Good afternoon, ladies and gentlemen. Welcome to Hang Seng Bank's 2025 Income Results Analyst presentation. On the phone with me are our Executive Director and Chief Executive, Ms. Diana Cesar, Executive Director and Chief Financial Officer, Ms. Say Pin Saw, and Chief Risk and Compliance Officer, Ms. Kathy Cheung. Now I hand over to Diana and Say Pin to start the presentation. Thank you, Kenneth. Good afternoon. Thank you for joining our 2025 Interim Results Announcement. I will start with a summary of our first half performance. Our Chief Financial Officer, Say Pin, will then take you through our financial results. As we all know, the first half of 2025 was demanding, with ongoing uncertainties including trade tariffs, sustained high-interest rates, and prolonged downturn in the commercial property market. These have all adversely affected the broader economy. As Hong Kong's largest domestic bank, we have an important role in supporting our customers and the local economy in general. We have maintained our priority to support our small and medium-sized enterprises and real estate customers throughout these challenging times. Inevitably, we have adopted a prudent and proactive approach to managing risks. To this extent, we have increased provisions, and expected credit losses reached HKD 4.9 billion. This has impacted our profit before tax, which declined by 28% year-on-year to HKD 8.1 billion. Non-performing loans reached 6.69%, primarily due to ongoing credit pressure in the property sector. We believe this is appropriate and positions us well going forward. Our capital base remains strong. Common Equity Tier 1 ratio stands at 21.3%, underpinned by our solid business fundamentals and profit-generating capabilities. This means we're able to manage future risks and opportunities whilst continuing to support our customers and deliver sustainable shareholder returns. I'll now move on to revenue diversification. Over the past six months, we have streamlined our organization structure to improve operational efficiency. The simplified structure enables faster decision-making, better customer service, and more effective cost control. We have also made meaningful progress in diversifying our revenue streams and growing our target customer base. These efforts are already yielding notable results. Net operating income before ECL increased by 3% year-on-year. As expected, net interest income was down 7% year-on-year. This was, however, more than compensated by an increase of 34% year-on-year in fee and other income, which was the result of our diversification strategy. Fee and other income now contributes to 31.6% of total revenue, up from 26% as at year-end 2024. Retail banking and wealth business has been the key growth driver, with a solid 43% year-on-year increase in wealth income. Insurance manufacturing and asset management income also grew by 18% year-on-year. Of particular note, Hang Seng Insurance became the second-largest life insurer by new business premiums, with the same having grown by 57% year-on-year in the first quarter of this year. We have continued to expand our affluent customer base, with the number of customers increasing by 10% annually over the past three years. New accounts opening of Prestige Family Plus increased by 51% year-on-year. There has also been notable progress in our cross-boundary business. Both the total number of new mainland customers and also those holding a Prestige account with wealth relationships grew by 20% year-on-year. In our commercial business, dedicated resources have been introduced to focus on banking customers from non-CRE sectors. Our lending to the information technology sector grew by 37% over the past six months. Additionally, we optimized the window during the tariff negotiation period, with trade finance balances growing by 16% since the end of 2024. Finally, SME digital lending also increased by a significant 49% when compared with last year-end. As part of our efforts to support customers in the green transition, close to 70% of our HKD 80 billion Sustainability Power-Up Fund has already been allocated, including our first Hong Kong Green Loan on acquisition of electric construction equipment. This helps reduce pollutant emissions and minimize noise at construction sites. We have also strengthened our connectivity with Hang Seng China, providing cross-boundary services to our commercial customers. Southbound loan average balances grew by 43% compared to the end of last year. We have continued to capture opportunities in Hong Kong's evolving economic landscape by enhancing our market presence. Hang Seng Investment expanded its exchange-traded fund portfolio, having introduced Hong Kong's first passive equity ETF with monthly dividends payouts. Hang Seng Indexes also launched three new indexes, two for Greater Bay Area and one for ASEAN, further improving connectivity between the Hong Kong and mainland China capital markets. This uniquely offers an opportunity and an important Benchmark for investors planning to invest in Southeast Asian markets. Building on last year's collaboration with the Saudi Exchange, Hang Seng Indexes joined the Hong Kong government's business delegation in the Middle East in May. During this visit, a new heads-of-terms agreement was signed with the Financial Center, expanding financial connections between Hong Kong and the Middle East. Our strong capital position enables us to maintain a consistent dividend policy. I am pleased to announce that the directors have declared a second interim dividend of $1.30 per share. This brings the total distribution for the first half of 2025 to $2.60 per share, 8% higher than the same period last year. Also, we intend to initiate a share buyback of up to HKD 3 billion. Looking forward, we see early signs of recovery in the capital markets and gradual improvements in the residential property sector. Whilst there are challenges, we are optimistic about Hong Kong's long-term growth prospects. I would like to take this opportunity to thank my colleagues for their hard work, their creativity, and dedication. Their efforts continue to make a meaningful difference to our customers and the communities we serve. Now, over to you, Say Pin. Thank you, Diana. Good afternoon, everyone. The Group's first half 2025 underlying business performance was resilient, with net operating income before change in expected credit losses and other credit impairment charges growing by 3% to HKD 20,975 million. On net interest income, the headwinds in first half 2025 were the subdued loan demand leading to a 2% decline in loans and advances to customers and lower market interest rate, especially the low HIBOR rate since May 2025. As a result, net interest income decreased by 7% to HKD 14,339 million. On the other hand, with customer deposit growth 3% in first half 2025, the bank's commercial surplus remains elevated. Commercial surplus was deployed into high-quality liquid assets, including fixed-rate sovereign debt, together with structured hedges to reduce net interest income sensitivity to future interest rate cuts. As a result, net interest margin was down by 30 basis points to 1.99% compared to first half 2024. Fee and other income rose by 34% year-on-year, reflecting the continued acceleration of revenue from the Wealth Management business. This growth was primarily driven by the increase in income from securities, brokering-related services, structured products, and retail investment funds. We have also seen higher revenue resulting from increased swap transactions and reduced interest expense on structured products. Expected credit losses and other credit impairment charges increased by HKD 3,361 million -HKD 4,861 million, mainly driven by an increase in allowances for new default exposures, asset quality credit migrations, the oversupply in non-residential properties putting continued direct pressure on rental and capital values, as well as updates to our model used for expected credit losses calculations. As of 30th June 2025, non-performing loans were 6.69% compared to 6.12% on 31st December 2024 and 5.32% on 30th June 2024. Operating expenses experienced a modest rise of 1% to HKD 7,565 million, with employee compensation and benefit and amortization of intangible assets, mainly software, increasing by 2% and 14% respectively, partially offset by the 2% drop in general and admin expenses. This reflects our cost discipline rigor for operational efficiencies and continued investment in our workforce and technology. Profit before tax decreased by 28% year-on-year to HKD 8,097 million. Attributed profit was reduced by 30% to HKD 6,880 million. Earnings per share were down 34% to HKD 3.34. Return on average ordinary shareholders' equity was 7.9%. Return on average total assets was 0.8%. While our profit and returns are largely impacted by the elevated credit costs in first half 2025, our Common Equity Tier 1 capital ratios remained strong at 21.3%. Tier 1 capital ratio was 23.3% and total capital ratio was 24.9%. The liquidity coverage ratio was 311% as at 30th June 2025, strong and well above the statutory requirement, compared to 301% on 31st December 2024. Our strong capital and liquidity positions put the bank in a good position to continue to support our customers and sustain shareholders' return. Thank you. Thank you, Diana and Say Pin. We will now begin our Q&A session. Please raise your hand if you wish to ask a question, and we will pass you the microphone. Please also introduce your name and your organization. Can we have the first question, please? Helen from UBS. Thanks, Management. This is Helen from UBS. Actually, I have two questions. The first one is on the asset quality front. Despite the growth in stage three loans, we see the ECL provision for CRE clients only increase by HKD 2.5 billion in the first half. How do you assess the future provisioning pressure for this portfolio? And what proportion of the impaired loans is no longer debt servicing? The next is the media reports indicate that New World Development has secured refinancing support. What is your refinancing policy for Hong Kong CRE clients, particularly in the current market environment? My second question is on the payout policy. We see net profit decline by 35% in the first half. Yet a new buyback program was announced. What is your outlook for the second half net profit? What are the key risks, such as NII compression pressure, higher ECL charges that could impact the full-year results? Is there a hard cap on the total payout ratio, let's say 100% of annual profit? What was the rationale behind the HKD 3 billion buyback? Does this signal a preference for buybacks over dividend in the current environment? That is my question. Thank you. Thank you, Helen. I think your first part of the question actually relates more to asset quality and our risk management approach. I will ask Kathy to answer that first before Say Pin then covers our capital payout policies. Yeah, Kathy first. Okay, so Helen, in terms of the outlook of the ECL policy, I think Diana has mentioned in her speech that the Hong Kong CRE sector still has some pressure in the short term. We expect this pressure will continue for the second half. As a result, there will be pressure on the rental value and also the capital value. In terms of negative credit migration, we won't preclude there will be further negative credit migration in the second half. In terms of the ECL allowance, given what we've just mentioned and outlook on the CRE market, there could be, you know, in terms of credit costs, there could be of the similar level as that of the first half. Of course, you know, there are many different factors driving the ECL, including the performance of the sector, the economic, and whatnot. Yeah, there will be a lot of uncertainties. Having said that, our ECL policies or our risk management policy has always been prudent and forward-looking. Actually, before Say Pin goes into your second set of questions, let me elaborate on Commercial Real Estate. I think that is pretty much where the crux of your questions stem from. I think first things first, we do see pressure in the Commercial Real Estate sector, and there are a number of factors. I wanted to spend some time to cover this because that's the backbone of the crux of a number of questions there. Over a period of sustained high interest rates and the fact that demand for office space and retail space remain relatively subdued. You know, if you look at supply and demand, that is a very simple analogy and set of reference, the pressure actually continues. The fact that the above factors would impact your rental income, right, as well as the value of the properties, those pressures will remain. In the near term, unless, of course, if there could be some recovery in the overall macro economy. That is pretty much driven by a number of external factors, right? The more macro economy, you'd be looking at interest rate movements, you'd be looking at trade tariffs, all of which actually happened quite quickly within the first half of this year. With that sustained pressure, inevitably, a number of medium-sized developers or real estate corporates would face a bit of pressure. That would be a set of cash flow pressure. Now, we do believe that as a result of that, it's a prudent approach from management perspective then to reflect what we see in the first half. That's why NPL ratio actually increased. That is a set of circumstances that explains the NPL ratio. I think it's worth noting that if you've clearly done a lot of homework there, if you recall our year-end 2024, the NPL was 6.12%. I think the increase is slowing down, yeah, from 6.12% - 6.69%. That is one set of macro and economic factors also pertaining to the CRE sector. At the same time, it's a set of management actions that we dialed up ECL. Again, based on what we see, we have to balance the interest of continuing to support customers whilst actually creating long-term value in terms of shareholders' return. The two, actually, we have to balance. Against the current environment, we have to take a prudent approach. We've always been prudent, Kathy says, but we also have to take a more forward-looking view. In the occasion, in the case where there might be uncertainties in the market, that's why we dialed up ECL. That is a cyclical set of management actions we have taken. I wanted to give that context of what's happening in the market, what management actions are, and more importantly, because I have mentioned we have the ability to generate revenue and to dial up our engine, the growth engine is actually sustainable, predominantly on the back of wealth, on the back of diversifying our revenue streams, on the back of growing customers. With that, actually, a sustainable growth engine, and the fact that we are very well capitalized, CET1 at 21.3%, it gives us the ammunition to support customers whilst delivering shareholder return to reasonable shareholder, sustainable shareholder return. I think that explains the dynamics of the three parts of it. I hope that gives you a clear indication. You did allude to a specific name. We don't comment on specific names. Unfortunately, we can't comment on that. Say Pin, over to you on capital. Thank you. Thank you, Diana. Thank you, Helen, for the questions. I think Diana also partly helped me answer some part of my questions already. On capital return, I think the first point, what Diana said, is correct. We remain very committed to prioritize growth for our customer and to support our customer, as well as to deliver returns to our shareholders. I think that is the main key drivers behind all the things that we do. On dividend return, Diana just now also mentions that we committed to long-term shareholders' return and sustainable long-term shareholders' return. From a forward-looking basis, I think I mentioned that before. Every year we do five-year capital planned, and every reporting date, we assess the positions again by our management, our board, and in connections with HKMA as well. In general, at this juncture, our expectation is that our dividend payout would be within the 100%. Obviously, that will be subject to business growth, stress scenarios, macro economic outlook, regulatory requirements, and so on and so forth. I think the positions that we are in, which is a very well-capitalized position of 21.3% CET1 and 24.9% total capital ratio, put us in a very good position to support our customer as well as to give shareholders return. We are also quite confident with our profit-generating capability, which is what Diana just now mentioned as well. That will generate more capital base and capital ratios for us for future dividend payout as well. With that, we are quite confident we will work hard and to deliver our commitment to shareholders as well as to our customer. I hope that answers your questions, Helen. Second question, please. Gurpreet. Thank you for taking my question. My name is Gurpreet Sahi. I work with Goldman Sachs. Similar questions as before. The themes of asset quality and capital, I think, will resonate. On asset quality, I acknowledge that the management is saying second half can be elevated credit cost. How much of that is based on conservatism that is typical we find with the group's communication? How much of this is really like we've upped our provisions nearly three times, the economy or the economy that impacts of all these borrowers is as bad as it can be right now? Reference some of the comments from the sectors, the leaders in that sector. They are saying office prices can stabilize. We already saw retail sales go up in the month of May. Give us a realistic view on credit cost. I hope it's coming down from second half onwards relative to first half. Second, on capital and payout ratio. Payout ratios, Say Pin, follow up, this 100% cap is only dividend, and then we can exceed it, including buyback. On buyback, the question is, as growth now returns to loan growth, et cetera. I'm assuming that this buyback won't be continued for a long period of time. In other words, we are rewarding shareholders with buyback now when earnings are not so great, and when loan growth returns, we will not have the buyback. Is that the correct way to think about it? Thank you. Thank you, Gurpreet. Kathy, over to you first, and then Say Pin. Okay, I think to give you some flavor of our downgrade, 60% of our downgrade currently has not reached 90 days past due, and they are also paying in some sort, even some interest or principal. In terms of the total NPL, 45% of the total NPL are still paying of some sort, plus they have not reached 90 days past due. That can give you a flavor as to how conservative or forward-looking we are. In fact, not every customer that we downgrade has reached a 90 days past due. We always assess whether they can really meet their original debt obligation in the coming 12 months. I think I have explained that before as well. When we find that they have difficulties in meeting either interest or principal obligations, then we are very likely to downgrade the customer to default. Hopefully I can answer your question, Gurpreet. Thank you. Say Pin. Thanks, Gurpreet, for the questions. I think that's a good question. I think you're right. I think we do have assessed capital with CET1 of about 20% as of now. Our outlook in second half for loan growth is still a subdue loan demand position despite the lower interest rate environment as of now. I think it's the right time to consider share buyback at this juncture. Hopefully, and we do hope that the loan demand will come back into the market. We would like to support our customers through all business cycles. If the loan demand comes true, our priority definitely is to support our customers and to also provide the sustainable return to our shareholders through dividend. As I say, every reporting date, we will reassess the positions because the market is dynamic. Customer demand is dynamic. Therefore, we need to be agile in response to all this dynamism in the market. Thank you, Gurpreet. Now, the third question, Michael. Hi, thanks management for taking my question. Michael from Citi. Just two questions on the revenue line. Firstly, could you just give us some color on the net interest income trend in May and June, and how are we seeing the margin pressure in July? The second question would be, the fee income has been pretty strong in the first half, but probably some of that is market sentiment recovery. Just wondering, how much of that do you think is cyclical and how much of that growth is structural? Thank you. Okay, thank you, Michael, for the questions. I think I go for the question number one, which is on a little bit in terms of how I see July and going forward in terms of NII. I think the highball had come back a little bit in July. The average rate I saw, I think a few days ago, is average for July is about 1%. It went down further earlier on. However, I think in second half of 2025, there are still many factors that will drive this highball, including the MPOL liquidity in the market. For various reasons, right? I think the market is a market. It remains dynamic. What we would do from a management perspective is that we continue to see deposit growth in our book. And then we need to price our deposit accordingly. When the highball went down, we immediately priced our time deposit timely. I think there are many banks who did that. We will continue to remain vigilant on that. We have continued to enhance our return from our commercial surplus in first half, and that will be continued into second half. Both actions are to, and then we continue to do the structural hedges in first half as well. That will defend the NII. To defend the revenue, I think we, as demonstrated in first half 2025, we drive our non-fund income growth. I think that goes to the second part of your questions. If you look at our non-fund income growth in first half of 2025, where does it come from? From the net fee income perspective, it does come from three main parts. I think that appear on my speech as well: the security brokerage, the investment fund, and the structure products. However, there is also a portion due to some of the positions we are, and insurance, in fact, comes through as a strong driver for our Wealth Management business. The underlying drivers for that is the expansion of our customer base in the affluent sectors as well as the cross-boundary business flow. That we expect to continue in second half, predominantly due to the return differential between Mainland and Hong Kong. Therefore, that should also drive the Wealth Management business in the second half of 2025. If you ask me, I think the net interest income and NIM will remain pressured in second half. The Wealth Management business growth momentum will remain in second half as well. That is this dynamic that drives the total revenue income in total revenue growth in second half of 2025. Michael, I would add one point, and that is, or two points, I should say. I think the fact that, and it's a very good question, how much of that is cyclical and how much of that is recurring, right? That's a very good question. I think what management should be focusing on is how we position ourselves in terms of growing our business and capturing opportunities. Regardless of how the market is going to unfold, right, we have the ability to do so. That is striking a balance. We do have a track record of sustaining an increase, a healthy increase in our fee income. I think that will continue for as long as the market remains buoyant from what we're seeing. I've said already that there are very early signs to say that this is actually coming back in quite an encouraging perspective. I think at the same time, it's also on the basis of the recurrence and the sustainability is also on the basis of customers' growth. Because if we continue to grow customers, and we've been doing that very successfully, not only would they bring in deposits, they also will be investing. They also will be investing or seeking protection, all of which are recurring income. I think we have to diversify, and that's why I keep stressing on the fact that we have to diversify our revenue streams. That is one way of management actively positioning ourselves for the future. I think that is one key point. The second point I wish to bring back is, yes, the market, and if the outlook says rates could be reducing, of course, there will be pressure on interest income. Yeah. Even amidst what we have already seen, we have sustained at a level of 1.99%. If you look at the market average, I think that is healthily above. The fact that we are very disciplined in our pricing decision, in what we focus on, and how we orchestrate and deploy our different tactics, I think that actually gives us confidence that going forward, we should be able to manage our NIM effectively. I think those are the two points I'd like to add. Thank you, Say Pin, for the answer. Next question, please. Emma. Thank you. I'm Emma from Bank of America. Actually, I have several follow-up questions with your earlier answer. You mentioned that you think your dividend payout ratio will remain within 100%. Given the net profit pressure we've seen in the first half, does it mean that it is acceptable to you that the DPS may decline, the full-year DPS may decline year- over- year? Or you think you still have room to raise your payout significantly in order to maintain a relatively stable DPS? I note that you just announced the HKD 3 billion buyback, which is indeed a good gesture to the shareholder return. For some of the investors, they also pay a lot of attention to the dividend income, which is a more sustainable revenue trend for them. I just want to get more clarification on the DPS. Another follow-up is about the asset quality. You also mentioned that the NPL increase is slowing down, and you expect your ECL in the second half to be similar to the first half based on the information you have. Could you share with us the assumptions you have for the Hong Kong property in the second half that lead you to believe that your ECL could probably remain stable versus the first half? I see that you mentioned your NPL coverage ratio, which includes both ECL and collateral, remains above 100%. Does it mean that if the collateral continues to fall, then you need to continue to raise your ECL and your target is just to keep this ratio at above 100%? Just to follow up. Start with you first, Say Pin. Yeah. Dividend per share buyback. Dividend per share, yeah. I think we are unable to announce dividend per share for the full year, but the management commitment is there as per what Diana and myself just said on our commitment to try to deliver sustainable return to our shareholders. I think that commitment remains. What helps us in our positions is our strong capital position at this juncture. 21.3% for CET1 and 24.9% for CAR ratio. That puts us in a very good position to consider shareholders' return in the form of dividend. We are aware of our shareholders' profile and their so-called preference in terms of receiving dividend. We always bear that in mind in our each reporting date's assessment on dividend and our discussions in management and board and together with HKMA as well on what is to be decided, approved, and announced. We will not announce Q3 and Q4 now, but what I am trying to say is that we are in a good position from a capital position perspective, and we will take shareholders' view and feedback as well. That is on dividend per share. I think the one point I'd like to add, Emma, is that you would be able to work it out very simply as well. I mean, over the years, our dividend payout ratio roughly is about 70%. I've also stressed that the fact that we have dialed up our provision impacting our PBT, it's a cyclical set of actions that management has adopted. That has not impacted our ability to continue our commitment to pay out dividends. That is, or if you would, right, including the share buyback return to shareholders. That commitment is met with because, and we have reasons to be confident in that, because we have the ability to sustainably grow our business and the basic infrastructure there in terms of our core businesses. We have been showing signs of strong growth. That will propel us and provide us with the ability to keep growing our capital, in which case will then enable us to fulfill our commitment to shareholder return. I think that is important. You did allude to whether share buyback will continue. I can't really offer any further guidance beyond what we have said today in terms of our intent of the $3 billion share buyback, which we intend to complete in six months. I think it's fair to say that in the macro environment, there are very many uncertainties, but we are confident we are very well positioned to weather the storm, if you would. That then is an indication of our commitment of continuing to, yeah, to provide decent shareholders and sustainable shareholders' return. Asset quality, that is a hot topic, Kathy. Thank you. Thank you, Emma, for your question. In our forecast, we will take a number of factors into consideration. Property price movement definitely is one. The second is, you know, that we will review our portfolio on a regular basis. We will look at the trends of them to downgrade to NPL and the movement within stage two as well. All this probability will go into our forecast. I think the ECL forecast is more like an outlook of the CRE market because that will impact the property price and also the negative credit migrations. One other factor that we look at is our collateral realization strategy as well because different outcomes may result in different ECL as a result. There are different assumptions into our ECL forecast, okay? Again, as Diana mentioned, it is a forecast. It's still subject to a lot of uncertainties, for example, like trade tariff, interest rate movements, economic recovery rate. It is just a very, very high-level estimate. Yeah. I think the second question that you asked is, do we want to maintain 100% coverage for our collateral? As you know, we have a very prudent strategy in terms of ECL calculation. We have taken a number of discounts in the valuation. We have different scenarios as well. We have the stress sale scenario. We have for sale scenario. We also have repossessed property discount when we do our ECL calculation. All in all, then actually our coverage is definitely more than 100%, yeah, to ensure our provision is adequate. Also, I think, Emma, you would also recall that we have mentioned in our last round of full-year results of 2024 that of our exposure, about 16% relates to Hong Kong CREs, roughly 15% now. Of that portfolio, 63% is secured, 37% of the remaining, i.e., is really from large corporates with very well-diversified streams, and 95% of them actually is investment grade. I think that gives us a reasonable confidence that by working closely with customers, be it the secured or the unsecured book, we will strive to work out with customers what is best to help weather the storm, help them weather the storm, help them go through this transitory set of challenges. In the interest of time, I have the last question, if any. If not, here's the end of today's presentation. Thank you, everyone, for joining us. Thank you kenneth. Thank you.