Online Banking

Bank of China Announced 2014 Annual Results

Profit After Tax Reached RMB177.2 billion, up by 8.22%

Bank of China Limited (“the Bank”: Hong Kong Stock Exchange stock code: 3988, 4601(Offshore Preference Share); Shanghai Stock Exchange stock code: 601988, 360002 (Domestic Preference Share)) announced its 2014 annual results on 25 March. According to International Financial Reporting Standard (“IFRS”), the Bank recorded a profit after tax of RMB177.198 billion and profit attributable to equity holders of RMB169.595 billion, increased 8.22% and 8.08% year-on-year respectively.

In 2014, dedicated to the strategic goal of “Serving Society, Delivering Excellence”, the Bank persisted in business development, risk management, reform and innovation and team building to continuously consolidate competitive edge and strive to improve operational profitability and comprehensive strength.

Good performance in key financial indicators

As at the end of 2014, the Bank’s total assets, liabilities and equity amounted to RMB15.25 trillion，RMB14.07 trillion and RMB1.18 trillion, increased 9.93%，8.95% and 23.08% respectively from the prior year-end. The ROA and ROE recorded 1.22% and 17.28% respectively. Net interest margin slightly improved and non-interest income ratio continued to lead peers. Cost to income ratio continued to decrease and asset quality remained stable. The Bank successfully issued preference shares and tier-2 capital instruments in both overseas and domestic markets and accelerated the conversion of A-share convertible bonds, which significantly increased the capital base and optimized capital structure. Its capital adequacy ratio and tier 1 capital adequacy ratio increased to 13.87% and 11.35% respectively. Basic earnings per share achieved RMB0.61, growing RMB0.05 year-on-year. The Board of Directors has recommended a final dividend of RMB0.19 yuan per share for the year of 2014, subject to the approval of the forthcoming Annual General Meeting scheduled in June.

In 2014, the size of the Bank’s tier 1 capital ranked 7th among 1,000 large banks around the world, 2 positions higher than previous year. As a Global Systemically Important Bank for four consecutive years, the Bank led the 30 Global Systemically Important Banks in terms of after-tax profit and ROE.

Support real economy with optimised business structure

In 2014, the Bank continuously supported the real economy with optimised credit structure and modest growth of its loan book. As at the end of 2014, the Bank’s loans and advances to customers amounted to RMB8.48 trillion, increased RMB875.484 billion or 11.51% compared with the prior year-end. The domestic RMB loans increased RMB550.384 billion or 9.91% from the prior year-end while overseas customer loans recorded rapid growth of 20.87%. New loans were primarily directed to the key national strategic opportunities, key areas related to livelihood initiatives and key projects under “Going Global” efforts. Loans to medium-sized enterprises and small-sized enterprise loans by ‘BOC Credit Factory’ realised rapid growth of 16.47% and 16.85% respectively. The domestic RMB personal loans grew 11.70%, with the proportion to domestic RMB loans increasing 0.55 percentage point. Loan structure was further optimised with loans granted to strategic emerging industries, cultural sectors, and agriculture-related industries increasing by 20%, 11% and 10% respectively. The Bank also proactively waived and regulated fee charge practice to cut social financing cost.

Facing up-trend of funding cost due to rise of market interest rate, the Bank strived to enhance service innovation to optimise liability structure. The Bank strived to acquire administrative institutions customer deposits, expanded traditional businesses such as payroll disbursements agency and agency of collection and payment, and actively developed global cash management and custody businesses to gather stable funding. It also took advantage of internationalisation edges to expand overseas funding resources. As a result, its customer base expanded with steady growth of customer deposits and effectively controlled funding cost. As at the end of 2014, the Bank’s customer deposits totaled RMB10.89 trillion, an increase of RMB787.437 billion or 7.80% compared with the prior year-end. The domestic RMB deposits increased 432.581 billion or 5.61% compared with the prior year-end while overseas customer deposits recorded rapid growth of 18.03%.

Due to the proactive efforts to optimise its asset and liability structure, the Bank expanded net interest margin by 1 basis point from previous year to 2.25%.

Develop integrated operation with increased diversified business income

The Bank vigorously developed integrated operations, enhanced competitive edges. Its diversified businesses include investment banking, insurance, investment and leasing have made a new progress. In 2014, the Bank’s non-interest income increased 9.12% year-on-year to RMB135.226 billion, representing 30% of total operating income, maintaining leading position. Net fee and commission income increased 11.14% year-on-year, among which agency commissions, bank card fees, credit commitment and custodian fees recorded fast growth.

Enhance internationalised operations with ascending in international status

Firmly following the nation’s new pattern of all-round opening up，the Bank vigorously developed overseas businesses, strengthened its globally integrated financial services and improved international operation. As at the end of 2014, the Bank’s total overseas assets was USD745.070 billion, an increase of 18.11% compared to the prior year-end, and accounted for 27.41% of the Bank’s total assets. Overseas profit before tax was USD8.656 billion, an increase of 29.91% year-on-year, accounted for 22.98% of the Bank’s total profit before tax, leading major peers.

The Bank’s cross-border RMB businesses continued to lead the market. In 2014, its cross-border RMB settlement volume reached RMB5.32 trillion, an increase of 33.7% compared with the prior year, ranking first by its market shares. The cross-border RMB clearing transactions volume totaled RMB240.8 trillion, up by 86.6% year-on-year, leading global peers.

The Bank continuously optimised its overseas resource allocation, and improved global network distribution. As at the end of 2014, the Bank owned 628 overseas institutions in Hong Kong, Macau, Taiwan and 38 countries. In addition to Hong Kong, Macau and Taiwan, the Bank was also designated by PBOC as the local RMB clearing bank in Frankfurt, Paris, Sydney and Kuala Lumpur.
The Bank exerted great efforts to build China (Shanghai) Pilot Free Trade Zone (FTZ) and established an industry-leading position. The Bank became qualified to conduct all “Shanghai-Hong Kong Stock Connect” business, acting as the exclusive settlement bank for the “Northbound Trading Link” and providing a cross-border fund settlement service for the “Southbound Trading Link”. The Bank consolidated its traditional competitive edges in foreign exchange and international trading businesses. The Bank actively supported the domestic enterprises “Going Global”. As at the end of the year, it cumulatively extended USD121.9 billion loan commitment to “Going Global” projects and successfully provided financial support to several large overseas M&A projects. The Bank successfully issued “Lion City Bond” in Singapore, “Oceania Bond” in Sydney, “Schengen Bond” in Luxemburg, “Arc de Triomphe Bond” in Paris and “Formosa Bond” in Taiwan and assisted the United Kingdom, Australia, Canada and Malaysia to issue RMB-denominated sovereign bonds, which further improved its international influence.

Strengthen risk control with stablised asset quality

Due to slowing down of macro economy and economy structure adjustment，the domestic banks are facing with incremental pressure on asset quality. The Bank took multiple measures to control risk and resolve stressed assets, to ensure the asset quality stable and credit risk under control. As at the end of 2014, the non-performing loans ratio was 1.18% , and overdue loan ratio was 1.48%. The special-mention loan ratio decreased 12 basis points to 2.37%. The Bank also actively resolved stressed assets with total RMB71.6 billion non-performing loans resolved by domestic branches, in which RMB19.9 billion loans were disposed. The Bank enhanced provision with the ratio of provision to total loans of domestic institutions increasing to 2.68%. It also strictly controlled the overall credit exposure to local government financing vehicles, and strengthened the risk management of overcapacity industries, real estate, wealth management businesses, innovative interbank businesses, etc.

Enhance infrastructure construction with accelerated E-finance development

The Bank continually consolidated its infrastructure construction. It enhanced the functionality and advanced the coordinated development of its physical outlets and e-banking. The Bank’s substitution ratio of e-banking channels for traditional outlets increased to 70.71%, It's e-banking transaction volume grew 22.98% year-on-year. The Bank stepped up E-finance bank construction. It initiated Integrated Regional Customs E-guarantee service, launched innovative online financial products such as Pension Financial Service, Wo Finance, Online Shipping Financial Services, and actively promoted Wang Luo Tong Bao service for SME customers, E-Community and cross-border e-commerce settlement services.

Mr. Tian Guoli, Chairman of the Bank, said, “the Bank will continue to follow the strategic goal of ‘Serving Society, Delivering Excellence’. Adhering to the development trend of internationalisatoin, the Bank will more deliberately thread our own forward path within the national framework of opening up and deepening reforms. We will take proactive steps to embrace the ‘new normal’ of economic growth and develop an accurate understanding of the new laws of banking development. We will plough deep the ‘blue ocean’, push forward transformation to improve benefits, strengthen risk control to ensure quality and bolster the grassroots so as to reinforce the foundation of our business. Continuous efforts will be made to enhance the dedication, expertise and execution of the Bank’s leadership and employees and create a fresh and vital enterprise culture. Striving to drive forward new development within the ‘new normal’, the Bank will reward the trust and support of our shareholders and the public with outstanding performance. ”

Mr. Chen Siqing, President of the Bank, said, “2015 is a year full of reforms and expectations. Adhering to the development trend towards internationalisation, the Bank will accelerate the transformation of pursuing quality rather than size to and make capital constraints more influential to its operational management. It will constantly improve the quality of growth and related benefits so as to realise intensified development. The Bank will accelerate the transformation of seeking innovation rather than comprehensiveness and further strengthen its competitive advantages, fully leveraging its internationalised network and diversified platforms to provide customers worldwide with integrated financial services. The Bank will also accelerate the transformation of aspiring to precision rather than speed and comprehensively improve management of capital, cost, process, risk, pricing, customer, talent, technology and operations so as to realise refined management. The Bank will make steadfast efforts to forge ahead and general outstanding performance, unremittingly marching towards our strategic goal of ‘Serving Society, Delivering Excellence’.”

Financial Highlights
(IFRS)

Key Performance Figures

Key Assets and Liabilities Figures

Key Ratios

Per Share Information

Note：The capital ratios of 2014 are calculated under the advanced approaches, and the capital ratios of 2013 are calculated under the non-advanced approaches.