Ladies and gentlemen, good afternoon. Welcome to the 2020 interim results briefing of BOC Hong Kong (Holdings) Limited. I'm Kenny Lau, Company Secretary of BOC HK. In light of the current COVID-19 situation, our interim results presentation will be conducted via webcast and teleconference. Let's now kick off our results briefing. First of all, I would like to introduce our senior executives with us today. Mr. Zhuo Chengwen, Chief Risk Officer. Madam Wang Qi, Deputy Chief Executive. Mr. Yuan Shu, Deputy Chief Executive. Mr. Zhong Xiangqun, Chief Operating Officer. Mr. Wang Bing, Deputy Chief Executive. Mr. Qiu Zhikun, Deputy Chief Executive. Madam Sui Yang, Chief Financial Officer. Madam Ann Kung, Deputy Chief Executive. Today's meeting consists of three parts. Our CRO, Mr. Zhuo, will share the implementation progress of the group's strategy. Our CFO, Madam Sui, will present the financial and business results for the period.
Finally, Mr. Zhuo will discuss the group's outlook and key priorities in the second half of the year before the Q&A session. Now I would like to hand over to our CRO, Mr. Zhuo.
Thank you, Kenny. Good afternoon, ladies and gentlemen. Thank you for joining us. I will start off with our strategic overview for first half of 2020. Over the past months, the city has witnessed the spread of COVID-19, a global economic downtime, the increasing geopolitical tensions, and financial market volatility. Hong Kong's economy is experiencing a slowdown with the unemployment rate reaching a 15-year high. In this challenging operating environment, we adhered to our strategic goal of building a top-class full service and internationalized regional bank, proactively tackled those challenges, and maintained a stable operation. Our core business continued to outperform the market and risk management was further strengthened. In the first half, the net operating income before impairment analysis was HKD 28.7 billion, down slightly by 1.5% year-on-year.
Profit for the period was HKD 16.2 billion, declining 11.6%, mainly due to an increase in a loan impairment analysis and a reduction in fair value adjustments on investment properties. Key financial indicators remain solid, with ROE and the total capital ratio standing at 10.43% and 23.11% respectively. Having taken into account the macroeconomic and operating environment, regulatory advice, and the group's financial performance, the board decided to declare an interim dividend of HKD 0.447 per share. We continued to deepen our commitment to the local market and contribute to Hong Kong's economic revival while realizing steady business development. The structure of our personal customer base was continuously optimized. The number of mid to high-end customers grew by 15.5%, and the total AUM of private banking customers went up by 4.6%.
We made the new residential mortgage loans market with a market share of 24.6%. The new business value of BOC Life grew by 8.8% year-on-year. During the first quarter, its market ranking in terms of standard new premium climbed to the third place from the fifth. Our corporate banking segment achieved solid growth. We maintained our position as a top syndicated loans arranger in Hong Kong and the Greater Bay Area, as well as a top IPO receiving bank in Hong Kong. We also completed a number of influential bond underwriting projects and became one of the major local bond underwriters. Moreover, we continued to lead the market in the cross-border cash pooling business with our cash management solutions tailored made for our customers. Capturing the opportunities from the mutual market access policies, assets under custody from institutional and corporate customers reached a new high.
We again led the market in terms of the number of bond connect customers. Our leading positions in RMB business was further consolidated. During the first half, offshore RMB clearing volume handled by BOC Hong Kong grew 8.1% to RMB 140 trillion, accounting for 70% of total global offshore RMB clearing volume. We captured the opportunities in financial markets and proactively promote the online trading platforms, realizing a rapid growth in online trading volume. Despite an adverse market environment, BOC Hong Kong Asset Management achieved a 15% growth in AUM from the end of last year. Its new fund products reported strong sales and its major stock portfolios outperformed the market. We made good progress in expanding our presence in Southeast Asia as we received the preliminary approval from local regulatory authority to set up our Yangon branch in Myanmar.
Meanwhile, Jakarta branch has become one of the mainstream foreign banks in Indonesia after it received approval to upgrade its status. This greatly improved the group's market position and brand influence in the country. We leveraged our advantages in RMB clearing business. BOC Malaysia was successfully reappointed as a local RMB clearing bank. Our Phnom Penh branch became the first overseas bank to be appointed as a quoting and a trading bank for RMB to Cambodia Riel in the regional market, and successfully processed the first transaction. Giving full play to the synergies generated from our regional network while exercising risk control, we worked to expand our customer base and undertake major projects. We proactively arranged syndicated loans for large local corporates and offered comprehensive financial solutions, including cash management service. Meanwhile, we enriched our personal banking services in the region with the use of digital technology.
Amid a difficult market, our Southeast Asia entities experienced a decline in revenue. However, our businesses showed a steady growth. Customer deposits went up 6.7% from last year to HKD 60.4 billion, while customer loans grew 6% to HKD 53.4 billion. The non-performing loan ratio was 1.94% due to the impact of certain customers. The overall asset quality remained sound. Despite slower cross-border flows amid the pandemic, we continued to sharpen our integrated competitive strengths and dedicated our efforts to the construction of the Guangdong-Hong Kong-Macao Greater Bay Area by optimizing our cross-border products and services and promoting intra-group collaboration. With the use of digital technology, we continued to enhance our mainland personal account attestation service by supporting digital application. As of the end of June, the total number of applicants exceeded 100,000.
Earlier this year, our GBA mortgage service was launched to facilitate property purchase for Hong Kong residents in the Greater Bay Area. In addition, BoC Pay was upgraded with a cross-border remittance function for mainland customers living in Hong Kong. Meanwhile, we strengthened collaboration with our parent bank in an effort to build an integrated marketing and service system and to support the development of tech enterprises. It will result in a growth of about 9% in financing to these enterprises. In mid-May, mainland authorities published the opinions on financial support for the construction of Greater Bay Area. By the end of June, authorities from mainland, Hong Kong and Macao jointly announced the launch of Wealth Management Connect pilot scheme. The launch is of major significance and will bring enormous opportunities to the banking industry.
Engaged in expanding our fintech application, we accelerated our digital transformation by focusing on the key capabilities of innovation, agility, digitalization, mobility, and regionalization. We expanded our e-payment and the collection service to transportation, retail, and catering industries and supermarkets. BoC Pay now covers a wide range of industries closely related to people's daily lives. This has laid a solid foundation for contactless payment. The number of BoC Pay customers increased by 44% from the end of last year, with total transaction volume growing by 44% as compared to the full-year of 2019. We adhered to our mobile-first strategy and continued to enhance our digital channels, such as upgrading the Home Expert mobile app, enriching the investment and wealth management features on mobile banking, and launch remote insurance enrollment services.
During the first half, the number of mobile banking active users increased by 23%, while mobile banking transaction volume recorded a rapid growth of 66%. Meanwhile, our iGTB platform was enriched to ensure easy access to financial services for corporate customers. We pushed for smart operations and intelligent transformation. Blockchain technology has been adopted in nearly 95% of our total property valuations. Our mobile account opening service has been extended to 10 overseas countries and regions. We also introduced intelligent risk management and optimized our smart customer service to continuously enhance our operating efficiency. Meanwhile, we pushed forward digital transformation by establishing an innovation mechanism, organizational structure, and corporate culture to attract and nurture innovative fintech talents. Furthermore, Livi Bank opened its virtual doors to customers on August 12th. It is a virtual bank joint venture started by the group, JD Digits and Jardine Matheson.
Livi will focus on providing Hong Kong customers with a virtual banking experience that is easy, secure, and refreshing. Deeply rooted in Hong Kong for more than a century, serving a wide range of industry, we have been actively fulfilling our social responsibilities by navigating this difficult time with local communities in face of the pandemic. In early February, we took the lead in introducing five financial support initiatives that provide timely relief to both SME and individual customers during the economic slowdown. The scope of these initiatives was then further broadened to better serve customers' needs as the situation evolved. As at the end of June, 3,500 applications were approved. Meanwhile, we supported and worked in coordination with the Hong Kong SAR government on the Special 100% Loan Guarantee Scheme and granted nearly HKD 6 billion loans to applicants, accounting for about 1/3 of the market.
Full support was also offered to the Hong Kong MA's Pre-approved Principal Payment Holiday Scheme, and a total 1,100 applications were received, which provides enterprises with timely relief. In addition, we offered full support to the Hong Kong SAR government's Employment Support Scheme and Cash Payout Scheme. As part of our efforts in supporting the community against the pandemic, we donated HKD 15 million to support frontline healthcare workers and vulnerable communities in Hong Kong. Our Southeast Asia entities also contributed to fight against the pandemic by helping those in need. We have taken a people-orientated approach and have always put the health and safety of our staff first. In addition to ensuring proactive supplies, a series of employee-friendly measures were also introduced, including split team and shift arrangements.
We were also among the first in the banking industry to announce no layoffs and no pay freezes in order to navigate this difficulty time with our employees. This concludes our strategic review. Next, our CFO, Madam Sui, will walk you through the financial and business performance for the first half.
Thank you, Mr. Zhuo. During the first half, we actively responded and adapted to a complex business environment and endeavored to deliver stable growth in major businesses. As of the end of June, our customer deposits was up 6.5% from the end of last year to HKD 2.14 trillion. The market share was further expanded by 0.6 percentage point to 15.16%. We continuously strengthened our mid to high-end customer base. The deposit structure was further improved as a result of growth in various services, such as the payroll and e-payment, IPO proceedings receiving, cash management, cash pooling, and settlement. Our current and savings account deposit increased by 16.5%, accounting for 60.2% of total deposit and up 5.1 percentage point from the end of last year. Our customer loans reached HKD 1.4 trillion, up 7.7% from the end of last year.
The market share increased by 0.59 percentage point to 13.56%, with various loan categories delivering solid growth. We strive to meet the financial needs of high-quality corporate customers and accelerate the digitalization of mortgage loans business. As a result, loans for use in Hong Kong grew by 7.4% or HKD 68.4 billion. Through expanding our business in Southeast Asia and leveraging the advantage in syndicate loans business, we achieved a growth of 8.4% or HKD 33.1 billion in loans for our use outside of Hong Kong. Seeking to meet our customers' needs, we achieved a growth of 8.3% in trade financing. In the first half of this year, net interest margin narrowed due to the falling market interest rate and the relatively shorter loan repricing period than those of deposits.
Net interest margin was down 19 basis point to 1.5% after adjustment of swap related impact, while net interest income dropped by 6.1% year-on-year. We took a proactive approach to manage our assets and liability in response to challenges in the market environment by expanding our loan portfolio, optimizing our asset structure, and lowering funding costs. Average interest-earning assets were expanded by 5.2% year-on-year, which partially mitigated the negative impact of declining interest rates. As a result of pandemic reduced slowdown of commercial activities, net fee and commission income fell by about HKD 0.6 billion or 10.1% year-on-year. Among which commission income from credit card business, insurance and loans fell by 43%, 39% and 14% respectively. However, commission income from securities brokerage increased by 43% thanks to increased transaction volumes in the stock market.
Commission income from payment services was up 5.6% as a result of our leading market position in the cash pooling business and outstanding cash management services. Compared to the second half of 2019, net fee and commission income increased by 11.5%. While ensuring resource for the key strategic development in such areas as human resource, fintech, and regional development, we exercised stringent control over administrative and business expenses. During the first half, total operating expense rose slightly by 0.8% to HKD 7.59 billion. Cost to income ratio was 26.4%, up slightly by 0.59 percentage point year-on-year, staying at a satisfactory level related to industrial peers. In light of a complex external environment, we further consolidated our capabilities in our persistently prudent risk management. Overall, assets quality remained benign.
The group's classified or impaired loan ratio stayed below the market average at 0.25%, up slightly 2 basis point from the end of 2019. Provision is sufficient with provision cover ratio standing at 211% higher than our major peers. Annualized credit cost was 0.19% in the first half, up 4 basis point from that of 2019. In the view of growing uncertainty in the macro environment, we adjusted the macroeconomic parameters of ECL model in a prudent manner, together with solid loan growth, which resulted in an increase in Stage 1 impairment allowance. We maintained a strong capital position and ample liquidity with consolidated our capability of withstanding risks. The CET1 and the tier one capital ratio increased by 0.76 and 0.62 percentage point from the end of 2019, respectively. The total capital ratio was 23.11%, up 0.22 percentage points.
The average LCR for the first half was 141%, while the NSFR at the end of the second quarter at 117.49%. Both maintained at a sound level. This concludes the review of our interim result. Mr. Zhuo will continue to talk about the key priorities in the second half of this year.
Thank you, Madam Sui. Looking into the second half, a high degree of uncertainty still hovers over the global economy and the financial markets. The operating environment is expected to remain tough. Industry chain and supply chain are being interrupted with a notable shortage of demand in international investment. Uncertainty and instability grow as geopolitical tensions intensify amid the increasingly complex international environment. For the first time in recorded history, Hong Kong's economy is expected to see negative growth for two consecutive years, combined with a low interest rate environment worldwide. The banking industry is faced with various challenges and growing operating risks. On a positive note, the Chinese mainland took the lead in economic recovery in line with its long-term and steady growth in its economic development. The long-term growth momentum of emerging markets in the Asia Pacific region remains strong.
The new Greater Bay Area policies further expand the potential for cross-border financial services. In addition, Hong Kong will continue to play the role of super connector between the Chinese mainland and the ASEAN region, two of the world's fastest growing economy. On the management side, ensuring a steady and sustainable operation will be our overall riding focus in view of a challenging operating environment. We were closely monitoring the market situation, step up our control measures against the pandemic, and strengthen risk control. We will remain committed to Hong Kong market by supporting various enterprises and major projects and seeking our new business opportunities while strengthening service capability through fintech innovation. We will further refine our regional network in Southeast Asia area and speed up this establishment of Myanmar branch.
In addition, we will seek to give full play to our regional synergies and achieve business growth by leveraging our competitive strengths. We will seize opportunities arising from the financial opening up of the Greater Bay Area and fully prepare for the upcoming Wealth Management Connect. We will strive to become the first choice bank for customers in the area by further enhancing our financial services, such as account opening and digital payment, and supporting the development of tech enterprises. With a focus on such contexts as cross-border transaction, public service, charity, education, waste management, and property transaction, we will accelerate our digital transformation by refining the financial ecosystem that is driven by digitalization. Meanwhile, in an effort to promote green and sustainable development, we will focus on enhancing our implementation capability and optimizing our corporate governance mechanism by integrating ESG framework into our overall strategy.
With the great support from our communities, as well as hard work from our colleagues, we will strive to achieve a solid performance in our major businesses amid the challenging operating environment. We will seek to maintain our financial and risk indicators at a sound level to ensure greater flexibility in meeting our development needs as well as responding to market changes. We will also contribute to the long-term economic and social prosperity and stability in Hong Kong. That concludes our presentation. Now we will be taking questions from the audience. Thank you.
Now let's open the floor for Q&A session. Each person can ask no more than two questions each time. Before asking questions, please inform us your name and institution. First, I would like to invite the analyst on telephone line to raise questions. Operator, please give us the first question.
We will now begin the question- and- answer session. If you wish to ask questions, please press star one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key.
The first question comes from Citibank, Mr. Tian Yafei.
Thank you management. Actually, I've got two questions. The number one question is, January NIM is 1.39%. I'd like to know what is the NIM between February and June so that we can actually anticipate what's going to be the whole year end NIM. Also, in the first half, actually, we can see that the performance actually has been much better than expected. I'd like to know why is it that your performance was at 0.39%, whereas Hang Seng Bank actually was on 16%. Also, the growth has been a little bit slow. I'd like to know why was there such a big difference between you and your peers in the banking sector?
Thank you for your question. Concerning NIM, I am going to ask the CFO to answer the question. As for the cost issue, I am going to take that later on.
Thank you very much for your question. First of all, concerning Q2 NIM, it was at 1.39%. For Q2 compared to Q1, the NIM has come down quite significantly because we can see that in the market in Q2, one month HIBOR and LIBOR has come down by 80 basis points as well as 105 basis points. It has a considerable impact on NIM.
As for the other part of the question concerning June, I would like to know what exactly was it? I would like to know what has been the NIM for June end.
We have not yet disclosed this quarter's NIM. However, if you look at the difference and the movement in NIM, you can see that our NIM movement has been very much the same as the market. For July and August, the HIBOR has been from 0.02% to 0.03%. For June, LIBOR has been from 0.16% and 0.17%. We believe that in terms of HIBOR, there is going to be a further downward reduction for both HIBOR and LIBOR by a dozen basis points. It will create pressure on our NIM. But we are going to try our very best to consolidate our first half's performance in terms of NIM and also in terms of pricing.
We are going to do very rigorous moves in order to improve our NIM pricing as well as the return on our loan, and in order to reduce negative impact on our NIM.
As for asset quality and also provision. This year, because of COVID-19, the asset quality for the bank has been under pressure. However, if you look at the entire industry, our customer base has been healthy. Also because we have very good credit risk management. As a result, our asset quality has been very good. By June end, our NPL has been 0.25%, and it has gone up by two basis points. This is because of the change in quality of the loans. In the first half, our impairment provision has been HKD 1.3 billion. It has come down by HKD 594 million.
This is all because of Stage 1 net increase in provision. The overall loan situation has produced certain impact, and also because of the macroeconomic environment. As a result, we have very cautiously and prudently changed our modeling. Our figure is now 0.18%. Compared to the same period of last year, it has gone up by 7 basis points. In the second half of last year, when compared with it has gone up by 2 basis points for Stage 1, Stage 2, and Stage 3. This mainly reflects our customer base and also our asset quality. As for other banks, we are not ready to comment on what they are doing and how they are doing. I just want to say that what we have been doing has been very prudent and cautious and also very forward-looking.
Next question, please.
The next question is from Bank of America Securities' Winnie Wu.
Thank you. First of all, I want to congratulate the management for achieving this performance. In terms of core profit, it has only dropped by 2%. Some of your peers have dropped 20% or so. What is surprising to the market is the dividend rate, which is lower than expected for the first half of the year. For our capital efficacy ratio, it is 18.5%. Why, under such circumstance, do you still want to lower the dividend rate by 31% compared to first half? What is the reason? It was 41%. What about the entire year in terms of dividend payout? Can you keep it at the level of last year? What will be the dividend payout rate for the entire year? There is another question about provisions.
At present, with our ECL model for macro assumptions, is it already sufficiently conservative or prudent? That is to say, the unemployment rate of Hong Kong, if it should continue to climb, or property prices continue to be in jitters, then for our ECL adjustments for macroeconomic factors, what do you think the adjustment would be? Would it be from the credit lowering of, or deterioration of quality? What do you think? First of all, on dividend payout, our CFO will answer that question, and I will supplement after that about the provisions question.
Thank you for your question, and thank you for your understanding. For this year, our core profitability drop is about 2%, and that is a rather satisfactory situation compared to the market. Our capital accuracy ratio is also at a good level.
We understand that you are somebody who pay long-term focus on our performance. For the long-term development of our bank, also for shareholders' interest, taking into account the macroeconomic situation, the low interest rate environment, also some of the risks, the environment for operation of banks had been challenging. Given that, the bank should provide, retain sufficient cash, also funding to support the bank's operation, the local economy. It was under careful balancing, consideration by the board to decide on the interim dividend. As for the entire year, we will continue to look at shareholders' demand, also macroeconomic, including foreign or external factors, the balance, ongoing development of the bank, also regulatory advice to decide on our dividend payout ratio.
As for provisions, the second half outlook, at present, with the epidemic situation in the Mainland subsiding significantly, well controlled, the Hong Kong government is also putting in a lot of measures. Therefore, for these regions, it is satisfactory. But there are fluctuations in other regions, the global economic recovery will take time, in particular for certain industries. For example, tourism, restaurant, transport, they face dire challenges. So for the second half provisions, even though for ourselves, in terms of our asset quality, we are highly confident that we are able to keep the non-performing rate, which is going to be better than the market. We are confident about that. But on the other hand, we have to take into account the unpredictability of the macroeconomic situation. We have to look into analysis, also external factors.
On the modeling parameters, we will have to adjust them accordingly. For GDP, unemployment rate, also property prices, all these factors, their changes will change according to the epidemic situation. So they may improve, but also for certain regions, it's hard to look into the future. Given this unpredictability in the second half for economic recovery, there are still some uncertainties. So provisions for the second half, it will still be on the rise. But overall speaking, we are still confident that with our sufficient provisions, we will be risk-resistant, we will be strong against any challenges.
Next question, please.
Sahi from Goldman Sachs, please ask a question.
Thank you. Two questions, please. First is on cost growth. The revenue environment is now a lot weaker, and it was welcome to see that the cost was tightly controlled. Can you talk about what kind of cost to income ratio the management is targeting this year or over the medium term? As the revenue environment becomes weak, the cost-to-income ratio has been around 29% last year, but could go higher. Second question is on the growth outlook. With a strong growth in the first half, what kind of growth areas are you targeting into the second half and beyond into 2021? Would we expect this kind of outperformance in growth versus the industry average in terms of magnitude to sustain? Thank you very much.
[Non-English content]
Thank you for your question. For the first question about cost control and also cost income ratio, I am going to defer that question to our CFO. As for the development of our business and also loan growth, I am going to ask our vice president to answer that question.
Thank you for your question. If you look at the first half, the cost control situation has been good. In terms of fee, that has been a growth of 2.8%, so as to maintain our labor resources stability and also labor growth. As for other growth in fees and costs, actually the increase has been moderate, because we really want to maintain our priority in investment in fintech. Our fees are mostly advertising as well as administrative fees, as well as promotional fees.
We are going to also try to centralize our operation in order to reduce cost. [Non-English content] As for cost income ratio, for near term and long term, it will be stable. For near term, it will be around 30%. For long term, it will be no more than 35%. As for the second question, I am going to ask Mr. Wang, our VP, to answer that.
During this year so far, the pandemic of COVID-19 has continued. Sino-American conflict has continued. That is why our performance has been under pressure. Because of all these challenges, Hong Kong actually has displayed a lot of tenacity. Our market and industry actually has been quite tenacious. Our loan actually has increased by 3% and we have outperformed the industry because we have grown by 7.7%, 4.7% above the industry average. We have already reached 13.56%.
Our new growth in loans, actually mainly because of our very good cooperation with our customers, also our good customers' relationship, also our overall manageable risk. Our loan quality actually has been good. In the second half, because of the stabilization of the pandemic control, we believe that the financial synergy among the international nations actually will be displayed. In China, in the second quarter, actually the economic growth has been 3.2%. Also the economic situation in China actually has been improving. As for America, actually its confirmed cases have come down from the peak. In February, for the European community, its PMI actually has already reached bottom, actually has begun to recover.
In Hong Kong, although the pandemic has been fluctuating, because of the efforts of the SAR government during the past two weeks, the situation is now gradually under control, the situation is improving. So overall speaking, the global economy is gradually going to go back onto the track of recovery. In Hong Kong, our customer foundation has been very strong. Also we have very diversified business model. Our team actually has been exposed to a lot of challenges and difficulties in the past, therefore they have become very toughened and weathered. That's why we have managed to outperform the rest of the industry consistently. Our loan growth is going to be a high single digit number.
In the near and long term, we believe that we have the ability to maintain the performance that will outperform the industry average. As I have already introduced, our market actually is very pluralistic, also diversified, our drivers actually are from three markets. Hong Kong, of course, is our core market, we are going to do our best to strengthen it. In the first half, our loan growth actually has good performance, mainly because of the good performance in the core market. We are confident that we will continue to consolidate our position here. We will continue to enhance our cooperation with our core customers.
At the same time, we're going to try our best to dovetail with the SAR government in order to support the various relief measures, in order to enhance our cooperation with SMEs, so as to enable them to weather the difficulties. Also, we are going to invest more in cross-border business. Hong Kong is a very strong and good market. For GBA and for the Yangtze River Delta region, also for Hainan Free Trade Zone development, all of these are our core business zones. Also health and finance services are all going to be our core business areas. We are going to increase our linkage with our parent company, also we are going to go for very stable and steady growth of our cross-border business. Also we are going to invest more in Southeast Asian markets.
Southeast Asia, of course, is also affected by the pandemic. It also has been subject to exchange rate fluctuations. As a result, the loan growth for this year for that particular area actually has lagged behind that of last year. But ASEAN and also Southeast Asia remain a very fast-growing region. The various business interaction is intensifying. We believe that after the pandemic is over, it will have very good growth prospect. We are going to keep our eyes also on Southeast Asia. We are going to develop all of our markets together. We will keep a very close watch over the changes in the development of pandemic. We are also going to control our risk very prudently and consciously.
We will see where we can help for both Southeast Asia and Hong Kong so that our loan business can continue to grow and be developed very steadily and healthily. In Southeast Asia, Bank of China already has a leg up. Because of our very strong history and also strong foundation, we are going to increase our ability for financing in order to further develop and further identify the good loan opportunities in overseas market.
The next question is from HSBC, Gary Lam. Please proceed.
Thank you, management. First of all, likewise, I would like to congratulate the management. Under such circumstances, your performance in a number of areas outstripped the industry. I have a couple of questions. First of all, in terms of industry-specific credit, apart from property and also manufacturing industry, there is over 30% growth for half-year. I would like to know, is this because of intentions, or is it because in the industries there is a greater demand? How do you judge the next stage for industry specific? How do you see the risks, et cetera? Another question concerning small to medium-size enterprises. What is our exposure to them? What is the quantity, and what about the NPL situation? A small question about the ASEAN area. What is the quality of our assets, please?
Well, thank you very much, HSBC analyst. For the first question, I will ask Mr. Wang Bing to answer the question, and that is industry-specific exposure. The second question about the micro to small enterprises and also for ASEAN area asset quality. I will answer that question afterwards.
Thank you for your questions. First of all, I have mentioned actually just now that for the first half, our loan growth is better than the market. In the main, it is shown in our core market, which is Hong Kong. Our loan growth, the main source of that is borrowers which enjoy long-term and deep relationship with us. In terms of a choice selection of our clients, we continue with our practice at BOC Hong Kong. We continue to be steadfast on that.
For this year, because overall speaking, with the market pressure, therefore our cooperation partners will have more demand for liquidity. Therefore in specific industries, you will see further demand in liquidity. But I can tell you, this kind of increase is all based on long-term relationship with our customers who are leaders in their industries and big corporations.
Micro and small enterprises, even though we do not specifically disclose the information what you have asked for, but for this epidemic scenario and with the industries that are deeply impacted by the epidemic, let me point out the following. First of all, according to our observation, because of the epidemic, it has affected economic activities and those most impacted include tourism, hotel, retail, entertainment, restaurant, and also travels, including airlines. Of these six segments, our total exposure is about HKD 160 billion, which is 10.68% of our total. For the large customers, it is 91.4%, and these are mostly industry competitive entities. As for medium to small enterprises, it is but 8.6% of HKD 160 billion. So that is less than HKD 1.6 billion. So this is quite controllable. For the different sectors, this is HKD 1.36 billion is our category under observation.
Our NPL level is less than 0.52%, which is less than HKD 800 million. Our 160% of the total, and in particular for these particular sectors, especially for enterprises which are most easily affected, whether it is in quality of our loans or our coverage ratio, we believe that we are highly confident in these areas. As for the next stage, because the epidemic is still spreading and there are some jitters in the situation, some industries may actually benefit from the measures of the government. At present, there is no default or delays in payment problems. In terms of the quality of our assets, it is perhaps that there are some delayed effects from the epidemic, and we will very dynamically take our measures accordingly. As for Southeast Asia, the quality of our assets, it is as follows.
Overall speaking, our NPL ratio at present is 1.94% at the end of June. It is 43 basis points compared to same period last year. This is mainly because of one airline customer, which had been lowered to NPL category. That is the main reason. At present, we do not see any systemic risks in the ASEAN market. But of course, given the macroeconomic challenges, as I have mentioned just now, we will closely monitor the risks and any negative elements, and we will strengthen our monitor of our clients' operations and their risks, and we will increase any risk mitigation measures, such as increasing the collateral level, et cetera.
Due to the time limit, now we will offer the last opportunity to the friends on telephone line. Operator, please.
The last question comes from Jimmy Wong from JPMorgan.
Thank you management for giving me this opportunity. Actually, I also have two questions. Question number one, can you explain to me the relief measures and also the scale of it? I would like to know what kind of amount is involved here. Also concerning the customer's repayment ability, I would like to know whether there is now any difference in their repayment ability and your expectation of it. Is that worsening or is that improving? Also the payout ratio is now 60% to 40%. I would like to know whether this year investors can also expect the same level of dividend payout ratio, or is it that this particular figure may not be any guideline for this year?
Now, concerning the first part of the question, I am going to ask Mr. Wang to take that question. Then the CFO will take the dividend payout ratio question.
BOC Hong Kong actually treats SMEs as long-term customers and also partners. When the epidemic has begun, we have already launched five measures in order to provide relief for Hong Kong's community. We have participated in the 100% Loan Guarantee Scheme launched by the Hong Kong government. Also, we have participated in the Pre-approved Principal Payment Holiday Scheme. So that together with our customers and our partners, we can try our best to weather the difficulties with them. So far, cumulatively, we have received around 18,300 inquiries. 3,500 loan applications have been approved, covering 1,500 corporate customers, as well as 7,000 individual customers.
It accounts for 5.5% of our overall loan figure. 4,000 corporations actually have already completed their applications and approval process for the 100% Loan Guarantee Scheme. HKD 7.1 billion has been involved. One-third of the application actually has been approved. So far, their asset quality has been good. But of course, we will keep a very close watch over the epidemic. Also, we increase our interaction with our customers, and we will be very prudently manage the risk. Also, we are trying to avoid and eliminate risk as much as possible, in accordance with the red light, green light, and yellow light system. Also, we continue to look for other possibilities of providing relief measures so that we can help the community to weather the difficulties.
Thank you for your question. Now, concerning the whole year dividend payout ratio, if you look at the situation right now, we will continue to strike a balance between return for our shareholders and also keeping a very close watch over the epidemic development and also our profitability situation. Of course, if there are other factors and also other suggestions, we will also take them into consideration. We will consider all of these factors together and collectively before coming to a decision.
Today's interim result briefing has to be finished. Should you have any further questions, please feel free to contact our investor relations team. Thanks for your participation, and see you next time.