...Balanced Intrinsic Strength: Hang Seng Bank Limited's (HSB) ratings capture its very sound financial profile, which benefits from an entrenched domestic franchise with stable retail deposit funding (9% share at end-1H18), healthy profitability and strong capitalisation. The ratings also reflect operational support from its parent, The Hongkong and Shanghai Banking Corporation Limited (HKSB, AA-/Stable/aa-), which owns 62% of the bank. Resumption in Growth: HSB's operations expanded healthily in 1H18 amid a further pick-up in China-related activities, and we expect the country to remain a key source of growth. HSB's gross mainland China exposure (MCE) rose to 20% of assets at end-1H18 from 19% in 2017 amid an un-annualised 8% growth in non-bank MCE (2017: 8%; system 1H18: 15%) with balanced growth from government-owned and private entities. Claims on Chinese banks declined by 12% during the six month period (2017: 36% increase). Well-Managed Concentration Risk: The bank's low risk appetite...
