Bank of China Made Operating Profit RMB57 Billion in 2003

Bank of China spokesman announced on January 16 that the Bank of China group ("the Bank") realized an operating profit (before making provisions and resolving historical burdens) of RMB57.035 billion for 2003, an increase of RMB4.764 billion or 9.11% from 2002, with ROA at 1.27%. After deducting the investment income derived from placing of shares of BOCHK, the Bank registered an operating profit of RMB49.

688 billion, an increase of RMB3.004 billion from 2002. In 2003, almost all of the operating profit of the Bank was applied to making provisions and resolving non credit asset loss. The Bank made bad loan provisions amounting to RMB24.643 billion, and resolved RMB22.981 billion in relation to non credit asset loss, totaling RMB47.

624 billion, an increase of RMB9.5 billion from the year before. As a result, the Bank's pre-tax profit for 2003 was reduced to RMB2.45 billion. As at December 31,2003, provisions coverage of the Bank stood at 74.55%, and thus the Bank's financial condition has substantially improved.

The Bank's asset quality was greatly improved in 2003, with declines in balance and ratio of non performing credit assets. By the end of 2003, according to the five-category criteria for loan classification, the Bank's NPL balance was RMB343.8 billion or 64.7 billion less than a year ago, and the NPL ratio stood at 15.92% or 6.45 percentage points lower than the same of 2002.

The Bank's RMB deposit rose significantly. By the end of 2003, the fresh increase in RMB deposit was RMB350.6 billion or 25.02%, up RMB114.3 billion over the growth figure of the previous year-end. Both the corporate deposit and savings deposit witnessed a historical breakthrough. By the end of 2003, corporate deposit saw an increase of RMB167.7 billion or 28.39%, and savings deposit soared RMB182.9 billion or 22.57% over the year before.

By the end of 2003, the fresh increase of RMB loans was RMB276.8 billion or 26.49%, up RMB84.8 billion comparing with the growth figure of last year. The increase of corporate loans was RMB150.4 billion or 18.09%. Bills financing and retail loans (including entrusted loans for housing reserve fund) rose respectively by RMB28.4 billion or 48.22% and RMB102.2 billion or 63.22%.

All fee-based businesses grew steadily in 2003. The Bank's fee-based business made up 16.09% of the whole income, up 26.74% year on year. Led by the strong increase of China's foreign trade, the Bank's international settlement business saw a fast development. By the end of 2003, the international settlement volume reached USD254.

5 billion within the mainland, increased by USD69.8 billion or 38% over the last year. And at the same time, trade financing business was greatly improved. In 2003, inward-outward documentary bills and bills discounted increased by USD5.616 billion or 83.48% to USD12.343 billion. Some emerging business also has more than doubling increases.

The increase of international factoring, forfeiting and domestic letter of credit respectively reached 629%, 263% and 288%.

Bank card business was improved tremendously, and risk control stood out. In 2003, the direct spending on cards issued by BOC increased by 50%, income from the card business was up 24%, and international cards grew 170%. The issuing number and authorized merchants of credit card remained No.1 comparing with other domestic financial institutions. Five international credit card organizations jointly awarded the Bank for its outstanding performance in risk management. All criteria for risk management were improved, and more efforts were made to address NPL problem.

RMB Great Wall electronic debit card business continued the good increasing momentum. By the end of 2003, the domestic electronic debit card numbered 564.2 million, up 142.5 million or 16% over last year. The direct spending on debit card reached RMB19.8 billion, increased by 119%. The ratio of successful inter-provincial trading exceed 93%.

Treasury business reform towards globalization was further deepened. Global trading network was on the way to final establishment and maintained strong developing momentum. Fund distribution and fund custodian business developed quickly, and market status was further elevated. In 2003, the volume of domestic fund distribution reached RMB6.5 billion, an increase of 30%.

The Bank has made progress in the primary market of syndicated lending. Its overseas subsidiaries such as BOCHK and branches in Luxemburg, New York, London, Paris, etc. have enhanced the co-operation with those banks active in international syndicated lending, and established and improved their underwriting and participating network of syndicated loans.

Investment banking and insurance business also improved. In 2003, BOCI (Bank of China International Holdings Limited) made impressive profit, overfulfilling task, which acted as the joint lead underwriter for four among the seven largest IPO projects in Hong Kong market in 2003. Business for BOCG Insurance (Bank of China Group Insurance Company Limited) and BOCG Life (Bank of China Group Life Assurance Company Limited) kept the strong momentum, and incomes and pre-tax profit grew steadily.