OREANDA-NEWS. August 30, 2011. Bank of China Limited (“BOC”: Hong Kong Stock Exchange stock code: 3988; Shanghai Stock Exchange stock code: 601988) announced its 2011 interim results, reported the press-centre of Bank of China.

According to International Financial Reporting Standard (“IFRS”), BOC has achieved profit after tax of RMB70.13 billion, a year-on-year growth of 28.98%. Profit attributable to the equity holders reached RMB66.51 billion, an increase of 27.86% as compared with the same period of 2010.

Key Financial Indicators and Income Structure Continued to Improve
In the first half of 2011, BOC recorded steady growth in asset and liability scale and achieved continuous improvement in operating performance. As at the end of June, the Bank’s total assets and liabilities amounted to RMB11.48 trillion and RMB10.78 trillion, representing an increase of 9.79% and 10.19% from the prior year-end respectively. Basic earnings per share reached RMB0.24, up by RMB0.04 compared with the same period of 2010. Return on average total assets and return on average equity were 1.28% and 19.87%, an increase of 0.10 percentage point and 0.48 percentage point respectively compared with the same period of 2010. Cost to income ratio decreased by 0.98 percentage point to 28.81%. Capital adequacy ratio and core capital adequacy ratios were 12.95% and 10.01%.

The Bank has leveraged the Group’s strength of comprehensive operation and focused on product innovation and cross-selling to boost the Bank’s non-interest income. In the first half of 2011, the Bank reported non-interest income of RMB55.76 billion, an increase of 35.95% compared with the first half of 2010, representing 33.60% of total operating income, up by 2.73 percentage points compared with the same period of 2010, leading Chinese banking peers. The Bank achieved rapid growth in non-interest income across all business lines including corporate banking, personal banking and financial markets. Fee income from settlement and clearing, agency, and credit commitment business each increased by over 30%.

Steady Growth in Deposits and Loans with Rapid Growth in Small Enterprises Business
In the first half of 2011, the Bank proactively responded to changes in the macro-economic environment, continuously improved its asset and liability management, and realized balanced growth in all business lines. As at the end of June, the Bank’s RMB-dominated deposits and loans increased by RMB496.85 billion and RMB419.55 billion, up by 8.11% and 10.11% respectively. Its foreign currency deposits and loans increased by USD15.31 billion and USD26.40 billion, up by 7.47% and 11.57% respectively. The average interest rates of newly granted domestic RMB and USD loans were 6.22% and 3.42%, up by 100 basis points and 71 basis points over 2010 respectively.

The Bank was committed to pushing forward the differentiated service model of SME business and further promoted the “BOC Credit Factory”, a credit approval model designed specially for SME clients. It also developed tailored financial products to small and medium enterprises, such as the “Zhongguancun Model”, “Ying Shi Tong Bao”, and “Mian Dai Tong Bao” to support small businesses in the high-tech, cultural and agricultural sectors, gaining social-wide recognition. By the end of June, the number of small enterprise clients reached 29.9 thousand, an increase of 48.02% from the prior year-end. The Bank’s outstanding loans extended to small enterprises increased by 35.35% from the prior year-end to RMB323.97 billion. In the first half, new loans granted to small enterprises accounted for 35.61% of the total new corporate loans. The ratio of non-performing loans to total loans within this segment was 2.01%, a decrease of 0.78 percentage point compared with the prior year-end.

Continue to Take Market Leading Position in International and Cross-border Businesses
The Bank further expanded its customer base through promotion of superior products. The international settlement business continued to grow steadily and reinforce its traditional leading position in the market. In the first half of 2011, the Group’s total international settlement transaction volume reached USD1.18 trillion, maintaining leading position in the global banking industry. Export dual-factoring business volume was USD1.89 billion, also ranking at top among global peers.

The Bank’s cross-border RMB settlement business leads the market. In the first half of 2011, cross-border RMB settlement volume by domestic branches amounted to RMB344.1 billion, up by over 200% compared with the first half of 2010, while surpassing total volume for the full year of 2010. Market share was 31.53%, up by 2.8 percentage points compared with the prior year-end. The volume of cross-border RMB settlement by BOCHK as participating bank and other overseas branches totaled RMB271.8 billion and RMB264.0 billion respectively. The Bank has completed over 10,000 transactions for thousands of customers from over 100 countries and regions and also opened more than 400 cross-border RMB clearing accounts for overseas participating banks, taking a market dominant position.

Rapid Growth in Overseas Businesses and Progress in Diversified Business Strength
In the first half of 2011, seizing the historic opportunities of the government’s “Going Global” strategy and development of cross-border business, the Bank further promoted the integration of its domestic and overseas operations by leveraging the Group’s consolidated strengths and accelerating the pace of global network expansion. As at the end of June, overseas deposits and loans amounts to USD202.23 billion and USD178.31 billion, an increase of 16.78% and 30.92% respectively compared with the prior year-end. Non-interest income in Hong Kong, Macau, Taiwan and other countries and regions totaled USD2.76 billion, a year-on-year increase of 31.13%. In Hong Kong, the Bank’s syndicated loans and residential mortgage businesses continued to lead the market. Diversified business platforms such as investment banking, insurance and direct investment provided increased profit contribution to the Bank, achieving before-tax profit of RMB8.44 billion, a year-on-year increase of 85.07%.

Asset Quality Maintained Stable with Risk in Key Areas Controllable
In the first half of 2011, the Bank strived to advance its risk management and internal control in a more systematic, effective and forward-looking manner, with a view to establishing an integrated, refined and professional risk management system while improving its comprehensiveness and strategic perspective. As at the end of June, the non-performing loan ratio dropped by 0.10 percentage point from the prior year-end to 1.00%, while NPL coverage ratio increased by 20.62 percentage points to 217.29%. The Bank achieved remarkable results in risk control of key areas. 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 NPL ratios of the above areas are all below the overall NPL level of the Bank.

Accelerated Implementation of IT Blueprint and Progress in Infrastructure
In 2011, the Bank continued to implement its IT Blueprint project with great efforts. Up to now, the Bank’s new IT Blueprint has been successfully launched in 32 domestic branches and upgraded to Version 3.0. The new system has provided stronger support to front-line business demands in a timely manner, and has achieved improvement in various major functions while significantly enhancing customer service quality and efficiency.

The Bank has also improved its service channels by increasing the number of full-functional medium-to-large-sized outlets,implementing outlet grade and accelerating business process integration along with the implementation of IT blueprint. In addition, the electronic banking business achieved breakthrough in its development. As at the end of June 2011, the numbers of domestic corporate online banking and personal online banking customers increased by 102% and 64% respectively from the beginning of the year. The proportion of domestic online corporate banking customers to total corporate customers increased by 25 percentage points, and such proportion of domestic personal customers increased by 10 percentage points. Online cross-border corporate banking services were expanded to 27 countries and regions. The Bank established innovative rural financial services model and demonstrated favorable development momentum, with 10 BOC Fullerton village banking operations opened up to now.

Currently, international financial markets continue to be sharply precarious, and the recovery of global economy is facing growing uncertainty and instability. The Chinese government will continue to adopt a macroeconomic policy of continuity and stability and will make it more directional, flexible and forward looking. The government will strive to maintain the balance among steady and rapid economic growth, economic structural adjustment and the management of inflationary expectations, to consolidate China’s strong economic development momentum.

Confronted with a more complex 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 with a diversified and integrated cross-border business platform. We will focus on improving the efficiency of our business outlets and enhancing competitiveness, profitability and sustainable development. We will further strengthen asset-liability management and comprehensive risk management, driving rapid and sustainable progress in all business lines, so as to welcome the Bank’s 100th anniversary with remarkable achievements.