Ladies and gentlemen, good afternoon. Welcome to the 2021 annual results briefing of BOC Hong Kong (Holdings) Limited. This is Kenny Lau, company secretary of BOCHK. In light of the current COVID-19 situation, our presentation will be conducted via webcast and teleconference. We apologize for any inconvenience caused. Let's now kick off our results briefing. Firstly, I would like to introduce our senior executives with us today. Mr. Sun Yu, Chief Executive. Madam Jiang Xin, Chief Risk Officer. Madam Wang Qi, Deputy Chief Executive. Mr. Yuan Shu, Deputy Chief Executive. Mr. Zhong Xiangqun, Chief Operating Officer. Mr. Wang Bing, Deputy Chief Executive. Ms. Ann Kung Yeung, Deputy Chief Executive. Mr. Liu Chenggang, Chief Financial Officer. Today's meeting consists of three parts. Mr. Sun, our Chief Executive, will brief you on the implementation progress of the group's strategy. Then Mr.
Liu, our Chief Financial Officer, will present the financials and business results for the period. Finally, Sun Yu will discuss our outlook and key priorities in 2022 before the Q&A session. Now I would like to hand over to Sun Yu.
Ladies and gentlemen, good afternoon. First of all, I'm pleased to introduce our new CFO, Mr. Liu Chenggang, who just arrived in Hong Kong a few weeks ago. Mr. Liu served in various positions related to finance management and treasury operations within BOC Group for a long time with abundant professional experience. Let's applaud to welcome Mr. Liu to join our management team. Now I would like to brief you on the strategic review for 2021. Amid a challenging operating environment, Bank of China Hong Kong seized business opportunities while maintaining stringent risk management. Our new five-year plan is off to a good start with steady business progress and solid financial indicators. Profit after tax for the year was HKD 25 billion, with a reduced decline rate of 12.12% year-on-year.
Total assets grew 9.6% to HKD 3.6 trillion. The board has proposed a final dividend of HKD 0.683 per share, including the interim dividend. Our dividend per share for the year will be HKD 1.13, representing a payout ratio of 52%, up 4 percentage points year-on-year. We deepened the development of Hong Kong core market and further consolidated our traditional competitive advantages. We maintained our leadership in areas such as new residential mortgages, main arrangement of syndicated loans in Hong Kong and Macau regions, IPO receiving bank and cash pooling business. We amassed new growth momentum. Our private wealth AUM grew by 35%. Assets under custody expanded to HKD 1.4 trillion. While our RMB-related client trading volume increased by 35%.
We also issued the first Yen-based certificate of deposit in Hong Kong. We further enhanced our integrated service capabilities. BOC Life ranked third in the market by standard new premium, while BOCI-Prudential Trustee and BOCHK Asset Management recorded steady business growth. We continually enhanced our cross-border financial service capability to capitalize on new business opportunities in the Greater Bay Area and achieved new breakthroughs. We took the lead in launching Cross-boundary Wealth Management Connect service and facilitating southbound trading under Bond Connect program, establishing a leading market share. The customer base of GBA account opening service grew by 41%, while our cross-border mortgage loan services were comprehensively enhanced. We also became the first bank to promote the Bay Area Social Security Service to help customers enjoy their lives in the GBA.
By tapping into corporate cross-border financial needs, we grew our GBA loans by 9.8%, and the loans to innovative technology companies grew by 8.3%. We further refined the Southeast Asian business layout by opening the Yangon branch in Myanmar and the Hanoi representative office in Vietnam. Proactively driving our regional business integration, we strengthened client referrals and the mutual brand recognition of BOC Wealth Management, while promoting the mobile banking and iGTB platform. We continue to focus on serving large customers and the major projects. Encouraging results were achieved through deepened collaboration with BOC's institutions in the Asian Pacific region. Despite the recurring pandemic and political instability in certain countries, our Southeast Asia entities delivered solid growth. Customer deposits and loans increased by 16.4% and 2.1% respectively. The net operating income grew by 8.3%.
NPL ratio was 2.39%, where overall risk remained manageable. We proactively optimized the RMB business management mechanism and stepped up product and service innovations to cement our RMB business advantages. We achieved strong growth in RMB deposits and loans and maintained the market-leading position. Our RMB clearing transaction accounted for over 70% of total global offshore volume. We launched the PBOC Bills repo business market-making mechanism in Hong Kong, serving as exclusive offshore market maker. We supported the local currency settlement framework between China and Indonesia and made Jakarta branch market leader in related business. Our Manila branch and BOC Malaysia became direct participants of CIPS. In addition, our FXall e-trading platform came online and facilitated direct exchange between RMB and the local currencies. We upheld a customer-centric principle and deepened digital transformation through constant innovation.
We enhanced the development, deployment of digital technologies, driving the growth in customer numbers and the transaction volumes on the mobile banking platform. We optimized online credit approval procedure for SME loans and launched an ERP Cloud Services. We also extended the application of blockchain technology to trade financing services, with related transaction amount doubled in the year. We deepened the construction of financial service ecosystems to build an open bank. BOC Pay customer base exceeded 1 million. BOC Bill settlement volume increased by 30%. Our virtual bank joint venture, Livi, has successfully acquired more than 200,000 customers. We promoted smart operations and fully leveraged the operating efficiency of our Nanning regional operations center. We also adopted intelligent risk control and enhanced the efficiency and effectiveness of secure bank operations.
Aligning with the carbon neutrality strategies of the nation and the SAR government, we formulated a five-year sustainable development plan and stepped up ESG training, promotion, and execution. We achieved fruitful results in green finance during this year. The green and sustainable loans grew by 3.1 times. Green deposits grew by 3.5 times. ESG bond underwriting amount increased by 1.7 times. We also launched many innovative products such as Hong Kong's first retail green mortgage scheme, first personal green time deposit scheme, and the first RMB ESG fund. In this February, we launched the second tranche of sustainable and smart living themed green bonds to meet clients' green demand. We strongly supported various financial relief and economic development programs of the local government.
Facing a new wave of pandemic since early this year, we further increased our financial service support to SME customers by providing HKD 50 billion credit resources to fight the virus together with the society. We also extended the application period for loan moratoriums on personal mortgage services, cumulatively donated more than HKD 25 million for charitable purposes, and provided a series of employee care measures. Moreover, we proactively fulfilled our social responsibilities by implementing more than 70 charity projects and more than 90 volunteer events throughout the year. We issued commemorative banknotes of Beijing Winter Olympics, and all net proceeds from it will be donated to local charities. In 2021, we were upgraded to the highest AAA rating by MSCI ESG Research. This is a market recognition of all of our efforts. This concludes our strategic review. Next, our CFO, Mr.
Liu will walk you through our financial and business performance.
Thank you, Sun Yu. It's my great pleasure to join in Bank of China Hong Kong, and I will do my best as CFO. Now I would like to brief you on our performance. Our profit after tax for the year was HKD 25 billion, down 12.2%. This was mainly due to the low interest rate environment, which put pressure on margins and a high base effect as we captured the opportunities to reap gains on debt securities disposal in 2020. In spite of this, we achieved solid growth in net fee income while maintaining provisions and operating expenses at steady levels. We continued to consolidate our mid to high-end customer base and deepen the business ties with large corporates and institutions through a wide range of services, including e-payment and collection, payroll, cash management, and cash pooling businesses.
Customer deposits grew by 6.8% to more than HKD 2.3 trillion, with our market share increasing 0.25 percentage point to 15.25%. CASA deposits grew by 4.3% to achieve the average proportion of 71%, up 7 percentage points year-on-year. We closely matched customer needs and strengthened collaboration with BOC Group to capture business opportunities in Hong Kong, cross-border, and Southeast Asian market. Customer loans increased 6.8% to HKD 1.6 trillion, and its market share rose by 0.2 percentage point to 14.18%, driven by rapid growth in corporate loans and residential mortgages in Hong Kong. Market interest rates remained at low levels in 2021.
Average one-month HIBOR and LIBOR dropped 75 and 42 basis points respectively, weighing on our margin. In response, we optimized the asset and the liability mix by increasing higher yielding assets, resulting in 10.1% growth in average interest earning assets. Excluding the swap impact, NIM for the year was 1.09%, down 24 basis points. It was largely stabilized in the second half of the year, heading down by 2 basis points half-on-half to 1.08%. Capitalizing on vibrant stock market sentiment in early 2021 and Hong Kong's gradual economic recovery throughout the year, we grew the net fee income by 9.5% to HKD 11.87 billion. Among these, investment and insurance-related fee income increased by 7.3% driven by securities brokerage and insurance businesses.
Traditional fee business broadly rebounded with income from credit card, trust and custody services, and loan commission grew by 15.2%, 10.9%, and 18.9% respectively. We consistently enhanced cost management. We will pursue the low carbon operations and optimize business procedure to improve cost efficiency while ensuring enough resources were available for strategic projects. During the year, our operating expenses increased only 0.4% with cost to income ratio at 33.5%, outperforming local peers. We insisted on prudent risk management principles and strengthened risk management foundation. Our asset quality remained solid and the NPL ratio at 0.27%, unchanged from the end of 2020. Credit cost was 0.12%, down four basis points year-on-year.
Overall, provisions were adequate and the NPL coverage ratio stood at 229%, a relatively high level in the market. Our capital and liquidity remained adequate, standing above the levels required by the regulator. We properly managed our capital at a sound and a reasonable level with CET1 ratio at 17.3% and total capital ratio at 21.44%. Meanwhile, we prudently and dynamically managed the liquidity, achieving stable improvements to our LCR and NSFR.
This concludes our results review. Sun Yu will now share the group's perspective and the priorities for 2022. Thank you.
Thank you, CFO Liu. Looking to 2022, the international landscape is evolving rapidly, and the global economic recovery remains uneven. Shifting monetary policy of major developed economies will benefit the banking sector earnings, but could also result in spillover risks. Despite the pressure of shrinking demand, disrupted supply and weakening expectations, the positive outlook of Chinese mainland's long-term fundamental remains unchanged. Though the rapid spread of pandemic will create uncertainties for the city's economic recovery, Hong Kong is, however, expected to achieve continuous growth driven by the national Fourteenth Five-Year Plan and the GBA development under the anti-pandemic initiatives launched by SAR government. Meanwhile, the RCEP has come into effect, and will inject new impetus to regional economic growth. 2022 marks the 110th anniversary of BOC and the 105th anniversary of its continuous operation in Hong Kong.
At this fresh starting point, we will adhere to our strategic goal of building a first-class regional banking group, strengthen the strategic implementation, uphold strict risk management principle, and capture market opportunities so as to achieve high quality growth. At the same time, we will firmly support the anti-pandemic measures launched by SAR government and HKMA to enhance our financial services while taking care of colleagues and ensuring customer safety. We will stand together with the society to navigate these tough times. Amid the challenging environment, we'll strive to outperform the market in our core businesses, such as deposits and loans, maintain stable asset quality and solid risk indicators, improve our margins, and expand non-interest income while enhancing cost efficiency. By achieving these targets, we'll create greater value for our stakeholders and contribute to the economic and social prosperity and the stability of Hong Kong.
That is the end of our presentation. Thank you. We will now open the floor for the Q&A session.
Thanks, Sun Yu and CFO Liu Chenggang. Dear analysts, if you have any questions, please press star one on your phone and stay online throughout the process. Kindly remind that each person can ask no more than two questions each time. Before asking questions, please inform us your name and institution. Now, let our operator to give us the first question.
Thank you. Our first question comes from Yafei Tian from Citigroup. Thank you.
Thank you very much for the opportunity. I have two questions. First of all, on NIM. The Q on Q, I see that there is still a downward pressure. How do you see the LIBOR, HIBOR situation? They seem to be increasing. How come there is still pressure for your NIM? Another question concerning the rate hike trend globally. For this year, it is possible that the U.S. will hike rates by seven times. For the management, do you think that you can give us some direction on 25 basis points hike in rates? How does that help us in Hong Kong in raising rates and your NIM? Further, for the asset quality of your bank, it is very, very stable indeed, and it's different from your peers in the industry.
Can you share with us about your asset quality, please, for this year?
Thank you for your two questions. The first question was about NIM, and I'm going to ask Mr. Liu to answer it. The second question is about asset quality. I'm going to defer to one of my colleagues too.
Let me answer the first question. About NIM. You have taken a very detailed look at our NIM. During Q4, our NIM was 1.06%, a drop of 5 BP. There were several fundamental reasons for it. Because during that quarter, there was a big demand for loans and also a lot of capital has flown in. That's why it has really helped our NIM performance. It has a positive impact on our NIM. When we look at our NIM, we have to look at the midterm and the long-term trend. Another point that you're concerned about is the interest rate hike and its impact on our NIM.
In America, there is a lot of pressure for interest hike, and this is the greatest pressure that I've felt in four years. For several times, they have already increased their interest rate by several dozen basis points. If you look at Hong Kong situation, the Hong Kong interest rate is also following the increase of interest rate in the U.S. But still, the interest rate movement in Hong Kong depends on liquidity in Hong Kong, and Hong Kong's liquidity is very sufficient right now. Whether it's Hong Kong's market interest rate or bank interest rate. In the near future, it is going to rise slowly. But on the whole, we believe that increase of interest rate and net interest income as well as NIM performance of banks will be helped in Hong Kong.
If you look at the external factors, increase of interest rate definitely will have a positive impact on our NIM. But exactly how much of an impact, we have to look at the rate of interest rate hike. Also, how closely the Hong Kong currency is following the U.S. currency in terms of interest rate hike. If you look at the bank itself, NIM as well as net interest income actually is affected by our asset structure and our product structure and our asset quality and so on and so forth. If you look at our annual report, if you look at our chart, there is an assumption there is going to be a certain movement of our net interest income. If you look at this simulated model, it is a static simulated model.
This is a major goal for our long-term performance. Assumptions actually could be inaccurate, and so there could be differences. Because in Hong Kong, there are a large inflow of capital, and so it has affected our NIM performance in Q4. Between 2016 and 2018, you can see that for HIBOR and LIBOR actually that has been an increase of 104 as well as 156 basis points. An increase of 25 basis points in NIM. If U.S. interest rate is increasing very rapidly and definitely its impact on our NIM and also net interest income will be realized within the year.
We have to take advantage of the interest rate increase, exercise, in order to optimize our asset structure and also optimize our net interest income, channels. As to stabilize our expenditure, items as well as to enhance our income performance from interest. Again, the backdrop of interest rate hike, we can really very steadily increase our performance for our NIM. As for the next question, I'm going to answer that concerning our asset quality.
Thank you very much for your concern over our asset quality. If you look at 2021, our asset quality has been stable and NPL has been 0.27, and the NPL coverage was 209%. If you look at these two indicators, actually we have outperformed the market.
The credit cost actually has come down by four basis points compared to the same period last year. That was the situation in 2021. If you look at 2022, from the beginning of the year to now, you can see that Hong Kong has been experiencing the fifth wave of the pandemic. Because of the restrictive policies, you can see that, for retail and also for tourism, they have been impacted upon by the restrictive policies from the pandemic. Also because of geopolitical pressure and also because of tension between China and USA, and also because of the quantitative easing by central banks, actually all of these would impede economic recovery. We are very much concerned about the changes in credit quality as well as changes in the core performance of our customers.
We have to increase our risk management. On the whole, we are very confident that we can maintain NPL performance within market expectations. We're going to take reference from external consultancies. We'll look at our own models so that we can really meet all requirements and we'll be very prudent and cautious. For the whole year, we are going to strive to maintain our credit costs to be stable.
Anyone have more questions? Please press star one on your phone and stay online. Next question please.
I'm from HSBC. My name is Gary. Thank you for this opportunity to ask question. I've got two questions. Concerning loan costs, if you look at the second half of 2021, you can see that there has been some provision. Again, the backdrop of fifth wave of pandemic, are you going to revise the economic forecast downward? Will that create even more pressure in 2022? If you look at credit costs, especially for stage two exposure, you can see that the exposure has increased. In Southeast Asia, the ratio has increased. Can you analyze the credit quality changes towards the end of last year, and what is going to be the credit cost movement for this year? Earlier on, Mr. Sun Yu has indicated that you have already negotiated several obstacles.
However, for the mainland state government, sometimes the government would require banks to actually concede some of its gains. Would that kind of request really put pressure on your loans? Would that create pressure on your profitability?
Thank you very much, Gary, for your question. For question number one, Ms. Jiang will answer that question, and then I will answer the second question. Well, thank you.
First of all, on loan costs, you had three questions. First of all, the ECL, especially for first stage changes. This really reflects last year our ECL modeling, its macroeconomic parameters and factors, and our expectations on economic recovery. There had been certain revisions, and in the first stage, there had been some write back or putting back of the provisioning. So that is for the period and for the entire last year for macroeconomic expectations. Our judgment on the basis of recovery, we have done our ECL modeling.
For this year, as I have mentioned just now, starting from the beginning of the year, we have went through the impact of the new wave of COVID, and also we see geopolitical tensions and these hinder economic recovery. We will continue to monitor the situation closely. On the recovery of the macroeconomy and our judgment, we will look at our internal judgments and also external views, and then we may adjust our ECL modeling factors. The provisions, there may be some changes to that, but overall, the loan costs will be stable for the whole year. As for your second point, that is stage two changes. Last year there had been two areas.
First of all, because of COVID-19 impacted clients and also industries and the loans we have after several rounds of lengthening the repayment period, because out of risk management and prudent policies, we have done some arrangements, including alleviation of pressure. Therefore that would include for some of the loans we have, adjusted them to the second category. For stage two, there had been new provisionings, that is increased provisions. Also for some of the operations they had come under negative impact. These clients have also been put into the stage two and therefore there had been some increase in stage two because of these clients being impacted by the factors I've mentioned just now, including COVID-19. These include clients or customers in the Southeast Asian regions.
It has to do with the Southeast Asian COVID-19 situation as well as geopolitical tensions. For the third point, for the entire year, we will be prudently putting in provisions, but we are confident that the loan costs will be kept at a relatively stable level. Thank you. Secondly, for your question about lowering fees and sharing of profits. Now the mainland and Hong Kong are different. The banks are definitely living up to their social responsibilities, but in different ways. For BOCHK, as I've mentioned, it's been 105 years of continuous operation in Hong Kong, a listed bank in Hong Kong, and very much a mainstream bank in Hong Kong. We are steadfast in our social responsibilities and customer orientation.
Since the fifth wave of COVID, we have been responding to the government in providing certain reliefs in living up to our social responsibility, and this is core to our ESG policy. Thank you.
Thanks for the answers from CE and CRO. If anyone have more questions, please press star one on your phone and stay online. Next question, please.
Thank you. Our next question comes from Mr. Nick Lord from Morgan Stanley. Please go ahead, sir.
Thank you very much. Thank you for taking my question. I have two questions actually. The first is just on costs. I heard, I mean, obviously a very good cost performance in 2021 and a commitment to keep costs well controlled in 2022. I think you spoke about efficiency. Could you just tell us, I'm assuming you know, cost income is relatively easy to control given what happens on margin. If you could give an indication as to what you can do in terms of absolute cost levels in 2022, especially in light of some of the inflationary pressures we're seeing across the world, that would be useful. Then my second question is just back onto that net interest margin.
I see the disclosure that you've given in the report and accounts on the impact of 100 basis points parallel increase and parallel decrease in the yield curve. When we're thinking about that, I guess it's pretty easy what we do with the Hong Kong dollar. I noticed that your benefit on the RMB seems to be the opposite. You benefit from a move down in the yield curve in the RMB. I wonder if you could just talk a little bit about that. I guess in an environment where we've got Hong Kong dollar rising and RMB rates falling, you know, how does that translate into what happens to your NIM?
Thank you, Nick, for your questions. You have mentioned two questions, one about cost, the other one about NIM. I'm going to refer this to Mr. Liu.
Thank you for your question. Thank you for your concern over our 221 cost control and your recognition of it. Basically, last year, against the pressure of income reduction, we basically have instituted a lot of cost reduction policies. We have already transformed our net service points, and also we have gone digital, and also we have redeployed our branches and so on, so that we can stabilize our costs. As for 2022, we are continuing the strategy of sustainability in our development and in our growth.
Basically, we are going to protect our fundamentals and we are going to keep our expenditures within our means. Basically, on one hand, we are going to invest more into digitalization. That, of course, would compress some of our fees, traditional fees, and also, for carbon neutrality measures, they will also increase our cost. At the same time, we are going to optimize our savings and deposits in order to support increase in expenditure in other areas. Basically, we're gonna go more digital, and also we're gonna streamline our procedures, and we are going to redeploy our net points and online points, and also redeploy our branches and so forth in order to reduce costs.
That our investment, as well as our output can continue to outperform the market, so that we can continue to maintain our market leading position. In the long run, our cost is gonna be kept within 35%. As for the other question, it's also about NIM. Again, earlier on, I have already reported to you the interest hikes between USD as well as Hong Kong dollar. As for RMB, actually, there are two parts. You can see that RMB's main field is on the mainland. If you look at the People's Bank, its main concern really is to maintain liquidity and also to continue to maintain overall volume and also to continue to reduce financing costs overall. That is the situation within the mainland. However, there is an offshore part to it.
For offshore, there is going to be some different treatment, because offshore RMB is going to be more affected by international market as well as geopolitical tension. Also it will be more affected by USD as well as HKD interest movements. If you look at our interest sensitivity exposure analysis, you can see that if interest goes up, actually it's gonna help us, because we are going to make use of various currencies in order to optimize our NIM performance. Also our growth definitely will still continue to be better than USD as well as HKD's situation. The RMB still will outperform USD as well as HKD. We are going to optimize our NIM situation using full advantage of that.
If anyone have more questions, please press star one on your phone and stay online. Next question, please.
Thank you. Our next question comes from Jerry Huang from J.P. Morgan . Thank you.
Thank you for this opportunity to ask questions. I've got two questions as well, also about NIM and the other one is about market. I'd like to ask about USD NIM. Just now, Mr. Liu said that it's a static analysis model, but how can we interpret it properly? 2016, you said that it was a positive impact, but how come in 2022 it became a negative impact? What has accounted for this kind of difference? Why is it that the impact has changed from positive to negative? As for asset quality, for BOC Hong Kong, in Eastern Europe and also in Russia, you've got no operation. However, if you look at your corporate customers, is it possible that because of the tension in Eastern Europe, some of your corporate customers might be impacted on?
If that is the case, has it been reflected in your ECL assumption? If you look at individual corporate customers of yours, have you already taken into account a possible impact from Eastern Europe tension?
Thank you, Jerry, for your questions. Mr. Liu will answer the NIM question. As for asset quality, Ms. Jiang will answer that question.
Well, thank you for your questions. The analysts are very deep in their perception of the issues. Now, first of all, concerning the sensitivity analysis, as you have mentioned just now, there are certain factors and changes and impacts to that, including the rate hikes. It provides us with the space and opportunity, especially for assets and our revenue thereof. It is a positive impact. In different periods of time, our asset structure would be adjusted and changed. For example, bonds investment, it would, in terms of asset, be an increase for us. Now, rate hikes in terms of the NIM, we will have to look at the matching of the asset and liability.
For example, our CASA deposit is the biggest part of us. Providing with basic deposits for our customers, their sensitivity actually would be different, and we have different sensitivity models for them. Out of prudence and regulatory requirements for this kind of fixed deposits, we will change or adjust the interest rate according to the prevailing interest rates yearly. Actually this may not be so. Some of the customers will change some of the deposits to fixed deposits to increase their income. The sensitivity is actually not as sensitive as the market interest rates. We have to be balanced in that approach. Of course, we have different assumptions. As we adjust the assumptions, it will yield different results for the analysis. Whether for Hong Kong dollar, for US dollar, any rate hike is positive for us overall.
Through different financial products and tools, we will be able to adjust well our configuration so as to maximize on any NIM opportunities. As for your second question about asset quality, you talked about the geopolitical tensions and its impact on our business as well as some of our customers or credit customers impact. At present, from what we can see is that our credit risk is highly controllable. For our customers, of course, things are changing, but the impact had been minimal. We will continue to closely monitor how the geopolitical situations are affecting the market, and we'll put in the right measures. Where there are changes, we will adopt the relevant measures to meet those changes. Thank you for your question.
Sterile. Next question, please. Next question.
Our next question comes from Ke Haoda from CICC. Please go ahead.
Hey,
Guang Yi Cheng.
Greetings. I'm Ke Haoda from CICC. Thank you for the opportunity. I have two questions. First of all, I see that in January or February, there had been an increase in local loans. Is it because of your changing structure or because of the COVID situation in Hong Kong? And how does it impact your whole year expectations on loans? Secondly, on the property market of Hong Kong, as the U.S. increases interest rates, it may impact the local property market, its demand and its pricing. For 2022, how do you think that this will be affected? Thank you.
Thank you for your question. The first question will be answered by Mr. Wang Bing. The second question will be answered by Ann Kung Yeung, Vice President.
Last year, global economy was gradually recovering. In Hong Kong, there has been a reversal of two years of a continuous and negative GDP growth. Overall there has been an improvement. Overall the loan situation has improved by 3.8%. In Hong Kong we've got a very good customer base, and also, we have diversified our market penetration. As a result, the loan has increased by 6.8% and outperformed the market expectation by 3%. Whether it's corporate loans or individual loans, we can see that there is a good performance.
Now for Southeast Asia, because the pandemic also was very serious there, and so we have been very prudent in enhancing our loan business. Overall, a 2.1% loan growth in Hong Kong terms. Doing our loans, we are very much concerned about our corporate performance as well as our corporate structure changes. Most of our customers are from Hong Kong and also high-quality customers from Southeast Asia. Our situation in this regard actually has outperformed our peers. We are maintaining market-leading position. For the entire 2022, our loan performance is going to be great and the momentum is going to be there. For Q1, because we are already at the end of March, in Q1 our loan growth actually has maintained its good momentum.
For further details, I'm gonna give them to you in our Q1 report. As for in 2022, the pandemic is still fluctuating, and there is a geopolitical tension. Pressure will continue, and we'll continue to pay attention to external environments changes. We also are going to do very good risk analysis. Earlier on, mention has been made of our risk management measures. We believe that with Hong Kong's anti-pandemic measures are taking effect, and especially with the vaccination rate going up very obviously, and also with the support from the mainland government and the central government, and with this good performance, the banking sector will continue to benefit and will continue to improve its performance.
In Greater Bay Area, assuming that we're able to manage our risk properly, we'll continue to outperform the market. We are confident to maintain a loan growth rate of mid- to high-single-digit. As for external macro environment, indeed, it is fluctuating and uncertain. If you look at mainland China, mainland China is also exercising very prudent fiscal policies. It has optimized its taxation structure and also increased investment in order to protect the growth of a macroeconomic growth, so as to maintain 5.5% growth, so that it can maintain its steady growth. In Hong Kong, the financial budget has already been announced, and it's got HKD 170 billion worth of economic boosting measures.
We believe that all of these are going to take effect and is going to fuel economic recovery. In ASEAN, the pandemic is easing. IMF forecast for ASEAN's growth in 2022 actually is still quite optimistic, and so the market prospect is looking good. We believe that there are several market opportunities. As for offshore development, because it can ensure the enhancement of regional synergy being cultivated. Hong Kong can continue to play a leading role, so that we can achieve synergy with Southeast Asia, and also we can work very closely with New Zealand, Sydney, Tokyo and Singapore, so that we can interact with these territories and areas very well, and we can make use of RCEP's impact.
We can make use of the opportunities coming from cross-boundary investment, so that we can further leverage business opportunities to develop our business in the market in Southeast Asia and in Hong Kong. If you look at our three major economic areas, the Greater Bay Area, as well as the Beijing Bohai Rim and also the Yangtze River Delta, you can see that we are very well placed there. You can see that in our BOC overall parent group, we've got a lot of advantages. In Hong Kong, we have three roles to play, and we are going to continue to participate in development. Also we're going to facilitate development. We believe that the Northern Metropolis area is going to bring about a lot of opportunities.
We can expect that there will be a lot of larger warehousing projects as well as infrastructure projects. We're gonna provide a lot of financing services for these. The second opportunity is RMB business. This is once again another advantage of ours. We are going to study the possibilities coming out of RMB business. We are going to continue and enhance our cooperation with the state enterprises as well as central government enterprises and to answer to customer needs, and also to increase the scale as well as volume for RMB lone. Certainly, we're going to increase our input into green economy as well green financing.
Hong Kong is going to be a green financing capital, and so there are four major areas for low-carbon mode of operation, and so definitely we are going to participate in that. In terms of new materials and also new energy and also a relevant industry chain, we are going to provide a lot of financing services for these. At the same time, we'll continue to work very closely with relevant Hong Kong departments in order to study financing services for carbon market related operations and businesses so that we can fully leverage the development of Hong Kong as a green and low carbon business capital. Thirdly, we are going to grasp business opportunities coming out of digitalization.
We're going to make use of integrated circuit, the latest development in that area so that we can fully leverage our advantages as a mainland and mainstream bank. We are going to optimize our services for SMEs. We're going to work very closely with incubation businesses so that we can work very, very closely with potential customers. We are very confident that in 2022 and 2021 we can still maintain a very high single-digit growth in loans.
Thank you very much again for the question about the property market and the interest rate. Property market is very important for Hong Kong, and interest rate, of course, is an important element that affects market sentiment and affordability. Overall, impacts the property market and our mortgage business is a combination of many factors, as we'd all know. The market in 2021 did very well in terms of price and volume. We saw a 3.3% increase in price and a transaction volume of over 96,000, which is 31% over the year before. This has led to a 12.4% growth in our mortgage business, which is faster than market's 9.8%, allowing us to maintain our number one position.
That is also supported by other factors, which included the extended use of our instant valuation service through API, and increased popularity of applications via electronic channels, which had gone up as a result of the introduction of our green mortgages, as that is also paired up with our online applications. As for property prices, we've seen that during the past two years, the market had been affected by various factors, including some of that, which were quite unforeseeable. The range of price fluctuation has been within 7%. According to government's number, up to February, residential housing prices had dropped by about 2.9% versus last year, and about 4% versus historical high, which happened last September. Against the end of 2020, there's still an increase of 0.6%.
This indicates that the price continues to hover around a level that is close to the historic high range, rather resilient despite the various market conditions. Looking ahead, I think the property market will continue to see challenges from COVID, geopolitical issues, the Fed stepping up its pace on a monetary policy normalization and increased volatilities in global financial environment, et cetera. This will trigger risk aversion sentiment, which will negatively affect prices. At the same time, the market will also benefit from what the Hong Kong government's many measures to boost the economy, the plan to gradually ease the pandemic restrictions, and the increase in maximum property value that's eligible for mortgage insurance program. In addition, we see that the short-term supply continues to be on the tight side.
I mean, the supply for properties, residential properties. Given that there's ample liquidity in Hong Kong's banking system and expectation that the Hong Kong rate hike will lag the US dollar interest rate hike cycle, the property market for 2020 is projected to remain stable, and the transaction volume is expected to gradually pick up again. Now, mortgage has always been one of our strategic businesses. We'll continue to upgrade our products, services, and channels, including our Home Expert App, which connects to many other service providers in the home buying industry. We'll continue to enhance our cross-border mortgage services too, and we aim to be customers' number one choice. Hope that answers your question.
Oh, thanks for the answers from Wang Qi and Anne. Due to the time limit, I would like to give the last opportunity to online questions. I noticed that several analysts ask about the asset quality of China property related loans.
Yes. Let me talk about the mainland asset quality for the property market. We have always been careful about the asset quality of the mainland property market. We have always been prudent, and we have been closely monitoring the situation. Through the participation in syndications, we have been controlling the risk thereof. As of the end of 2021, our customers
This is in total, 6.7% of our total loans to the tune of HKD 106.5 billion. According to the Three Red Lines, all the greens would be 82%, yellow category 18%. We have no red category customers. As for nature of company, 77% SOEs and private companies, 23% of total. Investment category customers is 71%. You can see that for our customers overall, the businesses being in the coastal first and second tier cities and also the GBA area and the leading companies in their industry, these are the main profile of our customers. We have no delayed payments during the period. We will continue to closely monitor the operation situation of the sector and also the policies thereof.
We will be closely liaising with our parent company concerning the alignment of our loan policy for this sector. We will dynamically inspect our customer's credit situation so as to calibrate accurately our credit rating and take relevant measures where appropriate.
Management. Today's annual result briefing has come to an end. Should you have any further questions, please contact our investor relations team. Thanks for your participation and see you next time. Bye-bye.