Hang Seng Bank's full-year profits up 21% to $3.08b

Their retail banking and wealth management arms account for 51.2% of the bank’s pre-tax profits.

Hang Seng Bank’s profits rose 21% YoY to $3.08b (HK$24.2b) in FY2018 from HK$20.01b in 2017 as all business lines achieved increases in revenue and profitability.

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Net interest income grew by 22% to HK$30.04b, supported by balanced growth in both customer advances and deposits. Effective balance sheet management and the successful acquisition of new customers drove growth in average loan and deposit balances, which increased by 15% and 9% respectively.

Net income from assets and liabilities of insurance business measured at fair value recorded a loss of HK$437m compared with a gain of HK$1.77b in 2017 amidst unfavourable movements in the equity markets. Net trading income and net income from financial instruments designated at fair value together declined by HK$246m, or 10%, to HK$2.14b. Foreign exchange income increased steadily but was more than offset by the loss on equity-linked derivatives due to unfavourable equity market movements. Income from foreign exchange derivatives was also down compared with a year earlier.

Income from insurance business increased by HK$438m, or 9%, to HK$5.08b. For life insurance, net interest income and fee income from life insurance business rose by 6%.

Investment returns on life insurance business recorded a loss of HK$605m compared with a gain of HK$1.76b in 2017, reflecting the less favourable movements in the equity markets in the second half of 2018.

Net insurance claims and benefits paid and movement in liabilities to policyholders decreased by 3%. Despite the increase in new and renewal business written, the net decrease was mainly due to regular review of discount rate reflecting the higher prevalent interest rate.

Operating expenses increased by HK$1.4b, or 13%, to HK$12.17b, due mainly to the bank’s continued investment in technology, people and services enhancement, as well as increased professional and consultancy expenses on initiatives to support business growth and investment in regulatory compliance and transformation programmes.