OREANDA-NEWS. April 06, 2012. Bank of China Limited ("BOC": Hong Kong Stock Exchange stock code: 3988; Shanghai Stock Exchange Stock code: 601988) announced its 2011 annual results. According to International Financial Reporting Standard ("IFRS"), BOC achieved profit after tax of RMB130.32 billion, a year-on-year growth of 18.81%, reported the press-centre of Bank of China. 

In 2011, the Bank strictly adhered to the theme of scientific development, focused on the transformation of its development model, continued to implement the Bank's strategic development plan and policy of "streamlining structure, scaling up, managing risks and sharpening competitiveness". The Bank actively promoted its innovative, transformative and cross-border development and achieved remarkable performance.

Steady improvement in profitability
In 2011, the Bank achieved profit after tax and profit attributable to equity holders of RMB130.32 billion and RMB124.18 billion respectively, increased by 18.81% and 18.93% from the previous year. As at the end of 2011, the Bank's total assets amounted to RMB11,830.07 billion, an increase of 13.10% from the prior year-end. The Group's net interest margin was 2.12%, an increase of 0.05 percentage point compared with the prior year. Return on total average assets and return on average equity stood at 1.17% and 18.27% respectively. Basic earnings per share also recorded an increase of RMB0.05 to RMB0.44. The Board of Directors has recommended a final dividend of RMB0.155 per share.

The Bank achieved steady profit growth in 2011, driven primarily by continuous increase in net interest margin which led to steady growth in net interest income, and also significant growth in non-interest income contributed by the advantages of diversified business platform and implementation of comprehensive operation strategy.  During the year, the Bank's net interest income and non-interest income grew by 17.58% and 21.41% compared with the prior year to RMB228.06 billion and RMB100.23 billion respectively. The ratio of non-interest income to total operating income was 30.53%, an increase of 0.67 percentage point compared with 2011. Driven by the rapid growth in both businesses with traditional advantages and emerging strength, net fee and commission income increased by 18.68% from the prior year to RMB64.66 billion. Credit cost was 0.32%, maintaining at a low level. Cost-to-income ratio decreased by 1.09 percentage point to 33.07%. Effective tax rate further decreased to 22.73%.

Remarkable achievements in business transformation
In 2011, BOC strengthened the construction of its outlets and channels, strived to expand its client base and deposits sources, and made great efforts to improve its deposit structure. As at the end of 2011, the Group's customer deposits totalled RMB8,817.96 billion, an increase of 14.02% from the prior year-end. RMB-denominated deposits reached RMB7,282.09 billion, an increase of 15.26% compared with the prior year. The deposits from government administrative institutions increased by RMB192.8 billion or 18% compared with the prior year. The proportion of average balance of RMB and foreign currency demand deposits reached 45.41% and 58.04%, an increase of 1.14 and 4.58 percentage points respectively. Loan to deposit ratio decreased by 2.95 percentage points to 68.77% from the prior year-end. Capital adequacy ratio and core capital adequacy ratio maintained at a high level of 12.97% and 10.07% respectively.

In light of the changing market conditions, BOC continued to optimise its asset allocation and credit structure. As at the end of 2011, the proportion of RMB-denominated assets increased by 0.28 percentage point to 76.13%. The Group's total loans increased by 12.05% to RMB6,342.81 billion from the prior year-end, among which RMB-denominated  loans amounted to RMB4,775.49 billion, an increase of 15.08% from the prior year-end. The Bank exerted great efforts towards supporting strategic emerging industries, cultural industries, modern agriculture and other key industries. The Bank also achieved robust development in low-carbon finance, supporting energy conserving and environmental enterprises as well as new energy projects. The proportion of loans to small enterprises to total corporate loans increased by 3.42 percentage points.

Improving profitability of domestic business
In 2011, BOC's domestic businesses reported balanced development and significant improvement in profitability. As at the end of 2011, the total assets of domestic institutions increased by 12.81% to RMB9,612.88 billion, accounting for 77.61% of the Group's total assets. Domestic deposits and loans increased steadily by 12.93% and 9.48% to RMB7,433.29 billion and RMB5,209.69 billion respectively. Domestic businesses recorded a pre-tax profit of RMB133.42 billion, an increase of 17.17% compared with the prior year, representing 78.77% of the Group's total pre-tax profit for the year. Net interest margin of domestic RMB businesses was 2.33%, an increase of 0.06 percentage point compared with the prior year. Net interest margin of domestic foreign currency businesses was 1.69%, an increase of 0.48 percentage point compared with the prior year. Domestic non-interest income increased significantly by 35.89% to RMB69.26 billion.

Leading the peers in overseas and diversified businesses
In 2011, BOC continued to leverage the Group's consolidated strengths, quicken the pace of global network extension and proactively transform overseas business models, achieving further improvement in market position. The proportion of overseas assets to the Group's total assets reached 22.39% and the pre-tax profit from overseas institutions represented 21.23% of the Group's total after-tax profit. Deposits and loans from overseas commercial banking customers increased by 26.12% and 32.36% respectively from the prior year-end. The core competitiveness of and contribution from overseas businesses remarkably exceeded domestic peers. 

Fully taking advantages of its early-mover advantage in cross-border RMB settlement business, the Bank's global clearing network started to take shape. Cross-border RMB settlement and clearing businesses maintained leading market position. The Group's total volume of cross-border RMB settlement business exceeded RMB1.7 trillion with a domestic market share over 30%. The underwriting of RMB-denominated bonds in Hong Kong, overseas RMB cash wholesale, RMB credit card, RMB investment products and other RMB businesses have all been growing rapidly.

BOC exerted great efforts to deepen comprehensive operation and promote synergy and cross-selling between commercial banking and diversified business platforms, to realize maximum benefit of the Group. The commercial banking business recommended over 300 projects to diversified business platforms involving businesses of IPO, refinancing, bond issuance, M&A, PE and asset-backed structural financing etc. The consolidated synergy effect of the diversified platforms achieved remarkable improvement and profit contribution of non-commercial banking businesses ranks top among domestic peers.

At the end of 2011, based on its relatively high level of cross-jurisdictional activity, size, interconnectedness, substitutability and complexity, BOC was enrolled in "Global Systemically Important Banks" ("G-SIFIs") as the only representative from China and other new emerging countries. The Bank's international influence and the brand value have been further upgraded.

Maintaining sound asset quality
In 2011, the Bank continued to push forward the integration, refinement and specialization of its risk management function, improve the comprehensive risk management system and strengthen risk management of key business areas. As at the end of 2011, Identified impaired loans totalled RMB63.31 billion, a decrease of RMB0.57 billion compared with the prior year-end. The ratio of impaired loans to total loans decreased by 0.13 percentage point to 1.00% compared with the prior year-end. The ratio of allowance for loan impairment losses to non-performing loans was 220.75%, up by 24.08 percentage points from the prior year-end. Credit cost was 0.32%, maintaining at a relatively low level.

In 2011, The Bank closely tracked the changes in the macro economy and financial markets as well as changes in regulatory requirements, accelerated the adjustment of credit structure and improved its proactive and forward-looking risk management. The proportion of loans granted to LGFVs and industries with overcapacity fell, and the growth rate of property loans was controlled at a low level. During the same period, the Bank continued to strictly control the bond investment risk and timely reduced the high risk position in bonds issued by European countries. As at the end of 2011, the total carrying value of debt securities issued by European governments and institutions held by the Group was RMB81.12 billion, of which the total carrying value of debt securities issued by the UK, Germany, Netherlands, France and Switzerland accounted for 95.97%. The sovereign ratings for the above five countries are relatively high, with security investment risks under control. The Group did not hold any debt securities issued by Greece, Portugal, Ireland, Italy or Spain.

The Bank made significant progress in the implementation of Basel II & III. The Bank has established the measurement management system for the three risks of Pillar I. Through the timely implementation of Basel II & III into its day-to-day risk management, the Bank has deepened and extended the application of internal rating results and risk parameter valuations to its strategy, portfolio and individual business units. The implementation of Basel II & III has supported the overall enhancement of the Bank's risk management and given further momentum to the Bank's strategy implementation and business transformation. The Bank also conducted in-depth researches into the influence of global regulatory reforms, formulated implementation plan for new regulatory standards and accelerated the implementation of the advanced approaches for Basel II & III.

Milestone development in infrastructure
In 2011, BOC pushed forward channel construction and achieved coordinated development in both traditional outlets and e-banking channels. By the end of 2011, the number of domestic commercial banking outlets reached 10,225, of which 1,500 were middle to large-sized full-functional outlets. Deposit and operating income per domestic outlet increased by 12% and 21% respectively, with outlet efficiency leading large bank peers. The Bank's outlet business processes have been continuously optimized. Service efficiency and quality achieved remarkable progress.

BOC's e-banking channel construction reached new heights. By the end of 2011, the Bank's e-banking customers exceeded 130 million, an increase of 72.45% from the prior year-end, among which, the numbers of online customer of personal banking, corporate banking and mobile banking increased by 122%, 159% and 27 times respectively. The business substitution rate of electronic channels rose by 13.82 percentage points compared with 2011.

In 2011, the new core banking system of the Bank rolled out across all domestic institutions, achieving a milestone in information technology development. The Bank won the sole Top Award among the "2011 Banking Technological Development Award" organized by the PBOC. The successful completion of the IT Blueprint project marks the transformation from "account-centric" to a "customer-centric" service model. The new core banking system realized centralized management of customer information, further optimization of internal control and promotion of business process reengineering. With the new system in place, technology will take a leading role in driving future advancement of the Bank, and construct a solid foundation for promoting business innovation, service innovation and management innovation.

Looking ahead, the global economy will remain complex in 2012. China is expected to realize steady and fast grow in economy and make progress while maintaining stability. Even though, it cannot be neglected that the institutional and structural contradictions and potential risks for Chinese economy remain existing. As the Chinese bank with the longest history of continuous operation and the sole Chinese enterprise that was listed in the Fortune 500 for consecutive 23 years, BOC celebrated the 100th year anniversary in early 2012. Standing at the new historic starting point, the Bank will inherit and develop its excellent traditions, step up its efforts in innovative, transformative and cross-border development and adhere to BOC's path featuring sustainable and balanced development. The Bank will establish a customer-centric, market-oriented and technology-led global service system, and continuously improve its ability to meet the needs of the real economy. It will seize fresh opportunities with alacrity, sound judgement and precision, forging ahead towards its historic goal of becoming a leading international banking group.