Bank of China announces 2010 first three quarters results

Bank of China Limited (“BOC”: Hong Kong Stock Exchange stock code: 3988; Shanghai Stock Exchange stock code: 601988) announced its 2010 third quarter results on 27 October. According to International Financial Reporting Standards (“IFRS”), in the first three quarters of 2010, BOC recorded a profit after tax of RMB82.96 billion, an increase of 27.48% compared with the same period of 2009. The Bank achieved profit attributable to equity holders of RMB79.24 billion, an increase of 27.70% compared with the same period of 2009. As at 30 September 2010, The Bank’s total assets amounted to RMB10.10 trillion, an increase of 15.43% compared with the prior year-end, exceeding RMB10 trillion for the first time.

Since 2010, the Bank continued to adopt the scientific outlook on development and pushed forward the implementation of its strategic development plan in a complex and volatile operating environment. By earnestly implementing the principles of streamlining structure, scaling up, managing risks and sharpening competitiveness, the Bank achieved sound operating results.

Key Financial Indicators Continued to Improve

In the first three quarters of 2010, BOC’s earnings per share reached RMB0.31, an increase of RMB0.07 compared with the same period of 2009. Return on average equity (annualised) was 19.54% and return on average total assets (annualised) was 1.17%, an increase of 2.37 percentage points and 0.04 percentage point respectively, compared with the same period of 2009.The ratio of non-performing loans to total loans was 1.10%, a decrease of 0.42 percentage point from the prior year-end. NPL coverage ratio reached 198.93%, up by 47.76 percentage points from the prior year-end. The cost to income ratio was 31.34%, a decrease of 0.63 percentage point compared with the same period of 2009. The capital adequacy and core capital adequacy ratio were 11.73% and 9.35%, up by 0.59 and 0.28 percentage point respectively, as compared with the prior year-end.

Scaling up in Deposits and Loans with Continuous Improvement in Credit Structure

Since 2010, the Bank continued to earnestly implement government policies, maintained a reasonable pace in credit growth, enhanced the credit risk management and accelerated adjustments to its loan structure, promoting the healthy development of its loan business. As at 30 September 2010, the total balance of loans and advances to customers rose by 13.13% to RMB5.56 trillion compared with the prior year-end. Domestic RMB-dominated loans amounted to RMB4,053.59 billion, an increase of RMB543.36 billion or 15.48% compared with the prior year-end. Further improvement has been achieved in the optimisation of credit structure. The proportion of loans granted to key industries including transportation, water conservation and electric power increased, whereas that to the manufacturing, leasing, commerce and service industries dropped. In 2010, the Bank has strengthened its marketing activities and achieved stable growth in customer deposits. As at 30 September 2010, the Bank’s total deposits from customers amounted to RMB7.44 trillion, representing an increase of 12.36% from the prior year-end, among which, domestic RMB-dominated deposits from customers amounted to RMB5,953.03 billion, an increase of RMB641.63 billion or 12.08% compared with the prior year-end.

Net Interest Income Recorded Rapid Growth and the Proportion of Non-interest Income Maintained Leading Position

In the first three quarters of 2010, BOC has achieved rapid growth in net interest income by expanding interest-earning assets and increasing the proportion of high-yield assets. Net interest income reached RMB140.80 billion, an increase of 21.79% compared with the same period of 2009.

In the first three quarters of 2010, the Bank’s non-interest income reached RMB61.49 billion, an increase of RMB8.36 billion or 15.73% compared with the same period of 2009. The proportion of non-interest to the total operating income recorded 30.40% and maintained the leading position among domestic peers. Net fee and commission income rose by 19.79% to RMB41.34 billion compared with the same period of 2009, which is attributed to the rapid growth in bank card fees, credit commitment fees,custodian and other fiduciary service fees.

Asset Quality Continued to Improve and Operating Cost was Effectively Controlled

In 2010, BOC has continued to enhance proactive risk management, strengthen liquidation and resolution on non-performing assets and achieved continuous improvement in asset quality. As at 30 September 2010, the balance of the Bank’s non-performing loans was RMB61.15 billion, down by RMB13.57 billion compared with the prior year-end. The ratio of non-performing loans to total loans was 1.10%, a decrease of 0.42 percentage point from the prior year-end. The ratio of allowance for loan impairment losses to non-performing loans was 198.93%, up by 47.76 percentage points from the prior year-end. The Bank’s impairment losses on loans and advances amounted to RMB13.58 billion with a credit cost of 0.35%, which remained at a lower level.

As at 30 September 2010, the carrying value of US subprime mortgage related debt securities, US Alt-A mortgage-backed securities and Non-Agency US mortgage-backed securities held by the Bank amounted to USD3.32 billion and the related impairment allowance was USD2.66 billion. The carrying value of the debt securities issued by Portugal, Ireland, Italy, Greece and Spain held by the Bank amounted to RMB2.79 billion, a decrease of RMB4.24 billion compared with the prior year-end, principally a result of partial disposal of the debt securities issued by these governments and financial institutions. The total carrying value of these debt securities held by the Bank exceeded cost. During the first three quarters of 2010, the reversal of impairment losses on debt securities amounted to RMB2.41 billion.

Since 2010, the Bank further strengthened strategic input. The Bank recorded operating expenses of RMB84.47 billion, an increase of RMB11.70 billion or 16.07% compared with the same period of 2009. The Bank’s cost to income ratio was 31.34%, a decrease of 0.63 percentage point compared with the same period of 2009. The operating cost was effectively controlled.

Looking into the future, guided by the blueprint for society and economy development in the 12th Five-year Plan, BOC will continue to adopt the scientific development approach, firmly capture the strategic opportunity and fully implement strategic development plan. Particularly, the Bank will continue to expand customer base, strengthen innovation, accelerate overseas operations development, fully enforce the risk management and internal control and speed up the development of its professional workforce, thus ensuring healthy and rapid business development.

Source: http://www.boc.cn/en/bocinfo/bi1/201010/t20101027_1180748.html

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One response to “Bank of China announces 2010 first three quarters results

  1. Pingback: Table of Contents of October 2010 « GOLD MONEY TALK

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