The world has faced its largest health crisis in a generation with shockwaves across the global economy and our societies.
Although the macroeconomic impacts of the pandemic will likely persist over the next few years, there is a general sense of optimism that medical science together with economic organisations, governments and regulators will help us navigate our way out of the current storm.
Haitong Bank’s activities in 2020 reflected these challenging conditions, particularly in the first half of the year, where the initial lockdowns significantly impacted both our Asia-related business as well as our domestic operations in Europe and LatAm.
As we adapted to a new business and work environment, the Bank showed a record recovery in the second half of the year, more than doubling the Banking Income generated in the first half. This rebound was driven by the China-related business, together with other credit activities, and a recovery of capital markets.
Haitong Bank therefore emerges from 2020 in good shape, posting positive net income for the FY2020, maintaining a solid operating profit, improving asset quality and continuing to enjoy Capital and Liquidity levels well above the regulatory thresholds.
Total Banking Income for the year was EUR 82 million. This figure, although representing a 25% drop from 2019, shows a strong recovery from the EUR 24 million generated in the first half of 2020. As the Bank maintained a strict cost awareness, Operating Costs decreased by almost 20% to EUR 58 million, leading to a solid Operating Income of EUR 24 million. Haitong Bank has shown tremendous resilience during these times that contributed to the break-even goal, with a Net Profit in 2020 of EUR 1.6 million.
Although we have operated in extremely adverse circumstances, the strategy of maintaining a healthy Balance Sheet will allow the Bank to emerge from this crisis with its strong Capital and Liquidity levels intact. Also, since the Bank is not exposed to retail and commercial banking activities, it is relatively protected from moratoriums and other credit-related deterioration.
By the end of 2020, Haitong Bank had Total Assets of EUR 2.8 billion and Capital of EUR 598 million, corresponding to a CET1 ratio of 22.7% and Total Capital ratio of 28.5%. The NPL ratio continued to be one of the lowest in the industry at 1.9%, breaking its previous record of 3.6% in 2019.
The Bank has been addressing the current crisis from a strong position not only in terms of its Balance Sheet but also from a business model perspective with seamless integration at a Group level. This allows us to be optimistic about the future recovery.
As we approach a new normal, the Bank will continue to optimize its business drivers: Expanding the Balance Sheet taking into consideration both the asset side, in terms of new credit generation and investments, and the liability side by optimizing the funding mix.
As we set our targets for the future, we know that we will only be able to cover the road ahead with the continuous trust and support from our clients globally in Asia, Europe and Latin America, together with the perseverance of our employees and the support from our shareholder.
Chief Executive Officer
Chairman of the Board of Directors