OREANDA-NEWS.  November 10, 2014. Bank of China Limited (“the Bank”: Hong Kong Stock Exchange ordinary share code: 3988; Shanghai Stock Exchange ordinary share code: 601988; Shanghai Stock Exchange convertible bond code: 113001;Hong Kong Stock Exchange preference share code: 4601) announced its 2014 third quarter results.

According to International Financial Reporting Standard (“IFRS”), the Bank recorded a profit after tax of RMB136.798 billion and profit attributable to equity holders of RMB131.133 billion in the first three quarters, up by 9.16% and 9.09% year-on-year respectively, keeping its solid development trend.

Stable performance in key financial indicators
As at the end of September 2014, the Bank’s total assets, liabilities and capital and reserves attributable to equity holders amounted to RMB15.43 trillion, RMB14.38 trillion and RMB1,005.374 billion, increasing 11.20%, 11.38% and 8.82% respectively from the prior year-end. The ROA and ROE recorded 1.24% and 18.03% respectively. Net interest margin expanded 4 basis points to 2.26% year-on-year. The proportion of non-interest income to total operating income stood at 31.02%, which remained the industry leader. The cost to income ratio was 26.99% as result of further improved operating efficiency.

The non-performing loans ratio stood at 1.07% and non-performing loans coverage ratio recorded 207.70%. Under the advanced capital management approach, the capital adequacy ratio and common equity tier 1 capital adequacy ratio reached 13.07% and 10.51% respectively. The Bank has successfully issued USD6.4998 billion offshore preference shares on 15th October, the first domestic listed company who issued preference shares. The issuance was warmly welcomed by the market and effectively supplemented the Bank’s capital as well as optimised its capital structure.

Optimised business structure to improve core profitability
Following the national development strategy, the Bank firmly seized the market opportunities and continued to optimise its business structure. As at 30 September 2014, the Bank’s customer deposits amounted to RMB11,047.285 billion, an increase of RMB949.499 billion or 9.40% compared with the prior year-end. The domestic RMB deposits reached RMB8,236.861 billion, an increase of RMB526.898 billion or 6.83% from the end of last year. The amount of loans and advances to customers was RMB8,444.403 billion, growing by RMB836.612 billion or 11.00% compared with the prior year-end. The domestic RMB loans was RMB5,975.261 billion, an increase of RMB421.631 billion or 7.59% during the reporting period. The Bank’s loan to deposit ratio stood at 71.65%.

The Bank continued to enhance its credit support to small and medium sized enterprises and key industries concerned the people’s livelihood. The domestic medium sized enterprise loans and small enterprise loans by “BOC Credit Factory” grew by 7.85% and 14.54% respectively compared with the prior year-end. The proportion of domestic RMB personal loans to domestic RMB loans increased 0.64 percentage point to 34.22%. The domestic personal mortgage loans grew by 9.93% compared with the prior year-end, and the proportion of its newly granted domestic personal mortgage loans accounted for 91.0% of total newly granted domestic personal loans in the first three quarters.?

During the period, the Bank’s net interest margin (NIM) expanded 4 basis points year-on-year to 2.26%. The domestic RMB NIM, the domestic foreign exchange NIM and overseas foreign exchange NIM recorded 2.46%, 1.06% and 1.26% respectively.

The growth of emerging businesses and diversified operating platforms has effectively offset the negative impact from the Bank’s cut in service charges since early August. In the first three quarters of 2014, non-interest income recorded RMB107.375 billion, and increased by 10.42% year-on-year, representing 31.02% of total operating income. Net fee and commission income increased 10.24% year-on-year to RMB72.078 billion.

Consolidated differentiated competitive businesses to  improve global financial service capability

Following the nation’s reform and opening up progress, the Bank insisted on innovation and consolidated its competitive edges to strengthen its synergy of domestic and overseas operations, and realised rapid growth in its overseas businesses. As at the end of September 2014, the Bank’s total overseas assets was USD779.231 billion, an increase of 23.52% compared to the prior year-end, and accounted for 28.29% of the Bank’s total assets. Overseas profit before tax was USD6.816 billion, an increase of 41.06% year-on-year, and accounted for 23.50% of the Bank’s total profit before tax. The Bank owns 622 overseas institutions in Hong Kong, Macau, Taiwan and 37 countries, and has established correspondent relationships with more than 1,600 financial institutions in 179 countries and regions, further expanding its service network.

The Bank continued to maintain its market leading position in cross-border RMB business. In the first three quarters of 2014, the Bank conducted cross-border RMB settlement and clearing volumes amounted to RMB4.05 trillion and RMB173.02 trillion respectively, an increase of 51.41% and 92.39% compared with the same period of last year. The Bank has established globally integrated RMB payment and clearing network pivoted in BOC Hong Kong and Shanghai Headquarter, with the outlets in Hong Kong, Macau, Taiwan, Germany and France as key centers as well as incorporating with other overseas operations, and maintained the primary channel for global cross-border RMB clearing business.

Enhanced proactive risk management to stablise asset quality

The Bank actively responded to the challenges and pressures from macro situation change, continued to improve risk study and judgement, and enhanced proactive risk management and non-performing assets resolution to maintain the overall credit risk at the controllable and resolvable level. As at the end of September 2014, the non-performing loans was RMB90.695 billion, with the non-performing loans ratio at 1.07%, 0.11 percentage point higher than the end of last year, The special-mention loan ratio decreased 0.20 percentage point to 2.29%. The non-performing loans coverage ratio stood at 207.70% and the ratio of provision to total loans of domestic institutions increased 10 basis points to 2.72%. The Bank 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 and etc.

The Bank will firmly seize the sound momentum in the first three quarters, stick to its strategic goal of “Serving Society, Delivering Excellence”, and earnestly carry out China’s macro-economic policies. It will deepen reform to promote transformation, improve service to win market, strengthen collaboration to consolidate competitiveness, enhance efficiency to control risk, and strengthen fundamental construction and team building to cultivate fresh culture and realise sustainable and robust development.