BANK OF CHINA REPORTS ROBUST GROWTH IN 2007 INTERIM RESULTS

(Hong Kong, 23 August 2007) Bank of China Limited ( BOC , HKEx stock code: 3988, SSE stock code: 601988) announced its interim results for the six months ended 30 June 2007.
For the period under review, BOC achieved RMB50.315 billion in operating profit, a year-on-year increase of 46.5%. Net profit attributable to shareholders reached RMB29.543 billion, up 51.7% year-on-year. Earnings per share were RMB0.12. Return on average equity grew remarkably by 180 basis points to 15.18%, whereas return on average assets increased 27 basis points to 1.16%. Excluding the impact of a one-off taxation adjustment, net profit after tax attributable to shareholders leaped 73%. During the report period, net non-structural foreign exchange exposure of BOC declined from USD15.7 billion at year-end 2006 to USD4.0 billion, representing a significant further reduction of exchange rate risk. The net foreign exchange exposure issue that had caused wide market concern has been basically solved. The significant increase in profit after tax in the first half year was mainly attributable to the rapid surge in net interest income and net fee income. Furthermore, the management stringent controlled credit cost, and BOC s operating efficiency was further enhanced.

Net interest income of BOC grew by 29.6% to RMB71.027 billion. Net interest spread and net interest margin widened by 37 and 39 basis points to 2.49% and 2.66% respectively. Non-interest income increased by 19.9% to a total of RMB17.604 billion. Therein, our agency commission income achieved substantial growth by 143.3%, leading to an surge of 72.0% in net fee and commission income. Domestic spread income derived from foreign exchange operations continued to climb quickly, while core non-interest income accounted for 24.3% of the operating income.

With BOC s successful expansion of diverse financial service platform, investment banking business delivered outstanding performance, and insurance business reported record high profit as benefited from the full open-up of scope of insurance operation and coverage in the country. The newly acquired aircraft leasing company in Singapore operated smoothly and achieved good operating performance, reporting a marked increase in income as compared with the same period last year. Income from other overseas businesses almost doubled, bringing in more contribution to the Group.

Effective cost control and rationalization initiatives allowed us to further improve our operating efficiency. The operating profit per capita has significantly increased by 43.8%, and cost to income ratio (excluding income tax and other taxes) was down to 32.91% from 38.41% in the same period last year.

With an effective risk management mechanism in place, BOC continued to achieve dual decrease in impaired loan balance and impaired loan ratio. During the report period, BOC s impaired loan balance was RMB99.429 billion, RMB3.803 billion less than the amount at the end of 2006, while impaired loan ratio was 3.72%, down 0.52% from the end of 2006. Impaired loan coverage ratio increased to 99.50% from 91.34% in year-end 2006. Credit cost dropped to 0.41%. Special mention loan ratio was lowered to 6.47% from 8.15% at the end of 2006.

As at 30 June 2007, the total assets of BOC amounted to RMB5,833.891 billion, an increase of 9.5% over that as at the end of 2006. Gross loans and advances grew steadily by 9.8% to RMB2,671.130 billion, with RMB loans surged a notable 11.1%. Total domestic personal lending increased significantly by 15.

9%. Total liabilities amounted to RMB5,408.426 billion, 10.0% more than that at the end of 2006. Total deposits swelled by 6.4% to RMB4,351.067 billion. Shareholder s equity (excluding minority interest) recorded a growth of 3.3% to RMB395.512 billion. Core capital adequacy ratio and capital adequacy ratio were 11.

32% and 13.39% respectively.

During the period, we proactively adjusted our investment portfolio in response to market changes and enhanced our investment return while controlling overall risks. As of the end of June 2007, our investment securities totaled RMB1.95 trillion, up 2.8% from the end of 2006. Our investment in ABS supported by US subprime mortgages totaled USD8.

965 billion, accounting for 3.51% of our total investment securities portfolio. Among them, 75.38% were with AAA rating, and 21.70% with AA rating and 2.92% with A rating. Our investment in CDOs supported by US subprime mortgages totaled USD682 million, accounting for 0.27% of our total investment securities.

Among them, 81.8% were with AAA rating, and 18.2% with AA rating. Given the recent instability of the US credit market, BOC has conducted an analysis of potential impairment of these securities. In the interest of prudent management, we have made unrealized impairment loss provisions of RMB388 million and RMB758 million against certain subprime ABS and subprime CDOs respectively.

. In the future, we will closely monitor market changes and prudently manage our asset portfolio to effectively control market risk.

Mr. Xiao Gang, Chairman of BOC, said, Since the shareholding reform, we have gradually optimized different internal practices and infrastructure and laid a solid foundation for achieving strong growth in the future. During the period, apart from fortifying our diversified financial service platform, we continued to strengthen corporate governance by enlarging the proportion of independent non-executive directors on the Board.

We appointed, through global recruitment, a new Chief Credit Officer and a new Chief Audit Officer with managerial experience in international banks, thereby strengthening further our senior management team, and steadily implementing human resources management reforms. We also achieved substantial progress in risk management, internal control, business process reengineering and implementation of the IT Blueprint.

In the second half year, facing the challenge from both domestic and foreign peers, Bank of China will speed up implementation of our development strategies, pay close attention to risks and try its best to generate long term increasing returns for shareholders.

Mr. Li Lihui, Vice Chairman and President of BOC, said, Looking ahead, we will continue to enhance our competitiveness with the aim of becoming a first-class bank of the world. We are intent, as ever, on enhancing our business management practices and fostering innovation; putting customers first and sharpening the competitiveness of each of the business lines; pushing forward our IT Blueprint to shore up our Bank s advantages in technology; advancing the development of the overseas business and diversifying businesses and earnings; strengthening risk management and internal control; and intensifying our reform of human resources management. We are committed to reinforcing our core competitive advantages consistently so as to acquire outstanding achievements continuously.
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