Ladies and gentlemen, good afternoon. Welcome to the 2020 annual results briefing of BOC Hong Kong (Holdings) Limited. I'm Kenny Luo, 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 result briefing. First of all, I would like to introduce our senior executives with us today. Mr. Sun Yu, Chief Executive. Madam Jiang Xin, Chief Risk Officer. Mr. Yuan Shu, Deputy Chief Executive. Mr. Zhong Xiangqun, Chief Operating Officer. Mr. Wang Bing, Deputy Chief Executive. Madam Sui Yang, Chief Financial Officer. Mrs. Ann Kung , Deputy Chief Executive. Today's meeting consists of three parts. Mr. Sun , our Chief Executive, will brief you on the implementation progress of the group strategy. Then Madam Sui , our Chief Financial Officer, will present the financial and business results for the period.
Finally, CE Sun will discuss the group's outlook and key priorities in 2021 before we begin the Q&A session. Now, I would like to hand over to CE Sun .
Good afternoon, ladies and gentlemen. It is my great pleasure to meet you here online for the first time in my capacity as Chief Executive. I would like to express my sincere gratitude for your enormous and long-standing support to Bank of China (Hong Kong). I hope you will continue to support and help us in the future. I would also like to take this chance to extend my gratitude to my predecessor, Mr. Gao Yingxin, and former Chief Risk Officer, Zhuo Chengwen. Under the leadership of Mr. Gao , the company made great progress through proactive actions and innovations over the past two years, and laid a solid foundation for the future development. Mr. Zhuo diligently performed his duties as acting Chief Executive and sustained the stable and orderly development of Bank of China (Hong Kong).
In addition, I'm delighted to introduce our new CRO, Madam Jiang Xin to you, the lady sitting on my left hand. Madam Jiang has extensive experience in corporate banking business and integrated management within Bank of China Group. She is familiar with global financial markets and skilled in cross-cultural communication. We hereby extend a warm welcome to Madam Jiang for joining our senior management team. Next, please allow me to walk you through the highlights of our strategy execution for the past year. In 2020, the COVID-19 pandemic swiftly swept the world and damaged the global economy and brought more complexities to the international environment. Hong Kong's economy fell into recession for two consecutive years, causing hardship for many local industries. In face of severe challenges, BOC Hong Kong strengthened strategy execution and risk management with calm and prudence. Our core business outperformed the market, while financial indicators remained solid.
We continued to gain market shares with strong growth in customer loans and deposits. We maintained strong capital position and stable asset quality among local peers. Profit after tax for the year was HKD 28.5 billion. The Board has proposed a final dividend of HKD 0.795 per share, including the interim dividend. Our dividend for the year will be HKD 1.242 per share, representing a payout ratio of 49.6%. We deepened our engagement in the local market by further enhancing our leading professional services to support economic recovery in Hong Kong. Taking advantage of Hong Kong's emergence as an asset management and wealth management hub for Asia Pacific region, we maintained double-digit growth in the number of mid to high-end customers. Our core product advantage was further solidified as our leadership in new residential mortgage business was sustained.
We kept our market leadership in corporate banking business. Aside from remaining the leading syndicated loan arranger in the Hong Kong and Macau region for the 16th consecutive year, we also continued to lead the market in various areas such as IPO receiving bank business, client acquisition on the Bond Connect, and the cash pooling business. Our DCM business made new breakthroughs in underwriting bonds for local public organizations and renowned enterprises. We boosted our strategy business capabilities and continued to optimize customer experience. We achieved solid progress in regional business development with the global market income of our Southeast Asia entities increasing by 17%. We fully leveraged our regional synergies by accelerating the growth of our Southeast Asia business footprint.
In Vietnam, we received regulatory approval to set up the Hanoi Representative Office, while our Jakarta Branch has obtained regulatory approval for an upgrade on the back of strengthened competitive capabilities. We proactively weathered the impact of the pandemic and steadily advanced business development. In the past three years, our Southeast Asia entities saw a compound annual growth rate of 16.7% and 9.4% in customer loans and deposits, respectively, notably higher than that of the group. The NPL ratio was 1.9%, and overall risks remained controllable. We actively participated in the construction of the Greater Bay Area. A total of 120,000 GBA accounts were opened with us, representing a growth of 40% in the year. We also optimized our GBA mortgage business to enhance the experience of the entire customer journey.
To support the development of innovative tech companies, we tailor-made financing solutions for them and achieved a loan growth of 10.7% in that particular segment. At the same time, we proactively supported new economy enterprises going for IPOs in Hong Kong. We leveraged our RMB franchise to promote RMB usage. In 2020, the offshore RMB clearing transaction value handled by Bank of China (Hong Kong) reached CNY 282 trillion , accounting for 75% of the global total. Bank of China (Malaysia) Berhad and the Jakarta Branch actively drove the local RMB business development. The Manila Branch officially launched its RMB clearing bank business. Bank of China (Hong Kong) launched the market-making mechanism of People's Bank of China bills repo business in Hong Kong to drive the growth of the offshore RMB bond market. We further enhanced the business development of our integrated service platform.
BOC Life improved its rank in the market, while both BOCHK Asset Management and BOCI-Prudential saw solid growth in their AUM. Remaining true to our customer-centric principle, we actively pursued our transformation into a digital bank. We continued to expand our payment ecology contacts in utility services, transportation, consumer spending, charity and education, and promoted cross-sector integration via open APIs. During the year, the number of FPS-registered customers increased by more than 70%, and the BoC Pay transaction volume grew by 2.7 x. We sped up the intelligent development of our service channels. The number of mobile banking users increased by about 30%, and the iGTB service was rolled out in our Southeast Asia entities. To increase the level of service convenience, we set up an electronic experience room at 181 branches in Hong Kong. We used new technology to enhance our business operations and risk control efficiency.
Blockchain was increasingly used in our property valuation platform, covering 97% of all valuations. In collaboration with our parent bank, we led the market by completing the first batch of blockchain cross-border trade financing. Moreover, a bank-wide smart anti-fraud platform was constructed to strengthen our intelligent risk management capability. We continued to strive for long-term sustainable growth by proactively embedding ESG into our corporate development. Led by the sustainability committee under the Board, we have formulated and published a sustainability policy. During the year, we became the first bank in the market to roll out green deposits. Meanwhile, we underwrote green loans and assisted our customers to issue ESG bonds and the green funds to support the Hong Kong Government's green finance promotion initiative. We also took part in various charity projects to show our care for society.
These efforts helped us keep our leadership in ESG area and earned us AA ratings from MSCI and the Hang Seng Corporate Sustainability Index for four consecutive years. In 2020, faced with the impact of the COVID-19 pandemic, we proactively cooperated with the Hong Kong Government and navigated the difficult times together with the local communities. We took the lead introducing five financial support initiatives against the COVID-19 outbreak, actively participated in the government's Special 100% Loan Guarantee Scheme and the Pre-approved Principal Payment Holiday Scheme, and are dedicated to mitigating customer difficulties by offering financing support. Leveraging our advantages in service channels and technology, we devoted maximum efforts to support the government's employment support scheme and the cash payment scheme.
We led the industry to provide job opportunities to new graduates and outstanding youth in Hong Kong, and in making donations to help frontline medical workers and the members of minority groups. Owing to our persistent charitable efforts, we received the Top Donor of the Year award and the Benefactor of the Year Awards from The Community Chest of Hong Kong in 2020. This concludes our strategy review for 2020. Next, our CFO, Madam Sui, will give you an overview of our financial and business performance.
Thank you, CE Sun . In 2020, our profit after tax was HKD 28.5 billion, down 16.5% year-on-year. It was mainly because of impact of lower net interest margin, higher loan impairment allowances, and the decreased value of investment properties due to the economic downturn during the year. We continued to expand our mid to high-end customer base and deepened business engagement with corporates, governments, central bank, international financial institutions, and the sovereign funds on diverse range of services, including payrolls, e-payment, IPO receiving bank business, cash management, cash pooling. Low or non-interest cost CASA deposits grew strongly by 31.8%, with CASA ratio rising to 66.8%. At the end of 2020, our customer deposit grew by 8.7% from the end of last year to HKD 2.2 trillion, taking our market share to 15%, up 0.44 percentage point.
Our customer loans increased to HKD 1.5 trillion, up 7.3% from the end of last year. Our market share increased by 0.79 percentage point to 13.76%. We supported Hong Kong's economy and met the financing needs of high-quality local customers. Loans for use in Hong Kong increased by HKD 66.7 billion, or 7.2%. We also take advantage of cross-border collaboration with mainland China and extended our strengths in syndicated loans into Southeast Asia, thus increasing loans for use outside Hong Kong by HKD 44.5 billion, or 11.3%. During 2020, the sharp fall in the market interest rates and the rise in competition for customer loans and deposits led to significant strength of loan-to-deposit spreads and debt securities investment yields.
Adjusted for the swap-related impact, our net interest margin dropped 36 basis points year-on-year to 1.33%, and the net interest income decreased by 15.6% year-on-year. In response to these challenges, we proactively managed our assets and liabilities by expanding our loan book and optimizing deposit structure. The average interest earning assets grew by 7.3% year-on-year. The pandemic weakened the consumption, dampened business activity, and led to a decrease in the large scale financing deals. As a result, our fee income from traditional businesses such as credit card, insurance, and loans commission dropped notably. We captured a strong demand from capital market and the cash management business, which facilitate a 69% growth in securities brokerage commission and the favorable growth in fee income from trust and custody service, as well as payment services.
For the whole year, our net fee and commission income edged up by 0.7% to HKD 10.84 billion, representing a remarkable improvement over the interim result. While ensuring resources for key strategic projects such as digital transformation and the fintech innovation, we strengthened the cost control so as to mitigate the revenue pressures. Our total operating expense fell by 1.9% year-on-year, and the cost- to- income ratio was 30%, continue to outperform the market. In response to a tough external environment, we strictly adhered to our prudent risk management principle and stepped up the risk control. Assets quality remained steady and sound. Provisions were maintained at an adequate level. At the end of 2020, our NPL ratio was 0.27%, up 4 basis points from the end of last year, while our provisions coverage increased to 230%. Both indicators were better than the market average.
The credit cost for 2020 edged upwards by 2 basis points year-on-year to 0.16%. Provision charges for customer advance and other accounts increased by HKD 637 million, mainly driven by stage one and stage two provisions, as a result of our solid loan growth, ECL model parameter updates, and proactive review of customer credit ratings. Our capital and liquidity positions remained sufficient. As of the end of 2020, our CET1 ratio was 17.75% and the total capital ratio was 22.1%. Our average LCR and NSFR continue to stand at a solid level. This concludes our result reviews. CE Sun will now share our perspective and priorities for the future.
Thank you, Madam Sui. Looking to 2021, the external environment will remain complex while the unsteady and uneven economic recovery around the world will continue to present uncertainties to the banking sector. However, we believe that China's 14th Five-Year Plan and the new dual circulation development pattern will provide favorable conditions for a higher level of opening up. As a super connector with Chinese mainland, Hong Kong will definitely benefit from the orderly construction of the Greater Bay Area, the accelerated opening up of mainland capital markets, as well as relatively fast economic recovery in Southeast Asia. The latest budget plan announced by the Hong Kong Government has well balanced the near-term challenges and the long-term development. It will effectively support local economic recovery and consolidate Hong Kong's status as an international financial center.
Going forward, Bank of China (Hong Kong) will keep focusing on the three major markets of Hong Kong, the Greater Bay Area, and Southeast Asia. The local market is our home base. We will deepen its development and fully unleash the market's potential and explore new growth drivers based on strengthened advantages. We will also seize the opportunities in RMB internationalization and cross-border business arising in our key market of the Greater Bay Area. In addition, we will deploy our Southeast Asia network to tap market potential and continuously improve our regional development capacity. At the same time, we will enhance our core development capability of regional management, digital empowerment, and integrated service provision. We will also vigorously strengthen corporate culture, talent development, smart operations, as well as comprehensive risk control and management so as to support the strategy execution to pursue sustainable and high quality development.
In 2021, empowered by the longstanding support of all sectors of Hong Kong society, as well as the diligent work of our entire staff, we are confident that we will be able to sustain market leading performance in our core business, maintain sound and stable financial and risk indicators, and deepen our ESG development. Pursuing our mission of bridging China and the world for the common good, we will strive to contribute to the stability and the prosperity of Hong Kong's economic and social development, and create value for all stakeholders. This is the end of our presentation. To be frank, to give a presentation without the audience on site is quite a strange feeling. I do hope we can meet in person in the near future. Thank you. We will now open the floor for the Q&A session.
Thanks for the presentation by CE Sun and CFO Sui. Now let us begin the Q&A session. 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, and you may ask questions in either English or Mandarin. Before asking questions, please inform us your name and institution. Now let our operator to give us the first question.
The first question actually is from Gary Lam, HSBC. Please go ahead. Thank you.
Thank you for your presentation, and we can see that Mr. Sun Yu actually has a broad experience from the mother bank from Beijing and try to use it for Bank of China (Hong Kong). I have several questions. Regarding the development targets for the coming three to five years, we can see that the macroeconomic environment in the past few years has undergone major changes, and also because of the pandemic, and also because of changes in Hong Kong GDP growth, and also the U.S. interest environment actually has changed, and also the Southeast Asia development pace has also changed. Under all these macroeconomic changes, how are you going to revise the KPI of BOC Hong Kong in order to respond to those?
While BOC Hong Kong continues to development, if you look at our asset debt situation and also the distribution of asset, and also its contribution to your performance. Is it that you are going to put even more proportion into Hong Kong or is it going to be more focused on GBA or Southeast Asia? Is it possible for the management to share their views on this?
Thank you very much, Gary. Thank you for your very positive comments as well. Let me just answer you the questions about our strategic development in the future. BOC Hong Kong had been listed in 2002, and in the past over 10 years or so, there had been huge developments in Hong Kong. BOC Hong Kong has grown its total asset size by 3.5 x, profit after tax by 3.1x , and achieved a total shareholder return of 640% since listing in 2002. This is a basis that we can continue to consolidate. As well, we will be growing new businesses. Our core business is better in terms of performance than the market. Our indices and also our profitability are better than the market. Also we are outstanding in terms of our new developments, but there are, of course, further room for development and improvements.
For example, our customer structure, our structure for products and services, and also our income structure. All these need to be improved. We can further enhance our servicing of customers. In the past five years, even though there have been developments in our regional business, there are further room for development. Digitalization is also where there will be further efforts put in, so a number of areas will be enhanced. As you have mentioned, when we formulate our strategic development strategies, at the same time, we have to look at the operating environment and also the industry. The environment is changing all the time. Because of time limit, I will not go into all the details, but basically we have gone through a very extraordinary year of 2020.
In the coming year 2021, there will still be a lot of uncertainties. The operating environment of the banks, the uncertainty will become a new normal. On the one hand, it comes from, in the short term, the COVID situation and its development and how it impacts the economy, and also globally easing and also fiscal policies, how it is going to change the economy as a whole, and also cross-border activities. Overall speaking, the operating environment is very changeable. At the same time, we have to consider our development strategy, that it has to be in line with the Bank of China (Hong Kong) and our parent bank's strategy. It has to be aligned. As mentioned just now, in the past few years, BOC Hong Kong, in terms of our strategic development and implementation, we have been successful.
In the next period of time, we will have to fully consider the continuous and also stable continuation of our strategies. Internally, we will very fully study our future development strategy. In the PPT, I have already made a brief introduction. I will repeat myself here, and that is, we have a guiding principle, and there will be three main markets and three main capabilities and our four bases of development. W e will forward ESG concept. ESG, I am sure is not a new concept to us all. But for banks, it is not only a fashionable concept or slogan, but really it is a concept that will be implemented that will run across all our strategies and our business processes so that this concept can be actually implemented.
In ESG, whether it is from our governance structure and our management policies and our objectives of work and measures, they will be implemented. We hope to be able to help ourselves and our clients to provide a friendly environment. I think for Bank of China (Hong Kong), 2015, with the integration of Southeast Asian market, we have become a regional bank. For us, we will not only focus on Hong Kong local market business, but at the same time, the Southeast Asian market and the Greater Bay Area market. Hong Kong is our home market. In this local market, we have had over 100 years of history. In a number of areas, we are very mature. Hong Kong is a very competitive market, but we still see in certain businesses in Hong Kong, we still have further room for development.
As for the Greater Bay Area, the entire group has an advantage in this area, whether it is our client base, our product and services bases, our asset size, and also our brand. BOC as a group has certain advantages. We also have the experience. In the past period of access and integration, we have accumulated very good and solid experience, so we will be able to develop and also develop our market in the Greater Bay Area. Further, in the past few years of development in Southeast Asia market, we have been building our foundation. On the one hand, we have been building the management and the structure in the market, and at the same time, for risk management in the market, we have stepped up with that work. It is a very big market with huge potentials, and each country is different in Southeast Asia.
We will be looking into the development policy for each of the countries so that we are in keeping with the realities of the local market. At the same time, we will be excavating the market and also realizing the potentials of the market. For the future, we do not have a hard and fast target for this market, but rather we will be realistic about the market potentials, about our clients' needs and our own capabilities. But in these three major markets, we would want to be very clear in our improved performance. Well, apart from the three main markets, we have the three core capabilities, and that would be our core regional management and also digitalization as well as integrated services. Whether it is the network of our bank branches and the headquarters, we will continue to build up our operational capabilities.
We will continue to do them. Digitalization is something that all banks want to embrace. We want to be able to enhance our products and services through digitalization and also step up with our operation and risk management. Then on the basis of our traditional commercial banking activities, as you know that BOC Hong Kong is also providing wealth management, insurance, and trust custodian services. We believe in the future, we will be strengthening our core businesses and also provide ourselves as a solution provider to our clients so as to provide integrated services to them. For the foundation of three core capabilities, we need a good corporate culture, talent team, risk management. Because of time, I will not go into the three areas in details. But basically, we want to grasp the opportunities. For the banks, there is no corner cutting.
To grasp opportunities, it depends on our value system. In the future, we will be strengthening our foundation and to reach and attain our business objectives.
—of our strategy by CE Sun. Anyone has more questions, please press star one on your phone and stay online. Operator, next question, please.
[Non-English content] Yafei of Citigroup.
Thank you so much for this opportunity to ask a question. Two questions here. First of all, in the PPT, you have mentioned that in the Greater Bay Area, Bank of China (Hong Kong) in the past year had 120,000 new clients and customers. What products are involved, please? What are the profitability concerning these customers? That's the first question. As for the second question about BOC Hong Kong, in the next period of time, the dividend and capital management CET1 ratio, I see that is much higher than the industry average. Last year, I know that it is affected by COVID, and it was not able to increase the payout ratio. Now, when COVID stabilizes, is it possible to raise the payout ratio? Thank you.
Thank you for your question. You have asked two questions. The first one is about the number of clients in GBA and also the product arrangements. I'm going to ask my colleague to take your question.
Thank you for your question. First of all, about the Greater Bay Area, the number actually has to do with cross-boundary account opening service. If you look at this particular service, you can see that when it was being launched, it was very well received. With the pandemic emerging, we believe that there is going to be some changes, but we believe that financial connection and connectivity between the Mainland and Hong Kong actually is a very solid source of demand. Even though the boundary is not yet open, and yet we can see that there is still a 40% increase. We have offered new functions. For instance, you can make use of Hong Kong mobile number in order to open an account. You can set up standing instructions for remittances.
You can see that the demand is for payment and also for transfer and remittances. For BoC Pay in our wallet, we have also put in new functions. For instance, a P2P, person-to-person transfer functions as well as cross-boundary payment functions. We can see that in this particular area, there has been 120% increase. You can see that Hong Kong customers actually have great demand for payment as well as transfer between Hong Kong and Mainland. Some of the new customers have opened the accounts because of the demand for such services, for such cross-boundary payment and transfer services. Last year in May, after the central government has promulgated the policy for supporting GBA and also in October, promulgation of another policy from the central government.
All of that actually has underlined the foundation and policies for financial connectivity between Hong Kong and Mainland. BOC Hong Kong will continue to make investment in this regard and to satisfy customer demand.
As for the second question about capital, our capital foundation is still very strong. The CET1 ratio was 17.75%. We believe that this is a very strong capital base on which we will be able to strategically position our resources. The recovery is now emerging and along comes a lot of other opportunities. When opportunities emerge, we will be able to have a very strong capital base on which to develop our business. The second question is about dividend payout ratio. In 2020, we have been communicating with analysts about the level of payout of dividend. We have to meet the regulatory authority's requirement. We have to keep an adequate level of capital, and also we have to keep an adequate level of asset in order to weather the risk. At the same time, we are mindful of the demand from our shareholders.
That is why balancing all factors, we have decided that t he dividend payout ratio was 49.6%. If you look at the past figures, you can see that this is a little bit on a high situation. As for future dividend payout, if you look at the existing circumstances, we believe that we still have to strike a balance among various conflicting demands. We have to look at the macroeconomic environment and shareholders demand, and also the profitability of bank, the long-term development needs of the bank, as well as requirements from regulatory authorities and also their recommendations, and so on and so forth. All of these factors will have to be balanced against each other before coming to an appropriate decision. If you look at our dividend payout policy, which is between 40%-60% of payout, actually is appropriate.
Next question please.
Thank you. The question is come from Gurpreet Sahi with Goldman Sachs, please go ahead.
Thank you for taking my question. It is for CE Sun. It is around the medium term. As you look towards the integration of Greater Bay Area, what business function unit of Bank of China (Hong Kong) you think would benefit the most from this? Is it the wealth management? Is it deposit gathering? Is it doing more loan growth? Can you be specific and tell us how we should think about growth? My second question is regarding 2021 on the loan growth outlook. Given that the interest rate is quite low in Hong Kong, do you see more demand, especially corporate banking customer loan demand to borrow from Hong Kong given the interest rate gap? Do you think that the loan growth outlook this year should be better than last year? Thank you.
Thank you for asking the questions. I think to make things easier for the majority of today's participants, I suggest we answer your questions in Chinese. We do have some simultaneous translation for you. For your first question about the Greater Bay Area market development, I have mentioned just now that the future is very broad indeed for ourselves, for the group, for our parent company. We have very good position and advantage in this Greater Bay Area, whether it is from our branch network, from our bases of customers, from our service capabilities, and also from our experience of business. In the Greater Bay Area, we have huge responsibilities. We will be focusing on consumer, on industry, technology, and also cross-border financing.
These are the areas which will be very promising. But at the same time, we will be looking at some policies and also some of the opportunities for implementation. From a bank's point of view, what is important is to be prepared and time to market. We have to grasp the opportunities on a timely basis. Mrs. Kung, do you have anything to add for the Guangdong-Hong Kong-Macao Greater Bay Area business?
Yes. I will be speaking in Putonghua. I think there are two areas which I would want to supplement on. Firstly, from the corporate side, for innovation and technology, all along we have been putting our focus on this, financing for this sector. With the cooperation with Shenzhen and Hong Kong, this is another very important area of exploration. Another topic would be wealth management, cross-border wealth management.
The seven regulators in the three lands have signed the MOU for wealth management. This is a major step forward for cross-border wealth management. The principles and the next stages of implementation, especially in the area of investor protection, it is a lot more clear. In the next period of development for our bank, we have a plan for implementation and delivery. Therefore, for wealth management, we have a very bright future. Not only in terms of the population size, which is impressive, but also, this is 10 x the size of the local market. Yes, on loans, Mr. Wang?
Yes, I will answer this question. For 2020, global economy had been badly affected by the COVID-19 situation, and there had been huge challenges.
For BOC Hong Kong, on the basis of our clients base, our good business structure, and our diversified market strategy, we have been able to grow by 7.3%. This is higher than the 6.1 percentage points of industry average. We have increased our market share to 13.76%, increasing 0.79 percentage points, and we have been balanced in our growth across the sectors. For loans used in Hong Kong and outside of Hong Kong, we are better than the average of the industry. In Southeast Asia, we have also overcome the challenge by growing 7.4% in loan size. The sources come from the Bank of China and also local corporations, which are resilient, and also medium to big size corporations in Southeast Asia. We have been in the lead in the sectors and also we have been good in the quality of our loans and our customers.
With good loan increase, it further builds our confidence about developing in the future. In 2021, with broadening of vaccination and the stabilization of the epidemic around the world, the economy will probably recover. For this year, the economic growth may be 5.5% globally. China had been outstanding in combating COVID, and it will be over 6% in terms of GDP growth. For Hong Kong, counter-cyclical measures would also help Hong Kong's recovery. The Asia Pacific economy will be more and more important in the global economy. Indonesia, Malaysia, Thailand, Vietnam, and Philippines, their local GDP will be about 5.2% growth. We have reason to believe that for 2021, the external environment will continue to improve.
As always before, we will continue to, as Mr. Sun had mentioned just now, that we will be focusing on the Hong Kong market, the Greater Bay Area market, and also Southeast Asia market and some of the international markets. We will be client based to serve our clients' needs, and we will be adjusting our developments as the market develops. We are confident in outperforming the market again with a mid- to high- single digit loan growth target. At the same time, we will guarantee that as we increase our loan growth, our quality and our income would also be balanced. For our future development, we will be focusing on new industries and also to grasp new industry opportunities. We will be developing into the new industries as we consolidate our existing customers' relationships.
We will be following very closely the country's 14th Five-Year Plan and its industries that the plan focuses on. We will be basing on our own capabilities to serve the biotech, life tech, digital industries, and also green industry to help their development. We will also be aligning with our parent bank, as mentioned just now, for the Greater Bay Area development. In fact, for our business there, together with our Shenzhen and also the Guangdong provincial sister banks, we have very deep cooperation. For cross-border, our balance is about 50%. H alf of that, that is 25% of the total for our loans, is related to the Greater Bay Area parent bank . As we continue to work together with these partners, we will continue to focus on raising the loans to the new industries and our preferred clients.
As for Southeast Asia, as it continues to grow economically, there will be a lot of opportunities presented to us. We will grasp these opportunities as we are a regional bank. We will continue to develop our businesses. We want to develop an integrated service. We will increase our guidance to our branches in Southeast Asia. We will be providing the strategy clearly, so as to have a very balanced approach, and also to grasp the opportunities in the coming year and after. The parent bank in Southeast Asia has an integration mechanism of which we are the lead. Bank of China (Hong Kong) is in the lead. Seoul, Tokyo, and Sydney, et cetera, we are working together with these points so as to, in Southeast Asia and Asia Pacific, to look for opportunities overseas, including loan growth overseas. The third point is RMB business.
Internationalization of RMB is an opportunity. For BOC Hong Kong offshore RMB business, we will continue to look for further opportunities and to provide differentiated services to our customers to satisfy their RMB financing needs, so that our RMB business will continue to grow. For the first quarter, the growth had been in line with expectations, and we will continue to outperform the market. Thank you.
We would like to [audio distortion]. Operator, please.
[Non-English content] JPMorgan, Jemmy.
Thank you very much for the opportunity to ask the question. I have two questions, actually. First of all, about the NIM. I would like to know, is it the same as the third and fourth quarter of last year for the first quarter this year? Do you see any room for improvements? What are some of the factors that you see, please, if you can share that? Second question about the quality of our assets. Our cost of credit had always been lower than the industry. It hasn't changed for the past number of years. From our observation, what is the underlying asset quality? What is the trend in the second half of the year? Do we see any improvements, please? Also for this year, can we expect that our cost will continue to fall?
For some of the measures, it is about 5.5% of our overall. How does it compare and what do you see is our future?
The first question is about NIM. I am going to pass it over to Madam Sui.
Thank you for your question regarding NIM. Concerning Q4 and Q3 NIM situation, if you look at the already released information, you know that Q3 and Q4 NIM actually is very similar. For Q4 NIM, when compared to Q3, actually there has been a drop of 1 basis point. Every month for the NIM, you can see that the second half of last year for IPO situation in Hong Kong actually has undergone certain changes. If you look at 2021, concerning the prospect for NIM development, our internal analysis is that in order to support the employment and so on and so forth, the Federal Reserve also has made certain changes to interest rate. We believe that the low interest environment will prevail and will continue.
We believe that for the Hong Kong market, the Hong Kong dollar actually still has a lot of surplus. For the LIBOR and HIBOR for one month, the interest rate relevancy will still be quite high. Because of impact from IPO and because of seasonal impact, there may be some fluctuations for the interest rate. For RMB, we can see that for onshore RMB, it will still be subject to easing. For offshore RMB, there will be some fluctuation. Overall, we believe that in 2021, the interest rate is not going to bounce back very significantly. We believe that overall the interest rate is going to remain at low level. In this very challenging interest rate environment, there are several things that we have to do. Just now it has been mentioned that for growth in loan.
We're going to keep it at a reasonable level, a mid to high level of growth. For 2021 for the loan growth, we will continue to very efficiently control our risk. In spite of that, we still have a 70% growth, even when the market wasn't doing so well. For the future, we are very confident. The loan incomings is going to be still quite high. We are going to increase the proportion of loan in order to enhance its contribution to our overall profit and revenue. Also we are going to control the risk and also the cost overall. If you look at our loan cost, there has been CASA deposits increased by 31.8%. Time deposits decreased by close to HKD 180 billion .
You can see that we are very actively controlling time deposit cost and also its structure, so that our overall deposit cost can be reduced. If you look at the RMB market opportunities, now under the low interest environment, if you look at the RMB interest rate, its profit will still be higher than Hong Kong dollar as well as USD. So we will continue to focus on RMB. We hope that through high revenue and profit from RMB, we can improve the NIM performance. With interest rate coming back up in the market, we believe that we can continue to grab market opportunities in order to increase revenue from interest payment through improving NIM.
Now you have mentioned two questions. First about asset quality, then the Pre-approved Principal Payment Holiday Scheme. Okay, let me give you a simple report.
Now, first about asset quality and its changes. First of all, I have to thank you for your recognition and for your support. Indeed, the BOC Hong Kong asset quality has been stable. For 2020, we have already given you the numbers and the figures for our asset quality. Our non-performance asset is around 0.27%. If you look at first half and second half and the changes between the two, for second half, our credit cost is 0.15%. There has been a drop of 3 basis points compared to the same period last year. If you look at the trend now for asset quality and for provisions, actually the situation has been improving.
Now as for our prospect for the coming year, our take is that with the global pandemic still fluctuating and the economic recovery of the world economy is still subject to uncertainty, on a whole we still believe that the Hong Kong SAR Government actually has already introduced certain policies and initiatives in order to relieve difficulties faced by corporations and enterprises. The central government is also introducing currency and financial policy in order to support the economy. We believe that our asset quality will still remain at a good level in the market. We will have sufficient resources for provisions. Now as for Pre-approved Principal Payment Holiday Scheme, for deferred repayment, actually it accounts for 4% of our overall loans. This figure continues to be updated and the proportion is dropping.
By 2021 February, deferred repayment and late repayment proportion actually has come down to 1.6% against overall loan figures.
Everything is finished. Should you have any further questions, please contact our investor relations team. Thanks for your participation and see you next time.