Ladies and gentlemen, good afternoon. Welcome to the 2025 Interim Results Briefing of BOC Hong Kong (Holdings) Limited. I'm Xuefei Huang, Board Secretary. To begin with our results briefing, I would like to introduce the senior management with us today: Mr. Sun Yu, 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; Madam Li Tong, Deputy Chief Executive. Today's meeting consists of three parts. First, our CEO, Mr. Sun, will introduce the implementation of our strategy in the first half of the year. Our Deputy Chief Executive, Mr. Xu, will present our financial results. Finally, Mr. Sun will share with us the outlook and key priorities for the second half of the year before a Q&A session. Now, I would like to hand over to CE Sun. Mr.
Sun, please.
Thank you. Good afternoon, ladies and gentlemen. In the first half of the year, the banking sector continued to face a challenging operating environment due to highly uncertain global economic and trade situations, as well as local market interest rates. BOC Hong Kong remained committed to pursuing progress while ensuring stability, aiming to achieve high-quality and steady growth in its operating performance. During the period, our profit attributable to equity holders rose by 10.5% to HKD 22.2 billion. ROE increased by 0.53 percentage point to 12.92%. The Board has declared a second interim dividend of HKD 0.29 per share. Total DPS for the first half showed year-on-year growth amounting to HKD 0.58. We enhanced our service quality and efficiency, further consolidating business advantages in the local market and maintaining leadership in new mortgage loans, syndicated loans, cash pooling, and IPO receiving bank services.
By actively identifying customer needs, we achieved growth of 44% in the number of cross-border high-end customers and 35% in new high-end personal banking customers. The number of cash pools increased by 15%, while assets under custody grew by 19%. We doubled the amount of bonds underwritten, facilitated BOC Group's market leadership in offshore RMB bond underwriting business, and secured a second position among the leading players in terms of Swap Connect business volumes. We were also appointed by the Shanghai Gold Exchange to operate its first international board-certified vault in Hong Kong and became the first offshore clearing member of the Shanghai Clearing House. We further strengthened synergies and performance across our integrated business platform. BOC Life grew its standard annuity premiums by 30%, ranking second in the market for the first quarter. BOCI Prudential's AUM increased by 13%.
In addition, BOC Hong Kong Asset Management participated in the issuance of Asia's first investment-grade government Sukuk ETF, which was successfully listed in Hong Kong. We seized the opportunities arising from the enhancement and expansion of mutual market access schemes and maintained our leadership across Stock Connect, Bond Connect, Wealth Management Connect, and Swap Connect. We became one of the first banks to participate in Payment Connect, for which we serve as a sole settlement bank. To proactively expand our cross-border financial services and meet market demand, we launched the dual-currency BOC Go Card and grew our BOC Pay+ Mainland transaction volumes by 40% year-on-year. We extended the attestation service of GBA account opening to all Mainland cities in the GBA and introduced RMB financing solutions through GBA loans. In addition, the monthly average of new account openings under the New Capital Investment Entrant Scheme was almost doubled.
We supported Hong Kong's development as an international hub for innovation and technology, as well as the construction of the Northern Metropolis. While assisting the HKSAR government in issuing infrastructure bonds, our tech enterprise customer base also continued to grow steadily. We focused on fostering regional collaboration, further refined our One Branch, One Policy differentiated management strategy, and offered customers integrated financial services with global support at any point of contact. We built a cross-border corporate banking brand that aimed at growing global enterprises, supported the major growing global projects, and cultivated relationships with large corporates in the region. We optimized our wealth management brand and expanded payroll services, while accelerating digital transformation and strengthening the trading, settlement, and market-making capabilities of our Southeast Asian entities.
During the first half, we achieved solid results in the Southeast Asian-related businesses, with deposits and loans increasing by 10.5% and 8.4% respectively, outpacing the corresponding growth rates of the group. Income increased by 9.3% year-on-year. NPL ratio of our Southeast Asian entities was 2.7%, down 8 basis points from the end of last year. We proactively participated in offshore RMB market development and achieved growth of 16% in RMB loans, 90% in the underwriting volume of offshore RMB public bonds, and 47% in RMB fund sales. We further enhanced our clearing capabilities, witnessing steady growth in RMB clearing volumes at BOC Malaysia, the Manila branch, and the Phnom Penh branch. To support financial service development, we provided policy recommendations and promoted product and service innovation.
We acted for the first time as a settlement agent for RMB green bonds issued by the Ministry of Finance, became one of the first banks to participate in Hong Kong MA's RMB Trade Financing Liquidity Facility, and helped complete the issuance of the world's first Shanghai Free Trade Zone offshore bonds, including acting as a sub-custodian. We remained a great supporter of the development of Hong Kong's financial infrastructure, while deeply refining our services through more advanced smart operations. We fully supported Payment Connect, as well as Hong Kong MA's interbank account data sharing and credit data smart initiatives. We further enriched the application scenarios of e-CNY and completed the phase II sandbox testing of the e-HKD Pilot Programme. We also expanded the scale of mBridge's pilot program, supplying e-CNY and e-HKD liquidity for various financial institutions in the Chinese mainland and Hong Kong.
We empowered our business development through digitalization, growing the number of active mobile banking personal customers by 10% and iGTB corporate mobile banking transaction volumes by 55%. We upgraded the latest version of BoC Pay+ , which grew its customer base by 6.5%, while BOC Bill's total settlement volume increased by 13.3%. We promoted intelligent operations and established an AI committee to coordinate AI-related scenarios application and risk management. We continued to enhance our digital metrics and talent cultivation and developed AI in application development for smart risk control and RegT ech, while expanding the capacity of the regional operating center in Nanning to increase the efficiency of our centralized operations. We consistently pursued our ESG ambitions and enriched our green and low-carbon financial products and services.
In the first half, our corporate green and sustainability-linked loans increased by 25%, ESG bond underwriting volume rose by 124%, and banking book ESG bond investments grew by 12%. We assisted the HKSAR government in publicly issuing green bonds and infrastructure bonds denominated in multiple currencies. We launched the Urban Green Up campaign to support industry action and carbon neutrality. BOC Life became one of the first issuers to sign the Insurance Industry Climate Charter. We actively fulfilled corporate social responsibilities, carrying out more than 30 charitable projects and over 60 volunteer events. Our efforts were widely recognized by the market, with BOCH K receiving various ESG and CSR accolades from renowned institutions and financial publications. This concludes the strategy review for the first half. Next, our DCE Mr. Xu will walk you through the financial performance. Mr. Xu, thank you.
Thank you. Thank you, CE Sun.
In the first half, we proactively managed assets and liabilities while effectively controlling funding costs, easing the impact of low interest rates on the net interest margin. We captured opportunities arising from the strong capital markets to grow our fee income, prudently controlled expenses, and strengthened risk management. As a result, our after-tax profit grew 11.4% year-on-year to HKD 22.8 billion. We expanded our high-quality customer base, tightening demand in clearing, custody, treasury, and IPO services, and deepening the development of our cross-border payroll and wealth management businesses to attract transactional deposits and optimize our deposit mix. Compared with the end of last year, our customer deposit increased by 5.6% to HKD 2.88 trillion. CASA deposit surged by 31.7%, with CASA ratio improving by 11.5 percentage points to 57.9%.
We enhanced intragroup collaboration and capitalized on increased demand for RMB financing to explore the business opportunities from local blue chips, multinationals, leading Chinese growing global enterprises, and large Southeast Asia corporates, while consolidating our competitive advantages in the mortgage business. As at the end of June, our customer loans reached HKD 1.71 trillion, up 2% year to date. Of this, loans for use in Hong Kong increased by 1.7%, while loans for use outside Hong Kong rose by 3.5%. During the first half, we strengthened asset liability management by dynamically managing our banking book investments, securing low-cost funding sources, and enhancing the management of time-deposit pricing and tenors. Adjusted for swap impact, our net interest income increased by 0.4% year-on-year to HKD 28.9 billion, while NIM narrowed by 7 basis points to 1.54%. Our second quarter NIM was 1.53%, down 2 basis points quarter- on- quarter.
The first half of the year witnessed a recovery in capital market sentiment, with robust IPO activity and sustained southbound fund flows. We captured opportunities to deepen wealth management business development, with cumulative fund sales more than doubling and the number of new securities brokerage customers continuing to rise. Fee income from our investment and insurance business grew significantly by 95%, resulting in 25.8% growth in net fee income. We optimized resource allocation to support the group's development priorities and maintained stringent cash control to increase utilization efficiency by pursuing low-carbon operations and refining our brand network layout. Operating expenses increased 2.3% to HKD 8.3 billion, while our cash-to-income ratio improved 2.2 percentage points to 20.8%, consistently outperforming the market average. We reinforced the monitoring and control of high-risk credit portfolios and conducted timely reviews of customers' internal credit ratings. Overall asset quality remained solid.
At the end of June, our NPL ratio decreased 3 basis points to 1.02% from the end of last year, continuing to outperform the market average. Due to higher impairment charges resulting from internal rating downgrades of certain accounts and downward revision in expected future cash flows from existing non-performing customers, annualized credit cost rose by 14 basis points year-on-year to 0.39%. ECL coverage stood at 0.88% of total loans, sustaining a strong capability to withstand potential risks. Due to profit growth as well as RWA savings from credit risk and operational risks following the implementation of the new Basel III rules, our total capital ratio and CET1 ratio increased to 25.69% and 23.69% respectively. Liquidity remained solid in the first half, with average LCR and NSFR standing at 208% and 140% respectively. This concludes our interim retail review.
CE Sun will now share the group's outlook and priorities for the second half of the year.
Thank you. In the second half of the year, trending interest rates, global trade, and geopolitics are expected to remain uncertain, while Hong Kong's economy will continue to undergo cyclical and structural adjustments, putting pressure on banking operations. At the same time, the Chinese mainland is set to meet its annual targets, supported by solid foundations and stable, progressive economic momentum. The Hong Kong SAR government will actively boost consumption, attract investment, and develop diversified markets. Hong Kong's global appeal and competitiveness will increase as it further reinforces its role as a super connector and a super value adder. In addition, new opportunities are emerging for the local banking industry from the industrial chain optimization of China's growing global enterprises and the prices and the robust development of AI and digital assets.
In the second half, we will continue to leverage our strategic function in support of the group's globalized development and firmly implement the key initiatives set out earlier this year. We will deepen the development of our private banking, asset management, and custodian business, strengthen our role as a regional headquarters for the Southeast Asian operations, and enhance our expertise and performance in the mutual market access scheme and RMB business. We will embrace innovative technologies, strengthen talent development, and bring the current five-year strategic plan to a smooth conclusion, laying a solid foundation for the next five-year plan. We will continue to balance quality, profitability, and scale, diversify income sources, maintain consistent risk management, and pursue high-quality development with the aim of delivering value for our shareholders, customers, employees, and all sectors of society. This concludes our presentation. Thank you.
You are now very welcome to ask any questions you may have. Thank you.
Okay. Thanks for the presentation by CE Sun and DCE Xu. It is the time to answer questions from our analysts. The Q&A session will be conducted in Mandarin. English-speaking friends, please feel free to ask the hashtags from our colleagues for the simultaneous interpretation service. [Foreign language].
If you have any questions, would you please raise your hand? We will bring you a roving microphone, and would you please limit your questions to two each time, and please introduce yourself and your organization before you ask questions. Gary?
Thank you so much, the management, and congratulations on the very good performance. I have two questions. First of all, on NIM and also the outlook for NIM. We observed that for HIBOR, the trajectory has come back to about 3.3 recently. How do you see HIBOR affecting your NIM and also the performance, and do you think it has come back to the previous levels? How do you see the second half pending? The second question concerning dividend and also shareholders' returns, it seems that our ratio had gone to a higher level.
Just want to know from the management concerning dividend policy, will it be increased going forward, and what about share repurchases? Now it's going to be put into treasury shares. It is a possibility made possible by the AGM resolution recently. What are the plans in that?
These are very important questions, Gary. First of all, on NIM, Mr. Xu will answer the question, and then I will come back to answer the dividend questions.
Thank you very much for Gary's questions. First of all, on NIM, HIBOR recently had been fluctuating a lot, and especially in May, there had been a lowering of interest rates. The average one-month HIBOR was 2.88%, falling by 163 and 137 basis points year-on-year and half-on-half, and there had been some fluctuations.
For our bank, after adjusting for swap factors, our net interest income reached HKD 28.9 billion, which is up 0.4% year-on-year, and the NIM was 1.54%, down 7 basis points year-on-year. Affected by the decline in the Hong Kong dollar interest rates, the second quarter's adjusted NIM was 1.53%, down 2 basis points Q- on- Q. Our performance in the first half is solid and stable. Basically, we benefit from our dynamic asset liability management strategies. On the liability side, we secured low-cost funding sources and grew our CASA deposits by 31.7% in the first half, and CASA ratio rising by 11.5 percentage points to 57.9%. We flexibly lowered our fixed deposit prices and shortened our deposit tenors. The average interest rate on customer deposits decreased by 55 basis points year-on-year. We captured the opportunity of market demand recovery for financing and grew our customer loans by 2%.
We effectively managed the tempo and tenors of bond investments to ease the impact of lower Hong Kong dollar interest rates. For the market, the expectation is that there will be two rate cuts in the second half. In July and August, there had been a rebound for HIBOR. Recently, we see that very obviously. In the second half, we see that it is difficult for Hong Kong dollar interest rates to rise back to the 3.8% level recorded during the period when aggregate balance was at a previous low. We believe that it will be lower going forward than before, and therefore, it will present pressure for our NIM and also net interest income.
As for dividend, I am considering that from a number of points of view. First of all, we provide long-term shareholder return built on our good operating results.
In the first half, as I have mentioned, we were able to steadily increase our operating income and manage our operating expenses, and as a result, our attributable profit increased by 10.5% and enhanced our ROE to 12.92%. Also, with the shareholders' demands for cash dividends and increasing their investment flexibility, we have declared a second interim dividend of HKD 0.29 per share. Including the first interim dividend for the first half, it's HKD 0.58. We have always been striving to achieve long-term shareholders' return, and at the same time, we strive to balance a number of long-term developments for the bank and other factors. It is expected for our dividend payout ratio to remain within the range that we have mentioned.
Also, as you have mentioned, at the end of June, we obtained approval of the general mandate from our AGM that permits us to keep shares repurchased in the form of treasury shares. We proactively advance internal and external communication and strive to enrich the toolbox for shareholders' returns options. For capital utilization, we will seize opportunities for business development and integration, strive to outperform the market and our core businesses, and maintain good profitability while optimizing our capital allocation. We will proactively complete the acquisition of BOCI Private Bank and expand our customer base.
Next question, Michael.
Greetings, management. Thank you for the opportunity. I have two questions. First question concerning loans growth. In the first half, it had been growing steadily. There had been some fluctuations in interest rates, though, and also for the property market, there had been some pressure as well. For the second half, can you share with us from what you see in terms of loan demands? Also, for the second half, what are the growth expectations and directions? A second question is about Southeast Asia. In the first half, it had been growing rather well, and we want to increase the Southeast Asian market contribution to the revenue of the company as a whole. What is the strategy and policy in this regard for Southeast Asia? How much would the contribution be to our group?
First question.
Mr. Huabin will answer the question, and then Li Tong will answer the second question.
Yeah.
Thank you very much. Yes, in the first half, our loan demand has increased by a single digit, which is a rebound from previous years, and BOCHK sees business opportunities. At the end of June, we have recorded HKD 1.71 trillion of customer loans, up by 2%. As you can see, it's been growing quite fast in Hong Kong. We have seen the retail and mortgage and other businesses have recorded relatively good growth. Loans outside of Hong Kong have been growing by 3.5%. RMB loans grew robust as well, and it has achieved 16% of growth. For the second half, downside risk remained in the global economy. Trade policies might continue to dampen corporate investment confidence and credit demand, presenting challenges to banking sectors. Meanwhile, we also see opportunities.
First, we can see that with the policy support and the restoring internal growth momentum, China is working hard to achieve its annual growth target. Hong Kong is consolidating its unique advantages as super connectors while integrating into national development. We gained persistent momentum. In addition to that, the negotiations of the 3.0 China-ASEAN Free Trade Area Agreement have concluded, facilitating deeper and broader regional integrations, which also present opportunities to us. DC E Xu also mentions that in the second half, we believe the U.S. interest rates will come down and HKD interest rates might rebound. However, it is still affected by USD, which will maintain a reasonable level, which combined will help reduce the pressure for financing, reduce the burden for financing for corporates in Hong Kong. We believe the bond, the loan demand will recover.
Facing both challenges and opportunities, BOCH K will fully serve the real economy, continue to focus on Hong Kong, cross-border, Southeast Asian market, and overseas markets. We'll leverage our unique strength in cross-border, RMB, and mortgage businesses to capture opportunities from the development of new quality productive forces and adhere to bottom risk bottom lines, effectively balancing among risk, profitability, and scale for lending businesses and striving to achieve solid loan growth, outperforming the market. Thank you very much.
Thank you very much to your questions relative to Southeast Asia business. DC E also mentions Southeast Asia business. Indeed, it is a very important driving force for the g roup. In the first half of 2025, the Southeast Asian economy has maintained steady economic recovery momentum, driven by consumption, export, and investment.
ASEAN achieved a GDP growth of about 4.9% and has remained China's largest trading partner, with the first half bilateral trade volumes growing by 9.6%, accounting for 16.8% of China's total foreign trade volumes. Just like DC E Huabin mentioned, China and the 10 ASEAN countries concluded the comprehensive negotiations on China-ASEAN Free Trade Area 3.0, which will effectively promote deep integrations of industrial and supply chains, injecting sustained momentum into regional growth. BOCH K insisted on an integrated operation approach and our differentiated One Branch, One Policy strategy. We're steadily advancing coordinated regional development. As of the end of June, our related deposit and loan grew by 10.5% and 8.4% respectively, outpacing the group's average growth rate. The related operating income grew by 9.3%, accounting for 8% of the group's total operating income.
We continue to strengthen regional risk management capabilities with our ASEAN SEA entities' NPL ratio dropping, which has dropped to 2.7%. NPL coverage ratio stood at 125%, which remains adequate and ensures our overall risk control. We actively integrate international development. We strengthen synergies to promote our businesses. We seize opportunities from industrial change shifts and fully support key regional projects and large customers. We fully optimize product offerings and iGTB regional services. We advance green finance development and accelerate expansion of custody networks and enhance diversified service capabilities. We fully expand payment and connectivities, of course, and RMB salary direct remittance functions. We improved user experience from mobile banking and strengthened corporate and personal banking collaborations. Our payroll accounts have been growing by over 9% from last year. Of course, we can look at the RMB and treasury services as well, which made further progress.
Our Malaysian Ringgit settlements and trading grew well. We were named one of the appointed overseas offices for trading and settlements in Malaysia, Ringgit. In the second half, we'll continue to leverage our function as a headquarter and collaborate with Southeast Asian entities and promote high-quality regional development. First, we'll focus on Chinese-related elements to expand SEA business. We'll also seize opportunities of the One Belt and Road project. We'll focus on growing global customers and corporate involvement in China, ASEAN economic and trading activities, and leading local industry players. Secondly, we'll enhance RMB clearing network capabilities and comprehensively promote the use of RMB in the regions. We'll work with major regional financial entities, lay the framework of basic RMB product offerings, facilitate direct exchange with local currencies, and strengthen customer trading services and market-making capabilities. Thirdly, we'll advance our digital banking services.
We'll achieve full coverage of iGBT platforms in SEA entities and implement unified plans for regional digitalization using online and smart development mode. Fourthly, we'll enhance risk management. We'll closely follow external environment changes, conduct research, enhance risk judgment and analysis, and further strengthen comprehensive risk control. Thank you very much.
Thank you. Next question, please. Jemmy.
Hi, management. I'm from JPMorgan. I've got two questions for you. First, in the first half, we can see the fee income has been quite robust. My question for management is, how about the second half? What is the momentum and the sustainability growth for this sector? Second, in relation to asset quality in the provisions side, the first half has increased quite substantially. My question is for the management's view on the full-year provisions status. Also, I want to ask in relation to the CRE business in Hong Kong, how do you control the asset qualities, and what's the outlook for the future?
We will have Mr. DC E Chan answer the first question.
Thank you for your question. Now, for the first half of the year, our non-interest income had increased 47.3%, and the increase had been some 53% year-on-year from personal wealth management income growth. Adjusted non-interest income was HKD 11.1 billion, up by HKD 4.6 billion, or 70.2% year-on-year, within which net fee income was HKD 6.3 billion, up HKD 1.3 billion, and 25.8%. Another non-interest income was HKD 4.8 billion, up HKD 3.3 billion, or 216.1% year-on-year. In the first half, the Hong Kong economy maintained strong momentum, especially with the stock market robustness and a stable property market and recovery in tourist numbers and retail sales improvement for consecutive months.
Seizing these opportunities, we focused on customer needs for wealth management and cross-border consumption, strengthened our product services, and expanded our fee income sources, achieving net fee income of HKD 6.3 billion, up 25.8% year-on-year. We also captured the strong stock market sentiment and recorded 95% growth in investment insurance businesses, driven primarily by securities, brokerage insurance, and funds distribution. Since early this year, we promoted securities, products, and different types of funds through multiple channels. As a result, our securities brokerage and funds distribution commissions rose by 64% and 38% year-on-year. Leveraging the strong sales sentiment earlier this year, we extended insurance promotion and strengthened the market of legacy insurance products to high-end and cross-border customers, driving the commission income growth by 2.2x year-on-year.
For traditional businesses, we leveraged our cross-border strengths to optimize cross-border payment experiences and catered for the diverse needs in dining, travel, and entertainment of our customers. We continued to enhance our credit card product suite, launching BOC Go Card, upgrading BoC Pay, and adding new application scenarios to BOC Bill, achieving steady growth in card spending and merchant acquiring, while credit card fee income increased 6.9% year-on-year. We deepened collaboration with offshore and onshore entities of our group by providing comprehensive services to key customers. We successfully brought in multiple new asset portfolios for our customer and our custody in our custody business and grew assets under custody by about 20% from the end of last year, driving 18% year-on-year growth in custody commissions. For the second half, we expect the Mainland and Hong Kong economies to remain steady and positive, with continuous and strong investment in sentiment.
The Mainland's efforts to expand domestic demand and boost consumption, coupled with the Hong Kong government's promotion of tourism and mega events, will drive sustained growth in cross-boundary travel and consumption north and southbound, boosting consumption sentiment. We'll benefit from investment insurance-related fee income, as well as other non-credit traditional fee businesses, and continue to identify our customer needs, focus on customer acquisition and retention, and enrich products and services marketing capabilities, striving to maintain solid growth in net fee income and enrich our trading product shelf to meet our customers' demands and drive diversified growth for non-interest income.
Now, for our asset quality, I just want to talk to you about that and also about our impairment as well as a property market situation. For the first half, the economy in Hong Kong had been stable. In particular, we look at retail sales and also residential prices.
They have been going stable. On the other hand, we do see some pressure in retail and commercial, for example, and it will take some time for it to recover. From our risk management point of view, there is some challenge still. With our risk management and our very good customer base and our asset quality, we have been strong and stable, and our coverage had been also healthy. Our overall quality is outstripping the market, and our loans to non-CRE customers had been healthy as well. We have also been able to provide for the loan category. Construction loans accounted for about 14% and secured loans accounted for about 31%, with collateral mainly located in Hong Kong and relevant average LTV ratio slightly above 50%. Our impairment coverage had increased. At the same time, we had some stress tests and increased our impairment provisions as well.
For some NPL , we see that their cash flow may be coming under pressure going forward, and their asset value may also be coming under pressure. We have increased our impairment coverage. We have increased our 1.1% for the second half. This is more or less the same as the first half. This is the total loan provision coverage ratio. We are in a steady and stable position. We do see good policies coming out in terms of the economy. The Hong Kong government is also putting in policies that would benefit the GDP and the residential market recovery. We continue to be cognizant of the global markets and dynamically and flexibly carry out our risk management and our overall policy for NPL. There is some upward pressure, but it will be better than the industry. We will continue to have full coverage for impairment.
Compared to the first half, our impairment will be more or less the same as the first half. That's the situation. As for the property market, as I have mentioned just now, for Hong Kong, the residential market has shown signs of stabilization, and it is quite clear. For office and retail commercial, they continue to come under pressure. We closely follow the market's changes and review property loan risk policies. At present, we see that even though there are pressures in real estate, it is overall relatively manageable in terms of overall asset quality. As of the end of June, our loans to non-Mainland CRE customers amounted to HKD 252.1 billion, largely flat compared to the end of last year, accounting for 14.7% of our customer loans, down 0.2%.
Most customers are large blue chips in Hong Kong, with over 70% related to listed companies, which have relatively stable financial positions. In terms of loan structure, 82% for use in Hong Kong and nearly 60% for use in property development. As of the end of June, NPL ratio was 1.27%, down by 0.1 percentage points from the end of last year, mainly due to repayments from certain existing NPL customers. Coverage ratio for NPL was 79.7%. Total loan provision coverage ratio was 1%, up 35 basis points. Pledged collateral was primarily Hong Kong property, with average LTV ratio slightly above 50%, while the LTV for NPL was about 65%. In the second half, looking forward, while low level of Hong Kong dollar interest rates will reduce mortgage rate burdens for home buyers, rental yields are expected to rise. This will help stabilize the Hong Kong residential market.
However, office and retail commercial properties will take time to recover. We'll closely track the market development, continue to monitor changes in customers' financial positions, and we will establish feasible credit enhancement. Overall, the credit risk and the risks are quite manageable.
Thank you very much.
Thank you for the opportunity. This is U BS Li. I have two questions to ask. First of all, on asset quality, I have a follow-up question. This year, for the first half, we see that there had been a stable NPL, and I do not know for the loans how much of your NPLs or impairment is related to the Hong Kong property market and developers. What are the refinancing needs of the developers in the Hong Kong market? What about the collaterals, residential, commercial, shops? What is the situation? For property investment balance in Hong Kong, there is a same period increase.
How do you see this going forward? That was the first question. Second question, in the first half of this year, for operating expenses, it is well managed, and it's increased by 2.3% approximately. What do you think will be the trend going forward?
Yes, thank you very much for your questions.
Thank you for your questions. Two questions. You mentioned the NPL issue. At this year, our NPL ratio remains quite stable. We have some newly added non-performing loans, and also, we have some cancellations. According to the cancellation perspectives, we can see that some existing NPL from Mainland customers were canceled. This takes up as the majority, but of course, some of them came from local customers as well. You also mentioned collateral from developers. Indeed, it has increased. Hong Kong property market, as you can see, we have development and investment, two main sectors. For developers, it takes up about 62%, which is the majority. This part mainly came from large listed companies in Hong Kong. The risk profile is good. We have property investment, which takes up about 38%.
While the risk from this sector is relatively higher, for the year, we can see that the NPL ratio in this sector has increased. Some property developers and investment companies in real estate have incurred some non-performing loans, and the internal grading has decreased, which results in the higher NPL ratio. Your second question in relation to operating expenses. Our operating business expenses in the first half of the year have been in good control. As of the end of June, our operating expenses were HKD 8.3 billion, up 2.3% year-on-year. Benefiting from the faster revenue growth, our cost-to-income ratio was 20.76%, down by 2.2 percentage points, continues to lead among local peers. In the second half, or for the full year of 2025, we expect a steady increase of expenses. The cost-to-income ratio for the full year of 2025 is expected to be stable and flat compared to 2024.
We expect to continue to lead among local peers for the year. For BOCH K, we maintained within 35%.
Thank you to your questions and answers. We have about 100 investors online. We have selected some questions from online participants. The first one from Ms. Yan.
BOCH K is an important bridge for cross-border business and Belt and Road region. My question for the management is RMB business, how to leverage your unique advantage in BOCH K to continue to promote RMB globalizations and to enhance the advantage of the currency?
This question will be answered by myself.
I will answer this question. We are continuing steadily in the RMB internationalization. RMB deposits in the Hong Kong market, as of the end of June, were RMB 882 billion, while loans grew 15.6% to RMB 836 billion, up 15.6% on a high base. In the first seven months, insurance volume reached RMB 420 billion, growing steadily with the same period of last year. For our bank, we remain customer-oriented, continuously leading the business and service innovation. We leverage the advantages as a clearing bank and maintained a significant share in global offshore clearing volumes as the volume processed through the RTGS RMB system reached RMB 326.6 trillion. Clearing volumes at BOC Malaysia and Manila branch grew 12% and 20% year-on-year, respectively. The Phnom Penh branch achieved a rapid growth in RMB clearing volume since commencing operations in the first quarter and grew by 62% Q-on-Q in the second quarter.
We enhanced product and service innovation, consolidated our traditional business advantage, and maintained market leadership in deposits, loans, and the new premium insurance market in RMB. For the first half, our RMB fund sales grew by almost 50% year-on-year. We actively participated in the Hong Kong MA's RMB trade finance liquidity arrangement and launched the first RMB insurance premium financing service to seize market demand and diversify RMB investment and financing. We maintained our leading position in Stock Connect, Bond Connect, Wealth Management Connect, Swap Connect, and we commenced the offshore RMB bond repo business by using Northbound Bond Connect as collateral in the Hong Kong market. We launched Payment Connect and acted as a sole agent clearing bank, providing cross-border bilateral clearing for Mainland and Hong Kong banks.
We were appointed by the Shanghai Gold Exchange to operate its first international board-certified vault, enhancing Hong Kong's central position in the gold market. Early this year, policies to deepen financial cooperation between Mainland and Hong Kong, issued by the PBOC and Hong Kong MA, have gradually taken effect, further enhancing the convenience of cross-border RMB usage and reinforcing Hong Kong's status as a global offshore RMB hub. We continue to capture the opportunities from RMB swap agreements, regional currency cooperation, connectivity, and free trade zones to innovate products, enrich RMB cross-border usage, and grow RMB financing and treasury services, enhance RMB clearing and treasury capabilities for our Southeast Asian entities. By doing so, we support the consolidation of Hong Kong's global offshore RMB hub status.
Next, we will have Mr. Wang's question.
Now, in Hong Kong, digital transformation is going on very rapidly, and AI adoption is also very rampant. How do you see AI development and applications going forward for your bank, and what are some of your development plans, please?
Thank you. The rise of GenAI has injected fresh momentum into our fintech development over recent years. We have actively explored and invested in AI applications. We had deployed over 100 AI models utilizing technologies such as GenAI, computer vision, natural language processing, OCR, and speech recognition. It is used for customer service, remote account opening, AML, anti-fraud corporate info analysis, credit rating operations, and network behavior risk control. We have already covered 150 user scenarios for anti-fraud applications. We have been improving the AI governance framework, establishing AI committees to formulate group-wide AI user strategies, to promote scenario usage, and to ensure efficient and compliant AI development. We are developing enterprise-level integrated AIs to support stable operation for open source and commercial large models. We are expanding, scaling up AI across business units to explore AI office applications.
At the same time, we actively participate in the sandbox programs for GenAI, jointly promoted by Hong Kong MA and Cyberport. We have selected for trial in customer experience and fraud detections, which has been well recognized. We have also used AI digital avatars to create financial literacy content. We also empower fraud detections, empower forged documents, and distinguish AI-generated faces and reduce fraud risk. In the future, we'll continue to strengthen digital transformation, consistently solidify AI applications in many regards. In the risk appetite, we'll continue to improve our application, enhance work efficiency, and strive to impress customers and staff.
Thank you for all the answers. This concludes our press announcement. If you have further questions, please contact our IR teams. Thank you. Thank you for your particiaption. [Foreign language].
[Foreign language].
Ladies and gentlemen, good afternoon. Welcome to the 2025 Interim Results Briefing of BOC Hong Kong (Holdings) Limited. We are about to begin. First of all, I would like to introduce the senior management with us today. First of all, the Chief Executive, Mr. Sun Yu, 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, Madam Li Tong, Deputy Chief Executive. There will be three parts to our meeting today. First of all, the Chief Executive will provide a briefing on the implementation of the group strategy for the first half. Then our DC E, Mr. Xu, will present the financial results. Finally, the CE, Sun, will share our outlook. There will be a Q&A session.
Good evening, ladies and gentlemen.
In the first half of the year, the banking sector continued to face a challenging operating environment. At the same time, there had been a pursuit of progress while ensuring stability, aiming to achieve high quality and steady growth in its operating performance. During the period, our profit attributable to equity holders rose by 10.5% to HKD 22.2 billion, ROE increased by 0.53% to 12.92%. The board has declared a second interim dividend of HKD 0.29 per share. Total DPS for the first half showed a year-on-year growth amounting to HKD 0.58. We enhanced our service quality and efficiency, further consolidating business advantages in the local market, maintaining leadership in new mortgage loans, syndicated loans, cash pooling, and IPO receiving bank services. We actively identify customer needs.
We achieved growth of 44% in the number of cross-border high-end customers and 35% in new high-end personal banking customers. The number of cash pools increased by 15%. Assets under custody grew 19%. We doubled the amount of bonds underwritten, facilitating BOC Group's market leadership in offshore RMB bond underwriting business, and secured a strong position among the leading players in terms of Swap Connect business. We were also appointed by the Shanghai Gold Exchange to operate the first international board-certified vault in Hong Kong and became the first offshore clearing member of the Shanghai Clearing House. We further strengthened synergies and performance across our integrated business platform. BOC Life grew at standard new premiums by 30%, ranking second in the market for the first quarter. BOCI Prudential's assets under management increased 13%.
In addition, BOC Hong Kong Asset Management participated in the issuance of Asia's first investment-grade government Sukuk ETF, which was successfully listed in Hong Kong. We seized the opportunities arising from the enhancement and expansion of mutual market access schemes and maintained our leadership across Stock Connect, Bond Connect, Wealth Management Connect, and Swap Connect. We became one of the first banks to participate in Payment Connect, for which we serve as a sole settlement bank. To proactively expand our cross-border financial services and meet market demand, we launched the dual currency BOC Go Card and grew up BoC Pay+ Mainland transaction volumes by 40% year-on-year. We extended the attestation service of GBA account opening to all Mainland cities in the GBA and introduced RMB financing solutions through GBA loans. The monthly average of new account openings under the New Capital Investment Entrant Scheme was almost doubled.
We supported Hong Kong's development as an international hub for innovation and technology, as well as the construction of the Northern Metropolis, while assisting the government in issuing infrastructure bonds. Our tech enterprise customer base also continued to grow steadily. We focused on fostering regional collaboration, further refined our One Branch, One Policy differentiated management strategy, and offered customers integrated financial services with global support at any point of contact. We built a cross-border corporate banking brand aimed at growing global enterprise support at the major Going Global projects and cultivated relationships with large corporations in the region. We optimized our wealth management brand and expanded payroll services, accelerating digital transformation, strengthening trading settlement market making in Southeast Asian entities. For the first half, we achieved solid results in Southeast Asian business, with deposits and loans increasing by 10.5% and 8.4%, respectively, outpacing the corresponding growth rates of the group.
Income increased by 9.3% year-on-year. NPL ratio of our Southeast Asian entities was 2.7%, down 8 basis points from the end of last year. We proactively participated in offshore RMB market development and achieved growth of 16% in RMB loans, 90% in underwriting volume of offshore RMB public bonds, and 47% in RMB fund sales. We further enhanced our clearing capabilities, witnessing steady growth in clearing volumes at BOC Malaysia, the Manila branch, and Phnom Penh branch. To support financial service development, we provided policy recommendations and promoted product and service innovation. We acted for the first time as a settlement agent for RMB green bonds issued by the MOF, became one of the first banks to participate in the Hong Kong MA's RMB Trade Financing Liquidity Facility, and helped complete the issuance of the world's first Shanghai Free Trade Zone offshore bonds, including acting as a sub-custodian.
We remained a great supporter of the development of Hong Kong's financial infrastructure while deeply refining our services through more advanced smart operations. We fully supported Payment Connect, as well as the Hong Kong MA's interbank account data sharing and credit data smart initiatives. We further enriched the application scenarios of e-CNY and completed the phase II sandbox testing of the e-HKD Pilot Programme. We also expanded the scale of mBridge, supplying e-CNY and e-HKD liquidity for various financial institutions in the Chinese mainland and Hong Kong. We empowered the business development through digitalization, growing the number of active mobile banking personal customers by 10% and iGTB corporate mobile banking transaction volumes by 55%. We upgraded the latest version of BoC Pay+ , which grew its customer base by 6.5%, while BOC Bill's total settlement volume increased 13.3%.
We promoted intelligent operations and established an AI committee to coordinate AI-related scenarios, application, and risk management. We continued to enhance our digital metrics and talent cultivation and deployed AI in application development for smart risk control and RegTech, while expanding the capacity of our regional operating center in Nanning to increase the efficiency of centralized operations. We consistently pursued our ESG ambitions and enriched our green and low-carbon financial products and services. In the first half, our corporate green and sustainability-linked loans increased 25%, ESG bond underwriting rose by 124%, and banking bulk ESG bond investment grew 12%. We assisted the Hong Kong SAR government in publicly issuing green bonds and infrastructure bonds denominated in multiple currencies. We launched the Urban Green Up campaign to support industry action on carbon neutrality. BOC Life became one of the first insurers to sign the Insurance Industry Climate Charter.
We actively fulfilled corporate social responsibilities, carrying out more than 30 charitable projects and over 60 volunteer events. Our efforts were widely recognized by the market, with BOC Hong Kong receiving various ESG and CSR accolades from renowned institutions and publications. This concludes the strategy review for the first half, and we also will be providing the financial performance. We have been given a number of escalates in terms of ESG and CSR, in particular in being environmentally friendly. Mr. Xu, our D C E, will go through the financial performance next.
Thank you, CE Sun . Starting at the beginning of the year, the macroeconomy is increasingly volatile since the second quarter. The Hong Kong dollar market rate is coming down, and the Hong Kong dollar USD interest rate spread has widened. We proactively manage asset and liability while effectively controlling funding costs, easing the impact of low interest rates on NIM. We capture opportunities arising from strong capital markets to grow our fee income, prudently control expenses, and strengthen risk management. As a result, our after-tax profit grew 11.4% year-on-year to HKD 22.8 billion. We expanded our high-quality customer base, tapping demand in clearing, custody, treasury, and IPO receiving bank services, and deepening the development of cross-border payroll wealth management businesses that attract transactional deposits and optimize deposit mix. Compared with the end of last year, our customer deposits increased by 5.6% to HKD 2.88 trillion.
Customer deposits surged by 31.7%, with the cost ratio improving by 11.5 percentage points to 57.9%. We enhanced intragroup collaborations and capitalized on increased demand for RMB financing to explore the business opportunities from local group ships, multinationals, leading Chinese Going Global enterprises, and large ASEAN corporates while consolidating our competitive edge in the mortgage business. At the end of June, our customer loans reached HKD 1.71 trillion, up 2% year to date. Of this, loans for use in Hong Kong increased by 1.7%, while loans for use outside Hong Kong rose by 3.5%. During the first half, we strengthened asset liability management by dynamically managing our banking book investment, securing low-cost funding sources, and enhancing management of time deposit pricing and tenor. Adjusted for swap impact, our net interest increased by 0.4% year-on-year to HKD 28.9 billion, while NIM narrowed by seven basis points to 1.54%.
Our second quarter NIM was 1.53%, down 2 basis points quarter- on- quarter. The first half of the year witnessed a recovery in capital market sentiment with robust IPO activity and sustained southbound fund flows. We captured opportunities to deepen wealth management business development, with cumulative fund sales more than doubling and the number of new security brokerage customers continuing to rise. Fee income from our investment and insurance businesses grew significantly by 95%, resulting in a 25.8% growth in net fee income. We optimized resources allocations to support the group's development priorities and maintained stringent cost controls to increase utilization efficiency by pursuing low-carbon operations and refining our branch network layout. Operating expenses increased 2.3% to HKD 8.3 billion, while our cost-to-income ratio improved 2.2% points to 20.8%, consistently outperforming the market average.
We reinforced monitoring and control of high-risk credit portfolios and conducted a timely review of customers' internal credit ratings. Overall asset quality remained solid. As at the end of June, our NPL ratio decreased 3 basis points to 1.02% from the end of last year, continuing to outperform the market average due to higher impairment charges resulting from the internal rating downgrade of certain accounts and downward revisions in expected future cash flow from existing non-performing customers. Annualized credit costs rose by 14 basis points year-on-year to 0.39%. ECL coverage stood at 0.88% of total loans, sustaining strong capabilities to withstand potential risks due to profits growth, as well as RWA savings from credit risk and operational risk following the implementation of the new Basel III rules. Our total capital ratio and CET1 ratio increased to 25.69% and 23.69% respectively.
Liquidity remained solid in the first half, with average LCR and NFR standing at 208% and 140% respectively. This concludes interim result reviews. CE Sun , please.
In the second half of the year, trends in the interest rate, global trade, and geopolitics are expected to remain uncertain, while Hong Kong's economy will continue to undergo cyclical and structural adjustments, putting pressure on banking operations. At the same time, the Chinese mainland is set to meet its annual target, supported by its solid foundation and stable progressive economic momentum. The SAR government will actively boost consumption, attract investment, and develop a diversified market. Hong Kong's global appeal and competitiveness will increase as it further increases its role as a super connector and a super value adder. In addition, new opportunities emerge from industrial chain optimizations of China's Going Global enterprises and robust development of AI and digital assets.
In the second half, we'll continue to leverage our strategic function in support of the group's globalized development and firmly implement key initiatives set out earlier this year. We'll deepen the development of private banking, asset management, and custody business, strengthen the role as a regional headquarter for Southeast Asian operations, and enhance expertise and performance in mutual market access schemes and RMB business. We'll embrace innovative technologies, strengthen talent development, and bring current five-year strategies to a smooth conclusion, laying a good foundation for the next five-year plans. We will continue to balance quality, profitability, and scale, diversify income sources, maintain consistent risk management, and pursue high-quality growth. This concludes our presentation.
Thank you very much. You're welcome to ask any questions.
Now it is Q&A session.
You need to limit your questions to two, and before you ask your questions, please identify yourself and the organizations that you represent.
Greetings, [Phoenix]. I have two questions. First of all, in terms of RMB business, what are some of the measures so that you continue to lead the market and also for offshore RMB demand and opportunities? The second question is on wealth management. What are some of the outlook and policies and measures you may have in this regard?
Thank you very much for your questions. First of all, on RMB business, I'll answer the question, and Mr. Chan will answer the question on wealth management. For RMB, the internationalization continued to make steady progress. As of the end of June, RMB deposits in the Hong Kong market reached RMB 882 billion, while RMB loans' growth was 15.6% to RMB 836 billion, up 15.6% on a high base.
For the first seven months, the issuance volume of RMB bonds reached RMB 420 billion, excluding CDs, growing steadily for the same period of last year. Our bank remained customer-oriented, continuously leading in business service innovation to promote the development of offshore RMB business. We leveraged the advantages as a clearing bank and maintained a significant share in clearing volumes, and the volume processed through the Hong Kong RMB RTGS system reached RMB 326.6 trillion. The RMB clearing volumes at BOC Malaysia and Manila branch grew 12% and 20% year-on-year, respectively. The Phnom Penh branch achieved rapid growth in RMB clearing volume since commencing operations in the first quarter and grew by 62% year-on-year in the second quarter. We enhanced product and service innovation and consolidated our traditional business advantage, maintaining market leadership in the RMB deposits, loans, and standard new premium insurance market.
In the first half, our RMB fund sales grew by almost 50% year-on-year, and we actively participated in the Hong Kong MA's RMB trade finance liquidity arrangement and launched the first RMB insurance premium financing service to seize market demand for diversified investment financing in RMB. We deeply participated in the mutual market access scheme business, maintaining a leading position in Stock Connect, Bond Connect, Wealth Management Connect, Swap Connect, and commenced offshore RMB bond repo business by using Northbound Bond Connect bonds as collateral in the Hong Kong market. We launched Payment Connect and acted as the sole Asian clearing bank, providing cross-border bilateral RMB Hong Kong dollar clearing for the Mainland and Hong Kong banks, and were appointed by the Shanghai Gold Exchange to operate its first international board-certified vault, enhancing Hong Kong's central position in the gold market in the region.
Earlier this year, policies to deepen financial cooperation between Mainland and Hong Kong, issued by the PBOC and Hong Kong MA, have gradually taken effect, further enhancing the convenience of cross-border RMB usage and reinforcing Hong Kong's status. As a hub, BOC Hong Kong will continue to capture the opportunities from RMB swap agreements, regional currency cooperation, connectivity, and free trade zones to innovate integrated products, enrich RMB cross-border usage scenarios, grow RMB financing and treasury services, and enhance RMB clearing and treasury capabilities of Southeast Asia entities. By doing so, we support the consolidation of Hong Kong's global offshore RMB hub status.
As for wealth management, as you mentioned, the Hong Kong SAR government is building Hong Kong into a leading asset and wealth management center in the globe. In 2024, total AUM in the local asset management industry grew 13% in the first half of the year.
Hong Kong reclaimed the top position in IPO fundraising globally, further consolidating the status as a financial center. Since early this year, we capitalized on market opportunities and continued to enhance our comprehensive regional digital service capabilities, delivering rapid growth in wealth management, with results as follows. Let me share. First of all, our wealth management income performance was strong in the first half. We enriched our products and services, optimized online and offline service channels, promoted securities products through multiple channels, and dynamically adjusted our product portfolio to meet customer needs amid a strong market sentiment. Personal wealth management income grew 53% year-on-year, new securities customer accounts continued to increase, and fund sales transactions, including fee-waived money market funds, surged over one time. Bank insurance standard new premiums rose 17% year-on-year.
In terms of fee income, commissions from investment and insurance businesses grew 95% year-on-year, with securities brokerage, funds distribution, and insurance fees rising 64, 38, and 223 percentages, respectively. Our wealth management customer structure continued to improve. We fully met the wealth management and lifestyle needs of high net worth customers, strengthening our premium wealth management brand. New to bank high-end customer numbers grew 35% in the first half. We supported young affluent families and younger customers to plan their wealth in early age, with Family Max customer AUM growing above 10% and young customer numbers increasing over 20%. Capitalizing on the policy for high-end talent relocation to Hong Kong, cross-border high-end customer numbers grew over 40% year-on-year, with cross-border account openings and fund transfer leading the market.
Monthly new account openings under the New Capital Investment Entrant Scheme in the first half nearly doubled compared with the full-year number in 2024. Thirdly, our comprehensive service platforms delivered strong performance. BOC Life standard new premiums rose 33.6% year-on-year, ranking second in the market in the first quarter. As an investment advisor, our asset management facilitated the issuance of Asia's first investment-grade Sukuk Bond ETF in Hong Kong. In the first half, our asset management and investment advisory AUM grew 20% and fund management fees surged about 2.2x . We proactively expanded our global custody network, improved sub-custody coverage in major global investment markets, and successfully became Hong Kong's sub-custodian for asset mutual funds entrusted to a Middle East custodian bank, with assets under custody growing 19% and custody trust fees rising 18%.
In the second half, with the support of national strategies, the government of Hong Kong optimizes cross-border wealth connect and promotes investment product innovation, expanding tax relief. We, as a bank, will seize these opportunities, strengthen group collaboration, and also focus on wealth management needs of high-end cross-border family customer segments to deepen the development of life insurance, asset management, and custody businesses. We'll actively pursue the completion of the acquisition of BOCI Private Bank and promote intra group synergy and build new competitive edges.
Thank you very much. This gentleman over here, your turn, please.
Greetings, Michael, Hong Kong Economic Journal. I have a question concerning your impairment. I see there's a rise. Is it about 59%? I notice. Why is that, please? What is the NPL rate overall for your bank, please? For real estate in Hong Kong, what is the NPL ratio, please?
In particular, for Hong Kong's commercial real estate, what is your exposure, please?
Thank you very much. DCE Xu, please.
Thank you very much for your questions. First, I would like to answer about the general asset quality. At the end of June 2025, our NPL ratio is 1.02%, down by 3 basis points compared to year-on-year. Our asset quality continues to outperform the average of peers in the local market. The mentioned loan percentage is 1.32%, down by 5 percentage points. The annualized credit cost is 39 basis points, up by 14 basis points. The impairment charges are HKD 3.26 billion, up by HKD 1.2 billion. Yes, it has increased in terms of provisions, mainly from the CRE sector, which is under pressure. In the period, some customers in CRE sectors have experienced downgrading internally. Of course, we have used very stringent ways to increase and step up our provisions. We are also evaluating based on some non-performing customers.
We are looking at risk profiles. At the end of June, our NPL coverage ratio is 85.9%, which is an increase of 1.1 percentage points. The total loan coverage ratio is 0.8%. The provision ratio is 0.88%, which is flat from last year. Looking at the second half, we expect steady growth, and we have maintained stringent provision policies. We expect the credit cost of the full year of 2025 will be flat from the first half of the year. This is in relation to provisioning. In Hong Kong, when we look at our local real estate markets in the CRE sectors, we think that this year the housing, the residential market has warmed up. However, the office and consumption models continue to change. In terms of the property market, it is still under pressure.
We are closely monitoring the CRE markets to review our risk policy and implement differentiated credit strategies. While we are under pressure in terms of Hong Kong property loan risk, overall asset quality remains relatively manageable. As of the end of June 2025, our loans to non-Mainland CRE customers amounted to HKD 252.1 billion, largely flat compared to the end of last year, accounting for 14.7% of the group's customer loans, down 0.2 percentage points. Most customers are large blue-chip enterprises in Hong Kong, with over 70% related to listed companies, which have relatively stable financial positions. In terms of loan structure, 82% were for use in Hong Kong, while nearly 60% for use in property development. As of the end of June, the NPL ratio was 1.27%, down by 0.1 percentage point from the end of last year, mainly due to repayment from certain existing NPL customers.
NPL coverage ratio was 79.7%, up by 32.7 percentage points. In terms of collateral, it is mainly local properties. The LTV ratio is slightly above 50%. The overall asset quality is controllable.
Thank you, DCE Xu. The lady in front of the front row, please.
Hi, management. I'm from Caixin. My name is Xiaoqing. I've got two questions. The first question was a follow-up question. I want to ask in relation to RMB development. The central government has paid attention to the RMB globalization. As a clearing bank, BOCHK , do you have any further strategies to strengthen your clearing capabilities? Do you have any effective policies to support this regard? We also see the decrease of U.S. exceptionalism. Any changes in terms of demand for RMB? My second question is in relation to stablecoins. During your briefing, the management has mentioned digital asset development in Hong Kong.
My question for you is that what is your view in relation to stablecoin as a custodian or issuance? Thank you.
Thank you very much for your questions. For RMB business, I will be supplementing that. In my previous answer, I have already talked about how I see the market and some of the policies and measures we have. I just want to emphasize that the Hong Kong MA and the bank have continued to deepen our measures to raise the convenience of use of RMB. That means more opportunities for the development of RMB. For Hong Kong, RMB business is the core of our business. I emphasize that. We have an advantage as a clearing bank, and in the innovation of products and services, we are in a leading position. Now, for regional connectivity and also free trade zones, all these will bring on more RMB usage scenarios and business opportunities.
In particular, for the Southeast Asian market, it will bring on new development opportunities for us in the RMB zone. Thank you very much for your question. We have always been participating in digital transformation and digital assets. In a number of areas, for example, in digital currency, this is our participation. For example, we have mBridge. We have participated, which is led by the Hong Kong MA, and we are the entity, the only entity that had been participating through this channel of participation, providing RMB and Hong Kong dollar transferability. We have also expanded our customer numbers and also participated in research sandbox, testing in Hong Kong MA's ensemble and other digital currency projects, completing the trial of configuration apps for prepayment scenarios and the earmarking of funds for specific users under phase II of e-HKD Pilot Programmes.
We continue to act as a sole agent clearing bank for Payment Connect. Via Hong Kong MA's interbank account data sharing services, we launched simplified personal and secured loans and credit card application processes. Secondly, we integrated technology with business operations. In the first half, we implemented 480 IT projects and processed 11,000 requests. We enhanced the online comprehensive service capabilities and mobile banking app and also corporate mobile banking, launching 180 new and upgraded features. We will continue to participate deeply in this regard.
Ming Pao Curtis, thank you for the opportunity. I would like to ask the following question. In terms of inventory shares from your repurchased shares, which was approved by the AGM, what is the outlook, please? I see that impairment had increased in your first half. Is it because there are certain NPLs or restructuring situations? What sectors do these come from?
What countries or regions do these NPLs come from, please?
I will address part of your questions. In terms of treasury shares, we need general mandates. In June, we have already received approval at the AGM. We'll continue to work with the authorities in Mainland China and Hong Kong to step up our corporate governance. We will also consider long-term development of the company, shareholder returns, and regulatory requirements and other factors. We'll work hard to utilize share buybacks and other measures to improve shareholder returns. Should we have any further details to disclose, we will disclose accordingly according to the listing rules in Hong Kong. To your questions in relation to provisions, as I mentioned just now in my answer, we have increased provisions in the first half, which is significant. Part of the reason is that we have updated some internal ratings for some customers, as well as some increased provisions due to stress tests.
In terms of categories of provisions, 47% is in relation to Hong Kong and Hong Kong-related property developers, while 42%- 44% is related to Mainland CRE customers. This is the basic mix. In terms of the category, yes, I would say that it is mainly due to the CRE sectors. For other sectors, we also see some changes, but that is not significant.
Thank you very much.
Thank you. Any other questions from the floor? Do you have any follow-up questions? Please go ahead.
Yes, I would like to follow up on NIM. As we can see that the spread, the Hong Kong interest rate was changing, HIBOR was low, and the NIM has been under pressure. My question for the management is what is the outlook for NIM for the rest of the year? HIBOR has come up to some extent right now.
Thank you very much.
Thank you for your question. Overall speaking, for the first half of the year, especially in May, HIBOR had been dropping quite fast. For us, in terms of net interest income and NIM, it presents pressure. For July and August, we see that the interest rate had rebounded, and recently, it's rebounded quite rapidly. We see for the first half, the U.S. dollar had been lowering in interest, and there is market expectation there will be two more interest rate cuts. Hong Kong had been rebounding in terms of the economy. However, there is still very little room for the Hong Kong dollar interest rate to go back to first quarter or higher levels as we have seen before. For HIBOR lowering, of course, it is causing some pressure for us in terms of NIM.
Are there any questions, please? Yes, the management had been very clear in their answers.
We will close the meeting here since there are no.