Analysts, investors, good afternoon to you. Welcome to the Bank of China Hong Kong (Holdings) Limited interim results announcement 2016. I am the new Company Secretary, Lou Na n, as well as the IR Manager. Before we begin, I would like to draw your attention to the slide concerning the disclaimer. If you need to read the announcement for our interim results, would you please scan the QR code on the top left-hand side for the text. We now officially begin the presentation. First of all, the management team of BOC Hong Kong on stage are Mr. Yue Yi, Vice Chairman, 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, the COO. Madam Sui Yang, the CFO. The Deputy Chief Executive, Ann Kung . Three parts to the agenda today.
First of all, the Chief Executive, Mr. Yue, will start with a strategy review for the first half of the year, followed by the CFO, Mrs. Sui, discussing our financial performance. Mr. Yue will talk about our outlook and business focus for the second half, and then we'll have a Q&A session. Mr. Yue.
Ladies and gentlemen, good afternoon to you. For the first half of 2016, Bank of China (Hong Kong) continued to pursue our parent bank's strategic goal of serving society, delivering excellence, and implement the new development strategy of the group. During the period, we overcame challenges in the operating environment, continued to make progress in its program of reform and innovation, and seized new business opportunities and made further business development and structural adjustments. With regard to our branch network transformation, we remained focused on the Hong Kong market, where we expanded and enhanced our personal banking business for mid to high-end customers while continuing to develop the SME business. This is all part of drive to transform BOCHK from a local bank into regional bank.
Through collaboration, mergers, and integration with the Southeast Asian institutions of our parent bank, we were able to enlarge our corporate customer base and extend the products and services we provided in these regions. We saw steady growth in our operational performance. In the first half, profit attributable to equity shareholders increased to HKD 42.7 billion, which is a growth of 219.2% compared with the same period of last year, a record high since our listing. Contributing to this profit was the sale of NCB, from which we received HKD 68 billion in cash and recorded a HKD 30 billion gain. If we exclude the non-comparable factors, our net profit increased 7.8% to HKD 11.71 billion. The increase in profit has substantially lifted the group's capital ratios. Based on our longstanding dividend policy, the board has decided to distribute an interim dividend per share of HKD 0.545.
At the same time, after a thorough evaluation and taking into account a comprehensive range of factors, including balancing the long-term development of the company and shareholders' interests, the board has decided to pay a special dividend per share of HKD 0.71. Taking advantage of the Belt and Road Initiative, mainland enterprises continue to invest heavily overseas. Recording M&A transactions amounting to more than $120 billion in the first half. Close collaboration with our parent banks institutions in Southeast Asia enabled us to issue new loans in countries along the Belt and Road, which at the end of June, exceeded HKD 30 billion. In April, Bank of China (Hong Kong) was approved to establish a branch in Brunei. On June 30, we signed an equity transfer agreement with BOC Thailand and Malaysia with our parent bank, marking the first step in our transformation into a regional bank.
Currently, we are preparing for the opening of the new Brunei branch and are assessing the feasibility of acquiring our parent's banks institutions in Cambodia, Indonesia, the Philippines, and Vietnam. In early July the Infrastructure Financing Facilitation Office of the Hong Kong Monetary Authority was launched. This will certainly create more opportunities for Hong Kong enterprises wishing to participate in infrastructure investments along the Belt and Road. BOCHK is collaborating with our parent bank in these investments, as well as other management projects, by satisfying customer needs for outbound investment, cross-border financing, and global cash management. We will also assist customers to establish a financial asset center and cross-border M&A center in Hong Kong to support their M&A activities, transfer of production capacity, and industry project upgrades in Southeast Asia.
In addition to customers investing in opportunities arising from the Belt and Road Initiative, we also work with our parent bank to cross-refer growing global enterprises in the Mainland and Hong Kong. Through acquisitions, we integrated institutions of our parent bank in Southeast Asia in order to expand our customer base and identify new sources of businesses. As part of our commitment to the Hong Kong market, we deepened our relationships with local customers and remained a leading arranger in the Hong Kong-Macau syndicated loan market, as well as a leading provider of new mortgage loan markets in Hong Kong. All of these developments have supported our strong growth in customer loans during the first six months of the year.
In the first half of the year, customer loans reached HKD 989.2 billion , which is an increase of 11.1% compared with the last year-end, and notably above the 2.2% growth of the market. Our market share in loans further increased to 12.8%, and in terms of the net loan growth, accounted for 60% of the Hong Kong market. This provides strong support to the city's economic development. In terms of deposits, the group increased the number of payroll account holders, deepened business relationships with governments and public institutions, and expanded the wealth management business among mid to high-end customers, all of which contributed to steady growth in deposits business. Customer deposits grew by 4.7% from the end of last year to HKD 1,474.3 billion , reinforcing our leadership in the market and supporting the group's asset growth.
These factors also help to maintain a healthy balance sheet and favorable liquidity position. With deep roots in Hong Kong for nearly a century, BOCHK has been serving the local market with the largest branch network in the city. As part of our branch network transformation project, we have expanded and strengthened our SME business while advancing the development of our wealth management businesses for personal banking and mid- to high-end segments. We also began our push to develop omnichannels, internet finance, and technological innovation to enhance service quality and profitability of our network. Early this year, with the help of professional consultants, we launched a pilot project for the transformation of our branches and selected 10 pilot branches in strategic business locations. These branches have shown encouraging results, including a significant increase in operating efficiency across various business areas.
Performance was particularly outstanding in the mid to high-end customer segment. We also saw sales performance improvements in investment and insurance products, with growth rate increases of 8 percentage points and 20 percentage points respectively, as compared with the non-pilot branches. Income in the pilot branches has also grown notably faster than the non-pilot branches, and in July, we began to officially implement the transformation of the 196 branches in Hong Kong. We are convinced that with the multifunction services we have introduced, together with a flatter and leaner management structure, as well as expanded RM teams, we will not only strengthen our service capabilities, but also the performance and efficiency of our branches.
In the first half, we continued to invest resources in eight key new business platforms that have helped us satisfy customer demand for a wide range of financial services and sharpened the group's competitive edge. The pre-tax profits of the eight business platforms grew satisfactorily by 3.9 percentage points during the first six months of 2016. In this period, we saw an increase in cross-selling ratio of a credit card business and a gain of 9.3% in our merchant acquiring business. Private banking streamlined its business procedures, bringing significant growth in the number of new customers and assets under management. BOC Life, the proportion of sales via non-banking channels rose 20%, while sales of its new standard premium went up 23%.
Taking advantage of the mutual recognition of funds between the Mainland and Hong Kong, our asset management company introduced a diversified range of fund products and expanded its target customer groups on the Mainland. We also provided global cash management solutions to multinational corporate customers and became the leader in cross-border two-way cash pooling. The average assets under custody in the custody business experienced satisfactory growth of 13%. Thanks to better service and internal business referrals, the trust business had a market share as high as 7.7% in terms of net asset value. Po Sang Futures set up a professional sales team and continued to launch futures products catering to our customers.
Internet finance has become a global trend in recent years, and we have seen increasing demand among customers for electronic finance and other online services. In order to build a competitive advantage in this area, we have devised an e-BoC strategy through which we aim to become the best internet bank. This will involve building an omni-channel with intelligent features, focusing on fintech applications, and taking advantage of three innovative platforms and four e-finance product lines. In the beginning of the year, we established an e-finance center and conducted cross-channel cooperation and collaboration with our parent bank, which has already paid off. Since then, we have put our traditional products online, expanded our mobile finance applications and services such as e-checks, as well as online loan applications and small value transfers via mobile phone.
We also became the first bank in Hong Kong to introduce mobile e-check services and bill payments through an e-check drop box. By the end of July, this service had handled over 80,000 deals. In July, we were also among the first banks to roll out Apple Pay service, offering customers a more convenient and flexible method of payment. In addition to this, we were the first bank to provide services and conduct transactions on WeChat platform with an increase in the number of registered users by 90% and active users by 30% compared to last year. In the first half of the year, the number of users of both our traditional online banking platform and mobile finance platforms, such as WeChat, rose by a notable margin. The number of transactions on self-service channels accounted for 84% of the total number of transactions, and that figure is expected to increase.
In the application of new technologies, we have started big data operations, research, and study of biometrics technology, and are now conducting a feasibility study to establish QR code-based payments for P2P and merchant transactions. Our strategic cooperation with cross-border e-commerce and third-party payment companies is currently underway. For example, earlier this year, we started providing a one-stop funds clearing solution exclusively for Tencent's Hong Kong version of WeChat's red envelope . What's more, we and the Hong Kong Applied Science and Technology Research Institute recently declared the establishment of a joint BOCHK-ASTRI FinTech Collaboration Centre to develop new financial technologies applicable to banking, including blockchain, cybersecurity, big data, artificial intelligence, as part of our concerted effort to become a leader in internet finance and propel the development of financial technologies forward in Hong Kong.
Our branch channel development, we plan to launch intelligent flagship branches and establish an O2O ecosystem for an integrated omni-channel experience. Cybersecurity is a particularly important area for us. As an indication of how much importance we attach to cybersecurity, we have established an independent security unit dedicated to security-related matters. This unit is responsible for building an intelligent cybersecurity platform and safeguarding the systems and transactions. In recognition of our innovations and technology, we won the Best Mobile Social Media Engagement Project in The Asian Banker Technology Innovation Awards and the World's Best Consumer Digital Banks in Hong Kong by American Global Finance. The group follows a stringent and prudent principle for managing all types of risks and has taken comprehensive measures to ensure better risk management as a way of safeguarding our business development.
In the first half of the year, we continued to maintain strict credit approval standards and enhance our monitoring of existing credit. We also put in place measures to identify early warning signals and downsize or clear non-performing loans with a view to guarding against new non-performing loans. As of June 30th, our NPL ratio was 0.25%, and our credit costs were maintained at a low level of 0.12%. NPL level is lower than the average for the market of 0.78%. We also took the initiative to improve our deposit structure and level intensive management. In both the first quarter and the second quarter, we managed liquidity effectively and maintained a coverage ratio around 110%, which was significantly higher than the regulatory minimum of 70%.
Bank of China (Hong Kong) is one of the main listed commercial banking groups in Hong Kong, one of the note-issuing banks, and the sole RMB clearing bank. In an ever more complex market environment, we have been working diligently to improve the effectiveness of our anti-money laundering policies. Since the beginning of the year, we have been refining our AML mechanism in order to enhance the prevention and control of AML risks in our business lines, and further strengthen the monitoring of high-risk businesses, such as those related to correspondent banks and remittance. Taking reference from international standards and the good practices of our banking peers, we have formulated an AML risk appetite policy to ensure that our banking system will not be used for money laundering. The three lines of defense are the proven risk management mechanism adopted by the group.
Business departments act as a first line of defense, and they are also the risk owner and shoulder the principal responsibility. Risk management units and supporting units are the second line of defense. They have independent responsibility to identify, measure, monitor, and report various kinds of risks while managing them in a centralized manner. The group audit is a third line of defense. It conducts independent audits of the risk management structure to ensure the compliance and effectiveness of our risk management approach. These three lines of defense all play a role with aligned responsibilities to control legal and compliance and operational risks. Next, our CFO, Madam Sui Yang, will discuss the financials of the group for the first half of the year.
Thank you, Mr. Yue. In the first half of 2016, our profit attributable to equity holders increased significantly to reach HKD 42.7 billion. That is a 219.2% up year-on-year. Of which HKD 30 billion was gained from the disposal of NCB. Excluding non-comparable factors, profit reached HKD 11.71 billion. That is a 7.8% up year-on-year. ROE average increased by 11.12 percentage points to 25.9%. As of the end of June, our Tier 1 capital ratio, as well as total capital ratio, reached, respectively, 16.63% and 23.3%. That is a 5.74 percentage points and 5.44 percentage points increase from the end of 2015. The group expanded its market. In the review period, total assets increased to HKD 2.36 trillion, which offset the decrease of HKD 300.5 billion in total assets due to the NCB proposal. Total assets reached a flat level at the end of 2015.
Corporate loan increased by 27.9% for use in Hong Kong and has a broad base in various countries. Individual loans rose by 1.9%, residential mortgage by 1.1%, trade finance by 6.9%. Loans that are used outside Hong Kong grew by 1.9%. Customer deposits grew steadily and up by 4.7% from the end of last year to HKD 1.47 trillion. The growth rate was ahead of the market growth rate of 2.8%. The group maintained its flexible deposit strategy to support business growth while actively managing its funding costs. During the first half, CASA deposits increased by 10.7%, while time and other deposits dropped by 4.3%. CASA mix increased by 3.4 percentage points to 63.9%. Due to the lower yield on RMB business and volatility of the market interest rate, the net interest margin of the group was down by 27 basis points year-on-year.
During the first half, we continued to optimize the deposit structure, increase the proportion of low or no interest deposits in order to reduce our cost. Loan and deposit spread increased by 16 basis points. That has a role of stabilizing the net interest margin to a certain extent. Our average interest earning assets expanded by 10.1%, and that helped to narrow the negative impact of the NIM impact. The group has been striving to optimize its income structure. Non-interest income grew by 15.3% year-on-year. That is a very strong year-on-year growth and contributed 41.33% of the net operating income. By developing a traditional fee-based business, that also helps to overcome the challenges of weak investment sentiment and low stock market turnover. Net fee and commission income reached HKD 5.667 billion, and that is flat year-on-year.
Net trading gain increased by 227% year-on-year due to increased currency exchange income from a net gain from foreign exchange swap contracts and the mark-to-market changes of debt securities. Operating expenses were up by 5.8% to HKD 5.82 billion. Cost to income ratio stood at 28.05%, which is amongst the lowest of the industry sector. While maintaining prudent cost control, we continue to invest in new businesses to enhance our long-term competitiveness. Staff costs increased by 4.1% year-on-year. That is a result mainly of higher salaries and also an increased headcount. Premises and equipment expenses grew up by 7.7% year-on-year. That is mainly because of higher rental and IT costs. Depreciation on owned assets rose by 6.1% year-on-year. That is due to a large depreciation cost on premises resulting from higher property reevaluation in Hong Kong, as well as higher IT equipment costs and depreciation costs.
Since the first half of 2016, we have been strengthening our branch services, adding on new concept branches. The total number grew from 30 at the end of last year to 35 of the end of June this year. The group always adhere to a very prudent credit policy, and manage our loan portfolio. In the first half of the year, asset quality remained sound. Classified and impaired loan ratio was 0.25%, way lower than at the end of first quarter industry average of 0.78%. Asset quality remained stable, and credit costs were maintained at a healthy level of 0.12%. The loan impairment allowances increased by 17% to HKD 544 million. That is mainly because of advances to customers grew by 11.1%. That is higher than the 7.3% growth in the first part of the year.
Net charge collectively assessed the impairment allowance increased by 32%. Now, may I invite Mr. Yue to talk about the outlook.
Thank you, Ms. Sui. Looking at the second half of 2016, the global economy will suffer economic hardship. However, mainland China's economy is expected to gradually restore to a steady level. Global monetary policy will remain largely loose, and pace of movement in cross-border funds will likely accelerate. Brexit and other major events would pose more potential financial risk. Affected by this, Hong Kong economy will remain only moderate growth, and local loan growth will require greater external support. Competition will become more intense and financial regulations stringent. The operating environment of the banking sector remains challenging. However, we also see unprecedented opportunities. After the post-financial crisis, international banks have been making strategic adjustments and leaving more room for regional business operations like us.
Secondly, the national Belt and Road Initiative will continue to drive the demand for infrastructure-related investments and financing in the countries along the Belt and Road Initiative. Thirdly, Hong Kong has been the first choice of springboard and financial hub for Chinese enterprises going global. Cross-country investment and M&A projects via Hong Kong will increase. Building on the success of its parent bank and its deep roots in Hong Kong, BOC Hong Kong has a unique advantage for regional development. Fourthly, RMB internationalization has been progressing steadily. October 2016, RMB will be included into the SDR at a weight of 10.92%. That definitely will encourage foreign central banks and sovereign institutions to increase their allocation of RMB in their reserves and stimulate investment demand for RMB bonds. BOC Hong Kong as the RMB's clearing bank have both CIPS and CIPS settlement channels.
We are in an excellent position to leverage in our advantage in RMB clearing services and products. Number five, there has been increasing demand from mainland Chinese individuals to allocate assets outside of the country. BOC Hong Kong is working closely with domestic institutions of BOC. We see high potential for serving high net worth customers referred to us by these institutions. The economic integration of Guangdong, Hong Kong, and Macau, as well as the Pan- Pearl River Delta, offers great opportunities. Lastly, the national economy of China is undergoing restructuring, and we do expect more and more policies favorable to economic, financial, and regional development. The launch of Shenzhen-Hong Kong Stock Connect, the removal of quota limits of Shanghai-Hong Kong Stock Connect, and the deepening financial cooperation between Guangdong, Hong Kong, and Macau, and the increasingly vibrant Cross-border investments will definitely benefit BOC Hong Kong.
To sum up, we are facing both opportunities and challenges. We remain highly confident in the future of BOC Hong Kong. BOC Hong Kong will firmly grasp the opportunity arising from mainland China's accelerated reform and open-up policy, and also Hong Kong's one country, two systems arrangement and role as a super connector of the Belt and Road Initiative. We will remain committed to the local market of Hong Kong, as well as promoting our regional expansion and continue to drive sustainable development. We will strive to achieve deposit growth at a faster rate than market average and reach double-digit loan growth for the year in order to meet our targets of sustainable profit growth.
In the second half of the year, as far as corporate banking is concerned, we will enhance our treasury, financial consultancy, and IPO businesses, step up on our efforts to increase contribution to SME customers, and to continue to improve the customer mix and income structure. In personal banking, we will continue our branch network transformation and strengthen our capacity to serve mid to high-end customers and SMEs. We will develop our traditional businesses as well as deposits, loans, and foreign exchange, and to work to maintain our leadership position in the mortgage market. In the financial market businesses, we will leverage on our traditional advantage, develop innovative new products, and reinforce our funds management with a view to improving our earnings. In the eight key business platforms, we will invest more resources to expand and enhance our life insurance, asset management, securities, futures, private banking businesses.
We see opportunities in the RMB inclusion in the SDR, making its advancements from an international settlement and foreign exchange trading currency to an international reserve currency. We will add on to our RMB-denominated and other investment products, as well as step up in our cross-selling efforts and constantly remaining controlling our ratio to non-interest income. Risk management is of top priority to us. We will closely monitor changes in asset quality, interest rate, liquidity, and exchange risk, and also strengthen our AML monitoring and controlling. Our operations continue to be legal and compliant. We will maintain our three lines of defense to control operational risks, as well as providing a guarantee for sustainable growth. 2016 will see the 100th anniversary of the group.
As one of the main listed commercial banking groups in Hong Kong and one of its note-issuing banks and the only RMB clearing bank, BOC Hong Kong will uphold its philosophy of serving society, delivering excellence. We will achieve this by continuing to provide high-quality financial services and customer society, creating long-term and sustainable value for our stakeholders, and making a greater contribution to the development of Hong Kong as an international finance center for its long-term prosperity and stability. Our presentation ends here. Thank you, and you are also welcome to raise any questions that you may have.
We move into Q&A sessions now. The last row, the gentleman over there. Thank you.
Thank you, Mr. Yue. Thank you, management. I have a question. Actually, two. Starting from June 30th till now, it is two months, and we have been giving out announcements about the acquisitions in Southeast Asia. I would like to know about the progress. Has it been smooth in terms of the acquisitions? The [RCN policy had given us a very good driver for growth in assets and also in our loans. In the first half of the year, there had been a lot of growth as well. But behind that, we also need to be cognizant of risk management. The management, can you share what areas of risks are you most concerned about so that we will know as investors that as we grow, we are also cognizant of the relevant risks?
June 30th of the year, we have formally signed the equity exchange agreement with a parent bank concerning the two banks. First of all, Malaysia and also the Thailand bank. As for the four remaining ones, Indonesia, Vietnam, Cambodia, and the Philippines, we are in an orderly and intensive process, working with the local regulatory bodies. They have given, in the main, their approvals, and we are now in the stage of due diligence, the last stages of it. I would say it has been smooth and orderly, and it has been completed, the first two, within the expected time period. We would want to be able to complete the six acquisitions within the year and also effect the transfer of equities as well. You talked about the risk management after the acquisitions.
The six countries in the Southeast Asian region, they are very big in geographical reach with big populations, and they are therefore huge markets. For Bank of China (Hong Kong)'s regional development and strategy, this is a huge potential. I led the general managers of a number of departments and went on due diligence and studies in these countries. When they came back, they all had a common impression, and that is the three countries we visited, Thailand, Indonesia, and Malaysia. The markets are stupendous with a lot of business opportunities, definitely an area that we should develop into. Going forward, our target customers in Southeast Asia are three types. First of all, the companies coming out from China.
For these companies, they would be involved in the big or huge infrastructure and syndicated loans projects such as Thailand-China Rail Road, the Malaysia Rail Road , and some of the major city infrastructural projects. These would be the Chinese companies going out to Southeast Asia. The second type of customers would be the leaders or multinational corporations, which are leaders in the industries in the local markets, which may include family businesses such as in Malaysia and Indonesia, the palm oil companies, and the rubber, and mining, and natural resources companies in Thailand. All these enjoy very high credit rating internationally, and they are potential customers. The third type of customer would be the overseas Chinese. As you all know, there are lots of overseas Chinese in Southeast Asian region, and these will present our target customers as individual personal customers.
BOC Hong Kong has always held the prudent approach to our risk management. In the first half of the year, our non-performing loan is about 0.25%, and the market is 0.76%. Also, in our classifications, we have always been the most conservative. We will adopt this policy, this procedure for risk management, this appetite of ours to, through the group's system, transmit to the six countries in Southeast Asian region, so that the six banks in the Southeast Asian region will be aligned with this risk management procedures and appetite and policies of the parent, which is BOC Hong Kong. Further, for the choice or selection among the customers, we will access only the quality companies, the leaders in the industries, and those which have very good potential for further development in the local markets. Those are our target customers.
Also, in our due diligence process and the acquisition process, we've also come to understand the regulators, as well as getting our KYC done vis-à-vis our customers. So, accessing the six countries, this builds a very good foundation and prerequisites for us.
Thank you.
Next question. On the row, second row, third from the right, please.
Thank you for the opportunity. My name is [John Lee]. I have a question regarding BOC Hong Kong's loan growth. I see that you have very strong growth in the first half. It is already 2% better than your industry peer. So I'd like for you to show us more data regarding the details of this growth in the past half year. What policy, what measures have you put in, and in the next half, what do you see? Since we have a number one market position, and we have introduced a very competitive rate. So would you expect to be accelerating on this business in the next half of the year? In our traditional advantage in syndication loan, what is our market share and what is the demand of the customers?
The third part is we have talked about supporting financing to SMEs. What is the progress of this work? Our project financing related progress, how is that?
Yeah, four questions. Mainly is regarding loans. Allow me to invite Mr. Lin, who is responsible for corporate financing, to walk you through corporate loan. Business increment and explain the causes of the growth. He can also talk about financing to SMEs. I would like to invite [Mr. M] to talk about the services to the SMEs.
Thank you for your question. I think many of you would like to know more details about this. As you are aware, in the first half of the year, the macroeconomic situation actually is slowing down. The global financial markets has been fluctuating. In Hong Kong, real estate property market into a cycle of adjustment, and commodity prices have been soft. So under such a context, Hong Kong market as a whole, the overall growth in loan is 2.2%. This also reflects that in Hong Kong, the overall loan market is weak. At the same time, just like CFO has explained in her report, BOC Hong Kong, our overall growth of loan has been at 11.1 ratio. This beats the market rate. Our market share has increased to 12.8%. Specifically, what growth this results and what were the causes that have contributed to this accelerated growth?
I think one of the number is that in those loans by the commercial industry market in Hong Kong, has increased by 27.9% versus last year. This is something that we have supported in a big way. The areas that we have invested or that we have been active, including property and manufacturing, IT, property investment, leisure activities, as well as electricity and other resources or material making. We have been benefited from the economic tides between Hong Kong and China, as well as the ever-growing Southeast Asian markets. Now, for those Chinese institutions that are going abroad, and also Hong Kong institutions, as well as Southeast Asian institutions that like to expand the market, we have been extending more offers to them.
I think for the first half, Southeast Asia loans have grown by HKD 30 billion. You have talked about syndicated loans. Indeed, this is a very important part of our growth dynamics. In the first half, BOC Hong Kong, in Hong Kong and Macau, has led 46 batches of syndicated loans in this area, way more than the aggregate of the second runner-up and the third runner-up. For those that we led is 39 batches of them. This is an actual historic high. Volume-wise, it has exceeded $10 billion. That has proved to be the strongest support of our growth. Thirdly, that would be our continued support to the SMEs and the commerce and industry sectors of Hong Kong. We have investigated and understood the needs of the second and third-tier companies in Hong Kong, as well as the family companies in Hong Kong.
We continue to provide good services to them. All of these factors together has caused a very fast growth of our corporate loan sectors. You asked for a ratio just now. Now, if we look at the overall loan portfolio, considering the risk factors, Hong Kong, Mainland, and other areas, customer loans has grown by 4.3%, by 0.9%, and 37.8%, respectively, versus last year. As of the next half of the year, what are our views? We feel that with our fast hastened integration in Southeast Asia and also the improving of Mainland economy and the accelerating of RMB internationalization, we believe that the loan growth in the second half will continue to be the main driver of the loan portfolio growth for BOC Hong Kong. Some of those, we may even be expecting a double-digit growth rate. How about, let's say, mortgage?
I think this is a hot topic in the media today. Mortgage has always been a core business for BOC Hong Kong. All along, we have made use of our largest branch network, our most comprehensive product mix, and our most innovative channels to serve these customers. We are launching new channels with very competitive pricing to maintain and protect our leadership position. The market has been more active lately, and there has been bringing more competitions, which is quite normal. As of the second half, we anticipate that competition will continue to be keen. However, as far as prices is concerned, because the cost of all of the banks actually offers very little room for further coming down of the mortgage rates.
The bank complies definitely to the HKMA's guidelines and regulations as far as mortgages is concerned, including our pricing policy, our bonuses, and benefits policy. So when the economic cycle is a downward one, the requirement for risk management would be more stringent, and we commit to excel in that. We are confident that with our network, with our scale, in 2016, we will continue to maintain leadership position in this sector. Thank you.
The next question, the gentleman in the middle.
Thank you very much, management, for this question opportunity. JPMorgan Chase . Concerning NIM. In the first half of the year, NIM, compared to second half of last year, is a drop. I would like to know, quarter- to- quarter, the first quarter compared to the second quarter, is it still a drop? For the next half, what is the outlook for NIM, and what are some of the measures in face of that?
It is true. It is 1.56% - 1.32%, and then 1.29% throughout the quarters from beginning of last year. It is dropping, and as you can see from the chart, we have come from the bottom of the first quarter to a better level in the second quarter. That's in answer to your question. From the bottom of the first quarter, the NIM had come back up. The reason is internal as well as external. Externally, it is mainly because of RMB NIM changes. Starting from 2015, the PBOC had various times lowered the RRR, and the monthly SHIBOR had come down 126 basis points second half compared to the first half. For the currency exchange rate, there had been major fluctuations. For the first quarter, because of the interest rate and currency exchange rate interplay, there had been some 18% in terms of the fluctuations.
The RMB, the short term is more expensive, long term is less expensive, and therefore affecting negatively the NIM. Given this very complicated situation, we have done the following. First of all, we have lowered, basically the CASA is 63.9%, and there is a 16% BP extension from deposit to loan. Further, we have lowered the NIM pressure by adjusting our balance sheet. As for the future, for the Fed interest rate hike, there is more talk about it. Last year, there's been the talk but no action, and we are hearing that kind of talk again. If indeed it is raised, it is beneficial to the industry. At present, the mainland economy growth is in a reasonable level. With the supply side changes and the lowering of the growing of the bubble, we do not believe there need to be any further adjustment.
RMB in the second half going forward, we think will be beneficial to us. We will be developing a range of deposits. We are already stepping up with our products, with our cross-selling, developing new accounts or customers, and including government and non-government financial institutions. The CASA ratio is also going to improve. For corporate loans, the yield rates would increase. Overall speaking, globally, it is in a low interest rate environment. All the more, we will be looking towards non-interest rate revenues. The eight platforms that we have, we will continue to raise our clearing capabilities, et cetera, so as to raise the profitability from these other platforms.
The lady in the middle on the second row, please. To the right.
Thank you for the opportunity. I am from [Chung Chen]. My name is [Chen Tian]. In the first half of the year, we have seen the selling of NCB has brought a HKD 30 billion profit. How would you be doing with this money? All in all, demand-wise, it is not quite good, and our balance sheet growth rate will slow down. Would that impact our dividend payout policy, please?
From the profit that are from selling of NCB is a good number, HKD 30 billion. We have already disclosed that we will be paying out a special dividend. The board of directors and the management attaches a lot of importance to the shareholders who want for a special dividend payout. Therefore, we have decided to pay at a 25% to distribute the special dividend. As for the standard dividend payout policy, there is no change. We are balancing the capital level, regulatory requirements, and business development needs, and other factors to determine the actual payout ratio and payout amount. This round of payout is in accordance with the 54.5% and 45% of payout ratio, that 45%-60% ratio. This is in accordance to the interim dividend payout that BOC Hong Kong has always been using. Our policy of paying a dividend payout between 40%-60% will not change.
The second row on the right.
HSBC, [Poon Chi yi Yook], and next to me is Anthony. First of all, congratulations on the excellent performance for the first half. Concerning assets, we see it is for the first half at a very good level. What is the outlook in the future? As you increase your exposure of loans to Southeast Asia and Hong Kong, what do you think would be the asset size going forward?
Thank you very much for your question. In the presentation, you have seen that as of the end of June, our quality of asset is relatively good, and our NPL is 0.25%, and our impairment is HKD 5.4 billion. Still, going forward, we see that the economy is jittery. It will present great challenges to the industry, including our bank. At this kind of low cost of loans, it is difficult to sustain. We will have to work harder in order to maintain that low cost and the asset quality. So whether it is for local business or regional business, we will be prudent in our credit policy and our principles. This will remain unchanged. We will continue to manage well the quality of our assets. At the same time, for the existing customers, we will raise our level of monitoring. Where we need to compress, we will compress.
Where we need to exit, we will exit. For new businesses, we will not relinquish the quality control of our loans and assets, so that we will continue to maintain the high quality of our assets.
The last question, please.
Let's, the last row, the gentleman sitting to the far right, please.
Thank you. I'm Franco. Thank you for the opportunity. One question. Please provide more information regarding internet financing and your strategy, and what is the results and performance that you have been able to achieve in this particular front. Thank you.
Thank you for your question. Indeed, in the last two years, a very important development of the financial industry is fintech, and it has been growing very quickly around the world. This trend has a very deep impact to the product and servicing of the financial sector. BOC Hong Kong attaches a lot of importance to the development of fintech. Also, we think that this is a very important strategic opportunity, and we have put in a series of measures. Now, you asked about our measures, and I'd like to run you through very quickly. First of all, as far as resources and our organization structure, we have made some changes. Including, we have introduced innovation laboratories and also an internet financing center to coordinate our product innovation and business development in fintech.
Now, this has allowed the commercialization and the transfer of our technology into the business, and to also meet the demands of our customers. We have also put together a long-term strategic development strategy into basically four steps, one to three, four internet finance strategies to build an ecosystem. Secondly, we have picked two very important sub-segments. For example, our social community and our cross-border business. These will be important index into our development in this front. As far as IT is concerned, we are building three innovation platforms. One is the closed IT system that would be turned into an open structure. You have to be an open platform in order to be able to cooperate with other vendors, and this is very important in fintech. We also group all of the dispersed data into a cohesive big data platform.
Now, this has been launched in the first half of this year. Thirdly, we will build a smart interface, that has already a lot of identification technologies in order, for example, biometrics and other. These are not compliant with others. So our new technology ensures that all of these can coordinate. Number four is that we would put our traditional products and turn them into internet office businesses, including our payment, our trading, our loans. All of these will be optimized in accordance to the internet platform. So we have put together this strategy that allow us to develop a long-term presence in this fintech age, and we call that step one, two, three, four. We also enhance our cooperation with the industry. Financial institutions are, relatively speaking, closed, and therefore, we must culture an open culture. For e-payment, we have to work with others.
For example, Tencent is our first cooperator, and we have been working very successfully, and our customer number has increased by 90%. Also, earlier this year, we have worked with The Academy of Sciences on some successful cases of using fintech in the financial sector. Also, we participated in seminars in smart technology and discussed and share about how smart technology can be applied in the financial sector. This is the measures that we have done to enhance cooperation with our peers. You have said that some of these measures have shown preliminary results, including in the first half. Our cell phone e-cheques use has been increasing, and that increment is the biggest in Hong Kong. That also included our small sum transfer payment using a cell phone that is very convenient. Also online fast loan, from application to contracting, to approval, to the distributing of funds.
All of these can be done online. We also have launched BOCHK iService, which is a remote banking platform. Therefore, when Ann Kung was saying that we would be able to offer our services through new channels, this is exactly what we meant. Going forward, we will also accelerate on internet financial products and services, including some lifestyle related, including QR code payments, so that there could be more choices in payment options for our smaller customers and individuals. We would also be introducing robots-supported services. So all of these will be our new results, and that has received some level of recognition from the industry. A magazine called Global Finance has awarded us with the best Hong Kong individual banking facility provider. Also, we have received a 2012 Innovative Award.
While all of these are quite encouraging for us, therefore, we have reasons to believe that BOC Hong Kong will continue to optimize our opportunities and development with the fintech development to bring forth the best internet banking there is in Hong Kong.
Because of time constraint, we will close now, and thank you for coming .