Analysts, investors, good afternoon. Welcome to the 2017 interim results briefing 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 adjustment to the reporting basis that has been made in today's presentation. Now, let's start our results briefing. First, please allow me to 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 Yeung, Deputy Chief Executive. Today's agenda is divided into three parts. First, CEO Yue Yi will start with a strategy review for first half 2017, followed by CFO Sui on financial performance. After that, CEO Yue Yi will discuss our outlook and strategy in second half 2017. Then we'll open the floor for a Q&A session. CEO Yue Yi, please.
Good afternoon, ladies and gentlemen. It is my great pleasure to see you again. The year 2017 marks the 20th anniversary of the return of Hong Kong's sovereignty with motherland, and BOC's centenary of services to Hong Kong and BOC Group's internationalized operations. Thanks to the untiring efforts of all generations of BOC staff who have served customers over the past 100 years, BOC Hong Kong has grown from a single branch of less than 10 employees into a major commercial banking group in the city.
Today, it is one of the three note-issuing banks, one of the largest listed companies, and the sole RMB clearing bank in Hong Kong. Along with supporting China's rejuvenation and the prosperity and development of Hong Kong, we have achieved huge successes during our century-long history. Standing at the new historical starting point, today, I am pleased to report to you the latest business developments of BOC Hong Kong. In the first half of 2017, BOC Hong Kong calmly responded to the complicated and ever-changing economic and financial environments at home and abroad, while promoting sustainable growth through innovation, transformation, and regional development.
We made solid progress in all major areas of work and delivered good operating results. In the first half of the year, BOC Hong Kong recorded HKD 17,216 million in profit attributable to the equity holders, of which profits from continuing operations increased by 24.5% year-on-year to HKD 14,627 million , setting a record high since our listing and outperforming comparable peers. While growing our business fast, we remained well-capitalized. Our CET1 capital ratio rose to 17.66%. Total capital ratio was 21.76%, laying a solid foundation for healthy and sustainable development in the future. Driven by good operating results, the stock price of BOC Hong Kong saw notable growth and surged by 45% as of yesterday from the beginning of the year.
It is a reflection of market recognition to the success of BOC Hong Kong's transformation strategy and operating results. The management is deeply encouraged and extends sincere thanks to all analysts and investors for your supports to BOC Hong Kong. Next, I will provide a detailed review on our strategy implementation and business development for the first half of this year. With our deep roots in Hong Kong and the support of a strong mainland market, BOC Hong Kong serves its customers with a global vision .
With our solid foundation built in the city and our close connection to it, we remained committed to Hong Kong market and expanded our local business, which in turn lending strong support to local economic growth and livelihood improvements. Through this, we made positive contributions to cementing Hong Kong's position as an international financial center and a global offshore RMB hub. In the first half of the year, we saw balanced development across all of our major business segments. Our Personal Banking, Corporate Banking, and treasury businesses registered a growth of 12.7%, 14.2%, and 19.9% year-on-year respectively in profit before taxation.
In the Personal Banking business, we achieved a growth of 74% year-on-year in the number of new mortgage approvals and continued to gain market share. We also saw fast growth in securities brokerage, funds distribution, and other wealth management business. Our mid to high-end customer base expanded further. In addition to that, we leveraged our strengths to develop cross-border business, which recorded a growth of 17% year-on-year in the number of cross-border mainland customers. In the Corporate Banking business, we sustained top arranger position in the Hong Kong accounts indicated loan market. We acted as the leading receiving bank for IPOs, handling more than half of total IPO proceeds in the market.
We proactively pursued business development in the local industrial and commercial sector, deepened relationships with local family corporations, chambers of commerce, and second or third-tier listed companies to achieve strong loan growth. We also deepened our services to SME customers, with SME loans rising by 10% from last year-end. In our Treasury business, we captured business opportunities and were appointed as the sole accounts opening bank for CMU, following the Shanghai-Hong Kong , Shenzhen-Hong Kong Stock Connect programs, which sharpens our leading edge in the relevant business area.
At the same time, we stepped up marketing efforts in development of institutional customers, including central banks, international financial organizations, and sovereign wealth funds. Currently, we have a total of 67 customers that fall in these three categories, paving a new way for RMB internationalization. The Belt and Road Summit was held successfully in Beijing in this May, and China has further increased its support to the Belt and Road Initiative. Seizing the opportunities arising from this national strategy, BOC Hong Kong proactively pushed forward the restructuring of the RDN institutions and started seeing results in the strategy to develop into an internationalized regional banking group.
In addition to the acquisition of BoC (Malaysia) and the establishment of Brunei branch last year, we completed the acquisition of Thailand subsidiary and the assets of Jakarta branch in January and July this year respectively. Moreover, we signed an agreement on the asset acquisition of Phnom Penh branch in Cambodia. We strive to complete the acquisition of the Philippines and Vietnam business of the parent bank by the end of this year. Meanwhile, we are stepping up efforts to improve the management structure and mechanisms for RDN institutions, accelerate the integration with them in a comprehensive manner, and strengthen business collaboration.
Our aim is to promote the business model upgrade and reform of the RDN institutions. In the first half of the year, our Thailand and Malaysia subsidiaries, as well as Brunei branch, which were already reported on a consolidated basis, recorded a 15% growth year-on-year in their aggregate net operating income. Their customer deposits and customer loans grew by 35% and 18% respectively from the end of last year. On a comparable basis, their asset quality was better than the industry average. In addition, we also strengthened business collaboration and started to achieve success in our regional development as our Southeast Asia-related business loans grew by 9.4% from the end of last year to HKD 61.5 billion.
In the first half of 2017, we continued to leverage our extensive branch network and deepen the transformation of our branch outlets. Dedicated efforts were placed on enhancing the servicing capabilities to personal wealth management, mid to high-end customers in cross-border businesses. We also further strengthened our industrial commercial service teams in branches and continued to promote the building of our intelligent network, which resulted in substantial increase in the branch network productivity. In the first half of 2017, the profit of our local branch network operations grew by 13.9% year-on-year, and the asset scale expanded by 8.1% from the end of last year.
As a point to note, we witnessed a remarkable increase in the income contribution and an enhancement in the customer structure in our wealth management business. In particular, the average daily account openings under our wealth management and enriched banking brands rose by 48% and 27% year-on-year respectively. Income from medium and high-end customers grew by nearly 20% year-on-year. The number of new business account openings for small enterprise customers increased by 7% year-on-year. Income from small and micro businesses rose by 17% year-on-year. These results clearly showed that our network transformation program has been highly effective, which strengthens further our channel advantage.
We continued to step up the development of our eight key business platforms and enhanced our asset management and cross-selling capabilities with a view to broadening the sources of non-interest income as well as fostering new competitive advantages. In the first half of the year, we continued to see solid business momentum in our eight business platforms and achieved a growth of 20.3% year-on-year in operating profit on an aggregate basis. They accounted for 19.4% of our net operating income.
In our credit card business, we actively developed payment scenarios and maintained our leadership in Hong Kong in UnionPay versions acquiring and card issuing business. In private banking business, we promoted product optimization, cross-border business, and customer need exploration, with average AUM surging by 73% year-on-year. Our BOC Life registered 13% growth in gross premiums compared with the same period last year, and it maintains its leading position in RMB insurance products.
BOC Hong Kong Asset Management has been granted QFII status by the CSRC. Its average AUM increased by nearly 200% year-on-year. In our transaction banking business, we pursued regional and global breakthrough in funding pool business to maintain leading position in cross-border business. In our custody business, we further enhanced the variety of products, with average assets under custody up 54% year-on-year. Our BOCI-Prudential Trustee registered an increase of 13% year-on-year in average value of total trust assets, and an increase of 20% year-on-year in the average size of its MPF assets.
Our BOCI Securities and Futures made steady progress in building its infrastructure as it continued to implement business expansion strategy in line with market practices and enrich its product suite. BOC Hong Kong's effort in innovation was well-recognized by the market. In the first half of the year, we won Gold Award in private sector in IT Governance Achievement Awards by the ISACA, and received Gold Award for Best Fintech by The Hong Kong Institute of Bankers. In our mortgage valuation services, currently, about 70% mortgage loan applications was conducted by using blockchain technology. In May this year, we successfully completed the first phase of blockchain application in trade finance in the local markets.
In other areas of innovation, we proactively deployed biometric identification technologies and became the first bank in Hong Kong to introduce finger vein authentication to bank counter services. We also launched finger vein authentication for cash withdrawals at ATM on a pilot basis, which has significantly enhanced the security and convenience of banking services. At the same time, BOC Hong Kong is actively promoting an open cross-sector cooperation. We are not only one of the first banks to roll out Apple Pay and Samsung Pay, but also are pursuing collaboration with strong third-party payment firms, including Alipay Hong Kong and WeChat Pay Hong Kong.
We strive to provide better e-payment services to our customers. In addition, in big data application, we made significant efforts in building big data database for 360-degree customer targeting, and aimed to enhance precise marketing capabilities through the construction of over 1,000 tags for individual and corporate customers. In e-channel developments, we promoted the construction of electronic channel facilities. The number of customers using our mobile banking, personal internet banking, and corporate internet banking services increased by 19%, 12%, and 11% year-on-year respectively.
After a century of dedicated service, we at Bank of China (Hong Kong) have realized our dreams through the achievements we have made. During the past century, we have sailed through both ups and downs with the city. Since the beginning of this year, we have held a series of grand but simple celebration events. While we celebrate our 100th anniversary servicing Hong Kong, we keep the society in our hearts and share our development results. To celebrate Bank of China's 100 years of service to Hong Kong and the successful disposal of Chiyu, as well as to show our appreciation to our loyal shareholders, the Board is pleased to announce a special dividend payment of HKD 1 billion, taking the total interim DPS to HKD 0.64. This is to share in the celebration of our 100th anniversary, and also to show appreciation to our loyal shareholders.
We also highly value our charity business. In the first half of the year, we donated HKD 100 million to the City University of Hong Kong in support of its animal medical science development, HKD 50 million to The Hong Kong Football Association for establishing a community football development fund, with the aim of promoting local football development, and MYR 5 million to fund the school building reconstruction of Kuen Cheng High School in Kuala Lumpur, Malaysia. Currently, our preparation for commemorative banknote issuance for the centennial anniversary is in steady progress.
We will take subscription faster and easier in accordance with market needs. We will announce the details after receiving approval. We welcome all citizens to subscribe. My review of our business progress in the first half of 2017 ends here. Next, Madam Sui Yang, the CFO, will give you the details of the group's financial performance in the first half of 2017.
Thank you, Mr. Yue. Bank of China (Hong Kong) achieved sound development across all business areas in the first half of the year, driving steady growth in assets and liabilities of the group to reaching HKD 2.64 trillion and HKD 2.4 trillion respectively, up 13% and 14% from the end of last year. We have successfully grew our asset base and fully filled the asset shortfall created by the disposal of NCB and Chiyu. First half of the year, our operating profit before impairment allowances grew by 17.1% year-on-year. Our profit attributable to equity holders from continuing operations reached HKD 14.627 billion, up 24.5% year-on-year, making a record high since our listing.
Compared with the same period of last year, our ROA and ROE for continuing operations went up 0.12 and 2.35 percentage points respectively, reaching 1.24% and 14.13% respectively. BOC Hong Kong has deepened collaboration with the parent bank, BOC, and its overseas institutions, and penetrated deeply into the Hong Kong market. As of the end of June, our total customer loans reached HKD 1.1 trillion, up 12.9% from the year, and outpacing the 10.2% growth of market average. Our market share rose 0.27 percentage points to 12.31%. We adopted diverse measures to expand our customer deposits. In particular, we placed stronger focus on the development of payroll services, central bank, and sovereign institution-side customers, and stepped up efforts in promoting our business in IPO, receiving bank business, cash management, settlement, etc.
We aim to bring in more transaction-based deposits. At the end of June, our total customer deposits reached HKD 1.65 trillion, up 9.3% from the end of last year, again, outpacing 5.6% growth of the market. Market share rose 0.5 percentage points to 13.62%. We grew our loan-to-deposit ratio steadily by 2.12 percentage points to 66.8%, while maintaining reasonable level liquidity. With strong market competition and deposits, an increasing tendency for customers to shift their money to time deposit accounts, we improved deposit structure. The proportion of CASA deposits was enhanced the second quarter to 62.7% after a decline in the first quarter.
In the first half of the year, we proactively managed our assets and liability by capturing the opportunity from rising market interest rates. We deployed more funding to a higher yielding asset class, and average balance of customer loans, debt securities, investments, as well as interbank placements and other financial institutions all increased. Average interest earnings, assets increased by 12.5% year-on-year to HKD 2.1 trillion, and NIM was 1.62%, up 34 basis points year-on-year, which is the main driver for the 41% growth in our net interest income. First half, we recorded HKD 5,662 million in net fee and commission income, up 0.8 percentage points year-on-year, and up 14.2% from the second half of last year.
First half, we seized the opportunity to improve market sentiment and increase our effort in product marketing. Investment and insurance product-related net fee income performed healthily, rose by 12.6% year-on-year, of which fee income of security brokerage and fund distribution increased by 23.6% and 22.6% year-on-year respectively. Traditional fee income business was largely stable, of which the fee income of trust and custody services went up 12.9%, driven by a higher volume of bank notes business in Hong Kong and Southeast Asia. Fee income from currency exchange up 16.8%. Fee and commission income from other business items including bills, commission, safe deposit box, and payment services recorded satisfactory growth.
We attach high performance to enhancing our productivity and improving operating efficiency. In the first half, our net operating income grew by 13.7% year-on-year versus a 5.2% growth in operating expenses. Cost-to-income ratio stood at 26.17%, comparing favorably to the banking average. In the first half of the year, we continued to strengthen our comprehensive risk management and strictly implemented loan management through a cycle of pre-lending and post-lending, and the quality of our credit continued to enhance. At the end of the June, the classified impaired loan ratio of the group was 0.19%, down 3 basis points from the end of last year, and notably better than market average.
The balance of classified impaired loans fell by HKD 119 million to HKD 2,015 million, representing a decline in both NPL ratio and balance. Provision coverage was 168.1%, up 17.4% from the end of last year. This is the end of our financial highlights for the first half, and Mr. Yue will be speaking about the opportunities. At the juncture of the 20th anniversary of Hong Kong's return to its motherland, Chinese President Xi Jinping visited Hong Kong, delivered a series of important speeches which provide clear direction for the future development of Hong Kong. Hong Kong is an important financial, shipping, and trade center. It is also the largest global offshore RMB business hub.
China has always been and will continue to support the economic development of Hong Kong and improve the livelihood of its citizens, support the city, and to leverage its advantages, and play an important role in national strategies such as the Belt and Road, and also the Greater Bay project in RMB internationalization. Our bank is a leading commercial bank group in Hong Kong. It is also one of three note-issuing banks and the sole clearing bank for RMB business in Hong Kong. We are situated in development stage where many unprecedented opportunities emerge. Strategic development opportunities from ASEAN is widely known for its great growth potential. It is also an important region for implementing strategic strategies, including the Belt and Road, RMB internationalization, and also the mainland enterprises of going global.
At the successful Belt and Road summit in May, China announced to increase its funding support to the Belt and Road Initiative. According to the estimation of the Development Research Center of the State Council, the countries and regions along Belt and Road will have a minimum infrastructure investment demand of $10.6 trillion during 2016- 2020. As ASEAN regions and China foster closer tie in trade and economic relationship, the usage of RMB currency will be increasing fast. The implementation of Belt and Road, Guangdong-Hong Kong-Macao Greater Bay Area, will further increase demand of RMB in Hong Kong, Macao, and ASEAN countries. We are now in the progress of restructuring our ASEAN business. We target to become the overseas flagship of BOC.
Our strategic target for ASEAN development is to become the local mainstream bank. Our strategy will focus on the development of mainstream customers, including mainland corporations going global, multinational corporations, local leading corporations, local Chinese, high-net worth individuals, and will follow closely the mainstream projects which have local and global influences by focusing on mainstream businesses related to RMB business, products, commodities, supply chain financing, high-net worth Personal Banking services, and will focus on mainstream products such as loan syndication, trade finance, cash management, and personal financing.
We will capture the opportunities arising from the further development of Belt and Road and the internationalization of RMB, gradual implementation of Guangdong-Hong Kong-Macao Greater Bay Area project, as well as increasing the number of mainland enterprises going global in order to develop our regional business. Second, it is construction of the Guangdong-Hong Kong-Macao Greater Bay Area. The overall aim of the Greater Bay Area construction is to build a world-class city cluster and facilitate economic connections across the three regions, which can complement each other well. Through this project, the Greater Bay Area will serve as a destination and a hub for global investment. It stands to solidify and enhance Hong Kong's status as an international financial, shipping, and trade center, while also strengthening its status as a global offshore RMB business hub and an international asset management center.
Recently, our group has laid down a collaborative solution for its institutions in Guangdong, Hong Kong, and Macao, and established a relevant mechanism to oversee the entire collaboration. Under the system, which we call 5+N+1, BOC Hong Kong will serve as the chairman in the collaboration committee. The five means the five institutions in Hong Kong, including BOC Hong Kong, BOC Hong Kong Branch, BOCI, BOC Life, BOC Group Investment. N means Bank of China Guangdong Branch, Shenzhen Branch, Macao Branch, BOC Insurance, BOCI Securities Limited, BOC-Samsung Life Insurance, while one means the Bank of China.
The objective of this mechanism is to promote collaborative development in the region and position the Greater Bay region as a core business region and income growth driver for the entire BOC Group. Further, we will focus on the diversified business development of the cross-border financing funding pool, high-net worth wealth management, asset management, and investment banking businesses. Third, the positioning advantages of Hong Kong in the region. Hong Kong plays an important role in connecting Mainland and the international market, which is also an important note in the Belt and Road regions.
It is a platform for serving foreign companies targeting to invest in the Mainland and Mainland companies going global. Hong Kong enjoys a unique advantage in its open economic model and abundant liquidity. Its practice in legal and accounting regulations are well known for international standards, has a wealth of talent pool, and provides a good business environment. The government has introduced corporate-friendly tax policy to attract enterprises to set up treasury hubs, and also to meet positive results. With this unique positioning, Hong Kong will play an even bigger role in the areas where the country needs and its strengths lie, and this must create huge demand for financial services.
Our bank as a major commercial bank in the city will embrace promising prospects in this area. In the second half of the year, BOC Hong Kong will continue to pursue the parent bank's strategic goal of serving society, delivering excellence, and adopt a prudent growth approach. We will evaluate ourselves in three dimensions against the market, against our sister companies, and against our own past performance, and we will implement our strategy to address issues in asset growth and structure and asset liability management, onshore and offshore business priority, income structure, and also developing more risk management tools, etc .
Our works will first focus on local market. We will leverage our brand influence as a local mainstream bank and will capture the opportunities of Belt and Road and the Greater Bay Area, as well as the major infrastructure projects in Hong Kong. We will continue to deepen our branch network transformation and expand our customer base in industrial and commercial corporates, as well as mid to high-end individuals, and focus on quality, exploring comprehensive cooperation with the government sector, and we achieve our goals in deposits and loans above market average levels. Secondly, we will accelerate our regional development and build ourselves into a local mainstream bank. We will develop the local business in Southeast Asia and expand further the cross-border business.
Behind our growth plan, we will strictly meet the regulatory requirements and fully enhance risk management to ensure sustainable development in long run. For our ASEAN institutions, we have set a growth target of over 20%, both in loans and deposits. Given these strategies and building on the strong business momentum in the first half, we target to achieve double-digit growth in both customer loans and deposits for the full year and keeping our performance above market average. In the meantime, we will continue to capture market opportunities, enhance funding efficiency, manage funding costs, and strive to achieve stable margin in the second half. We will continue to expand income sources, enhance fee income growth, look to achieve new high in attributable profit in our continuing operations.
We will work earnestly to maintain various regulatory indicators at sound levels with a view to building a stronger foundation for further long-term sustainable growth. We will work relentlessly to attain excellence and contribute more to cementing and enhancing Hong Kong's status as an international financial center while promoting the long-term prosperity and stability of Hong Kong. This ends our presentation. Thank you. We welcome your questions.
We will start Q&A session here. Gary, please. Please use the microphone.
Thank you, Mr. Yue, and members of the management. I am from Citibank. My name is Yan Jiahui . Thank you very much, management. This is the 21st time that I am attending your results announcement. Actually, from 2007, I am proud that I have been witnessing your bank's development in terms of your capability and also market share. You have delivered excellent results. Concerning your future developments, concerning your future M&A strategy, especially in Southeast Asia, in Singapore or other places, are you going to acquire assets from your parent bank? Or will you acquire other non-bank assets or assets outside of your parent bank? Thank you.
Thank you for your question. You are very familiar with our business, and you have asked some very critical questions that many analysts are interested in. BOC Hong Kong, since two years ago, started to acquire parent bank's assets in Southeast Asia. Basically, in the capital market, we started our acquisition and restructuring chapter. That is the start of this chapter. As we all know, Southeast Asia presents huge business opportunities. Some research institutions are of the view that in the coming three to five years in Southeast Asia, there will be investment demand of about $500 billion.
In Southeast Asia, especially ASEAN, BOC has been deepening the development to achieve a good foundation. BOC (Malaysia), BOC (Indonesia), and also our branch in Thailand, have a history of more than a few decades. Of course, Singapore BOC has a history of more than 80 years already. In Southeast Asia, there are opportunities of use of RMB. Southeast Asian countries have good relationship with China. There are more and more interactions and trading relationship. Concerning the six acquisition targets that are banks, three of them have already been designated by BOC and also local regulatory authorities as RMB clearing banks.
For example, BOC (Malaysia) has been designated as the only RMB clearing bank. Our BOC Limited and also the Phnom Penh branch were also designated as an RMB clearing bank by local authority. These will lay a very good foundation for the development in Southeast Asia. In the first half of the year, the branch in Malaysia, Thailand, and also Brunei branch, have enjoyed good growth in business. The deposit-to-loan ratio rose 35% and 18% respectively, and after-tax profit rose 15%. This is a very good trend. All along, we have been working hard to cover all 10 countries of ASEAN. We have been working hard to cover all 10 countries of ASEAN, of course, including Singapore.
BOC headquarters have given BOC Hong Kong the positioning of i nternational regional bank. All along, we have been working hard to cover all 10 countries of ASEAN. At the same time, we do hope to further expand our extension in Southeast Asia and other regions in order to better achieve regional synergy. BOC Hong Kong has been operating in Hong Kong for 100 years, and BOC Hong Kong's 100 years are equal to the overseas operation of BOC for 100 years. In other words, BOC Hong Kong does not only need to consider our own internationalization development and also our international regional development. At the same time, BOC Hong Kong is also a major constituent of international development of our parent bank.
In the future, in the internationalization operation of BOC Group, we will be playing a very important role. As regards to diversification, over the past years, we have been working hard to develop and build the eight major platforms. In the future, our diversified platforms can be integrated with the Belt and Road and also the development demands of the Greater Bay to go out of Hong Kong so that we can provide for our customers the opportunities for both investment and lending. In other words, we are able to serve as investment bank, insurance company, a total solution provider.
Today, I am very happy to tell you that at present, the Board had already formally approved that under BOC Hong Kong, a BOC Insurance (International) Holdings Company w ill be established. This BOC Insurance (International) Holdings Company Limited will be positioned in Hong Kong and Macau and Southeast Asia. It is going to be an insurance platform for the BOC Group. Now, please note that this is an insurance business platform in Hong Kong, Macau, and Southeast Asia of the parent group. In other words, it represents the group. In Southeast Asia, it is going to deal with insurance business.
In other words, the parent bank will support BOC Life to develop Macau and Singapore market as a start. Then gradually, the coverage will be extended to ASEAN and Southeast Asia. Right now, we have seen some good initial progress. Future development potential is going to be huge in terms of M&A target markets and target customers. I think as long as it is in line with our overall development strategy and BOC Hong Kong's development strategy and our strategic needs, then in fact, things will be possible. That is my answer. I believe that the analysts will be happy with my answer. Thank you.
The next question. Vincent, in the middle, please. Thank you.
This is Vincent. Thank you very much, and we are very happy to see your first half excellent performance. I have a question concerning our loan increase. In the Hong Kong market, we see that there is an increase overall, and my question is, you have exceeded the industry's average, actually. I would like to know for your loans, what is the main drivers and also outside of Hong Kong, what are your target customers for your loans? If you can just also project into the second half for your growth in this area. For the entire year, what is your target, please, for loan growth?
Thank you very much for this question. In the first half of the year, overall, Hong Kong's increase had been over 6%. It was more than the 6.5% recorded in the past years. This is because of the overall economic situation and the Belt and Road Initiative under the central government. Local corporations of these corporations have further demand for loans. For Bank of China (Hong Kong), as we have increased our loan growth, we have also achieved an integrated and balanced growth. We have been able to increase 12.9% in terms of our overall growth, of which for Hong Kong use loans, the growth was 10.1%. Trade financing, 7%. Use of outside of Hong Kong loans was 22.3%, and this is in keeping with our strategy and targets.
As for the other growth, they have also been higher than the industry. As for market share, for Hong Kong use, it is 78%. Use outside of Hong Kong market share is 22%. For corporate loans, the main driver for growth was property development, manufacturing, transportation equipment, as well as technology. Also the property market for Hong Kong had still been active in the first half. Our mortgage loans have also been growing fast. For outside of Hong Kong, the growth for the One Belt One Road Initiative, Chinese corporations going global.
With these initiatives, with the South East Asian growth, also growing into the leading companies in the Southeast Asian countries and supporting infrastructure, electricity, telecoms, and other projects that are related to financing for everyday life of these countries. With the international financial organizations and the guarantees from these institutions, our performance has been very good. As of the end of June, in Southeast Asia related loans, it had been HKD 61.5 million, which is an increase of 9.4%. We already see the effects of this development. At the same time, we are also further developing outside of Hong Kong markets, including Mainland, Thailand, Australia, Taiwan, and developing the leading company's relationship, and achieving very stable and good growth.
Hong Kong is very special in its competitive edge as a One Belt One Road spot, also Greater Bay region super connector, and also the clearing for RMB offshore center. Hong Kong is definitely a top choice. Some 60% of the corporations go through Hong Kong as a platform for going out. For our loan growth, this is also another driver, which is stable and continuous and more than sufficient. In the first half of the year, we have continued to play to our competitive edge. For the arranger of syndication loans for Hong Kong and Macau, of corporations, we have ranked number one.
Going forward, we will continue to develop our cross-border business, Southeast Asian business, Belt and Road region business. At the same time, we will continue to grow our deep roots in Hong Kong to fasten our SME individual loans, as well as industrial and commercial industry loans, as well as improve our structure. Also to improve our NIM and our overall performance. Even though there are some seasonality in the second half of the year, overall loan growth will be slightly lower in pace than the first half. If we look at the last year, it will still be higher than that of our markets, and it will exceed 10%. Thank you very much.
Next question please. Stanley.
Congratulations on your excellent results on the 100th anniversary. Concerning your CAR ratio, it is at a high level. Concerning utilization of capital, what are your plans? Concerning dividend payout, is there any room for an upward revision of that?
Thank you for your question. Concerning dividends, I think investors are very interested in that every time this question is asked, and we do understand your concerns. Let me explain to you factors that we consider. This year is the 100th anniversary, and Chiyu disposal has been completed. Strategic transformation has more or less been completed. We are going to pay special dividend of HKD 1 billion to thank shareholders for their long-term support. The management and the Board are both happy.
Now, the management has done in-depth study. We have balanced various factors and made this proposal to the Board on special dividends. For the first half, actually, we have considered our business results, the disposal of Chiyu, and also the strategic transformation. We also need to meet future development needs. Only this will be in line with long-term interests of shareholders. Now, apart from BOC Hong Kong and business development needs of the ASEAN organizations, we have to develop our eight diversified platforms, and that needs a guarantee of capital.
As Mr. Yue said, you know about our future strategy, and in fact, we face very broad business development opportunity. So we have to make sure that there is adequate capital to meet long-term development needs. Concerning our future dividend policy, At present, we are of the view that 40%-60% dividend payout is reasonable, where we can strike a balance between best interest for shareholders and long-term development needs of our bank, and we can also maintain stable dividend payout. Thank you.
Merrill Lynch, Winnie, at the back, please.
Thank you very much. Congratulations on the performance. I noticed in the first half, our NIM performance is very good. It is 27 basis points higher compared to last year. Now, the main reason for that is what? What are the main drivers, and how much is it related to our Southeast Asian countries loan growth or non-Hong Kong business related or RMB related business? Going forward for the second half, the HIBOR and also U.S. dollar interest rate, will it narrow the difference between the two? Also, what is the NIM in the second half?
Thank you very much for your confirmation. The NIM for the first half was 34 basis points increase, which is much improved from last year. Overall speaking, there are macroeconomics drivers as well as our own reasons. Now, since December of last year, there have been three rate hikes for U.S. dollars, but on the other hand, the funding is sufficient in Hong Kong. Overall speaking, as we have said in our PPT, the overall interest rate environment, whether it is for RMB or Hong Kong U. S. dollars, there have been year-on-year significant increase, and we see that this is better for our NIM situation. We have had multi-pronged measures. On the one hand, we benefit from the Hong Kong market, in which we have deep roots.
We transform ourselves and our customer base are excellent in quality, and this maintains our very good deposit foundation, and it is also stable in terms of our deposits. As for our cross-border business, growing out Southeast Asia and also Belt and Road business, and also with our new businesses deposit and loan interest rate difference had been raising. Also our deposit on our interbank rate had also been improving. So if we look at, it is over 60% for our deposits. In this higher interest rate environment, it is better for our NIM.
The market having had a downward trend in 2017, the interest rate had been improving, and we have grasped this good opportunity and reformed ourselves, increased the usage of RMB. RMB NIM had also improved the same period of last year. As for the second half of this year, we believe, looking at July situation, SHIBOR, LIBOR, HIBOR had continued with the trend in the first half. Hong Kong dollar is highly sufficient. The U. S. dollar interest rate trend, we believe it will be not so quick, and LIBOR, HIBOR may increase its spread as a result. In the Hong Kong market, as we have mentioned earlier, the loan increase had been very fast, and overall, the pricing for loans had also experienced pressure because of competition.
Analysts would have noticed that for Hong Kong, fixed deposit is also increasing, so there is even more pressure for NIM and interest rates, so that will be the case for us as well in the second half. Internally, we will continue to control better our NIM and also integrate our business and balance our business better, and to grasp opportunities from One Belt One Road , and consolidate our relationship with our customers and to optimize our structure for loan and deposit, and also balance the NIM level. For 2017, we believe the NIM will be better than that of 2016. Thank you.
Next question, analyst from HSBC, Anthony.
Thank you, management, for allowing me to ask question. Congratulations on your very good first half results. My question is related to RMB. This year, RMB trend has been stable, and Hong Kong offshore RMB fund pool had experienced a slowdown in decline. Management, for the second half, what is the outlook of RMB interest rates and concerning mainland interest rates and also RMB international policy, what do you think? RMB internationalization, what are the merits and advantages of BOC Hong Kong, and how will be your business strategy?
Thank you for your question. You asked three questions. Actually, I think your third question has been answered already, and I will focus on the first two questions. First question is about, in the coming period, what will be the trend of RMB interest rates? On the last two occasions during Q&A, this question was asked. At that time, you remember at the end of the year. RMB against USD had reached almost 7%. Today, RMB against USD had reached the lowest level of this year. It is at around 6.6480%, up 5.5% from the beginning of the year.
Today, I will give the same answer. USD RMB interest rate is such that there won't be a big increase. Based on current market situation, and also our analysis of both internal and external factors, we are of the view that the exchange rates will remain stable. Dual fluctuations will remain for the coming period. That is our judgment. Of course, there are various factors affecting exchange rate. There are internal, external factors. At the same time, there are some fundamental factors and also geopolitical factors, and also some speculations.
In the short term and medium term, these will lead to exchange rate fluctuations. If you look at the USD index, it dropped from 103.8 to 92.6, so a decline of more than 10%. I do not think there is big chance of further depreciation of RMB. Besides, there are other factors. At the end of June, Hong Kong RMB deposit balance had seen the bottom. It is stable now. It is at a scale of CNY 520 billion. A few months ago, if you talk about daily settlements of RMB, the amount is CNY 860 billion, up 20% year-on-year. This increase is very big. Based on the above points, we do not see a big RMB fluctuation, so it will be within a certain stable range. The second question is about RMB internationalization policies and our views.
I personally think that in terms of RMB internationalization policies, well, on this 20th anniversary of Hong Kong's return to China, a series of favorable policies have been put in place. In July, there is Bond Connect, and also just now, Mr. Yue talked about the Guangdong-Hong Kong Account Framework Agreement and also the new RQFII quota in Hong Kong. This means that Mainland supports enterprises to issue stocks and bonds denominated in RMB. These are favorable to the internationalization of RMB. I believe that all these can further reinforce Hong Kong's role as a transactional trading center for offshore RMB.
Sophie of Nomura in the second row.
Thank you very much for this opportunity. I'm Jiang Li of Nomura. We have heard just now in the presentation our quality of loans. It's 19 basis points less for our bad non-performing loans, and also it is 168%, and we also see that it is already HKD 60 billion for Southeast Asian loans, and this is all very good. But for this kind of loans income, I think it should be relatively good, and in the long term, I would say the NPL level would be higher than the local ones. Would that be the case? Would you talk about the long-term NPL trend? For Southeast Asia, what do you think is the trend for the NPL ratio? Also our provision coverage ratio for NPL, will it be normalized or will it fall?
Thank you very much for your question. For quality of assets, in fact, that has already been presented just now. We can see from the first half that our quality is stable to good. Our NPL rate and volume is lowering, and our risk cost is at 0.07%, which is relatively low. Overall, our group is lower than the market average for Hong Kong in terms of NPL level. As for Southeast Asia, analysts will know very well for these countries, because their market developments are at different stages. Overall, the banking industry NPL is higher than that of Hong Kong's average. For some of the institutions, their NPL level, and that is for Southeast Asia institutions' NPL level, is higher than that of Hong Kong. However, all of them are better
in NPL levels than the market average in the local industry and the local market. Overall speaking, the ratio is still relatively low, so it is not a big impact from NPL for our business. We also very much understand and put a lot of emphasis on the different risks in the Southeast Asian market, as well as in controlling these risks. We will be putting in measures, structures, and systems in risk management, and the Hong Kong ones will be extended to the Southeast Asian market for implementation. This will build up their infrastructure and also their capabilities. There will be a number of measures, systems, independent structure for risk management, training of experts, IT monitoring systems and implementation, and strengthening of threshold for loan customers.
Overall, our target is to raise the Southeast Asian institutions' risk management capabilities. In the future, we believe we are very clear that there are a lot of uncertainties in these markets, and we do face a number of challenges. But we will be steadfast, we will be prudent in our risk management and in our internal controls, so that our asset quality will be maintained at a stable and good level. Thank you.
Next question, Franco from Deutsche Bank.
Thank you. This is Franco Lam from Deutsche Bank. I think I'm going to ask two questions in English, if it's okay. I have two questions. First question is regarding your fee income growth on a year-on-year basis. It has been relatively quite weak. I think we're 0.8% on a year-on-year basis. Just want to get a sense from management, what is the driver of this slower growth? The second question relates to your retail banking profitability. History shows that you're more of a corporate bank as compared to retail bank, which shows that from a contribution perspective, retail banking contributes about 23% of profits. Just want to again, want to ask management, is there any measures to improve the proportion coming from retail banking? Thank you.
Okay. Let us have a change of channel here. If you look at the total fee income, if you split it into two halves, you will see that the revenue from investment and insurance had taken quite a positive growth in the first half of the year with 14% year-on-year. You do see a couple of lines which may look otherwise, and let me address these points. For the first half of the year, the growth across key global economies and the market sentiment had given quite a positive push to customers to be more active in their investment and maybe portfolio diversification. That's part of the reason why we saw a very solid growth in our securities trading and fund businesses.
What's more important to us, however, is who's behind these trades, who are doing them. The number of investors, the number of customers we saw in our wealth management segment has taken quite a healthy growth. It was a 24% growth year-on-year, which was driven by our branch transformation, a branch network transformation initiative, that was launched last year. This provided a much stronger base that had allowed us to better capture the market opportunities as these became available. That had, however, affected our insurance income a little bit, because more investment options became available to the customers. Another factor was the increased subscription in our longer-term protection policies.
These longer-term products, as compared to the short-term endowment plans, they would produce a little bit lower upfront commission, but a longer stream of fee income to the bank. So it is a healthy stretch, especially when combined with a year-on-year increase in the number of customers insured. From the insurance company's angle, there was also a reduction in placement on our reinsurance and therefore a lowered fee. We expect our revenue from investment and insurance products to see good growth in the second half of the year, as our branch network transformation initiative continues to run its course. The product take-up by our mass affluent and affluent customers continue to grow.
As for cards, which is the other line which you saw a little drop, the fee income was mainly affected by the drop in mainland visitors spending. While the increase in number of cards issued for our wealth management segment, which was about 31% increase for our wealth management segment and 50% increase on the number of cards issued. Also, there was quite a significant improvement in their spending. They were not yet able to compensate for the drop in the mainland spenders drop. However, the regional expansion, the development of new payment channels, and all these, we are expecting the growth to be in the positive region again in the very near future.
Now, overall, if we look into the future, we see that the wealth management segment and the cross-border businesses as the key drivers for our commission income for Personal Banking. There are the opportunities from the Big Bay Area. There is the use of technology to facilitate cross-border and then also to facilitate financial connections. There is the digitizing of the surveillance channels development, and also there is the focused growth on products targeted at the mass market, mass affluent, and we are all looking quite positive for them all to deliver value in the near and medium term. Thank you.
Last question, JP Morgan, Steven, in the middle, please.
Thank you for the opportunity. Steven, J.P. Morgan. Concerning fintech. In the past few years, we see that for you have been very innovative, your bank in fintech. I would like to know in terms of the contribution to our business, what is it? Also in our future development in fintech, what are the main areas of development, please?
Thank you very much for this question. I would like to thank you for your concern on our development on fintech, and I am very happy to be answering the last question as well. As you have mentioned, we have come up with a number of innovative implementations of fintech. As you all know, our valuation with blockchain. At present, we have 12,000 valuations which are utilizing blockchain, and cooperating with us. The main entities are all on the internet, so it is already digitalized. Also the performance and efficiency is increased.
Also last year, we have started with the sandbox project for Hong Kong MA. Starting from the counters, we have already extended to ATM at the branches as a pilot project. By the end of next year, we will be extending the use in our ATMs. We find that the efficacy and efficiency is much better than the encryption that we have used before. Also the biometrics authentication will also help us in telephone banking and other services to increase the convenience and also security.
Apart from Apple Pay, Samsung Pay, we are also using other payment methods, including the QR code. As we have mentioned earlier, for our customers, it is a very major big data tax. This is very important. We already have 200+ dimensions where we are providing tax for our personal and corporate customers. This will provide us with the opportunity to provide even more precision and refined services for our customers. Our services products will also make us more integrated online and offline, providing new business models. This year, we see that there is further development in our internet banking.
Our online customers, cell phone banking, have also increased by 19% and 12% respectively, and it has increased some 35% overall, so that is very encouraging. In the next phase, we would want to, in the four following areas, provide further fintech innovation. First of all, we would want to make it higher digitalization and smart utilization at our branch offices. This is 3+ 3, so that is the three smart channels and the three smart products. The three smart channels are in terms of our network. We want to provide smart counters in the future. The tellers do not hide behind high counters, rather the tellers and the auto counters will work together, and there will be self-help for the customers to access their banking services.
Also biometrics authentication and finger vein authentication, etc., so our back office becomes front office and servicing for customers. Also smartphone service. Smartphone banking service, we want to enhance that service as well. The other three are the three smart products, payment, financing, and investment. We will be using AI to increase our robotic investment consultants and other usage. Further, we will be using new technology to build up the internet banking and internet financing, in particular for the Big Bay area, the service for the needs in the everyday life of the Big Bay Area. We will be developing the service in this area.
As well for the Hong Kong community and hospitals in Hong Kong, we would want to be able to develop these new usage scenarios involving community and hospital, etc . Also there will be cross-border cooperation. As you know, we are already working with Alipay and Tencent. With their payment channels, we are cooperating with them. In the future, we will be deepening this kind of cooperation. In terms of social media cooperation, big data, social media, there will be new and deeper developments so that we can have a win-win situation and also be able to be complementary with our cooperative partners.
Also for some products which are already mature and services which are mature in Hong Kong, we would want to replicate them to the ASEAN markets, our subsidiaries and our branches to strengthen their servicing capabilities for their clients through this kind of technology In the future, we will be giving you more details. Thank you very much. Because of time today, we have come to an end to this interim results announcement. We thank you for coming and-