BANK OF CHINA ANNOUNCES THIRD QUARTER RESULTS OF 2007

Bank of China Limited ( Bank of China , SEHK ticker: 3988; SSE ticker: 601988) announced its performance in the third quarter of 2007 on October 30. The healthy momentum of growth continued in the third quarter. According to IFRS, during the first 3 quarters ended 30 September, Bank of China achieved operating profit of RMB74.98 billion, increasing 37.01% YoY. Net profit attributable to shareholders reached RMB45.47 billion, increasing significantly by 40.10%. If excluding the impact of the one-off tax adjustment in the first quarter, the net profit grew by 52.97%.

During the reporting period, Bank of China achieved robust growth in all business lines. The return on equity ( ROE ) and the return on asset ( ROA ) further rose as compared with last year, and the ROA also ranks among the top of domestic large commercial banks. The significant improvement in profitability was mainly attributable to the rapid surge in net interest income and net fee income, the stringent control of credit cost, and continuously enhanced operating efficiency.

During the reporting period, Bank of China kept optimizing its assets-liabilities structure. Without compromising on asset quality, Bank of China achieved continuous and rapid growth in domestic RMB loans, ranking first in both the amount and the market share of new personal loans among the large commercial banks.

Besides, Bank of China maintained its leadership in the auto loans and education loans market. The average yield on interest-earning assets also steadily improved. By strengthening the marketing efforts in connection with demand deposits of securities, funds and clearing houses, Bank of China has almost doubled its deposits from financial institutions and thereby effectively controlled funding costs and ensured reasonable liquidity for business development.

For the first three quarters of 2007, Bank of China s net interest income totaled RMB110.573 billion, increasing 26.69% vs. the same period last year. The bank s net interest spread and net interest margin further expanded.

Fee income maintained its momentum of fast growth. Bank of China took advantage of the opportunities brought by the rapid development of the capital market and gradually maturing financial environment, and have strengthened business innovations and market explorations. Bank of China also strived to develop fee-based businesses, and kept enriching its wealth management product lines. The business volume of fund distribution and custodian and corporate intermediary business rose by 795% and 288% respectively, and the net fee and commission income increased by 87.88% YoY to RMB18.92 billion.

Bank of China made outstanding progresses with the development of its diversified financial service platform. Business segments including investment banking, direct investment, insurance and leasing recorded remarkable income growth. The profitability of overseas operations also improved rapidly. During the first 3 quarters of this year, the bank s non-interest income increased by 32.72% YoY to RMB26.72 billion, accounting for 19.46% of total operating income.

During the reporting period, with further improvement in the risk management mechanism, Bank of China continued to achieve dual decrease in NPL balance and NPL ratio. The special mention loan ratio continued to decrease steadily and the credit cost continued to fall from that at end of June which was already at a relatively low level. Impairment loan coverage ratio further increased and the asset quality kept improving.

Effective cost controls and reform measures further improved the bank s operational efficiency. Cost to income ratio dropped from 41.98% in last year to 40.17%, while the operating profit per capita increased by 34.92% to RMB319 thousand, higher than other large domestic commercial banks.

As at 30 September 2007, total assets reached RMB6,015.58 billion, an increase of 12.91% over that as at the end of 2006. Total liabilities and total shareholders equity grew by 13.33% and 8.66%, and reached RMB5,569.81 billion and RMB416.08 billion respectively. Gross loans and advances rose by 17.28% and reached RMB2,741.74 billion, total deposits had increased by 6.31% to RMB4,349.23 billion.

As at 30 September, Bank of China s securities investment balance stood at RMB1,957.22 billion, steadily increasing 3.42% over that as at the end of 2006. In response to market changes, Bank of China flexibly adjusted the portfolio, and made great efforts to improve the return on investment and steadily increased the overall interest income while controlling overall risks.

As at the end of September, the investment in asset-backed securities supported by U.S. subprime mortgages totaled USD7.451 billion (equivalent to RMB55.96 billion) and the investment in CDOs supported by US subprime mortgages was USD496 million (equivalent to RMB3.727 billion), accounting for 2.86% and 0.

19% respectively of the total securities investment. The total balance of such investments dropped by USD1.7 billion from the end of June mainly due to payments of principals and interests of the securities held by the bank.

According to the changes in the U.S. subprime mortgage loan market in the third quarter of 2007, Bank of China has conducted assessment and testing of the related securities on a case-by-case basis. According to accounting principle, Bank of China charged additional impairment allowance of USD135 million and USD187 million against these subprime ABS and subprime CDOs respectively.

By the end of September, the aggregate amounts of these allowances were USD186 million (equivalent to RMB1.395 billion) and USD287 million (equivalent to RMB2.152 billion) respectively. In addition, Bank of China has charged to equity a valuation reserve to reflect the depreciation in fair value of the related subprime securities held by the bank.

By the end of September, the balance of the aforementioned reserve was USD321 million (equivalent to RMB2.414 billion).

Management paid close attention to the development of the U.S. subprime mortgage loan market, and further strengthened the overall management of the bank s global market risks. In the future, Bank of China will closely monitor market changes and prudently assess the securities portfolio in accordance with International Accounting Standards. It is expected that, by the end of 2007, along with the payments of principals and interests, the balance of the related securities investments will further decrease.

Mr. Xiao Gang, chairman of the Board of Directors of Bank of China, pointed out, In the fourth quarter of 2007 and through the year of 2008, we expect that China s economy will continue to maintain steady and relatively rapid growth, and the state will further strengthen and improve macro economic adjustment to prevent the economic growth from overheating.

As reforms to the financial system accelerate, competition in the banking industry will intensify and the banking industry will thus face more opportunities and challenges. We are committed to improving our core competitiveness to bring to shareholders a return of value that is long-term and sustainable.

Mr. Li Lihui, president of Bank of China, said, Bank of China will continue to focus on our strategic objective, which is building a world first-class bank and a leading international financial service company , strive to make progresses, and pursuit for excellence. we shall strengthen our marketing efforts regarding key customers and key projects, improve business plans for small enterprises, and make great efforts to develop personal credit businesses.

Moreover, we shall increase our resource inputs to key regions, accelerate outlet transformation, and build a 3-tier service system comprising financing centers, wealth management centers and private banking outlets. Furthermore, Bank of China will strengthen product innovation, actively research and develop new products for asset management and debt capital, put more efforts in expanding structured financing products, explore the developing potential of the supply chain financing, rigorously promote the Olympics cards and Olympics-related financial services, increase marketing efforts for fund companies, and strive to develop agency businesses.

In addition, our bank will further deepen the interactions between domestic and overseas offices, speed up overseas development, and promote the coordinated development between commercial banking and other businesses lines such as investment banking, insurance, investment and leasing. Meanwhile, our bank will pay close attention to the state s macro economic adjustment and industrial adjustment policies, emphasize on the awareness of Green Credit , and conscientiously perform our social responsibilities.