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Bank of China Limited Achieves Impressive Performance In The First Interim Results After Listing

(Hong Kong, 29 August 2006)─Bank of China Limited (“BOC”, SEHK stock code:3988, SSE stock code: 601988) announced its interim results for the six months ended 30 June 2006. Due to its relentless efforts in pursuing reforms and innovation, BOC achieved impressive results in its first financial report after listing. Profitability, operational efficiency and quality of assets all advanced during the period.

In the first half of 2006, BOC recorded an operating profit of RMB34,338 million, a year-on-year increase of 19.72%. Net profit attributable to equity holders was RMB19,477 million, up 28.30% year-on-year. Annualized return on average equity (ROAE) increased to 13.38%, a remarkable rise of 124 basis points when compared with that of last year. The return on average assets (ROAA) grew 19 basis points to 0.89%.

Net interest income increased 12.32% year-on-year to RMB54,823 million in the first half of 2006, primarily due to the enlargement in loan base, higher average yield as well as the optimization of BOC’s asset mix that led to notable growth in securities investment. Yet the increase in average yield of the interest-earning assets was offset by the rise in funding cost. Net interest margin was narrowed moderately by 4 basis points to 2.27%. By undertaking more RMB deposits, optimizing and improving asset and liability structure, BOC aims to achieve broad-based development in its key business lines and consistent increase in net interest margin.

Non-interest income grew 16.86% year-on-year to RMB14,680 million in the period, which accounted for about 21.12% of the total income. Net fees and commission income surged 51.42% year-on-year, mainly attributable to the significant growth in agency commissions, settlement and clearing fees, and bank card fees on back of BOC’s increased focus to grow fee-based businesses.

BOC continued to implement effective cost control, and manage to improve overall operational efficiency. Operating expenses moderately increased by 7.09% year-on-year, as the business expansion resulted in the rising general operating and administrative expenses. The operating expenses to operating income ratio, on the other hand, improved 241 basis points to 38.41% thanks to the notable increase in operating income.

Consistent with the goal to achieve long-term high quality growth and profitability, BOC dedicated to constantly improve risk management capability and strictly control assets quality, while striving for higher profit. During the period, impaired loan ratio decreased from 4.90% at the end of last year to 4.40%. Impaired loan coverage ratio increased from 75.92% to 83.18%. Annualized credit cost improved to 0.47% compared to 0.52% for full year 2005. The special mention loans as a percentage of total loans also decreased notably to 10.88% from 12.71% at the end of 2005.

As at 30 June, 2006, total assets of BOC reached RMB5,231,635 million, an increase of 10.37% from the end of 2005. Loans to customer recorded a robust but disciplined growth of 7.6% to RMB2,405,753 million. Total liabilities stood at RMB4,846,553 million, an increase of 8.07% over that at the end of last year. Total deposits was enlarged by 9.4% to RMB4,048,438 million. Total equity (excluding minority interest) amounted to RMB355,747 million, an increase of 57.12%.

The listing of BOC has substantially enhanced its capital strengths. As at the end of June 2006, capital adequacy ratio was 12.40%, 198 basis points more than at the end of last year.

Mr. Xiao Gang, Chairman of BOC, said, Being the first Chinese bank to be listed in both the international and domestic capital markets, BOC refreshed a number of listing records. The IPOs have boosted the value of our brand name and market reputation, strengthened our capital base and capital adequacy ratio, and driven us to deepen banking reform and improve corporate governance. We will adhere to the “client-oriented and market-driven” principle, continue to enhance our corporate governance and focus on enhancing profitability and sustainable growth, so as to build a stronger foundation for growth and create maximum value for shareholders.

Mr. Li LiHui, Vice Chairman and President of BOC, said, In the future, BOC will strive to drive the growth of fee-based businesses and retail banking businesses. We will further optimize our business and income structure, enhance our liability management to reduce the funding cost and improve service quality. We will also push forward with our organizational structure reforms, business processes integration and implementation of the IT Blueprint to enhance the operational efficiency. 

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About Bank of China Limited

Bank of China Limited (“BOC”) is one of the four largest state-owned commercial banks in China. Headquartered in Beijing, it has over 11,000 branches and sub-branches, 580 self-service centers and 11,600 automated service machines throughout China. With over 600 overseas branches, subsidiaries and representative offices covering 27 countries and regions, and correspondent banking relationships with over 1,400 foreign banks, BOC also has the most extensive international network among commercial banks in the country. According to the Banker magazine, it was the 27th largest bank in the world in terms of total assets as at 31 December 2005.

BOC primarily engages in commercial banking. It also provides investment banking and insurance services through its subsidiaries, BOC International and BOCG Insurance, thereby creating a universal banking platform that offers comprehensive integrated services to its customers. Bank of China (Hong Kong) Limited, wholly owned by BOC Hong Kong (Holdings) Limited (SEHK: 2388), BOC’s subsidiary, and the Macau branch of BOC, are one of the banks authorized to issue bank notes in their respective areas. The former is the second largest commercial bank in Hong Kong, whereas the latter is the largest commercial bank in Macau.

BOC was listed on the Stock Exchange of Hong Kong on 1 June 2006 (stock code: 3988) and shortly after, on the Shanghai Stock Exchange (stock code: 601988) on 5 July 2006, thus making it the first commercial bank in China listed in the international and domestic capital markets. The listing in Hong Kong and China has further enhanced BOC’s strengths and influence in the international and domestic markets, giving this century-old brand a yet stronger fame.

For Enquiries:

Strategic Financial Relations (China) Limited

Anita Cheung
 Tel: (852) 2864 4827 / (852) 9100 9002
 Email：anita@strategic.com.hk
 
Olive To
 Tel: (852) 2864 4894
 Email：olive@strategic.com.hk
 
Cherry Mok
 Tel: (852) 2864 4839/ (852) 9660 4765
 Email：cherry@strategic.com.hk
 
Winnie Lau
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