BOC Hong Kong (Holdings) Limited ($2388)

Welcome to 2025 Annual Results Briefing of BOC Hong Kong Holdings Limited. I'm Sophie Huang, Board Secretary. To begin with our results briefing, let me introduce the senior management with us today, Mr. Xing Guiwei, Chief Executive; Mr. Xu Haifeng, Deputy Chief Executive and Chief Risk Officer; Mr. Xing Guiwei, Deputy Chief Executive; Mr. Wang Huabin, Deputy Chief Executive. Mr. Chan Man, Deputy Chief Executive; and Madam Li Tong Deputy Chief Executive. Today's meeting consists of 3 parts. First, our CEO, Mr. Sun, will introduce us implementation of our strategy in 2025. Then our Deputy Chief Executive, Mr. Xu will present our financial results. Finally, Mr. Sun will share with us the outlook and key priorities for this year before our Q&A session. Now I would like to hand over to CEO, Mr. Sun, please.

Good afternoon, ladies and gentlemen. In 2025, faced with a complex and volatile global economic environment, the Chinese mainland economy continued its stable growth while Hong Kong accelerated its economic recovery. However, interest rate volatility persisted while credit demand remained weak. Against this backdrop, BOC Hong Kong earnestly pursued high-quality development and recorded satisfactory progress, bringing its 5-year plan to a successful close and proactively formulating a future blueprint. Attributable profit for the year reached HKD 40.1 billion, up 4.9% year-on-year. ROE remained largely stable at 11.5%. The Board has proposed a final dividend of HKD 1.255 per share including the 3-year interim dividends already distributed. DPS for the full year will be HKD 2.125, representing an increase of 6.8% year-on-year. We further consolidated our competitive advantages in the local market, maintaining leadership in new residential mortgage loans for 7 consecutive years and the largest mandated arranger in the Hong Kong and Macau syndicated loan market for 21 consecutive years. We achieved a leading position in IPO receiving bank business helping Hong Kong to reclaim the top spot in global IPO fund rising capitalizing on business opportunities in asset and wealth management we increased assets under custody by 29% and the value of bonds underwritten by 65%, while the personnel payroll amounts grew by 17%. For the fourth consecutive year, we gained market share in fund sales reaching a record high. Our integrated risk capabilities were significantly enhanced. BOC Life grew its standard new premiums by 50%, while BOCI Prudential increased its MPF assets by over 20%. And BOC Hong Kong Asset Management expanded its AUM by about 40%, retaining leading position in their respective markets. In addition, we were appointed by the Shanghai Gold Exchange to operate its first international Board certified vote in Hong Kong, supporting Hong Kong's development as an international gold trading center. We stepped up efforts to enhance regional operations and management capabilities across the GBA and Southeast Asian cross-border markets. We maintained our leading position in various mutual market access businesses, expanded the service coverage of GBA account opening enriched the product solutions of GBA loans and introduced comprehensive cross-border elderly care solutions. The number of cross-border high-end customers grew by 21% and driving a steady growth in cross-border income. In alignment with Hong Kong SAR Government's go global task force, we launched one-stop cross-border financial service solutions to address the financial needs of going global enterprises. We also assisted HKSAR government in issuing infrastructure bonds to support the construction of the Northern metropolis. Fully leverage of leading low as regional headquarters for SEA operations, we refined our capabilities in integrated marketing and expanding product and service offerings of SEA entities delivered steady growth in the number of corporate accounts and the personnel payroll accounts, while enhancing their] [ cherry ] business capabilities. During the year, SEA-related deposits and loans grew by 20.2% and 9.6%, respectively, both exceeding the corresponding growth rates of the group, where RCA related income increased by 6.2%. The NPL ratio of our SEA entities fell to 2.11%. We fully supported Hong Kong in playing its role as an offshore RMB business hub while further consolidating of RMB business capabilities. We achieved steady growth in RMB assets and RMB public bonds under written volume. BOC Hong Kong led the industry in RMB clearing while BOC Malaysia, the Manila branch and the non-PAM branch held strong market positions in local RMB clearing services. In addition, the [ Vention ] branch became the acquiring and clearing bank for e-CNY in loss. Furthermore, we acted for the first time as a settlement agent for RMB green bonds issued by the Ministry of Finance and became the first offshore clearing member of the Shanghai Clearing House. We engaged deeply in the Hong Kong MA's RMB business facility arrangements as 1 of the first commercial bank participants and assisted government of Indonesia in issuing [ Dingson ] bonds -- Dim Sum bonds and the Malaysia Bank in issuing Panda bonds further encouraging the international use of RMB. Focusing on digital currency innovation, we participated in the Hong Kong MA's project [ Ansamble ] and studied the values and risks associated with the trading of digital assets. We also facilitated the innovative development of e-CNY version 2 and optimized [ Enbridge ] related business contributing to the construction of a digital currency ecosystem, sharpening our efforts to enhance the financial service convenience, we utilized Hong Kong MA's interbank account data share initiative and cross-boundary credit referencing to simplify personal loan approval process. We delivered solid growth across our digital platforms with active mobile banking personal customers, up 19%. iGTB transaction volumes up 66% and BOC Pay plus customers up 12%, while BOC Bill settlement volumes rose 13%, reaching almost a 9-year high to generate greater value from our AI capabilities, we established an AI committee to conduct top-level planning and push forward implementation. We implemented AI in various application scenarios and used AI assistance to boost work efficiency. We also deepened the application of smart technology in anti-fraud management through active participation in Hong Kong MA's genetic AI sandbox. In addition, we enhanced our smart operations by expanding the capacity of our regional operating center in [indiscernible]. We comprehensively implemented the concept of sustainable development to build new green business models and strive to transition towards net 0. Over the past 5 years, of green and sustainability-related loans increased by 7.2x. ESG bonds underwritten grew by 34% and and the greenhouse gases emissions per employee fell by 22%. In 2025, we supported various mainland local governments in issuing ESG bonds and once again, assisted the Hong Kong SAR government in issuing green bonds in multiple currencies. We strive to create a better and more collaborative society supporting significant charitable initiatives through over 50 projects and more than 170 volunteer events, contributing a total of over 30,000 service hours. During the year, we were again awarded the highest -- REIT by MSCI ESG Research and named Hong Kong's Best Bank for Corporate responsibility by Euromoney. This concludes a strategy review for 2025. Next, of DCE, Mr. Xu will walk you through the financial performance, please.

Thank you Yu Sun. In 2025, we further optimized customer base, expanded income sources, improved operating efficiency and strictly adhere to our risk bottom line to proactively corporate market challenges. This resulted in solid growth in income and earnings with profit after tax increased 5.3% year-on-year to HKD 41.2 billion. We expanded our high-quality deposit base through diversified products and services. We have deepened the relationship with large enterprises, financial institutions government and public organizations, while enhancing the high-end, young and cross-border customer segment to promote the payroll cash management and IPO receiving bank services. All these efforts help us attract new funds with customer deposits increasing 7.9% to HKD 2.94 trillion. Our deposit mix was further optimized with CASA deposits increasing by 24.3% and the CASA ratio improving by 7 percentage points to 53.4%, outperforming the market average. Building our strong producers across local cross border, SEA and other key overseas markets, with deepened intergroup collaboration and reached RMB usage scenarios while providing integrated and comprehensive services to local blue chips multinational's leading going global enterprises and major Southeast Asia corporates. We also captured opportunities arising from the recovery of local residential market and maintained our leadership in the new residential mortgage loans, achieving rapid growth in the mortgage loan balances. Our customer loans grew by 2.3% to HKD 1.72 trillion, of which loans for use in Hong Kong increased by 3.7%. We proactively managed our assets and liabilities by enhancing pricing and the tender management for time deposits will solidify low-cost funding sources and optimizing the asset deployment across our loans banking book fund investments, together with effective implementation of FX swap strategies. This enabled us to successfully mitigate the impact of the lower market interest rates. Adjusted for swap impact, our net interest income increased by 1.4% year-on-year to HKD 59.7 billion, while NIM narrowed by 6 basis points to 1.58%. Our fourth quarter NIM was 1.71% and up 17 basis points quarter-on-quarter. Capitalizing on the opportunities arising from strong capital market sentiment and steady recovery in the private consumption, we enhanced our products and services capabilities to its [ bond ] fee businesses, resulting in a 13.9% growth in the net fee and commission income to HKD 11.3 billion. We stepped up wealth management business development with securities brokerage, fund distribution and the insurance business incoming rising by 45%, 43% and 96%, respectively. We also refined our credit card product portfolios with credit card income growing by 7.9% and BOC's bills settlement volume up 13%, reaching almost a 9-year high. In line with our strategic focus, we prioritize resource allocation for key development areas while refining our branch network layout and pursuing a low carbon and smart operation strategy to enhance resource utilization. Operating expenses increased by 4%, and with cost-to-income ratio improved by 0.93 percentage points to 23.6%, continuously outperforming the market average. We further strengthened comprehensive risk management closely monitor the market and industry trends, tighten control over high-risk credit portfolios and conduct timely reviews of customers' internal credit ratings asset quality remained solid. Our impaired loan ratio rose by 9 basis points from the previous year and to 1.14%, remaining at a solid and a manageable level. We conduct more stringent stress test on high-risk customers and increase the provisions to ensure fees and coverage. As a result, -- our credit cost increased by 19 basis points year-on-year to 0.9%, while the provision coverage ratio hit up by 0.2 percentage points to 1.09% of total loans, further consolidating our capability to withstand potential risks. We remained well capitalized with a total capital ratio and the CET1 ratio rising to 25.98% and 24.01% respectively, driven mainly by earnings growth and a 7.5% reduction in RWA resulting from the implementation of the new budgetary rules in early 2025. During the year, we endeavored to enhance shareholder return by utilizing capital more efficiently, increasing the ordinary dividend payout ratio, distributing quarterly dividends and refining our governance process for share buyback. In early 2026, we completed acquisition of BOCI Private Bank to serve in the fruit of our sound business development with shareholders, the Board proposed to launch a 3-year shareholder return program for 2026 to 2028 with details subject to external regulatory review and the internal corporate governance procedures. This concludes our results review for 2025. Yu Sun will now share the group's outlook and the priorities for 2026.

Thank you, DCE Xu. Looking ahead, a rapidly changing global geopolitical landscape will add further complexity and uncertainty to the international economic environment. potentially increasing volatility in global trade and financial markets. Banks will face the challenges from shifting of growth dynamics and increasing risk management demands. At the same time, the 15th 5-year plan provides clear guidance for the country's future development with a focus on advancing high-quality growth and enhancing technological capabilities. The latest Hong Kong SAR government budget proposes to deepen the development of key industries, such as innovation and technology, finance, shipping and trade. Together with various national strategies supporting Hong Kong's development, this will help the city consolidate its position as a super connector and super value added. Furthermore, with growing global Chinese enterprises, optimizing their industrial lay outs, alongside the rapid development of AI and digital assets, the Hong Kong banking industry is well positioned to capture new growth opportunities, providing sustainable momentum for high-quality development over the next 5 years. In the year ahead, BOC Hong Kong will remain confident and dedicated to achieving further growth, strictly adhering to the development strategies of the nation and the group we will effectively perform our role as a regional management center, strengthen our function as a business center and drive the development of integrated businesses. We'll strive to set new standards for cross-border financial services, enhance our wealth management brand reputation, consolidate of RMB business advantages and accelerate the development of our custody and asset management businesses to actively expand our diversified income sources. Furthermore, we will enhance intelligent operations strengthen our comprehensive risk management capabilities cultivate a robust corporate culture to maintain high operating efficiency. We will strive to make a strong start to the new 5-year plan, delivering greater value for stakeholders through high-quality development and sound operating performance while making greater contributions to Hong Kong's long-term prosperity and stability as well as regional economic development. This concludes our presentation. Thank you. You are now very welcome to ask any questions you may have.

Thanks for the presentation by Yu Sun and DCE Xu. It is time to answer questions from our analysts. [Operator Instructions]

Thank you, management. And congratulations on the very good performance in 2025. I have 2 questions. There have been questions asked in the past couple of years about the management framework for the capital and also for this framework when you introduce it now, what is the ultimate point of that. And that is -- will there be a target ratio, let's say, as some of the peers bank would have. Will there be a level? Because I see that for this dividend framework, it is from '26 to '28. And in the calendar year, we already see repatriation of capital to the shareholders. So that's the first question. And the other is about the impairment of our loans and there is a slight increase from fourth quarter compared to the third. So can you talk about the outlook for 2026? And what about property developers. Will these be normal? Or will they be impaired? Or will they be under watch.

Well, thank you very much. First of all, about capital management and the other 1 about the impairment of our loans. Thank you very much. Mr. Xu will answer the question.

Thank you for the questions. First of all, in terms of dividend and capital management for a long time, BOC Hong Kong has been adopting a stable dividend policy, striving to balance between shareholders' interest maximization and long-term growth of our bank. -- with high regard to realizing a long-term, stable dividend return. And in 2025, we continue to increase our shareholders' returns by enhancing the earning capability and strengthening capital utilization and giving out quarterly dividends, raising the ordinary dividend payout ratio. And also, we refined our corporate governance procedure to add the terms of treasury sales in the general mandate related to share buyback. In the year, our attributable profit grew 4.1% year-on-year to HKD 40.1 billion, ROE reaching 11.51%. And the Board declared a final dividend of HKD 1.255 per share. Including the 3 interim dividends, which had already been paid, our total dividend was HKD 2.125 per share. which is 68% growth year-on-year. The dividend payout ratio was 56%, up 1 percentage points from 2024 levels. For 2026, we'll continue to take into account our earnings performance shareholders' return expectations, regulatory requirements, risk changes and various business needs and will determine the full year dividend within the payout range of 40% to 60%. And at the same time, as was asked, and we have mentioned before that the Board has in principle approved the framework of the 3-year shareholder return program for '26 to '28 aiming to enhance shareholders' return through flexibly implementing the capital management measures, including orderly increases in our dividend payout ratios within the range with share buybacks, special dividends, et cetera, in accordance with market conditions. As for the details of the program, remains subject to external regulatory review and internal corporate governance procedures. It is expected to be implemented upon the release of interim results announcements for 2026 after due process by the management of the bank. So in the future, we will have to wait for the announcement of the interim results for 2026 before we can release the details and the process. And for the other question concerning for the fourth quarter, our impaired loan and professional situation. Let me just tell you about the asset quality overall, and then I will talk about the impaired loan ratio, et cetera. for 2025 with Hong Kong's economic growth accelerating with continued improvement in external trade, retail sales and also in the residential property market. However, we do notice that office and retail commercial properties still face pressure from high vacancy. So we continue in our efforts to closely monitor the market information and customer dynamics and strengthen credit risk control mechanisms and measures to maintain strict monitoring of high-risk credit portfolios and timely review internal credit ratings and loan classifications. As at the end of 2025, our impaired loan ratio was 1.14 percentage points, up 9 basis points from the end of last year, continuing to outperform the Hong Kong market average, which is 2.01%. And we make adequate provisions with full year impairments of HKD 8.25 billion which is an increase of HKD 3.3 billion year-on-year, and credit costs were 49 basis points, which is up 19 basis points year-on-year. And primarily, this is driven by impairment increases from internal credit rating downgrades of certain property customers and the weakened cash flow projections for certain existing NPL customers given the ongoing pressure in the property market. And also as of the end of December, our impaired loan coverage ratio was 95.9% and which is up 11.1 percentage points from the end of last year. And as mentioned, with some of the customers with the weakened cash flow situation, we will be we are able to see that for our provisions, it is increased. But overall speaking, I would say that we expect for our impairment ratio, overall speaking, there is certain pressure, but we will continue to perform at a better-than-market average level. And we will continue to be consistent with our prudent strategy to maintain adequate provisions. If there are no big swings in the global economies, -- we expect the full year credit cost to improve compared to 2025. In the fourth quarter, we see certain faster increase for our property customers in in particular, and this is because of the reasons that I have mentioned just now.

Yes. I have a question concerning provisions and impairments and macro economy. Now -- this year, we saw a lot of things happening. So if you look at the ECL and macro situation and some of the risks, what do you think are some of the risks that will impact us for example, in our exposure for Middle East or certain private credit situation in the U.S. are there such exposures or if the oil prices continue to be high, and this impacts negatively the trade and economy of Southeast Asian countries, for example, ForEx situation. How do you see this reflected in our financials?

This is Xu please, indeed, from the external environment that we did observe some dynamics, including the dynamics in Middle East, the conflict there. and the tensions has brought about the fluctuations of oil price. So from a credit risk perspective, what we can see from Middle East, our exposure there are very small. Despite the fact that the Middle East tensions are still unclear however, in general, for our exposure, it is small and limited and the risk is manageable. And you mentioned the upward trends of oil price. However, how will it evolve? And how long will it persist? And through what means and what processes will that affect global inflation -- the path weight should be under observation. Therefore, in general, when we look at our ASEAN business, of course, we are conducting research in an appropriate manner, and we have been doing examinations in general, we believe the risk is controllable and manageable. And from private credit perspectives, currently, we do not have direct private credit exposure. As for private equity customers Yes, we do have them. However, we do not have direct exposure to private credit. We do not have such product. So we believe the overall risks remains manageable. We do not have direct exposure again. And for private equity customers, we have exposure, but it is relatively small, and we are observing related risk. We believe it is manageable.

Thank you, DCE Xu. We would like to invite the next questions from the next analyst. Michael, please?

Thank you, management. I'm from Citic. My name is [ Michael. ] I've got 2 questions for the management. Number one, I would like to ask for the outlook of NIM. HIBOR in Q1 has come down. So would that have any pressure on our margins. And of course, the expectation for U.S. dollar interest rate have fluctuated. The rate cut expectation has come down as well. So facing the dynamics of U.S. interest rate changes, how would that affect our NIMs in 2026. Could you please talk about the outlook? And question number two, the fee income, as you can see, there is some pressure. So could you please talk about the outlook for the wealth management business and the fee income in 2026. I've got 2 questions.

So let us answer the question about fees and commissions, and then Mr. Xu will come back to answer your first question.

Thank you very much, Michael, for the questions. First of all, for the overall 2025 situation, if I can start with that and look into 2026. In 2025, Hong Kong's economic growth accelerated with continued improvements in retail and tourism as well as active trading and stock and property markets -- so we seized business opportunities, focusing on customer demand for wealth management and cross-border consumption. We strengthened products and services and expanded our source of fee income Full year net fee and commission income was HKD 11.27 billion, up 13.9% year-on-year. And among this, income from investment insurance businesses grew by about 60%, mainly driven by securities brokerage, insurance and funds distribution. We also capitalized on the positive sentiment in the Hong Kong stock market and also the rising IPO demand. And I also mentioned that it is and 45% and 43% in terms of our securities brokerage and funds distribution income, respectively. Now fund sales market sales also increased for the fourth consecutive year. And also with our product promotion and credit cards, et cetera, we have also experienced some growth. As we have mentioned, the fee income there is a 3.9% growth. And at the same time, there is for the single quarter of the fourth quarter, there had been some higher demand, but at the same time, there had been some structural changes to our businesses as well, and they have brought on higher net fee and commission. And also in terms of our policies in terms of macro with the employment and also with investment increasing, we believe that there will be further growth for net fee and commissions growth. And as mentioned, we will continue with the efforts in the 2025 investments, including in wealth management, focusing on the needs of high-end and cross-border young customer segments and also in line with our strategy, we will continue to work together with our parent bank, and it can bring on customer service and other services and it will bring on higher net fee and commission income. So we will be working together with our parent bank and also with market development to bring on higher income in this regard. Next, I will talk about the interest rate trend. This is how we see it. First of all, from the U.S. dollar point of view, from the beginning of the year to now, the Fed rate had been 3.5% to 3.75% within that range because of political changes, there had been fluctuations in prices, including in oil. And there has been more concern in the market concerning inflation. But on the hand, we see for future Fed funds rate, it is more or less the same within the period. So that is to say, for the U.S. dollar, lowering the interest rate, it has significantly decrease the expectation. As for the U.S. dollar loans we see that the yield curve has already reflected the market expectation. So going forward, for the market, we believe that it will depend on oil prices and its impact on inflation. And that would also include the global economic outlook. These will continue to affect the economy and also the U.S. dollar interest rates. From a NIM point of view, the U.S. dollar situation impact on NIM for our bank, there is still a small negative gap for U.S. dollar. So the exposure is controllable. As for Hong Kong dollar, we are in a small positive gap. And so this will benefit us -- but at the same time, as we analyze Hong Kong dollar, as you have mentioned just now, starting from the beginning of 2026, liquidity had been good. And for HIBOR, from the beginning of the year to 3%, it has come down to 2%. And at the end of the quarter, it is at 2.4% or so. So if we look at HIBOR changes, it depends on the demand for Hong Kong dollar, the capital market movements and also end of quarter factors. So overall, for HIBOR coming down and also the gap is about 120 to 130 between the HIBOR and U.S. rates. So it has brought on some pressure on the banks, and we continue to monitor closely the market -- and also, we will be looking at the very dynamic market situation and interest rate situation and we will continue to mitigate any factors concerning interest rate fluctuations. Well, thank you very much. Helen next question please.

I am UBS analyst. Helen. I have 2 questions. First of all, concerning the overall this year, concerning capital growth for our bank. In the past 2 years, we see that for capital growth for the bank has been rapid. And 1 of them is about the liability side, structural drive. For overall, Hong Kong deposits have been increasing rapidly. So for the deposit side, what is the growth target, please? And also, as mentioned, for the capital structure and arrangement, for example, investment in bonds and also loans. What is the target, please? I have a second question concerning costs. And in 2025, we see that cost income is already at a very low level. I do not know how you see the future. For instance, how do you see the cost growing? Is there a target for cost growth or whether for cost to income ratio, there is a target. And also, what are some of your investment areas I see a lot of peers of yours are already deploying a lot more AI, for example. Will this be an investment for you? And how would it impact our benefit your efficiency, for example.

So that was way more than 1 question. It was 2 big questions and a lot of small questions. In terms of assets, I would like to ask DCE Wang to address that. And then mortgage DCE Chan, please. For deposit DCE Xu in terms of CIR, I would like to have DCE Xu to address that as well. For AI, other colleagues will address that. So all together, there will be 5 questions.

Thank you, Helen, for the questions. In terms of loans, DCE Xu has mentioned in the presentations. In 2025, our Mainland and Hong Kong economic recovery remained on solid trend with full year GDP growth of 5.0% and 3.5%, respectively, so we can feel that the demand for loans has bottomed out. So we seize business opportunity and grew customer loans by 2.3% this year to HKD 1.72 trillion, maintaining leading positions with local market share of 16.27% and corporate loans SOEs as grew rapidly and mortgage grew rapidly for RMB loans and Southeast Asian loans, there are the drivers. Looking into 2026 affected by factors such as uncertain U.S. tariff policy and elevated geopolitics risk Global economy may continue a low growth trend, presenting challenges for the banking industry. We also have positive sides. So for example, Chinese mainland macroeconomic policy expected produce impact upfront, driving increases in investments and growth in export and consumption and rapid development in new quality productive forces. While on the other hand, Hong Kong will accelerate cultivation and application of innovative technologies, optimizing industry structure while China are going overseas. All these presents positive trends, helping Hong Kong to integrate into the bigger development strategy. On top of that, we have China ASEAN FTA 3.0 upgrade protocol, it will further enhance trade facilitation -- and all these will help us to bring out the demand for loans and the liquidity sufficiency will help the Hong Kong dollar interest rate dynamics, however, it is still affected by U.S. dollar interest rate. Well, RMB were maintained at a low interest rate ratio. All these will help us to improve the financing of customers. It will also support the steady growth of the loans in Hong Kong. So therefore, we will set foot in Hong Kong, while helping cross-border business will serve real economy. We will utilize mortgage in RMB will leverage the advantages of green technology finance adhering to the bottom line of risk management, we will balance between profit and scale to outperform the market. In relation to loans. Yes, in 2025, growing benefiting from positive factors such as sustained local economic improvement across our stock market following Hong Kong dollar rate and increasing rental yields. Hong Kong's residential property market achieved a steady recovery in 2023. Average price rose by over 3%. Transaction volume exceeded 62,800 cases up 18.3% year-on-year and the rental index hit a record high of an increase of 4.3%. For us, we in 2025, our numbers of new mortgages for the full year was 21,989 up 38.7% year-on-year, with a market share of 33.1% ranking first, in the market for 7 consecutive years, we also maintained market leadership in mortgages for uncompleted properties, completed properties, reverse mortgages and government subsidized housing. As of the end of December 2025, our mortgage loan balance stood at HKD 471.8 billion, an increase of 5.2% compared to end of 2024, outperforming the market growth rate of 3.4%. Overall asset quality remained good with an NPL ratio of 0.131% and and delinquency and rescheduled loans ratio of 0.08% better than the market average. Looking ahead of 2026 -- we can see that the market has been very positive. And with the economics continues to develop steadily and Hong Kong interest rates remained in a moderate downward trend with a cheaper in renting than buying situation persisting, we expect that the residential demand is expected to continue its recovery. Residential mortgages are a core business for BOCHK we remain committed to serving the community by providing comprehensive and professional mortgage services for different property types. We'll continue to leverage our advantages of having the largest branch networks in Hong Kong We serve the citizens in Hong Kong and maintained a high policy development of our mortgage business. I would like to address the deposit topics. In 2025, by the end of '25, we have HKD 2.9 trillion in our deposit. It is an increase of 8.9%. Our market share has reached 16%. And CASA reached increased by 24.3% exceeding the market average growth rate. Our CASA ratio increased by 7 basis percentage to 53.4%. So our deposit growth has been positive. We leverage diversified product and services to drive product deposit growth, further consolidating and expanding the high-quality customer base. We deepen relationship with large corporations, financial institutions, government and public institutions to explore needs in areas in many business. We will sustain steady deposit growth for the year while maintaining a market-leading CASA ratio, and we will manage our time deposit pricing and tenure. And this is our presentation in relation to deposit. Another 1 is in relation to expenses. In 2027, our expenses is HKD 18.19 billion is increase by 4%, while benefiting from the growth of income, our CIR has dropped by 0.9 percentage points to 23.6%. We are still leading in the industry. As we can see that in 2023, our human costs increased by 5.2%. IT expenditure has increased as well. However, that mitigates the decline in part of our rental expenses. Our Equipment expenses increased by 6.2%. Marketing and IT-related expenses has increased. The overall increase of expenses are 5.4%. In 2026, our outlook is that through refined management will achieve cost saving and efficient utilization of our resources. We will also continue to developed in comprehensive marketing manners to replace traditional telemarketing models will also deepen integration of regional operations and platforms to achieve economies of scale through intensive operations will continue to perform low carbon operations and enhanced management of both existing and new resources to optimize cost structure. Operating expenses for 2026 are expected to increase steadily with long-term target of Cost-to-income ratio remaining within 35% remains unchanged and remained at a competitive level among peers. In terms of AI, especially GenAI, it brought great opportunities for financial technologies. We actively explore and implement in AI. We will increase investment in AI. And with the goal of risk bottom line. We have established AI governance mechanisms to organize and promote AI scenario application and risk management. In the year, we realized in 2025, we have implemented dozens of AI application scenarios, including precise marketing intelligence services, risk management and intelligence operations. We fully promote AI office systems for our employees to improve office efficiency in the future for all employees will offer AI knowledge Q&A bot to front office employees and to consolidate Multisource product and business information. And it has been broadly applied to our front-lined customers, we have provided the new AI facilitation in marketing. We have also leveraged market-leading AI technologies to improve customer experience. We also leveraged GenAI in precise marketing. We also integrate AI to our business flow. We have achieved AI marketing documentation formations. In terms of risk management, we have applied AI to translations of negative needs. We also apply AI to news monitoring that help us to improve comprehensive risk management capabilities. We have also in the Sandbox program for Gen AI jointly promoted by Hong Kong MA and Sever port completing AI avatars and ati-fraud solutions. And facing the future, we can see profound influence of AI in banking industry will uphold the principle of making steady progress, pursuing technology empowerment and actively embrace innovative technology from perspective of practical applications to create better value for our business.

Thank you for the management. The last opportunity will be handed over to analysts online. -- analyst from CICC raised 2 questions from Shanghai. Number one, Wealth Management has -- business has achieved rapid growth for many quarters. So how do we see its sustainability? And number two, for deposit CASA growth in 2025 has been very fast. What are the contributions? What are the main customers and business scenario contributions? And how about the trends for 2026.

For the first question on Wealth Management. Thank you very much for the question. Concerning wealth management and its outlook from a macro point of view, let us look at the Hong Kong SAR government and its policy focusing on strengthening Hong Kong's competitiveness as a leading asset and wealth management center and also the national policy is also for Hong Kong to be and IFC and also wealth management center. And with the economy warming back up in a number of areas we have been putting in efforts. First of all, for our wealth management income, as mentioned just now, it had grew strongly and there is some 80% for our fund sales transaction. Personal Wealth Management income grew by 40% year-on-year, and private banking fee income grew by 29%. And also please notice but our structure of customers had also optimized and the SAR government family office policy has strengthened our group collaboration and enhance our influence in the area. And during the year, our private banking AUM grew by 10%. And with the acquisition of BOCI Private Bank, we have completed in January '26. This gives us increased drive as well. And it will continue with our comprehensive investment in succession wealth succession and needs and value growth. And we continue with our TRP and which had rose 13% for a high-end customer. And it is an income contribution of 63% from high-end customer. So this is from the customer structure point of view. And also, we continue to vigorously develop cross-border business and also with sovereign funds and also these cross-border funds custodian and also with the within the year, it had grown some 29% in terms of our AUM. And this is a very important part of our of our business, and that is in total custody assets under custody grew by 29% and full year standard new premiums for BOC Life increased 49.5% year-on-year. And also for our there had been a 37% growth in terms of AUA for our overall fund management commission income. It has also increased substantially for almost 2.5%. So that is BOCHK Asset Management continued to promote product innovation and launching our all-weather Hong Kong dollar money market fund. Looking ahead for 2026, with the 15 5-year plan, the Hong Kong SAR government continues to bring on connectedness including optimizing securities market reforms, expanding the scope of tax concessions and for family offices and funds. So we will step up with these efforts to have more high-end cross-border and family segment customer segment focus. And we will continue to fully unleash the potential for a number of areas, including digital intelligence expand the construction of well plus ecosystem platform and also our insurance business to push forward our private banking business and overall asset management capabilities. And the question on deposits. Actually, I have already answered that question quite fully just now. Just on 2026, our development, the target is that the growth will be maintaining a market-leading CASA ratio with steady deposit growth for the year. So overall speaking, we will be continue to leverage RMB business advantages and internationalization of RMB use, expand our multichannel RMB funding sources. And also, we will manage time deposit tenors and in business development, we will fully utilize the going global development of Hong Kong and connect up to Southeast Asia and also to continue with our leading position in the market and also to strengthen segment coordination and product planning. And by tapping into new customers and retaining our quality customers, we continue to explore new products in a number of areas and with product planning and together with the low cost on and off balance sheet, we will continue to increase our CASA performance.

Well, thank you very much for the questions and the answers because of time, we will have to close the meeting here. If you have further questions, we'll be very happy at the Investor Relations team to answer your queries. Thank you very much. See you next time. Thank you.