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Bank of China Announces 2010 First Quarter Results Profit Attributable to Shareholders Reached RMB26.23 billion, up by 41.25%

Bank of China Limited (“BOC”: Hong Kong Stock Exchange stock code: 3988; Shanghai Stock Exchange stock code: 601988) announced its 2010 first quarter results on 27 April 2010. According to International Financial Reporting Standards (“IFRS”), BOC has achieved profit attributable to equity holders of RMB26.23 billion, an increase of 41.25% compared with the same period of the previous year.

Under the guidance of the scientific outlook on development and in accordance with the spirit of the Central Economic Working Conference and the State’s proactive fiscal and moderately easy monetary policy, Bank of China has achieved solid operating results with continuous improvement in performance by accelerating the implementation of its strategic development plan, optimising structure, scaling up, managing risk and sharpening competitiveness.

Stable growth in business scale with continuous improvement in profitability

As at 31 March 2010, the Group’s total assets amounted to RMB9,717.963 billion, an increase of RMB969.786 billion or 11.09%, and total liabilities amounted to RMB9,148.183 billion, an increase of RMB941.634 billion or 11.47% compared with the end of 2009. In the first quarter of 2010, the Group recorded profit attributable to equity holders of the Bank of RMB26.23 billion, an increase of 41.25% compared with the same period of 2009. Earnings per share (EPS) were RMB0.10, up by RMB 0.03. Return on average equity (annualised) was 19.99% and return on average total assets (annualised) was 1.19%, an increase of 4.28 percentage points and 0.15 percentage point compared with the same period of 2009, respectively.

Expanded deposit base with great efforts and maintained an appropriate pace in credit growth

In the first quarter of 2010, taking advantage of the seasonal increase in deposit business, BOC strengthened its marketing activities, expanded customer base, enhanced the efficiency of outlets and achieved stable growth in customer deposits. As at 31 March 2010, the Group’s total deposits from customers amounted to RMB7,284.731 billion, an increase of RMB664.179 billion or 10.03% from the prior year-end. Domestic RMB-denominated deposits from customers amounted to RMB5,928.824 billion, an increase of RMB617.423 billion or 11.62% from the prior year-end, with the market share up by 0.45 percentage point to 9.89%.

Meanwhile, BOC continued to implement government policies, maintain a reasonable pace in credit supply, enhance credit risk management and accelerate adjustments to its loan structure, promoting the healthy development of its loan business. As at 31 March 2010, the balance of total customer loans rose by RMB 402.238 billion or 8.19% to RMB5,312.596 billion compared with the prior year-end. Domestic RMB-denominated loans amounted to RMB3,764.852 billion, an increase of RMB254.616 billion or 7.25% compared with the prior year-end, with market share up by 0.08 percentage point to 8.84%. Domestic RMB-denominated corporate loans amounted to RMB2,695.319 billion, an increase of RMB164.155 billion or 6.49% compared with the prior year-end; domestic RMB-denominated personal loans amounted to RMB1,069.533 billion, an increase of RMB90.461 billion or 9.24% compared with the prior year-end.

Net interest income recorded rapid growth while the proportion of non-interest income continued to increase

In the first quarter of 2010, the Group’s net interest margin (NIM) was 2.04%, equal to that of full year 2009.  Due to the robust growth in interest-earning assets, the Group recorded net interest income of RMB44.506 billion, an increase of RMB7.668 billion or 20.82% compared with the same period of 2009. Non-interest income of the Group reported an increase of RMB9.416 billion or 69.09% and amounted to RMB23.045 billion, representing 34.11% of the total operating income, up by 7.10 percentage points compared with the same period of 2009. Net fee and commission income amounted to RMB15.656 billion, an increase of RMB4.393 billion or 39.00% compared with the same period of 2009, which is mainly attributable to the rapid growth in international settlement fees, bank card fees, financial advisory fees, credit commitment fees and agency commissions.

Asset quality continued to improve and operating cost was effectively controlled

Since 2010, BOC has continued to enhance proactive risk management, and strengthen liquidation and resolution on non-performing assets, and achieved continuous improvement in asset quality. As at 31 March 2010, the balance of Group’s non-performing loans was RMB69.038 billion, down by RMB5.68 billion compared with the prior year-end. The ratio of non-performing loans to total loans was 1.30%, a decrease of 0.22 percentage point from the prior year-end. The ratio of allowance for loan impairment losses to non-performing loans was 172.09%, up by 20.92 percentage points from the prior year-end. The Group’s impairment losses on assets amounted to RMB5.897 billion, including RMB6.955 billion of impairment losses on loans and advances and a reversal of RMB0.968 billion in impairment losses on debt securities.

In the first quarter of 2010, BOC continued to expand strategic investment in business development. Total operating expenses reached RMB26.274 billion, an increase of 35.10% compared with the same period of 2009. Operating cost was effectively controlled with cost to income ratio (calculated under domestic regulations) decreasing by 2.32 percentage points compared with the same period of 2009 to 29.89%.

BOC has achieved strong performance in all business areas in the first quarter, providing a solid base for the healthy business development for the full year. BOC will capture the opportunities arising from the State’s efforts in accelerating the transformation of economic growth pattern, and align structure optimization with business development and risk management efforts. BOC will continue to fully implement strategic development plan, consolidate its competitiveness and create value for shareholders.

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