Good afternoon, ladies and gentlemen. Thank you for attending the 2015 interim results presentation of BOC Hong Kong (Holdings) Limited. I am Ronick Chan, Board Secretary and Head of Investor Relations. Before we begin, may I draw your attention to this slide for the forward-looking statement disclaimer. Now, 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; Miss Sui Yang, Chief Financial Officer; and Mrs. Ann Kung, Deputy Chief Executive. For today's agenda, CEO Yue will start with the performance highlights, followed by CFO Sui with the financial results. CEO Yue will then talk about the outlook and strategy. Finally, we will open the floor to questions. CEO Yue, please.
Thank you, Ronick. Good afternoon, ladies and gentlemen. In the first half of 2015, growth in the world's major economy was modest. So, at around paced, economy recovered at a faster pace, while the rate of recovery in emerging market economy was more divergent. In Mainland China, the focus was on the economy's stability and progress under the new normal. Driven by domestic demand, the local economy grew at a moderate rate with strong support from the Hong Kong government. Labor market conditions were largely stable, despite weak external demand. With more transactions in the local stock market in the second quarter of this year, investment sentiment picked up. Recently, however, the global financial market has been extremely volatile, and this has caused fluctuation in both stock market and the foreign exchange market, adding uncertain to the banking industry.
In the first half of the year, more intense market competition and the stringent regulatory environment weighed on the Hong Kong banking industry. The good news is the growing number of opportunities arising from the accelerated internationalization of the RMB, the One Belt One Road, the gradual opening up of the Mainland capital account, and the expansion of the free trade zone. I am pleased to report that the group record a new interim high, both income and profit, for the first half of this year, with growth reaching near at double digits. By focusing on the implementation of a variety of growth strategies, our core business achieved good result with the key financial indicators at a solid level. Our net operating income before impairment allowances rose by 9.4% year-on-year to HKD 23.6 billion.
Profit attributable to equity holders increased by 10.8% to HKD 13.3 billion, or an earnings per share of HKD 1. 2662. Return on average shareholders' equity was 14.78%, up by 3 basis points year-on-year. In addition to these results, the board has declared an interim dividend of HKD 0.545 per share, the same as last year, which stands for a payout ratio of 43%. Customer loans and deposit outperformed the market growth compared with the last year-end. Our customer loans grow by 7.3%, which was well supported by a deposit growth of 8.9%. The loan-to-deposit ratio maintained at a healthy level of 63.87%. By adhering to a prudent credit policy, our loan quality was sound, with a low classified or impaired loan ratio at 0.27%, a slight drop of 4 basis points.
The average liquidity coverage ratio was above the regulatory minimum at a solid level of 109.9% in the second quarter. We adopted proactive measures to manage capital and optimize the risk weights of our assets. Our total capital ratio was at 17.26%, down by 0.25 percentage points, while the Tier 1 capital ratio was at 12.41%, up by 3 basis points. During the first half of this year, the group made strong strides forward. We enhanced our long-term development potential and grew our business in sustainable manners, increased overall profitability by optimizing our product mix, expanded cross-border collaboration, and improved our services capabilities. As a result, the group achieved promising result in various business segments. With the positive investment segments and the growing number of stock transactions coming from the Shanghai-Hong Kong Stock Connect, we sped up our marketing and promotion efforts and closely followed the change in customer behavior.
In addition, we introduced more products to meet customer demand, launched themed and bundled promotion campaigns, enriched functions of our e-channel, and strengthened our manpower support. We also promoted our wealth management business and the mid-business platform. During the period, our capital light fee income rose strongly by 31%. Income from the securities brokerage rose 98%. Funds distribution grew 32%. Insurance fee income grew 21%. The private banking-related net fee and the commission income grew at a faster rate of 178%. Following the successful introduction of the Mainland-Hong Kong Mutual Recognition of Funds, we selected a number of funds, which with the growth potential in preparation for the all-round fund investment services we will be offering.
In line with our customer-centric approach, we reinforced our customer segmentation strategy to satisfy the wealth management needs of target segments and build a main bank relationship with our customers, which helped increase product sales and the group's overall profits. The group also successfully expanded its customer base and regional coverage. We established client relationships with overseas financial institutions and central banks and accepted new RQFII and QDII applications, which helped us maintain our status as one of the largest RQFII services providers in Hong Kong. Net fee income from the custody business grew by 21% during the first half this year. For corporate seeking to expand in Asia Pacific and Europe, we participated in a number of significant syndicated loans and established cross-border cash pooling solutions. We also expanded our overseas banknote business.
All this promoted the development of our different business lines, providing a driving force for the group's profit growth. During the period, the group continued to optimize its distribution channels. We rolled out new concept branches in strategic areas to e-channel our services capabilities and brand image. In electronic banking, we joined with the TransUnion to launch the first-ever online loan 360 services in Hong Kong and set up a convenient online- to- offline model with the highest customer data protection. Other improvements include functional upgrades to the BOC Hong Kong credit cards, WeChat social platform, internet banking, mobile banking, and the call center. During the first half of the year, the offshore RMB business in Hong Kong continued to develop steadily. We further enriched our total RMB services, enhanced our RMB funds usage capabilities, and expanded our financing channels to capture new opportunities.
We also captured business opportunities arising from the development of the new free trade zone in Guangdong, Fujian, and Tianjin. Through our close collaboration in the Bank of China Group, we have taken the lead by signing loan contracts with a number of corporate customers and by offering them cross-border RMB loans. In our role as the offshore participating bank, we also provided innovative cross-border financial services and completed the first offshore bond repo transactions. As a premier liquidity provider in RMB and the largest offshore RMB clearing bank, BOC Hong Kong considers its stable offshore RMB market to be critical for its future development. We have taken on the responsibilities of providing RMB liquidity to the market and strengthen our clearing capabilities. All of these have further reinforced and enhanced our leading position in the offshore RMB business market.
This year, the BOC Group has been reviewing its overall strategic business development in Hong Kong and the ASEAN region. As part of this transformation, we have begun the bidding process for the potential disposal of Nanyang Commercial Bank and examined the strategic value of the potential restructuring and transfer of banking assets owned by BOC in some ASEAN countries to BOC Hong Kong. We have been setting a strategic plan and direction for transformation riding on our financial strength, franchise value, and professional expertise. The ASEAN strategy will position us well for capturing opportunities from the One Belt One Road, internationalization of the RMB, Mainland enterprises going global, and the local enterprises going into Mainland.
We will be able to better support the needs of our customer for growing their business, fostering the industrial and commercial development, facilitate the economic prosperity, and provide new growth drivers for the group's long-term sustainable development. I would like to stop here. Miss Sui, our CFO, will now give some details on the financial results. Miss Sui, please.
Thank you, Mr. Yue. First, let me go through the income statement with you. In the first half of 2015, our profit attributable to equity holders reached a new high for the interim period, up by 10.8% year-on-year to HKD 13.3 billion. Core operating income grew, and at the same time, all key financial ratios stay at healthy levels. Net interest income was flat. Net fee and commission income grew by 31.4%. Operating expenses increased by 5.8%. Operating profit after impairment allowances rose by 8.3% to HKD 16.3 billion. Net interest income was broadly unchanged at HKD 15.6 billion, with growth of 9.9% in average interest-earning assets. Average interest-earning assets expanded. In the pursuit of increase in the deposits from customers, both advances to customers and debt securities investments increased.
Net interest margin fell to 1.59% due to the increase in lower- yielding assets in short-term debt securities investments and interbank placements, as well as a decrease in the average interest spread of RMB assets caused by the drop in the market interest rates. All of these offset the positive impact of the widened loan and deposit spread. Moving on to non-interest income. Net fee and commission income expanded by 31.4% with broad-based growth. In particular, the investment and insurance businesses performed extremely well. Market sentiment was active in the second quarter, reflected in the substantial income growth of 98% from security brokerage. Income from funds distribution grew by 32%, while insurance commission income grew by 21%. Our traditional business also saw encouraging growth. Loan commission grew by 17%, currency exchange rose by 43%, and trust and custody service recorded healthy growth of 17%.
Other operating income was up by 43.5%. Net trading gain dropped by 54.3% year-on-year, mainly due to the higher net loss on foreign exchange swap contracts, partly offset by the increased income from equity-linked products. Other income was HKD 1.2 billion. This was mainly comprised of net insurance income by BOC Life and net gain on other financial assets. Now, let's look at our expenses. In the first half, the group's operating expenses was up by 5.8% year-on-year to HKD 6.5 billion. The cost-to-income ratio at 27.76% was still among the lowest in the local banking sector. While maintaining disciplined cost control, we continue to invest in new businesses to enhance our long-term competitive edge. Staff costs increased by 5.7%, mainly driven by the annual salary increment and increase in performance-related pay. Premises and equipment expenses was up by 4.1%, owing to higher rental and maintenance costs.
Depreciation expenses rose by 6.8% due to a larger depreciation charge on premises from the upward property revaluation in Hong Kong and higher expense on IT equipment as we continued to upgrade our IT infrastructure. The loan impairment allowances recorded a new charge of HKD 806 million. This increased by 114% year-on-year, caused mainly by the higher net charge on individually assessed impairment allowances related to our Mainland business. The lower net charge of collectively assessed impairment allowances by 73% was mainly due to the review of parameter values in the assessment model. The amount of recoveries was down by 6%. The formation of new classified or impairment loans was HKD 1.3 billion, about [audio distortion] of total loans outstanding. The slight drop in classified or i mpaired loans was due to the total amount of the collections and the write off the loans, which was greater than that of downgrades during the period.
The group's overall quality remained sound. Compared with the end of last year, our classified or impairment loans ratio dropped by 4 basis points to 0.27%. In view of market uncertainties, we continue to proactively optimize our asset liability mix to enhance returns and control funding costs in the first half of the year. The group's total assets was HKD 2.36 trillion, an increase of 8.1% from the last year-end. Cash and balances with banks and other financial institutions decreased by 17.4%, as banks are deployed to security investments and customer loans. Securities investments increased by 30.3%. Advances and other accounts rose by 6.4%, driven by the growth in customer loans. Total equity grew by 5%, mainly due to the higher retained earnings. We maintained our proactive and flexible deposit strategy to support business growth while actively managing funding cost. Our focus is to absorb CASA deposits.
Our deposit from customers was up by 8.9%, driven by Hong Kong dollar deposits. In the first half, our advances to customer grew by 7.3%. Corporate loans for use in Hong Kong rose by 12.7%, with broad-based growth in various industries and sectors. Individual loans were up by 4%. Of these, residential mortgage loans grew by 4.5%. Trade finance edged up by 1.2%. Loans for use outside Hong Kong grew by 6.5%. The loan-to-deposit ratio was maintained at a healthy level of 63.87%, down 0.92 percentage point from the end of last year. Securities investments balance increased by 30.3%. For the purpose of balancing return and risks, we further optimized our investment portfolio by increasing government-related and high-quality corporate bonds. In terms of debt issue distribution, 35% of our investment was in government or government-related papers, 22% in government entities, and 43% in banks and other financial institutions.
87% of our debt security holding was rated A or above. Now, let's look at our performance by business segment. In the first half, encouraging development was seen in the offshore RMB business, cross-border business, and those arising from collaboration with our parent, BOC. In personal banking, we remained the market leader in new mortgage loans and the UnionPay card business. Our refined customer segmentation strategy laid a solid foundation for the stronger customer relationships, which also resulted in a satisfactory growth in both the wealth management and the private banking business. For corporate banking, we deepened our collaboration with parent BOC, which enabled us to capture the increasing customer demand for cross-border banking services. During the period, the group successfully participated in a number of significant syndicated loans and acted as the receiving bank for some major IPOs in Hong Kong, which consolidated our leading position in the market.
In the treasury business, we took a proactive but prudent approach in our investment strategy, closely monitored market changes, and stayed attuned to risk. We enhanced the customer experience by analyzing customers' preference to provide time to market products and services. We also strived to grow our bond underwriting business and achieved satisfactory results. BOCHK was appointed the sole settlement bank for the Shanghai-Hong Kong Gold Connect to provide Shanghai International Gold Exchange with fast settlements and cross-border payment services. As for our insurance business, we broadened our product offering and diversified our distribution channels to reach different customer segments. During the period, we reinforced our leadership position in the local RMB insurance market. Net operating income of Mainland business decreased by 14% year-on-year, mainly due to the decrease in net interest income from a decline in the market interest rates.
The group's total number of branches and the sub-branches in the Mainland remain at 42. During the period, we continued to broaden our new product spectrum and improve the customer experience through our electronic platforms. Customer loans and deposits grew by 6.8% and 2.6%, respectively, from the last year-end. We conducted more prudent risk management and credit control. However, because of economic slowdown in Mainland China, credit quality remained challenging. As a result, the classified or impairment loans ratio of our Mainland business slightly increased to 2.16% in the first half. That concludes our financial review, and now, I hand you back to Mr. Yue. Thank you.
Thank you, Miss S ui. Heading into the second half of this year, the global recovery has been divergent across different economies. The monetary environment stays moderate, while t he continued opening up of the Mainland's financial markets, a new round of reforms by state-owned enterprises, integrations of the Beijing-Tianjin-Hebei metropolitan area, and the speedy development of free trade zone in Shanghai, Guangdong, Tianjin, and Fujian will bring more opportunities for Hong Kong's economic and financial development. Entering a new era, we will closely follow our strategic goal of serving society, delivering excellence. We will work towards this goal while benchmark against the best, capturing new business opportunities and enhance results. We are seeing growing business potential for the Hong Kong banking industry. Firstly, there will be an increasing demand for large infrastructure investment in Asia Pacific over the next few years.
Secondly, the speed up of the launch of policies in capital, interest rates, and foreign exchange, including opportunities related to capital account opening, interest rate marketizations, Shenzhen-Hong Kong Stock Connect, and the QDII2 pilot scheme. Thirdly, the speed up of RMB internationalizations will stimulate the development of the cross-border financing, asset management, and the interconnections in capital market. Firstly, the One Belt One Road national initiative will create many new business opportunities, especially with Hong Kong as a super connector being promoted by Hong Kong governments. These will bring benefits such as increased financing, trade, logistics, project management, and legal arbitration work. It is the largest overseas institution in the BOC Group and has been in Hong Kong for nearly 100 years. BOC Hong Kong plays a unique role with an important mission for our regional business development.
We will be a bridge ahead for the internationalizations and diversifications of the BOC Group, in particular in the ASEAN region. We will development our major business platform by increasing our customer space, product innovation, and professional expertise. We will provide full financial support across regions, such as through project financing, syndication, bridge loans, and bond underwriting to achieve higher returns. The trend of RMB internationalizations is moving forward. China will continue to pave the way for the future inclusion of RMB into the IMF SDR basket of currencies. We expect the launch of more cross-border policies such as the Shenzhen-Hong Kong Stock Connect and the QDII2, which will not only facilitate two-way funds flows, but also deepen the offshore RMB funding pools and increase RMB deposits.
As the sole RMB clearing bank in Hong Kong, we will enhance our role as a main channel for the overseas RMB clearing business. Similar to what we did with the launch of Shanghai-Hong Kong Stock Connect and the Shanghai-Hong Kong Gold Connect, we will respond to policy and market changes by developing a more diversified selection of RMB products and services to solidify our position as a premier RMB bank for institutional, corporate, and personal clients in the Mainland, Hong Kong, and overseas. We will continue to strengthen our multi-directional collaboration in the BOC Group, optimize our business structure, and diversify our products. BOC Hong Kong will expand its business in Hong Kong and leading corporates in Southeast Asia, while striving to better service Mainland corporate customers and the world's top 500 enterprises through positive interaction with our parent bank.
These will help us to expand our customer coverage both at home and in the international market. At the same time, we will expand our institutional client base and provide high-quality services to the Hong Kong government and public sector customers. Furthermore, we will enhance our central platform for Asia Pacific syndications to maintain our syndication business leading position in Hong Kong and Macau. We will capture opportunities arising from the cross-border business, including Shenzhen-Hong Kong Stock Connect, the Mainland-Hong Kong Mutual Recognition of Funds, and the QDII2 to enhance our services. What is more, we will develop our wealth management business, including our asset management, insurance, and private banking business. We will deepen our relationship with existing customers while developing them up to high-end segments by adopting a family banking services philosophy. We will expand the scale of our mortgage business and deliver banking services to the mass retail segments.
We will continue to extend the new concept branch model in core and strategic districts of Hong Kong. In addition, we will enhance the integrated services capabilities of the network and further increase the coverage of automated self-services network for the convenience of our customers. To strengthen our regional connection and financial services capabilities, we will leverage Hong Kong's advantage as an international financial hub and maintain close integration and communication through our systems network. With respect to the change in technology and customer habits, we will also focus on developing internet finance to meet the needs of cross-border financing and overseas business expansion plans of our target customers. Beyond this, we at BOC Hong Kong will strengthen the depth and the breadth of our onshore and offshore collaboration and take advantage of BOC Group's globally integrated platform and strong franchise in offshore RMB and cross-border business.
Since we announced the proposed acquisition of ASEAN assets from our parent BOC, the acquisition work has been progressed smoothly. We will make further announcements on the acquisition once we have met all the conditions, including the regulatory approvals. Expanding into the ASEAN market will transform us from the local bank here in Hong Kong into a regional bank with cross-border operations. There is an old Chinese proverb about the importance of strategic planning. A wise man is well aware of the situation and will plan without missing any significant details. We will carefully manage the planning and implementation of the regional transformation. In preparation of this new era, we are drawing up a new plan with innovation on operational mechanism, management structure, business strategy, supported systems, and so on.
With the gradual implementation of Basel III guidance and various regulatory requirements, BOC Hong Kong is one of the domestic systematically important authorized institutions in Hong Kong. We will continually focus on the prudent risk, and the capital management is our major consideration in the group's business development. We will be proactive in managing our capital and liquidity and will continually optimize our balance sheet mix. We will also strive to focus on strengthening the group's capital position for our business development needs. Our goal is to balance business growth, the regulatory requirements, and stable shareholders' returns. To maintain our asset quality at a level better than the industry average, we will strengthen our credit risk management and adhere strictly to our prudent credit policy.
We are also committed to enhancing the management of market risk, operational risk, reputation risk, and cybersecurity risk while stepping up our efforts for anti-money laundering in accordance with the regulatory requirements. Furthermore, we will improve our internal controls in order to support the sustainable and healthy development of the group. The financial markets have been especially sensitive recently. U.S. interest rate hikes expectation, fund outflows from the emerging markets, and downward movements in foreign exchange have all lead to greater uncertain in global financial market. We could not neglect the impacts across the economic development in Hong Kong and to the world. During the turbulent period, we will stay alert and adopt appropriate measures so that we can respond to developments in a timely manner.
Against the backdrop of the One Belt One Road and the internationalization of the RMB, together with Hong Kong's unique strategic competitive advantage, we have opportunities to make our strategic transformation and regional development a reality and create promising new future for BOC Hong Kong. We have confidence in this strategy and believe that our efforts will be highly recognized by the market. I conclude our presentation here. Now, my colleagues and I will be pleased to take your any question. Thank you.
Okay. For the Q&A section, kindly ask only one question each time so as to allow more chance for other participants. Like to, okay Franco .
Thank you. So, Franco Lam from Deutsche Bank. Thank you for the presentation. Can you kindly share with us the progress update on the potential acquisitions in the ASEAN franchise? For example, the time frame when this will be finished. Also, in terms of the focus area, which markets or countries that your bank has high interest in? Also, lastly, with the currency weakness and rising asset quality within the ASEAN markets, will this impact your decision to expand in this market ultimately? Thank you.
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Since our announcement on 21st May regarding our proposed acquisition of the parent bank's ASEAN assets, we have been working earnestly on the projects. These include sending our colleagues from different departments to those countries to conduct on-site visits, carrying out due diligence, as well as studying the management structure and mechanism. The projects have been progressing smoothly.
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So, we capitalize on this opportunity to transform ourselves from a local community bank to a regional bank. To BOC Hong Kong, it will be easier for us to manage the business in ASEAN countries with our geographical proximity and cultural similarity. There has been frequent communications made between people in Hong Kong and the ASEAN countries, while the ASEAN countries will also serve as the key region for the growing global initiative of Mainland companies and RMB internationalization. We have full confidence in ensuring a smooth transition after the restructuring.
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Our ASEAN development strategy is based on our long term strategic consideration. Short term volatility in the market will not have an impact on the directions we have determined. So, with respect to our expansion in ASEAN, we are encouraged with stronger confidence in our future development.
Thank you.
Thank you.
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Gary?
Thank you. It's Gary, I am from Citi. Aware that your first half loan growth looks slightly faster than sector average of 7.6% versus 5.5% in the sector. Could you offer us your thinking of the key drivers here? Of course, aware again that it is the local corporate as well as overseas corporate that seems to exceed the sector average. How do you see the second half demand coming in into your pipeline, a nd whether the recent volatile market would influence your risk appetite? Thank you.
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In the first half of 2015, Mainland China made great efforts to achieve better growth under new normal. Despite the external trade environment remaining soft, underpinned by the efforts of the Hong Kong SAR government towards boosting economic development, the local employment remained largely stable, and the economy saw moderate growth driven by private consumption. On the other hand, the demand for cross-border financing weakened due to the narrowing gap between the onshore and offshore interest rate, which reduced the loan demand and drove up market competition.
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Nevertheless, the group continued to leverage its strong customer base and competitive advantage in services and also enrich its product spectrum. Meanwhile, we are capitalizing on the close collaborations with the BOC branches both in the Mainland and overseas. We capture the opportunities arising from the national strategies, including One Belt One Road , new free trade zones, RMB internationalization, et cetera. Our loans grew by 7.3%, which is better than the market average, of which loans for use outside Hong Kong increased steadily by 6.3%. Loans for use in Hong Kong grew even better by 12.7%, with broad-based growth across different industry. In particular, loan growth from the sectors including property development, transport and transport equipment, and manufacturing industry all exceed 20%.
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Stepping into the second half, we expect opportunities will continue to come from the gradual implementation of national development initiatives, including One Belt One Road , RMB internationalization, the collaborative development of Beijing-Tianjin-Hebei region, going global strategy by Mainland corporates, as well as the expansion and the free trade zones. This, coupled with the stable development in the Hong Kong market, will give us strong confidence in keeping our consistent record of double-digit loan growth. We strive to balance the growth of loans for use both in Hong Kong and outside Hong Kong. For Mainland business, we will continue to adhere to a prudent approach and maintain an appropriate pace of development in line with the economic atmosphere in the Mainland China。
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Through commercial bank, loan facility is fundamental to developing long-term stable relationship with customers. Due to the appreciation trend over the years, the loan-to-deposit ratio of RMB business in Hong Kong has been lower than other currency for a long time. With the recent change in RMB currency movement, we believe the RMB loan demand will increase in the future. Therefore, we will capture the business opportunities to develop RMB loans as a main channel for our asset deployments over longer time. Thank you.
Okay, let's provide a chance for a lady. Sharnie, please.
Hi, Sharnie Wong from Barclays. Given the recent devaluation of the RMB, could you please share your thoughts about the impact on BOCHK, as well as your thoughts on the outlook for the currency going forward as well? Thank you.
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On August 11th, the PBOC improved or enhanced the renminbi FX exchange system mechanism. Because of this, it increased the internationalization and marketization of renminbi.
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We believe that the renminbi exchange rate will stay at a stabilized level. As mentioned by Premier Li Keqiang, there is no basis for the continuous depreciation of renminbi . The reasons are as follows: China's solid economic fundamentals, especially with a GDP growth of 7% per annum, provide a strong support to its currency. For the first seven months of this year, its trade surplus amounted to $305.2 billion. Its ample foreign reserves, low inflation rates, both the fiscal deficit and the level of government debts are within a safety level. So, we believe that the renminbi exchange rate will stay at a stabilized level.
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We believe that for the longer term, the renminbi exchange rate reform is one of the important milestones of the internationalization of renminbi. Although in the short term, volatility posed some pressure to asset price, but then renminbi business opportunities increased. Because of the various opportunities present to us, renminbi is the fifth largest currency and is widely accepted by many countries. So, we believe that because of these new initiatives and also opportunities from opening up of capital accounts and QDII2, these all create favorable conditions for the massive support to the development of offshore renminbi business.
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Being the sole renminbi clearing bank in Hong Kong, BOCHK will continue to enhance its integrated servicing capabilities and strive to enhance our clearing efficiency. We may use our channels to provide renminbi funding liquidity, increase the size of repos conducted in the Mainland's interbank bond market. As participating bank, renminbi business opportunities increased, including more corporations would borrow in renminbi. This could drive our renminbi lending business, and also, more activities will be conducted related to the deployment of renminbi currency exchange transactions, and more people would convert their assets to overseas. All these present good opportunities for our participating bank business. In the past years, we have seen large spread in the renminbi market. Still, at those times, we continued to grow our business and handle smoothly. Because of our leverage on our rich knowledge in the renminbi business, we have the capabilities.
We have confidence to continue to grow our renminbi business. Thank you.
Okay. I think it is time for our last questions, and I am surprised that a lot of you have not yet got the chance. Stanley, please. Offer a chance for that side of the podium.
Hi, I am Stanley Cheung from BOCI-Prudential Asset Management . I would like to have a bit sensitive question on Nanyang Commercial Bank, if I may. Will you please share with us if there is any timetable or price or if anything you could share with us on this disposal? Thank you.
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I am afraid you said it is a sensitive issue, but actually not so sensitive, because it has been in the market for quite some time. Actually, the sale of NCB commenced on the Beijing Financial Assets Exchange on the 15th of July . On 26th of August , we have already issued an announcement saying that we received one bidding from Cinda, a f inancial holdings company. Regarding the bidding price, HKD 68 billion, I would think this is within market expectations. It also reflects the investor confidence in the local banking operations. It also gives good support to the price-to-book levels and price-to-earnings levels of the listed banks, and also the asset value of the long list of banks in Hong Kong. I think it is favorable to the share price of the banks in Hong Kong.
As you can see that some of the banks rise even faster than us. I think the first thing I want to highlight is the market response is positive.
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Nanyang Commercial Bank is one of the top 10 banks in Hong Kong. It has a very excellent brand and long operating history. It is also the first foreign bank entering the Mainland market. It has a very strong distribution network in Hong Kong, widely covering the prime locations on Hong Kong Island. It also has a banking license in both Hong Kong and Mainland China. For NCB China, its network covers 40 cities across Mainland China, with a very solid branch network and business platform. At the same time, because the founder of NCB, Mr. Chuang Shih-ping, he is a very famous compatriot, t herefore, it helps the bank to enjoy very good reputations among the overseas Chinese communities in Southeast Asia and also the overseas market. Nanyang Commercial Bank is a full service bank. I think these are the relevant points I want to make.
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As of end of June this year, the Nanyang Commercial Bank's financial strength is solid, with a net asset value of HKD 36.2 billion. It has a good asset quality with the NPL ratio standing at only 0.71%, with an improvement of 13 basis points compared with the end of 2004. Overall speaking, it is a very healthy operation. Regarding NCB China, its non-performing loan ratio is only 1.13%, which is lower than the average of the Mainland market. I think overall speaking, this is a very solid bank.
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The proposed disposal of NCB is a careful decision of an extensive strategy review performed by BOC HK. This is consistent with the long-term development strategy of the group in Hong Kong, as well as in ASEAN region. Similarly, we believe this proposed transaction of NCB should also be a part of the long-term strategy of the potential buyer. Therefore, based on these two points, I believe the short-term volatility in the market shouldn't have any impact on these strategic directions.
Okay. Thanks all for coming to this presentation. For those who still have questions, please stay and we will arrange accordingly. Thanks for coming again. See you.