10% user growth from the end of last year and 24% year-on-year growth in transaction volume in the first half. And we continue to increase the growth for our BOC Pay, there's an 80% growth in average daily spending volume with our BOC credit card spending as well. And the number of accounts opened and the cross-boundary wealth management connects more than doubled, and we maintained a leading position in the Hong Kong market in total accounts opened and amounts remitted, and we also have the motor insurance as well. As well, we continue to top the market in terms of scale on the Northbound and Southbound trading of Bond Connect, and we continue to be the preferred bank for GBA area for both Mainland customers and also Hong Kong clients.

Last question, please. That person over there.

[indiscernible] Bloomberg Intelligence. I just got a quick question on your CASA ratio. I saw that it's been stabilized. And if you may, can you comment on some particular strategies you've implemented to achieve this and perhaps in the second half, which is due to further maintenance? And the second question I got is what will be your core pillar supporting the deposit franchise versus your peers?

The first question, Mr. Liu will respond, and I will respond to the second question.

[Interpreted] Thank you for your questions. I have mentioned earlier that our CASA by the end of the June is 48. 8% industry level was 44.8%. And CASA continued to decline because of the interest hike. And we can see that the absolute amount in the percentage of CASA of BOC is superior than our peers. And it went down by 1.5 percentage points. For the first half of the year, the CASA percentage maintained at around 5%. The -- in terms of change and CASA's change will be determined by the interest rate. And as I've mentioned earlier, in terms of the interest hike, people's expectations have been lowered, so the CASA for the second half of the year, we believe that the impact from the interest rate will also be reduced. But if the Fed decides to increase the interest, then CASA will continue to face pressure. So for us, we will continue to try our best to stabilize our CASA. And the purpose of CASA is to provide more service to our customers and the term deposit is to provide interest earnings for our customers. So our aim is to provide better service for our corporate customers and individual customers. For example, for enterprise annuity, we will continue to strengthen our relationship with the government and we will also do our government deposit based on the policies. We will also focus on the cross-border finance and payment services and provide more solutions for our customers and manage our cash pools to cater to the needs of our customers and to increase the CASA proportion. And in terms of BOC Pay, we -- it is a very good product for us to consolidate our payment business. And at the same time, for the corporate customers, we will have new customer acquisitions to enhance our customer penetration with such initiatives, our CASA decline will be suspended for the second half of the year.

And for your second question, I think it depends on your definition of peer bank compared to the international bank in Hong Kong. Our advantage is the support from our mother company. Our biggest advantage, of course, is from our domestic Chinese franchise. We have our advantage in GBA business expansion. Compared to the Chinese local company -- local banks in Hong Kong, our advantage lies in our retail foundation. As I mentioned, compared to our peers, we have advantage in our business volume and CASA, et cetera. And in the future, we will continue to leverage our advantages and take strong foothold in Hong Kong market, Greater Bay area as well as Southeast Asia markets. And all these 3 markets enjoy great potential and to develop business in these 2 markets we must strengthen our capabilities, and that's why we need to have a regionalized or localized management and enable the local management. And in this way, we can put into full play our advantage and to give our shareholders more returns. Thank you for your response. And for our analysts, if you have any more questions, please feel free to contact our Investors Relationship Department and this most the end of today's conference. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]