Hang Seng Bank
It’s hard not to like Hang Seng Bank, not least because their branches in stations across Hong Kong’s underground rail network make convenient places to meet.
Handy branches don’t make a good bank, but chief executive Rose Lee’s prudent steady-as-you-go management in a tough year does. After a year when operating profits fell 2% to HK$19 billion ($2.4 billion), Hang Seng endured negligible impact on its capital adequacy (20.8%, down just over a percentage point on 2015), the bank’s return on equity (12.1% versus 12.6% a year earlier) and its return on average total assets (1.2% versus 1.3% in 2015, excluding the Industrial Bank disposal gain that year). Its cost-to-income ratio is a staggeringly low 33%.
Despite narrower spreads on customer lending, Hang Seng managed to improve its interest margin by 2%. The bank’s insistence on asset quality and managing risk was evident in Hang Seng’s bad-loan book, measured at a paltry 0.46% of its total book. At the same time, it is growing revenues and profits in its commercial and wholesale banking business lines and is increasingly an important player in Hong Kong’s small and medium-sized enterprise sector.
In Hong Kong, Hang Seng Bank is a byword for community. With its 10,000 employees, it banks half of the territory’s bankable population, a substantial standalone operation in its own right, albeit one with the resources of mighty HSBC, which owns 62%, behind it. As we say, there’s a lot to like.