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Bank of China Announced 2012 First Three Quarters Results


Profit After Tax Reached RMB111.4 billion, up by 9.85% YoY

2012-10-25

Bank of China Limited (“Bank”: Hong Kong Stock Exchange stock code: 3988; Shanghai Stock Exchange stock code: 601988) announced its 2012 first three quarters results on October, 25th. According to International Financial Reporting Standards (“IFRS”), during the period, the Bankrecordeda profit after tax of RMB111.42 billion, a year-on-year growth of 9.85%. The profit attributable to equity holders of the Bank increased by 10.37% to RMB106.36 billion. After eliminating the impact of write-back for Lehman Brothers-related products and other one-off factors in last year, the Bank achieved 13.53% increase in the profit aftertax and profit attributable to equity holders of the Bank.Return on average equity (“ROE”) and return on average total assets (“ROA”) stood at 18.66% and 1.21% respectively, representing increases of 0.39 and 0.04 percentage point compared with the prior year-end.Capital adequacy ratio and core capital adequacy ratio increased by 0.18 and 0.30 percentage point to 13.16% and 10.38% respectively.

Asset and liability structure optimization improved net interest margin

In the first three quarters of 2012, the Bank continued to strengthen the integrated and balanced management of its assets and liabilities and proactively optimize asset and liability structure. As at the end of September, the Bank’s total assets and liabilities amounted to RMB12.74 trillion and RMB11.92 trillion, an increase of 7.7% and 7.6% respectively from the prior year-end.

The Bank strived to increase the proportion of high yield assets. As at the end of September, the Bank’s total loans and investment securities grew by 9.1% and 13.9% from the prior year-end to RMB6,918.4 billion and RMB2,277.8billion respectively, with the proportion to total asset increasing by 0.67 and 0.96 percentage point respectively. The Bank maintained stable growth in its loan portfolio, and total domestic RMB-denominated loans amounted to RMB5,085.5 billion, up by 9.7% from the prior year-end. The Bank continued to increase its support to the real economy development, fulfilled credit needs for key industries such as manufacturing, transportation, electric power, retail and wholesale, and actively provided financial support to the development of key sectors includingemerging strategic industries, cultural industries, agriculture, rural areas and farmers as well as domestic consumption. Small-and-medium enterprises (“SMEs”) business developed robustly, and RMB-denominated SMEs loans under the “BOC Credit Factory” model went up by 37%. Personal loan grew constantly. Domestic RMB-denominated personal loans increased by 14.9% to RMB1,597.6 billion, and the market share of newly granted personal loans among major peers improved by 3.43 percentage points from the prior year-end.

The Bank dedicated to optimize liability structure and lower interest costs. As at the end of September, the Bank’s total deposits amounted to RMB9,343.1 billion, an increase of 6.0% from the prior year-end. Of which, the deposits excluding the structured deposits increased by 7.7% from the prior year-end and achieved a sustained growth in the third quarter. The Bank strived to improve product function and service channel. By proactively expanding upstream and downstream customers from its existing customers’ supply and production chains, the Bank broadened the funding sources, optimized the structure,reduced the cost, and developed asset business supported by high quality deposit gathering.

In the first three quarters of 2012, the Bank realized net interest income of RMB189.4 billion, an increase of 13.2% compared with the same period of 2011. The net interest margin stood at 2.12%, an increase of 2 basis points from the first half of this year. In the third quarter, net interest margin of the Bank and domestic RMB businesses increased by 6 basis points and 11 basis points on quarterly base, reaching 2.16% and 2.45% respectively. 

Strengthening business innovation with improved structure of fee-based business

In the first three quarters of 2012, the Bank reported non-interest income of RMB79.9 billion, an increase of 2.7% compared with the same period of 2011. Of which, net fee and commission income declined by 1.8% to RMB49.9billion. However, in the third quarter, the Bank’s non-interest income and net fee and commission income increased by 14.1% and 19.7% respectively compared to the second quarter of 2012. In the first three quarters of the year, domestic net income from its less capital-intensive fee-based business was RMB37.8 billion, an increase of 10% compared with the same period of 2011, accounting for 80% of total net fee-based business income. The Bank continued to solidify advantages in trade finance business, and its international settlement business maintained a steady growth, consolidating its leading position in the market. Bank card business developed robustly. In the first three quarters of 2012, the number of accumulated effective bank cards and instalment transaction amount increased by 20% and 104%, driving bank card fee growth by 35% compared with the same period of 2011. The Bank focused on non-interest income businesses innovation and expansion. Revenue of precious mental, insurance and custody businesses increased by 22%, 14% and 20% respectively compared with the same period of 2011. The Bank accelerated the development of E-banking service. The number of corporate online banking, personal online banking and mobile banking customers increased by 54%, 52%, and 120% respectively from the prior year-end.

Accelerating overseas business development with further consolidated international operation advantages

Under the guiding principle of “specialized operation, intensive management and integrated development of domestic and overseas businesses”, the Bank accelerated the development of its overseas business by coordinating its domestic and overseas operation. As at the end of September, the Bank’s asset and profit before income tax of overseas institutions amounted to RMB3,258.3 billion and RMB28.15 billion, representing 24% and 20% of the Bank’s total asset and profit before income tax respectively. Customer deposits and total loans increased by 15.0% and 15.9% respectively from the prior year-end to RMB1,592.2 billion and RMB1,312.9 billion.

The Bank extended its overseas network by establishing outlets, representative office and “China Desk”, and the Stockholm Branch, Nairobi representative office, and Turkey China Desk were established successively in the third quarter. Currently, the Bank’s overseas operations cover Hong Kong, Macau, Taiwan and 35 countries and provide financial services to countries such as Oman, Peru, Ghana, Chile and Turkey through “China Desk” business model. The Bank exerted great effort on businesses such as overseas credit, cash management, supply chain financing, trade finance, project financing, capital market financing and settlement and clearance, improved financial service capability to “going global” enterprises and premier local enterprises. The Bank maintained its leading position in cross-border RMB business. In the first three quarters, the Bank achieved cross-border RMB settlement transactionvolume of RMB1.72 trillion, up by 31% year-on-year, ranking first in the market.

Maintaining stable asset quality with key areas risk under control

The Bank maintained a close watch on changes in the economic and financial environment, and regulatory requirement, and enhanced its asset quality control and monitoring systems. It strengthened post-lending risk management, periodic risk investigation, risk classifications re-examination and proactively detected potential risks. By enhancing proactive, forward-looking, focused and effective risk management, the Bank maintained its stable asset quality. As at the end of September, the Bank’s non-performing loans totalled RMB64.1 billion. The ratio of non-performing loans to total loans stood at 0.93%, down by 0.07 percentage point compared with the prior year-end. The allowance for loan impairment losses to non-performing loans was 237%, an increase of 16 percentage points from the prior year-end, which further enhanced the risk mitigation capability. The Bank continued to enforce risk control for key business areas. The loans granted to local government financing vehicles, real estate sector and industries with overcapacity accounted for 13.5% of total loans, further decreasing from the prior year-end, and the ratio of non-performing loans stood at 0.28%, 0.36% and 0.99% respectively, with risk under control.

Currently, the Chinese economy growth is stabilizing and showing positive signs, yet the economic and social development environment at home and abroad is still complicated. The Bank will strictly comply with macroeconomic policies, continue to implement the principles of “streamlining structure, scaling up, managing risks and sharpening competitiveness”, and promote innovative, transformative and cross-border development. The Bank will actively establish a customer centric, market-oriented and technology-led global service system, and build its distinctive features of international, diversified and intellectual operation. The Bank will continue to improve its ability to meet the needs of the real economy, accelerate its pace of building a premier multinational banking group and strive for new brilliance.

Financial Highlights

(IFRS)

Key Performance Figures

Unit: RMB million Change Nine-month ended 30 Sep 2012 Nine-month ended 30 Sep 2011
Net interest income 13.23% 189,444 167,302
Non-interest income 2.72% 79,895 77,779
Including: Net fee & commission income -1.76% 49,930 50,827
Operating expenses 15.82% (113,146) (97,694)
Impairment losses on assets -16.08% (13,626) (16,237)
Profit after income tax 9.85% 111,419 101,424
Profit attributable to the equity holders of the Bank 10.37% 106,363 96,368

Key Assets and Liabilities Figures

Unit: RMB million Change As at 30 Sep 2012 As at 31 Dec 2011
Total assets 7.73% 12,743,685 11,829,789
Loans and advances to customers 9.07% 6,918,410 6,342,814
Investment securities 13.85% 2,277,798 2,000,759
Total liabilities 7.62% 11,915,956 11,072,652
Due to customers 5.96% 9,343,145 8,817,961
Capital and reserves attributable to equity holders of the Bank 9.36% 791,703 723,914

Key Ratios

  Change (PPT) Nine-month ended 30 Sep 2012 Nine-month ended 30 Sep 2011
Return on average total assets -0.02 1.21% 1.23%
Return on average equity -0.48 18.66% 19.14%
Net interest margin 0.02 2.12% 2.10%
Cost to income ratio (calculated under domestic regulations) 0.37 30.51% 30.14%
Credit Cost -0.11 0.27% 0.38%
  Change (PPT) As at 30 Sep 2012 As at 31 Dec 2011
Non-performing loan ratio -0.07 0.93% 1.00%
Non-performing loan coverage ratio 16.44 237.19% 220.75%
Core capital adequacy ratio 0.30 10.38% 10.08%
Capital adequacy ratio 0.18 13.16% 12.98%

Per Share Information

Unit: RMB Change Nine-month ended 30 Sep 2012 Nine-month ended 30 Sep 2011
Earnings per share (basic) 0.03 0.38 0.35
Change As at 30 Sep 2012 As at 31 Dec 2011
Net assets per share 0.25 2.84 2.59

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