2016

CONTENTS

PAGE

Financial Highlights 2 Management's Discussion and Analysis 3 Condensed Consolidated Income Statement 34 Condensed Consolidated Statement of Comprehensive Income 35 Condensed Consolidated Balance Sheet 36 Condensed Consolidated Statement of Changes in Equity 37 Condensed Consolidated Cash Flow Statement 39 Notes to the Interim Financial Information 40 Additional Information 115 Independent Review Report 122 Appendix - Subsidiaries of the Company 123 Definitions 125 Interim Report 2016 BOC Hong Kong (Holdings) Limited 1 Financial HigHligHts

For the period

30 June 2016

HK$'m

30 June 2015

HK$'m

Net operating income before impairment allowances1

20,745

20,730

Operating profit1

14,399

14,759

Profit before taxation1

14,540

15,216

Profit from continuing operations1

12,228

12,490

Profit from discontinued operations

30,917

1,301

Profit for the period2

43,145

13,791

Profit attributable to the equity holders of the Company2

42,731

13,387

Per share

HK$

HK$

Basic earnings per share2

4.0416

1.2662

Dividend per share

1.2550

0.5450

At period/year end

30 June 2016

HK$'m

31 December 2015

HK$'m

Total assets

2,364,232

2,367,864

Issued and fully paid up share capital

52,864

52,864

Capital and reserves attributable to the equity holders of the Company

228,586

192,578

Financial ratios for the period

30 June 2016

%

30 June 2015

%

Return on average total assets3

2.30

1.22

Return on average shareholders' equity4

25.90

14.78

Cost to income ratio1

28.05

26.55

Average value of liquidity coverage ratio5

First quarter

112.92

101.90

Second quarter

109.70

109.89

Financial ratios at period/year end

30 June 2016

%

31 December 2015

%

Loan to deposit ratio6

67.10

63.25

Total capital ratio7

23.30

17.86

  1. The financial information for the period ended 30 June 2016 is from continuing operations and the comparative information has been restated accordingly.

  2. The financial information is from continuing operations and discontinued operations.

  3. Return on average total assets =

    Profit for the period

    Daily average balance of total assets

  4. Return on average shareholders' equity

    Profit attributable to the equity holders of the Company

    =

    Average of the beginning and ending balance of capital and reserves attributable to the equity holders of the Company

  5. The average value of liquidity coverage ratio is computed on the consolidated basis which comprises the positions of BOCHK and certain subsidiaries specified by the HKMA in accordance with the Banking (Liquidity) Rules.

  6. Loan to deposit ratio is calculated as at period/year end. Loan represents gross advances to customers. Deposit represents deposits from customers including structured deposits reported as "Financial liabilities at fair value through profit or loss".

  7. Total capital ratio is computed on the consolidated basis for regulatory purposes that comprises the positions of BOCHK and certain subsidiaries specified by the HKMA in accordance with the Banking (Capital) Rules.

2 BOC Hong Kong (Holdings) Limited Interim Report 2016

ManageMent's Discussion anD analysis

In the first half of 2016, the Group captured development opportunities from the market and achieved a record high in its financial results. With the disposal of NCB and the satisfactory operating performance, profit attributable to the equity holders increased strongly to HK$42,731 million, up 2.2 times year-on-year, a new high since the Group's listing. Total capital ratio also rose strongly. The Group made good progress in its regional transformation, succeeded in capturing opportunities from the implementation of China's important strategies, including the Belt and Road initiative and RMB internationalisation, and expanded its businesses across the ASEAN region. With the Group's focus on expanding its customer base and proactive management of assets and liabilities, growth in customer deposits and advances to customers outperformed the market with a further improvement in deposit structure. It drove solid business growth in the local market, being the top mandated arranger in the Hong Kong-Macau syndicated loan market and maintained its market leadership in new residential mortgage loans in Hong Kong. At the same time, the Group accelerated the development of its diversified business platforms and made innovative development in Internet finance. It also proactively expanded mobile finance and strengthened its service capabilities of e-Channels. In July, the branch network transformation project was fully implemented to enhance customer experience and service capabilities. The Group continued to adopt prudent risk management to ensure the solid and sustainable business development.

FINANCIAL PERFORMANCE AND CONDITION AT A GLANCE

As a result of the Group's disposal of NCB, the Group reported the operating results of NCB as discontinued operations in the condensed consolidated income statement with comparative information restated. Assets and liabilities of NCB as at 31 December 2015 were presented separately as assets held for sale and liabilities associated with assets held for sale in the condensed consolidated balance sheet. As a result, to facilitate a year-on-year comparison, comparative information for 2015 is restated and analysed in this Management's Discussion and Analysis.

The following chart is a summary of the Group's key financial results for the first half of 2016 in comparison with the previous two half-yearly periods. The average value of the liquidity coverage ratio is reported on a quarterly basis.

Key Performance Trends

Profit Attributable to the Equity Holders

HK$'m

42,731

13,38713,409

1H2015 2H2015 1H2016

Return on Average Shareholders' Equity1 ("ROE") and Return on Average Total Assets2 ("ROA")

%

25.90

14.78 14.18

2.30

1.22 1.17

1H2015 2H2015 1H2016

ROA ROE

Earnings Per Share ("EPS") and Dividend Per Share ("DPS")

HK$

4.0416

1.2662 1.2682 0.7100

0.5450 0.67900.5450

1H2015 2H2015 1H2016

Special DPS Interim DPS EPS

Profit attributable to the equity holders reached new high

  • The Group's profit attributable to the equity holders amounted to HK$42,731 million in the first half of 2016, up 219.2% year-on-year.

  • ROE was 25.90%. Excluding the gain from the disposal of NCB, ROE would have been 12.57%.

  • ROA was 2.30%. Excluding the gain from the disposal of NCB, ROA would have been 1.06%.

  • EPS was HK$4.0416. Excluding the gain from the disposal of NCB, EPS would have been HK$1.2083. The interim dividend per share was HK$0.545. The special dividend resulting from the gain on the disposal of all the issued shares of NCB was HK$0.71 per share.

Solid return to shareholders

Interim Report 2016 BOC Hong Kong (Holdings) Limited 3

BOC Hong Kong (Holdings) Ltd. published this content on 13 September 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 13 September 2016 09:20:07 UTC.

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