Analysts, investors, good afternoon. Thank you for attending the 2016 annual results presentation of BOC Hong Kong Holdings Limited. I am Kenny Luo, company secretary of BOC Hong Kong. Before we begin, may I draw your attention to this slide for the forward-looking statement disclaimer and the new reporting basis that has been adopted in today's presentation. Now, let's start our annual results briefing. First, please let me introduce our senior management team. With us today are Mr. Yue Yi, Vice Chairman and Chief Executive. Mr. Li Jiuzhong, Executive Director and Chief Risk Officer. Mr. Lin Jingzhen, Deputy Chief Executive. Mr. Yuan Shu, Deputy Chief Executive. Mr. Zhong Xiangqun, Chief Operating Officer. Madam Sui Yang, Chief Financial Officer. Mrs. Ann Kung, Deputy Chief Executive. Today's agenda is divided into three parts. First, CEO Yue will start with the performance highlights, followed by CFO Sui on financial results.
After that, CEO Yue will discuss our outlook and strategy for 2017. Then we will open the floor for Q&A. CEO Yue, please.
Ladies and gentlemen, good afternoon. I am very glad to see you again. In 2016, in the face of the complicated internal and external environments, BOC Hong Kong adhered to its strategy, made steady progress in each area by accelerating innovation and transformation, thereby outperformed the market in terms of core business. Operating results hit a record high and added a meaningful chapter to its centenary development history. Today, I feel proud and honored to announce that profits attributable to the shareholders of BOC Hong Kong soared 105.7% year-on-year to HKD 55.5 billion in 2016, a record high since IPO.
Even after stripping out one-off non-recurring items, such as the disposal of Nanyang Commercial Bank, Limited, the adjusted profit still remarkably outpaced our peers by delivering a growth of 6.8% year-on-year. The robust growth in profits further solidified our capital strength. The group's total capital ratio rose to 22.35%, which lays a solid foundation for sustainable business growth in the future. According to the dividend policy of BOC Hong Kong, the board of directors, after taking various factors into consideration, recommended a final dividend of HKD 0.625 per share. Together with the interim dividend of HKD 0.545 per share, the full-year dividend will be HKD 1.17 per share on a normal basis, which translates into a dividend payouts ratio of 48.4%, including the special dividend of HKD 0.71 per share associated with the sale of our equity stake of NCB.
The full-year dividend sets a new high of HKD 1.88 per share in aggregate. Here, I would like to introduce the major achievements made by BOC Hong Kong with respect to strategic implementation and business development in 2016. With the further implementation of the nation strategies, such as Belt and Road Initiative, Hong Kong, serving as a key joint along the Belt and Road Initiative, as well as an important window and bridge connecting mainland China with the overseas markets, will leverage its advantages brought by one country, two systems, while striving to fulfill its role as a super connector. Therefore, BOC Hong Kong made plans and preparations in advance.
Since 2016, we achieved remarkable progress in our transformation from a municipal bank to a regional bank by taking a series of actions, including the disposal of NCB and Chiyu Banking Corporation Limited, the acquisition of BOC subsidiaries in Malaysia and Thailand, branches in Indonesia and Cambodia, and the setup of Brunei branch. At the same time, BOC Hong Kong seeks to instill its edges in the aspects of advanced management concepts, outstanding talent team, mature products, and professional services to ASEAN business through in-depth integration of systems, operations, rules, process, supervision, and culture with our ASEAN counterparts in order to drive the sustainable development of our Southeast Asia business.
In 2016, through collaboration with the parent bank and our ASEAN counterparts, BOC Hong Kong helped domestic enterprises in their course of going global and developed new business with local leading corporates by utilizing the edges of our products and services, thereby leading to a phenomenal increase of HKD 30.1 billion in Southeast Asia-related loans business from the end of 2015. In 2016, BOC Hong Kong achieved exceptional performance in loan business. Customer loan balance increased by 11.7% to HKD 973.1 billion, outpacing the market and peers in its growth, with market share up by 0.5 percentage points to 12%.
The good results should be attributable to BOC Group's scale advantages in both mainland China and Hong Kong, as well as our strong customer base, the efforts we made to further strengthen the collaboration with our parent bank, and to further improve the financial services offered to going global Chinese enterprises and local leading enterprises in ASEAN. Additionally, thanks to our efforts in consistently developing local business in Hong Kong and deepening relationship with local customers during the past century, BOC Hong Kong was able to sustain its leading position as an arranger in Hong Kong and Macau syndicate loans market, and in the new residential mortgage loan market in Hong Kong, whilst effectively developing our industrial, commercial, and SME loans business.
Benefited from the developments of payroll account services, the expansion of wealth management business that are targeting mid to high-end customers, the increase of central banks and supranational institution customers, and the exploitation of IPO fund business, our customer deposits increased by 9.8% over the end of the previous year to HKD 1,507.5 billion, with market share rising to 13.1%. The growth in deposits also supported the healthy growth of assets while providing a solid liquidity position.
In order to fully leverage the scale advantage of our branch network, strengthen overall productivity of branches, and step up the capability of integrated services for SME customers, BOC Hong Kong has embarked on branch network transformation, close to 200 branches in Hong Kong since July 1, 2016, which echoes its customer-centric business philosophy, with aims to expand and reinforce SME business, to expedite the development of personal wealth management and wealth management for mid to high-end customers, to promote the integration of online and offline channels, and to greatly enhance local service capability and profitability of the branch network. To support the growing multi-channel integrated service model and enhance the productivity of our branches, we optimized and restructured the operating model, which was originally based on seven major districts, and set up 35 sub-districts.
We extended the functions of our industrial and commercial centers to the district branches, which were transformed from purely retail focus into full service model that provide banking functions to both individuals and corporate customers. In the second half of 2016, comprehensive service capacity of the branches and customer experience improved noticeably post transformation. Compared with the first half of the year before transformation, average monthly income from branches in the 35 sub-districts grew 7.5%. Average monthly income from mid to high-end customers grew 13.1%. Average monthly income from small enterprise customers grew 11.5%, and the number of mid to high-end individuals and SME customers also increased remarkably.
We continued to expand the business of our eight key business platforms with an aim to increase the fee and commission income, to enhance the non-interest income, and optimize the customer structure and revenue mix, in which fruitful results were realized in key business fields in 2016. In credit cards business, average number of mid to high-end customers grew 13.6% year-on- year, with UnionPay card merchants acquiring and card issuing businesses leading our peers. The number of private banking customers and the scale of assets under management grew strongly. Besides, BOC Life continued to pursue diversified business model, while the volume contributed by non-bank channel rose. BOCHK Asset Management served with a wide variety of products and saw its assets under management up 1.7x .
In cash management, BOC Hong Kong earnestly pursued product innovation and functional upgrades, while capitalizing on the preferential financial and trade policies of Hong Kong to promote the setting up of corporate treasury centers and sustained its leadership in cross-border cash pooling business with regional and global capabilities. In custody business, customer base was expanded, customer mix became more diversified, and both the asset under custody and profitability increased sharply. Through collaboration, BOCI-Prudential Trustee enhanced its overall sales, referral, and cross-selling capacity, thus sustaining overall market share with Mandatory Provident Fund, asset size grew by 10.9%. BOCI Securities and Futures constantly enhanced its business capacity. Moreover, we stepped up efforts in building a global transaction banking platform. We set up an investment banking department under our global corporate banking department, further moving ourselves towards an asset-light and capital-light business model to drive sustainable growth.
Developments of our eight key business platforms and business such as transaction banking and investment banking will further enhance the degree of diversification in our business, while improving our product quality and service capability. Besides, it will help driving the proportion of non-interest income and continuously optimizing the profit mix of the group. 2016 was a year where active progress was made by BOC Hong Kong in fintech. We explored the application of new technologies like blockchain, artificial intelligence, big data, and biometric authentication, and made breakthroughs in various areas. E-banking service level and customer experience improved continuously, and consistent progress were made in the integration of online and offline channels. The number of digital banking customers increased remarkably, while mobile banking and corporate internet banking delivered solid results, with number of customer increasing by 16.1% and 13.4% respectively.
BOC Hong Kong offered many new internet products on the market, some of which were first launched in the market. These new products substantially enriched the scope of service and enhanced our capability to provide round-the-clock services. In respect of application of new technology, we developed and optimized three major innovative platforms, including the open platform, big data platform, and intelligent technology platform to meet some longstanding, unresolved needs of customers. For instance, we launched the application of blockchain in property valuation project in Hong Kong, which has been used in more than 2,500 property valuation cases since November 2016, effectively ensuring the authenticity of documents and improving approval efficiency. Moreover, we took proactive approach to cooperate with capable research institutions and enterprises in fintech R&D, and created widespread spillover effect in financial sector and among internet enterprises and partners, which boost the local fintech development.
In 2016, BOC Hong Kong's outstanding performance in financial technology was widely recognized by the industry and the media, both internationally and locally. We were awarded by The Asian Banker at The Asian Banker Technology Innovation Award for mobile social media engagement projects, and by Global Finance magazine, the best consumer digital banks in Hong Kong, which have significantly improved the market in influence, position, and brand image of BOC Hong Kong. In 2016, adhering to a prudent and comprehensive risk management concept, BOC Hong Kong kept improving the risk governance system and overall risk management standards. As a local systemically important bank, we strictly adhered to the laws and guidelines set out by regulators and requirements of the board, and took the initiatives to prevent various types of risks.
We strictly implemented a prudent credit policy and gave close attention to the possible impacts associated with global economic uncertainties that potentially affects the credit risk of related industries, countries, and customers, and continuously refined relevant risk management policies and measures. At the end of 2016, our classified or impaired loan ratio was 0.2%, a drop of 0.03 percentage point from that of 2015. Well below the market's average of 0.72%. Credit cost stayed low at 0.06%. During the year, we actively sought to optimize our deposit structure, enhanced the degree of our intensive management, and maintained a solid liquidity position. On the other hand, we spared no efforts in anti-money laundering during 2016 and achieved remarkable progress. We refined operating mechanism of AML framework in the aspects of structure, risk appetite, assessment model and monitoring system.
In turn, enhancing the effectiveness of preventing and controlling potential money laundering activities in high-risk business. We looked to eliminate preemptive risk through continuous business investigation. In the future, we will continue to improve the group's anti-money laundering measures and processes to further increase the effectiveness of the anti-money laundering mechanism. Next, Madam Sui Yang, our CFO, will give you the details of the group's financial performance in 2016.
Thank you, Mr. Yue. In 2016, our BOC Hong Kong's profit attributable to shareholders surged to HKD 55.5 billion, which is a year-on-year growth of 105.7%, of which HKD 30 billion was contributed by the disposal of NCB. Adjusted profits stood at HKD 23.7 billion, up 6.8% year-on-year. As of the end of 2016, our Tier 1 capital ratio and total capital ratio reached 17.69% and 22.35% respectively, which were 4.8 percentage points and 4.49 percentage points higher than the end of 2015 respectively. Average return on equity rose 12 percentage points to 26.47%. In 2016, our group actively developed Southeast Asian related business and exploited Hong Kong local market. Our total customer loan balance increased 11.7% over the end of the previous year, outperforming the market.
Loans for use in Hong Kong rose 20.5%, of which industrial, commercial, and financial loans growth showed outstanding performance with a balance of HKD 374.9 billion, an increase of 31.9% over the end of 2015. Loan growth drivers by industry fields were diverse, covering property development, transportation and transportation equipment, wholesale and retail, manufacturing, IT, and recreational activities. Personal loans for use in Hong Kong increased 8.3% despite the volatile performance in real estate market in 2016. We still registered 5.4% growth in mortgage loans faster than the market's average. Balance of trade finance decreased, partly explained by the poor trade environment, and commodity market has not recovered. It was, however, also due to our positive and proactive management to maintain loan pricing level.
Loans for use outside Hong Kong decreased modestly, mainly due to the strengthening of U.S. dollars and some customers accelerated repayment of U.S. dollar loans to cut financial cost. Also, mainland enterprises were less motivated to borrow in Hong Kong due to the narrowing of low loan spread between mainland China and Hong Kong. We continue to enhance services quality in order to enhance our customer acquisition capability. Our deposit business continues to grow. Branch network transformation drove the expansion of our mid to high-end wealth management business and the growth of personal deposits. Our CASA deposits grew remarkably through the development of payroll business, attraction of central banks and supranational customers, and exploitation of IPO fund business. CASA deposits increased by 16.4% over the end of 2015, and mix rose 3.7 percentage points to 64.3% of our total customer deposit.
The growth of low interest and interest-free deposits effectively improved our profit structure. Our deposit cost dropped by 18 basis points year-on-year, and we recorded a NIM of 1.32% in 2016, down 14 basis points from the year before due to lower RMB asset yield in 2016, shrinkage of offshore RMB deposit pool, and volatility of offshore RMB interest rates. Net interest margin stabilized and rebounded in the second half of the year, with six basis points increase over the first half, thanks to lower deposit costs, increase in customer loans, and increase in market interest rates in the fourth quarter of the year. We continue to increase the contributions of non-interest income optimized in income structure. In 2016, the group's non-interest income increased 8.8% year-on-year, with its proportion rising 1.8 percentage points to 39.1%.
Thanks to effective implementation of regional strategy associated with Southeast Asia and our efforts to deepen local market penetration, the demand for corporate loans grew significantly, driving loan commissions up 8.1%, with increase in the business volumes in insurance, bill commission, fee income increasing 11.1%, 12.5% respectively. Currency exchange commission income grew 11.3%. Payment services and safe deposit box commission income also achieved healthy growth. Compared with 2015, investment climate of capital market remained weak, and trading volume in the stock market shrank, leading to a decline of 40%, 18.4% in brokerage income and fund distribution income. In the second half, with the gradual recovery of market sentiment, we seized the opportunities to strengthen promotion and publicity, especially in wealth management customers. In the second half, our securities brokerage income and fund distribution income rebounded 29.5% and 5.3%.
Due to the net gains from foreign exchange swap contracts, increase in currency exchange income from customer transactions, and mark-to-market changes of debt securities value, the net trading income increased 77.3% to HKD 4.605 billion. In order to implement our new strategy, this year we struck a balance in the resource allocation among human resources, system platform optimization, improvement of network finance infrastructure, while supporting long-term sustainable business development and maintaining competitive edge. We continued to achieve sound cost management while operating expense increased 5.2% year-on-year to HKD 12.2 billion. Among them, staff costs rose 5.7% due to higher salary following the salary increment. Premises and equipment expenditure increased at 10.3%, mainly due to higher rental costs and IT expenses associated with strategic initiatives. Ming Hua.
Depreciation on owned fixed asset decreased by 4.4% due to larger depreciation charge on premises following the upward property revaluation on IT infrastructure, and the group's cost income ratio was 29.25%, continuing to be low compared to local banking sector. We have strictly implemented a prudent credit policy and maintained good credit quality by proactively managing our loan portfolio throughout the whole credit process. At the end of the year, our classified or impaired loan ratio was 0.2% of total, a decrease of three basis points from the end of 2015, well below the market's average of 0.72%. The balance of classified or impaired loans was HKD 1.955 billion, down HKD 39 million. In 2016, net charge of loan impairment allowances was HKD 589 million, down HKD 217 million, or 26.9% from 2015.
It was mainly due to the reversal of impairment allowances for a few corporate advances, leading to a net decrease of 92% in individually assessed impairment allowances. The provision coverage ratio was 159.8%. Let me pass this back to Mr. Yue.
Thank you, Ms. Sui. Looking into 2017, international political and economic situation remain complicated. It is expected that growth rate of the world economy will remain low, protectionism will gain more attention, and de-globalization trend will intensify. There are many uncertainties in global politics and economy, and banks will face challenges in operations and growth. However, there are also many favorable factors and significant opportunities. The good seamen is known in bad weather. Being adept at finding opportunities in adverse environment and ensuring sustained development through reform are the reasons for the prosperity of BOC over the past century.
In the current period, BOC Hong Kong is focusing on five major strategic opportunities. First, Chinese government annual work report puts emphasis on stability and growth. The implementation of active financial policy and solid monetary policy will deepen the supply-side reform, which propels economic transformation and expands open up policy. These also enhance economic growth. The supply-side reform, industry upgrades, and technology innovation will stimulate the demand of financial services and increase banking opportunities. Second, economic integration of Guangdong, Hong Kong, and Macau will further deepen and unleash regional development potential in the regions. Chinese government work report points out that the country will study and develop a plan for Guangdong-Hong Kong-Macao Big Bay Area and enhance the position and functions of Hong Kong and Macau in the country's economic development and opening up.
It will bring significant opportunities for Hong Kong's industrial transformation and upgrades and provide bigger room for financial industry. As a result, Hong Kong needs to do its best and also grasp the opportunities and join with China's national strategy in order to serve the needs of the country with its strengths. Third, Hong Kong, as a member of AIIB, will strengthen its super connector role. Currently, strategies such as Belt and Road Initiative will encourage more Chinese enterprises to expand in ASEAN. Hong Kong is an important international financial center in the Asia Pacific region, an important node of 21st Century Maritime Silk Road, and the center of global economic network for Chinese people. Recently, Hong Kong has become one of the 13 members of AIIB, which will allow it to take these advantages altogether by leveraging its legal system, financial infrastructure, and internationalized talent.
These will bring Hong Kong more cooperations and development opportunities, strengthen its role as a super connector, and enhance its position as an international financial center. Fourth, following the implementation of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, Mainland Hong Kong Bond Market Connect is also on the agenda. It is expected that with the launch of such program, offshore investors will be able to invest in onshore bond market through their offshore accounts and under the transaction rules of their respective territories, which will provide more investment channels and convenience for investors and induce their investment appetite. It will eventually add impetus to the development of Hong Kong as an offshore RMB center.
Fifth, there have been increasing demand from Chinese enterprises and mid to high-end individuals to allocate overseas assets in Hong Kong, which is their preferred choice for external investment and overseas asset management. With the presence of friendly policies and strategies promoted by the Hong Kong SAR government, such as the introduction of preferential tax policies, it is expected that more multinational corporations and Chinese enterprises will be attracted to set up their corporate treasury centers in Hong Kong. According to the survey conducted by the Trade Development Council, among the Chinese enterprises that are looking to expand to the market along Belt and Road region, 50% of them would see Hong Kong as their top pick as investment platform. Last year, among the new wealth management clients acquired by our bank, 30% of them are cross-border clients, who are mainly composed of mainland clients.
Through collaborating with our parent bank, BOC Hong Kong enjoys a unique advantage in terms of business scale in both mainland and among Chinese banks in Hong Kong. This will provide tremendous opportunities for further development of our diversified and integrated operations. One would easily notice from our results in the past two years, that we have consistently outperformed the market in loan and deposit growth, steadily enhanced the market share, and continuously delivered record high profits. Benefited from the opportunities arising from national strategies such as the Belt and Road Initiative, and leveraging of the dominant advantages with our parent banks in China and Hong Kong, the pursuance of innovation, the promotion of regional transformation, and the development of local business, we are able to achieve commendable results.
Based on the solid foundation aforementioned, we are confident in capturing opportunities offered by policies and the market, and in delivering even more noticeable achievements in the future. Thank you.
In 2017, BOC Hong Kong will continue to uphold parent bank strategic goal of serving society, delivering excellence. We will grasp the opportunities from China's national strategies, such as the Belt and Road Initiative, integration of Guangdong-Hong Kong-Macao , and speed up our progress in regional development. Close collaboration with our parent bank institutions in the mainland and overseas will give us advantages to develop cross-border business. We will remain committed to the local market, develop eight major business platforms, and deepen branch transformation. We will increase efforts in innovation and enhance the competitiveness and leadership position in fintech, and we will insist on our customer-oriented principle, and optimize business process, service mode, and organization structure.
We will seek to improve customer experience and strive to become a flagship bank for BOC Group at home and abroad. In face of operating environment challenges, we will continue to enhance asset and liability and cost management. We will continue to cope with the ever-changing technology development, and strengthen technical innovation. Besides, we will improve internal control of risks in response to the uncertainties of external environment, and challenges of regional transformation, and meet all regulatory requirements. 2017 marks the 20th anniversary of Hong Kong's return to the motherland, and the BOC's centenary service in Hong Kong. Different parts of our social communities will cast their attention to us. That's why each and every one of our staff are full of hope for the future. With full confidence in the future, we will continue to implement our development strategies and maintain healthy business development.
We will spare no effort to contribute to the economic development of Hong Kong, improvement of its people's livelihood, and its long-term prosperity and stability. This concludes our presentation here. Thank you. You are welcome to raise any questions. Would you please raise your hand?
Before you ask questions, can you please briefly introduce yourself? On the left, on the second row, that gentleman there.
Good afternoon. I am from Citibank. My name is Gary Lin. I have two questions. First of all, I must congratulate the management on your 2016 results. We are delighted about that. Since 2015 till now, in overseas, you have been making plans to develop further the local market, and you have accumulated some achievements there. What you see is your core competency and the focus of your development strategy. What about how to overcome challenges concerning loan growth in the past two years?
We are increasing market share, but in recent half a year, the growth. The first half of 2016 saw bigger growth than second half. After the second half, is it true that you have made adjustments so that more emphasis is placed on quality and profitability, and you lessened your focus on increase in volume? Thank you.
Concerning development strategy of BOC Hong Kong, let me give you some explanations. Concerning loan business development strategies, Mr. Lin Jingzhen will answer the question. Concerning our future development strategy, basically, there are two major strategic focuses. First, under the Belt and Road strategy, there is the very broad Southeast Asian markets. Right now, BOC Hong Kong had already covered all 10 countries of ASEAN. In seven countries where there is asset reorganization with the parent company, there are 31 branch organizations. For these branch organizations, they service a long period in those countries. For example, in Indonesia, our branch organization was set up in 1938. In Malaysia, 1939.
So we have a history of more than 75 years. For ASEAN, there is very good development. We understand that in ASEAN, population was 620 million, and for Chinese, there are 26 million Chinese people. In the coming years, transport, traffic, energy, infrastructure in ASEAN will exceed $400 billion in value. GDP in 2020 may reach $4.7 trillion. So all these will bring huge business opportunities to our group. In the past two years, looking at the development, our development in Southeast Asia, we have achieved quite good progress. Last year, for the whole year, for new loan balance, we reached HKD 30 billion, a big growth from the previous year. Besides, in Southeast Asia, if you look at the developments of our various branches, the development was fast. In the Manila branch, last year, loan increase was almost 50%. For Xinjiang branch, 30% growth.
For our Thai branch, concerning credit cards and other cards issued, the number exceeded 80,000. These are our very important developing markets. Southeast Asia is a very good story for BOC Hong Kong, and Southeast Asia is a very good source of profit growth, so that is a big strategy. Another strategy is that we will deepen our development of the local market. BOC Hong Kong has been operating in Hong Kong for 100 years. We are totally a local enterprise, deeply rooted in Hong Kong, and we serve Hong Kong. We are the second-largest banking group, with 4 million individual customers, 200 odd thousand enterprise and corporate clients, and 200 branches with a few thousand ATM and technical equipment. Last year, the restructuring was aimed at deepening the development of the local market here. Last year, our deposits, our loans, outperformed the markets.
For syndicated loans, for 11 consecutive years, we are number one in the markets. After branch transformation in the 35 sub-districts, the total monthly average income saw a 75% increase from last year. Besides, there is a clear regional advantage in Hong Kong. It is a critical point in the Belt and Road, and it is also a critical node in the Big Bay Area, and there is the advantage under one country, two systems and its status being the international financial center. Hong Kong's regional advantage cannot be matched by any city in China and any other country in the world. We will continue to deepen our development of the Hong Kong market as our strategic center.
We will actively seize the opportunities from the Big Bay Area development, Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, the Bond Connect, and also the mutual access scheme. We will do a good job with our business, and we will serve Hong Kong people in a better way. That is all I would like to say for the time being. Mr. Lin is going to comment on our loan business.
Thank you for the question from the Analyst of Citibank. I will comment on five areas to answer your question. First of all, it is true that the scale of our loan increased in a satisfactory manner. As you all know, in 2016, for our overall loan balance, it is up 11.7% year-on-year. We outperformed the market. Market share also increased. Corporate clients or corporate loans used in Hong Kong was up 31.9% from 2015.
Loan investment was very wide. We cover property development, traffic transport equipment, manufacturing, hotel, retail, recreation, and so on and so forth. What I would like to say is that this satisfactory performance is a result of good strategy. Concerning competition, in the market in 2016, our judgment was very accurate. You can see that in the first half of the year, our loans grew very rapidly. In the second half, we made adjustments to our structure. In the second half, competition was most intense among banks. Our good performance in loan business originated from a grasping of opportunities from the Belt and Road, and also our strategy transformation in developing branches in sub-districts. We also capitalize on our advantage with the big customer base.
We use loan as an entry point to offer all-round comprehensive financial solutions to customers in order to increase stickiness to our service. Besides, the pricing of our loan is also market-oriented. Basically, we are at 2.23%, which is very stable. Concerning our strategy on provision, we are closely connected to BOC, our parent company, so Mainland enterprises, Southeast Asian leading enterprises. We give a lot of service to these places, and we deepen our development of the Hong Kong market. We expand customer relationship with Hong Kong clients, including big enterprises, institutional customers, family customers, big trade associations, and also quality second and third line listed companies. In these areas, we saw good growth. Number 3, we did branch transformation. We enhanced our ability to serve corporate clients for our corporate business and SME loans. There is good growth year- on- year.
The third point is our syndicated loans, and other high-end business areas. We continue to maintain our leading position. BOC Hong Kong is the Asia Pacific syndicated loan center of BOC Group, and we offer high-quality syndicated loan business, and we lead our peers in this area. With overseas branches, we have synergy with them, and we take part in many important syndicated loans. BOC Hong Kong and BOC Group, for 12 years, have been number 1 in terms of being the arranger bank for syndicated loans, and we also have close connection with Southeast Asia. We work with large enterprises and groups in Southeast Asia, and for investment projects in Hong Kong, and also Chinese enterprises, Hong Kong enterprises developing in Southeast Asia. We try our best to serve them in their acquisition and merger and also satisfy their overall funding needs.
Comparing with last year, there is net growth in loans by HKD 30.1 billion, and Southeast Asian business has become a very important source of our business growth. The fourth point is business growth profit contribution benefited from stringent risk control. in 2016, we actively controlled loans to backward and over capacity industries. We strictly control credit risk so that classified loan ratio and also loan ratio to all those problematic industries were stable. In 2017, in terms of our strategy and outlook, given the good loan growth in 2016, in 2017, our goal is to maintain stable growth. It is expected that overall loan business growth will be at around 10%. Besides, we will try to identify diversified sources of loan business growth, so we will look at countries along the Belt and Road, especially the ASEAN countries' loan business opportunities.
We will expand local financial institutions, personal customers, SME, Southeast Asian enterprise, and customers loan growth opportunities. Thank you.
On the right, second row in the middle, the gentleman over there, please. Thank you.
Thank you, management. From Deutsche Bank, Franco. I have two questions. First question, concerning NIM. In the U.S., we see that they have already raised the interest rate once. Concerning this raise in interest rates, how has it impacted you, and how do you see 2017? My next question is about Belt and Road and ASEAN investments. In the long run, for investments in ASEAN countries, how much do you think it will contribute to your profits, please?
First of all, the NIM question. Ms. Sui Yang, our CFO, will answer that question.
As you have mentioned in your question, in 2017, well, the U.S. had already raised for one time the interest rates. Interest rates rise is always good for banks because the NIM, the spread would increase.
In the short term, the deposit will be shorter, and therefore, for us, the spread will increase, and for the entire year, or for the medium to longer term, we feel that for the interest rates of loans will outgrow that of deposits. So in the whole, rates rise is good for our NIM. Now, apart from this good external factor, at the same time, we pay a lot of attention to our own internal strategy. The CEO had already mentioned our two main strategies, one for ASEAN countries and secondly in Hong Kong. For Hong Kong, we will continue to grow deep our roots in Hong Kong. We will transform our network, our branches, and also increase our CASA, and also increase our SME customers, and also raise our profitability.
On Belt and Road initiatives, we will be grasping the medium to high-end customers, and in ASEAN countries, we will raise our exposure. In the ASEAN countries' development, we will grow the credit business, and therefore, we will be able to add to our overall credit growth and profitability, as well as increasing our asset management products and also adjusting our loan maturities, et cetera. We are very optimistic. As for the specific figures for contribution, it will depend on the need for loans in Hong Kong, the competitiveness, the rate rise in the U.S., et cetera.
As for Southeast Asian markets, I will answer that question. Thank you very much for your question. I will answer this question in four perspectives. First of all, for the ASEAN countries integration and acquisition. The integration of ASEAN countries business had progressed greatly.
In October of last year, the Malaysian bank had been integrated, and in December, our Brunei branch had opened business, and in January, the Thai subsidiary had been integrated. Also Indonesia and Cambodia, the acquisition agreements have already been signed. So for acquisition and integration in Vietnam and the Philippines, we are still progressing with these projects, and the relevant transaction will need to be approved by the local authorities, the Hong Kong authorities, and mainland authorities. If there are any announcements to be made, we will be, according to the listing rules of Hong Kong, announcing them to the market. For contribution to our BOC HK, I have already disclosed some figures.
For ASEAN countries, for them to be integrated into BOC Hong Kong for management and operation, this is the group's intention. It is in response to the Belt and Road Initiative of the country and also internationalization. The group's intention is to fully utilize the maturity and management capabilities, talents, capacity, and capital capabilities of BOC HK to strengthen its role in the region as the headquarters for the region in the ASEAN countries. in 2016, the headquarters of BOC for Philippines, Thailand, Cambodia, they have met with the very high officials of these countries. They are discussing further business development in these countries and multi-pronged cooperation as well. This will be beneficial to the extension of our brand in ASEAN countries. BOC HK, when extending our business in these countries, this will be highly beneficial.
I have mentioned just now that we also have strengthened our engagement with the ASEAN countries. The business in these countries have increased significantly in the credit growth, over HKD 30.1 billion compared to the year before. Another point is future integration and our positioning. In 2017, according to plan, BOC HK will transform and integrate the ASEAN market. The headquarters is in Hong Kong, and we will be engaging and interacting with the ASEAN market. The main point will be in system operation, workflow management and culture. In integration, first of all, for what is advanced in Hong Kong, that is in operation and management of our finances, our products, our talents, and also professionalism and high level of service capabilities, we will bring all these to the ASEAN countries.
In terms of products, we will be extending to Hong Kong companies and Mainland companies, and some of the leading companies in the domestic regions, as well as Chinese-led companies. Also, in terms of settlement investment banking, personal banking, credit card, asset management, custodian services, we will also extend these services and products to these ASEAN countries so that we will be able to extend our business quickly in these countries, so that our banks will become the mainstream banks in these countries. Further on our development goals, as our entire group develops in these ASEAN countries, and as they are integrated into BOC HK, it will be BOC HK's medium to long-term main target for growth and impetus in developing these countries' businesses. Especially when there is more saturation in the local Hong Kong market, this will become even more important.
As we extend on this plan in the ASEAN market, the contribution to our revenue will grow many times. Thank you very much for your question.
On the left, the second row, the gentleman in the center.
Thank you management for giving me the chance to ask a question. I am Jeremy from JPMorgan. My question is about asset quality. At present, no matter whether you are talking about cost of credit provision and also the ratio, they are all at low levels. When the U.S. hikes interest rates, and then you are also expanding in ASEAN. Is it true that in the future, credit costs may go up? Or for BOC Hong Kong, do you have any strategy or plan to more appropriately control risk about asset quality? Thank you.
Regarding risk quality or risk control and management, especially after interest rates rise, and also our business development in Southeast Asia, I will ask our Mr. Li Jiuzhong to answer the questions.
Thank you for your questions. Just now, our CEO and CFO said that in 2016, our NPL ratio is 0.5% and cost is 0.06%, so risk and also cost of credit are at a stable and good level. The major reason why we can maintain this condition is that all along we have been very prudent in our risk management, we have very strict credit standards. We also step up after loan management.