15 April 2015

Bright development for transaction banking business in Asia BOCHK is well positioned to capture the rising opportunities

Bank of China (Hong Kong) ("BOCHK") - Vice Chairman and Chief Executive, Mr Yue Yi, today attended The 2015 Asian Banker Summit. At The International Transaction Banking Convention, CE Yue delivered an opening speech on the New Normal for the Global Economy and the Future of Transaction Banking in Asia. He expects to see growing importance of the Asia-Pacific region in the global transaction banking business, faster pace of product innovation and increasing use of RMB among regional cooperations. As the most international and diversified bank in China, BOC Group has always been ahead in terms of planning and expanding our overseas presence. Today, BOC Group has network coverage in more than 40 countries and areas globally, and among them Hong Kong holds the key for BOC Group's overseas expansion strategy. BOCHK will closely follow China's One Belt One Road strategy to capture the opportunities and cater for customer needs, riding on the comprehensive advantages of BOC Group's globally integrated platform and the strong franchise in offshore RMB and cross border businesses.
In his speech, CE Yue pointed out that the development of the global economic environment is seeing a new normal. Growth momentum in the U.S. remains tepid after nearly six years of recovery, and a breakthrough in 2015 appears unlikely. In the meantime, emerging markets in Asia will remain the growth engine of the global economy. GDP in China and India for the next few years will probably grow at a rate of over 6.5%, while growth in major ASEAN countries should improve. With RMB internationalisation gathering steam and the establishment of a number of free trade zones in China, the grand national strategy of One Belt One Road is being increasingly recognised. These developments will have a long-lasting and significant impact on growth and prosperity in the region. Countries around the world are seeking to participate in the Asia-Pacific regional economic cooperation as growing numbers of foreign enterprises use Hong Kong, Singapore and other offshore centres as springboards for entering the region. Cooperation and exchange with these international enterprises require transaction banking services as a supporting pillar and enabler. Therefore, he believes transaction banking will be a bright spot for growth in the banking sector and will likely follow three trends.

First, the status of the Asia-Pacific region in the development of transaction banking business will grow in importance. The Boston Consulting Group estimated that by 2023, total

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revenue from retail and wholesale payments in Asia-Pacific emerging markets will be 3.8 times and 3.5 times that of 2013, with growth almost doubling of world's average. McKinsey & Company expected that the post-risk revenues of the Asia-Pacific transaction banking business would grow by 12% to USD 578 billion dollars in 2017. Of which, the two largest markets will be China which will account for about three-quarters of Asian transaction banking revenues, and Southeast Asia will account for 8%.

Second, product innovations in transaction banking will grow faster. By leveraging big data analytics and capturing interactive exchanges of customers' capital flows, logistics and information flows more efficiently, product innovations in transaction banking will be accelerated to respond to customers' needs in a timely manner. By combining traditional trade settlement, financing, liquidity management and other treasury products, banks are becoming better at meeting the onshore and offshore needs of corporate customers, as well as their upstream and downstream buyers and suppliers. These total solutions can bring cost savings to customers and additional hedge and exchange income to banks. They are also helping corporates meet their multi-currency liquidity requirements and realise their strategic visions. Third, the weight of the RMB as a transaction currency will increase among regional cooperations. As part of a growing trend in Asia, emerging economies that are not international financial centres, that export energy or stand to benefit from the One Belt, One Road strategy will become the new drivers for the global adoption of the RMB. A recent survey from SWIFT showed that other countries such as Malaysia, Indonesia, Thailand, the Philippines and South Korea, as well as the Middle East and Australia, are all increasing the use of RMB for payments. For these countries, more than 10% of their payments to the Mainland of China and Hong Kong were in RMB. Hong Kong is now the largest RMB clearing platform not just in Asia but worldwide, with a global market share of over 60%. In fact, in 2014 China had already become the world's largest commodity trading country and the second largest economy with cross- border trade settlements in RMB amounting to over 6.55 trillion yuan, 41% higher than last year. The RMB has become the world's fifth largest foreign exchange currency, and RMB trade financing volume now comfortably ranks second.

The accelerating pace of RMB internationalisation is benefiting other countries by deepening their investment and trading relations with China and hence allowing them to share the growth premium that comes with rapid Chinese economic development. Especially for emerging economies, using RMB will help them increase economic stability and security thanks to the
sheer scale of the Chinese economy.

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Looking ahead, CE Yue believes that closer cooperation in the Asia-Pacific economic region, the accelerating internationalisation of the RMB and the opening up of China's capital market will not only bring new development opportunities in global trade, financing and investment, but also stimulate innovative new ideas for transactional banks. With its enterprising spirit and close relationships with industry peers, BOC Group endeavours to provide strong support to the rapid and healthy development of the regional economy.
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About The Asian Banker Summit

Into its 16th year, The 2015 Asian Banker Summit ("The Summit") is organised by The Asian Banker magazine. It is the largest annual financial forum in Asia which features discussions and presentations by global thought leaders, subject matter experts and regulators on topics ranging from banking regulations and technology trends to changes in market initiatives and financial supply chain. BOCHK is the Exclusive Premier Sponsor - Host Bank of The Summit which returns to Hong Kong after four years.

About Bank of China (Hong Kong) Limited

Bank of China (Hong Kong) Limited ("BOCHK") is a leading listed commercial banking group in Hong Kong. With over 260 branches, more than 610 ATMs and other distribution channels in Hong Kong, BOCHK and its subsidiaries offer a comprehensive range of financial products and services to personal and corporate customers. BOCHK is one of the three note issuing banks in Hong Kong and also the Clearing Bank for Renminbi business in Hong Kong. In addition, the BOCHK Group (comprising BOCHK, Nanyang Commercial Bank and Chiyu Banking Corporation) and its subsidiaries have 42 branches and sub-branches in the Mainland of China to provide cross-border banking services to customers in Hong Kong and the Mainland.
BOC Hong Kong (Holdings) Limited, BOCHK's holding company, began trading on the main
board of the Stock Exchange of Hong Kong on 25 July 2002, with stock code "2388", ADR OTC Symbol "BHKLY".

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