As one of the important international financial centers, the Hong Kong market continues to consolidate its stable, transparent and efficient financial system, and the securities market, money market, insurance market and capital market continue to improve, forming an efficient and convenient financial ecosystem. It has attracted investors from home and abroad to invest in Hong Kong, and its status as an international financial center has been continuously consolidated.
The financial industry plays an important role in Hong Kong's economy and plays an important role in economic development and stability. Among them, the financial industry accounts for more than 40% of the market capitalization, which has naturally become one of the main sections of the Hong Kong stock market.
Recently, Xiamen International Investment, a financial company with a long history, submitted an application for listing to the Hong Kong Stock Exchange, which will add another piece to the huge sector of Hong Kong stock finance. Among them, China International Capital Corporation, CITIC, Huatai International and Xingsheng International are the co-sponsors of the attack on the HKEx.
Mainly play the card of "overseas Chinese Finance", the net profit performance fluctuates greatly.
Zhitong Financial APP learned that Xiamen International Investment, founded in 1977, is a comprehensive financial services group with corporate subsidiary commercial banks in Hong Kong and Macao, and its earlier history can be traced back to 1943.
At present, the subsidiaries of Xiamen International Investment and Operation mainly include Jiyu Bank and Macau International Bank. Among them, Jiyou Bank has the longest history, dating back to 1943, when the predecessor of the bank was founded by overseas Chinese Chen Jiageng in Yong'an City, Fujian Province, then the temporary provincial capital city of Fujian Province.
Tan Kah Kee hopes to build Jiyou Bank into a sustainable enterprise and dedicate its profits to education in Xiamen and other parts of Fujian Province. Jiyu Bank moved its headquarters to Xiamen in 1945 and was incorporated as a limited company in Hong Kong on April 24, 1947, becoming the 39th licensed bank in Hong Kong.
In 2017, through the strategic acquisition of the 64.31% interest of Chiyu Bank from Bank of China Ltd. (Hong Kong), Jiyu Bank has become a subsidiary of Xiamen International Investment and has been in operation since the acquisition. Xiamen International Investment's shareholding in Chiyu Bank is as follows:
According to Frost Sullivan's report, as of December 31, 2021, the total assets of Jiyu Bank reached HK $177.2 billion, ranking 18th among locally registered licensed banks in Hong Kong. the annual compound growth rate of total assets ranked fourth from 2017 to 2021.
In addition, Xiamen International Investment also operates the Macau International Bank. According to Zhitong Financial APP, Macau International Bank was established in Macau in 1974 by a number of local entrepreneurs and is the first batch of modern commercial banks in Macau. In 1978, Macau International Bank was approved by the Macao government to operate commercial banking business, becoming the 13th commercial bank established in Macao.
In 1980, Macau International Bank was acquired by Pan India International Finance and became a wholly owned subsidiary of Pan India. Two years later, after Xiamen International Investment acquired a 100% interest in Macau International Bank from Pan Indian International Finance, Macau International Bank officially became a wholly-owned subsidiary of Xiamen International Investment.
As of December 31, 2021, Macau International Bank had total assets of HK $231.1 billion, making it the third largest bank in Macau (by total assets). As of December 31, 2022, Macau International Bank has a total of 14 outlets in Macau, covering the core business and residential areas, serving about 170000 retail customers.
With the contribution of the two banks, as of December 31, 2021, the overseas Chinese financial business of Xiamen International Investment ranked in the top 6% among the Hong Kong and Macao counterparts.
According to Zhitong Financial APP, as of December 31, 2022, the total number of overseas Chinese customers served by Chiyu Bank and Macau International Bank exceeded 60, 000, accounting for more than 20% of the total number of customers of Chiyu Bank and Macau International Bank. As of December 31, 2022, deposits totaled more than HK $41 billion, accounting for more than 14 per cent of the total deposits of the two banks, and loans and advances totaled more than HK $24.4 billion, accounting for more than 10 per cent of the total loans of the two banks.
In addition, as an integrated financial services group mainly operating in Hong Kong, Macao and many mainland cities (especially Guangdong-Hong Kong-Macau Greater Bay Area), Guangdong-Hong Kong-Macau Greater Bay Area is also an important source of international investment income in Xiamen. In 2020-22, the business operating income from Guangdong-Hong Kong-Macau Greater Bay Area accounted for 92.1%, 91.1% and 84.6% of the company's operating income, respectively.
By the end of 2022, Xiamen International Investment in Guangdong-Hong Kong-Macau Greater Bay Area had total assets of 375.9 billion Hong Kong dollars and total loans of 165.7 billion Hong Kong dollars.
In terms of income, net interest income plays an important role in the financial performance of Xiamen international investment. In 2020-22, the company's net interest income accounted for 64.5%, 67.8% and 68.4% of the total operating income, respectively. The fluctuation of net interest income was mainly affected by interest rates and changes in the average balance of interest-bearing assets and interest-bearing liabilities.
Of this total, the company's net interest income increased slightly from HK $3.757 billion in 2020 to HK $3.868 billion in 2021 and further to HK $4.187 billion in 2022.
In addition, fee and commission income is another major component of Xiamen International Investment. In 2021, the company's net fee and commission income fell 2.2 per cent to HK $1.273 billion from HK $1.302 billion in 2020, followed by a further 9.0 per cent year-on-year decline to HK $1.159 billion in 2022.
Reflected in net profit, the company's net profit increased by 76.0% to HK $3.65 billion in 2021 from HK $2.075 billion in 2020, mainly due to the decrease in the average interest rate of interest-paying liabilities from 1.89% to 1.39% in 2021, while it decreased by 34.5% to HK $2.389 billion in 2022 compared with the same period last year. This is mainly due to the increase in the average interest payment rate of interest-paying liabilities of Chiyu Bank and Macau International Bank, and the increase in provision for impairment of financial assets.
In contrast, the company's return on assets increased from 0.56 per cent of 2020 to 0.92 per cent in 2021 and declined to 0.58 per cent in 2022. In the same period, the company's non-performing loan ratio has also increased year by year over the past three years, reaching 0.40%, 0.61% and 1.38%, respectively.
Based on Guangdong-Hong Kong-Macau Greater Bay Area, what is the advantage of Xiamen's international investment?
As far as the banking industry is concerned, Guangdong-Hong Kong-Macau Greater Bay Area's commercial bank has always been at the leading level in China. With the rapid development of Guangdong-Hong Kong-Macau Greater Bay Area, the financial innovation and opening up of commercial banks are expected to be further promoted.
According to Frost Sullivan's report, by the end of 2022, except for the branches of six large state-owned commercial banks and 12 joint-stock banks set up in Guangdong-Hong Kong-Macau Greater Bay Area, there were 3 joint-stock banks headquartered in Guangdong-Hong Kong-Macau Greater Bay Area, 3 urban commercial banks, 63 rural commercial banks, 6 foreign corporate banks and 1 private bank. As of December 31, 2022, there are 182 and 34 authorized institution banks in Hong Kong and Macao respectively (including Macao Postal Reserve Bureau). Ten international banks have set up branches in Guangdong-Hong Kong-Macau Greater Bay Area, which constitute the main banking system in the region.
Among them, in Hong Kong and Macau, where Chiyu Bank and Macau International Bank are located, as of December 31, 2022, there were a total of 182 authorized institutions in Hong Kong. these include: 155 licensed banks (including 31 locally registered licensed banks), 15 restricted license banks and 12 deposit-taking companies.
Among the 31 locally registered licensed banks mentioned above, Jiyu Bank ranked fourth with a compound annual growth rate of 20.5% of total assets from 2017 to 2021, and ranked third with a compound annual growth rate of 19.0% of total deposits in the same period. and ranked third with the annual compound growth rate of 18.2% of total loans in the same period.
In Macau, the banking industry in Macao is mainly composed of registered banks, foreign-registered banks and the Postal Reserve Bureau. According to Frost Sullivan, as of December 31, 2022, Macau had a total of 34 banks, including 12 locally registered banks, 21 foreign-registered banks and 1 Postal Reserve Bureau.
In 2021, Macau International Bank ranked third with total assets of 198.8 billion yuan, with a market share of 8.9 percent. In the same period, Macau International Bank ranked fourth with total deposits of 128.7 billion yuan, with a market share of 12.1 percent, and ranked fifth with total loans of 103.9 billion yuan, with a market share of 9.6 percent.
As the business focus on Guangdong-Hong Kong-Macau Greater Bay Area's financial services, Xiamen International Investment is expected to benefit from the regional cluster effect and policy support dividends in the future, but at the same time, the company is still facing risks and challenges.
For example, the ability to maintain and improve the quality of assets, especially loans and advances, is crucial to the financial and operating performance of Xiamen International Investment. From 2020 to 2022, the total loans and advances made by the company accounted for 51.4%, 50.4% and 50.5% of the total assets, respectively, and the corresponding non-performing loan ratio increased year by year, being 0.39%, 0.80% and 1.38%, respectively.
Interest income from loans and advances is the main source of income for international investment in Xiamen. Historically, short-term corporate loans and advances constitute a major part of the total corporate loans and advances, and changes in the economic environment or regulatory policies may have a greater impact on the stability of the short-term loan interest income stream.
In addition, customer deposits are an important source of funds for the company. up to 2020-2022, the total deposits of corporate customers are HK $279.996 billion, HK $274.931 billion and HK $289.56 billion respectively. In terms of this growth rate, it has not obviously shown that it is based on Guangdong-Hong Kong-Macau Greater Bay Area. Overseas Chinese financial gene competitive advantage. In the future, if the company fails to maintain a good growth rate of customer deposits and fails to find other funds in time to meet the liquidity requirements, it may have a significant adverse impact on its business, financial position and operating performance.