ʕვБٰ΅Ϟࠢʮ̡BANK OF CHINA LIMITED(a joint stock company incorporated in the People’s Republic of China with limited liability)(Stock Code: 3988)Report for the Third Quarter ended 30 September 2007The Board of Directors (the “Board”) of Bank of China Limited (the “Bank”) is pleased to announce the unaudited results of the Bank and its subsidiaries (the “Group”) for the third quarter ended 30 September 2007. I. BASIC Key fi nancial data and performance Key fi nancial data and performance indicators for the Group prepared in accordance with International Financial Reporting Standards (“IFRS”)As atAs at30 September 31 December Change (%)20072006Total assets (RMB million)6,015,5825,327, and reserves attributable to equity holders of the Bank416,083382, (RMB million)Net assets per share (RMB)
Nine-month Nine-month period ended period endedChange (%)30 September 30 September 20072006Net cash outfl ow from operating(11,004)(88,463) activities (RMB million)Net cash outfl ow from operating()()* activities per share (RMB)Profi t after tax (RMB million)49,71336, t after tax attributable to equity45,47432, holders of the Bank (RMB million)Earnings per share for profi t attributable to equity holders the Bank (basic and diluted, RMB) on average %%percentage (annualized)pointNote: Net cash outfl ow from operating activities per share is calculated based on the Bank’s total number of ordinary shares outstanding at the end of reporting 16 March 2007, the National People’s Congress approved the new PRC Enterprise Income Tax Law. This legislation will reduce the enterprise income tax rate for domestic enterprises from 33% to 25% with effect from 2008. In accordance with International Accounting Standards (No. 12), the Group re-measured its net deferred tax assets of the domestic operations as at the date of pronouncement of the new Income Tax Law to refl ect future realisation at the newly enacted tax rate and thereby increased the tax expenses. Excluding such impact, the profi t after tax attributable to equity holders of the Bank from January to September 2007 would have increased % compared with the same period of
Reconciliation between IFRS and CAS fi nancial informationThe reconciliations of profi t after tax attributable to equity holders of the Bank for the nine-month periods ended 30 September 2006 and 2007 and consolidated equity as at 30 September 2007 and 31 December 2006 prepared under IFRS to those under Chinese Accounting Standards (“CAS”) are set forth below. The fi nancial information as at 31 December 2006 and for the nine-month period ended 30 September 2006 has been restated in accordance with CAS issued by the Ministry of Finance in February 2006 which was effective 1 January : RMB millionEquityProfi t after tax attributable to (including minority interest)equity holders of the BankNine-month Nine-month period periodAs at 30 As at 31 ended 30 ended 30September December September September 2007200620072006CAS fi gures450,393417,32545,74432,294Adjustments for differences in accounting standards: Reversal of asset revaluation surplus, corresponding (6,165)(6,521)356245depreciation and other items Deferred tax impact1,5412,152(626)(81)Sub-total(4,624)(4,369)(270)164IFRS fi gures445,769412,95645,47432, Number of shareholders and top ten As at 30 September 2007, the Bank’s total number of shareholders was 1,276,094, comprising 298,456 H-Share holders and 977,638 A-Share
Top ten A-Share holders not subject to selling restrictions as at 30 September 2007Unit: shareNumber of shares not subject to selling of shareholderrestrictions1Nuoan Stock Securities Investment Fund 122,350,0002Boshi Value Growth Securities Investment Fund 59,999,9493E Fund 50 Index Securities Investment Fund 40,000,0004Boshi Yufu Securities Investment Fund 37,784,0575Morgan Stanley Investment Management — Morgan29,732,000 Stanley China A Share Fund 6NCI — Profi t sharing — Personal profi t sharing — 018L27,905,180 — FH002 SH 7SSE-50 Trading Open-end Index Securities Investment24,371,575 Fund 8China Life Insurance Company Limited — Traditional16,778,100 — Ordinary insurance products — 005L — CT001 SH 9Everbright Pramerica Advantage Allocation Stock16,489,947 Securities Investment Fund 10Everbright Securities Co., Ltd 16,000,500Note: Some of the above shareholders are managed by the same legal entity. Save for that, the Bank is not aware of any connected relations and concerted action among the above-mentioned Top ten H-Share holders as at 30 September 2007Unit: shareNumber of shareholdershares held1HKSCC Nominees Limited30,724,926,1222RBS China Investments S.à.,942,736,2363Fullerton Financial Holdings Pte. Ltd10,471,368,1184National Council for Social Security Fund, PRC8,377,341,3295UBS AG3,377,860,6846Asian Development Bank506,679,1027The Bank of Tokyo-Mitsubishi UFJ Ltd473,052,0008Wingreat International Limited420,490,0009Turbo Top Limited46,526,00010Best Sense Investments Limited 36,526,000Note: The number of shares held by H-Share holders was recorded in the Register of Members maintained by the H-Share Registrar of the Bank as at 30 September
II. SIGNIFICANT Signifi cant changes in major fi nancial statement items and indicators and the reasons thereof Applicable Not Applicable The Group’s key fi nancial items and indicators which fl uctuated over 30% compared with those as at the end of 2006, or compared with those for the nine-month period ended 30 September 2006 are as follows:Unit: RMB millionAs at 30 As at 31 September December Items20072006Change (%)Main reasonsIncrease in deposits Cash and due from63,13139, fi nancial in derivative fi nancial 35,15624, due to increase in items in the process Other assets92,19653, clearance and to banks andIncrease in deposits other fi nancial 359,091178, fi nancial cates of deposit and Increase in interbank placements 312,562146, from from banks and fi nancial fi nancial institutionsMainly due to the Undistributed73,04638, t for the reporting profi due to Currencyfl uctuation of exchange translation (4,301)(2,071) during the differencesreporting
Unit: RMB millionAs at 30 As at 31 September December Items20072006Change (%)Main reasonsA wholly owned subsidiary of the Group held certain listed shares of the Bank in relation to its derivative and arbitrage business. Treasury shares(12)(216) total number of treasury shares held by the subsidiary as at 30 September 2007 has decreased as compared with that as at the end of : RMB millionNine-month Nine-month period ended period ended 30 September 30 September Items20072006Change (%)Main reasonsDue to the continued Net fee andgrowth of fee-based commission 18,92310,, including incomeagency business, in costs related to foreign currency derivatives in support Net trading losses(1,455)(572) the Bank’s increased foreign currency to impairment losses for investment Net (losses)/gainssecurities. Please on investment (2,328)1, to “ Other securitiessignifi cant events” of this report for additional in net Operating profi t74,97654, income and non-interest
Unit: RMB millionNine-month Nine-month period ended period ended 30 September 30 September Items20072006Change (%)Main reasonsShare of results ofIncrease in profi ts of associates and venturesDue to the Profi t before75,84255,-mentioned income taxfactors. Due to re-measurement of net deferred tax Income tax expense(26,129)(18,754) and the increase of operating profi t for the period. Due to the Profi t after tax49,71336,-mentioned t after taxDue to the attributable to 45,47432,-mentioned equity holders of factors. the Development of signifi cant events, related impact and resolution Applicable Not Applicable Fulfi llment of undertakings by the company, shareholders and controlling parties Applicable Not Applicable Based on the best knowledge of the Bank, undertakings by the Bank, its shareholders and controlling parties were fulfi lled during the reporting Warnings and explanations of any forecasted losses or signifi cant changes to retained earnings brought from the beginning of the fi nancial year to the end of next reporting period Applicable Not Applicable 7
Other signifi cant Stocks of other listed companies held by the Group Applicable Not Applicable Stocks of other listed companies held by the Group’s subsidiaries BOCHK Group, BOCI, BOCG Insurance and BOCG Investment during their regular business Stock held Proportion of investment cost Accounting codeCompany name(unit: share)the total share(unit: RMB)classifi cation1000002 CHCHINA VANKE86,936,%991,477,767Held for tradingHeld for trading and 21088 HKCHINA SHENHUA76,588,%581,555,917Available-for-sale securitiesAvailable-for-sale 38002 HKPHOENIX TV412,000,%377,396,411securities40005 HKHSBC HOLDINGS2,267,%293,327,176Held for tradingGUANGDONG 5000527 CHMIDEA ELECTRIC 12,370,%286,329,633Held for tradingAPPLIANCESHeld for trading and 61398 HKICBC93,712,%282,379,769Available-for-sale securitiesSHANGHAI 7600823 CH8,135,%217,864,848Held for tradingSHIMAOHeld for trading and 80386 HKSINOPEC CORP28,370,%168,699,607Available-for-sale securitiesSHANGHAI LUJIAZUI 9600663 CHFINANCE & 6,515,%161,673,338Held for tradingTRADE ZONE DEVELOPMENTAvailable-for-sale 102006 HKJINJIANG HOTELS70,780,%152,301,171securitiesTotal3,513,005,637Note: Information in the above table details the Group’s holding of stocks of other listed companies in respect of long-term equity investments, fi nancial assets available-for-sale and fi nancial assets held for trading. The top 10 stocks held by the Group are presented in the above table in descending order based on the size of initial investment
Equity investments in unlisted fi nancial institutions and companies with future intention to obtain listing held by the Group Applicable Not Applicable Initial investmentNumber of % Carrying value costshares held equity at period end Company name(unit: RMB)(unit: share)held(unit: RMB)Dongfeng Peugeot Citroen232,619,036 —%250,933,564 Auto Finance Co., LtdChina UnionPay Co., Ltd90,000,000 90,000,000 %225,000,000 JCC Financial Co., Ltd56,475,507 —%62,197,599 Hunan Hualing Financial28,148,117 —%29,295,885 Co., LtdCJM Insurance Brokers726,225 2,000,000 %4,463,516 LtdDebt Management16,074 1,660 %16,074 Company LtdTotal407,984,959571,906,638Notes:1. Financial institutions include commercial banks, securities fi rms, insurance companies, trust companies and futures . The carrying value is stated after the deduction of impairment . The information stated in the above table is based on the consolidated fi nancial . Only holdings of 5% or more are Changes of shareholders holding shares of more than 5% and changes or estimated changes of shareholding of the actual controller of the company or its controlling situation. Applicable Not Applicable Please refer to the announcement on Matters related to the Establishment of China Investment Corporation published on 9 October 2007 by the
The statement on Subprime ABS and Subprime CDOs held by the GroupThe Group’s foreign currency denominated investment portfolio includes asset-backed securities and collateralized debt obligations supported by US subprime mortgages (Subprime ABS and Subprime CDOs). The Group has conducted assessment on these securities based on the changes in market condition of US subprime mortgages since the half-year end of 2007. According to the relevant accounting standards, the Group decided to charge additional impairment allowance of USD135 million and USD187 million against these Subprime ABS and Subprime CDOs respectively. The aggregated amounts of these allowances were USD186 million (equivalent to billion) and USD287 million (equivalent to billion) respectively as at 30 September 2007. The Group has also made reserve of USD321 million (equivalent to billion) directly in the “Reserve for fair value changes of available-for-sale securities” under the equity, refl ecting the depreciation of the fair value of the related Subprime at 30 September 2007, the carrying value of the investment in Subprime ABS and Subprime CDOs stood at USD7,451 million (equivalent to billion) and USD496 million (equivalent to billion), representing % and % of the Group’s total investment securities the inherent uncertainties of the US subprime mortgages market, the Group will closely monitor the future developments of the of Directors of Bank of China Limited30 October 200710
ARED IN ACCORDANCE IV. APPENDIX — FINANCIAL STATEMENTS(PREP WITH IFRS)Consolidated Income StatementsUnit: RMB millionThree-month Three-month Nine-month Nine-month period ended 30 period ended 30 period ended 30 period ended 30 September 2007September 2006September 2007September 2006(unaudited)(unaudited)(unaudited)(unaudited)Interest income67,84456,682190,347156,806Interest expense(28,298)(24,228)(79,774)(69,529)Net interest income39,54632,454110,57387,277Fee and commission income8,2143,85321,60212,019Fee and commission expense(1,055)(622)(2,679)(1,947)Net fee and commission income7,1593,23118,92310,072Net trading losses(203)(1,129)(1,455)(572)Net (losses)/gains on investment securities(2,157)1,194(2,328)1,258Other operating income 4,3152,15511,5789,373Impairment losses on loans and advances(1,925)(2,117)(7,169)(7,596)Operating expenses (22,074)(15,401)(55,146)(45,087)Operating profi t24,66120,38774,97654,725Share of results of associates and joint ventures26139866410Profi t before income tax24,92220,42675,84255,135Income tax expense(7,591)(6,296)(26,129)(18,754)Profi t for the period17,33114,13049,71336,381Attributable to: Equity holders of the Bank15,93112,98145,47432,458 Minority interest1,4001,1494,2393,92317,33114,13049,71336,381Earnings per share for profi t attributable to equity holdersof the Bank during the period(RMB per ordinary share) — Basic and
Consolidated Balance SheetsUnit: RMB millionAs at 30 As at 31September 2007December 2006(unaudited)(audited)ASSETSCash and due from banks63,13139,812Balances with central banks474,044379,631Placements with banks and other fi nancial institutions459,228399,138Government certifi cates of indebtedness for bank notes issued34,83036,626Precious metals39,25442,083Trading assets and other fi nancial instruments at fair value through profi t or loss150,186115,828Derivative fi nancial instruments35,15624,837Loans and advances to customers, net2,741,7432,337,726Investment securities — available-for-sale810,207815,178 — held-to-maturity522,678461,140 — loans and receivables474,144500,336Investment in associates and joint ventures6,7065,931Property and equipment83,31786,200Investment property9,3028,221Deferred income tax assets19,46021,396Other assets92,19653,570Total assets6,015,5825,327,65312
Consolidated Balance Sheets (continued)Unit: RMB millionAs at 30 As at 31September 2007December 2006(unaudited)(audited)LIABILITIESDue to banks and other fi nancial institutions359,091178,777Due to central banks54,02942,374Bank notes in circulation34,87136,823Certifi cates of deposits and placements from banks and other fi nancial institutions312,562146,908Derivative fi nancial instruments and liabilities at fair value through profi t or loss118,277113,048Due to customers4,349,2324,091,118Bonds issued 63,55660,173Other borrowings54,22663,398Current tax liabilities23,07818,149Retirement benefi t obligations6,7997,444Deferred income tax liabilities2,9893,029Other liabilities191,103153,456Total liabilities5,569,8134,914,69713
Consolidated Balance Sheets (continued)Unit: RMB millionAs at 30 As at 31September 2007December 2006(unaudited)(audited)EQUITYCapital and reserves attributable to equity holders of the BankShare capital253,839253,839Capital reserve66,58266,617Statutory reserves10,80310,380General and regulatory reserves14,31713,934Undistributed profi ts 73,04638,425Reserve for fair value changes of available- for-sale securities1,8092,009Currency translation differences(4,301)(2,071)Treasury shares(12)(216)416,083382,917Minority interest29,68630,039Total equity445,769412,956Total equity and liabilities 6,015,5825,327,653 Xiao Gang Li Lihui DirectorDirector14
Consolidated Cash fl ow StatementsUnit: RMB millionNine-month period Nine-month period ended 30 September ended 30 September 20072006(unaudited)(unaudited)Cash fl ows from operating activitiesProfi t before income tax75,84255,135Adjustments:Impairment losses on loans and advances7,1697,596Impairment losses/(write back) on investment securities and other assets3,702(6)Depreciation of property and equipment4,0723,888Amortization of intangible assets and other assets925525Net gains on disposal of property and equipment and other long-term assets(106)(238)Net gains on disposal of investments in subsidiaries, associates and joint ventures(37)(907)Share of results of associates and joint ventures(866)(410)Interest expense arising from bonds issued2,1852,105Net changes in operating assets and liabilities:Net increase in balances with central banks(129,813)(58,503)Net (increase)/decrease in due from banks and placements with banks and other fi nancial institutions(89,602)13,159Net increase in loans and advances to customers(411,186)(206,428)Net increase in investment securities(66,845)(235,580)Net decrease/(increase) in precious metals2,873(14,490)Net increase in other assets(26,633)(16,518)Net increase in due to central banks11,65511,657Net increase in due to banks and other fi nancial institutions180,31453,720Net increase/(decrease) in certifi cates of deposits and placements from banks and other fi nancial institutions165,654(44,232)Net increase in due to customers258,114347,253Net decrease in other borrowings(9,172)(4,403)Net increase in other liabilities28,82721,408Net cash infl ow/(outfl ow) from operating activities7,072(65,269)Income tax paid(18,076)(23,194)Net cash outfl ow from operating activities(11,004)(88,463)15
Consolidated Cash fl ow Statements (continued)Unit: RMB millionNine-month period Nine-month period ended 30 September ended 30 September 20072006(unaudited)(unaudited)Cash fl ows from investing activitiesProceeds from disposal of property and equipment, intangible assets and other long-term assets3,2431,165Proceeds from disposal of investments in subsidiaries, associates and joint ventures651,211Dividends received265160Purchase of property and equipment, intangible assets and other long-term assets(6,728)(3,205)Payment for increase of investments in subsidiaries, associates and joint ventures(105)(84)Net cash outfl ow from investing activities(3,260)(753)Net cash outfl ow before fi nancing activities(14,264)(89,216)Cash fl ows from fi nancing activitiesProceeds from issuance of ordinary shares—117,423Cash received from issuance of bonds3,389—Proceeds from minority equity holders of subsidiaries2718Proceeds from sales of treasury shares204—Payment of interest on bonds issued(2,177)(2,154)Dividends paid to equity holders of the Bank(10,154)(1,375)Dividends paid to minority interest(3,370)(3,402)Other payment for fi nancing activities(20)(261)Net cash (outfl ow)/infl ow from fi nancing activities(12,101)110,249Effect of exchange rate changes on cash and cash equivalents(12,170)(3,043)Net (decrease)/increase in cash and cash equivalents(38,535)17,990Cash and cash equivalents as at 1 January519,944397,112Cash and cash equivalents as at 30 September 481,409415,10216
