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Bank of China Announces 2011 First Three Quarters Results


Profit After Tax Reached RMB 101.28 billion, up by 22%

2011-10-26

Bank of China Limited (“BOC”: Hong Kong Stock Exchange stock code: 3988; Shanghai Stock Exchange stock code: 601988) announced its 2011 third quarter results on 26October. According to International Financial Reporting Standards (“IFRS”), in the first three quarters of 2011, BOC recorded a profit after tax of RMB101.28 billion, an increase of 22.09% compared with the same period of 2010. The Bank achieved a profit attributable to equity holders of RMB96.30 billion, anincrease of 21.52% compared with the same period of 2010.

Key Financial Indicators Continued to Improve

Since 2011, the Bank continued to adopt the scientific outlook on development, firmly implemented the macro economic policy and the Bank’s strategic development plan, vigorously promoted innovation, transformation and cross-border business development. The Bank has consistently strengthened its competitiveness and achieved steady improvement in operating performance in all business lines. As at the end of September, The Bank’s total assets and liabilities amounted to RMB11.53 trillion and RMB10.80 trillion, an increase of 10.23% and 10.43% respectively compared with the prior year-end. In the first three quarters of 2011, BOC’s basic earnings per share reached RMB0.35, an increase of RMB0.05 compared with the same period of 2010. Return on average total assets was 1.23%, an increase of 0.06 percentage point compared with the same period of 2010.Net interest margin improved by 6 basis points compared with the same period of 2010. Non-interest income represented 31.74% of total operating income, up by 1.34 percentage points compared with the same period of 2010, continuing to lead Chinese banking peers.The Bank achieved steady improvement in operating efficiency. Cost to income ratio was 30.14%, a decrease of 1.20 percentage points compared with the sameperiod of 2010.

Deposit Business Outperformed the Market

Under a more tightened liquidity environment and fierce market competition, the Bank has strengthened the marketing of its deposit business and proactively broadened its deposit sources. As at the end of September, the Bank’s customer deposits amounted to RMB8,538.31 billion[1], an increase of 11.21% from the prior year-end. Domestic RMB customer deposits[2] has increased by RMB720.8 billion or 11.36% compared with the prior year-end, and the growth rate is 1.20 percentage points above industry average. The improvement of the Bank’s market share of corporate deposits ranked the first among large banks, and the amount of new deposit from financial institutions ranked the second among large bank peers.

Credit Structure Further Optimized

The Bank earnestly implemented the government’s prudent monetary policy, strictly controlled loan scale, and proactively adjusted loan structure. The proportion of loans to local government financing vehicles and overcapacity industries continued to decrease, and growth in real estate loans significantly decelerated compared with the same period of last year. The growth rate of loans to small enterprises exceeded that of total loans by 31.57 percentage points. The proportion of new loans to small enterprises has accounted for 36.98% of total new corporate loans. The average interest rate of newly granted RMB loans has improved significantly by 125 basic points year-on-year to 6.43%. Among the new loans, the average interest rates of corporate loans, trade finance and personal loans recorded an increase of 124, 144 and 151 basic points respectively.

Leading Position of Cross-border Business Strengthened

In the first three quarters of 2011, the Bank’s domestic branches conducted cross-border RMB settlement of over RMB530 billion, 3.2 times of total volume for the full year of 2010. The market share was around 30%, covering overseas customers from over 100 countries and regions. 24 overseas branches of the Bank have launched cross-border RMB settlement business, with total volume amounted to RMB770 billion, 3.5 times of total volume for the full year of 2010. Among the total, BOCHK conducted cross-border RMB settlement of RMB430 billion as participating bank, and continued to maintain leading position in cross-border RMB settlement business and market share of RMB deposit business in HK. Currently, the Bank has opened more than 500 cross-border RMB clearing accounts, covering Asia, Europe, America, Oceania and Africa. Promoted by the success of cross-border RMB settlement business, overseas RMB businesses in deposit, loan, cash, exchange, clearing and treasury operation all recorded robust growth. In the future, as RMB will play a more important role in cross-border trade and investment, the Bank will serve as the main channel of cross-border RMB settlement and devote all efforts to build a world-class trade finance service bank.

Non-interest Income Recorded Rapid Growth

In the first three quarters of 2011, non-interest income of the Bank reported an increase of RMB16.29 billion or 26.48% to RMB77.78billion, of which net fee and commission income amounted to RMB50.83 billion, an increase of RMB9.48 billion or 22.94% compared with the same period of 2010, mainly driven by the rapid growth in settlement fees, credit commitment fees, agency commissions and consultancy and advisory fees. Other non-interest income amounted to RMB26.95 billion, an increase of RMB6.80 billion or 33.76% compared with the same period of 2010, of which the revenue on precious metals business and net trading gains grew by more than 100%.

Asset Quality Maintained Stable

Since 2011, the Bank strived to advance its risk management and internal control in a more systematic, effective and forward-looking manner, and asset quality continued to improve. As at the end of September,the balance of non-performing loan totaled RMB61.88 billion, a decrease of RMB0.59 billion from the prior year-end. Non-performing loan ratio dropped by 0.11 percentage point from the prior year-end to 0.99%, while NPL coverage ratio increased by 26.34 percentage points to 223.01%.In the first three quarters of 2011, the Bank’s impairment losses on loans and advances amounted to RMB16.77 billion with a credit cost of 0.38%. The Bank proactively enhanced risk control of key areas. The NPL ratios of local government financing vehicles, overcapacity industries and real estate industrywere all below the overall NPL level of the Bank.

In the third quarter, the Bank continued to decrease its exposure to European and American debt securities and maintained sufficient allowances. As at the end of September, the total carrying value of the Bank’s exposure to debtsecurities issued by European countries amounted to RMB97.08 billion. Majority of this amount were issued by sovereign governments and other institutions of United Kingdom, Germany, Netherlands, France and Switzerland, and the risk was relatively low. The Bank did not hold any debt securities issued by Portugal, Ireland, Greece and Spain. The Bank’s debt securities issued by Italy only amountedto RMB0.454 billion, and related impairment allowance was RMB0.047 billion.

Given a more complex and volatile environment, the Bank will continue to push forward its own development strategy in the spirit of innovation, transformation and cross-border development, to achieve our strategic goal of building a large multinational banking group and promote rapid and sustainable progress in all business lines.

Financial Highlights

(IFRS)

Key Performance Figures

Unit: RMB million Change Nine-month ended 30 Sep 2011 Nine-month ended 30 Sep 2010
Net interest income 18.82% 167,302 140,804
Non-interest income 26.48% 77,779 61,493
Including: Net fee & commission income 22.94% 50,827 41,344
Operating expenses 15.66% (97,694) (84,465)
Impairment losses on assets 45.47% (16,237) (11,162)
Profit after income tax 22.09% 101,284 82,960
Profit attributable to the equity holders of the Bank 21.52% 96,301 79,244

 

Key Assets and Liabilities Figures

Unit: RMB million Change As at 30 Sep 2011 As at 31 Dec 2010
Total assets 10.23% 11,529,912 10,459,865
Loans, net 10.34% 6,110,332 5,537,765
Total liabilities 10.43% 10,804,125 9,783,715
Due to customers[3] 5.96% 7,929,372 7,483,254
Capital and reserves attributable to equity holders of the Bank 7.75% 694,061 644,165

Key Ratios

  Change (PPT) Nine-month ended 30 Sep 2011 Nine-month ended 30 Sep 2010
Return on average total assets 0.06 1.23% 1.17%
Return on average equity -0.35 19.15% 19.50%
Net interest margin 0.06 2.10% 2.04%
Non-interest income to operating income 1.34 31.74% 30.40%
Cost to income ratio (under domestic regulations)   -1.20 30.14% 31.34%
Credit Cost 0.03 0.38% 0.35%
  Change (PPT) As at 30 Sep 2011 As at 31 Dec 2010
Non-performing loan ratio -0.11 0.99% 1.10%
Non-performing loan coverage ratio 26.34 223.01% 196.67%
Loan provision to total loan ratio (domestic operations) 0.10 2.55% 2.45%

Per Share Information

Unit: RMB Change Nine-month ended 30 Sep 2011 Nine-month ended 30 Sep 2010
Earnings per share, basic 0.05 0.35 0.30
  Change As at 30 Sep 2011 As at 31 Dec 2010
Net assets per share 0.18 2.49 2.31

[1]Figures cited here include structured deposits.

[2]Figures here are cited from internal management data.

[3]Excluding structure deposit.

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