Bank of China Limited (“the Bank”, Hong Kong Stock Exchange ordinary stock code: 3988, Offshore Preference Share: 4601; Shanghai Stock Exchange ordinary stock code: 601988，Domestic Preference Share code: 360002, 360010) announced its 2016 annual results on 31 March 2017. In accordance with the International Financial Reporting Standard, the Bank had an after-tax profit in FY2016 of RMB184.1 billion, up 2.58% year-on-year.
Mr. Tian Guoli, the Chairman of Bank of China, stated that, Bank of China should continue with its strategy of “Serving Society, Delivering Excellence” and to contribute to the process of the people’s rejuvenation; should maintain its leading status in the process of globalization by leveraging its strengths as China’s most internationalized bank; should follow the pulse of times to upgrade services through technology reform; should win over customers loyalty by embracing market and technological innovations; and should solidify the foundations for sustainable growth by defending the risks bottom line. In the past year, even though it was faced with a complex operating environment, Bank of China tackled the challenges with an innovative mind-set, and achieved a sustainable, steady and healthy development by accelerating adjustments of its business structures and improving its management mechanisms and regimes.
Specifically, the Bank’s 2016 operating results are highlighted as follows:
Steadily improved financial results from steady and healthy operations
In 2016, the Bank continued to improve its assets and liabilities profiles, with total assets, total liabilities and capital and reserves attributable to equity holders of the Bank reached RMB18.15 trillion, RMB16.66 trillion and RMB1.41 trillion, respectively up 7.93%, 7.79% and 8.18% compared with last year-end. ROA and ROE stayed at 1.05% and 12.58%. NIM stood at 1.83%. Non-interest income weighted heavier to 36.98%. Capital is more sufficient with common equity tier 1 CAR of 11.37% and CAR of 14.28%, respectively up 0.27 ppt and 0.22 ppt from last year-end. NPL coverage ratio went up against the market by 9.52 pps to 162.82%, further enhancing the Bank’s risks compensation capabilities.
New developments for internationalization businesses by leveraging strengths and expanding into overseas markets
In recent years, the Bank closely coordinated with the nation’s strategies to promote a new round of high-level reform and opening up, and explored deep into the “blue sea” of overseas markets, thus achieved new developments for its internationalization businesses. As of the end of 2016, total assets of the Bank’s overseas institutions reached USD730.7 billion, representing 26% of the Bank’s total assets. Profit before tax grew 39% to USD12.2 billion with a contribution ratio of 36%. The Bank was way ahead of domestic peers in terms of weight of overseas assets and profit contribution ratio.
In 2016, the Bank accelerated in building up the “Belt and Road” financial artery and proactively financed the “going global” domestic enterprises in their M&A projects and investment in countries along the routes of the “Belt and Road” initiative, with accumulatively a total of USD60 billion new credits extended so far. Currently the Bank’s overseas institutions have covered 51 countries and regions, out of which 20 countries are along the routes of the “Belt and Road” initiative. Leveraging strengths in cross-border operations, the Bank successively held for Cambodia and Philippine two successful “Belt and Road” training forums on international finance exchanges and cooperation.
The Bank was the first to build a platform to assist SMEs in seeking cross-border development. The Bank has accumulatively conducted 28 cross-border matchmaking events globally, attracting over 20,000 SMEs from home and abroad to join in. During the visits of the president of Peru and the president of Philippine in China, the Bank and the relevant authorities of Peru and Philippine respectively organized special cross-border matchmaking forums to promote Sino-Peru and Sino-Philippine cooperation.
The Bank continued to lead markets in its RMB internationalization businesses and was exclusively designated as a qualified RMB clearing bank in the US. Cross-border RMB clearing and settlement volume continued to rank top globally with a total of RMB312 trillion and RMB4 trillion respectively. The Bank focused on developing global cash management businesses, and has become the lead bank in cash management for many multinational enterprises, with its businesses covering the Asia-pacific, Europe and America areas. By fully leveraging the strength of syndicated loans, the Bank acted as a lead arranger for a total of USD52.1 billion syndicated loans, ranking top in the Asia-pacific markets, and leading Chinese banks both in the Euro-African and American syndication markets.
New progress in serving the real economy with better structures and deepened transformations realized
The Bank closely followed the nation’s strategies, diligently implementing the five major tasks of “cutting industrial capacity, reducing the inventory, lowering leverage, cutting corporate cost and improving economic weakness” so as to vigorously push forward the “supply-side structural reform”. The Bank maintained a steady and moderate growth in credit extension adopting differentiated policies on credit support and limit. In 2016, new domestic RMB loans were RMB681.2 billion, pretty much the same as last year. The Bank increased loans to key sectors and weak areas, and assisted the nation in implementing major strategies. It supported 240 projects on coordinative developments for “Beijing-Tianjin-Hebei” with a finance of RMB94.8 billion. The Bank strictly limited loans to industries of high polluting, high energy-consumption and overcapacity. Proportion of loans to overcapacity industries reduced by 0.13 ppt compared with the end of 2015.
The Bank stepped up efforts developing inclusive finance with personal auto loans and sponsored student loans continuing to lead markets and loans to small and micro-enterprises growing faster than total loans. The BOC Fullerton Community Banks grew at a faster pace and have most institutions and broadest businesses scope among the domestic village banks with 82 BOC Fullerton community banks with 77 branches set up domestically and a total of RMB18.5 billion loans, up 21% from last year-end. The Bank earnestly increased targeted financial services to attack poverty in targeted areas. Accumulatively more than RMB72 million were provided to directly help over 27,000 people living in poverty.
New highlight on businesses restructure by way of optimizing existing assets and liabilities and enhancing allocation efficiency
The Bank actively applied markets mechanism to deepen reform and conducted capital markets operations to lower leverage and cut cost, raising capital operative efficiency. The successful sale of Nanyang Commercial Bank, Limited and Chiyu Banking Corporation Limited efficiently reduced businesses overlaps within the Bank as well as cut management cost. The successful IPO of BOC Aviation in Hong Kong market increased the Bank’s value as a whole as well as helped preserve and increase the value of state-owned assets, further revealing the Bank’s competitive edge in its diversified strategies. The Bank actively pushed forward the restructure of its ASEAN institutions. The successful transfer of institutions in Malaysia and Thailand, the approval to set up an overseas institution in Brunei as well as the signing of agreements on transfer of branches in Indonesia and Cambodia significantly expanded BOCHK’s regional radiation. The Bank smoothly reorganized institutions in Shandong and Liaoning so as to enhance its market competitiveness in the Bohai Rim.
New achievements in assets quality control due to risks prevention and NPAs resolution
The Bank always attaches greater importance to the prevention and control of financial risks, and upholds the principle of “substance over form”, so it comprehensively enhanced its risk management and defended the risk bottom line. As at the end of 2016, the Bank’s NPLs was RMB146.003 billion, RMB15.106 billion more than last year-end. The NPL ratio was 1.46%, up 0.03 ppt, slower than average among the commercial banks. Under the prerequisite of compliance with laws and regulations, with the concept of managing NPAs, the Bank comprehensively adopted multiple measures to resolve NPAs by fully leveraging its strengths in internationalization and diversification. As a result, a total of RMB128.9 billion NPAs were resolved by its domestic institutions, RMB24.5 billion more than last year, achieving another record high. Meanwhile, embedded with the principle of prudent operations, the Bank increased allowance for loans with a total of RMB86.795 billion appropriated for loan impairment losses, up 55.35% yoy.
Mr. Chen Siqing, the President of Bank of China, stated that, in 2017 the Bank will firmly develop internationalization, firmly serve people and the SMEs, firmly innovate in technology, and firmly strengthen team building; it will adhere to the general guidance of a steadily improving economic work promulgated by the central government, endeavour to optimize structure while maintaining stable assets scale, to develop liabilities business while ensuring steady assets business, to accelerate overseas growth while smoothing domestic growth, to boost non-interest income while stabilizing interest income, to improve service quality while solidifying service foundations, and to innovate in resolution methods while enhancing assets quality; conforming to the relevant regulatory stipulations and policies at home and abroad, the Bank will further leverage domestic and overseas markets, integrate on-B/S and off-B/S businesses and coordinate on-line and off-line services, so as to realize sustainable and healthy growth in its businesses.