Delivering Growth and Excellence

Transcription

1 Delivering Growth and Excellence Bank of China Limited 2008 Annual Results Mar 24, 2009

2 Forward-looking Statement Disclaimer This presentation and subsequent discussions may contain forward-looking statements that involve risks and uncertainties. These statements are generally indicated by the use of forward-looking terminology such as believe, expect, anticipate, estimate, plan, project, target, may, will or may be expressed to be results of actions that may or are expected to occur in the future. You should not place undue reliance on these forward-looking statements, which reflect our belief only as of the date of this presentation. These forward-looking statements are based on our own information and on information from other sources we believe to be reliable. They relate to future events or our future financial, business or other performance and are subject to a number of uncertainties that may cause our actual results to differ materially. 1

3 Presentation Team Mr. Li Lihui, Vice Chairman & President Mr. Zhu Min, Executive Vice President Mr. Chen Siqing, Executive Vice President 2

4 Agenda Agenda Speaker 1 Key performance highlights and strategy Mr. Li Lihui, President Annual Results and 2009 Outlook Mr. Zhu Min, Executive Vice President 3

5 Agenda Agenda Speaker 1 Key performance highlights and strategy Mr. Li Lihui, President Annual Results and 2009 Outlook Mr. Zhu Min, Executive Vice President 4

6 2008 Performance Highlights Total Assets Total Liabilities Capital and reserves attributable to equity holders of the Bank Growth rate =10.4% RMB billion Growth rate =12.5% 5,991 5,328 Growth rate =16.0% 6,952 RMB billion Growth rate =16.6% Growth rate =12.7% 6,462 5,541 4,915 RMB billion Growth rate =9.8% Profit before provision Profit attributable to equity holders of the Bank Return on average equity RMB billion Growth rate =38.4% 80.2 Growth rate =19.2% Growth rate =14.4% 14.55% Growth rate =31.3% % 14.00% RMB billion 5

7 Enhanced Competitiveness Increased market share in RMB deposit and loan business Market share of RMB corporate loans 6.25% 6.54% Market share of RMB corporate deposits 8.13% 8.40% Leading position in various business lines Corporate Banking Business Leading position in foreign currencydenominated corporate deposits & loans International settlement transaction vol. reached US$1.7 trillion, topped the global banking sector BOC Aviation reinforced its leading position in Asia Market share of RMB personal loans 16.05% 16.06% Market share of issued credit card volume 7.02% 8.06% Personal Banking Business Largest market share in personal foreign currency denominated deposits & loans No.1 in FX card merchant acquiring business Financial Markets Business Leading position in foreign-currency WM business, FX sale & settlement, RMB bond repurchase, forward bond transaction and gold trading in domestic market

8 Risk Management in Financial Crisis Manage investment securities portfolio Reduced exposure in foreign currency investment Total amount and currency structure of investment securities Charge impairment provision on investment securities in a prudent manner Impairment losses for investment securities ,713 1,646 RMB billion 43.5% 56.5% 37.4% 62.6% RMB billion Effective risk management through timely adjustment of industry credit policies 91.34% RMB FX % % Effectively strengthened internal control % 3.17% 2.76% Impaired loan ratio Coverage ratio Value involved in the cases (RMB mn) Number of cases 7

9 Earthquake Relief Fulfilling Corporate Social Responsibilities Effective earthquake relief Resume operation Resume operation in the shortest time Sichuan Branch is the only financial institution to receive the honor of National Quake-relief Hero Group. Donations Domestic and overseas institutions and employees made over RMB150 million donations A Green Channel for Global Donations was opened in all domestic & overseas outlets Support after-quake reconstruction Signed a RMB300 billion Full Strategic Co-operation Agreement with Sichuan Province Government Extended credit to Dongfang Electric, Panzhihua Iron & Steel, Sichuan Highway, and Conch Cement to support after-quake reconstruction Provided priority handling of personal loan application for quake-hit region local resident at prime rate. Extended RMB18 billion credit lines to over 20 real estate development companies and car agencies. 8

10 Enhanced Brand Value through Olympic Services Provided full range of quality financial services, reflecting comprehensive competitiveness 40 outlets in 7 Olympic hosting cities provided one-to-one services to Game Center, Olympic Village & International Broadcasting Center Zero customer complaints, zero machinery defaults, zero network breakdown, zero negative news report, zero security defaults and zero errors Fulfilled the ticket consignment plan & the issuance and sales of Olympic commemorative banknotes denominated in HK Dollar and MOP Dollar Hot sales of Olympic franchised products and precious metal products Successfully launched the Great Wall Payment Card and Great Wall Pre-paid card 80% of the Olympic Gold-Medallists became BOC Private Banking VIP customers 9

11 Achievement in Infrastructure 3 Global Business Units Integrating Business Structure Corporate Banking Corporate Banking Financial Institutions International Settlement Domestic Settlement SME Personal Banking Individual Services Wealth Management Private Banking Bank Cards Financial Markets Security Investment Trading Agency Business Custodian Investment Corporate Annuity Operation Service Unit Transforming Retail Outlets Transformed 6,761 outlets, 68% of the total domestic 9,980 outlets Over 6,220 ATM terminals were put into service Improving Risk Management Further enhanced global risk management system Accelerated implementation of Basel II Implementation of IT Blueprint Beijing and Shanghai Information Centers are ready for operation The second stage of System Integration Test commenced and the first regression test completed Smooth progress in data clearance. Successful implementation of some key projects. Improved Online Banking System 10

12 Strategy In New Age Strategic Goal Delivering Growth & Excellence Become a leading global bank Strategic Positioning Commercial Banking as core business Develop diversified service capabilities Focusing on domestic market with multinational operation Integrated development of domestic & overseas operations 11

13 Commercial Banking as Core Business with Diversified Services Diversified servicing platform is an important component and competitiveness of Commercial Banking Investment Banking Commercial Banking Fund Management Insurance Direct Investment Aircraft Leasing Trade Finance International Settlement Global Credit Cash Management Financial Advisory Insurance Asset Management Agency Business Legal Consultation Tax Consultation Wealth Management Overseas Education Financial Services 12

14 Integrated Development of Domestic and Overseas Businesses To become an international first-class bank supported by strong domestic business RMB billion Total assets by region Domestic assets CAGR = 14.9% 6, , , % 22.6% 23.5% 75.2% 76.5% 77.4% RMB billion Operating profit by region Domestic operating profit CAGR= 37.3% % 7.2% 37.1% 92.8% 62.9% 67.5% Domestic assets Overseas assets Domestic operating profit Overseas operating profit Expand service lines and provide integrated global financial services to customers Integrated customer service Unified capital management Vertical business management 13

15 Expanding Business Base & Optimizing Business Structure Expanding Business Base Optimizing Business Structure Deposit & Loan Expand deposit base. Attract low-cost funding Expand market share of RMB deposits & loans as major performance indicator Customer Mix Increased % of key customers i.e. midto-high end corporate & personal customers. Expand high quality SME customers Customer Base Expand customer base that matches China s industries adjusting directions & customers with the needs of overseas services Explore good quality large corporate customers Regional Structure 3 major economic regions, 10 key areas & 40 key cities as major markets. Actively adjust resources allocation & market focused in line with country policies, and increase its profit contribution Increase penetration rate in key regions & key industries Asia as the key overseas market Institutional Network Expand domestic network in key provinces Enhance domestic & overseas electronic service channels Assets & Liabilities Increase % of loans in key industries & mid-to-long term loans. Actively attract low cost demand deposit Maintain leading position in non-interest income ratio among peers Overseas Network Expand overseas network through selfconstructing, M&A etc. Fully utilize our international & diversified business advantages, provide quality services to high-end and going-aboard customers. RMB & FX Reduce low yield foreign currency assets, including investment securities Increase % of RMB assets 14

16 Agenda Agenda Speaker 1 Key performance highlights and strategy Mr. Li Lihui, President Annual Results and 2009 Outlook Mr. Zhu Min, Executive Vice President 15

17 Profit & Loss Summary Net profit up by 14.4% to RMB64.4 billion (RMB million) % growth Net interest income 162, , % Non-interest income 65,960 42, % - Net fee and commission income 39,947 35, % Operating income 228, , % Operating expenses (97,412) (85,278) 14.2% Impairment losses on assets (45,031) (20,263) 122.2% Operating profit 86,453 89, % Profit before income tax 87,179 90, % Income tax (21,285) (28,661) -25.7% Profit for the year 65,894 62, % Profit attributable to equity holders of the Bank 64,360 56, % EPS (RMB) % Key Ratios (%) Change (PPT) Non-interest income to operating income Fee and commission income to operating income Cost to income ratio (excluding business & other taxes) Net interest margin Credit cost Effective tax rate

18 Balance Sheet Summary Steady balance sheet growth and capital base remain sound (RMB million) % growth Assets Loans, net 3,189,652 2,754, % Investment securities 1,646,208 1,712, % Balances with central banks 1,207, , % Due from banks & other financial institutions 525, , % Total assets 6,951,680 5,991, % Liabilities Due to customers 5,102,111 4,400, % Due to banks & other financial institutions 859, , % Total liabilities 6,461,793 5,540, % Key financial ratios (%) Change (PPT) Core capital adequacy ratio Capital adequacy ratio Impaired loan ratio Impairment coverage ratio Notes: 1 Investment securities include securities available for sale, securities held to maturity, securities classified as loans and receivables and financial assets at fair value through profit or loss. 17

19 Robust Growth in Domestic Business Major domestic indicators (RMB million) Growth Net interest income 139, , % Non-interest income 46,909 10, % - Net fee & commission income 32,791 25, % RMB Billion Domestic loans Growth rate=16.46% 1, % 84.9% Growth rate=14.99% 2, , % 15.5% 87.8% 84.5% Profit before impairment losses 110,638 79, % Operating profit 80,281 60, % Profit after tax 60,779 35, % Domestic RMB loans 2,338,684 1,955, % Domestic RMB deposits 3,931,645 3,221, % Domestic non-performing loan ratio Domestic non-performing loan coverage ratio 3.13% 3.76% ppt % % ppt RMB billion RMB loans Domestic deposits FX loans Growth rate =20.55% 4,254.3 Growth rate = 7.93% 3, , % 11.6% 8.7% 91.3% 92.4% 88.4% RMB deposits FX deposits 18

20 RMB Billion Corporate Banking Optimized customer & industry structure, promoted new SME model Corporate loan growth (Group) Optimized domestic corporate client structure Growth rate =17.69% 2,492.7 Growth rate =14.53% 1, , % 18.3% 13.0% 16.4% 17.0% 16.3% 64.7% 67.6% 67.3% The balance of loans to corporate clients with BB above rating accounts for 91.37% of total loans, up by 3.74 ppts 1, ,357.4 RMB billion RMB Billion Domestic RMB Loan Domestic FX Loan Overseas FX Loan Corporate deposit growth (Group) Growth rate =15.64% Growth rate =22.30% 2, , , % 16.0% 15.5% % 84.5% 84.0% 85.6% Domestic Overseas RMB billion Improved corporate loan industry structure Manufacturing Commerce & services Transportaton & Logistics Power, Gas & Water Real Estate Mining Financial Services Public Utilities Water, Environment etc Construction others 2008 balance 2007 balance Change in proportion to total corporate loan 19

21 Personal Banking Enhanced 3-tier wealth management service framework, expanded customer base Retail Deposit (Group) Growth rate =15.61% Growth rate = -2.52% 2, , % 34.4% 2, % 12 Private Banks RMB Billion 68.1% 65.6% 66.9% 50 Fortune Mgmt Centers Time Demand Retail loans (Group) 36.46% 525 Wealth Mgmt Centers Growth rate =9.67% Growth rate = 25.71% % % RMB Billion 21.6% 79.0% 78.9% 78.4% Mortgage Others Issued million debit cards in domestic market Issued million credit cards in domestic market, of which 9.72 million non quasi-credit cards Launched a series of commercial cards Launched co-branded cards, such as Nanhang Mingzhu BOC Credit cards & BOC Gotone Credit card 20

22 Managing Investment Securities Proactively adjusted investment portfolio in response to the market changes. Increased investment yields. Further reduced exposure in US mortgage related bond investment (USD million) US Subprime mortgage related debt securities 2,590 4,990 - of which is AAA-rated 38.83% 71.23% - Impairment charges 2,245 1,295 - Reserve for fair value changes Foreign Currencydenominated investment securities dropped by 17% Proportion of US mortgage related bond to total foreign currencydenominated investment securities reduced by 17 ppt US Alt-A mortgage-backed securities 1,148 2,470 - of which is AAA-rated 47.34% 98.21% - Impairment charges 709 n.a. Non-Agency US mortgage-backed securities 3,512 6,177 - of which is AAA-rated 60.65% 99.95% - Impairment charges 1,506 n.a. Fannie Mae & Freddie Mac related bonds 8,756 21,829 Total Carrying Value 16,006 35,466 Investment securities by issuer type (RMB Billion) 2008 % Government & government guaranteed % Financial Institution % Public sector & quasigovernment % Corporate % Equity securities & Other % Total 1, % 21

23 Further Improvement in Asset Quality Impaired loan and coverage ratio NPL and special-mention loan ratio % % 91.34% 8.15% 4.24% 3.17% 2.76% 4.04% 5.08% 3.12% 4.85% 2.65% RMB billion Impaired loan ratio Coverage ratio Impaired loan balance and credit cost 0.53% 0.55% 0.31% RMB billion Special-mention Loan ratio NPL ratio Impaired loan ratio of manufacturing, realestates & construction industries 8.79% 6.14% 5.22% 4.76% % 3.51% Impaired loan balance Credit Cost Impaired loan balance of Manufacture Impaired loan balance of Property and Construction Impaired loan ratio of Impaired loan ratio of Property and Manufacture Construction 22

24 Continuous Growth in Net Interest Income NIM Average yield 2.76% 2.45% 2.70% 2.24% 3.21% 3.44% 2.89% 2.70% 2.63% 5.48% 4.34% 3.54% 2.70% 5.94% 6.12% 4.74% 4.63% 3.87% 3.63% 3.11% 2.37% Group Domestic (Rmb) Domestic (FX) Structure of interest-earning assets & interestbearing liabilities Interbank loans Securities Investment RMB6,191bn RMB5,687bn 2.1% 22.0% 13.0% 26.6% Other borrowings Interbank placement Loans Investment securities Placement with central banks and other banks Average interest-earning assets Funding cost 4.21% 4.35% 4.24% Loans and advances 51.4% 84.9% Due to customers 2.51% 2.53% 2.15% 2.06% 1.96% 2.04% 2.18% 2.16% 1.97% Average interest-earning assets Average interest-bearing liabilities Due to customers Other borrowings Interbank placement Average interest-bearing liabilities 23

25 Further Growth in Non-Interest Income Non-interest income Net fee and commission income breakdown 21.7% % of operating income 28.8% 65,960 Growth rate = 10.38% 43,712 RMB million Growth rate = 56.19% 42, % 15.9% 60.6% 39.4% RMB million 39, % 9.4% 9.1% 12.2% 20.3% 36.3% 4, % 11.0% 14.7% 18.1% 21.4% 19.3% 3, Net fee and commission income Net trading income and others1 Note: 1 Others include net gains or losses on investment securities and other non-interest income Other fees Bank card fees Credit commitment fees Settlement and clearing fees Spread income from foreign exchange business Agency commissions Fee and commission expense 24

26 Stringent Cost Control Operating expenses breakdown Enhancing efficiency Growth rate = 14.23% 85,278 97, Change Staff costs/ operating expenses 40.41% 42.52% Cost to income ratio (exclude business & other taxes) 37.59% 39.26% ,365 Cost to income ratio (Under CAS) 33.55% 35.59% RMB million 36,261 21,736 23,932 Operating income per capita (RMB) 918, , % Operating expenses per capita (RMB) 390, , % Effective tax rate 7,094 8,726 9,837 1,624 7,816 11,367 8,243 6, % 31.6% 24.4% Staff costs General operating and administrative expenses Depreciation and amortization Business and other taxes Insurance benefits and claims Others 25

27 2009 Outlook Achieve solid performance in 2009 Expand Size Internal Control Branding Delivering Growth & Excellence Adjust Structure Control Cost Firmly execute the strategy of Commercial Banking as core business and provide diversified services; multinational operation and integrate the development of domestic and overseas businesses. Expand asset size, optimize credit structure. Increase share of medium-to-long term loans. Fully utilize the comparable competitive advantages, provide full-range & global financial services to corporate & personal customers. Expand deposit size and customer base. Increase share of demand deposit. Quality Closely monitor asset quality and increase the efforts in non-performing assets disposals. Achieve further decrease of NPL ratio. Tight budget control to improve cost efficiency. Allocate more budget resources to key areas and key business. 26

28 Q&A 27