Equity Linked Deposits (Put Option)

Financial Disclosure Document dated 24 August 2012

Equity Linked Deposits (Put Option)

offered by

Nanyang Commercial Bank Limited(incorporated in Hong Kong with limited liability and is a licensed bank regulated by

the Hong Kong Monetary Authority and registered with the Securities and Futures Commission for

Types 1 and 4 regulated activities under the Securities and Futures Ordinance)

(ldquoBankrdquo)

Offeror and Product Arranger

Nanyang Commercial Bank Limited

Our Equity Linked Deposits (Put Option) (ldquoEquity Linked Depositsrdquo) are not equivalent to

conventional time deposits and are not principal protected They are unlisted structured

investment products embedded with derivatives You may sustain a total loss in your

investment

The Securities and Futures Commission (ldquoSFCrdquo) has authorised the issue of this document based

on the standard format submitted under section 105(1) of the Securities and Futures Ordinance

(Cap 571 Laws of Hong Kong) The SFC takes no responsibility for the contents of this

document makes no representation as to its accuracy or completeness and expressly disclaims

any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any

part of the contents of this document The SFCrsquos authorisation does not imply its endorsement

or recommendation of the Equity Linked Deposits referred to in this document

IMPORTANT

If you are in any doubt about any of the contents of this document you should obtain independent

professional advice

References to the ldquoBankrdquo ldquowerdquo or ldquousrdquo in this document mean Nanyang Commercial BankLimited

This Financial Disclosure Document sets out financial information relating to the Bank No EquityLinked Deposits are being offered by this document alone If you would like to make an investmentin any Equity Linked Deposits you must read the principal brochure dated 4 May 2012 (including anyaddendum to the principal brochure) issued by the Bank relating to the Equity Linked Deposits andthe relevant termsheet together with this Financial Disclosure Document each as indicated in therelevant termsheet from time to time (together ldquoOffering Documentsrdquo) Printed copies CD-Romcopies (if available) andor electronic copies (if available) of the Offering Documents are availablefrom (in the case of printed copies and CD-Rom copies) our branches or (in the case of electroniccopies) on our website at httpwwwncbcomhk as specified on the relevant termsheet You shouldread and understand all of the Offering Documents for an Equity Linked Deposit before decidingwhether to make an investment

You are warned that the value of our Equity Linked Deposits may fluctuate and you may sustain atotal loss of your investment You should therefore ensure that you understand the nature of ourEquity Linked Deposits and carefully study the risk factors set out in the Offering Documents for ourEquity Linked Deposits and where necessary seek independent professional advice before youdecide whether to invest in our Equity Linked Deposits

The Offering Documents of the Equity Linked Deposits include particulars given in compliance withthe Code on Unlisted Structured Investment Products issued by the SFC (ldquoCoderdquo) for the purpose ofgiving information with regard to the Bank (as the Offeror and the Product Arranger) and the EquityLinked Deposits We (as the Offeror and the Product Arranger) accept full responsibility for thecontents of and the completeness and accuracy of the information contained in each of the OfferingDocuments and confirm having made all reasonable enquiries that to the best of our knowledgeand belief there is no untrue or misleading statement or other facts the omission of which wouldmake any statement therein untrue or misleading We (as the Offeror and the Product Arranger) alsoconfirm that the Equity Linked Deposits comply with the Code We confirm that we (as the Offeror)meet the eligibility requirements applicable to issuers set out in the Code and we (as the ProductArranger) meet the eligibility requirements applicable to product arrangers set out in the Code

None of the Offering Documents constitute a prospectus under the Companies Ordinance (Cap 32Laws of Hong Kong)

The Bankrsquos independent auditor PricewaterhouseCoopers (the certified public accountants) of 22ndFloor Princersquos Building 10 Chater Road Central Hong Kong has given and has not withdrawn itswritten consent to the inclusion of its independent auditorrsquos report dated 23 March 2012 on theconsolidated financial statements of the Bank for the year ended 31 December 2011 and theauditorrsquos review report dated 15 August 2012 on the unaudited consolidated interim financialstatements of the Bank for the six months ended 30 June 2012 (collectively the ldquoReportsrdquo) andorthe references to its name in this document in the form and context in which they are included TheReports were not prepared for incorporation in this document The Bank confirms thatPricewaterhouseCoopers was engaged by the Bank as its independent auditor in respect of itsaudited consolidated financial statements for the year ended 31 December 2011 and unauditedconsolidated interim financial statements for the six months ended 30 June 2012 and the Bank is notaware of to the best of its knowledge any conflict of interests for the auditor in the preparation ofthe Reports

We confirm that the unaudited consolidated interim financial statements for the six months ended30 June 2012 were prepared in accordance with the Bankrsquos usual accounting policies and procedures

The Bankrsquos financial year runs from 1 January to 31 December

If English is not your preferred language you may request for copies of this Financial DisclosureDocument written in Chinese from our sales staff at our designated branches 倘若英文並非閣下屬意的語言閣下可向本行指定分行的銷售人員索取本財務披露文件的中文語言版本

minus 1 minus

CONTENTS

The audited consolidated annual financial statements of Nanyang Commercial Bank Limited for

the year ended 31 December 2011

The unaudited interim report of Nanyang Commercial Bank Limited for the six months ended 30

June 2012

minus 2 minus

2011

CONTENTS PAGEReport of the Directors 1Independent Auditorrsquos Report 3Consolidated Income Statement 5Consolidated Statement of Comprehensive Income 6Statement of Comprehensive Income 7Consolidated Balance Sheet 8Balance Sheet 9Consolidated Statement of Changes in Equity 10Statement of Changes in Equity 11Consolidated Cash Flow Statement 12Notes to the Financial Statements

1 Principal activities 132 Summary of significant accounting policies 133 Critical accounting estimates and judgements in applying accounting policies 384 Financial risk management 405 Net interest income 1126 Net fee and commission income 1137 Net trading gain(loss) 1138 Net gain on other financial assets 1149 Other operating income 11410 Net charge of impairment allowances 11411 Operating expenses 11512 Net gain from disposal offair value adjustments on investment properties 11513 Net (loss)gain from disposalrevaluation of properties plant and equipment 11514 Taxation 11615 Profit attributable to the equity holders of the Bank 11616 Dividends 11717 Retirement benefit costs 11718 Share option schemes 11819 Directorsrsquo and senior managementrsquos emoluments 12020 Cash and balances with banks and other financial institutions 12221 Financial assets at fair value through profit or loss 12322 Derivative financial instruments 12423 Advances and other accounts 13124 Loan impairment allowances 13125 Investment in securities 13326 Investment in subsidiaries 13827 Investment properties 13828 Properties plant and equipment 13929 Other assets 14230 Financial liabilities at fair value through profit or loss 14231 Deposits from customers and hedge accounting 14232 Other accounts and provisions 14333 Assets pledged as security 14334 Deferred taxation 14335 Share capital 14636 Reserves 14637 Notes to consolidated cash flow statement 14738 Contingent liabilities and commitments 14839 Capital commitments 14840 Operating lease commitments 149

CONTENTS PAGE41 Litigation 15042 Segmental reporting 15043 Loans to directors and officers 15744 Significant related party transactions 15745 Currency concentrations 16046 Cross-border claims 16047 Non-bank Mainland China exposures 16248 Ultimate holding company 16249 Comparative amounts 16250 Approval of financial statements 162

Unaudited Supplementary Financial Information 1 Capital charge for credit market and operational risks 1632 Capital requirements for credit risks 1643 Credit risk under the internal ratings-based approach 1654 Credit risk under the standardised (credit risk) approach 1765 Counterparty credit risk-related exposures 1796 Assets securitisation 1837 Capital requirements for market risk 1848 Capital requirements for operational risk 1859 Equity exposures in banking book 185 Management of Risks 186Corporate Governance 189Business Review 196 Appendix

Subsidiaries of the Bank 201

Definitions 202

1

Report of the Directors

The Directors are pleased to present their report together with the audited consolidated financial statements of Nanyang

Commercial Bank Limited (hereinafter as the ldquoBankrdquo) and its subsidiaries (together with the Bank hereinafter as the ldquoGrouprdquo) for


Principal Activities The Bank is a licensed bank authorised under the Hong Kong Banking Ordinance The principal activities of the Bank are the

provision of banking and related financial services The principal activities of the Banks subsidiaries are shown in ldquoAppendix -

Subsidiaries of the Bankrdquo to the Financial Statements

Results and Appropriations The results of the Group for the year are set out in the consolidated income statement on page 5

No dividend was declared for the year ended 31 December 2011 (31 December 2010 HK$483000000)

Reserves Details of movements in the reserves of the Group are set out in the consolidated statement of changes in equity on page 10

Donations Charitable and other donations made by the Group during the year amounted to approximately HK$91000

Properties Plant and Equipment Details of movements in properties plant and equipment of the Group and the Bank are set out in Note 28 to the Financial

Statements

Share Capital Details of the share capital of the Bank are set out in Note 35 to the Financial Statements

Directors The directors during the year and up to the date of this report are

Board of Directors

Chairman Zhou Zaiqun

Vice Chairman Fang Hongguang (appointed on 28 March 2011)

Zeng Xiaoping

Xu Gang (resigned on 28 March 2011)

Directors Gao Yingxin

Zhuo Chengwen

Li Jiuzhong

Zhu Yanlai

Yuen Wai Keung

Chang Hsin Kang

Lan Hong Tsung David

Lau Hon Chuen

Non-executive directors Independent non-executive directors

2

Report of the Directors (continued) Directors (continued) In accordance with Article 81 of the Articles of Association of the Bank Mr Zeng Xiaoping Mr Gao Yingxin Mr Zhuo Chengwen

and Ms Zhu Yanlai retire at the forthcoming annual general meeting and being eligible offer themselves for re-election

Directorsrsquo Interests in Equity or Debt Securities Saved as disclosed in Note 18 at no time during the year was the Bank or any of its holding companies subsidiaries or fellow

subsidiaries a party to any arrangements to enable the directors of the Bank to acquire benefits by means of the acquisition of

shares in or debentures of the Bank or any other body corporate

Directorsrsquo Interests in Contracts of Significance No contracts of significance in relation to the Groups business to which the Bank or any of its holding companies subsidiaries or

fellow subsidiaries was a party and in which any of the Banks directors had a material interest whether directly or indirectly

subsisted at the end of the year or at any time during the year

Management Contracts No contracts concerning the management and administration of the whole or any substantial part of the business of the Bank were

entered into or existed during the year

Compliance with the Banking (Disclosure) Rules The financial statements for the year ended 31 December 2011 comply with the requirements set out in the Banking (Disclosure)

Rules under the Hong Kong Banking Ordinance

Auditor The financial statements for the year have been audited by PricewaterhouseCoopers who retire and being eligible offer

themselves for re-appointment

On behalf of the Board

Zhou Zaiqun

Chairman

Hong Kong 23 March 2012

3

Independent Auditorrsquos Report To the shareholders of Nanyang Commercial Bank Limited (incorporated in Hong Kong with limited liability)

We have audited the consolidated financial statements of Nanyang Commercial Bank Limited (the ldquoBankrdquo) and its subsidiaries

(together the ldquoGrouprdquo) set out on pages 5 to 162 which comprise the consolidated and company balance sheets as at 31

December 2011 and the consolidated income statement the consolidated and company statements of comprehensive income

the consolidated and company statements of changes in equity and the consolidated cash flow statement for the year then ended

and a summary of significant accounting policies and other explanatory information

Directorsrsquo Responsibility for the Consolidated Financial Statements

The directors of the Bank are responsible for the preparation of consolidated financial statements that give a true and fair view in

accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and

the Hong Kong Companies Ordinance and for such internal control as the directors determine is necessary to enable the

preparation of consolidated financial statements that are free from material misstatement whether due to fraud or error

Auditorrsquos Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion

solely to you as a body in accordance with section 141 of the Hong Kong Companies Ordinance and for no other purpose We do

not assume responsibility towards or accept liability to any other person for the contents of this report

We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public

Accountants Those standards require that we comply with ethical requirements and plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free from material misstatement

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial

statements The procedures selected depend on the auditorrsquos judgment including the assessment of the risks of material

misstatement of the consolidated financial statements whether due to fraud or error In making those risk assessments the auditor

considers internal control relevant to the entityrsquos preparation of consolidated financial statements that give a true and fair view in

order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the

effectiveness of the entityrsquos internal control An audit also includes evaluating the appropriateness of accounting policies used and

the reasonableness of accounting estimates made by the directors as well as evaluating the overall presentation of the

consolidated financial statements

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion

4

Independent Auditorrsquos Report (continued) To the shareholders of Nanyang Commercial Bank Limited (continued) (incorporated in Hong Kong with limited liability)

Opinion

In our opinion the consolidated financial statements give a true and fair view of the state of affairs of the Bank and of the Group as

at 31 December 2011 and of the Grouprsquos profit and cash flows for the year then ended in accordance with Hong Kong Financial

Reporting Standards and have been properly prepared in accordance with the Hong Kong Companies Ordinance

PricewaterhouseCoopers

Certified Public Accountants


5

Consolidated Income Statement

For the year ended 31 December Notes 2011 2010 HK$rsquo000 HK$rsquo000

Interest income 5803023 3820407Interest expense (2518282) (1062445) Net interest income 5 3284741 2757962 Fee and commission income 863825 780442Fee and commission expense (73639) (79799) Net fee and commission income 6 790186 700643 Net trading gain(loss) 7 80349 (36185)Net (loss)gain on financial instruments designated at fair value through

profit or loss (4561) 45047Net gain on other financial assets 8 53780 80200Other operating income 9 46074 46344 Net operating income before impairment allowances 4250569 3594011Net charge of impairment allowances 10 (161306) (30620) Net operating income 4089263 3563391Operating expenses 11 (1284837) (1433785) Operating profit 2804426 2129606Net gain from disposal offair value adjustments on investment properties 12 136237 78674Net (loss)gain from disposalrevaluation of properties plant and equipment 13 (14468) 3544 Profit before taxation 2926195 2211824Taxation 14 (477237) (377422) Profit for the year 2448958 1834402 Dividends 16 - 483000

The notes on pages 13 to 162 are an integral part of these financial statements

6

Consolidated Statement of Comprehensive Income For the year ended 31 December Notes 2011 2010 HK$rsquo000 HK$rsquo000 Profit for the year 2448958 1834402 Premises

Revaluation of premises 1213719 534270Deferred tax 34 (172968) (68439) 1040751 465831

Available-for-sale securities Change in fair value of available-for-sale securities 3249 185775Release upon disposal of available-for-sale securities (53559) (89538)Net charge of impairment allowances on available-for-sale securities

transferred to income statement 10 725 -Amortisation with respect to available-for-sale securities transferred to held-

to-maturity securities (5957) (11218)Deferred tax 34 11131 (15162) (44411) 69857

Change in fair value of hedging instruments under net investment hedges (91759) (23785) Currency translation difference 292659 229350 Other comprehensive income for the year net of tax 1197240 741253 Total comprehensive income for the year 3646198 2575655


7

Statement of Comprehensive Income For the year ended 31 December Notes 2011 2010 HK$rsquo000 HK$rsquo000 Profit for the year 2180414 1812794 Premises

Revaluation of premises 1195288 518116Deferred tax 34 (169034) (65507)

1026254 452609 Available-for-sale securities

Change in fair value of available-for-sale securities (18200) 196205Release upon disposal of available-for-sale securities (53559) (89538)Net charge of impairment allowances on available-for-sale securities



Currency translation difference 175 1018 Other comprehensive income for the year net of tax 965932 531306 Total comprehensive income for the year 3146346 2344100


8

Consolidated Balance Sheet

At

31 December At

31 December Notes 2011 2010 HK$rsquo000 HK$rsquo000ASSETS Cash and balances with banks and other financial institutions 20 43994333 24455981Placements with banks and other financial institutions maturing between

one and twelve months 23169580 7754054Financial assets at fair value through profit or loss 21 2245761 2252783Derivative financial instruments 22 816403 1128659Advances and other accounts 23 132914225 124150176Investment in securities 25 30182604 27180437Investment properties 27 847948 618263Properties plant and equipment 28 4583411 3439380Deferred tax assets 34 57714 26204Other assets 29 819477 1169252 Total assets 239631456 192175189 LIABILITIES Deposits and balances from banks and other financial institutions 28066288 18774689Financial liabilities at fair value through profit or loss 30 1077896 1185375Derivative financial instruments 22 672618 916211Deposits from customers 31 174469468 141336905Other accounts and provisions 32 8396670 6856327Current tax liabilities 229927 168626Deferred tax liabilities 34 582393 447058 Total liabilities 213495260 169685191 EQUITY Share capital 35 700000 700000Reserves 36 25436196 21789998 Total equity 26136196 22489998 Total liabilities and equity 239631456 192175189

The notes on pages 13 to 162 are an integral part of these financial statements Approved by the Board of Directors on 23 March 2012 and signed on behalf of the Board by

Fang Hongguang Lau Hon Chuen

Director Director

Yuen Wai Keung Leung Ka Chun

Director Secretary

9

Balance Sheet

At

31 December At


one and twelve months 2260456 1834313Financial assets at fair value through profit or loss 21 2245761 2252783Derivative financial instruments 22 749148 1095238Advances and other accounts 23 95159808 83912646Investment in securities 25 26016031 25758916Investment in subsidiaries 26 5222682 5286630Investment properties 27 802260 579940Properties plant and equipment 28 4120250 3102010Deferred tax assets 34 656 627Other assets 29 652284 1146077 Total assets 164170914 145307651 LIABILITIES Deposits and balances from banks and other financial institutions 9476635 8896221Financial liabilities at fair value through profit or loss 30 1077896 1185375Derivative financial instruments 22 614632 888344Deposits from customers 31 124747402 109845308Other accounts and provisions 32 2767476 2344087Current tax liabilities 199047 142517Deferred tax liabilities 34 573293 437612 Total liabilities 139456381 123739464 EQUITY Share capital 35 700000 700000Reserves 36 24014533 20868187 Total equity 24714533 21568187 Total liabilities and equity 164170914 145307651


Approved by the Board of Directors on 23 March 2012 and signed on behalf of the Board by


Director Director


Director Secretary

10

Consolidated Statement of Changes in Equity

Share capital

Share premium

Capital reserve

Premisesrevaluation

reserve

Reserve forfair value

changes of available-

for-sale securities

Regulatory reserve

Translation reserve

Retained earnings Total

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2010 700000 2444517 605 2328600 61954 740826 219077 13901764 20397343 Profit for the year - - - - - - - 1834402 1834402Other comprehensive income

Premises - - - 465831 - - - - 465831Available-for-sale securities - - - - 81530 - - (11673) 69857Change in fair value of hedging

instruments under net investment hedges - - - - - - (23785) - (23785)

Currency translation difference - - - 3288 (1) - 226063 - 229350

Total comprehensive income - - - 469119 81529 - 202278 1822729 2575655 Release upon disposal of premises - - - (102452) - - - 102452 -Transfer from retained earnings - - - - - 400310 - (400310) -Interim dividend - - - - - - - (483000) (483000) At 31 December 2010 700000 2444517 605 2695267 143483 1141136 421355 14943635 22489998

Share capital

Share premium

Capital reserve

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve



Premises - - - 1040751 - - - - 1040751Available-for-sale securities - - - - (38690) - - (5721) (44411)Change in fair value of hedging


Currency translation difference - - - 4568 (362) - 288453 - 292659 Total comprehensive income - - - 1045319 (39052) - 196694 2443237 3646198 Release upon disposal of premises - - - (67095) - - - 67095 -Transfer from retained earnings - - - - - 217491 - (217491) - At 31 December 2011 700000 2444517 605 3673491 104431 1358627 618049 17236476 26136196

In accordance with the requirements of the HKMA the amounts are set aside for general banking risks including future losses or other unforeseeable risks in addition

to the loan impairment allowances recognised under HKAS 39


11

Statement of Changes in Equity

Share capital

Share premium

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve

Retained earnings

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2010 700000 2444517 2190125 61952 507306 (7122) 13810309 19707087 Profit for the year - - - - - - 1812794 1812794 Other comprehensive income

Premises - - 452609 - - - - 452609 Available-for-sale securities - - - 89351 - - (11672) 77679 Currency translation difference - - - - - 1018 - 1018

Total comprehensive income - - 452609 89351 - 1018 1801122 2344100 Release upon disposal of premises - - (99138) - - - 99138 - Transfer from retained earnings - - - - 131808 - (131808) - Interim dividend - - - - - - (483000) (483000) At 31 December 2010 700000 2444517 2543596 151303 639114 (6104) 15095761 21568187

Share capital

Share premium

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve

Retained earnings


Premises - - 1026254 - - - - 1026254 Available-for-sale securities - - - (54776) - - (5721) (60497) Currency translation difference - - - - - 175 - 175

Total comprehensive income - - 1026254 (54776) - 175 2174693 3146346 Release upon disposal of premises - - (65938) - - - 65938 - Transfer from retained earnings - - - - 69396 - (69396) - At 31 December 2011 700000 2444517 3503912 96527 708510 (5929) 17266996 24714533

In accordance with the requirements of the HKMA the amounts are set aside for general banking risks including future losses or other unforeseeable risks in

addition to the loan impairment allowances recognised under HKAS 39


12

Consolidated Cash Flow Statement

For the year ended 31 December Notes 2011 2010

HK$rsquo000 HK$rsquo000

Cash flows from operating activities Operating cash inflow before taxation 37(a) 20676887 8737858Hong Kong profits tax paid (366311) (218661)Overseas profits tax paid (106236) (46017)

Net cash inflow from operating activities 20204340 8473180 Cash flows from investing activities

Purchase of properties plant and equipment 28 (198551) (111492)Purchase of investment properties 27 (13105) -Proceeds from disposal of properties plant and equipment 67734 105084Proceeds from disposal of investment properties 5892 166221

Net cash (outflow)inflow from investing activities (138030) 159813 Cash flows from financing activities

Dividends paid (483000) -Distribution to BOCHK - (6215)

Net cash outflow from financing activities (483000) (6215) Increase in cash and cash equivalents 19583310 8626778Cash and cash equivalents at 1 January 30391069 21301340Effect of exchange rate changes on cash and cash equivalents 1014729 462951 Cash and cash equivalents at 31 December 37(b) 50989108 30391069


13

Notes to the Financial Statements

1 Principal activities

Nanyang Commercial Bank Limited was incorporated in Hong Kong (hereinafter as the ldquoBankrdquo) and its subsidiaries were

incorporated in Hong Kong or Shanghai (together with the Bank hereinafter as the ldquoGrouprdquo) The Bank is a licensed bank

authorised under the Hong Kong Banking Ordinance

The principal activities of the Bank are the provision of banking and related financial services The principal activities of the

Bankrsquos subsidiaries are shown in ldquoAppendix - Subsidiaries of the Bankrdquo to the financial statements The address of the Bankrsquos

registered office is 151 Des Voeux Road Central Hong Kong

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below

These policies have been consistently applied to all the years presented unless otherwise stated

21 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with Hong Kong Financial

Reporting Standards (HKFRSs is a collective term which includes all applicable individual Hong Kong Financial Reporting

Standards HKASs and Interpretations) issued by the HKICPA and the requirements of the Hong Kong Companies

Ordinance

The consolidated financial statements have been prepared under the historical cost convention as modified by the

revaluation of available-for-sale securities financial assets and financial liabilities (including derivative financial

instruments) at fair value through profit or loss investment properties which are carried at fair value and premises which

are carried at fair value or revalued amount less accumulated depreciation and accumulated impairment losses

The preparation of financial statements in conformity with HKFRSs requires the use of certain critical accounting

estimates It also requires the Management to exercise judgement in the process of applying the Grouprsquos accounting

policies The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are

significant to the consolidated financial statements are disclosed in Note 3

14

Notes to the Financial Statements (continued)

2 Summary of significant accounting policies (continued)

21 Basis of preparation (continued)

(a) Standards amendments and interpretations already mandatorily effective for accounting periods beginning

on 1 January 2011

Standard Interpretation Content

Applicable for financial years beginning onafter

Currently relevant to the Group

HKAS 24 (Revised) Related Party Disclosures

1 January 2011 Yes

HKAS 32 (Amendment) Classification of Rights Issues 1 February 2010 No

HKFRS 1 (Revised) First-time Adoption of Hong Kong Financial Reporting StandardsndashLimited exemption from comparative HKFRS 7 disclosures for first-time adopters

1 July 2010 No

HK(IFRIC)-Int 14 (Amendment)

The Limit on a Defined Benefit Asset Minimum Funding Requirements and their Interaction

1 January 2011 No

HK(IFRIC)-Int 19 Extinguishing Financial Liabilities with Equity Instruments

1 July 2010 No

bull HKAS 24 (Revised) lsquoRelated Party Disclosuresrsquo The Group early adopted the partial exemption regarding disclosure

requirements for transactions with government-related entities in its annual financial statements for the year ended 31

December 2009 The application of the remainder of the revised standard this year which amends the definition of

related parties will not have significant impact on the presentation and disclosure of the Grouprsquos financial statements

15




(b) Standards and amendments issued that are not yet mandatorily effective and have not been early adopted by

the Group in 2011

The following standards and amendments have been issued and are mandatory for accounting periods beginning on

or after 1 July 2011

Standard Content



HKAS 1 (Revised) Presentation of Financial Statements 1 July 2012 Yes

HKAS 19 (2011) Employee Benefits 1 January 2013 Yes

HKAS 27 (2011) Separate Financial Statements 1 January 2013 Yes

HKAS 28 (2011) Investments in Associates and Joint Ventures

1 January 2013 No

HKAS 32 (Amendment) Financial Instruments Presentation ndash Offsetting Financial Assets and Financial Liabilities

1 January 2014 Yes

HKFRS 1 (Revised) First-time Adoption of HKFRS ndash Fixed Dates and Hyperinflation

1 July 2011 No

HKFRS 7 (Amendment) Financial Instruments Disclosures ndash Transfer of Financial Assets

1 July 2011 Yes

HKFRS 7 (Amendment) Financial Instruments Disclosures ndash Offsetting Financial Assets and Financial Liabilities

1 January 2013 Yes

HKFRS 7 (Amendment) Financial Instruments Disclosures ndash Transition to IFRS 9

1 January 2015 Yes

HKFRS 9 Financial Instruments 1 January 2015 Yes

HKFRS 10 Consolidated Financial Statements 1 January 2013 Yes

HKFRS 11 Joint Arrangements 1 January 2013 No

HKFRS 12 Disclosure of Interests in Other Entities 1 January 2013 Yes

HKFRS 13 Fair Value Measurement 1 January 2013 Yes

16





the Group in 2011 (continued)

bull HKAS 1 (Revised) lsquoPresentation of Financial Statementsrsquo The amendments to HKAS 1 (Revised) require companies

preparing financial statements in accordance with HKFRSs to group together items within other comprehensive

income (OCI) that may be reclassified to the profit or loss section of the income statement The amendments also

reaffirm existing requirements that items in OCI and profit or loss should be presented as either a single statement or

two consecutive statements The adoption of this revised standard will affect the presentation of the Grouprsquos statement

of comprehensive income

bull HKAS 19 (2011) lsquoEmployee Benefitsrsquo The revised standard mainly amends the part related to accounting for

changes in defined benefit obligations and plan assets and related presentation and disclosure The amendments do

not have significant impact on the Grouprsquos financial statements

bull HKAS 27 (2011) lsquoSeparate Financial Statementsrsquo Please refer to the below on HKFRS 10 lsquoConsolidated Financial

Statementsrsquo

bull HKAS 28 (2011) lsquoInvestments in Associates and Joint Venturesrsquo Please refer to the below on HKFRS 11 lsquoJoint

Arrangementsrsquo

bull HKAS 32 (Amendment) lsquoFinancial Instruments Presentation ndash Offsetting Financial Assets and Financial Liabilitiesrsquo

The amendment addresses inconsistencies in current practice when applying the offsetting criteria and clarifies the

meaning of lsquocurrently has a legally enforceable right of set-offrsquo and the application of offsetting criteria to some gross

settlement systems (such as central clearing house systems) that may be considered equivalent to net settlement The

Group is considering the financial impact of the amendment

bull HKFRS 7 (Amendment) lsquoFinancial Instruments Disclosures - Transfer of Financial Assetsrsquo The amendment

introduces new quantitative disclosure requirements for transfers of financial assets that are either fully derecognised

or derecognised not in their entirety The adoption of this amendment will affect the disclosures of the Grouprsquos financial

statements when the Group undertakes transfers of financial assets that fall within its scope

17






bull HKFRS 7 (Amendment) lsquoFinancial Instruments Disclosures - Offsetting Financial Assets and Financial Liabilitiesrsquo

The new disclosures which are similar to the new US GAAP disclosure requirements would provide users with

information that is useful in (i) evaluating the effect or potential effect of netting arrangements on an entityrsquos financial

position and (ii) analysing and comparing financial statements prepared in accordance with IFRSs and US GAAP The

adoption of this amended standard will affect the disclosure of the Grouprsquos financial statements

bull HKFRS 7 (Amendment) lsquoFinancial Instruments Disclosures - Transition to IFRS 9rsquo The amendments provide relief

from the requirement to restate comparative financial statements which was originally available only to entities that

chose to apply HKFRS 9 prior to 2012 Instead additional transition disclosures will be required to help users to better

understand the effect of initial application of the standard

bull HKFRS 9 lsquoFinancial Instrumentsrsquo The first part of HKFRS 9 was issued in November 2009 and will replace those

parts of HKAS 39 relating to the classification and measurement of financial assets In November 2010 a further

pronouncement was published to address financial liabilities and derecognition Key features are as follows

(i) Classification and Measurement

Financial assets are required to be classified into one of the following measurement categories (1) those to be

measured subsequently at fair value or (2) those to be measured subsequently at amortised cost Classification is

to be made on transition and subsequently on initial recognition The classification depends on the entityrsquos

business model for managing its financial instruments and the contractual cash flow characteristics of the

instrument

A financial instrument is subsequently measured at amortised cost only if it is a debt instrument and the objective

of the entityrsquos business model is to hold the asset to collect the contractual cash flows and the assetrsquos contractual

cash flows represent only unleveraged payments of principal and interest All other debt instruments are to be

measured at fair value through profit or loss

All equity instruments are to be measured subsequently at fair value Equity instruments that are held for trading will

be measured at fair value through profit or loss For all other equity investments an irrevocable election can be

made at initial recognition to recognise unrealised and realised fair value gains and losses through other

comprehensive income rather than income statement Once elected to be recognised through other comprehensive

income there will be no reclassification of fair value gains and losses to income statement Dividends are to be

presented in income statement as long as they represent a return on investment

18






(ii) Financial Liabilities and Derecognition

Except for the two substantial changes described below the classification and measurement requirements of

financial liabilities have been basically carried forward with minimal amendments from HKAS 39 For the

derecognition principles they are consistent with that of HKAS 39

The requirements related to the fair value option for financial liabilities were changed to address own credit risk It

requires the amount of change in fair value attributable to changes in the credit risk of the financial liabilities be

presented in other comprehensive income The remaining amount of the total gain or loss is included in income

statement If this requirement creates or enlarges an accounting mismatch in profit or loss then the whole fair value

change is presented in income statement The determination of whether there will be a mismatch will need to be

made at initial recognition of individual liabilities and will not be re-assessed Amounts presented in other

comprehensive income are not subsequently reclassified to income statement but may be transferred within equity

The standard eliminates the exception from fair value measurement contained in HKAS 39 for derivative liabilities

that are linked to and must be settled by delivery of an unquoted equity instrument

The mandatory effective date of HKFRS 9 is deferred from 1 January 2013 to 1 January 2015 with earlier adoption

still permitted The deferral will make it possible to have the same mandatory effective date for the entire standard

New transitional disclosures are required instead of comparative restatement The Group is considering the

financial impact of the standard and the timing of its application

bull HKFRS 10 lsquoConsolidated Financial Statementsrsquo HKFRS 10 builds on existing principles by identifying the concept of

control as the determining factor when considering whether an entity should be included within the consolidated

financial statements of the parent company The standard provides additional guidance to assist in the determination

of control where this is difficult to assess It also replaces all of the guidance on control and consolidation stipulated in

HKAS 27 (Revised) lsquoConsolidated and Separate Financial Statementsrsquo and HK(SIC)- Int 12 lsquoConsolidation ndash Special

Purpose Entitiesrsquo The remainder of HKAS 27 (Revised) is renamed HKAS 27 (2011) lsquoSeparate Financial Statementsrsquo

as a standard dealing solely with separate financial statements without changing the existing guidance for separate

financial statements

19






bull HKFRS 11 lsquoJoint Arrangementsrsquo Changes in the definitions stipulated in HKFRS 11 have reduced the lsquotypesrsquo of joint

arrangements to two joint operations and joint ventures A joint operation is a joint arrangement that gives parties to

the arrangement direct rights to the assets and obligations for the liabilities The lsquojointly controlled assetsrsquo classification

in HKAS 31 lsquoInterests in Joint Venturesrsquo has been merged into joint operations as both types of arrangements

generally result in the same accounting outcome A joint venture in contrast gives the parties rights to the net assets

or outcome of the arrangement Joint ventures are accounted for using the equity method in accordance with HKAS 28

lsquoInvestments in Associatesrsquo which is renamed as HKAS 28 (2011) lsquoInvestments in Associates and Joint Venturesrsquo The

standard is amended to include the requirements of joint ventures accounting and to merge with the requirements of

HK(SIC)-Int 13 lsquoJointly Controlled Entities ndash Non-Monetary Contributions by Venturersrsquo After the application of HKAS

28 (2011) entities can no longer account for an interest in a joint venture using the proportionate consolidation method

bull HKFRS 12 lsquoDisclosure of Interests in Other Entitiesrsquo The standard sets out the required disclosures for entities

reporting under the two new standards HKFRS 10 and HKFRS 11 and the revised standard HKAS 28 (2011) The

existing guidance and disclosure requirements for separate financial statements stipulated in HKAS 27 (Revised) are

unchanged HKFRS 12 requires entities to disclose information that helps financial statements readers to evaluate the

nature risks and financial effects associated with the entityrsquos interests in subsidiaries associates joint arrangements

and unconsolidated structured entities

The above HKFRS 10 HKFRS 11 HKFRS 12 HKAS 27 (2011) and HKAS 28 (2011) issued in June 2011 are a group

of five new standards that address the scope of reporting entity and will supersede HKAS 27 (Revised) HKAS 28

HKAS 31 HK(SIC)-Int 12 and HK(SIC)-Int 13 Earlier application of these standards are permitted but only when they

are applied at the same time The Group is assessing the impact on the financial statements of the Group as a result

of the adoption of these new standards

bull HKFRS 13 lsquoFair Value Measurementrsquo The new standard which was issued in June 2011 replaces the fair value

measurement guidance contained in individual HKFRSs by providing a revised definition of fair value and a single

source of fair value measurement and disclosure requirements for use across HKFRSs The requirements do not

extend the use of fair value accounting but provide guidance on how it should be applied when its use is already

required or permitted by other standards within HKFRSs The Group is assessing the impact on the financial

statements of the Group as a result of the adoption of this new standard

20




(c) Improvements to HKFRS

lsquoImprovements to HKFRSrsquo contains numerous amendments to HKFRS which the HKICPA considers not urgent but

necessary It comprises amendments that result in accounting changes for presentation recognition or measurement

purpose as well as terminology or editorial amendments related to a variety of individual HKFRS Most of the

amendments are effective for annual periods beginning on or after 1 July 2010 For amendments that are effective for

the financial year beginning on 1 January 2011 there is no material impact on the financial statements of the Group

(d) Amendment issued that is not yet mandatorily effective but has been early adopted by the Group

Standard Content



year of early adoption

HKAS 12 (Amendment)

Income Taxes 1 January 2012 Yes 2010

bull HKAS 12 (Amendment) lsquoIncome Taxesrsquo The standard which was revised in December 2010 is mandatorily effective

for reporting periods beginning on or after 1 January 2012 Earlier application is permitted The Group considers that

the required treatment under the revised standard better reflects the tax position of the investment properties of the

Group and has early adopted the amended standard retrospectively since the year ended 31 December 2010

Upon early adoption deferred tax liabilities for the revaluation of investment properties have been calculated subject to

a nil tax rate

22 Consolidation

The consolidated financial statements include the financial statements of the Bank and all of its subsidiaries made up to

31 December

Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group controls the composition of the board

of directors controls more than half of the voting power holds more than half of the issued capital or by any other means

that entitle the Group to govern the financial and operating policies of the entities The existence and effect of potential

voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls

another entity Subsidiaries are fully consolidated from the date on which control is transferred to the Group They are de-

consolidated from the date that control ceases

21



22 Consolidation (continued)

Subsidiaries (continued)

For combination with a company under common control the merger accounting method will be applied The principle of

merger accounting is a way to combine companies under common control as though the business of the acquiree had

always been carried out by the acquirer The Grouprsquos consolidated financial statements represent the consolidated results

consolidated cash flows and consolidated financial position of the Group as if any such combination had occurred from

the date when the Bank and the acquiree first came under common control (ie no fair value adjustment on the date of

combination is required) The difference between the consideration and carrying amount at the time of combination is

recognised in other comprehensive income The effects of all transactions between the Group and the acquiree whether

occurring before or after the combination are eliminated in preparing the consolidated financial statements of the Group

Comparative amounts are presented as if the acquiree had been combined at the end of the previous reporting period

The transaction costs for the combination will be expensed in the income statement

Inter-company transactions balances and unrealised gains on transactions between Group companies are eliminated

unrealised losses are also eliminated unless the transaction provides evidence of impairment of the assets transferred

Where necessary accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted

by the Group

In the Bankrsquos balance sheet the investments in subsidiaries are stated at cost less allowance for impairment losses The

results of subsidiaries are accounted for by the Bank on the basis of dividends received and receivable

23 Segmental reporting

The operating result of segments are reported in a manner consistent with the internal reporting provided to the

Management which is the chief operating decision maker of the Group that allocates resources and assesses the

performance of operating segments Income and expenses directly associated with each segment are included in

determining business segment performance

24 Foreign currency translation

Items included in the financial statements of each of the Grouprsquos entities are measured using the currency of the primary

economic environment in which the entity operates (the ldquofunctional currencyrdquo) The consolidated financial statements are

presented in Hong Kong dollars which is the Bankrsquos functional and presentation currency

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions using the exchange

rates prevailing at the dates of the transactions and monetary assets and liabilities denominated in foreign currencies

translated at the rate of exchange at the end of the reporting period are recognised directly in the income statement

22



24 Foreign currency translation (continued)

Translation differences on monetary securities held at fair value through profit or loss are reported as part of the fair value

gain or loss Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-

sale are analysed between translation differences resulting from changes in the amortised cost of the securities and other

changes in the carrying amount of the securities Translation differences related to changes in the amortised cost are

recognised in the income statement and other changes in the carrying amount are recognised in other comprehensive

income

Translation differences on non-monetary items such as equities held at fair value through profit or loss are reported as

part of the fair value gain or loss Translation differences on non-monetary financial assets such as equities classified as

available-for-sale are included in the available-for-sale reserve in equity

The results and financial position of all the Group entities that have a functional currency different from Hong Kong dollars

are translated into Hong Kong dollars as follows

bull assets and liabilities are translated at the closing rate at the end of the reporting period

bull income and expenses are translated at average exchange rates and

bull all resulting exchange differences are recognised in the currency translation reserve in equity through other

comprehensive income

On consolidation exchange differences arising from the translation of the net investment in foreign entities and of

borrowings and other currency instruments designated as hedges of such investments are taken to other comprehensive

income When a foreign entity is sold such exchange differences are recognised in the income statement as part of the

gain or loss on sale

25 Derivative financial instruments

Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently re-

measured at fair value Fair values are obtained from quoted market prices in active markets including recent market

transactions and through the use of valuation techniques including discounted cash flow models and options pricing

models as appropriate All derivatives are carried as assets when fair value is positive and as liabilities when fair value is

negative

The best evidence of the fair value of a derivative at initial recognition is the transaction price (ie the fair value of the

consideration given or received)

23



25 Derivative financial instruments (continued)

Certain derivatives embedded in other financial instruments are treated as separate derivatives when their economic

characteristics and risks are not closely related to those of the host contract and the host contract is not carried at fair

value through profit or loss These embedded derivatives are measured at fair value with changes in fair value recognised

in the income statement

Derivatives are categorised as held for trading and changes in their fair value are recognised immediately in the income

statement unless they are designated as hedges and are effective hedging instruments then they are subject to

measurement under the hedge accounting requirements

26 Hedge accounting

The Group documents at inception the relationship between hedging instruments and hedged items as well as its risk

management objective and strategy for undertaking various hedge transactions The Group also documents its

assessment both at the hedge inception and on an ongoing basis of whether the hedging instruments that are used in

hedging transactions are highly effective in offsetting changes in fair values of hedged items These criteria should be met

before a hedge can be qualified to be accounted for under hedge accounting

Net investment hedge

A gain or loss on the effective portion of the hedging instrument is recognised in other comprehensive income and

accumulated in equity a gain or loss on the ineffective portion is recognised immediately in the income statement

Accumulated gains and losses previously recognised in other comprehensive income are reclassified to income statement

upon disposal of the foreign operation as part of the gain or loss on disposal

27 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally

enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset

and settle the liability simultaneously

28 Interest income and expense and fee and commission income and expense

Interest income and expense are recognised in the income statement for all financial assets and financial liabilities using

the effective interest method

24



28 Interest income and expense and fee and commission income and expense (continued)

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of

allocating the interest income or interest expense over the relevant period The effective interest rate is the rate that

exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or

when appropriate a shorter period to the net carrying amount of the financial asset or financial liability When calculating

the effective interest rate the Group estimates future cash flows considering all contractual terms of the financial

instrument (eg prepayment options or incentives relating to residential mortgage loans) but does not consider future

credit losses The calculation includes fees premiums or discounts and basis points paid or received between parties to

the contract and directly attributable origination fees and costs which represent an integral part of the effective yield are

amortised as interest income or expense over the expected life of the financial instrument

Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss

interest income is recognised on the written down value using the rate of interest used to discount the future cash flows

for the purpose of measuring the impairment loss Subsequent unwinding of the discount allowance is recognised as

interest income

Fee and commission income and expenses that are not an integral part of the effective yield are recognised on an accrual

basis ratably over the period when the related service is provided such as administrative fee asset management fee and

custody services fee Loan syndication fees are recognised as revenue when the related syndication arrangement has

been completed and the Group has retained no part of the loan package for itself or has retained a part at the same

effective interest rate as that of other participants

29 Financial assets

The Group classifies its financial assets into the following four categories financial assets at fair value through profit or

loss loans and receivables held-to-maturity securities and available-for-sale financial assets The Management

determines the classification of investments at initial recognition The classification depends on the purpose for which the

financial assets were held All financial assets are recognised initially at fair value Except for financial assets carried at

fair value through profit or loss all transaction costs of financial assets are included in their amortised costs

(1) Financial assets at fair value through profit or loss

This category has two sub-categories financial assets held for trading and those designated at fair value through

profit or loss at inception

A financial asset which has been acquired or incurred principally for the purpose of selling in the short term or is part of

a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent

actual pattern of short-term profit-taking is classified as held-for-trading Derivatives are also classified as held for

trading unless they are designated as effective hedges

25



29 Financial assets (continued)

(1) Financial assets at fair value through profit or loss (continued)

A financial asset other than one held for trading will be designated as a financial asset at fair value through profit or

loss if it meets one of the criteria set out below and is so designated by the Management

bull eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as lsquoan

accounting mismatchrsquo) that would otherwise arise from measuring the financial assets or recognising the gains and

losses on them on different bases or

bull applies to a group of financial assets financial liabilities or both that is managed and its performance is evaluated on

a fair value basis in accordance with a documented risk management or investment strategy and information about

the group is provided internally on that basis to the key Management or

bull relates to financial assets containing one or more embedded derivative that significantly modifies the cash flow

resulting from those financial assets

These assets are recognised initially at fair value with transaction costs taken directly to the income statement and

are subsequently re-measured at fair value

Gains and losses from changes in the fair value of such assets (excluding the interest component) are reported in net

trading gainloss or net gainloss on financial instruments designated at fair value through profit or loss The interest

component is reported as part of interest income Dividends on equity instruments of this category are also recognised

in net trading gainloss when the Grouprsquos right to receive payment is established

(2) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in

an active market including placements with and advances to banks and other financial institutions investment debt

securities without an active market and loans and advances to customers They arise when the Group provides money

goods or services directly to a debtor with no intention of trading the receivable They are initially recorded at fair value

plus any directly attributable transaction costs and are subsequently measured at amortised cost using the effective

interest rate method less allowances for impairment losses

26




(3) Held-to-maturity

Financial assets classified as held-to-maturity are those traded in active markets with fixed or determinable payments

and fixed maturities that the Grouprsquos Management has both the positive intention and the ability to hold to maturity

Where the Group sold held-to-maturity assets (i) other than due to an isolated event beyond the Grouprsquos control non-

recurring and could not have been reasonably anticipated by the Group or (ii) other than an insignificant amount of

held-to-maturity assets the entire category would be tainted and reclassified as available-for-sale They are initially

recorded at fair value plus any directly attributable transaction costs and are subsequently measured at amortised

cost using the effective interest method less allowances for impairment losses

(4) Available-for-sale

Financial assets classified as available-for-sale are those that are either designated as such or are not classified in any

of the other categories They are intended to be held for an indefinite period of time but may be sold in response to

needs for liquidity or changes in interest rates exchange rates or equity prices

Available-for-sale financial assets are initially recorded at fair value plus any directly attributable transaction costs and

are subsequently measured at fair value Unrealised gains and losses arising from changes in the fair value of

investments are recognised directly in other comprehensive income until the financial asset is disposed of or impaired

at which time the accumulated gain or loss previously recognised in equity should be transferred to the income

statement However interest income which includes the amortisation of premium and discount is calculated using the

effective interest method and is recognised in the income statement Dividends on equity instruments classified as

available-for-sale are recognised in other operating income when the Grouprsquos right to receive payment is established

The treatment of translation differences on available-for-sale securities is dealt with in Note 24

210 Financial liabilities

The Group classifies its financial liabilities under the following categories trading liabilities financial liabilities designated

at fair value through profit or loss deposits and other liabilities All financial liabilities are classified at inception and

recognised initially at fair value

(1) Trading liabilities

A financial liability is classified as held for trading if it is incurred principally for the purpose of repurchasing in the

short term Derivatives are also classified as held for trading unless they are designated as effective hedges It is

measured at fair value and any gains and losses from changes in fair value are recognised in the income statement

27



210 Financial liabilities (continued)

(2) Financial liabilities designated at fair value through profit or loss

A financial liability can be designated at fair value through profit or loss if it is so designated at inception A financial

liability is so designated if it meets one of the following criteria


accounting mismatchrsquo) that would otherwise arise from measuring the financial liabilities or recognising the gains

and losses on them on different bases or

bull applies to a group of financial assets financial liabilities or both that is managed and its performance is evaluated

on a fair value basis in accordance with a documented risk management or investment strategy and information

about the group is provided internally on that basis to the key Management or

bull relates to financial liabilities containing one or more embedded derivative that significantly modifies the cash flow

resulting from those financial liabilities

Financial liabilities designated at fair value through profit or loss are measured at fair value and any gains and

losses from changes in fair value are recognised in the income statement

(3) Deposits and other liabilities

Deposits and other liabilities other than those classified as trading liabilities or designated at fair value through profit

or loss are carried at amortised cost Any difference (if available) between proceeds net of transaction costs and the

redemption value is recognised in the income statement over the period using the effective interest method

211 Financial guarantee contracts

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder

for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a

contract between the holder and the debtor

Financial guarantees are initially recognised as financial liabilities and reported under ldquoOther accounts and provisionsrdquo in

the financial statements at fair value on the date the guarantee was given Subsequent to initial recognition the Grouprsquos

liabilities under such guarantees are measured at the higher of (i) the amount determined in accordance with HKAS 37

ldquoProvisions Contingent Liabilities and Contingent Assetsrdquo and (ii) the amount initially recognised less where appropriate

accumulated amortisation recognised over the life of the guarantee on a straight-line basis Any changes in the liability

relating to financial guarantees are taken to the income statement

28



212 Recognition and derecognition of financial instruments

Purchases and sales of financial assets at fair value through profit or loss available-for-sale and held-to-maturity

securities are recognised on the trade date the date on which the Group purchases or sells the assets Loans and

receivables (except investment securities without an active market) are recognised when cash is advanced to the

borrowers Financial assets are derecognised when the rights to receive cash flows from the financial assets have

expired or where the Group has transferred substantially all risks and rewards of ownership When the Group neither

transfers nor retains substantially all the risks and rewards of ownership of the financial asset the Group either

continues to recognise the transferred financial asset to the extent of its continuing involvement if control remains or

derecognise it if there is no retained control

Trading liabilities and financial liabilities designated at fair value through profit or loss are recognised on the trade date

Deposits that are not trading liabilities are recognised when money is received from customers other liabilities are

recognised when such obligations arise Financial liabilities are de-recognised from the balance sheet when and only

when the obligation specified in the contract is discharged cancelled or expired

Securities and bills sold to a counter party with an obligation to repurchase at a pre-determined price on a specified

future date under a repurchase agreement are referred to as Repos Securities and bills purchased from a counter party

with an obligation to re-sell to the counter party at a pre-determined price on a specified future date under a resale

agreement are referred to as Reverse repos

Repos or securities lending are initially recorded as due to banks placements from banks and other financial institutions

as appropriate at the actual amount of cash received from the counter party Financial assets given as collateral for

repurchase agreements are not derecognised and are recorded as investment securities or financial assets at fair value

through profit or loss Reverse repos or securities borrowing are initially recorded in the balance sheet as cash and due

from banks or placements with banks and other financial institutions as appropriate at the actual amount of cash paid

to the counter party Financial assets received as collateral under reverse repurchase agreements are not recognised on

the balance sheet The difference between sale and repurchase price is recognised as interest income or interest

expense over the life of the agreements using the effective interest method

213 Determination of fair value of financial instruments

The fair values of financial assets and financial liabilities that are quoted in active markets are based on current bid

prices and current ask prices respectively If the market for financial assets and financial liabilities is not active (such as

unlisted securities) the Group establishes fair value by using valuation techniques These include the use of recent

armrsquos length transactions discounted cash flow analysis option pricing models and other valuation techniques

commonly used by market participants

29



214 Impairment of financial assets

The Group assesses as at the end of each reporting period whether there is objective evidence that a financial asset or

group of financial assets is impaired A financial asset or a group of financial assets is impaired and impairment losses

are incurred if and only if there is objective evidence of impairment as a result of one or more events that occurred after

the initial recognition of the asset (a ldquoloss eventrdquo) and that loss event (or events) has an impact on the estimated future

cash flows of the financial asset or group of financial assets that can be reliably estimated Objective evidence that a

financial asset or group of financial assets may be impaired includes observable data that comes to the attention of the

Group about the following probable loss events

(i) significant financial difficulty of the issuer or obligor

(ii) a breach of contract such as a default or delinquency in interest or principal payment

(iii) the Group granting to the borrower for economic or legal reasons relating to the borrowerrsquos financial difficulty a

concession that the lender would not otherwise consider

(iv) it becoming probable that the borrower will enter into bankruptcy or other financial reorganisation

(v) the disappearance of an active market or downgrading below investment grade level for that financial asset

because of financial difficulties or

(vi) observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of

financial assets since the initial recognition of those assets although the decrease cannot yet be identified with the

individual financial assets in the group including

bull adverse changes in the payment status of borrowers in the group or

bull national or local economic conditions that correlate with defaults on the assets in the group

(1) Assets carried at amortised cost

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are

individually significant If the Group determines that no objective evidence of impairment exists for an individually

assessed financial asset it includes the asset in a group of financial assets with similar credit risk characteristics and

collectively assesses them for impairment together with all other financial assets that are not individually significant

or for which impairment has not yet been identified Assets that are individually assessed for impairment and for

which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment

30



214 Impairment of financial assets (continued)

(1) Assets carried at amortised cost (continued)

If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity securities has

been incurred the amount of the loss is measured as the difference between the assetrsquos carrying amount and the

present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted

at the financial assetrsquos original effective interest rate The carrying amount of the asset is reduced through the use of

an allowance account and the amount of the loss is recognised in the income statement If a loan or held-to-maturity

investment has a variable interest rate the discount rate for measuring any impairment loss is the current effective

interest rate determined under the contract As a practical expedient the Group may measure impairment on the

basis of an instrumentrsquos fair value using an observable market price

The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the

cash flows that may result from foreclosure less costs for obtaining and selling the collateral

For the purposes of a collective assessment of impairment financial assets are grouped on the basis of similar and

relevant credit risk characteristics Those characteristics are relevant to the estimation of future cash flows for groups

of such assets by being indicative of the debtorsrsquo ability to pay all amounts due according to the contractual terms of

the assets being evaluated

Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the

basis of the contractual cash flows of the assets in the group and historical loss experience for assets with credit risk

characteristics similar to those in the group Historical loss experience is adjusted on the basis of current observable

data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is

based and to remove the effects of conditions in the historical period that do not exist currently

When a loan is uncollectible it is written off against the related allowance for impairment losses Such loans are

written off after all the necessary procedures have been completed and the amount of the loss has been determined

Subsequent recoveries of amounts previously written off decrease the amount of impairment losses in the income

statement

If in a subsequent period the amount of allowance for impairment losses decreases and the decrease can be

related objectively to an event occurring after the impairment loss was recognised (such as an improvement in the

debtorrsquos credit rating) the previously recognised impairment loss to the extent of such a decrease is reversed by

adjusting the allowance account The amount of the reversal is recognised in the income statement

Loans whose terms have been renegotiated with substantial difference in the terms are no longer considered to be

past due but are treated as new loans

31




(2) Assets classified as available-for-sale

If evidence of impairment exists for available-for-sale financial assets the accumulated losses measured as the

difference between the acquisition cost or amortised cost and the current fair value less any impairment loss on that

financial asset previously recognised in the income statement is removed from equity and recognised in the income

statement In the case of equity investments classified as available-for-sale a significant or prolonged decline in the

fair value of the security below its cost is considered in determining whether the assets are impaired If in a

subsequent period the fair value of a debt instrument classified as available-for-sale increases and the increase can

be objectively related to an event occurring after the impairment loss was recognised in the income statement the

impairment loss to the extent of such a decrease is reversed through the income statement With respect to equity

instruments further fair value changes are recognised in the reserve for fair value change of available-for-sale

securities through other comprehensive income impairment losses are not reversed through the income statement

215 Impairment of investment in subsidiaries and non-financial assets

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount

may not be recoverable Potential indications of impairment may include significant adverse changes in the

technological market economic or legal environment in which the assets operate or whether there has been a

significant or prolonged decline in value below their cost

An impairment loss is recognised for the amount by which the assetrsquos carrying amount exceeds its recoverable amount

The recoverable amount is the higher of an assetrsquos fair value less costs to sell and value in use For the purposes of

assessing impairment assets are grouped at the lowest levels for which there are separately identifiable cash flows

(cash generating units) Assets that suffered impairment are reviewed for possible reversal of the impairment at each

reporting date

In the Bankrsquos financial statements impairment testing of the investment in a subsidiary is also required upon receiving

dividend from that entity if the dividend exceeds the total comprehensive income of that entity concerned in the period

the dividend is declared or if the carrying amount of that entity in the Banks balance sheet exceeds the carrying amount

of that entitys net assets including goodwill in its consolidated balance sheet

216 Investment properties

Properties that are held for long-term rental yields or for capital appreciation or both and that are not occupied by the

companies in the Group are classified as investment properties Properties leased out within Group companies are

classified as investment properties in individual companiesrsquo financial statements and as premises in consolidated

financial statements Land held under operating lease is classified and accounted for as investment property when the

rest of the definition of investment property is met The operating lease is accounted for as if it is a finance lease

32



216 Investment properties (continued)

Investment properties are recognised initially at cost including related transaction costs After initial recognition

investment properties are measured at fair value assessed by professional valuers on the basis of open market value If

information of open market value is not available alternative valuation methods are used such as recent prices on less

active markets or discounted cash flow projections These valuations are performed in accordance with valuation

standards on properties published by The Hong Kong Institute of Surveyors

Subsequent expenditure is charged to the assetrsquos carrying amount only when it is probable that future economic benefits

associated with the item will flow to the Group and the cost of the item can be measured reliably The item is stated at

cost less impairment and is included in the carrying amount of investment properties Once the item begins to generate

economic benefits it is then measured at fair value All other repairs and maintenance costs are expensed in the income

statement during the financial period in which they are incurred

Any changes in fair value are recognised directly in the income statement

If an investment property becomes owner-occupied it is reclassified as premises and its fair value at the date of

reclassification becomes its cost for accounting purposes If an item of premises becomes an investment property

because its use has changed any difference resulting between the carrying amount and the fair value of this item at the

date of transfer is recognised in other comprehensive income as a revaluation of premises under HKAS 16 ldquoProperty

Plant and Equipmentrdquo However if a fair value gain reverses a previous revaluation loss or impairment loss the gain is

recognised in the income statement up to the amount previously debited

217 Properties plant and equipment

Properties are mainly branch and office premises Premises are shown at fair value based on periodic at least annually

valuations by external independent valuers less subsequent accumulated depreciation Any accumulated depreciation at

the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the

revalued amount of the asset In the intervening periods the directors review the carrying amount of premises by

reference to the open market value of similar properties and adjustments are made when there has been a material

change

All plant and equipment are stated at historical cost less accumulated depreciation and impairment Historical cost

includes expenditures that are directly attributable to the acquisition and installation of the items

Subsequent costs are included in an assetrsquos carrying amount or are recognised as a separate asset as appropriate

only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the

item can be measured reliably The item is stated at cost until it begins to generate economic benefits then the item is

subsequently measured according to the measurement basis of its respective assets class All other repairs and

maintenance costs are charged to the income statement during the financial period in which they are incurred

33



217 Properties plant and equipment (continued)

Increases in the carrying amount arising on revaluation of premises are credited to the premises revaluation reserve

through other comprehensive income Decreases that offset previous increases of the same individual asset are

charged against premises revaluation reserve through other comprehensive income all other decreases are expensed

in the income statement Any subsequent increases are credited to the income statement up to the amount previously

debited and then to the premises revaluation reserve Upon disposal of premises the relevant portion of the premises

revaluation reserve realised in respect of previous valuations is released and transferred from the premises revaluation

reserve to retained earnings

Depreciation is calculated on the straight-line method to write down the cost or revalued amount of such assets over

their estimated useful lives as follows

bull Properties Over the life of government land leases

bull Plant and equipment 2-15 years

The useful lives of assets are reviewed and adjusted if appropriate as at the end of each reporting period

At the end of each reporting period both internal and external sources of information are considered to determine

whether there is any indication that properties plant and equipmentare impaired If any such indication exists the

recoverable amount of the asset is estimated and where relevant an impairment loss is recognised to reduce the asset

to its recoverable amount Such impairment loss is recognised in the income statement except where the asset is

carried at valuation and the impairment loss does not exceed the revaluation surplus for that same asset in which case

it is treated as a revaluation decrease The recoverable amount is the higher of the assetrsquos fair value less costs to sell

and value in use Impairment loss is reversed through the premises revaluation reserve or income statement as

appropriate

Gains and losses on disposals are determined by comparing proceeds with carrying amount relevant taxes and

expenses These are recognised in the income statement

34



218 Leases

(1) Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified

as operating leases The total payments made under operating leases (net of any incentives received from the lessor)

are charged to the income statement on a straight-line basis over the period of the lease

When an operating lease is terminated before the lease period has expired any payment required to be made to the

lessor by way of penalty is recognised as an expense in the period in which termination takes place Rental income

from operating leases is recognised on a straight-line basis over the lease term

(2) Finance leases

Leases of assets where lessee have obtained substantially all the risks and rewards of ownership are classified as

finance leases Government land leases in Hong Kong are classified as finance leases as market anticipates that the

leases can be extended for a nominal amount the risks and rewards of leasehold land would have already been

substantially transferred to the lessee as if it were freehold

Finance leases are capitalised at the leasersquos commencement at the lower of the fair value of the leased asset and

the present value of the minimum lease payments Each lease payment is allocated between the liability and finance

charges so as to achieve a constant rate on the finance balance outstanding The corresponding rental obligations

net of finance charges are included in other liabilities Investment properties acquired under finance leases are

carried at their fair value

When assets are leased out under a finance lease the present value of the lease payments is recognised as a

receivable Lease income is recognised over the term of the lease using net investment method which reflects a

constant periodic rate of return

219 Cash and cash equivalents

For the purposes of the consolidated cash flow statement cash and cash equivalents comprise balances with original

maturity less than three months from the date of acquisition including cash balances with banks and other financial

institutions short-term bills and notes classified as investment securities

220 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a

reliable estimate of the amount of the obligation can be made

35



221 Employee benefits

(1) Retirement benefit costs

The Group contributes to defined contribution retirement schemes under either recognised ORSO schemes or MPF

schemes that are available to the Grouprsquos employees Contributions to the schemes by the Group and employees

are calculated as a percentage of employeesrsquo basic salaries for the ORSO schemes and in accordance with the MPF

rules for MPF schemes The retirement benefit scheme costs are charged to the income statement as incurred and

represent contributions payable by the Group to the schemes Contributions made by the Group that are forfeited by

those employees who leave the ORSO scheme prior to the full vesting of their entitlement to the contributions are

used by the Group to reduce the existing level of contributions or to meet its expenses under the trust deed of the

ORSO schemes

The assets of the schemes are held in independently-administered funds separate from those of the Group

(2) Leave entitlements

Employee entitlements to annual leave and sick leave are recognised when they accrue to employees A provision is

made for the estimated liability for unused annual leave and the amount of sick leave expected to be paid as a result

of services rendered by employees up to the end of the reporting period

Compensated absences other than sick leave and special approved annual leaves are non-accumulating they lapse

if the current periodrsquos entitlement is not used in full Except for unexpired annual leaves they do not entitle

employees to a cash payment for unused entitlement on leaving the Group Such compensated absences are

recognised when the absences occur

(3) Bonus plans

The expected cost of bonus payments are recognised as a liability when the Group has a present legal or

constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be

made Liabilities for bonus plans that are expected to be settled longer than twelve months will be recognised using

discounted cash flow method if the amounts are significant

222 Current and deferred income taxes

Tax expenses for the period comprises current and deferred tax Tax is recognised in the income statement except to

the extent that it relates to items recognised directly in other comprehensive income In this case the tax is also

recognised in other comprehensive income within the corresponding item

Income tax payable on profits based on the applicable tax law enacted or substantially enacted at the end of the

reporting period in each jurisdiction where the Bank and the subsidiaries operate and generate taxable income is

recognised as a current income tax expense in the period in which profits arise

36



222 Current and deferred income taxes (continued)

Deferred income tax is provided in full using the balance sheet liability method on temporary differences arising

between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements

Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the end

of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred

income tax liability is settled

The principal temporary differences arise from asset impairment provisions depreciation of premises and equipment

revaluation of certain assets including available-for-sale securities and premises and tax losses carried forward

However the deferred income tax is not recognised if it arises from initial recognition of an asset or liability in a

transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable

profit or loss

Deferred income tax liabilities are provided in full on all taxable temporary differences and deferred income tax assets

are recognised to the extent that it is probable that future taxable profit will be available against which the temporary

differences can be utilised

Deferred income tax is charged or credited in the income statement except for deferred income tax relating to fair value

re-measurement of available-for-sale securities and revaluation of premises which are charged or credited to other

comprehensive income in which case the deferred income tax is also credited or charged to other comprehensive

income and is subsequently recognised in the income statement together with the realisation of the deferred gain and

loss

Deferred tax liability or deferred tax asset arising from investment property is determined based on the presumption that

the revaluation amount of such investment property will be recovered through sale with the relevant tax rate applied

223 Repossessed assets

Repossessed assets are initially recognised at the lower of their fair value less costs to sell and the amortised cost of the

related outstanding loans on the date of repossession and the related loans and advances together with the related

impairment allowances are derecognised from the balance sheet Subsequently repossessed assets are measured at

the lower of their cost and fair values less costs to sell and are reported as lsquonon-current assets held for salersquo included in

lsquoOther assetsrsquo

224 Fiduciary activities

The Group commonly acts as a trustee or in other fiduciary capacities that result in its holding or managing assets on

behalf of individuals trusts and other institutions These assets and any gains or losses arising thereon are excluded

from these financial statements as they are not assets of the Group

37



225 Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by

the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group It

can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow

of economic resources will be required or the amount of obligation cannot be measured reliably

A contingent liability is not recognised as a provision but is disclosed in the notes to the financial statements When a

change in the probability of an outflow occurs so that outflow is probable it will then be recognised as a provision

A contingent asset is a possible asset that arises from past events and whose existence will only be confirmed by the

occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group

Contingent assets are not recognised but are disclosed in the notes to the financial statements when an inflow of

economic benefits is probable When the inflow is virtually certain it will be recognised as an asset

226 Related parties

For the purposes of these financial statements a party is considered to be related to the Group if that party controls

jointly controls or has significant influence over the Group is a member of the same financial reporting group such as

parents subsidiaries and fellow subsidiaries is an associate or a joint venture of the Group or parent reporting group is

a key management personnel of the Group or parents or where the Group and the party are subject to common control

Related parties may be individuals or entities

38


3 Critical accounting estimates and judgements in applying accounting policies

The Group makes estimates and assumptions that affect the carrying amounts of assets and liabilities within the next

financial year Estimates and judgements are continually evaluated and are based on historical experience and other factors

including expectations of future events that are believed to be reasonable under the circumstances Areas susceptible to

changes in essential estimates and judgements which affect the carrying amount of assets and liabilities are set out below

The effect of changes to either the key assumptions or other estimation uncertainties will be presented below if it is

practicable to determine It is possible that actual results may require material adjustments to the estimates referred to below

31 Impairment allowances on loans and advances

The Group reviews its loan portfolios to assess impairment at least on a quarterly basis In determining whether an

impairment loss should be recorded in the income statement the Group makes judgements as to whether there is any

observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans

and advances before the decrease can be identified with an individual loan in that portfolio This evidence may include

observable data indicating that there has been an adverse change in the payment status of borrowers in a group (eg

payment delinquency or default) or economic conditions that correlate with defaults on assets in the group The

Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective

evidence of impairment similar to those in the portfolio when estimating expected future cash flows The methodology and

assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly

Carrying amounts of loans and advances as at 31 December 2011 are shown in Note 23 to the Financial Statements

32 Impairment of held-to-maturity and available-for-sale investments

The Group reviews its held-to-maturity and available-for-sale investment portfolios to assess impairment at least on a

quarterly basis In determining whether any of these investments is impaired risk characteristics and performance such

as external credit rating market price etc will be assessed The Group makes estimates on the default rate and loss

severity of each investment with reference to market performance of the portfolios current payment status of the issuers

or performance of the underlying assets or economic conditions that correlate with defaults on the collateralised assets

The methodology and assumptions used for impairment assessments are reviewed regularly

Carrying amounts of investment in securities as at 31 December 2011 are shown in Note 25 to the Financial Statements

33 Fair values of derivative financial instruments

The fair values of derivative financial instruments that are not quoted in active markets are determined by using valuation

techniques Valuation techniques used include discounted cash flows analysis and models with built-in functions available

in externally acquired financial analysis or risk management systems widely used by the industry To the extent practical

the models use only observable data

39


3 Critical accounting estimates and judgements in applying accounting policies (continued)

34 Held-to-maturity investments

The Group follows the guidance of HKAS 39 in classifying certain non-derivative financial assets with fixed or

determinable payments and fixed maturity as held-to-maturity securities This classification requires significant

Management judgement to evaluate the Grouprsquos intention and ability to hold such investments to maturity If the Group

fails to hold these investments to maturity other than for specific circumstances defined in HKAS 39 such as selling an

insignificant amount selling close to maturity or due to significant credit deterioration of such investments it will be

required to reclassify the entire portfolio of financial assets as available-for-sale investments The investments would then

be measured at fair value and not amortised cost

40


4 Financial risk management

The Group is exposed to financial risks as a result of engaging in a variety of business activities The principal financial risks

are credit risk market risk (including currency risk and interest rate risk) and liquidity risk This note summarises the

Grouprsquos exposures to these risks as well as its objectives policies and procedures for managing and the methods used to

measure these risks

Financial risk management framework

The Grouprsquos risk management governance structure is designed to cover all business processes and ensure various risks

are properly managed and controlled in the course of conducting business The Group has a sound risk management

organisational structure with a comprehensive set of policies and procedures to identify measure monitor and control

various risks that may arise These risk management policies and procedures are regularly reviewed and modified to reflect

changes in markets and business strategies

The Board of Directors representing the interests of shareholders is the highest decision making authority of the Group

and has the ultimate responsibility for risk management The Board with the assistance of the Risk Management

Committee (ldquoRMCrdquo) has the primary responsibility for formulating risk management strategies and ensuring that the Group

has an effective risk management system to implement these strategies

The RMC a standing committee established by the Board of Directors is responsible for overseeing the Grouprsquos various

types of risks reviewing and approving high-level risk-related policies and overseeing their implementation reviewing and

approving significant or high risk exposures or transactions and exercising its power of veto if it considers that the

transactions should not proceed

41

Notes to the Financial Statements (continued) 4 Financial risk management (continued)

Financial risk management framework (continued)

The Group has put in place appropriate internal control systems including establishment of an organisation structure that

sets adequately clear lines of authority and responsibility for monitoring compliance with policies procedures and limits

Proper reporting lines also provide sufficient independence of the control functions from the business areas as well as

adequate segregation of duties throughout the organisation which helps to promote an appropriate internal control

environment

Pursuant to a risk-based approach the Auditing Department conducts independent reviews on areas including principal

risks regulatory compliance adequacy and effectiveness of risk policies and internal control systems operations and

activities

Product development

To ensure effective risk assessment and monitoring the Group developed a comprehensive product development and

management framework which clearly defines the roles and responsibilities of all related units and the proper risk

assessment procedures for the product development process

In accordance with the strategic objectives set by the Management the respective product management units are

responsible for formulating business and product development plans and the division of strategic development shall ensure

the plans are aligned with the Grouprsquos overall strategies Divisions that are responsible for risk management legal

compliance and finance etc are accountable for reviewing the relevant risk assessment results

Apart from product development the respective business units identify and assess all the related risks Risk evaluating

divisions shall conduct independent review on risk management procedures and assessment results Products can only be

launched after the risk management procedures are fulfilled and endorsed by all risk evaluating divisions

In order to be prudent in offering treasury products to our clients all treasury products regardless brand new or modified

require approval from the Management or the special committee before launching

41 Credit Risk

Credit risk is the risk of loss that a customer or counterparty will be unable to or unwilling to meet its contractual

obligations Credit risk exists in the trading book and banking book on- and off-balance sheet exposures of a bank It

arises principally from lending trade finance treasury businesses and covers inter-bank transactions foreign exchange

and derivative transactions as well as investments in bonds and securities

Credit risk management framework

The Group has formulated a comprehensive set of credit risk management policies and procedures and appropriate

credit risk limits to manage and control credit risk that may arise These policies procedures and credit risk limits are

regularly reviewed to cope with changes in risk market conditions and business strategies

42


4 Financial risk management (continued)

41 Credit Risk (continued)

Credit risk management framework (continued)

The Grouprsquos organisation structure establishes a clear set of authority and responsibility for monitoring compliance with

policies procedures and limits

The Credit and Loans Management Committee (ldquoCLMCrdquo) a management committee chaired by the Chief Executive

(ldquoCErdquo) is responsible for the implementation of the credit risk management strategies as well as the approval of credit

policies It also monitors various aspects of the Grouprsquos loan portfolio such as asset quality risk concentration etc

Various units of the Group have their respective credit risk management responsibilities Business units act as the first

line of defense They are obliged to make thorough assessment on every credit application and are fully responsible for

monitoring credit performance and punctual repayments The business activities conducted should also comply with the

credit policies and procedures The risk management units which are independent from the business units have the

primary responsibilities for providing an independent due diligence and identifying measuring monitoring and

controlling credit risk They report directly to the CLMC RMC and CE

The Board of Directors is the ultimate source of credit authority The Board of Directors delegates credit approval

authority to the CE The CE can further delegate to the subordinates within the limit authorized by the Board of Directors

The Group sets the limits of credit approval authority according to business nature rating the level of transaction risk

and the extent of the credit exposure

Credit risk measurement and control

In view of the rapidly changing market conditions the Group has been continuously revisiting its credit strategies and

conducting rigorous reviews on the concerned portfolios

Loans and advances

Different credit approval and control procedures are adopted according to level of risk associated with the customer

counterparty or transaction All credit applications are subject to thorough risk assessment and proper approval In

general most of the credit applications will be reviewed and assessed by independent officer(s) of risk management

unit(s) before approval with exceptions given to certain designated products which satisfy certain conditions These

designated loans will be (randomly) reviewed by designated unit(s) which is(are) independent from the front line

business units after funding being drawn Corporate and financial institution credit applications are independently

reviewed and objectively assessed by risk management units Obligor ratings and facility grades are assigned to these

portfolios Retail internal ratings systems are used in risk assessment of retail credit transactions including small

business retail exposures residential mortgage loans and personal loans Loan grades obligor ratings as well as loss

estimates (if applicable) are used to support credit approval

43




Credit risk measurement and control (continued)

Loans and advances (continued)

The Group also uses loan grades obligor ratings and loss estimates (if applicable) to support credit monitoring analysis

and reporting For corporate and financial institution more frequent rating review and closer monitoring are required for

riskier customers For retail exposures monthly updated ratings and loss estimates are used for credit monitoring on a

portfolio basis More comprehensive review is required for obligors being identified under high-risk pools

The Group has established credit master scale for internal rating purpose which is in compliance with the Banking

(Capital) Rules on rating structure and can be mapped to Standard amp Poorrsquos external ratings

In addition to obligor ratings the Group adopts a facility rating system (in the case of corporate and bank exposure) and

expected loss (in the case of retail exposures) to assess the risk in the facility structure during credit approval This two-

dimensional rating approach to evaluate credit risk complies with the HKMArsquos requirements on IRB

Regular credit management information reports and ad hoc reports are provided to the Management RMC and Board

of Directors to facilitate their continuous monitoring of credit risk

The Group identifies credit concentration risk by industry geography customer and counterparty risk The Group

monitors changes to counterparties credit risk quality of the credit portfolio and risk concentrations and reports

regularly to the Management

The Group continues to adopt loan grading criteria which divides credit assets into 5 categories with reference to

HKMArsquos guidelines

ldquoPassrdquo represents loans where the borrower is current in meeting its repayment obligations and full repayment of

interest and principal is not in doubt

ldquoSpecial Mentionrdquo represents loans where the borrowers are experiencing difficulties which may threaten the Grouprsquos

position Ultimate loss is not expected at this stage but could occur if adverse conditions persist

ldquoSubstandardrdquo represents loans where the borrower displays a definable weakness that is likely to jeopardise

repayment

ldquoDoubtfulrdquo represents loans where collection in full is improbable and the Group expects to sustain a loss of principal

andor interest taking into account the net realisable value of the collateral

ldquoLossrdquo represents loans which are considered uncollectible after all collection options (such as the realisation of

collateral or the institution of legal proceedings) have been exhausted

44





Debt securities and derivatives

For investments in debt securities and securitisation assets the obligor ratings or external credit ratings assessment of

the underlying assets and credit limits setting on customersecurity issuer basis are used for managing credit risk

associated with the investment For derivatives the Group sets customer limits to manage the credit risk involved and

follows the same approval and control processes as loans and advances On-going monitoring and stop-loss

procedures are established

Settlement risk arises mainly from foreign exchange transactions with counterparties and also from derivatives in any

situation where a payment in cash securities or equities is made in the expectation of a corresponding receipt in cash

securities or equities Daily settlement limits are established for each counterparty to cover all settlement risk arising

from the Grouprsquos transactions on any single day

45




Collateral held as security and other credit enhancements

The valuation and management of collateral have been documented in the policy covering acceptance criteria validity

of collateral loan-to-value ratio haircut ratio valuation and insurance etc The collateral is revalued on a regular basis

though the frequency and the method used varies with the type of collateral involved and the nature and the risk of the

underlying credit The Group has established a mechanism to update the value of its main type of collateral real estate

properties with the use of public indices on a portfolio basis Collateral is insured with the Group as the beneficiary

For loans guaranteed by a third party the Group will assess the guarantorrsquos financial condition credit history and ability

to meet obligations

As at 31 December 2011 and 2010 the Group did not hold any collateral permitted to sell or re-pledge in the absence of

default by the borrower

46




(A) Credit exposures

The maximum exposure is a worst case scenario of credit risk exposure to the Group without taking account of any

collateral held or other credit enhancements For on-balance sheet assets the maximum exposure to credit risk

equals their carrying amount For letters of guarantee issued the maximum exposure to credit risk is the maximum

amount that the Group could be required to pay if the guarantees are called upon For loan commitment and other

credit related liabilities the maximum exposure to credit risk is the full amount of the committed facilities

The nature of the collateral held and other credit enhancements and their financial effect to the different classes of

the Grouprsquos financial assets are as follows

Balances and placements with banks and other financial institutions

These exposures are generally considered to be low risk due to the nature of the counterparties Collateral is

generally not sought on these assets

Financial assets at fair value through profit or loss and investment in securities

Collateral is generally not sought on debt securities

Derivative financial instruments

The International Swaps and Derivatives Association Master Agreement is the preferred agreement for documenting

derivatives activities of the Group It provides the contractual framework within which dealing activities across a full

range of OTC products are conducted and contractually bind both parties to apply close-out netting across all

outstanding transactions covered by an agreement if either party defaults or another pre-agreed termination event

occurs

Advances and other accounts contingent liabilities and commitments

The general types of collateral are disclosed on page 45 Advances and other accounts contingent liabilities and

commitments are collateralised to the extent considered appropriate by the Group taking account of the risk

assessment of individual exposures The collateral coverage of advances to customers is analysed on pages 58 to

61 The components and nature of contingent liabilities and commitments are disclosed in Note 38 Regarding the

commitments that are unconditionally cancellable without prior notice the Group would assess the necessity to

withdraw the credit line in case where the credit quality of a borrower deteriorates Accordingly these commitments

do not expose the Group to significant credit risk

47




(B) Gross advances and other accounts

Gross advances and other accounts before loan impairment allowances are summarised by product type as follows

The Group

2011 2010 HK$rsquo000 HK$rsquo000

Advances to customers Personal

- Mortgages 17151357 16648970- Others 3711930 2774624

Corporate - Commercial loans 93541765 91651292- Trade finance 5439177 5125758

119844229 116200644 Trade bills 13318487 7724207Advances to banks and other financial institutions 544256 858924 Total 133706972 124783775

The Bank






Advances with a specific repayment date are classified as overdue when the principal or interest is past due and

remains unpaid Advances repayable by regular instalments are classified as overdue when an instalment payment

is past due and remains unpaid Advances repayable on demand are classified as overdue either when a demand for

repayment has been served on the borrower but repayment has not been made in accordance with the instruction or

when the advances have remained continuously outside the approved limit that was advised to the borrower

A financial asset is impaired and impairment losses are incurred if and only if there is objective evidence of

impairment as a result of one or more events that occurred and that loss event(s) has an impact on the estimated

future cash flows of the financial asset that can be reliably estimated

48




(B) Gross advances and other accounts (continued)

If there is objective evidence that an impairment loss on loans has been incurred the amount of loss is measured as

the difference between the carrying amount and the present value of estimated future cash flows generated by the

financial asset Objective evidence that a financial asset is impaired includes observable data that comes to the

attention of the holder of the asset about the loss events

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include

- Significant financial difficulty incurred by the borrower

- A breach of contract such as a default or delinquency in interest or principal payment

- For economic or legal reasons related to the borrowerrsquos financial difficulty the Group has granted to the borrower a

concession that it would not otherwise consider

- Probable that the borrower will become bankrupt or undergo other financial reorganisation or

- Other observable data indicating that there is a measurable decrease in the estimated future cash flows from such

loans and advances

49





(a) Advances neither overdue nor impaired

Advances that were neither overdue nor impaired are analysed by internal credit grades as follows

The Group

2011

PassSpecial

mentionSubstandard

or below

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Advances to customers

Personal - Mortgages 16930079 2668 4213 16936960- Others 3690063 879 655 3691597

Corporate - Commercial loans 92528432 780456 21801 93330689- Trade finance 5375545 20585 - 5396130

118524119 804588 26669 119355376 Trade bills 13231930 86557 - 13318487Advances to banks and other

financial institutions 544256 - - 544256 Total 132300305 891145 26669 133218119

The Group

2010

PassSpecial

mentionSubstandard

or below




115445260 306990 31829 115784079 Trade bills 7724207 - - 7724207Advances to banks and other


50





(a) Advances neither overdue nor impaired (continued)

The Bank

2011

PassSpecial

mentionSubstandard

or below






The Bank

2010

PassSpecial

mentionSubstandard

or below






The occurrence of loss event(s) may not necessarily result in impairment loss where the loans are fully

collateralised While such loans are of ldquosubstandardrdquo or lower grades they are regarded as not being impaired

and have been included in the above tables

51





(b) Advances overdue but not impaired

The gross amount of advances overdue but not impaired is analysed as follows

The Group 2011

Overdue for

threemonths or less

Overdue forsix months

or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over

one year Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Advances to customers

Personal - Mortgages 203980 1452 - 210 205642- Others 12565 1305 - - 13870

Corporate - Commercial loans 124832 - 64 1 124897- Trade finance 11581 10 - - 11591

Total 352958 2767 64 211 356000

The Group 2010

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over



Personal - Mortgages 161274 1180 - 2127 164581- Others 9698 - - 353 10051

Corporate - Commercial loans 120206 - 126 311 120643- Trade finance 2642 - - - 2642

Total 293820 1180 126 2791 297917

52





(b) Advances overdue but not impaired (continued)

The Bank 2011

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over



Personal - Mortgages 133301 503 - - 133804- Others 12565 1305 - - 13870

Corporate - Commercial loans 124833 - 64 - 124897- Trade finance 11422 10 - - 11432

Total 282121 1818 64 - 284003

The Bank 2010

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over



Personal - Mortgages 144049 1180 - - 145229- Others 9698 - - - 9698

Corporate - Commercial loans 120206 - 126 - 120332- Trade finance 2642 - - - 2642

Total 276595 1180 126 - 277901

53





(c) Impaired advances

Advances individually identified to be impaired are analysed by product type as follows

The Group 2011 2010

Grossadvances

Marketvalue of

collateral Gross

advances

Marketvalue of

collateral HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Advances to customers


Corporate - Commercial loans 86179 - 106982 -- Trade finance 31456 65851 4556 -

Total 132853 75765 118648 5645 Loan impairment allowances made in respect of

such advances 87615 105289

The Bank 2011 2010

Grossadvances

Marketvalue of

collateral Gross

advances

Marketvalue of


Personal - Mortgages - - - -- Others 6418 4972 849 -

Corporate - Commercial loans 16341 - 16931 -- Trade finance 4397 - 4556 -

Total 27156 4972 22336 - Loan impairment allowances made in respect of


The loan impairment allowances were made after taking into account the value of collateral in respect of impaired

advances

54





(c) Impaired advances (continued)

The Group 2011 2010 HK$rsquo000 HK$rsquo000

Current market value of collateral held against the covered portion of

such advances to customers 75765 5645 Covered portion of such advances to customers 35646 5442 Uncovered portion of such advances to customers 97207 113206

The Bank 2011 2010 HK$rsquo000 HK$rsquo000


such advances to customers 4972 - Covered portion of such advances to customers 3977 - Uncovered portion of such advances to customers 23179 22336

Classified or impaired advances to customers are analysed as follows

The Group 2011 2010

HK$rsquo000 HK$rsquo000 Gross classified or impaired advances to customers 165966 158892 Gross classified or impaired advances to customers as a percentage of

gross advances to customers 014 014 Individually assessed loan impairment allowances made in respect of


The Bank 2011 2010




Classified or impaired advances to customers follow the definitions set out in the Banking (Disclosure) Rules

under the Banking Ordinance and represent advances which are either classified as ldquosubstandardrdquo ldquodoubtfulrdquo or

ldquolossrdquo under the Grouprsquos classification of loan quality or individually assessed to be impaired

55





(d) Advances overdue for more than three months

The gross amount of advances overdue for more than three months is analysed as follows

The Group 2011 2010

Amount

of gross advances to

customers Amount


customers HK$rsquo000 HK$rsquo000 Gross advances to customers which have

been overdue for

- six months or less but over three months 11900 001 2430 000- one year or less but over six months 5490 000 3431 000- over one year 88155 008 110660 010

Advances overdue for over three months 105545 009 116521 010 Individually assessed loan impairment

allowances made in respect of such advances 84606 102151

The Bank 2011 2010

Amount


customers Amount



been overdue for




56





(d) Advances overdue for more than three months (continued)







Collateral held against overdue or impaired loans is principally represented by charges over business assets such

as commercial and residential premises for corporate loans and mortgages over residential properties for

personal loans

As at 31 December 2011 and 2010 there were no advances to banks and other financial institutions overdue for

more than three months for the Group and the Bank

57





(e) Rescheduled advances

The Group 2011 2010

Amount


customers Amount


customers HK$rsquo000 HK$rsquo000 Rescheduled advances to customers net of

amounts included in ldquoAdvances overdue for more than three monthsrdquo 20514 002 27196 002

The Bank 2011 2010

Amount


customers Amount




As at 31 December 2011 and 2010 there were no rescheduled advances to banks and other financial

institutions for the Group and the Bank

Rescheduled advances are those advances that have been restructured or renegotiated because of

deterioration in the financial position of the borrower or of the inability of the borrower to meet the original

repayment schedule Rescheduled advances which have been overdue for more than three months under the

revised repayment terms are included in overdue advances

58





(f) Concentration of advances to customers

(i) Sectoral analysis of gross advances to customers

The information concerning gross advances to customers has been analysed into loans used inside or outside

Hong Kong by industry sectors of the borrowers as follows

The Group 2011

Gross

advances

Coveredby collateral

or othersecurity

Classifiedor impaired Overdue

Individually assessed

impairment allowances

Collectivelyassessed


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Loans for use in Hong

Kong Industrial commercial and

financial - Property development 2738332 5871 - - - 8510- Property investment 10942261 7938 - 45685 - 110811- Financial concerns 3005772 3570 - - - 8392- Stockbrokers 3241 10000 - - - 12- Wholesale and retail

trade 18064963 6152 8032 48960 2492 109024- Manufacturing 4412357 3810 9409 14854 2214 39747- Transport and transport

equipment 3542563 1055 - 2466 - 18360- Recreational activities 70162 - - - - 194- Information technology 1091930 248 2173 2173 552 3215- Others 5427639 6295 977 30140 725 39451

Individuals

- Loans for the purchase of flats in Home Ownership Scheme Private Sector Participation Scheme and Tenants Purchase Scheme 861024 10000 4618 29248 - 577

- Loans for purchase of other residential properties 11929257 9999 2422 104556 - 4932

- Others 2477768 8341 2625 10544 825 2084 Total loans for use in

Hong Kong 64567269 6635 30256 288626 6808 345309 Trade finance 5439177 3302 31456 39972 2971 44663 Loans for use outside

Hong Kong 49837783 3550 104254 150518 77836 315160 Gross advances to

customers 119844229 5201 165966 479116 87615 705132

59





(f) Concentration of advances to customers (continued)

(i) Sectoral analysis of gross advances to customers (continued)

The Group 2010

Gross

advances


or othersecurity









financial - Property development 2554599 4909 - - - 7688- Property investment 10635477 7908 71 50932 72 98689- Financial concerns 2919759 3477 - - - 7749- Stockbrokers 797 10000 - - - 6- Wholesale and retail



Individuals






customers 116200644 5172 158892 414616 105289 528310

60







The Bank 2011

Gross

advances


or othersecurity












Individuals






customers 84235941 5620 57870 304498 11652 428451

61







The Bank 2010

Gross

advances


or othersecurity












Individuals





Hong Kong 18311017 2767 20254 196 - 58335 Gross advances to

customers 77374903 5523 58424 298287 12447 342818

Advances with a specific repayment date are classified as overdue when the principal or interest is past due and remains

unpaid

62







The amount of new impairment allowances charged to the income statement and classified or impaired loans

written off during the year are shown below

The Group 2011 2010

Newimpairmentallowances

Classified orimpaired loans

written off

New impairment allowances


written off HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Loans for use in Hong Kong Industrial commercial and financial

- Property development - - - -- Property investment 10625 118 1086 -- Financial concerns 766 - 1673 -- Stockbrokers 6 - 5 -- Wholesale and retail trade 42298 877 34360 2611- Manufacturing 13487 4979 1317 338- Transport and transport equipment 7098 - - -- Recreational activities 42 - 45 -- Information technology 233 - 776 -- Others 8763 13 2742 750

Individuals

- Loans for the purchase of flats in Home Ownership Scheme Private Sector Participation Scheme and Tenants Purchase Scheme - - - -

- Loans for purchase of other residential properties 673 - 486 -

- Others 885 - - - Total loans for use in Hong Kong 84876 5987 42490 3699 Trade finance 12896 4819 11317 37835 Loans for use outside Hong Kong 87728 22891 32952 73 Gross advances to customers 185500 33697 86759 41607

63







The Bank 2011 2010



written off






Individuals



- Others 885 - - - Total loans for use in Hong Kong 84229 5987 42026 3699 Trade finance 11716 4819 10173 37835 Loans for use outside Hong Kong 1940 - - - Gross advances to customers 97885 10806 52199 41534

64






(ii) Geographical analysis of gross advances to customers

The following geographical analysis of advances to customers is based on the location of the counterparties

after taking into account the transfer of risk In general such transfer of risk takes place if the advances to

customers are guaranteed by a party in a country which is different from that of the customer

Gross advances to customers

The Group 2011 2010 HK$rsquo000 HK$rsquo000 Hong Kong 65296349 62068720Mainland China 48409389 46927384Others 6138491 7204540

119844229 116200644

The Bank 2011 2010 HK$rsquo000 HK$rsquo000 Hong Kong 60491684 58050513Mainland China 18394496 13982987Others 5349761 5341403 84235941 77374903

Collectively assessed loan impairment allowances in respect of the gross advances to customers


705132 528310

The Bank 2011 2010 HK$rsquo000 HK$rsquo000 Hong Kong 323930 268306Mainland China 83186 54175Others 21335 20337

428451 342818

65






(ii) Geographical analysis of gross advances to customers (continued)

Overdue advances


479116 414616


304498 298287

Individually assessed loan impairment allowances in respect of the overdue advances

The Group 2011 2010 HK$rsquo000 HK$rsquo000 Hong Kong 60027 48672Mainland China 24757 54797Others 89 -

84873 103469

The Bank 2011 2010 HK$rsquo000 HK$rsquo000 Hong Kong 6682 8431Mainland China 2139 2196Others 89 -

8910 10627

66







Overdue advances (continued)

Collectively assessed loan impairment allowances in respect of the overdue advances


5933 4652


5183 4574

Classified or impaired advances


165966 158892


57870 58424

67







Classified or impaired advances (continued)

Individually assessed loan impairment allowances in respect of the classified or impaired advances


87615 105289


11652 12447

Collectively assessed loan impairment allowances in respect of the classified or impaired advances

The Group 2011 2010 HK$rsquo000 HK$rsquo000 Hong Kong 362 76Mainland China 214 1

576 77

The Bank 2011 2010 HK$rsquo000 HK$rsquo000 Hong Kong 81 76

81 76

During the year the basis of the above analyses has been refined and the comparative amounts have been

reclassified accordingly

68




(C) Repossessed assets

No assets by taking possession of collateral held as security was obtained by the Group and the Bank during the

year (2010 Nil)

The estimated market value of repossessed assets held by the Group and the Bank as at 31 December 2011

amounted to HK$2530000 (2010 HK$2357000) and Nil (2010 Nil) respectively They comprise properties in

respect of which the Group and the Bank have acquired access or control (eg through court proceedings or

voluntary actions by the borrowers concerned) for release in full or in part of the obligations of the borrowers

When the repossessed assets are not readily convertible into cash the Group may consider the following

alternatives

- adjusting the selling prices

- selling the loans together with the assets

- arranging loan restructuring

69




(D) Balances and placements with banks and other financial institutions

The following tables present an analysis of balances and placements with banks and other financial institutions that

are neither overdue nor impaired as at 31 December by rating agency designation based on Moodyrsquos ratings or

their equivalent

The Group 2011 Aaa to A3 Lower than A3 Unrated Total

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Central banks 10554122 - - 10554122Banks and other financial institutions 25055790 5512998 25450185 56018973 35609912 5512998 25450185 66573095 The Group 2010 Aaa to A3 Lower than A3 Unrated Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Central banks 6378971 - - 6378971Banks and other financial institutions 14817856 3347416 7269516 25434788

21196827 3347416 7269516 31813759

The Bank 2011 Aaa to A3 Lower than A3 Unrated Total

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Central banks 517779 - - 517779 Banks and other financial institutions 16827133 2369543 9123777 28320453 17344912 2369543 9123777 28838232 The Bank 2010 Aaa to A3 Lower than A3 Unrated Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Central banks 946459 - - 946459Banks and other financial institutions 11615783 2086454 7197310 20899547

12562242 2086454 7197310 21846006

As at 31 December 2011 and 2010 there were no overdue or impaired balances and placements with banks and

other financial institutions for the Group and the Bank

70




(E) Debt securities

The tables below represent an analysis of the carrying value of debt securities by credit rating and credit risk

characteristic based on Moodyrsquos ratings or their equivalent to the respective issues of the debt securities

The Group 2011 Unrated

Aaa Aa1 to

Aa3A1 to

A3Lower

than A3

Hong Kong government

and government

bodies

Other governments

and government

agencies Other Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Investment in securities MBSABS - 20335 - 1699 - - - 22034Other debt securities 622547 10594378 3879203 202942 5005270 678604 9133727 30116671 Subtotal 622547 10614713 3879203 204641 5005270 678604 9133727 30138705 Financial assets at fair value

through profit or loss MBSABS - - 5046 - - - - 5046Other debt securities 500 521205 570501 267066 587575 - 293868 2240715 Subtotal 500 521205 575547 267066 587575 - 293868 2245761 Total 623047 11135918 4454750 471707 5592845 678604 9427595 32384466


Aaa Aa1 to

Aa3A1 to

A3Lower than

A3


and government

bodies

Other governments

and government

agencies Other Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Investment in securities MBSABS 2881 183813 - - - - - 186694Other debt securities 2858814 6914704 3306742 759580 5413400 1067307 6638281 26958828 Subtotal 2861695 7098517 3306742 759580 5413400 1067307 6638281 27145522 Financial assets at fair value

through profit or loss MBSABS 19312 - - - - - - 19312Other debt securities 255 74484 789759 427258 941715 - - 2233471 Subtotal 19567 74484 789759 427258 941715 - - 2252783 Total 2881262 7173001 4096501 1186838 6355115 1067307 6638281 29398305

The total amount of unrated issues of the Group amounted to HK$15699044000 (2010 HK$14060703000) as at

31 December 2011 of which only HK$2741631000 (2010 HK$987628000) were without issuer ratings For

details please refer to page 72

71




(E) Debt securities (continued)

The Bank 2011 Unrated

Aaa Aa1 to

Aa3A1 to

A3Lower

than A3


and government

bodies

Other governments

and government

agencies Other Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Investment in securities MBSABS - 20335 - 1699 - - - 22034 Other debt securities 622547 7843283 3879203 202942 5005270 - 8396853 25950098 Subtotal 622547 7863618 3879203 204641 5005270 - 8396853 25972132 Financial assets at fair value

through profit or loss MBSABS - - 5046 - - - - 5046 Other debt securities 500 521205 570501 267066 587575 - 293868 2240715 Subtotal 500 521205 575547 267066 587575 - 293868 2245761 Total 623047 8384823 4454750 471707 5592845 - 8690721 28217893


Aaa Aa1 to

Aa3A1 to

A3Lower than

A3


and government

bodies

Other governments

and government

agencies Other Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Investment in securities MBSABS 2881 183813 - - - - - 186694Other debt securities 2858814 6560490 3306742 759580 5413400 - 6638281 25537307 Subtotal 2861695 6744303 3306742 759580 5413400 - 6638281 25724001 Financial assets at fair value

through profit or loss MBSABS 19312 - - - - - - 19312Other debt securities 255 74484 789759 427258 941715 - - 2233471 Subtotal 19567 74484 789759 427258 941715 - - 2252783 Total 2881262 6818787 4096501 1186838 6355115 - 6638281 27976784

The total amount of unrated issues of the Bank amounted to HK$14283566000 (2010 HK$12993396000) as at



72





For the above debt securities with no issue rating their issuer ratings are analysed as follows

The Group 2011

Aaa Aa1 to Aa3 A1 to A3Lower

than A3 Unrated

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Available-for-sale securities - 8069695 1699982 - 2741381 12511058Held-to-maturity securities - 204679 225695 - 250 430624Loans and receivables - - 1875919 - - 1875919Financial assets at fair value

through profit or loss - 587575 293868 - - 881443 Total - 8861949 4095464 - 2741631 15699044

The Group 2010


than A3 Unrated

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Available-for-sale securities 19903 8090718 2623309 54487 987360 11775777Held-to-maturity securities - 288315 - - 250 288565Loans and receivables - - 1054628 - 18 1054646Financial assets at fair value

through profit or loss - 941715 - - -

941715 Total 19903 9320748 3677937 54487 987628 14060703

The Bank 2011


than A3 Unrated

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Available-for-sale securities - 6776600 1699982 - 2741381 11217963Held-to-maturity securities - 82296 225695 - 250 308241 Loans and receivables - - 1875919 - - 1875919 Financial assets at fair value


The Bank 2010


than A3 Unrated



941715 Total 19903 8253441 3677937 54487 987628 12993396

73





The following tables present an analysis of debt securities neither overdue nor impaired as at 31 December by rating

agency designation based on Moodyrsquos ratings or their equivalent to the respective issues of the debt securities

The Group 2011


than A3 Unrated

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Available-for-sale securities 622547 9736598 3638941 202942 12511058 26712086 Held-to-maturity securities - 878115 240262 1699 430624 1550700 Loans and receivables - - - - 1875919 1875919 Financial assets at fair value

through profit or loss 500 521205 575547 267066 881443 2245761 Total 623047 11135918 4454750 471707 15699044 32384466

The Group 2010


than A3 Unrated

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Available-for-sale securities 2700318 6137409 2725204 369593 11775777 23708301Held-to-maturity securities 161377 961108 581538 350868 288565 2343456Loans and receivables - - - - 1054646 1054646Financial assets at fair value

through profit or loss 19567 74484 789759 427258 941715

2252783 Total 2881262 7173001 4096501 1147719 14060703 29359186

The Bank 2011


than A3 Unrated



The Bank 2010


than A3 Unrated



2252783 Total 2881262 6818787 4096501 1147719 12993396 27937665

74





The impaired debt securities by credit rating are analysed as follows

The Group and the Bank 2011 2010

Carrying Value Carrying Value

Lower than A3

Of which accumulated

impairment allowances Lower than A3



HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Held-to-maturity securities - - 39119 (3303)

As at 31 December 2011 and 2010 there were no US MBSABS securities for the Group and the Bank

As at 31 December 2011 and 2010 there were no overdue debt securities for the Group and the Bank

75



42 Market Risk

Market risk is the risk of loss that results from the adverse movements in the value of trading positions held by the Group

The Group adopts Standardised Method (ldquoSTMrdquo) for calculation of trading book market risk capital charge The following

positions held by the Group are covered by STM

- debt securities held and interest-rate-related contracts for trading purposes and

- exchange rate-related contracts

The Grouprsquos trading book market risk arises from trading positions taken from customer-related business and proprietary

trading in the above-mentioned financial instruments which are subject to daily marked-to-market valuation The risk

includes potential losses arising from changes in foreign exchange and interest rates

The Group adopts robust market risk appetite to achieve balance between risk and return The Grouprsquos objective in

managing market risk is to secure healthy growth of treasury business by effective management of potential market risk in

the Grouprsquos treasury business according to the Grouprsquos overall risk appetite and strategy of treasury business and based

on well established risk management regime and measures

According to corporate governance in risk management the Board of Directors and RMC the Management and functional

units of market risk perform their duties and responsibilities to manage the Grouprsquos market risk The risk management units

are responsible for monitoring the market risk profile and compliance of management policies and limits of the Group to

ensure that overall and individual market risks are within the Grouprsquos acceptable level Independent units are assigned to

monitor the risk exposure against risk limits on a daily basis together with profit and loss reports submitted to the

Management on a regular basis while exceptions to limits should be reported at once when they occur

The Group sets up market risk indicators and limits to identify measure monitor and control market risk Risk indicators

and limits established by the Group include but are not limited to VAR Loss Open Position and Stress Testing etc To

meet management requirements major risk indicators and limits are classified into three levels and approved by RMC or

the Asset and Liability Management Committee respectively Treasury business units are required to conduct their

business within approved market risk indicators and limits

76



42 Market Risk (continued)

(A) Currency risk

To ensure the currency risk exposure of the Group is kept to an acceptable level risk limits (eg position and loss

limit) are used to serve as a monitoring tool Moreover the Group seeks to minimize the gap between asset and

liability in the same currency Foreign exchange contracts (eg FX swap) are usually used to manage FX risk

associated with foreign currency-denominated assets and liabilities

77




(A) Currency risk (continued)

The tables below summarise the Grouprsquos and the Bankrsquos exposure to foreign currency exchange rate risk as at 31

December Included in the tables are the assets and liabilities at carrying amounts in HK$ equivalent categorised by

the original currency

The Group 2011

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen

Pound Sterling Others Total

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Assets Cash and balances with banks

and other financial institutions 31755587 3875707 6247430 1137543 134900 100390 742776 43994333Placements with banks and other

financial institutions maturing between one and twelve months 20433570 1495263 1240747 - - - - 23169580

Financial assets at fair value through profit or loss - 766259 1403148 - - - 76354 2245761

Derivative financial instruments 65299 6001 745103 - - - - 816403Advances and other accounts 26669960 40465402 64321827 272602 297283 - 887151 132914225Investment in securities

- Available-for-sale securities 6381679 6339356 11184833 511059 - 93761 2245297 26755985- Held-to-maturity securities 980163 121596 104580 225695 - - 118666 1550700- Loans and receivables - - - 1875919 - - - 1875919

Investment properties 45688 - 802260 - - - - 847948Properties plant and equipment 463161 1065 4119185 - - - - 4583411Other assets (including deferred

tax assets) 165459 57198 649071 - 1316 1 4146 877191 Total assets 86960566 53127847 90818184 4022818 433499 194152 4074390 239631456 Liabilities Deposits and balances from

banks and other financial institutions 10925158 16001440 861463 132 211516 2619 63960 28066288

Financial liabilities at fair value through profit or loss - - 1077896 - - - - 1077896

Derivative financial instruments 55771 165291 451556 - - - - 672618Deposits from customers 64244114 27651490 72832671 4007694 143143 1100153 4490203 174469468Other accounts and provisions

(including current and deferred tax liabilities) 5188863 681887 3073162 87096 114537 2046 61399 9208990

Total liabilities 80413906 44500108 78296748 4094922 469196 1104818 4615562 213495260 Net on-balance sheet position 6546660 8627739 12521436 (72104) (35697) (910666) (541172) 26136196 Off-balance sheet net notional

position (2216052) (7515536) 8491862 74164 36636 911189 533472 315735 Contingent liabilities and

commitments 19225118 29009786 19190225 386957 255138 2741 2182 68072147

78





The Group 2010

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen




financial institutions maturing between one and twelve months 6924567 612399 163824 41497 - - 11767 7754054



- Available-for-sale securities 2209808 7481353 10160230 827346 - 572717 2491762 23743216- Held-to-maturity securities - 1258309 782804 - - - 341462 2382575- Loans and receivables - 8 1054638 - - - - 1054646


tax assets) 121809 32902 1029930 3 - - 10812 1195456 Total assets 46258109 57313561 79861336 3623641 208717 828736 4081089 192175189 Liabilities Deposits and balances from







commitments 7214879 24187953 18581172 724921 737367 4166 8825 51459283

79





The Bank 2011

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen




financial institutions maturing between one and twelve months 1390503 869953 - - - - - 2260456


Derivative financial instruments - 4045 745103 - - - - 749148Advances and other accounts 2153962 29897707 61883399 266528 71061 - 887151 95159808Investment in securities

- Available-for-sale securities 3195269 6339356 11184833 511059 - 93761 2245297 23569575- Held-to-maturity securities - 121596 104580 225695 - - 118666 570537- Loans and receivables - - - 1875919 - - - 1875919

Investment in subsidiaries 81653 - 5141029 - - - - 5222682Investment properties - - 802260 - - - - 802260Properties plant and equipment - 1065 4119185 - - - - 4120250Other assets (including deferred




Derivative financial instruments - 163076 451556 - - - - 614632Deposits from customers 19822327 25355859 70080020 3822538 122799 1072828 4471031 124747402Other accounts and provisions




commitments 120827 16531470 18749692 262351 39428 2741 333 35706842

80





The Bank 2010

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen




financial institutions maturing between one and twelve months - 1821083 13230 - - - - 1834313





tax assets) 1723 23511 1110658 - - - 10812 1146704 Total assets 10582587 44401480 81888608 3404725 163319 807688 4059244 145307651 Liabilities Deposits and balances from






position 24467 (16262331) 13199894 2286885 280381 332402 511738 373436 Contingent liabilities and

commitments - 12023253 18346577 513897 661528 3951 7642 31556848

Off-balance sheet net notional position represents the net notional amounts of foreign currency derivative financial instruments which

are principally used to reduce the Grouprsquos and the Bankrsquos exposure to currency movements

81





Sensitivity analysis to foreign exchange risk exposure (Non Structural)

At 31 December 2011 the majority of the net positions of the Group and the Bank were denominated in US dollar

and Renminbi therefore the Group and the Bank do not expose to significant foreign exchange risk other than US

dollar and Renminbi If US dollar and Renminbi exchange rate had changed by 1 with other variables held

constant profit after tax for the year of the Group and the Bank would have been changed by HK$7705000 (2010

HK$1007000) and HK$7026000 (2010 HK$481000) respectively

(B) Interest rate risk

Interest rate risk means the risks to a bankrsquos earnings and economic value arising from adverse movements in

interest rate and term structures of the bankrsquos asset and liability positions The Grouprsquos interest rate risk exposures

are mainly structural The major types of interest rate risk from structural positions are

- Repricing risk - mismatches in the maturity or repricing periods of assets and liabilities

- Basis risk - different pricing basis for different transactions so that the yield on assets and cost of liabilities may

change by different amounts within the same repricing period

- Yield curve risk - non-parallel shifts in the yield curve that may have an adverse impact on net interest income or

economic value

- Option risk - exercise of the options embedded in assets liabilities or off-balance sheet items that can cause a

change in the cashflows of assets and liabilities

The Group has formulated ldquoInterest Rate Risk Management Policiesrdquo which set out the framework and methodologies

to identify measure monitor and control interest rate risk

Both the members of the Asset and Liability Management Committee (ldquoALCOrdquo) and RMC are responsible for interest

rate risk management ALCO maintains oversight of interest rate risk and RMC sanctions the interest rate risk

management policies formulated by ALCO The interest rate risk is identified and measured on a weekly basis The

Finance Department manages the interest rate risk according to the established policies and assigns the Financial

Management Division to monitor the related risks closely and to report the results to ALCO regularly

Gap analysis is one of the tools used to measure the Grouprsquos exposure to repricing risk This provides the Group with

a static view of the maturity and repricing characteristics of its balance sheet positions The Group uses interest rate

derivatives to hedge its interest rate exposures and in most cases plain vanilla interest rate swaps are used

82




(B) Interest rate risk (continued)

Sensitivities of net interest income and economic value to interest rate changes are assessed through a hypothetical

interest rate shock of 200 basis points across the yield curve on both sides Sensitivity of net interest income is

controlled within an approved percentage of the projected net interest income for the year whereas sensitivity of

economic value is confined to a percentage of the latest capital base both measures are sanctioned by RMC The

results are reported to ALCO and RMC on a regular basis

The impact of basis risk is gauged by the projected change in net interest income under scenarios of imperfect

correlation in the adjustment of the rates earned and paid on different instruments

Stress test on yield curve risk is performed to assess the impact on economic value due to the steepening or

flattening of the yield curve The impact of options embedded in demand and savings deposits and prepayment of

mortgage loans is also assessed under different stress test scenarios

The interest rate risk exposures in the Group are controlled through the use of limits

1 Net Interest Income sensitivity ratio

2 Economic Value sensitivity ratio

3 Repricing Mismatch Gap limits

Before launching a new product or business the relevant departments are required to go through a risk assessment

process which includes assessment of underlying interest rate risk and consideration of the adequacy of current risk

management mechanism Any material impact on interest rate risk noted during the risk assessment process will be

reported to ALCO

83





Sensitivity analysis to market risk exposure of banking book of the Group

The Group is principally exposed to HKD USD and RMB in terms of interest rate risk The following example

illustrates how the Grouprsquos stress test is performed As at 31 December 2011 if HKD USD and RMB market interest

rates had been 100 basis points higher with other variables held constant the impacts on net interest income over

the next twelve months and on reserves for the Group and the Bank would have been as follows

Impact on net interest income over the next

twelve months at 31 December Impact on reserves

at 31 December The Group The Bank The Group The Bank 2011 2010 2011 2010 2011 2010 2011 2010Scenarios HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000Up 100 basis points parallel shift in HK dollar yield curves 173383 159088 153181 138206 (37656) (44830) (37656) (44830) Up 100 basis points parallel shift in US dollar yield curves (55874) (87748) (52696) (81833) (128679) (156064) (128679) (156064) Up 100 basis points parallel shift in Renminbi yield curves 68429 117098 7232 37019 (125726) (18817) (62236) (9455)

The overall positive impact (HKD USD and RMB combined) on net interest income is similar to 2010 The increase

in positive earnings impact of HKD and USD is met by the fall in RMB Reserves would have been reduced

because of the expected reduction in valuation of available-for-sale portfolio due to the above simulated market

rates movement The reduction of reserves is larger compared with 2010 because the size and duration of

available-for-sale portfolio is increased

To construct stressful scenarios severe assumptions are made including a change in the correlation between HK

dollar and US dollar interest rates parallel movement of interest rates for the banking book positions of all repricing

or maturity dates In the absence of actions that would be taken to mitigate the impact of interest rates shock all

positions are assumed to run to maturity and reprice or mature simultaneously within a given time band

84





The tables below summarise the Grouprsquos and the Bankrsquos exposure to interest rate risk as at 31 December Included

in the tables are the assets and liabilities at carrying amounts categorised by the earlier of contractual repricing or

maturity dates

The Group 2011

Up to 1month

1-3months

3-12months

1-5years

Over 5 years

Non- interest bearing Total

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Assets Cash and balances with banks

and other financial institutions 41830459 - - - - 2163874 43994333 Placements with banks and

other financial institutions maturing between one and twelve months - 9635651 13533929 - - - 23169580

Financial assets at fair value through profit or loss 99989 1011057 373002 513813 247900 - 2245761

Derivative financial instruments - - - - - 816403 816403 Advances and other accounts 74162458 27424388 25002509 6324626 244 - 132914225 Investment in securities

- Available-for-sale securities 6444004 7053021 5138085 6277450 1799526 43899 26755985 - Held-to-maturity securities 247729 241049 503474 558448 - - 1550700 - Loans and receivables 1875919 - - - - - 1875919

Investment properties - - - - - 847948 847948 Properties plant and equipment - - - - - 4583411 4583411 Other assets (including deferred

tax assets) - - - - - 877191 877191 Total assets 124660558 45365166 44550999 13674337 2047670 9332726 239631456 Liabilities Deposits and balances from

banks and other financial institutions 12962586 4011804 10741870 - - 350028 28066288

Financial liabilities at fair value through profit or loss 299981 389850 388065 - - - 1077896

Derivative financial instruments - - - - - 672618 672618 Deposits from customers 96775799 33370694 29479124 7432118 162148 7249585 174469468 Other accounts and provisions

(including current and deferred tax liabilities) 1190610 1001353 2848635 - - 4168392 9208990

Total liabilities 111228976 38773701 43457694 7432118 162148 12440623 213495260 Interest sensitivity gap 13431582 6591465 1093305 6242219 1885522 (3107897) 26136196

85





The Group 2010

Up to 1month

1-3months

3-12months

1-5years

Over 5 years



and other financial institutions 22428184 - - - - 2027797 24455981Placements with banks and



Derivative financial instruments - - - - - 1128659 1128659Advances and other accounts 72671585 28735941 16921508 5751929 69213 - 124150176Investment in securities

- Available-for-sale securities 6312831 5137573 3743001 7380402 1134494 34915 23743216- Held-to-maturity securities 411433 869061 896781 205300 - - 2382575- Loans and receivables - - 1054646 - - - 1054646

Investment properties - - - - - 618263 618263Properties plant and equipment - - - - - 3439380 3439380Other assets (including deferred




Derivative financial instruments - - - - - 916211 916211Deposits from customers 87604788 24538543 18010055 4654888 - 6528631 141336905Other accounts and provisions

(including current and deferred tax liabilities) 795051 1069827 2163324 394086 - 3049723 7472011

Total liabilities 95728937 32634738 25357318 5048974 - 10915224 169685191 Interest sensitivity gap 6595082 6495333 1599459 8814456 1456422 (2470754) 22489998

86





The Bank 2011

Up to 1 month

1-3 months

3-12 months

1-5 years

Over 5 years







- Available-for-sale securities 6115223 6793083 4216309 5094513 1306548 43899 23569575 - Held-to-maturity securities 247729 118665 204143 - - - 570537 - Loans and receivables 1875919 - - - - - 1875919

Investment in subsidiaries - - - - - 5222682 5222682 Investment properties - - - - - 802260 802260 Properties plant and equipment - - - - - 4120250 4120250 Other assets (including deferred

tax assets) - - - - - 652940 652940 Total assets 93488161 24847032 19300578 11452634 1554472 13528037 164170914 Liabilities Deposits and balances of banks

and other financial institutions 5198920 1560854 2319384 - - 397477 9476635 Financial liabilities at fair value

through profit or loss 299981 389850 388065 - - - 1077896 Derivative financial instruments - - - - - 614632 614632 Deposits from customers 78059357 22290177 13015412 4127957 - 7254499 124747402 Other accounts and provisions

(including current and deferred tax liabilities) 480379 - - - - 3059437 3539816

Total liabilities 84038637 24240881 15722861 4127957 - 11326045 139456381 Interest sensitivity gap 9449524 606151 3577717 7324677 1554472 2201992 24714533

87





The Bank 2010

Up to 1 month

1-3 months

3-12 months

1-5 years

Over 5 years

Non- interest

bearing Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Assets Cash and balances with banks






Investment in subsidiaries - - - - - 5286630 5286630Investment properties - - - - - 579940 579940Properties plant and equipment - - - - - 3102010 3102010Other assets (including deferred


and other financial institutions 3849309 2663585 1914806 - - 468521 8896221Financial liabilities at fair value

through profit or loss 449978 458714 276683 - - - 1185375Derivative financial instruments - - - - - 888344 888344Deposits from customers 75769059 19047756 4616106 3729969 - 6682418 109845308Other accounts and provisions


Total liabilities 80572347 22170055 6807595 3729969 - 10459498 123739464 Interest sensitivity gap 3014135 (909602) 6565915 8983237 1455855 2458647 21568187

Interest rate risk exposure of trading book of the Group and the Bank is insignificant

88



43 Liquidity Risk

Liquidity risk is the risk that the Group may not be able to fund increases in assets meet obligations as they fall due or

take strategic opportunity without incurring unacceptable losses

Liquidity risk management framework

The liquidity risk management framework of the Group comprises three levels The Board of Directors and the RMC

are the ultimate decision making authority and are responsible for the compliance with regulatory requirements

Formulation of the risk management procedures and implementation mechanism and monitoring of the compliance are

mainly responsible by the ALCO Daily management of liquidity is carried out by the Treasury Management Sub-

Committee and the Treasury Division while the Financial Management Division monitors the liquidity risk and provides

regular reports to the Management and local regulatory bodies

The liquidity management process is carried out both at the Group and subsidiary level The principal subsidiaries

execute their daily risk management processes independently subject to risk policies that are consistent with those of

the Group and report to the Grouprsquos Management on a regular basis

The Group has developed a robust liquidity risk management mechanism by maintaining an appropriate size of highly-

liquefiable assets and proper liability structure enabling the Group to meet even under adverse market conditions all

its obligations as they fall due and to fund all its asset growth and strategic opportunities without forced liquidation of

its assets at short notice

At present the Group has set up Key Risk Indicators such as 1-month liquidity ratio and loan-to-deposit ratio The

indicators are used as the major tools in the identification measurement monitoring and control of the liquidity risk on

regular basis by setting limits assessing and monitoring the ratios Besides the Group also monitors deposit stability

concentration of deposits from large depositors and liquidity profile of the investment portfolio

89



43 Liquidity Risk (continued)

Liquidity risk management framework (continued)

The related risk management process includes

- Perform cash-flow projections under normal and stressed scenarios using the net mismatch gap between assets and

liabilities to estimate the prospective net funding requirements

- Maintain strong liquidity ratios to comply with both internal and external regulatory requirements

- Maintain a diversified liability base to ensure sufficient funding sources

- Maintain a proper level of highly liquid assets to serve as a liquidity buffer for emergency needs

- Monitor the structure and stability of the deposit portfolio

- Assess the ability to borrow from the inter-bank money market to avoid over-reliance on the money market for funding

- Maintain a proper contingency plan which includes setting early warning signals (including internal indicators and

market indicators) with timely monitoring procedures and establishing a management reporting system and

contingency procedures

Before launching a new product or business relevant departments are required to go through a risk assessment

process which includes assessment of underlying liquidity risk and consideration of the adequacy of the current risk

management mechanism Any material impact on liquidity risk noted during the risk assessment process will be

reported to ALCO

90




(A) Liquidity ratio

2011 2010

Average liquidity ratio 3937 3835

The average liquidity ratio is calculated as the simple average of each calendar monthrsquos average liquidity ratio of

the Bank for the year

The liquidity ratio is computed on the solo basis (the Hong Kong offices only) and is in accordance with the Fourth

Schedule to the Banking Ordinance

91




(B) Maturity analysis

Tables below analyse assets and liabilities of the Group and the Bank as at 31 December into relevant maturity

groupings based on the remaining period at balance sheet date to the contractual maturity date

The Group 2011 On Up to 1 1-3 3-12 1-5 Over 5 demand month months months years years Indefinite Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Assets Cash and balances with

banks and other financial institutions 27545031 16449302 - - - - - 43994333

Placements with banks and other financial institutions maturing between one and twelve months - - 9635651 13533929 - - - 23169580

Financial assets at fair value through profit or loss

ndash debt securities held for trading

- others - 99989 635789 373002 500 - - 1109280 ndash debt securities

designated at fair value through profit or loss

- others - - - 293869 594712 247900 - 1136481 Derivative financial

instruments 587300 11605 32901 116818 67779 - - 816403 Advances and other

accounts ndash advances to customers 2846884 6935770 11001742 35122628 38924531 24124709 95218 119051482 ndash trade bills 115 1617566 4995685 6705121 - - - 13318487 ndash advances to banks and

other financial institutions - - - 544256 - - - 544256

Investment in securities ndash debt securities held for

available-for-sale - certificates of deposit

held - - 269994 112756 968039 - - 1350789 - others - 5275152 3685012 6247984 8353623 1799526 - 25361297

ndash debt securities held for held-to-maturity

- certificates of deposit held - 225695 - - - - - 225695

- others - - 122383 503474 697199 1949 - 1325005 ndash debt securities held for

loans and receivables - 1875919 - - - - - 1875919

ndash equity securities - - - - - - 43899 43899 Investment properties - - - - - - 847948 847948 Properties plant and

equipment - - - - - - 4583411 4583411 Other assets (including

deferred tax assets) 157936 638654 9348 27823 40899 - 2531 877191 Total assets 31137266 33129652 30388505 63581660 49647282 26174084 5573007 239631456

92




(B) Maturity analysis (continued)

The Group 2011 On Up to 1 1-3 3-12 1-5 Over 5 demand month months months years years Indefinite Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000Liabilities Deposits and balances

from banks and other financial institutions 740877 12571737 4005861 10747813 - - - 28066288

Financial liabilities at fair value through profit or loss

ndash others - 299981 389850 388065 - - - 1077896 Derivative financial

instruments 247907 59349 28939 122358 166556 47509 - 672618 Deposits from customers 56822738 44447805 32384158 31577957 9074613 162197 - 174469468 Other accounts and

provisions (including current and deferred tax liabilities) 3209830 826097 1190525 3397758 584780 - - 9208990

Total liabilities 61021352 58204969 37999333 46233951 9825949 209706 - 213495260 Net liquidity gap (29884086) (25075317) (7610828) 17347709 39821333 25964378 5573007 26136196

93










- others - 499986 224182 217954 - 326 - 942448ndash debt securities


- others - - - 154277 884357 271701 - 1310335Derivative financial

instruments 799269 77473 52771 112209 86937 - - 1128659Advances and other

accounts ndash advances to customers 3160441 4682144 11133015 30716918 43232938 22563939 77650 115567045ndash trade bills 502 715056 4176691 2831958 - - - 7724207ndash advances to banks and

other financial institutions - - 190 312414 546320 - - 858924



held - - - 880265 1194204 - - 2074469- others - 5160435 1496013 3616135 10226755 1134494 - 21633832


- certificates of deposit held - - 23806 - - - - 23806

- others - 182318 260967 1365233 508001 3131 39119 2358769ndash debt securities held for

loans and receivables - - - 1054646 - - - 1054646

ndash equity securities - - - - - - 34915 34915Investment properties - - - - - - 618263 618263Properties plant and

equipment - - - - - - 3439380 3439380Other assets (including


94






of banks and other financial institutions 725905 6573874 6567654 4907256 - - - 18774689


ndash others - 449978 458714 276683 - - - 1185375Derivative financial

instruments 434812 41079 51574 124550 223331 40865 - 916211Deposits from customers 59480174 32298417 25111853 18603052 5843409 - - 141336905Other accounts and



95





The Bank 2011 On Up to 1 1-3 3-12 1-5 Over 5 demand month months months years years Indefinite Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Assets Cash and balances with













held - - 269994 112756 968039 - - 1350789 - others - 4946370 3425073 5326208 7170688 1306548 - 22174887



- others - - - 203893 139000 1949 - 344842 ndash debt securities held for


ndash equity securities - - - - - - 43899 43899 Investment in

subsidiaries - - - - - - 5222682 5222682 Investment properties - - - - - - 802260 802260 Properties plant and



96





The Bank 2011 On Up to 1 1-3 3-12 1-5 Over 5 demand month months months years years Indefinite Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000Liabilities Deposits and balances







97















other financial institutions - - - 34 546320 - - 546354



held - - - 880265 1194204 - - 2074469- others - 5042678 899185 3200938 9935016 1134494 - 20212311





ndash equity securities - - - - - - 34915 34915Investment in

subsidiaries - - - - - - 5286630 5286630Investment properties - - - - - - 579940 579940Properties plant and



98












The above maturity classifications have been prepared in accordance with relevant provisions under the Banking

(Disclosure) Rules The Group has reported assets such as advances and debt securities which have been

overdue for not more than one month as ldquoRepayable on demandrdquo In the case of an asset that is repayable by

different payments or instalments only that portion of the asset that is actually overdue is reported as overdue Any

part of the asset that is not due is reported according to the residual maturity unless the repayment of the asset is

in doubt in which case the amount is reported as ldquoIndefiniterdquo The above assets are stated after deduction of

provisions if any

The analysis of debt securities by remaining period to maturity is disclosed in order to comply with relevant

provisions under the Banking (Disclosure) Rules The disclosure does not imply that the securities will be held to

maturity

99




(C) Analysis of undiscounted cash flows by contractual maturities

(a) Non-derivative cash flows

The tables below summarise the cash flows of the Group and the Bank as at 31 December for non-derivative

financial liabilities by remaining contractual maturities

The Group 2011 Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Financial liabilities Deposits and balances from banks

and other financial institutions 13327549 4047157 10936950 - - 28311656 Financial liabilities at fair value

through profit or loss 300000 390000 388500 - - 1078500 Deposits from customers 101301509 32500206 32062308 10011925 220582 176096530 Other financial liabilities 3940581 1110630 3163290 1289 - 8215790

Total financial liabilities 118869639 38047993 46551048 10013214 220582 213702476


and other financial institutions 7305360 6588410 4979464 - - 18873234Financial liabilities at fair value

through profit or loss 450000 459000 277000 - - 1186000Deposits from customers 91787934 25158199 18843268 6279970 - 142069371Other financial liabilities 2757670 1057872 2178242 264715 - 6258499 Total financial liabilities 102300964 33263481 26277974 6544685 - 168387104

100




(C) Analysis of undiscounted cash flows by contractual maturities (continued)

(a) Non-derivative cash flows (continued)

The Bank 2011 Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Financial liabilities Deposits and balances from banks


through profit or loss 300000 390000 388500 - - 1078500Deposits from customers 84305748 21358351 15175688 4250852 - 125090639 Other financial liabilities 2681632 - - - - 2681632

Total financial liabilities 92885975 23312202 17913044 4250852 - 138362073



through profit or loss 450000 459000 277000 - - 1186000Deposits from customers 81291802 19646753 5238568 3857963 - 110035086Other financial liabilities 1798899 - - - - 1798899 Total financial liabilities 87859929 22771697 7439111 3857963 - 121928700

101





(b) Derivative cash flows

(i) Derivatives settled on a net basis

The Grouprsquos derivatives that will be settled on a net basis include

- Exchange rate contracts non-deliverable currency forwards

- Interest rate contracts interest rate swaps and

- Bullion contracts bullion margin contracts

The tables below analyse the Grouprsquos and the Bankrsquos derivative financial instruments as at 31 December

that will be settled on a net basis into relevant maturity groupings based on the remaining period at the

balance sheet date to the contractual maturity date The amounts disclosed in the tables are the net

contractual undiscounted cash flows of derivatives with net negative fair value

The Group 2011 Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Exchange rate contracts (247251) (31008) (79674) 23837 - (334096)Interest rate contracts (1327) (10120) (107266) (91584) (5482) (215779)Bullion contracts (2071) (151) - - - (2222)

(250649) (41279) (186940) (67747) (5482) (552097)


Exchange rate contracts (427411) (33531) (48676) 136223 - (373395)Interest rate contracts (1134) (4682) (91000) (189832) (21078) (307726)Bullion contracts (7870) - - - - (7870)

(436415) (38213) (139676) (53609) (21078) (688991)

102





(b) Derivative cash flows (continued)

(i) Derivatives settled on a net basis (continued)

The Bank 2011 Up to 1 1-3 3-12 1-5 Over 5 month months months years years Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Exchange rate contracts (247251) (31008) (79674) 23837 - (334096)Interest rate contracts 16 (4943) (73663) (91584) (5482) (175656)Bullion contracts (1928) - - - - (1928)

(249163) (35951) (153337) (67747) (5482) (511680)



(435413) (37334) (129135) (49656) (21078) (672616)

103






(ii) Derivatives settled on a gross basis

The Grouprsquos derivatives that will be settled on a gross basis include currency forwards currency swaps

currency options


that will be settled on a gross basis into relevant maturity groupings based on the remaining period at the

balance sheet date to the contractual maturity date The amounts disclosed in the tables are the gross

contractual undiscounted cash flows for all derivatives that are settled on a gross basis

The Group 2011 Up to 1 1-3 3-12 1-5

month months months years Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Exchange rate contracts

- Outflow (11417779) (1925850) (4816609) - (18160238)- Inflow 11367954 1928099 4828157 - 18124210

Total outflow (11417779) (1925850) (4816609) - (18160238) Total inflow 11367954 1928099 4828157 - 18124210

The Group 2010 Up to 1 1-3 3-12 1-5



- Outflow (14506757) (7394285) (3345066) (34332) (25280440)- Inflow 14541213 7387103 3350384 34392 25313092

Total outflow (14506757) (7394285) (3345066) (34332) (25280440) Total inflow 14541213 7387103 3350384 34392 25313092

104






(ii) Derivatives settled on a gross basis (continued)

The Bank 2011 Up to 1 1-3 3-12 1-5



- Outflow (10758766) (1652950) (621855) - (13033571)- Inflow 10710899 1654478 624204 - 12989581


The Bank 2010 Up to 1 1-3 3-12 1-5



- Outflow (13647452) (5999636) (557364) - (20204452)- Inflow 13682848 5993963 557262 - 20234073


(c) Off-balance sheet items

Loan commitments

The contractual amounts of the Grouprsquos and the Bankrsquos off-balance sheet financial instruments as at 31

December 2011 that the Group and the Bank commit to extend credit to customers and other facilities amounting

to HK$50503226000 (2010 HK$41155065000) and HK$31434914000 (2010 HK$28530515000)

respectively Those loan commitments can be drawn within 1 year

Financial guarantees and other financial facilities

Financial guarantees and other financial facilities of the Group and the Bank as at 31 December 2011 amounting

to HK$17568921000 (2010 HK$10304218000) and HK$4271928000 (2010 HK$3026333000)

respectively are maturing no later than 1 year

105



44 Capital Management

The major objective of the Grouprsquos capital management is to maximise total shareholdersrsquo return while maintaining a

capital adequacy position in relation to the Grouprsquos overall risk profile The Group periodically reviews its capital

structure and adjusts the capital mix where appropriate to achieve the required rate of return on capital

The Group has developed and maintained a sound framework of policies and controls on capital management to

support the development of the Grouprsquos business and to meet the statutory capital adequacy ratio ALCO monitors the

Grouprsquos capital adequacy The Group has complied with all the statutory capital standards for all the periods

In prior years the Group adopted the STC approach to calculate credit risk capital charge With the HKMA approval

from 1 January 2011 the Group has migrated to the FIRB approach to calculate the credit risk capital charge for the

majority of its non-securitisation exposures and internal ratings-based (securitisation) approach to calculate the credit

risk capital charge for its securitisation exposures A small residual credit exposures was approved by HKMA to be

exempted from FIRB approach and remained under STC approach

The Group continues to adopt the standardize approach to calculate the capital charges on market risk and operational

risk under Pillar One in compliance with the Banking (Capital) Rules in year 2011

In compliance with the Banking (Capital) Rules this regulatory capital framework aligns regulatory capital requirements

more closely with the inherent risks Following announcement of the Basel III regulations by Basel Committee the

Group has analyzed the possible impact of the new capital requirements to ensure that the Group plans ahead for the

transition of for the implementation of the new regulations

The Group has established an ICAAP Through this process each material risk associated with the Grouprsquos main

activities is assessed by pre-defined assessment models and a comprehensive judgment of the overall risk profile is

decided subsequently by taking into account the Grouprsquos governance structure risk management quality internal

control environment and capital strength Finally the minimum CAR is derived through the procedures to relate the

Grouprsquos overall risk profile to its capital adequacy The minimum CAR aims to cover the various material risks

undertaken by the Group The Group considers this ICAAP process as an on-going process for capital management

and periodically reviews and adjusts its capital structure in relation to the overall risk profile

In addition the annual capital plan of the Group is drawn up and discussed by the ALCO and submitted to the Board for

approval The plan is built up by assessing the impacts by various factors upon CAR such as the business strategies

return on equity risk appetite credit rating as well as regulatory requirements and based on this study to derive our

future capital demand and the way to obtain the capital sources The plan is to ensure the Grouprsquos capital adequacy

and achieve optimal capital structure in order to align with our business development and risk profile

106



44 Capital Management (continued)

As a result of the change in the basis used the amounts shown below are not directly comparable

(A) Capital adequacy ratio

2011 2010 Capital adequacy ratio 1706 1552 Core capital ratio 1642 1418

The capital ratios are computed on the consolidated basis that comprises the positions of the Bank and certain

subsidiaries specified by the HKMA for its regulatory purposes and in accordance with the Banking (Capital) Rules

The differences between the basis of consolidation for accounting and regulatory purposes are described in

ldquoAppendix ndash Subsidiaries of the Bankrdquo on page 201

(B) Components of capital base after deductions

The consolidated capital base after deductions used in the calculation of the above capital adequacy ratio as at 31

December and reported to the HKMA is analysed as follows

2011 2010 HK$rsquo000 HK$rsquo000Core capital

Paid up ordinary share capital 700000 700000Reserves 17334150 16025907Profit and loss account 2319287 1289509

20353437 18015416

Deductions from core capital (23795) (26479) Core capital 20329642 17988937 Supplementary capital

Fair value gains arising from holdings of available-for-sale securities

51862 74499

Fair value gains arising from holdings of securities designated at fair value through profit or loss

10768 24357Collective loan impairment allowances 25260 516672Regulatory reserve 49961 1115997Surplus provisions 668424 -

806275 1731525 Deductions from supplementary capital (23795) (26479) Supplementary capital 782480 1705046 Total capital base after deductions 21112122 19693983

Subsidiaries which are not included in the consolidation group for the calculation of capital adequacy ratios are

denoted in ldquoAppendix ndash Subsidiaries of the Bankrdquo on pages 201 Investment costs in such subsidiaries are

deducted from the capital base

107



45 Fair values of financial assets and liabilities

(A) Financial instruments not measured at fair value

Fair value estimates are made at a specific point in time based on relevant market information and information

about various financial instruments The following methods and assumptions have been used to estimate the fair

value of each class of financial instrument as far as practicable

Balances with banks and other financial institutions and Trade bills

The maturities of these financial assets and liabilities are within one year and the carrying value approximates fair

value

Advances to customers banks and other financial institutions

Substantially all the advances to customers banks and other financial institutions are on floating rate terms bear

interest at prevailing market interest rates Their carrying value approximates fair value

Held-to-maturity securities

Fair value for held-to-maturity securities is based on market prices or brokerdealer price quotations Where this

information is not available fair value has been estimated using quoted market prices for securities with similar

credit maturity and yield characteristics Their carrying value approximates fair value

Loans and receivables

A discounted cash flow model is used based on a current yield curve appropriate for the remaining term to maturity

and their carrying value approximates fair value

Deposits from customers Substantially all the deposits from customers mature within one year from the balance sheet date and their carrying

value approximates fair value

108



45 Fair values of financial assets and liabilities (continued)

(B) Financial instruments measured at fair value

Financial instruments measured at fair value are classified into following three levels

ndash Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities including certain foreign

exchange derivative contracts

ndash Level 2 Valuation technique using inputs other than quoted prices included within level 1 that are observable for

the asset or liability either directly or indirectly This level includes the majority of the OTC derivative contracts

debt securities with quote from pricing services providers

ndash Level 3 Valuation technique using inputs for the asset or liability that is not based on observable market data

(unobservable inputs) This level includes equity investment and debt instruments with significant unobservable

components

The Group uses valuation techniques or brokerdealer quotations to determine the fair value of financial

instruments when unable to obtain the open market quotation in active markets

The main parameters used in valuation techniques for financial instruments held by the Group include bond prices

interest rates foreign exchange rates equity and stock prices volatilities counterparty credit spreads and others

which are all observable and obtainable from open market

For certain illiquid debt securities and unlisted private equity held by the Group Management obtains valuation

quotations from counterparties The fair value of these financial instruments may be based on unobservable inputs

which may have significant impact on the valuation of these financial instruments and therefore these instruments

have been classified by the Group as level 3 The Group has established internal control procedures to control the

Grouprsquos exposure to such financial instruments

109




(B) Financial instruments measured at fair value (continued)

There have been no significant transfers between level 1 and 2 during the year 2011 and 2010

(i) Fair value hierarchy

The Group 2011 Level 1 Level 2 Level 3 Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000Financial assets Financial assets at fair value through

profit or loss - Trading securities

- Debt securities - 1109280 - 1109280- Financial assets designated at fair value

through profit or loss - Debt securities - 1131435 5046 1136481

Derivative financial instruments 586916 229487 - 816403Available-for-sale securities

- Debt securities - 26712086 - 26712086- Equity securities - - 43899 43899

Financial liabilities Financial liabilities at fair value through

profit or loss - Trading liabilities - 1077896 - 1077896

Derivative financial instruments 247907 424711 - 672618










110





(i) Fair value hierarchy (continued)

The Bank 2011 Level 1 Level 2 Level 3 Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000Financial assets Financial assets at fair value through


- Debt securities - 1109280 - 1109280 - Financial assets designated at fair value



- Debt securities - 23525676 - 23525676 - Equity securities - - 43899 43899













111





(ii) Reconciliation of level 3 items

The Group and the Bank 2011

Financial assets Financial assets

designated at fair value through

profit or loss Available-for-sale

securities

Debt

securities Equity

securitiesHK$rsquo000 HK$rsquo000

At 1 January 2011 19312 34915Gains - Profit or loss 3613 - - Other comprehensive income - 8984Sales (17879) - At 31 December 2011 5046 43899

Total gains for the year included in profit or loss for

assets held as at 31 December 2011 3613 -





securities

Debt

securities Equity


At 1 January 2010 24902 35845Gains(losses) - Profit or loss 1739 - - Other comprehensive income - (930)Sales (7329) - At 31 December 2010 19312 34915



Gains included in profit or loss for the year as well as gains relating to assets held as at year end are

presented in ldquoNet trading gain(loss)rdquo ldquoNet (loss)gain on financial instruments designated at fair value through

profit or lossrdquo or ldquoNet charge of impairment allowancesrdquo depending on the nature or the category of the related

financial instruments

112


5 Net interest income

2011 2010 HK$rsquo000 HK$rsquo000 Interest income Due from banks and other financial institutions 1605671 410284Advances to customers 3452243 2692941Listed investments 274409 317802Unlisted investments 446792 368893Others 23908 30487 5803023 3820407 Interest expense Due to banks and other financial institutions (400755) (267694)Deposits from customers (2015621) (726696)Others (101906) (68055) (2518282) (1062445) Net interest income 3284741 2757962

Included within interest income is HK$1264000 (2010 HK$704000) of interest with respect to income recognised on

advances classified as impaired for the year ended 31 December 2011 Interest income accrued on impaired investment in

securities amounted to HK$36000 (2010 Nil)

Included within interest income and interest expense are HK$5749266000 (2010 HK$3760190000) and

HK$2516786000 (2010 HK$1060700000) for financial assets and financial liabilities that are not recognised at fair

value through profit or loss respectively

113


6 Net fee and commission income

2011 2010


Fee and commission income Securities brokerage 210891 258817Credit card business 531 190Loan commissions 187756 125098Bills commissions 180329 144100Payment services 77805 68200Insurance 71781 56589Currency exchange 787 886Safe deposit box 20846 19566Funds distribution 47279 32547Others 65820 74449

863825 780442 Fee and commission expense Securities brokerage (37601) (41481)Payment services (6755) (6771)Others (29283) (31547) (73639) (79799) Net fee and commission income 790186 700643 Of which arise from

- financial assets or financial liabilities not at fair value through profit or loss - Fee and commission income 233985 168821- Fee and commission expense (749) (634)

233236 168187- trust and other fiduciary activities

- Fee and commission income 13865 19074- Fee and commission expense (1088) (947)

12777 18127

7 Net trading gain(loss)

2011 2010 HK$rsquo000 HK$rsquo000 Net gain(loss) from

- foreign exchange and foreign exchange products 143121 58299- interest rate instruments (62772) (94484)

80349 (36185)

114


8 Net gain on other financial assets 2011 2010 HK$rsquo000 HK$rsquo000 Net gain from disposal of available-for-sale securities 53559 80200Others 221 - 53780 80200

9 Other operating income

2011 2010 HK$rsquo000 HK$rsquo000 Dividend income from investment in securities

- unlisted investments 6016 4763Gross rental income from investment properties 33873 32590Less Outgoings in respect of investment properties (4783) (2859)Others 10968 11850 46074 46344

Included in the ldquoOutgoings in respect of investment propertiesrdquo is HK$111000 (2010 HK$507000) of direct operating

expenses related to investment properties that were not let during the year

10 Net charge of impairment allowances 2011 2010 HK$rsquo000 HK$rsquo000 Advances to customers

Individually assessed - new allowances (17007) (4935)- releases 1947 22991- recoveries 20020 36450

Net reversal of individually assessed loan impairment allowances (Note 24) 4960 54506 Collectively assessed

- new allowances (168494) (81823) Net charge of collectively assessed loan impairment allowances (Note 24) (168494) (81823) Net charge of loan impairment allowances (163534) (27317)

Available-for-sale securities

Net charge of impairment allowances on available-for-sale securities - Individually assessed (725) -


Net reversal(charge) of impairment allowances on held-to-maturity securities - Individually assessed (Note 25) 2953 (3303)

Net charge of impairment allowances (161306) (30620)

115


11 Operating expenses


Staff costs (including directorsrsquo emoluments) - salaries and other costs 830380 725659- termination benefit - 865- pension cost 91340 75322

921720 801846 Premises and equipment expenses (excluding depreciation)

- rental of premises 188465 108311- information technology 108269 101958- others 48347 35079

345081 245348 Depreciation (Note 28) 115441 102348Auditorrsquos remuneration

- audit services 7160 6929- non-audit services 929 602

Lehman Brothers related products (447661) 7019Other operating expenses 342167 269693

1284837 1433785

The final resolution of certain series of Lehman Brothers minibonds was announced on 15 June 2011 The net amount of HK$454296000

recovered by the Group from the underlying collateral of the Lehman Brothers minibonds after deducting the ex gratia payments and

provision for trustee expenses was credited to operating expenses in 2011

12 Net gain from disposal offair value adjustments on investment properties

2011 2010 HK$rsquo000 HK$rsquo000 Net (loss)gain from disposal of investment properties (316) 4Net gain from fair value adjustments on investment properties (Note 27) 136553 78670 136237 78674

13 Net (loss)gain from disposalrevaluation of properties plant and equipment

2011 2010 HK$rsquo000 HK$rsquo000 Net gain(loss) from disposal of premises 366 (90)Net loss from disposal of other fixed assets (12953) (2049)Net (loss)gain from revaluation of premises (Note 28) (1881) 5683 (14468) 3544

116


14 Taxation

Taxation in the consolidated income statement represents

2011 2010 HK$rsquo000 HK$rsquo000Hong Kong profits tax

Current tax - current year taxation 405275 303862- (over)under-provision in prior years (1532) 8825

403743 312687

Deferred tax (credit)charge (Note 34) (56611) 12551

347132 325238

Overseas taxation 130105 52184 477237 377422

Hong Kong profits tax has been provided at the rate of 165 (2010 165) on the estimated assessable profits arising in

Hong Kong during the year Taxation on overseas profits has been calculated on the estimated assessable profits for the

year at the rates of taxation prevailing in the countries in which the Group operates

The taxation on the Grouprsquos profit before taxation that differs from the theoretical amount that would arise using the taxation

rate of Hong Kong is as follows

2011 2010 HK$rsquo000 HK$rsquo000 Profit before taxation 2926195 2211824 Calculated at a taxation rate of 165 (2010 165) 482822 364951Effect of different taxation rates in other countries 23146 12256Income not subject to taxation (47833) (18865)Expenses not deductible for taxation purposes 13773 9490Tax losses not recognized 1300 6(Over)under-provision in prior years (1532) 8825Foreign withholding tax 5561 759 Taxation charge 477237 377422 Effective tax rate 1631 1706

15 Profit attributable to the equity holders of the Bank

The profit of the Bank for the year ended 31 December 2011 attributable to the equity holders of the Bank and dealt with in

the financial statements of the Bank amounted to HK$2180414000 (2010 HK$1812794000)

117


16 Dividends

2011 2010 Per share Total Per share Total HK$ HK$rsquo000 HK$ HK$rsquo000 Interim dividend - - 69 483000

No dividend was declared for the year ended 31 December 2011

17 Retirement benefit costs

The principal defined contribution schemes for the Grouprsquos employees are ORSO scheme exempted under the MPF

Schemes Ordinance and the BOC-Prudential Easy Choice MPF Scheme Under the ORSO schemes employees make

monthly contributions to the ORSO scheme equal to 5 of their basic salaries while the employer makes monthly

contributions equal to 5 to 15 of the employeesrsquo monthly basic salaries depending on years of service The employees

are entitled to receive 100 of the employerrsquos contributions upon termination of employment after completing 10 years of

service or at a scale ranging from 30 to 90 for employees who have completed between 3 to 10 years of service on

conditions of retirement early retirement permanent incapacity and ill-health or termination of employment other than

summary dismissal

With the implementation of the MPF Scheme Ordinance on 1 December 2000 the Group also participates in the BOC-

Prudential Easy Choice MPF Scheme of which the trustee is BOCI-Prudential Trustee and the investment manager is

BOCI-Prudential Manager which are related parties of the Bank

The Grouprsquos total contributions made to the ORSO schemes for the year ended 31 December 2011 amounted to

approximately HK$36382000 (2010 approximately HK$34967000) after a deduction of forfeited contributions of

approximately HK$400000 (2010 approximately HK$1110000) For the MPF Scheme the Group contributed

approximately HK$4581000 (2010 approximately HK$3812000) for the year ended 31 December 2011

118


18 Share option schemes

(a) Share Option Scheme and Sharesave Plan

The principal terms of the Share Option Scheme and the Sharesave Plan were approved and adopted by written

resolutions of all the shareholders of BOCHK (Holdings) dated 10 July 2002

The purpose of the Share Option Scheme is to provide the participants with the opportunity to acquire proprietary

interests in BOCHK (Holdings) The Board of BOCHK (Holdings) may in its absolute discretion offer to grant options

under the Share Option Scheme to any person as the Board of BOCHK (Holdings) may select The subscription price

for the shares shall be determined on the date of grant by the Board of BOCHK (Holdings) as an amount per share

calculated on the basis of established rules An option may be exercised in whole or in part at any time after the date

prescribed by the Board of BOCHK (Holdings) and from time to time as specified in the offer and on or before the

termination date prescribed by the Board of BOCHK (Holdings)

The purpose of the Sharesave Plan is to encourage broad-based employee ownership of the shares of BOCHK

(Holdings) The amount of the monthly contribution under the savings contract to be made in connection with an option

shall be the amount which the relevant eligible employee is willing to contribute which amount shall not be less than

1 and not more than 10 of the eligible employeersquos monthly salary as at the date of application or such other

maximum or minimum amounts as permitted by the Board of BOCHK (Holdings) When an option is exercised during

an exercise period it may be exercised in whole or in part

No options were granted pursuant to the Share Option Scheme or the Sharesave Plan during the year 2011 (2010 Nil)

119


18 Share option schemes (continued)

(b) Pre-Listing Share Option Scheme

On 5 July 2002 several directors together with management personnel of the Group were granted options by BOC

(BVI) the immediate holding company of BOCHK (Holdings) pursuant to a Pre-Listing Share Option Scheme to

purchase from BOC (BVI) an aggregate of 5615200 existing issued shares of BOCHK (Holdings) The Group has

taken advantage of the transitional provisions set out in paragraph 53 of HKFRS 2 under which the new recognition

and measurement policies have not been applied to all options granted to employees on or before 7 November 2002

Details of the share options outstanding as at 31 December 2011 and 2010 are disclosed as follows

Total number of share options to

directors and senior management

Averageexercise price

(HK$ per share) At 1 January 2011 1084500 850 At 31 December 2011 1084500 Exercisable at 31 December 2011 1084500




(HK$ per share) At 1 January 2010 - Add Share options of director appointed during the year 1084500 850 At 31 December 2010 1084500 Exercisable at 31 December 2010 1084500

No share options were exercised during the year 2011 and 2010

The options granted under this scheme can be exercised at HK$850 per share in respect of the option price of

HK$100 These options have a vesting period of four years from the date on which dealings in the shares commenced

on the Stock Exchange with a valid exercise period of ten years No offer to grant any options under the Pre-Listing

Share Option Scheme will be made on or after the date on which dealings in the shares commenced on the Stock

Exchange

120


19 Directorsrsquo and senior managementrsquos emoluments

(a) Directorsrsquo emoluments

Details of the emoluments paid to or receivable by the directors of the Bank in respect of their services rendered for the

Bank and managing the subsidiaries within the Group during the year are as follows

2011 2010 HK$rsquo000 HK$rsquo000 Fees 4681 2325Other emoluments 12604 10481 17285 12806

In July 2002 options were granted to several directors of the Bank by the immediate holding company of BOCHK

(Holdings) BOC (BVI) under the Pre-Listing Share Option Scheme as set out in Note 18(b) Full details of the scheme are

stated in Note 18 During the year no options were exercised and no benefits arising from the granting of these share

options were included in the directorsrsquo emoluments disclosed above or recognised in the income statement (2010 Nil)

121


19 Directorsrsquo and senior managementrsquos emoluments (continued)

(b) Remuneration for the senior management and key personnel

Pursuant to CG-5 Guideline on a Sound Remuneration System issued by the HKMA details of the remuneration for the

senior management and key personnel of the Group during the year are as follows

(i) Remuneration awarded during the year 2011 Senior management Key personnel

Non-deferred Deferred Total


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Fixed remuneration Cash 9968 - 9968 5142 - 5142

Variable remuneration Cash 3876 260 4136 1913 - 1913

Total 13844 260 14104 7055 - 7055

2010 Senior management Key personnel

Non- deferred Deferred Total




Variable remuneration Cash 3562 - 3562 1781 - 1781

Total 12677 12677 8835 8835

The remuneration above includes 7 (2010 5) members of senior management and 4 (2010 6) members of key

personnel

Remark

The number includes a staff promoted from ldquoKey personnelrdquo to ldquoSenior Managementrdquo on 1 March 2011 and at the

same time held the position as ldquoKey personnelrdquo To avoid double-counting his remuneration from January to

February 2011 is classified as ldquoKey personnelrdquo and from March to December 2011 as ldquoSenior managementrdquo For

the number this staff is included in ldquoSenior Managementrdquo and not in ldquoKey personnelrdquo

122



(b) Remuneration for the senior management and key personnel (continued)

(ii) Deferred remuneration outstanding

2011 2010

Senior management Key personnel


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000Deferred remuneration

Vested - - - -Unvested 260 - - -

260 - - -

At 1 January - - - -

Awarded 260 - - -Paid out - - - -Reduced through performance

adjustments - - - -

At 31 December 260 - - -

For the purpose of disclosure Senior Management and Key Personnel mentioned in this section are defined

according to the HKMArsquos Guideline on a Sound Remuneration System

Senior Management The senior executives designated by the Board who are responsible for oversight of the firm-

wide strategy or material business lines including Chief Executive and Deputy General Managers

Key Personnel The employees whose individual business activities involve the assumption of material risk which

may have significant impact on risk exposure or whose individual responsibilities are directly and materially linked

to the risk management or those who have direct influence to the profit including Head of material business lines

Head of Trading as well as Head of risk control functions

20 Cash and balances with banks and other financial institutions The Group The Bank 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Cash 590818 396276 363802 326778Balances with central banks 10554122 6378971 517779 946459Balances with banks and other

financial institutions 16400091 8283865 17195853 9566940Placements with banks and other

financial institutions maturing within one month

16449302 9396869 8864144 9498294

43994333 24455981 26941578 20338471

123


21 Financial assets at fair value through profit or loss

The Group and the Bank

Trading securities

Financial assets designated at fair value through profit or loss Total

2011 2010 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At fair value Debt securities

- Listed in Hong Kong - 152 247900 252389 247900 252541- Listed outside Hong

Kong - - 518359 699388 518359 699388 - 152 766259 951777 766259 951929

- Unlisted 1109280 942296 370222 358558 1479502 1300854 Total 1109280 942448 1136481 1310335 2245761 2252783

Financial assets at fair value through profit or loss are analysed by type of issuer as follows The Group and the Bank 2011 2010 HK$rsquo000 HK$rsquo000 Sovereigns 1108780 941715Public sector entities 500 733Banks and other financial institutions 293869 283532Corporate entities 842612 1026803 2245761 2252783 Included financial assets at fair value through profit or loss of HK$500000 (2010 HK$733000) which are eligible to be classified as public

sector entities under the Banking (Capital) Rules Financial assets at fair value through profit or loss are analysed as follows The Group and the Bank 2011 2010 HK$rsquo000 HK$rsquo000 Treasury bills 1108780 941715Other financial assets at fair value through profit or loss 1136981 1311068 2245761 2252783

124



The Group enters into the following exchange rate interest rate and precious metal related derivative financial instrument

contracts for trading and risk management purposes

Currency forwards represent commitments to purchase and sell foreign currency on a future date

Currency and interest rate swaps are commitments to exchange one set of cash flows for another Swaps result in an

exchange of currencies interest rates (for example fixed rate for floating rate) or a combination of all these (for example

cross-currency interest rate swaps) Except for certain currency swap contracts no exchange of principal takes place

Foreign currency options are contractual agreements under which the seller (writer) grants the purchaser (holder) the right

but not the obligation either to buy (a call option) or sell (a put option) at or by a set date or during a set period a specific

amount of the financial instrument at a predetermined price In consideration for the assumption of foreign exchange and

interest rate risk the seller receives a premium from the purchaser Options are negotiated over-the-counter (ldquoOTCrdquo)

between the Group and its counterparty

The contractnotional amounts and fair values of derivative financial instruments held by the Group are set out in the

following tables The contractnotional amounts of these instruments indicate the volume of transactions outstanding at the

balance sheet dates and certain of them provide a basis for comparison with fair value instruments recognised on the

consolidated balance sheet However they do not necessarily indicate the amounts of future cash flows involved or the

current fair values of the instruments and therefore do not indicate the Grouprsquos exposure to credit or market risks The

derivative financial instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in foreign

exchange rates market interest rates or metal prices relative to their terms The aggregate fair values of derivative financial

instruments assets and liabilities can fluctuate significantly from time to time

125



The Group trades derivative products (both exchange-traded or OTC) mainly for customer business The Group strictly

follows risk management policies in providing derivative products to our customers and in trading of derivative products in

the interbank market

Derivatives are also used to manage the interest rate risk of the banking book A derivative instrument must be included in

the approved product list before any transactions for that instrument can be made Every derivative transaction must be

input into the relevant system for settlement mark to market revaluation reporting and control

The following tables summarise the contractnotional amounts of each class of derivative financial instrument as at 31

December

The Group 2011

Trading

Not qualified for hedge

accounting Total HK$rsquo000 HK$rsquo000 HK$rsquo000 Exchange rate contracts Spot and forwards 38126849 - 38126849 Swaps 12343293 - 12343293 Foreign currency options

- Options purchased 17165 - 17165 - Options written 17165 - 17165

50504472 - 50504472 Interest rate contracts Swaps 28510868 721698 29232566 Bullion contracts 305772 - 305772 Other contracts 5705 - 5705 Total 79326817 721698 80048515

Derivative transactions which do not qualify as hedges for accounting purposes but are managed in conjunction with the financial

instruments designated at fair value through profit or loss are separately disclosed in compliance with the requirements set out in the

Banking (Disclosure) Rules

126



The Group 2010

Trading



- Options purchased 28195 - 28195- Options written 28195 - 28195


127



The Bank 2011

Trading


accounting Total HK$rsquo000 HK$rsquo000 HK$rsquo000 Exchange rate contracts Spot and forwards 34075862 - 34075862 Swaps 11267612 - 11267612 Foreign currency option



The Bank 2010

Trading





128



The following tables summarise the fair values of each class of derivative financial instrument as at 31 December

The Group 2011 Fair value assets Fair value liabilities

Trading

Notqualified

for hedgeaccounting Total Trading

Not qualified

for hedge accounting Total

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Exchange rate contracts

Spot and forwards 760384 - 760384 (400191) - (400191) Swaps 10841 - 10841 (57385) - (57385) Foreign currency option

- Options purchased 72 - 72 - - -- Options written - - - (72) - (72)

771297 - 771297 (457648) - (457648) Interest rate contracts

Swaps 40998 - 40998 (120847) (91464) (212311) Bullion contracts 4095 - 4095 (2659) - (2659) Other contracts 13 - 13 - - - Total 816403 - 816403 (581154) (91464) (672618)

The Group

2010 Fair value assets Fair value liabilities

Trading

Notqualified


Not qualified



Spot and forwards 983762 - 983762 (671594) - (671594)Swaps 78086 - 78086 (45081) - (45081)Foreign currency option




129



The Bank 2011 Fair value assets Fair value liabilities

Trading

Notqualified


Not qualified







The Bank


Trading

Notqualified


Not qualified







130



The credit risk weighted amounts of the above derivative financial instruments are as follows

The Group The Bank

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Exchange rate contracts

Forwards 619563 715286 566541 672931Swaps 25906 77199 22902 65682

Interest rate contracts Swaps 21507 26231 4150 8258

666976 818716 593593 746871

The credit risk weighted amounts are calculated in accordance with the Banking (Capital) Rules The amounts are

dependent upon the status of the counterparty and the maturity characteristics of each type of contract

The Group adopted the FIRB approach to calculate credit risk exposures as at 31 December 2011 as opposed to the STC

approach that was used as at 31 December 2010 As a result of the change in the basis used the risk weighted amounts

shown above are not directly comparable

There is no effect of valid bilateral netting agreement on the fair values or the credit risk weighted amounts of the derivative


131


23 Advances and other accounts

The Group The Bank 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Personal loans and advances 20863287 19423594 16318123 16170606Corporate loans and advances 98980942 96777050 67917818 61204297 Advances to customers 119844229 116200644 84235941 77374903 Loan impairment allowances

- Individually assessed (87615) (105289) (11652) (12447)- Collectively assessed (705132) (528310) (428451) (342818)

119051482 115567045 83795838 77019638 Trade bills 13318487 7724207 10819714 6346654Advances to banks and other financial

institutions 544256 858924 544256 546354 Total 132914225 124150176 95159808 83912646

As at 31 December 2011 advances to customers of the Group and the Bank included accrued interest of HK$533810000

(2010 HK$277031000) and HK$308728000 (2010 HK$109641000) respectively

As at 31 December 2011 and 2010 no impairment allowance was made in respect of trade bills and advances to banks and

other financial institutions

Included advances to customers of the Group denominated in HK dollars of HK$61458683000 (2010 HK$56527335000) and US

dollars equivalent to HK$34285493000 (2010 HK$37829893000) Included advances to customers of the Bank denominated in HK

dollars of HK$58979430000 (2010 HK$52071570000) and US dollars equivalent to HK$23881658000 (2010 HK$23964653000)

24 Loan impairment allowances

The Group The Bank 2011 Individual assessment Personal Corporate Total Personal Corporate Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2011 2189 103100 105289 859 11588 12447

(Credited)charged to income

statement (2044) (2916) (4960) (1865) 7228 5363Loans written off during the year

as uncollectible - (33697) (33697) - (10806) (10806)Recoveries 4506 15513 20019 3771 1598 5369Unwind of discount on

impairment allowances (365) (899) (1264) (67) (652) (719)Exchange difference 280 1948 2228 - (2) (2) At 31 December 2011 4566 83049 87615 2698 8954 11652

132


24 Loan impairment allowances (continued)

The Group The Bank 2011 Collective assessment Personal Corporate Total Personal Corporate Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2011 6575 521735 528310 5565 337253 342818

Charged to income statement 35332 133162 168494 1336 84046 85382Exchange difference 270 8058 8328 - 251 251 At 31 December 2011 42177 662955 705132 6901 421550 428451


Credited to income statement (2342) (52164) (54506) (1306) (10940) (12246)Loans written off during the year


impairment allowances (15) (689) (704) - (442) (442)Exchange difference - 2131 2131 (8) (100) (108) At 31 December 2010 2189 103100 105289 859 11588 12447



133


25 Investment in securities

The Group The Bank 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 (a) Available-for-sale securities

Debt securities at fair value - Listed in Hong Kong 1402102 1209278 1402102 1209278- Listed outside Hong Kong 4487726 5890914 4487726 5890914

5889828 7100192 5889828 7100192

- Unlisted 20822258 16608109 17635848 15186588

26712086 23708301 23525676 22286780 Equity securities at fair value

- Unlisted 43899 34915 43899 34915 26755985 23743216 23569575 22321695

(b) Held-to-maturity securities

Listed at amortised cost - outside Hong Kong 121596 991678 121596 991678

Unlisted at amortised cost 1429104 1394200 448941 1394200

1550700 2385878 570537 2385878

Impairment allowances - (3303) - (3303) 1550700 2382575 570537 2382575 (c) Loans and receivables

Unlisted at amortised cost 1875919 1054646 1875919 1054646 Total 30182604 27180437 26016031 25758916 Market value of listed held-to-maturity securities 118147 989242 118147 989242

134


25 Investment in securities (continued)

Investment in securities is analysed by type of issuer as follows

The Group 2011

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and

receivables Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Sovereigns 10439564 980163 - 11419727Public sector entities 175915 - - 175915Banks and other financial institutions 11344638 330025 1875919 13550582Corporate entities 4795868 240512 - 5036380 26755985 1550700 1875919 30182604

The Group 2010

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and

receivables Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Sovereigns 7077036 - - 7077036Banks and other financial institutions 14596042 1552391 1054646 17203079Corporate entities 2070138 830184 - 2900322 23743216 2382575 1054646 27180437 Included available-for-sale securities of HK$175915000 (2010 Nil) which are eligible to be classified as public sector entities under the

Banking (Capital) Rules

The Bank 2011

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and

receivables Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Sovereigns 7990028 - - 7990028Public sector entities 175915 - - 175915Banks and other financial institutions 11344638 330025 1875919 13550582Corporate entities 4058994 240512 - 4299506 23569575 570537 1875919 26016031

135



The Bank 2010

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and

receivables Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Sovereigns 5655515 - - 5655515Banks and other financial institutions 14596042 1552391 1054646 17203079Corporate entities 2070138 830184 - 2900322 22321695 2382575 1054646 25758916

Included available-for-sale securities of HK$175915000 (2010 Nil) which are eligible to be classified as public sector entities under the


The movements in investment in securities are summarised as follows

The Group

2011

Available-

for-salesecurities

Held-to- maturity

securities Loans and

receivables HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2011 23743216 2382575 1054646 Additions 182365290 3281486 3405538Disposals redemptions and maturity (179542115) (4106159) (2476506)Amortisation 21518 (3004) 31489Change in fair value 3249 - -Net reversal of impairment allowances (Note 10) - 2953 -Exchange difference 164827 (7151) (139248) At 31 December 2011 26755985 1550700 1875919

The Group

2010

Available-

for-salesecurities

Held-to- maturity


receivables HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2010 16425697 9811280 383842 Additions 142128114 1049647 1044738Disposals redemptions and maturity (135349515) (8300533) (382059)Amortisation 97494 (34373) 12161Change in fair value 185775 - -Net charge of impairment allowances (Note 10) - (3303) -Exchange difference 255651 (140143) (4036) At 31 December 2010 23743216 2382575 1054646

136



The Bank

2011

Available-

for-salesecurities

Held-to- maturity


receivables HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2011 22321695 2382575 1054646 Additions 179167233 1027097 3405538 Disposals redemptions and maturity (177987097) (2810311) (2476506)Amortisation (13063) (24252) 31489 Change in fair value (18200) - -Net reversal of impairment allowances - 2953 -Exchange difference 99007 (7525) (139248) At 31 December 2011 23569575 570537 1875919

The Bank

2010

Available-

for-salesecurities

Held-to- maturity


receivables HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2010 16201038 9811280 383842 Additions 140113771 1049647 1044738Disposals redemptions and maturity (134512054) (8300533) (382059)Amortisation 68296 (34373) 12161Change in fair value 196205 - -Net charge of impairment allowances - (3303) -Exchange difference 254439 (140143) (4036) At 31 December 2010 22321695 2382575 1054646

137



Available-for-sale and held-to-maturity securities are analysed as follows

The Group



2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Treasury bills 10214915 6815656 980163 -Certificates of deposit held 1350789 2074469 225695 23806Others 15190281 14853091 344842 2358769 26755985 23743216 1550700 2382575

The Bank


Held-to-maturity Securities

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Treasury bills 7765378 5394135 - -Certificates of deposit held 1350789 2074469 225695 23806Others 14453408 14853091 344842 2358769 23569575 22321695 570537 2382575

The movements in impairment allowances on available-for-sale and held-to-maturity securities are summarised as follows




2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January - - 3303 - Charged(credited) to income statement

(Note 10) 725 - (2953) 3303Disposals (725) - (350) - At 31 December - - - 3303

138


26 Investment in subsidiaries

The Bank


Unlisted shares at cost 5222682 5286630

The particulars of all subsidiaries of the Bank are set out in the ldquoAppendix - Subsidiaries of the Bankrdquo


The Group The Bank 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 618263 717985 579940 679287Additions 13105 - 13105 -Disposals (6208) (166217) - (162797)Fair value gains 136553 78670 135195 77110Reclassification from(to) properties plant and

equipment (Note 28) 84461 (13660) 74020 (13660)Exchange difference 1774 1485 - - At 31 December 847948 618263 802260 579940

The carrying value of investment properties is analysed based on the remaining terms of the leases as follows

The Group The Bank 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Held in Hong Kong

On long-term lease (over 50 years) 732050 530650 732050 530650On medium-term lease (10 ndash 50 years) 70210 49290 70210 49290

Held outside Hong Kong

On long-term lease (over 50 years) 1728 5874 - -On medium-term lease (10 ndash 50 years) 43960 32449 - -

847948 618263 802260 579940

As at 31 December 2011 investment properties are included in the balance sheets at valuation carried out at 31 December

2011 on the basis of their fair value by an independent firm of chartered surveyors Savills Valuation and Professional

Services Limited The fair value represents the estimated amount at which the asset should exchange on the date of

valuation between a willing buyer and a willing seller in an armrsquos length transaction after proper marketing wherein the

parties had each acted knowledgeably prudently and without compulsion

139



The Group

Premises

Equipment fixtures and

fittings Total HK$rsquo000 HK$rsquo000 HK$rsquo000 Net book value at 1 January 2011 3196912 242468 3439380Additions 21416 177135 198551Disposals (67242) (13079) (80321)Revaluation 1211838 - 1211838Depreciation for the year (Note 11) (55383) (60058) (115441)Reclassification to investment properties (Note 27) (84461) - (84461)Exchange difference 8262 5603 13865 Net book value at 31 December 2011 4231342 352069 4583411 At 31 December 2011 Cost or valuation 4231342 663934 4895276Accumulated depreciation - (311865) (311865) Net book value at 31 December 2011 4231342 352069 4583411 Net book value at 1 January 2010 2757277 215971 2973248Additions 24616 86876 111492Disposals (105151) (2072) (107223)Revaluation 539953 - 539953Depreciation for the year (Note 11) (43014) (59334) (102348)Reclassification from investment properties (Note 27) 13660 - 13660Transfer 2942 (2942) -Exchange difference 6629 3969 10598 Net book value at 31 December 2010 3196912 242468 3439380 At 31 December 2010 Cost or valuation 3196912 519239 3716151Accumulated depreciation - (276771) (276771) Net book value at 31 December 2010 3196912 242468 3439380 The analysis of cost or valuation of the above assets is as follows

Premises


fittings Total HK$rsquo000 HK$rsquo000 HK$rsquo000 At 31 December 2011 At cost - 663934 663934At valuation 4231342 - 4231342 4231342 663934 4895276 At 31 December 2010 At cost - 519239 519239At valuation 3196912 - 3196912 3196912 519239 3716151

140



The Bank

Premises


fittings Total HK$rsquo000 HK$rsquo000 HK$rsquo000 Net book value at 1 January 2011 3015655 86355 3102010Additions 14961 18791 33752 Disposals (67242) (13) (67255)Revaluation 1195735 - 1195735 Depreciation for the year (46352) (23620) (69972)Reclassification to investment properties (Note 27) (74020) - (74020) Net book value at 31 December 2011 4038737 81513 4120250 At 31 December 2011 Cost or valuation 4038737 261479 4300216 Accumulated depreciation - (179966) (179966) Net book value at 31 December 2011 4038737 81513 4120250 Net book value at 1 January 2010 2580328 89046 2669374Additions 24616 25341 49957Disposals (92296) (1816) (94112)Revaluation 520572 - 520572Depreciation for the year (34167) (23274) (57441)Reclassification from investment properties (Note 27) 13660 - 13660Transfer 2942 (2942) - Net book value at 31 December 2010 3015655 86355 3102010 At 31 December 2010 Cost or valuation 3015655 260543 3276198Accumulated depreciation - (174188) (174188) Net book value at 31 December 2010 3015655 86355 3102010 The analysis of cost or valuation of the above assets is as follows

Premises



141



The carrying value of premises is analysed based on the remaining terms of the leases as follows

The Group The Bank

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Held in Hong Kong



On long-term lease (over 50 years) 37432 34796 - -On medium-term lease (10 ndash 50 years) 141821 134744 1514 1410On short-term lease (less than 10 years) 14866 13127 - -

4231342 3196912 4038737 3015655

As at 31 December 2011 premises are included in the balance sheets at valuation carried out at 31 December 2011 on the

basis of their fair value by an independent firm of chartered surveyors Savills Valuation and Professional Services Limited

The fair value represents the estimated amount at which the asset should exchange on the date of valuation between a

willing buyer and a willing seller in an armrsquos length transaction after proper marketing wherein the parties had each acted

knowledgeably prudently and without compulsion

As a result of the above-mentioned revaluations changes in value of the Grouprsquos and the Bankrsquos premises were recognised in

the Grouprsquos and the Bankrsquos premises revaluation reserve and the income statements as follows

The Group The Bank

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Increase in valuation credited to premises revaluation

reserve 1213719 534270 1195288 518116(Decrease)increase in valuation (debited)credited to

income statement (1881) 5683 447 2456 1211838 539953 1195735 520572

As at 31 December 2011 the net book value of premises that would have been included in the Grouprsquos and the Bankrsquos

balance sheets had the assets been carried at cost less accumulated depreciation and impairment losses was

HK$226859000 (2010 HK$233627000) and HK$193243000 (2010 HK$190818000) respectively

142


29 Other assets

The Group The Bank

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Repossessed assets 942 50 - -Accounts receivable and prepayments 818535 1169202 652284 1146077 819477 1169252 652284 1146077

30 Financial liabilities at fair value through profit or loss


2011 2010 HK$rsquo000 HK$rsquo000 Trading liabilities

- Short positions in Exchange Fund Bills and Notes 1077896 1185375

As at 31 December 2011 there are no financial liabilities designated at fair value through profit or loss (2010 Nil)

31 Deposits from customers and hedge accounting

(a) Deposits from customers

The Group The Bank

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Current savings and other deposit accounts

(per balance sheets) 174469468 141336905 124747402 109845308 Analysed by Demand deposits and current accounts - corporate 11847789 8898591 6328499 5760692 - personal 1628352 1709136 1450028 1574135 13476141 10607727 7778527 7334827 Savings deposits - corporate 14590706 16875977 13158043 15275293 - personal 28599476 31736950 27788030 31079284 43190182 48612927 40946073 46354577 Time call and notice deposits - corporate 65148525 48789231 40556901 28058909 - personal 52654620 33327020 35465901 28096995 117803145 82116251 76022802 56155904 174469468 141336905 124747402 109845308

143


31 Deposits from customers and hedge accounting (continued)

(b) Hedge accounting

Hedges of net investments in foreign operations

As at 31 December 2011 a proportion of the Grouprsquos RMB-denominated deposits from customers of

HK$2073358000 (2010 HK$1981598000) are designated as a hedging instrument to hedge against the net

investments in foreign operations

There are no gains or losses on ineffective portion recognised in the income statement during the year (2010 Nil)

32 Other accounts and provisions The Group The Bank 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Other accounts payable 8334637 6822767 2711207 2310527Provisions 62033 33560 56269 33560 8396670 6856327 2767476 2344087

33 Assets pledged as security

As at 31 December 2011 liabilities of the Group and the Bank both amounting to HK$872412000 (2010

HK$1855245000) were secured by assets deposited with central depositories to facilitate settlement operations In

addition the liabilities of the Group amounting to HK$617973000 (2010 Nil) were secured by debt securities related to sale

and repurchase arrangements The amount of assets pledged by the Group and the Bank to secure these liabilities was

HK$1495704000 (2010 HK$1858552000) and HK$873977000 (2010 HK$1858552000) respectively included in

ldquoTrading securitiesrdquo and ldquoAvailable-for-sale securitiesrdquo

34 Deferred taxation

Deferred tax is recognised in respect of the temporary differences arising between the tax bases of assets and liabilities and

their carrying amounts in the financial statements in accordance with HKAS 12 ldquoIncome Taxesrdquo

The major components of deferred tax (assets)liabilities recorded in the balance sheets and the movements during the

year are as follows

The Group 2011

Accelerated

tax depreciation

Propertyrevaluation Losses

Impairment allowances

Other temporary

differences Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2011 12554 495653 - (94197) 6844 420854Charged(credited) to income

statement (Note 14) 5717 4594 - (50220) (16702) (56611)Charged(credited) to other

comprehensive income - 172968 - - (11131) 161837Exchange difference (40) 1349 - (1952) (758) (1401) At 31 December 2011 18231 674564 - (146369) (21747) 524679

144


34 Deferred taxation (continued) The Group 2010

Accelerated

tax depreciation



Other temporary

differences Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2010 10899 427607 (22864) (83823) (6643) 325176Charged(credited) to income

statement (Note 14) 1689 (1646) 22680 (8938) (1234) 12551Charged to other

comprehensive income - 68439 - - 15162 83601Exchange difference (34) 1253 184 (1436) (441) (474) At 31 December 2010 12554 495653 - (94197) 6844 420854

The Bank 2011

Accelerated

tax depreciation

Propertyrevaluation


Other temporary

differences Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2011 13487 457065 (55937) 22370 436985Charged(credited) to income statement 4943 (288) (14536) (6977) (16858)Charged(credited) to other

comprehensive income - 169034 - (16494) 152540Exchange difference - - (30) - (30) At 31 December 2011 18430 625811 (70503) (1101) 572637

The Bank 2010

Accelerated

tax depreciation

Propertyrevaluation


Other temporary

differences Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 At 1 January 2010 11798 389139 (46976) 1616 355577Charged(credited) to income statement 1689 2419 (8938) 2984 (1846)Charged to other comprehensive

income - 65507 - 17770 83277Exchange difference - - (23) - (23) At 31 December 2010 13487 457065 (55937) 22370 436985

145


34 Deferred taxation (continued)

Deferred tax assets and liabilities are offset on an individual entity basis when there is a legal right to set off current tax

assets against current tax liabilities and when the deferred taxation relates to the same authority The following amounts

determined after appropriate offsetting are shown in the balance sheets

The Group The Bank 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Deferred tax assets (57714) (26204) (656) (627)Deferred tax liabilities 582393 447058 573293 437612 524679 420854 572637 436985

The Group The Bank 2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Deferred tax assets to be recovered after more than

twelve months (40052) (26204) (656) (627)Deferred tax liabilities to be settled after more than

twelve months 583494 424688 574394 415242 543442 398484 573738 414615

At the end of the balance sheet dates the Group and the Bank have not recognised deferred tax assets in respect of tax

losses amounting to HK$5314000 (2010 HK$129000) and HK$5198000 (2010 Nil) which is considered unlikely to be

utilised Of the amount HK$116000 (2010 HK$129000) for the Group and Nil ((2010 Nil) for the Bank have no expiry

date and HK$5198000 (2010 Nil) for the Group and the Bank is scheduled to expire within five years

146


35 Share capital

2011 2010 HK$rsquo000 HK$rsquo000 Authorised

7000000 ordinary shares of HK$100 each 700000 700000 Issued and fully paid

7000000 ordinary shares of HK$100 each 700000 700000

36 Reserves

The Grouprsquos and the Bankrsquos reserves and the movements therein for the current and prior years are presented in the

consolidated statement of changes in equity and statement of changes in equity respectively on pages 10 to 11 of the


147


37 Notes to consolidated cash flow statement

(a) Reconciliation of operating profit to operating cash inflow before taxation

2011 2010 HK$rsquo000 HK$rsquo000 Operating profit 2804426 2129606Depreciation 115441 102348Net charge of impairment allowances 161306 30620Unwind of discount on impairment allowances (1264) (704)Advances written off net of recoveries (13678) (5157)Change in balances with banks and other financial institutions with original

maturity over three months (1714625) 59069Change in treasury bills with original maturity over three months (3479676) (888426)Change in placements with banks and other financial institutions with original

maturity over three months (13708025) 3682808Change in financial assets at fair value through profit or loss 174087 263700Change in derivative financial instruments 68663 (122115)Change in certificates of deposit held with original maturity over three months 521791 656618Change in advances and other accounts (8923197) (29930034)Change in investment in securities 802150 (147604)Change in other assets 349775 241087Change in deposits and balances from banks and other financial institutions 9291599 (1189804)Change in financial liabilities at fair value through profit or loss (107479) 370069Change in deposits from customers 33132563 31297504Change in other accounts and provisions 2023343 2449469Elimination of exchange effect (820313) (261196) Operating cash inflow before taxation 20676887 8737858 Cash flows from operating activities included

- Interest received 5003691 3600836- Interest paid (1853550) (796067)- Dividend received 6016 4763

Certain comparative figures have been revised to conform with the current yearrsquos presentation The effect of exchange

rate changes on cash and cash equivalents has also been separately presented on the consolidated cash flow

statement to enhance the presentation

(b) Analysis of the balances of cash and cash equivalents

2011 2010 HK$rsquo000 HK$rsquo000 Cash and balances with banks and other financial institutions with original

maturity within three months 40709119 22885392Placements with banks and other financial institutions with original maturity

within three months 3380186 1672685Treasury bills with original maturity within three months 6899803 5832992 50989108 30391069

148


38 Contingent liabilities and commitments

The following is a summary of the contractual amounts of each significant class of contingent liability and commitment and

the corresponding aggregate credit risk weighted amount

The Group The Bank

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Direct credit substitutes 7190596 3941792 319899 350961Transaction-related contingencies 1683929 1400471 442879 449710Trade-related contingencies 8694396 4961955 3509150 2225662Commitments that are unconditionally cancellable

without prior notice 43938343 31241831 26872836 23483714Other commitments with an original maturity of

- up to one year 1486232 2022481 1004859 963253- over one year 5078651 7890753 3557219 4083548

68072147 51459283 35706842 31556848 Credit risk weighted amount 9276672 7462170 3193805 2772797

The credit risk weighted amount is calculated in accordance with the Banking (Capital) Rules The amount is dependent

upon the status of the counterparty and the maturity characteristics of each type of contract




39 Capital commitments

The Group and the Bank have the following outstanding capital commitments not provided for in the financial statements

The Group The Bank

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Authorised and contracted for but not provided for 12106 9208 5179 5618Authorised but not contracted for 3255 12600 3255 3366 15361 21808 8434 8984

The above capital commitments mainly relate to commitments to purchase computer equipment and software and to

renovate the Grouprsquos and the Bankrsquos premises

149


40 Operating lease commitments

(a) As lessee

The Group and the Bank have commitments to make the following future minimum lease payments under non-

cancellable operating leases

The Group The Bank

2011 2010 2011 2010 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Land and buildings

- not later than one year 177452 112056 40356 38139- later than one year but not later than

five years 468675 102752 39806 37414- later than five years 244365 11850 320 -

890492 226658 80482 75553 Other commitments

- not later than one year 56 - - -- later than one year but not later than

five years 65 - - - 890613 226658 80482 75553

(b) As lessor

The Group and the Bank have contracted with tenants for the following future minimum lease receivables under non-


The Group The Bank



five years 32416 40425 19215 32214 72393 71558 52633 60477

The Group leases its investment properties (Note 27) under operating lease arrangements with leases typically for a

period from one to three years The terms of the leases generally require the tenants to pay security deposits None of

the leases include contingent rentals

150


41 Litigation

The Group is currently being served a number of claims and counterclaims by various independent parties These claims

and counterclaims are in relation to the normal commercial activities of the Group

No material provision was made against these claims and counterclaims because the directors believe that the Group has

meritorious defences against the claimants or the amounts involved in these claims are not expected to be material


(a) By class of business

The Group has changed the charge on inter-segment funding from the corresponding money market rates to money

market rates adjusted with pre-determined margins this year These margins reflect differentiation based on product

features Meanwhile corporate bonds were reclassified from Corporate Banking to Treasury to align with the

corresponding change in the product management No change has been made to the comparative figures However if

the same mechanismclassification were applied for last year it is estimated that the net interest income of Personal

Banking Corporate Banking and Treasury would be increased (+) or decreased (-) approximately by HK$

+227219000 -302924000 and +75705000 respectively Moreover a net trading loss of HK$124141000 and a

net gain of HK$40617000 on financial instruments designated at fair value through profit or loss which were

generated from corporate bonds would be shifted from Corporate Banking to Treasury

The Group divides its business into four classes Personal Banking Corporate Banking Treasury and Investment

Both Personal Banking business and Corporate Banking business provide general banking services Personal

Banking serves individual customers while Corporate Banking deals with non-individual customers The Treasury

segment is responsible for managing the capital liquidity and the interest rate and foreign exchange positions of the

Group in addition to proprietary trades It provides funds to other business segments and receives funds from deposit

taking activities of Personal Banking and Corporate Banking These inter-segment funding is charged according to the

internal funds transfer pricing mechanism of the Group The assets and liabilities of Treasury have not been adjusted

to reflect the effect of inter-segment borrowing and lending (ie the profit and loss information in relation to Treasury is

not comparable to the assets and liabilities information about Treasury)

Investment includes bank premises and equipment used by supporting units Charges are paid to this segment from

other business segments based on market rates per square foot for their occupation of the Grouprsquos premises The

exchange difference arising from capital of our subsidiary Nanyang Commercial Bank (China) Limited is recognised

in its income statement is also included in this class

ldquoOthersrdquo refers to other group operations and mainly comprises of items related to the Group as a whole and totally

independent of the other four business segments

Revenues and expenses of any business segment mainly include items directly attributable to the segment For

management overheads allocations are made on reasonable bases In this year a more detailed and comprehensive

cost allocation mechanism was adopted No change has been made to the comparative figures However if the same

mechanism were applied for last year it is estimated that the operating expenses of Personal Banking Corporate

Banking Treasury investment and Others would be increased (+) or decreased (-) approximately by HK$ -

101583000 +106943000 +99348000 -59328000 and -45380000 respectively

151


42 Segmental reporting (continued)

(a) By class of business (continued)

The Group

2011

Personal Banking

CorporateBanking Treasury Investment Others

Subtotal

Eliminations Consolidated

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Net interest

income(expense) - external (274306) 1837500 1721507 4 36 3284741 - 3284741 - inter-segment 760116 (82130) (677986) - - - - -

485810 1755370 1043521 4 36 3284741 - 3284741 Net fee and commission

income(expense) 315659 453130 22490 1422 (2515) 790186 - 790186 Net trading gain(loss) 48286 79419 (10484) (37174) 302 80349 - 80349 Net loss on financial

instruments designated at fair value through profit or loss - - (4561) - - (4561) - (4561)

Net (loss)gain on other financial assets (277) 498 53559 - - 53780 - 53780

Other operating income 2837 935 4 122394 11868 138038 (91964) 46074 Net operating income

before impairment allowances 852315 2289352 1104529 86646 9691 4342533 (91964) 4250569

Net (charge)reversal of impairment allowances (33288) (130246) 2228 - - (161306) - (161306)

Net operating income 819027 2159106 1106757 86646 9691 4181227 (91964) 4089263 Operating expenses (606129) (851873) (270882) (57467) 409550 (1376801) 91964 (1284837) Operating profit 212898 1307233 835875 29179 419241 2804426 - 2804426Net gain from disposal

offair value adjustments on investment properties - - - 136237 - 136237 - 136237

Net gain(loss) from disposal revaluation of properties plant and equipment - 24 - (14492) - (14468) - (14468)

Profit before taxation 212898 1307257 835875 150924 419241 2926195 - 2926195 Assets Segment assets 22429651 112100397 99468390 5498528 134490 239631456 - 239631456 Liabilities Segment liabilities 85905585 96627683 29648616 5741 1307635 213495260 - 213495260 Other information Capital expenditure - - - 211656 - 211656 - 211656Depreciation 17150 26482 12359 54649 4801 115441 - 115441 Amortisation of securities - - 50003 - - 50003 - 50003

152




The Group

2010

Personal Banking


Subtotal



income(expense) - external 125733 2130625 501573 31 - 2757962 - 2757962- inter-segment 186511 (371219) 184708 - - - - -

312244 1759406 686281 31 - 2757962 - 2757962 Net fee and commission

income 346875 344093 3076 6599 - 700643 - 700643Net trading gain(loss) 94267 (78623) 11090 (62919) - (36185) - (36185)Net gain on financial

instruments designated at fair value through profit or loss - 40617 4430 - - 45047 - 45047

Net gain on other financial assets - - 80200 - - 80200 - 80200



Net reversal(charge) of impairment allowances 1130 (28447) (3303) - - (30620) - (30620)

Net operating income 754783 2037050 781961 71235 11233 3656262 (92871) 3563391Operating expenses (676122) (678436) (20142) (102629) (49327) (1526656) 92871 (1433785) Operating profit 78661 1358614 761819 (31394) (38094) 2129606 - 2129606Net gain from disposal


Net gain from disposal revaluation of properties plant and equipment - - - 3544 - 3544 - 3544

Profit before taxation 78661 1358614 761819 50824 (38094) 2211824 - 2211824 Assets Segment assets 21602864 109061573 57296898 4103797 110057 192175189 - 192175189 Liabilities Segment liabilities 69005849 78856743 20372055 487830 962714 169685191 - 169685191 Other information Capital expenditure - - - 111492 - 111492 - 111492Depreciation - - - 102348 - 102348 - 102348Amortisation of securities - - 75282 - - 75282 - 75282

153




The Bank

2011

Personal Banking


Subtotal



income(expense) - external (53414) 1182910 1013413 - 36 2142945 - 2142945- inter-segment 387731 (28945) (358786) - - - - -

334317 1153965 654627 - 36 2142945 - 2142945 Net fee and commission

income(expense) 311060 366902 (3469) - (2515) 671978 - 671978Net trading gain(loss) 45690 61599 (40611) 47 302 67027 - 67027Net loss on financial


Net (loss)gain on other financial assets (277) - 53559 - - 53282 - 53282



Net reversal(charge) of impairment allowances 529 (91274) 2228 - - (88517) - (88517)

Net operating income 691320 1491270 661777 120300 6642 2971309 (91964) 2879345Operating expenses (476635) (376049) (18327) (46352) 410179 (507184) 91964 (415220) Operating profit 214685 1115221 643450 73948 416821 2464125 - 2464125Net gain from disposal


Net gain from disposal revaluation of properties plant and equipment - 24 - 800 - 824 - 824

Profit before taxation 214685 1115245 643450 209943 416821 2600144 - 2600144 Assets Segment assets 17689047 78851759 57424489 10189232 16387 164170914 - 164170914 Liabilities Segment liabilities 67271814 60222651 10965474 5001 991441 139456381 - 139456381 Other information Capital expenditure - - - 46857 - 46857 - 46857Depreciation 11596 5875 1375 46353 4773 69972 - 69972Amortisation of securities - - (5826) - - (5826) - (5826)

154




The Bank

2010

Personal Banking


Subtotal



income(expense) - external 120122 1278487 517042 31 - 1915682 - 1915682- inter-segment 209214 (136939) (72275) - - - - -

329336 1141548 444767 31 - 1915682 - 1915682 - Net fee and commission

income(expense) 314517 301576 (5237) - - 610856 - 610856Net trading gain(loss) 92119 (101165) 5963 - - (3083) - (3083)Net gain on financial






Net operating income 737000 1346177 527007 330117 197 2940498 (92871) 2847627Operating expenses (498740) (270343) (20142) (57723) (49327) (896275) 92871 (803404) Operating profit 238260 1075834 506865 272394 (49130) 2044223 - 2044223Net gain from disposal




155



(b) By geographical area

The following information is presented based on the principal places of operations of the subsidiaries or in the case of

the Bank on the locations of the branches responsible for reporting the results or booking the assets

The Group 2011 2010

Net operating income before

impairment allowance

Profit before

taxation



Profit before

taxation HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Hong Kong 2948054 2596262 2655688 1900950Mainland China 1277528 323544 913611 298079Others 24987 6389 24712 12795 Total 4250569 2926195 3594011 2211824

The Group 2011

Total

assetsTotal

liabilitiesNon-current

assets

Contingent liabilities

andcommitments

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Hong Kong 152179720 135290810 4921445 34853375Mainland China 85846677 76703039 509695 33057759Others 1605059 1501411 1065 161013 Total 239631456 213495260 5432205 68072147

The Group 2010

Total

assetsTotal


assets


andcommitments


156



(b) By geographical area (continued)

The Bank 2011 2010



Profit before

taxation



Profit before

taxation HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Hong Kong 2947940 2598966 2852929 2098478Mainland China (5065) (5211) 9166 10803Others 24987 6389 24712 12795 Total 2967862 2600144 2886807 2122076

The Bank 2011

Total

assetsTotal


assets


andcommitments

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Hong Kong 159876420 135431198 4921445 34934712Mainland China 2689435 2523772 - 611117Others 1605059 1501411 1065 161013 Total 164170914 139456381 4922510 35706842

The Bank 2010

Total

assetsTotal


assets


andcommitments


157


43 Loans to directors and officers

Particulars of advances made to directors and officers of the Bank pursuant to section 161B of the Hong Kong Companies

Ordinance are as follows

2011 2010 HK$rsquo000 HK$rsquo000 Aggregate amount of relevant loans outstanding at year end 30 59 Maximum aggregate amount of relevant loans outstanding during the year 59 2035

44 Significant related party transactions

The Group is subject to the control of the State Council of the PRC Government through China Investment Corporation

(ldquoCICrdquo) its wholly-owned subsidiary Central Huijin Investment Ltd (ldquoCentral Huijinrdquo) BOC and BOCHK in which Central

Huijin has controlling equity interests

(a) Transactions with the parent companies and the other companies controlled by the parent companies

General information of the parent companies

The Group is controlled by BOCHK Central Huijin is the controlling entity of BOCHK and it is a wholly-owned subsidiary

of CIC which is a wholly state-owned company engaging in foreign currency investment management

Central Huijin has controlling equity interests in certain other entities in the PRC

The Group enters into banking and other transactions with these companies in the normal course of business which

include loans investment securities and money market transactions

158


44 Significant related party transactions (continued)

(b) Transactions with government authorities agencies affiliates and other state controlled entities

The Group is subject to the control of the State Council of the PRC Government through CIC and Central Huijin which

also directly and indirectly controls a significant number of entities through its government authorities agencies affiliates

and other state controlled entities The Group enters into banking transactions with government authorities agencies

affiliates and other state controlled entities in the normal course of business at commercial terms

These transactions include but are not limited to the following

- lending provision of credits and guarantees and deposit taking

- inter-bank balance taking and placing

- sales purchase underwriting and redemption of bonds issued by other state-controlled entities

- rendering of foreign exchange remittance and investment related services

- provision of fiduciary activities and

- purchase of utilities transport telecommunication and postage services

159



(c) Summary of transactions entered into during the ordinary course of business with other related parties

The aggregate income and expenses arising from related party transactions with other related parties of the Group are

summarised as follows

2011 2010

Other related

parties Other related

parties HK$rsquo000 HK$rsquo000Income statement items

Interest income 7701 7227Interest expense (62493) (28714)Insurance premium paidinsurance commission received (net) 6420 7322Administrative services fees paidpayable (15433) (15655)Rental fees receivedreceivable 18178 16792Securities brokerage commission paidpayable (net) (19583) (22610)Rental paidpayable (295) (295)Funds selling commission received 7409 8614Other expense (3121) (3603)Other commission income 3648 3325Other fees and commission expense (2879) (4919)Dividend income 4504 3341Net trading gains (278) 43

Balance sheet items

Cash and balances with banks and other financial institutions 282778 4161Derivative financial instruments assets 1348 797Advances and other accounts 1346438 1347528Investment in securities 41490 32909Other assets 45034 192662Deposits and balances of banks and other financial institutions (792681) (568921)Deposits from customers (7776861) (4821035)Other accounts and provisions (80834) (194658)

(d) Key management personnel

Key management are those persons having authority and responsibility for planning directing and controlling the

activities of the Group directly or indirectly including directors and senior management The Group accepts deposits

from and grants loans and credit facilities to key management personnel in the ordinary course of business During both

the current and prior years no material transaction was conducted with key management personnel of the Bank its

holding companies and parties related to them

The key management compensation for the year ended 31 December is detailed as follows


Salaries and other short-term employee benefits 30435 26635Post-employment benefits 1625 1761 32060 28396

160


45 Currency concentrations

The following is a summary of the major foreign currency exposures arising from trading non-trading and structural

positions and is prepared with reference to the Completion Instructions for the prudential return ldquoForeign Currency Position

of an Authorized Institutionrdquo issued by the HKMA

2011 Equivalent in thousand of HK$

USOther

foreign Total

foreign Dollars Renminbi currencies currencies Spot assets 52900757 84893540 8772053 146566350 Spot liabilities (44991277) (81818133) (10331691) (137141101)Forward purchases 17708212 17690399 6192677 41591288 Forward sales (24785848) (20970120) (4637216) (50393184) Net long(short) position 831844 (204314) (4177) 623353 Net structural position 315414 4712402 - 5027816


USOther

foreign Total

foreign Dollars Renminbi currencies currencies Spot assets 56965719 43611708 8740860 109318287Spot liabilities (38818498) (42564121) (12161654) (93544273)Forward purchases 17787839 15172833 5259033 38219705Forward sales (35803212) (15288819) (1847627) (52939658) Net long(short) position 131848 931601 (9388) 1054061 Net structural position 295431 2868676 - 3164107

46 Cross-border claims

The information on cross-border claims discloses exposures to foreign counterparties on which the ultimate risk lies and is

derived according to the location of the counterparties after taking into account any transfer of risk In general such transfer

of risk takes place if the claims are guaranteed by a party in a country which is different from that of the counterparty or if

the claims are on an overseas branch of a bank whose head office is located in another country Only regions constituting

10 or more of the aggregate cross-border claims are analysed by geographical areas and disclosed as follows

161


46 Cross-border claims (continued)

2011

BanksPublic sector

entities Others

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Asia other than Hong Kong - Mainland China 32081508 309716 31847007 64238231 - Others 8475580 - 3011115 11486695 40557088 309716 34858122 75724926 North America - United States 1213477 30483 3969862 5213822 - Others 708805 - 144436 853241 1922282 30483 4114298 6067063 Western Europe - Germany 550777 175915 19866 746558 - Others 3801320 - 211896 4013216 4352097 175915 231762 4759774

2010

BanksPublic sector

entities Others

Total HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 Asia other than Hong Kong - Mainland China 16487143 449307 21293117 38229567 - Others 9136703 - 3195757 12332460 25623846 449307 24488874 50562027 North America - United States 118751 68603 3433777 3621131 - Others 846198 - 93456 939654 964949 68603 3527233 4560785 Western Europe - Germany 998645 - 21282 1019927 - Others 5168287 - 120307 5288594 6166932 - 141589 6308521

Included other countries in Western Europe of HK$175915000 (2010 Nil) which are eligible to be classified as public sector entities

under the Banking (Capital) Rules

162


47 Non-bank Mainland China exposures

Non-bank counterparties are identified in accordance with the definitions set out in the prudential return ldquoQuarterly Analysis

of Loans and Advances and Provisionsrdquo issued by the HKMA Exposures in Mainland China arising from non-bank

counterparties are summarised as follows

2011

On-balance

sheetexposure

Off-balance

sheetexposure

Total exposure

Individuallyassessed

impairmentallowances

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Mainland China entities 51257131 15823486 67080617 34074Companies and individuals outside Mainland China where

the credit is granted for use in Mainland China 5172926 2465701 7638627 2010Other non-bank Mainland China exposures 14901127 317428 15218555 43471

71331184 18606615 89937799 79555

2010

On-balance

sheetexposure

Off-balance

sheetexposure

Total exposure






67780708 11956937 79737645 98886

During the year the basis of the above analyses has been refined and the comparative amounts have been reclassified

accordingly

48 Ultimate holding company

The Group is subject to the control of the State Council of the PRC Government through CIC its wholly-owned subsidiary

Central Huijin BOC and BOCHK in which Central Huijin has controlling equity interests

49 Comparative amounts

Certain comparative amounts have been reclassified to conform with the current yearrsquos presentation

50 Approval of financial statements

The financial statements were approved and authorised for issue by the Board of Directors on 23 March 2012

163

Unaudited Supplementary Financial Information

1 Capital charge for credit market and operational risks

The bases of regulatory capital calculation for credit risk market risk and operational risk are described in Note 44 to the

Financial Statements

As a result of the change in the bases of regulatory capital calculation the amounts shown below are not directly comparable

The financial information contained in these supplementary notes has been prepared on a consolidated basis that comprises

the positions of the Bank and certain subsidiaries specified by the HKMA for its regulatory purposes and in accordance with the

Banking (Capital) Rules Subsidiaries that are not included in the consolidation for regulatory purposes are denoted in

Appendix ndash Subsidiaries of the Bank on page 201

The table below summarises the capital requirements and capital charge calculated by applying 8 on the risk-weighted

amounts computed on the same consolidation basis for credit market and operational risks

2011 2010 HK$rsquo000 HK$rsquo000 Credit risk 9328152 9639352Market risk 391676 323674Operational risk 585678 486057 10305506 10449083

For detail of capital management and capital adequacy ratio of the Group please refer to Note 44 to the Financial Statements

164

Unaudited Supplementary Financial Information (continued)

2 Capital requirements for credit risk

The table below shows the capital requirements for credit risk for each class and subclass of exposures as specified in the



Capital required for exposures under the IRB approach Corporate

Specialised lending under supervisory slotting criteria approach - Project finance 159943 -

Small-and-medium sized corporate 807922 - Other corporates 4848716 -

Bank Banks 2485253 -Securities firms - -

Retail Residential mortgages

- Individuals 50979 -- Property-holding shell companies 5602 -

Qualifying revolving retail - -Small business retail 30892 -Other retail to individuals 50837 -

Others Cash items - -Other items 472174 -

Securitisation 51 -

Total capital requirements for exposures under the IRB approach 8912369 -

Capital required for exposures under the standardised (credit risk) approach On-balance sheet exposures

Sovereign 4855 18582Public sector entity 665 19585Multilateral development bank - -Bank 1545 1304422Securities firm - -Corporate 179958 6330161Regulatory retail 15528 215633Residential mortgage loans 172880 689371Other exposures which are not past due 10306 395180Past due exposures 1074 3872

Off-balance sheet exposures

Off-balance sheet exposures other than OTC derivative transactions or credit derivative contracts

28727 596740

OTC derivative transactions 245 65497 Securitisation - 309 Total capital requirements for exposures under the standardised (credit risk)

approach

415783 9639352 Total capital requirements for credit risk exposures 9328152 9639352

165


3 Credit risk under the internal ratings-based approach

31 The internal rating systems and risk components

The Group adopts the FIRB approach to calculate the regulatory capital requirements for most of the corporate and bank

exposures and adopts the supervisory slotting criteria approach to project finance exposures under specialised lending

The Group adopts retail IRB approach for retail exposures to individuals and small business The following is the table

showing the different capital calculation approaches to each asset class

Classes and sub-classes of exposures by capital calculation approach

Asset class Exposure sub-class Capital calculation approach Specialised lending under supervisory slotting criteria approach (project finance)

Supervisory Slotting Criteria Approach

Small-and-medium sized corporates FIRB Approach

Corporate exposures

Other corporates FIRB Approach Sovereigns Sovereign foreign public sector entities

Sovereign exposures Multilateral development banks

Standardised (credit risk) Approach

Banks FIRB Approach Securities firms FIRB Approach

Bank exposures Public sector entities (excluding sovereign

foreign public sectors entities) Standardised (credit risk) Approach

Residential mortgages to individuals Residential mortgages to property-holding shell companies Qualifying revolving retail Small business retail

Retail exposures

Other retail to individuals

Retail IRB Approach

Equity exposures Standardised (credit risk) Approach Cash items Other exposures

Other items Specific Risk-weight Approach

(A) The structure of internal rating systems and the relationship between internal ratings and external ratings

The internal rating system is a two dimensional rating system that provides separate assessment of borrower and

transaction characteristics For corporate and bank portfolios the obligor rating reflects exclusively the risk of borrower

default and the facility rating reflects transaction specific factors that affect the loss severity in the case of borrower

default Expected Losses are also calculated in the retail IRB portfolios to reflect the risk of loss in credit decisions

All the corporate and bank borrowers are assigned into eight broad obligor ratings including seven grades for non-

defaulted obligors with sub-divisions into 26 minor credit grades and one grade for defaulted obligors All credit

transactions for corporates and banks are assigned into 21 facility grades In the supervisory slotting criteria approach

for the project finance exposures there are four grades for non-defaulted borrowers and one for defaulted borrowers in

accordance with the HKMA guidance

The Group uses internal rating system to assess the borrowers likelihood of default for all IRB portfolios PD is

measured to reflect the risk of borrower default over a one-year period A borrower rating means a category of credit-

worthiness to which borrowers are assigned on the basis of a specified and distinct set of rating criteria from which

estimates of PD are derived

166


3 Credit risk under the internal ratings-based approach (continued)

31 The internal rating systems and risk components (continued)


(continued)

In the process of obligor rating assignment variables of latest financial performance management quality industry

risks and group connection of each obligor are assessed as critical factors to predict borrowers ability and willingness

to meet with the contractually obligations under different economic conditions The internal rating tools employ

statistical and analytical techniques for the final rating assignment

The Group adopted statistical models to provide own estimated PD LGD and EAD for exposures arising from

residential mortgages to both individuals and property-holding shell companies qualifying revolving retail exposures

and other retail exposures to individuals and small business retail exposures The PD reflects the risk of borrower

default over a one-year period while the EAD and LGD estimates reflect the loss severity of its credit exposures Each

of retail exposures is pooled by nature of obligors facility types collateral types and delinquency status This grouping

process provides the basis of accurate and consistent estimation for PD LGD and EAD at the pool level

For each internal rating the equivalent external rating in terms of default risk is as below

Internal credit grades Definition of internal ratings Standard amp Poorrsquos

equivalent 1 1A AAA

2A AA+ 2B AA

2

2C

The obligors in grades 1A 2A 2B and 2C have extremely low default risk The obligors capacity to meet its financial commitment on the obligation is extremely strong

AA- 3A A+ 3B A

3

3C

The obligors in grades 3A 3B and 3C have low default risk but are somewhat susceptible to the adverse effects of changes in circumstances and economic conditions However the obligors capacity to meet its financial commitment on the obligation is very strong

A-

4A BBB+ 4B BBB

4

4C

The obligors in grades 4A 4B and 4C have relatively low default risk and are currently under adequate protection However adverse economic conditions or changing circumstances are likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation

BBB-

5A BB+ 5B BB+ 5C BB 5D BB 5E BB-

5

5F

The obligors in grades 5A 5B 5C 5D 5E and 5F have medium default risk which are less vulnerable to nonpayment than other speculative obligors However it faces major ongoing uncertainties or exposure to adverse business financial or economic conditions which could lead to the obligors inadequate capacity to meet its financial commitment on the obligation

BB- 6A B+ 6B B+ 6C B 6D B 6E B-

6F B-

6

6G

The obligors in grades 6A 6B 6C 6D 6E 6F and 6G have high default risk and are vulnerable to nonpayment The obligors currently have the capacity to meet its financial commitment on the obligation but adverse business financial or economic conditions will very likely impair the obligors capacity or willingness to meet its financial commitment on the obligation

B-

7A CCC 7B CC

7

7C

The obligors in grades 7A 7B and 7C have very high default risk and are currently quite vulnerable to nonpayment The obligorsrsquo ability to meet their financial commitment and obligation are dependent upon favorable business financial or economic conditions In the event of adverse business financial or economic conditions these obligors are not likely to have the capacity to meet its financial commitment on the obligation

C

8 8 Obligors rated ldquo8rdquo are in payment default D

167

Unaudited Supplementary Financial Information (continued) 3 Credit risk under the internal ratings-based approach (continued)


(B) Use of internal estimates

The estimates of risk components derived from internal rating models are not only used in the calculation of regulatory

capital but also in many other areas including credit approval credit monitoring reporting and analysis of credit risk

information etc

(C) Process of managing and recognising credit risk mitigation

For those collaterals recognised under capital management the Group has well-defined policies and procedures for

collateral valuation and management which are compliant with the operational requirements for recognised collateral

for credit risk mitigation as stated in the Banking (Capital) Rules

For credit exposures adopting FIRB approach for capital calculation purpose the recognised eligible guarantees

include the guarantees provided by banks and securities firms with a lower risk weights than the counterparty and

corporate with internal credit ratings which is equivalent to external credit rating A- or above The Group takes into

account the credit risk mitigation effect of recognised collaterals through its determination of the net credit exposures

and the effective LGD

For retail IRB approach the effect of the credit risk mitigation is incorporated into the internal risk parameters of PD or

LGD depending on the nature of the guarantees and collaterals for calculating the risk exposures

The credit and market risk concentrations within the credit risk mitigation (recognised collateral and guarantees for

capital calculation) used by the Group are under a low level

Up to the date of report the Group has not used any recognised credit derivative contracts on- or off-balance sheet

recognised netting for credit risk mitigation yet

(D) The control mechanisms used for internal rating systems

The Group has established a comprehensive mechanism to ensure the integrity accuracy and consistency of the

rating systems including the estimation processes for the risk components

All of IRB risk measurement models are approved by the Credit and Loans Management Committee (ldquoCLMCrdquo) and

Risk Management Committee (ldquoRMCrdquo) of the Board

168



31 The internal ratings system and risk components (continued)

(D) The control mechanisms used for rating systems (continued)

To achieve reasonably accurate risk ratings assignment the Group has established the rating approval process which

is independent from the sales and marketing units Since the internal ratings is one of the key inputs to the making of

credit decisions a control mechanism is in place to ensure the integrity accuracy and consistency of the rating

assignment For the wholesale (corporate and banks) portfolio internal ratings are normally approved by credit officers

who are functionally separated from sales and marketing units In some cases where the transactions are small

amount or low risk ratings can be assigned and approved by staff within sales and marketing activities subject to post-

approval review by credit risk management unit

The rating assignment and risk quantification process of retail portfolio is highly automated As an integral part of the

daily credit assessment process the accuracy and completeness of the data input for automatic rating assignment is

verified by units independent from business development function

The performance of internal ratings system is under ongoing periodic monitoring The senior management periodically

reviews the performance and predictive ability of the internal rating system The effectiveness of the internal rating

system and processes are reviewed by independent control functions (including model validation unit) and internal

audit The results of the review are reported to the Board and senior management regularly

A model validation team which is independent from the model development unit and rating assignment units conducts

periodic model validations Model acceptance standards are established to ensure the discriminatory power accuracy

and stability of the rating systems Reviews of rating models are triggered if the performance of a model deteriorates

materially against predetermined tolerant limits

169





The obligor rating assignment is reviewed at least annually as required by the Grouprsquos credit risk policy When credit

events occur to the obligor rating review is triggered promptly in accordance with the Grouprsquos credit risk policy

Rating override process is designed to allow the credit analyst to include any other relevant credit information that has

not already been captured in the rating process The overrides are unlimited in terms of downgrades for reasons of

conservatism and prudential consideration Overrides to better grades (upgrades) are however more confined All

upgrades will be limited to a maximum of two sub-grades with a pre-defined list of appropriate reasons All overrides

need to be signed off by a higher level of credit approval authority The internal rating policy sets a maximum limit of

10 of rating cases for overrides The use of overrides and override reasons are analysed as part of rating system

performance review

(E) Approach for determining provisions

The approach in determining provisions is in line with the Grouprsquos accounting policies For details please refer to Note

214 ldquoImpairment of financial assetsrdquo to the Financial Statements

170



32 Exposures by IRB calculation approach

The table below shows the Groups exposures other than securitisation exposures (including the EAD of on-balance sheet

exposures and off-balance sheet exposures) by each IRB calculation approach

2011

FoundationIRB

Approach

SupervisorySlottingCriteria

Approach

RetailIRB

Approach

Specific Risk-weight

Approach Total

exposures HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000

Corporate 105021848 1893758 - - 106915606Bank 88007701 - - - 88007701Retail

Residential mortgages to individuals and property-holding shell companies - - 14263338 - 14263338

Qualifying revolving retail exposures - - - - -

Other retail exposures to individuals and small business retail exposures - - 6876340 - 6876340

Others - - - 6158687 6158687 Total 193029549 1893758 21139678 6158687 222221672

33 Exposures subject to supervisory estimates under the IRB approach

By definition amounts reported under the supervisory slotting criteria approach continue to be subject to supervisory

estimates The table below shows the total EAD of the Groups exposures subject to supervisory estimates under the use

of IRB approach

2011 HK$rsquo000

Corporate 106915606 Bank 88007701 Others 6158687

201081994

171



34 Exposures by credit risk mitigation used

(A) Exposures covered by recognised collateral

The table below shows the Groups exposures (after the effect of any on-balance sheet or off-balance sheet

recognised netting) which are covered by recognised collateral after the application of haircuts required under the

Banking (Capital) Rules These exposures exclude OTC derivative transactions and repo-style transactions

2011 HK$rsquo000 Corporate 27129230Bank 23324Others - 27152554

(B) Exposures covered by recognised guarantees


recognised netting) which are covered by recognised guarantees after the application of haircuts required under the


2011 HK$rsquo000 Corporate 2384748Bank 5954083Retail -Others - 8338831

35 Risk assessment for corporate and bank exposures under IRB approach

The tables below detail the Grouprsquos total EAD of corporate and bank exposures by exposure-weighted average risk-weight

and exposure-weighted average PD for each obligor grade as at 31 December 2011

The EAD and PD disclosed below in respect of corporate and bank exposures have taken into account the effect of

recognised netting and recognised guarantees

For definition of each obligor grade please refer to page 166

172



35 Risk assessment for corporate and bank exposures under IRB approach (continued)

(A) Corporate exposures (other than specialised lending under supervisory slotting criteria approach) 2011

Internal Credit Grades Exposureat default

Exposure- weighted

average risk-weight

Exposure-weighted

average PD HK$rsquo000 Grade 1 - 000 000Grade 2 1457568 1613 004Grade 3 15918178 2431 007Grade 4 17421545 4235 027Grade 5 47244291 7072 118Grade 6 22725397 9448 515Grade 7 125939 8066 1988Grade 8 Default 128930 17618 10000 105021848

(B) Corporate exposures (specialised lending under supervisory slotting criteria approach)

2011

Supervisory Rating Grades Exposure at default

Exposure-weighted

average risk-weight

HK$rsquo000 Strong 243289 7000Good 1019406 9000Satisfactory 577266 11500Weak 53797 25000Default - 000 1893758 The supervisory rating grades and risk-weights of specialised lending are determined in accordance with section 158

of the Banking (Capital) Rules

(C) Bank exposures 2011


Exposure-weighted

average risk-weight

Exposure-weighted

average PD HK$rsquo000 Grade 1 - 000 000Grade 2 6586337 1638 004Grade 3 44940062 2450 007Grade 4 32598476 4472 023Grade 5 3882826 6803 075Grade 6 - 000 000Grade 7 - 000 000Grade 8 Default - 000 000 88007701

173



36 Risk assessment for retail exposures under IRB approach

The tables below show breakdown of retail exposures on a pool basis by expected loss percentage (EL) range as at 31

December 2011

Residential mortgages 2011 HK$rsquo000 Up to 1 14191953gt1 63834Default 7551 14263338

Qualifying revolving retail 2011 HK$rsquo000 Up to 10 -gt10 -Default - -

Other retail 2011 HK$rsquo000 Up to 2 3769802gt2 11504Default 3940 3785246

174



36 Risk assessment for retail exposures under IRB approach (continued)

Small business retail 2011 HK$rsquo000 Up to 1 3011749gt1 67053Default 12292 3091094

37 Analysis of actual loss and estimates

The table below shows the actual losses which represent the net charges (including write-offs and individually assessed

impairment loss allowances) made by each class of exposures under the internal ratings-based approach

2011 HK$rsquo000 Corporate 8461Bank (2953)Residential mortgages to individuals and property-holding shell companies 300Qualifying revolving retail -Other retail to individuals 222Small business retail 6789 12819

175



37 Analysis of actual loss and estimates (continued)

The table below shows the expected loss which is the estimated loss likely to be incurred arising from the potential default

of the obligors in respect of the exposure over a one-year period

Expected lossat 31 December

2010 HK$rsquo000 Corporate 627870Bank 32959Residential mortgages to individuals and property-holding shell companies 8256Qualifying revolving retail -Other retail to individuals 2989Small business retail 4605 676679

The table below sets out the actual default rate for the year 2011 compared against the estimated PD at 31 December

2010 of the respective portfolio

Actual default

rate during 2011

Estimated PDat 31 December

2010 Corporate 034 183Bank 042 030Residential mortgages to individuals and property-holding shell companies 002 075Qualifying revolving retail 000 000Other retail to individuals 007 073Small business retail 056 129

It should be noted that actual loss and expected loss are measured and calculated using different methodologies which

compliant to relevant regulatory and accounting standards which are therefore not directly comparable The limitation

arises mainly from the fundamental differences in the definition of ldquolossrdquo The expected loss under Basel II which estimates

the economic loss arising from the potential default of the obligor by taking into account the time value of money and

including the direct and indirect costs associated with the recoveries on the credit exposures while actual loss is the net

individually assessed impairment charges and write-offs made during the year in accordance with the accounting

standards

The actual default rate (actual PD) is measured by using the number of obligors (for wholesale exposures) or number of

accounts (for retail exposures) defaulted whereas the estimated probability of default (estimated PD) is the long run

average default rate over an economic cycle and is the estimated one-year forward-looking PD estimated from the

beginning of the reporting period

Hence actual PD in a particular year (ldquopoint-in-timerdquo) will typically differ from the estimated PD which is the ldquothrough-the-

cyclerdquo estimate as economies move above or below the cyclical norms

The estimated PD is more conservative than the actual default rate for most asset classes

176


4 Credit risk under the standardised (credit risk) approach

41 Ratings from External Credit Assessment Institutions (ldquoECAIrdquo)

The ECAIs recognised by the Group include Standard amp Poorrsquos Moodyrsquos and Fitch The Group continues to adopt STC

approach based on external ratings to determine the risk weight of the following asset classes of exposures

- Sovereign

- Public sector entity

- Multilateral development bank

The Group performs the ECAI issuer ratings mapping to its exposures in the banking book in accordance with Part 4 of

the Banking (Capital) Rules

42 Credit risk mitigation

For credit exposures adopting STC approach the main types of recognised collaterals include cash deposits debt

securities and shares for non past-due exposures In addition real estate collateral is also recognised for past due

exposures Those collaterals taken by the Group are compliant with the comprehensive approach in its treatment of

recognised collateral for credit risk mitigation in capital calculation as mentioned in the Banking (Capital) Rules For credit

exposures under STC approach the recognised guarantees for capital calculation include the guarantee given by

sovereigns public sector entities multilateral development banks with a lower risk weight than the counterparty and

corporate with external rating of A- or above

177


4 Credit risk under the standardised (credit risk) approach (continued)

43 Credit risk exposures other than securitization exposures under the standardised (credit risk) approach

2011

Exposures after CRM Risk-weighted amount

Total

Exposures Rated Unrated Rated Unrated

Total exposures covered byrecognised

collateral

Total exposurescovered byrecognisedguarantees

orrecognised

creditderivativecontracts

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 On-balance sheet exposures Sovereign 21984173 22010840 - 60693 - - - Public sector entity 244057 217469 - 8311 - - 26667 Multilateral development bank 156045 156045 - - - - - Bank 93837 93837 - 19316 - - - Securities firm - - - - - - - Corporate 2939236 952256 1760385 489087 1760385 226595 - Cash items 216 - 216 - - - - Regulatory retail 300674 - 258799 - 194099 41875 - Residential mortgage loans 4322075 - 4321996 - 2160998 - 79

Other exposures which are not

past due 206728 - 128828 - 128828 77900 - Past due exposures 8947 - 8947 - 13421 - -

Total for on-balance sheet

exposures 30255988 23430447 6479171 577407 4257731 346370 26746 Off-balance sheet exposures

Off-balance sheet exposures other than OTC derivative transactions or credit derivative contracts 428984 97127 331857 66037 293047 184182 4357

OTC derivative transactions 3617 - 3617 - 3062 - -

Total for off-balance sheet

exposures 432601 97127 335474 66037 296109 184182 4357

Total for non-securitisation

exposures 30688589 23527574 6814645 643444 4553840 530552 31103

Exposures deducted from Core Capital or Supplementary Capital 41490

178




(continued)

2010


Total

exposures Rated Unrated Rated Unrated


collateral


orrecognised


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 On-balance sheet exposures Sovereign 13475201 15907240 - 232281 - - - Public sector entity 55467 1224061 - 244812 - - 23463 Multilateral development bank 344344 344344 - - - - - Bank 49843206 44332214 9193496 13185572 3119698 - - Securities firm 797 - - - - - - Corporate 95004095 8610238 73388716 5738294 73388716 7961218 6813173 Cash items 396276 - 396276 - - - - Regulatory retail 4795550 - 3593883 - 2695413 154078 1022930 Residential mortgage loans 20336874 - 19141285 - 8617142 3963 1191625


past due 5253915 - 4939751 - 4939751 314041 - Past due exposures 42046 - 42046 - 48398 12096 8194




OTC derivative transactions 1181766 603134 578632 240085 578632 - -


exposures 9087667 2448418 6639249 1863965 6413997 1725194 1320674


exposures 198635438 72866515 117334702 21264924 99223115 10170590 10380059


Recognised credit risk mitigation satisfying the requirements and conditions set out in the Banking (Capital) Rules

179


5 Counterparty credit risk-related exposures

The Grouprsquos counterparty credit risk arising from OTC derivative transactions repo-style transactions both in trading and

banking book is subject to the same risk management framework as mentioned in Note 4 to the Financial Statements The

Group establishes credit limit through formal credit approval procedures to control the pre-settlement credit risk arising from

OTC derivatives transactions and settlement limit to control the settlement risk arising from foreign exchange-related

transactions in both the trading book and banking book The Group monitors the risk exposure due to fluctuations in the

market by using the current exposure and the potential exposure value of the transactions Exceptions or excesses are timely

and closely identified and monitored by credit risk management units

Currently the Group uses the Current Exposure Method to measure and monitor the counterparty credit exposures which

comprises current exposures and potential future exposures

The Group establishes prudent eligibility criteria and haircut policy of debt securities being pledged as collateral for repo-style

transactions

The Group formulates policy for classification of credit assets according to the PD of individual counterparty and the period of

overdue If there is objective evidence that an impairment loss has been incurred impairment allowance will be provided

according to HKFRS and regulatory requirements

180


5 Counterparty credit risk-related exposures (continued)

51 Counterparty credit risk exposures

The following tables summarise the Grouprsquos exposures to counterparty credit risk arising from OTC derivative and repo-

style transactions

(A) Counterparty credit risk exposures under the internal ratings-based approach 2011 HK$rsquo000OTC derivative Gross total positive fair value 203766

Credit equivalent amounts 1032115Less Value of recognised collateral by type

- debt securities -- others -

Net credit equivalent amounts 1032115

Exposure at default by counterparty type

Corporate 452759Banks 579356Retail -Others -

1032115 Risk weighted amounts by counterparty type


663914 Repo-style transactions Net credit exposures 3487630


Corporate -Banks 3487630Retail -Others - 3487630

Risk weighted amounts by counterparty type Corporate -Banks 1851904Retail -Others - 1851904

181



51 Counterparty credit risk exposures (continued)

(B) Counterparty credit risk exposures under the standardised (credit risk) approach

2011 2010 HK$rsquo000 HK$rsquo000OTC derivative Gross total positive fair value 3250 334345

Credit equivalent amounts 3617 1181766Less Value of recognised collateral by type

- debt securities - -- others - -

Net credit equivalent amounts 3617 1181766

Credit equivalent amounts net of recognised collateral by counterparty

type Sovereign - -Public sector entity - -Banks - 603445Corporate 1395 578213Regulatory retails 2222 -Other exposures which are not past due exposures - 108Past due exposures - -

3617 1181766 Risk weighted amounts by counterparty type

Sovereign - -Public sector entity - -Banks - 240396Corporate 1395 578213Regulatory retails 1666 -Other exposures which are not past due exposures - 108Past due exposures - -

3061 818717

182




(B) Counterparty credit risk exposures under the standardised (credit risk) approach (continued)

2011 2010 HK$rsquo000 HK$rsquo000 Repo-style transactions Net credit exposures - 1649946 Net credit exposures net of recognised collateral by counterparty type

Sovereign - -Public sector entity - -Bank - 1649946Corporate - -Regulatory retail - -Other exposures which are not past due exposures - -Past due exposures - -

- 1649946 Risk weighted amounts by counterparty type


- 824973

There are no outstanding repo-style transactions under the STC approach as at 31 December 2011

There is no effect of valid bilateral netting agreement on the credit equivalent amounts of the derivative transactions as at

31 December 2011 (2010 Nil)

There are no outstanding credit derivative contracts as at 31 December 2011 and 2010

183


6 Assets securitisation

The Group has not acted as an originating institution for the issuance of securitisation transactions business during the year

Securitisation exposures arise from the Grouprsquos investing activities and the related exposures are commercial mortgage loans

As an investing institution the Group has adopted the IRB approach to calculate the credit risk for asset securitisations in 2011

In prior years the Group adopted the standardised (securitisation) approach to calculate the credit risk for securitisation

exposures

The ECAIs used by the Group include Standard amp Poorrsquos Moodyrsquos and Fitch

Securitisation exposures arising from the Grouprsquos investing activities are analysed as follows

61 Securitisation exposures 2011 2010 HK$rsquo000 HK$rsquo000 Residential mortgages loans - -Commercial mortgages loans 5046 19312Student loans - - 5046 19312

62 Breakdown by risk-weights of the securitisation exposures under internal ratings-based (securitisation) approach

2011 Securitisation

exposuresRisk-weighted

amount Capital

requirements HK$rsquo000 HK$rsquo000 HK$rsquo000 12 5046 642 51 5046 642 51

184


6 Assets securitisation (continued)

63 Breakdown by class of exposure of the securitisation exposures under standardised (securitisation) approach

2010 Securitisation


amount Capital

requirements HK$rsquo000 HK$rsquo000 HK$rsquo000 Residential mortgages - - -Commercial mortgages 19312 3862 309Student loans - - - 19312 3862 309

There is no securitisation exposures deducted from core capital and supplementary capital as at 31 December 2011 and 31

December 2010

During the year the Group has no credit derivative contracts which are treated as part of synthetic securitisation transactions

(2010 Nil)

7 Capital requirements for market risk 2011 2010

HK$rsquo000 HK$rsquo000Under the standardised (market risk) approach

Foreign exchange exposures (net) 362123 293532Interest Rate exposures 29553 30142Equity exposures - -Commodity exposures - -

Capital charge for market risk 391676 323674

185


8 Capital requirements for operational risk

2011 2010 HK$rsquo000 HK$rsquo000 Capital charge for operational risk 585678 486057

The Group uses the standardised (operational risk) approach to calculate its operational risk capital charge

9 Equity exposures in banking book

Equity holdings in other entities are accounted for in accordance with the underlying intentions of holdings at the inception of

acquisition The classifications for equity holdings taken for relationship and strategic purposes will be separated from those

taken for other purposes (including capital appreciation) Investments in equity shares which are intended to be held on a

continuing basis but which do not comprise investments in subsidiaries are classified as available-for-sale securities and are

reported in the balance sheet as investments in securities

For equity exposures in banking book other than subsidiaries the Group applies the same accounting treatment and

valuation methodologies as detailed in the Notes 29(4) and 212 to the Financial Statements If additional investment is made

subsequently such that an investee becomes an associate jointly controlled entity or subsidiary then the investment is

reclassified in accordance with the Grouprsquos accounting policies

Gains or losses related to equity exposures are summarised below

2011 2010

HK$rsquo000 HK$rsquo000 Realised losses from sales (51) - Unrealised gains on revaluation recognised in reserves

but not through profit or loss 32572 23588

Unrealised gains included in supplementary capital 14657 10615

186

Management of Risks

The Overview

The principal types of risk inherent in the business of the Group include credit risk liquidity risk market risk interest rate risk

foreign exchange risk and operational risk The Grouprsquos risk management goal is to maximise shareholder value by managing risk

exposures within our acceptance level

Risk Management Structure

The Bankrsquos Board of Directors (the ldquoBoardrdquo) holds the ultimate responsibility for the Grouprsquos overall risk management It

determines the risk management strategies and the risk management structure

To achieve the Grouprsquos goals in risk management the Board sets up the Risk Management Committee which comprises of

independent non-executive directors to oversee the Grouprsquos various types of risks and approve the high-level risk management

policies

According to the risk management strategies established by the Board risk management policies and controls are devised and

reviewed regularly by relevant departments and respective management committees chaired by the Chief Executive (the ldquoCErdquo)

The Risk Management Units develop policies and procedures for identifying measuring monitoring and controlling credit risk

market risk operational risk reputation risk legal and compliance risk interest rate risk liquidity risk and strategic risk to set

appropriate risk limits and to continually monitor risks

The Auditing Department conducts independent reviews on the adequacy and effectiveness of risk management policies and

controls to ensure that the Group is operating according to the established policies procedures and limits

Independence is crucial to effective risk management To ensure the independence of the Risk Management Department and the

Auditing Department they report directly to the Risk Management Committee and the Audit Committee respectively Both

committees are specialised committees set up by the Board and all members are directors of the Bank

187

Management of Risks (continued)

Risk Management Structure (continued)

(i) Credit risk management

Details of management of credit risk are set out in Note 4 to the Financial Statements

(ii) Liquidity risk management

Details of liquidity risk management are set out in Note 4 to the Financial Statements

(iii) Market risk management

Details of market risk management are set out in Note 4 to the Financial Statements

(iv) Operational risk management

Operational risk is the risk of loss resulting from inadequate or failed internal processes staff and information technology

system or from external events The risk is inherent in every aspect of operations The Board recognises operational risk as

a distinct risk category that should be managed with full attention and should be kept up with the best practice of the industry

The Group has formulated and implemented the Operational Risk Management Policy which provides a bank-wide

classification of operational risks and sets out the requirements on risk identification assessment reporting monitoring and

mitigation

To ensure operational risks being under proper monitoring and supervision effective internal control system has been

enforced by means of computer systems and rigorous procedures In addition through coaching and frequent training the

Group has maintained teams of experienced and competent staff in all business and management areas to execute and

monitor the operations of the Group

The Grouprsquos policies and procedures will be reviewed vigilantly and updated in accordance with the new promulgated

requirements from time to time Furthermore the Auditing Department performs independent checking to ascertain that the

procedures are properly followed and reports discrepancies found directly to the Audit Committee

In order to meet regulatory bodiesrsquo requirements and to facilitate the implementation of operational risk management

framework a dedicated division in the Risk Management Department monitors collects analyzes reports the records and

details of the operational risk losses and incidents

The Group has reviewed and enhanced the Business Continuity Plan of all critical banking services To ensure practicality of

the plan drill on contingency plans on certain critical business functions has been duly performed annually and the result was

satisfactory

188



(v) Reputation risk management

Reputation risk is the risk that negative publicity damage to reputation or complaints associated with or relating to the Group

membersrsquo business practices financial condition staff behaviour or conduct whether genuine or not which may impair public

confidence in the Group members causing a potential decline in the customer base costly litigation or settlement revenue

erosion public reprimand or severe regulatory sanctions Reputation risk is inherent in every aspect of the Grouprsquos business

operation and covers a wide spectrum of issues Market rumors or public perceptions are significant factors in determining

the level of risk in this category

In order to mitigate reputation risk the Group has formulated and implemented - Reputation Risk Management Policy which

establishes standards to prevent and to manage reputation risk proactively at an early stage In order to eliminate or alleviate

the negative impact on the Grouprsquos reputation incidents related to reputation risk are handled promptly in accordance with

the Business Continuity Plan and Negative Incident Response Mechanism

In addition precautionary measures have been taken and special attention has been drawn in the combat of the Anti-Money

Laundering and Anti-Terrorist Financing activities Specific procedure manuals and self-checking compliance list have been

issued and trainings have been provided to all staff to stipulate the Grouprsquos policy and stance in order to prevent the Grouprsquos

services being used by the villains for illegal activities

(vi) Legal and compliance risk management

Legal risk is the risk that unenforceable contracts lawsuits or adverse judgments may disrupt or otherwise negatively affect

the operations or financial condition of the Group

Compliance risk is the risk of legal and regulatory sanctions financial loss or loss to reputation that the Group may suffer as

a result of its any failure to comply with all applicable laws and regulations By establishing and maintaining appropriate

policies and guidelines the Group ensures to conduct its business in compliance with the requirements of relevant laws and

regulations

(vii) Strategic risk management

Strategic risk generally refers to the risks that may induce some current or future negative impacts on the earnings capital

reputation or market position of the Group because of poor strategic decisions improper implementation of strategies and

lack of response to the market The Group has developed its Strategic Risk Management Policy that defines the

responsibilities of the Board and the Management when implementing its desired strategies

189

Corporate Governance

The Group strives to achieve high standards of corporate governance and has followed the module on ldquoCorporate Governance of

Locally Incorporated Authorised Institutionsrdquo under the Supervisory Policy Manual (CG-1) issued by the Hong Kong Monetary

Authority in September 2001

Board of Directors and the Management

The Board is responsible for setting objectives and formulating long term strategies as well as managing the Grouprsquos overall

business It currently comprises eleven Directors with a variety of different experience and professionalism Among them two are

Executive Directors while the remaining nine are Non-executive Directors Of the nine Non-executive Directors three are

Independent Non-executive Directors whose indispensable function is to provide independent scrutiny The Board meets regularly

and four board meetings were held in the year with attendance rate of 9772 The Management led by the Chief Executive is

responsible for formulating and implementing detailed programmes to effect the approved strategies and policies and providing

detailed reports on the Grouprsquos performance to the Board on a regular basis to enable the Board to discharge its responsibilities

effectively In order to focus its attention on strategic and material issues that have significant impact on the Grouprsquos finances and

long-term development the Board has set up four committees to oversee the major areas of the Group Details of the committees

are given below

Executive Committee

The Executive Committee has been delegated with power directly from the Board to handle matters which require the Boardrsquos

review during the adjournment of the Board Its responsibilities include-

- approving policies implementing plans and management measures to effect the group-wide development strategies and

business plans approved by the Board

- reviewing the progress on implementation of the strategies and business plans

- recommending strategic proposals to the Board for its consideration and approval and

- approving the Grouprsquos rules and regulations according to the policies imposed by the supervisory authorities and the holding

company

The members of Executive Committee during the year were Mr Fang Hongguang1 (Chairman) Mr Yuen Wai Keung and Mr Xu

Gang2 All of them were Executive Directors of the Bank

Notes

1 Appointed as an Executive Director and Chairman of the Executive Committee of the Bank with effect from 28 March 2011

2 Resigned as an Executive Director and ceased to be Chairman of the Executive Committee of the Bank with effect from 28

March 2011

190

Corporate Governance (continued)

Audit Committee

The Committee assists the Board in fulfilling its oversight role over the Group in the following areas-

- integrity of financial statements and the financial reporting process

- internal control system

- performance of internal audit functions and internal auditors

- appointment of external auditors and evaluation of external auditorsrsquo qualifications independence and performance

- periodic review and annual audit of the Grouprsquos financial statements

- compliance with applicable accounting standards and legal and regulatory requirements on financial disclosures and

- enhancement of the corporate governance framework

The members of Audit Committee during the year were Mr Lau Hon Chuen (Chairman) Mr Lan Hong Tsung David and Mr Zhuo

Chengwen All were Non-executive Directors of the Bank Among them Mr Lau Hon Chuen and Mr Lan Hong Tsung David were

Independent Non-executive Directors

Risk Management Committee

The Risk Management Committee oversees the risk management of the Bank and formulates the Bankrsquos risk management

strategies Its responsibilities include-

- assisting the Board to monitor the risk exposures of the Bank

- recommending appropriate risk management strategies to the Board and

- approving high level risk management related policies

The members of the Risk Management Committee during the year were Mr Li Jiuzhong (Chairman) Mr Fang Hongguang1 Mr

Xu Gang2 Mr Zhuo Chengwen Mr Chang Hsin Kang Mr Lau Hon Chuen and Mr Yuen Wai Keung All were Directors of the

Bank Among them Mr Chang Hsin Kang and Mr Lau Hon Chuen were Independent Non-executive Directors

Notes

1 Appointed as an Executive Director and member of the Risk Management Committee of the Bank with effect from 28 March

2011

2 Resigned as an Executive Director and ceased to be member of the Risk Management Committee of the Bank with effect from

28 March 2011

191


Nomination and Remuneration Committee

The Nomination and Remuneration Committee was established on 17 August 2011 upon approval of the Board The Committee

assists the Board in fulfilling its oversight role over the Group in the following areas-

- remuneration strategy and incentive framework of the Group

- selection and nomination of Directors Board Committee members and certain senior executives as designated by the Board

from time to time

- structure size and composition (including skills experience and knowledge) of Directors and Board Committee members

- remuneration of Directors Board Committee members designated senior management and key personnel and

- effectiveness of the Board and Board Committees

The members of Nomination and Remuneration Committee during the year were Mr Zhuo Chengwen (Chairman) Mr Lau Hon

Chuen and Mr Lan Hong Tsung David All were Non-executive Directors of the Bank Among them Mr Lau Hon Chuen and Mr

Lan Hong Tsung David were Independent Non-executive Directors

192


Sound Remuneration and Incentive Mechanism

The Remuneration and Incentive Mechanism of the Group is based on the principles of ldquoeffective motivationrdquo and ldquosound

remuneration managementrdquo It links remuneration performance and risk management tightly and encourages staff to enhance

their performance and at the same time strengthen their mindset of risk management so as to achieve sound remuneration

management

The Remuneration and Incentive Mechanism of the Group is applicable for Nanyang Commercial Bank Limited and all its

subsidiaries (including the branches and institutions both in and out of Hong Kong)

ldquoSenior Managementrdquo and ldquoKey Personnelrdquo

The following groups of employees have been identified as the ldquoSenior Managementrdquo and ldquoKey Personnelrdquo defined in the

HKMArsquos Guideline on a Sound Remuneration System

ldquoSenior Managementrdquo The senior executives designated by the Board who are responsible for oversight of the

Grouprsquos firm-wide strategy or the Grouprsquos material business lines include Chief Executive and Deputy General

Managers

ldquoKey Personnelrdquo The employees whose individual business activities involve the assumption of material risk which

may expose the AI to material amounts of risk or whose individual responsibilities are directly and materially linked to

the Grouprsquos risk management or those who have direct influence to the Group profit include Head of material

business lines Head of Trading as well as Head of risk control functions

The Determination of the Remuneration Policy

To fulfill the above-mentioned principles and to facilitate effective risk management within the framework of the

Remuneration Policy of the Group Human Resources Division is responsible for proposing the Remuneration Policy of the

Group and will seek consultation of the risk control units including Risk Management Financial Management and

Compliance if necessary in order to balance the needs for staff motivations sound remuneration and prudent risk

management The proposed Remuneration Policy will be submitted to the Nomination and Remuneration Committee for

review and thereafter to the Board of Directors for approval The Nomination and Remuneration Committee and the Board

of Directors will seek opinions of other Board committees (eg Risk Management Committee Audit Committee etc) where

they consider necessary under the circumstances

193


Sound Remuneration and Incentive Mechanism (continued)

The Key Features of the Remuneration and Incentive Mechanism

1 Performance Management Mechanism

To reflect the corporate culture of ldquoAchieving Performance and Effectivenessrdquo the Group has put in place a performance

management mechanism to formalize the performance management at the levels of the Group units and individuals The

annual targets of the Group will be cascaded down under the framework of balanced scorecard whereby the performance

of the senior management and different units (including business units risk control units and other units) would be

assessed from the perspectives of financial customer building blockkey tasks human capital risk management and

compliance As to the performance management of individual staff at different levels the annual targets of the Group will

be tied to the job requirements of different posts at different levels through the model of level-based performance

management Performance of individuals will be appraised with reference to their accomplishment of work targets

contribution towards overall performance of their corresponding units and compliance of risk management and internal

control policies Under this mechanism not only the target accomplishment has been taken into account the risk

exposure involved during the course of work of a staff member could also be evaluated and managed so as to provide

safeguards to the Group against the risk and ensure normal operations The mechanism is also coupled with the

assessment on system of values thereby facilitating the attainment of the core values of the Group

2 Risk Modification of Remuneration

To implement the principle of aligning the performance and remuneration with the risk based on ldquoThe Risk Adjustment

Method for Group Bonus Funding Mechanicsrdquoof BOCHK the key risk modifiers of the bank have been incorporated into

the performance management mechanism of the Group The size of the Variable Remuneration Pool of the Group is

calculated according to the risk adjusted performance results approved by the Board of BOCHK and is subject to its

discretion In doing so the total amount to be paid to staff as variable remuneration would be determined on the basis of

the risk adjusted performance results This method enables the Group to fix the Grouprsquos Variable Remuneration Pool

after considering risk exposures and changes and to maintain effective risk management through the remuneration

mechanism

ldquoThe Risk Adjustment Method for Group Bonus Funding Mechanicsrdquo consists of ldquoRisk Modifierrdquo and ldquoPost Result Score

Adjustmentrdquo

ldquoRisk Modifier measures the risk factors that are quantifiable and directly linked to the Group financial performance

including credit risk market risk interest rate risk as well as liquidity risk With most of the indicators being quantitative

ldquoRisk Modifierrdquo utilizes both absolute and relative measures and assesses the risk level from both ex-ante and ex-

post perspectives

ldquoPost Result Score Adjustment measures the risk factors that are not quantifiable aiming at the overall adjustment

to the group performance results upon the occurrence of major risk events These risk factors include operational risk

legal and compliance risk as well as reputation risk ldquoPost Result Score Adjustmentrdquo utilizes qualitative measures to

assess the impact of non quantifiable risk factors to the group performance results from ex-post perspective

194



The Key Features of the Remuneration and Incentive Mechanism (continued)

3 Performance-based and Risk-adjusted Remuneration Management

The remuneration of staff is composed of ldquofixed remunerationrdquo and ldquovariable remunerationrdquo the proportion of one to the

other for individual staff members depends on job grades roles responsibilities and functions of the staff with the

prerequisite that balance has to be struck between the fixed and variable portion Generally speaking the higher the job

grades andor the greater the responsibilities the higher will be the proportion of variable remuneration so as to

encourage the staff to follow the philosophy of prudent risk management and sound long-term financial stability

Every year the Group will conduct periodic review on the fixed remuneration of the staff with reference to various factors

like remuneration strategy market pay trend and staff salary level and to determine the remuneration based on the

affordability of the Group as well as the performance of the Group units and individuals As mentioned above

performance assessment criteria include quantitative and qualitative factors as well as financial and non-financial

indicators

According to the Group Bonus Funding Mechanics of BOCHK the size of the Variable Remuneration Pool of the Group

is determined by the Board of BOCHK on the basis of the financial performance of the Group and the achievement of

non-financial strategic business targets under the long-term development of the BOCHK Group Thorough consideration

is also made to the risk factors in the determination process The size of the Pool is reached based on pre-defined

formulaic calculations but the Board of BOCHK can make discretionary adjustment to it if deemed appropriate under

prevailing circumstances When the BOCHK group performance is relatively weak (eg failed to meet the threshold

performance level) no variable remuneration will be paid out that year in principle however the Board of BOCHK owns

the rights of discretionary decision

As far as individual units and individual staff are concerned allocation of the variable remuneration is closely linked to the

performance of the units and that of each individual staff as well as the unit heshe is attaching to the assessment of

which should include risk modifiers The performance and remuneration arrangement of risk control personnel are

determined by the achievements of their core job responsibilities independent from the business they oversee for front-

line risk controllers a matrix reporting and performance management system is applied to ensure the suitability of

performance-based remuneration Within the acceptable risk level of the Group the better the performance of the unit

and the individual staff the higher will be the variable remuneration for the individual staff

195




4 Linking the payout of the variable remuneration with the time horizon of the risk to reflect the long-term value

creation of the Group

To work out the principle of aligning remuneration with the time horizon of risk and to ensure that sufficient time is

allowed to ascertain the associated risk and its impact before the actual payout payout of the variable remuneration of

staff is required to be deferred in cash if such amount reaches certain prescribed threshold The Group adopts a

progressive approach towards deferral The longer the time horizon of risk in the activities conducted by the staff the

higher the job grade or the higher amount of the variable remuneration the higher will be the proportion of deferral

Deferral lasts for 3 years

The vesting of the deferred variable remuneration is linked with the long term value creation of the Group The vesting

conditions are linked to the yearly performance (financial and non-financial) of the BOCHK Group in the next 3 years to

the effect that the variable remuneration could only be vested to such extent as set for the relevant year in that 3-year

period subject to the condition that the BOCHK Grouprsquos performance has met the threshold requirement in the

corresponding year In case of material revision of the original estimates of the performance of the Group or individual

units or if a staff is found to commit fraud or found to be of malfeasance or in violation of internal control policies the

unvested portion of the deferred variable remuneration of the relevant staff will be clawed back

196

Business Review

Dampened by the catastrophic Japan earthquake the lingering European sovereign debt crisis and the first-ever downgrade of the

US credit rating in its history 2011 saw volatile fluctuation in the global financial markets and a slowdown in global economic

recovery Meanwhile local exports and the economy of Hong Kong were also undermined to some extent resulting in a slowdown

in its economic growth

Under such macroeconomic circumstances the Bank managed to maintain its results performance and business growth by

adhering to its overall development strategies of ldquoadjusting assets structure expanding assets scale enhancing profitability and

building itself into a regional first-class retail bankrdquo The Bank took various approaches to continuously enhance its customer base

proactively promoted our ldquoNCB Wealth Managementrdquo services to facilitate diversified development adhered to differentiated

operation with strong focus on the development of SME businesses expanded RMB-related businesses and perfected

professional high quality cross-border services In 2011 the Bank made adjustments in various aspects of its businesses to

improve efficiency endeavoured to make breakthroughs on the basis of balanced development and made innovations to achieve

further development By so doing the risks in crucial areas were put under control and our operating results grew steadily

Financial Highlights

As at the end of December 2011 the consolidated operating profit of the Group was HK$2804 million representing an increase of

3169 as compared to the previous year the consolidated profit after tax was HK$2449 million representing an increase of

3350 as compared to the previous year Net interest income was HK$3285 million representing an increase of 1910 as

compared to the previous year while non-interest income was HK$966 million representing an increase of 1552 as compared

to the previous year among which net fee income grew by 1278 In 2011 the average annualised return on equity and average

annualised return on assets were 1007 and 113 respectively Net interest margin was 156 representing a decrease of

004 percentage point as compared to the previous year

Principal Business

During the year the Group recorded stable growth in all its businesses As at the end of December 2011 total loan balance of the

Group was HK$119844 million representing an increase of HK$3644 million or 314 as compared to the end of the previous

year Total balance of deposits was HK$174469 million representing an increase of HK$33133 million or 2344 as compared to

the end of the previous year among which RMB deposits amounted to HK$64244 million representing an increase of

HK$27036 million or 7266 as compared to the end of the previous year

197

Business Review (continued)

Principal Business (continued)

1 Various measures were taken to expand customer base

The Bank endeavored to expand its customer base through dedicate customer classification to create synergies between its

individual and corporate customers and to innovate products Firstly the Bank conducted market analysis and customer

classification in accordance with the development strategy of ldquoattracting new customers tapping potential customers and

retaining existing customersrdquo The Bank cooperated proactively with its business partners to launch preferential programmes at

various levels so as to motivate new customers activate existing customers and reward large customers The Bank made

every effort to secure mid- and long-term deposits tried its best to improve customer satisfaction of our services enhanced our

marketing efforts to cultivate and explore new customers and put emphasis on the maintenance of customer relationship

During the year promotional deposit-taking campaigns were launched in different forms and combinations Secondly the Bank

increased the collaboration between its individual and corporate customers enhanced the synergies between its individual and

corporate customers and improved its scientific sales management model The Bank further strengthened its focused sales

efforts concentrated on exploring the list of targeted customers and timely followed up the marketing work In order to

effectively increase deposits the Bank also improved the indicators for appraisal of its marketing staff prepared a list of large

enterprisesinstitutions with specified deposit-taking targets increased the penetration rate of ancillary businesses for corporate

customers receiving loans from the Bank guided our marketing staff to pay due attention to customerrsquos need for overall wealth

management proactively encouraged the referral of wealth management business of senior management and staff of

corporate customers and effectively expanded its deposit base and increased the revenue from fee base business through

centralized marketing efforts Meanwhile in order to relieve funding strain the Bank further increased its efforts in innovating its

products and services through utilizing the ldquoNCB Wealth Managementrdquo brand During the year the Bank launched a series of

innovative new products and realized the bundled sales of products and services in various combinations through its upgraded

electronic trading platform Thanks to the various efforts made the Bank achieved considerable improvement in its customer

base As at the end of December 2011 individual customersrsquo deposits were HK$82882 million representing an increase of

2413 as compared to the end of the previous year corporate customersrsquo deposits were HK$91587 million representing an

increase of 2283 as compared to the end of the previous year and total deposits increased by HK$33133 million or 2344

Regarding the overall deposit structure the percentage of time deposits increased from 5810 as at the end of the previous

year to 6752 as at the end of December 2011 Net fee income was HK$790 million representing an increase of 1278 as

compared to the previous year Among which our funds and life insurance businesses both recorded satisfactory growth

which was mainly attributable to the launch of various long- and short-term insurance products under the ldquoNCBrdquo brand and the

concerted efforts of a dedicated marketing team thus offsetting the negative impact of decreased revenue from share trading

198



2 Spearheaded by our SMEs strategy the Bank pushed forward the transformation of our corporate banking business

Our net interest margin was further narrowed as competition in the market intensified during the year For our corporate

banking business the Bank stressed on differentiated and featured operations and focused on optimization of its customer

structure on the premise that equal attention is always paid on large medium and small enterprises All departments of the

Bank had clearly defined their objectives and fully performed their duties The SME Management Center is responsible for

concentrating our resources to effectively promote the development of SME business achieving standardization of the

approval process through standardizing the requisite contents of credit application which in turn enhanced the processing and

approval efficiency and improved our competitiveness in the market In respect of precautionary monitoring the Bank achieved

the target of ldquocomprehensive whole process and efficientrdquo management of its credit business which met the requirements of

sophisticated management Moreover the Bank has based on the characteristics of its SME business continued to increase

the support to SMEs and provide them with professional efficient and comprehensive financial services through introducing

diversified products and services as well as standardized risk management and newly launched businesses By doing so the

Bank fully implemented its development strategy of strengthening the business with large enterprises while expanding the

businesses with small and medium enterprises

As at the end of December 2011 deposits of corporate customers increased by 2283 to HK$91587 million from HK$74564

million at the beginning of the year and loans from corporate customers increased by 228 to HK$ 98981 million from

HK$96777 million at the beginning of the year

3 Professional and premium cross-border services provided while capturing business opportunities in China

As the Central Government gradually deregulated its policy towards offshore RMB circulation lots of business opportunities

were available for banks in Hong Kong Based in Hong Kong and by leveraging on the long-established partnership with

enterprises located in Pearl River Delta area the Bank successively explored various potential means to conduct extensive

business co-operation with NCB (China) and Bank of China and established liaison channels to seize various opportunities in

especially RMB-related business and cross-border financial services and guarded against market uncertainties Through

exchanging visits by cross-border teams and senior officers between banks the Bank established cooperative relation with

various leading banks in Guangdong province for a mutual referral of clients who had cross-border operations and financing

needs and expanded trade settlement and credit facility business of cross-border corporate clients Taking advantage of the

spread of lending interest rates between Mainland and Hong Kong the Bank attracted more trade clients to use Hong Kongrsquos

funding sources for meeting their lending and trade finance credit facility needs At the same time more efforts were spent to

develop relationship with cross-border enterprises and their affiliated entities and those along the industry chain and the

connected upstream and downstream enterprises so that our existing business relationship with corporate customers were

expanded into a comprehensive one which consisted of deposit loan cross-border RMB trade settlement and investment

treasury activities and fee-based wealth-management

199




(continued)

In addition NCB (China) increased cooperation with Bank of China and the Group to provide more comprehensive financial

services including the Channel Sharing with Bank of China and cross-border RMB trade settlement services and signed up

more new customers with cross-border banking service needs During the year NCB (China) set up its SME Services and

bank card division NCB (China) aggressively grew its SME services and will launch NCB (China) credit cards as soon as

possible As at the end 2011 NCB (China) had 23 branches and sub-branches in Mainland China

Risk Management

In response to the changing market conditions and additional regulatory requirements the Bank restructured its front-line risk

management system formulated relevant regulations and measures conducted monitoring on the implementation of regulated

businesses by the front-line business units coordinated reporting to the Management and timely followed up corrective actions

The Bank also strengthened the firewall of risk management by holding quarterly compliance meetings with branches arranging

focus team symposium and on-site training In addition the Bank continued to pay close attention to market changes and the

operation of companies to which we had granted facilities strengthened risk management measures and formulated reviewed

and revised a number of management policies Based on scenario analysis the Bank identified the priority order for target sectors

of SME services and kept a dynamic control of industry-specific risks and risks associated with other SME loans granted In

addition the Bank further advanced the implementation of internal ratings-based approach strengthened post-loan inspection

conducted regular stress-test on various credit risks increased risk monitoring and alarming on emergent incidents and

maintained a sound credit policy During the year the Bank launched the project of implementing market risk internal model which

included set up an inter-division working team maintained on-going monitoring of and reporting on project progress and carried

out optimization of relevant regulations and system configuration

As at the end of December 2011 the Grouprsquos total classified or impaired customer loans amounted to HK$166 million

representing 014 of total loans to customers As at the end of December 2011 our consolidated capital adequacy ratio and

average liquidity ratio (for local operations only) were 1706 and 3937 respectively both at a healthy level

200


Corporate Social Responsibility

The Group proactively fulfilled its corporate social responsibility in addition to its aggressive business development The Bank

fulfilled its commitments towards the society through donations to educational services and arranging volunteer teams to get

involved in charity and community campaigns for the benefits of the public During the year the Bank held an epic dance-poem

performance named ldquoTwo Swallows - Ode to Wu Guanzhong the Painterrdquo and a total of 371 poverty-stricken students from 16

schools in Hong Kong were invited to enjoy the performance free of charge An official delegation headed by our executives visited

Yang Ping School of Yongsheng County Yunnan province to attend the inauguration ceremony of NCB Teaching Building which

was funded with our donation and named by us We were granted a bronze plaque inscribed with Chinese characters ldquo厚德永

存善義之舉 (Good virtues shall sustain Practice of charity and justice) In late 2011 we once again donated 15 new

computers to Yang Ping School for use by teachers and students in their teaching or study and continued to offer scholarship to

outstanding students and grants to poverty-stricken students At the same time we promoted green office implemented various

environmental and energy-efficient measures such as upholding paperless office and encouraging customers to choose online

banking and electronic version of monthly account statement service

Outlook

In 2012 the Bank will adhere to our intensive business policy and continue to optimize our business structure The Bank will

continue to promote the growth of our core businesses such as SME services and NCB Wealth Management expand RMB

businesses in line with the development of RMB policy impose more stringent measures to guard against risks and continue to

enhance our own competitive edge to offer comprehensive services to corporate and individual clients

201

Appendix

Subsidiaries of the Bank

The particulars of our subsidiaries are as follows

Equity interestheld by the Bank

Name

Place of incorporation operation

Particulars of issued and paid up ordinary share capital Directly Principal activities

Nanyang Commercial Bank

(China) Limited The Peoplersquos

Republic of China

Registered capital RMB4100000000

100 Banking business

Nanyang Finance Company

Limited Hong Kong 500000 shares of

HK$100 each 100 Financial services


Trustee Limited Hong Kong 300000 shares of

HK$10 each 100 Trustee services

Kwong Li Nam Investment

Agency Limited Hong Kong 30500 shares of

HK$100 each 100 Investment agency

Nan Song Company Limited Hong Kong 100 shares of

HK$10000 each 100 Property investment and

investment holding Nanyang Commercial Bank

(Nominees) Limited Hong Kong 500 shares of

HK$100 each 100 Nominee services

Patson (HK) Limited Hong Kong 10000 shares of

HK$100 each 100 Property investment

Nanyang Finance Company Limited and Nan Song Company Limited have been dissolved on 16 February 2012

Patson (HK) Limited has been dissolved on 19 March 2012

Remarks

Name of subsidiaries which are not included in the consolidation group for regulatory purposes in respect of capital adequacy is

marked with in the above table The Bank and its subsidiaries specified by the HKMA form the basis of consolidation for its

regulatory purposes in accordance with the Banking (Capital) Rules For accounting purposes subsidiaries are consolidated in

accordance with the accounting standards issued by the HKICPA pursuant to section 18A of the Professional Accountants

Ordinance

202

Definitions

In this Annual Report unless the context otherwise requires the following terms shall have the meanings set out below Terms Meanings

ldquoABSrdquo Asset-backed securities

ldquoBoard of BOCHK (Holdings)rdquo the Board of Directors of BOCHK (Holdings)

ldquoBOCrdquo Bank of China Limited a joint stock commercial bank with limited liability established under the laws of the PRC the H shares and A shares of which are listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange respectively

ldquoBOC (BVI)rdquo BOC Hong Kong (BVI) Limited a company incorporated under the laws of the British Virgin Islands and a wholly owned subsidiary of BOCHKG

ldquoBOCHKrdquo Bank of China (Hong Kong) Limited a company incorporated under the laws of Hong Kong and a wholly owned subsidiary of BOCHK (Holdings)

ldquoBOCHK (Holdings)rdquo BOC Hong Kong (Holdings) Limited a company incorporated under the laws of Hong Kong

ldquoBOCHKGrdquo BOC Hong Kong (Group) Limited a company incorporated under the laws of Hong Kong and a wholly owned subsidiary of BOC

ldquoBOCI-Prudential Managerrdquo BOCI-Prudential Asset Management Limited a company incorporated under the laws of Hong Kong

ldquoBOCI-Prudential Trusteerdquo BOCI-Prudential Trustee Limited a company incorporated under the laws of Hong Kong

ldquoCARrdquo Capital Adequacy Ratio computed on the consolidated basis that comprises the positions of the Bank and certain subsidiaries specified by the HKMA for its regulatory purposes and in accordance with the Banking (Capital) Rules

ldquoCICrdquo China Investment Corporation

ldquoCentral Huijinrdquo Central Huijin Investment Ltd (formerly known as ldquoCentral SAFE Investments Limitedrdquo)

ldquoEADrdquo Exposure at Default

ldquoECAI(s)rdquo External Credit Assessment Institution(s)

ldquoFIRBrdquo Foundation Internal Ratings-Based

ldquoFitchrdquo Fitch Ratings

ldquoHKAS(s)rdquo Hong Kong Accounting Standard(s)

203

Definitions (continued) Terms Meanings

ldquoHKFRS(s)rdquo Hong Kong Financial Reporting Standard(s)

ldquoHKICPArdquo Hong Kong Institute of Certified Public Accountants

ldquoHK(IFRIC)-Intrdquo Hong Kong (IFRIC) Interpretation

ldquoHKMArdquo Hong Kong Monetary Authority

ldquoHong Kongrdquo Hong Kong Special Administrative Region

ldquoICAAPrdquo Internal Capital Adequacy Assessment Process

ldquoIFRSrdquo International Financial Reporting Standards

ldquoLGDrdquo Loss Given Default

ldquoMainlandrdquo or ldquoMainland Chinardquo the mainland of the PRC

ldquoMBSrdquo Mortgage-backed securities

ldquoMedium Term Note Programmerdquo the medium term note programme was established by BOCHK on 2 September 2011

ldquoMoodyrsquosrdquo Moodyrsquos Investors Service

ldquoMPFrdquo Mandatory Provident Fund

ldquoMPF Schemes Ordinancerdquo the Mandatory Provident Fund Schemes Ordinance Chapter 485 of the Laws of Hong Kong as amended

ldquoNCB (China)rdquo Nanyang Commercial Bank (China) Limited a company incorporated under the laws of the PRC and a wholly owned subsidiary of the Bank

ldquoORSO schemesrdquo the Occupational Retirement Schemes under Occupational Retirement Schemes Ordinance Chapter 426 of the Laws of Hong Kong

ldquoPDrdquo Probability of Default

ldquoPRCrdquo the Peoplersquos Republic of China

ldquoRMBrdquo or ldquoRenminbirdquo Renminbi the lawful currency of the PRC

ldquoShare Option Schemerdquo the Share Option Scheme conditionally approved and adopted by the shareholders of BOCHK (Holdings) on 10 July 2002

204


ldquoSharesave Planrdquo the Sharesave Plan conditionally approved and adopted by the shareholders of BOCHK (Holdings) on 10 July 2002

ldquoSME(s)rdquo Small and medium-sized enterprise(s)

ldquoStandard amp Poorrsquosrdquo Standard amp Poorrsquos Ratings Services

ldquoSTCrdquo Standardised (Credit Risk)

ldquoSTMrdquo Standardised (Market Risk)

ldquoSTOrdquo Standardised (Operational Risk)

ldquoStock Exchangerdquo or rdquoHong Kong Stock Exchangerdquo

The Stock Exchange of Hong Kong Limited

ldquoUSrdquo the United States of America

ldquoVARrdquo Value at Risk

2012 中期業績報告

Interim Report 2012

目錄頁數 CONTENTS PAGE 簡要綜合收益表 1 Condensed Consolidated Income Statement 1簡要綜合全面收益表 2 Condensed Consolidated Statement of

Comprehensive Income 2

簡要綜合資產負債表 3 Condensed Consolidated Balance Sheet 3簡要綜合權益變動表 4 Condensed Consolidated Statement of Changes

in Equity 4

簡要綜合現金流量表 6 Condensed Consolidated Cash Flow Statement 6中期財務資料附註 Notes to the Interim Financial Information

1 編製基準及主要會計政策 7 1 Basis of preparation and significant accounting policies

7

2 應用會計政策時之重大會計估計及判斷 10 2 Critical accounting estimates and judgements in applying accounting policies

10

3 金融風險管理 11 3 Financial risk management 114 淨利息收入 47 4 Net interest income 475 淨服務費及佣金收入 48 5 Net fee and commission income 486 淨交易性收益 49 6 Net trading gain 497 其他金融資產之淨收益 50 7 Net gain on other financial assets 508 其他經營收入 50 8 Other operating income 509 減值準備淨（撥備）撥回 51 9 Net (charge)reversal of impairment allowances 51

10 經營支出 52 10 Operating expenses 5211 投資物業出售公平值調整之淨收益 53 11 Net gain from disposal offair value adjustments on

investment properties 53

12 出售重估物業器材及設備之淨虧損 53 12 Net loss from disposalrevaluation of properties plant and equipment

53

13 稅項 54 13 Taxation 5414 股息 56 14 Dividends 5615 庫存現金及存放銀行及其他金融機構的結餘 56 15 Cash and balances with banks and other financial

institutions56

16 公平值變化計入損益之金融資產 57 16 Financial assets at fair value through profit or loss 57

17 衍生金融工具 59 17 Derivative financial instruments 5918 貸款及其他賬項 66 18 Advances and other accounts 66

19 證券投資 67 19 Investment in securities 6720 投資物業 69 20 Investment properties 6921 物業器材及設備 70 21 Properties plant and equipment 7022 其他資產 71 22 Other assets 7123 公平值變化計入損益之金融負債 72 23 Financial liabilities at fair value through profit or loss 7224 客戶存款 73 24 Deposits from customers 7325 其他賬項及準備 74 25 Other accounts and provisions 7426 已抵押資產 74 26 Assets pledged as security 7427 遞延稅項 75 27 Deferred taxation 7528 股本 78 28 Share capital 7829 儲備 78 29 Reserves 7830 簡要綜合現金流量表附註 79 30 Notes to condensed consolidated cash flow

statement 79

31 或然負債及承擔 81 31 Contingent liabilities and commitments 8132 資本承擔 82 32 Capital commitments 8233 經營租賃承擔 82 33 Operating lease commitments 8234 分類報告 84 34 Segmental reporting 8435 主要之有關連人士交易 91 35 Significant related party transactions 91

目錄頁數 CONTENTS PAGE 36 貨幣風險 96 36 Currency concentrations 9637 跨國債權 97 37 Cross-border claims 9738 非銀行的中國內地風險承擔 99 38 Non-bank Mainland China exposures 9939 符合香港會計準則第 34 號 100 39 Compliance with HKAS 34 10040 法定賬目 100 40 Statutory accounts 100

獨立審閱報告 101 Independent Review Report 101 其他資料 Additional Information 1 董事會 103 1 Board of Directors 1032 本銀行之附屬公司 104 2 Subsidiaries of the Bank 1043 符合《銀行業（披露）規則》 104 3 Compliance with the Banking (Disclosure) Rules 104

業務回顧 105 Business Review 105 釋義 111 Definitions 111

1

簡要綜合收益表 Condensed Consolidated Income Statement （未經審核）（未經審核）

(Unaudited) (Unaudited) 半年結算至半年結算至

2012 年 6 月 30 日

2011 年

6 月 30 日

Half-year ended Half-year ended 附註

Notes30 June

2012 30 June

2011 港幣千元港幣千元


利息收入 Interest income 3823200 2464251利息支出 Interest expense (1884023) (944607)

淨利息收入 Net interest income 4 1939177 1519644

服務費及佣金收入 Fee and commission income 406947 461947服務費及佣金支出 Fee and commission expense (32896) (37602)

淨服務費及佣金收入 Net fee and commission income 5 374051 424345

淨交易性收益 Net trading gain 6 49397 28464界定為以公平值變化計入損益之

金融工具淨收益 Net gain on financial instruments designated at

fair value through profit or loss 15836 8412

其他金融資產之淨收益 Net gain on other financial assets 7 2834 53559其他經營收入 Other operating income 8 23335 21255

提取減值準備前之淨經營收入 Net operating income before impairment allowances 2404630 2055679

減值準備淨（撥備）撥回 Net (charge)reversal of impairment allowances 9 (109672) 16723 淨經營收入 Net operating income 2294958 2072402經營支出 Operating expenses 10 (890403) (306810)

經營溢利 Operating profit 1404555 1765592投資物業出售公平值調整之淨

收益 Net gain from disposal offair value adjustments

on investment properties 11 70493 95762出售重估物業器材及設備之

淨虧損 Net loss from disposalrevaluation of

properties plant and equipment 12 (1575) (670)

除稅前溢利 Profit before taxation 1473473 1860684稅項 Taxation 13 (248308) (315062)

期內溢利 Profit for the period 1225165 1545622

股息 Dividends 14 392000 -

第 7 至 100 頁之附註屬本中期財務資料

之組成部分

The notes on pages 7 to 100 are an integral part of this interim financial information

2

簡要綜合全面收益表 Condensed Consolidated Statement of Comprehensive Income

（未經審核）（未經審核）


2012 年 6 月 30 日

2011 年

6 月 30 日

Half-year ended Half-year ended

30 June

2012 30 June


HK$rsquo000 HK$rsquo000 期內溢利 Profit for the period 1225165 1545622 房產 Premises

房產重估 Revaluation of premises 612006 687829遞延稅項 Deferred tax (97184) (103682)

514822 584147可供出售證券 Available-for-sale securities

可供出售證券之公平值變化 Change in fair value of available-for-sale securities 233744 44257

因出售可供出售證券之轉撥 Release upon disposal of available-for-sale securities (1038) (48778)

由可供出售證券轉至持有至到

期日證券產生之攤銷 Amortisation with respect to available-for-sale

securities transferred to held-to-maturity securities (715) (4371)

遞延稅項 Deferred tax (40691) 2969 191300 (5923) 凈投資對沖下對沖工具之公平值

變化 Change in fair value of hedging instruments

under net investment hedge 22595 (41279) 貨幣換算差額 Currency translation difference (92681) 130619

期內除稅後其他全面收益 Other comprehensive income for the period net of tax 636036 667564

期內全面收益總額 Total comprehensive income for the period 1861201 2213186


之組成部分


3

簡要綜合資產負債表 Condensed Consolidated Balance Sheet （未經審核）（經審核）

(Unaudited) (Audited)

於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

附註

NotesAt 30 June

2012 At 31 December


HK$rsquo000 HK$rsquo000資產 ASSETS 庫存現金及存放銀行及其他

金融機構的結餘 Cash and balances with banks and other

financial institutions 15 38252446 43994333 在銀行及其他金融機構一至十二

個月內到期之定期存放 Placements with banks and other financial institutions

maturing between one and twelve months 24669689 23169580 公平值變化計入損益之金融資產 Financial assets at fair value through profit or loss 16 5401550 2245761 衍生金融工具 Derivative financial instruments 17 755912 816403 貸款及其他賬項 Advances and other accounts 18 136409170 132914225 證券投資 Investment in securities 19 36798084 30182604 投資物業 Investment properties 20 917943 847948 物業器材及設備 Properties plant and equipment 21 5158387 4583411 應收稅項資產 Current tax assets 1098 -遞延稅項資產 Deferred tax assets 27 1011 57714其他資產 Other assets 22 2147535 819477

資產總額 Total assets 250512825 239631456

負債 LIABILITIES 銀行及其他金融機構之存款

及結餘 Deposits and balances from banks and other

financial institutions 26185699 28066288公平值變化計入損益之金融負債 Financial liabilities at fair value through profit or loss 23 3996035 1077896衍生金融工具 Derivative financial instruments 17 637474 672618 客戶存款 Deposits from customers 24 182655014 174469468其他賬項及準備 Other accounts and provisions 25 8403084 8396670 應付稅項負債 Current tax liabilities 317541 229927遞延稅項負債 Deferred tax liabilities 27 712581 582393 負債總額 Total liabilities 222907428 213495260 資本 EQUITY 股本 Share capital 28 700000 700000 儲備 Reserves 29 26905397 25436196 資本總額 Total equity 27605397 26136196 負債及資本總額 Total liabilities and equity 250512825 239631456

第 7 至 100 頁之附註屬本中期財務資料之

組成部分


4

簡要綜合權益變動表 Condensed Consolidated Statement of Changes in Equity

（未經審核） (Unaudited)

股本

Share capital

股本溢價

Share premium

資本儲備

Capital reserve

房產

重估儲備

Premisesrevaluation

reserve

可供出售

證券公平值

變動儲備



for-sale securities

監管儲備

Regulatory reserve

換算儲備

Translation reserve

留存盈利

Retained earnings

總計

Total 港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 於 2011 年 1 月 1 日 At 1 January 2011 700000 2444517 605 2695267 143483 1141136 421355 14943635 22489998 期內溢利 Profit for the period - - - - - - - 1545622 1545622其他全面收益 Other comprehensive

income 房產 Premises - - - 584147 - - - - 584147可供出售證券 Available-for-sale

securities - - - - (1395) - - (4528) (5923)淨投資對沖下對沖工具

之公平值變化 Change in fair value

of hedging instruments under net investment hedges - - - - - - (41279) - (41279)

貨幣換算差額 Currency translation difference - - - 2056 (163) - 128726 - 130619

全面收益總額 Total comprehensive

income - - - 586203 (1558) - 87447 1541094 2213186因房產出售之轉撥 Release upon disposal

of premises - - - (4855) - - - 4855 -留存盈利轉撥 Transfer from retained

earnings - - - - - 52986 - (52986) - 於 2011 年 6 月 30 日 At 30 June 2011 700000 2444517 605 3276615 141925 1194122 508802 16436598 24703184 於 2011 年 7 月 1 日 At 1 July 2011 700000 2444517 605 3276615 141925 1194122 508802 16436598 24703184 期內溢利 Profit for the period - - - - - - - 903336 903336其他全面收益 Other comprehensive









earnings - - - - - 164505 - (164505) - 於 2011 年 12 月 31 日 At 31 December 2011 700000 2444517 605 3673491 104431 1358627 618049 17236476 26136196

5

簡要綜合權益變動表（續）

Condensed Consolidated Statement of Changes in Equity(continued)


股本

Share capital

股本溢價

Share premium

資本儲備

Capital reserve

房產

重估儲備

Premisesrevaluation

reserve

可供出售

證券公平值

變動儲備



for-sale securities

監管儲備

Regulatory reserve

換算儲備

Translation reserve

留存盈利

Retained earnings

總計




securities - - - - 191839 - - (539) 191300淨投資對沖下對沖工具


of hedging instruments under net investment hedges - - - - - - 22595 - 22595

貨幣換算差額 Currency translation difference - - - (1267) (86) - (91328) - (92681)


income - - - 513555 191753 - (68733) 1224626 1861201留存盈利轉撥 Transfer to retained

earnings - - - - - (24799) - 24799 -中期股息 Interim dividend - - - - - - - (392000) (392000) 於 2012 年 6 月 30 日 At 30 June 2012 700000 2444517 605 4187046 296184 1333828 549316 18093901 27605397

除按香港會計準則第 39 號對貸款提取

減值準備外按金管局要求撥轉部分

留存盈利至監管儲備用作銀行一般風

險之用（包括未來損失或其他不可預

期風險）

In accordance with the requirements of the HKMA the amounts are set aside for general banking risks including future losses or other unforeseeable risks in addition to the loan impairment allowances recognised under HKAS 39


組成部分


6

簡要綜合現金流量表 Condensed Consolidated Cash Flow Statement



2012 年 6 月 30 日

2011 年

6 月 30 日

附註

Notes

Half-year ended 30 June

2012



HK$rsquo000 HK$rsquo000 經營業務之現金流量 Cash flows from operating activities

除稅前經營現金之流入 Operating cash inflow before taxation 30(a) 1454023 15332175支付香港利得稅 Hong Kong profits tax paid (76030) (56444)支付海外利得稅 Overseas profits tax paid (37282) (63152)

經營業務之現金流入淨額 Net cash inflow from operating activities 1340711 15212579 投資業務之現金流量 Cash flows from investing activities

購入物業器材及設備 Purchase of properties plant and equipment

(48200) (45670)

購入投資物業 Purchase of investment properties - (11934)出售物業器材及設備所得款項 Proceeds from disposal of properties plant

and equipment

74 4234出售投資物業所得款項 Proceeds from disposal of investment

properties

- 5847 投資業務之現金流出淨額 Net cash outflow from investing activities (48126) (47523) 融資業務之現金流量 Cash flows from financing activities

支付股息 Dividend paid - (483000) 融資業務之現金流出淨額 Net cash outflow from financing activities - (483000) 現金及等同現金項目增加 Increase in cash and cash equivalents 1292585 14682056於 1 月 1 日之現金及等同現金項目 Cash and cash equivalents at 1 January 41732029 24585347滙率變動對現金及等同現金項目的影

響 Effect of exchange rate changes on cash and

cash equivalents

(238385) 566037 於 6 月 30 日之現金及等同現金項目 Cash and cash equivalents at 30 June 30(b) 42786229 39833440

第 7 至 100 頁之附註屬本中期財務資料之組成

部分


7

中期財務資料附註 Notes to the Interim Financial Information

1 編製基準及主要會計政策 1 Basis of preparation and significant accounting policies

編製基準此未經審核之中期財務資料乃

按照香港會計師公會所頒佈之香

港會計準則第34號「中期財務報

告」而編製主要會計政策除以下所述外此未經審核之中

期財務資料所採用之主要會計政

策及計算辦法均與截至2011年

12月31日止之本集團年度財務

報表之編製基礎一致並需連同

本集團2011年之年度報告一併

閱覽已強制性地於 2012 年 1 月 1 日

起開始的會計年度首次生效的經

修訂之準則及修訂

Basis of preparation The unaudited interim financial information has been prepared in accordance with HKAS 34 lsquoInterim Financial Reportingrsquo issued by the HKICPA Significant accounting policies Except as described below the significant accounting policies adopted and methods of computation used in the preparation of the unaudited interim financial information are consistent with those adopted and used in the Grouprsquos annual financial statements for the year ended 31 December 2011 and should be read in conjunction with the Grouprsquos Annual Report for 2011 Revised standards and amendments to standards that are mandatory for the first time for the financial year beginning on 1 January 2012

香港會計準則第12號（經修

訂）「所得稅」此會計準則於

2010年12月被修訂於2012年1月1日起開始的會計年度

強制生效並容許提前應用

本集團考慮到修訂準則的處

理要求更能反映本集團持有

投資物業的相關稅務責任的

實況因此以追溯調整方式自

2010年12月31日結算之年度

起提前採納此項經修訂的準

則

香港財務報告準則第7號（經

修訂）「金融工具披露－資

產轉讓」本修訂對於可全部

終止確認或不可全部終止確

認的金融資產轉讓引進了新

的量化披露要求當本集團轉

讓適用於此範圍的金融資產

時會於財務報表披露有關資

訊

HKAS 12 (Amendment) lsquoIncome Taxesrsquo The standard which was revised in December 2010 is mandatorily effective for reporting periods beginning on or after 1 January 2012 Earlier application is permitted The Group considers that the required treatment under the revised standard better reflects the tax position of the investment properties of the Group and has early adopted the amended standard retrospectively since the year ended 31 December 2010

HKFRS 7 (Amendment) lsquoFinancial Instruments Disclosures ndash Transfer of Financial Assetsrsquo The amendment introduces new quantitative disclosure requirements for transfers of financial assets that are either fully derecognised or derecognised not in their entirety The Group will disclose relevant information in the financial statements when the Group undertakes transfers of financial assets that fall within its scope

8

中期財務資料附註（續）

Notes to the Interim Financial Information (continued)

1 編製基準及主要會計政策（續）

1 Basis of preparation and significant accounting policies (continued)

主要會計政策（續）已頒佈並與本集團相關但尚未

強制性生效及沒有被本集團於

2012年提前採納之準則及修訂

Significant accounting policies (continued) Standards and amendments issued that are relevant to the Group but not yet effective and have not been early adopted by the Group in 2012

準則 Standard

內容 Content

起始適用之年度 Applicable for financial years beginning onafter

香港會計準則第 1 號（經修訂） HKAS 1 (Revised)

財務報表的列示－其他全面收益項目的列示 Presentation of Financial Statements - Presentation of

Items of Other Comprehensive Income

2012 年 7 月 1 日 1 July 2012

香港會計準則第 19 號（2011） HKAS 19 (2011)

僱員福利 Employee Benefits

2013 年 1 月 1 日 1 January 2013

香港會計準則第 27 號（2011） HKAS 27 (2011)

獨立財務報表 Separate Financial Statements

2013 年 1 月 1 日 1 January 2013

香港會計準則第 28 號（2011） HKAS 28 (2011)

聯營公司及合資企業投資 Investments in Associates and Joint Ventures

2013 年 1 月 1 日 1 January 2013

香港會計準則第 32 號（經修訂） HKAS 32 (Amendment)

金融工具列示－金融資產及金融負債之抵銷 Financial Instruments Presentation - Offsetting Financial

Assets and Financial Liabilities

2014 年 1 月 1 日 1 January 2014

香港財務報告準則第 7 號（經修訂） HKFRS 7 (Amendment)

金融工具披露－金融資產及金融負債之抵銷 Financial Instruments Disclosures - Offsetting Financial


2013 年 1 月 1 日 1 January 2013


金融工具披露－香港財務報告準則第 9 號的過渡安排

Financial Instruments Disclosures - Transition to HKFRS 9

2015 年 1 月 1 日 1 January 2015

香港財務報告準則第 9 號 HKFRS 9

金融工具 Financial Instruments

2015 年 1 月 1 日 1 January 2015


綜合財務報表 Consolidated Financial Statements

2013 年 1 月 1 日 1 January 2013


合資安排 Joint Arrangements

2013 年 1 月 1 日 1 January 2013


其他企業投資權益的披露 Disclosure of Interests in Other Entities

2013 年 1 月 1 日 1 January 2013


公平值計量 Fair Value Measurement

2013 年 1 月 1 日 1 January 2013

有關上述準則與修訂的簡介

請參閱本集團2011年之年度

報告內財務報表附註21(b)項

Please refer to Note 21 (b) of the Grouprsquos Annual Report for 2011 for brief explanations of the above-mentioned standards and amendments

9








（續）

此外「完善香港財務報告準

則2009至2011年週期」包含

多項被香港會計師公會認為

非緊急但有需要的修訂當中

包括引致在列示與分類方面

出現會計變更的修訂有關修

訂於2013年1月1日起開始的

會計年度開始生效其對集團

的會計政策沒有重大影響

Significant accounting policies (continued) Standards and amendments issued that are relevant to the Group but not yet effective and have not been early adopted by the Group in 2012 (continued)

In addition lsquoAnnual Improvements to HKFRS 2009 - 2011 Cyclersquo contains numerous amendments to HKFRS which the HKICPA considers not urgent but necessary It comprises amendments that result in accounting changes for presentation and classification The amendments will be effective for the financial year beginning on or after 1 January 2013 there is no material impact on the Grouprsquos accounting policies

10



2 應用會計政策時之重大會

計估計及判斷 2 Critical accounting estimates and judgements in applying accounting

policies

本集團會計估計的性質及假

設均與本集團截至 2011 年 12月 31 日的財務報告內所採用的

一致

The nature and assumptions related to the Grouprsquos accounting estimates are consistent with those used in the Grouprsquos financial statements for the year ended 31 December 2011

11



3 金融風險管理 3 Financial risk management

本集團因從事各類業務而涉及

金融風險主要金融風險包括

信貸風險市場風險（包括外

匯風險及利率風險）及流動資

金風險本附註概述本集團的

這些風險承擔

The Group is exposed to financial risks as a result of engaging in a variety of business activities The principal financial risks are credit risk market risk (including currency risk and interest rate risk) and liquidity risk This note summarises the Grouprsquos exposures to these risks

31 信貸風險 31 Credit Risk

(A) 總貸款及其他賬項 (A) Gross advances and other accounts

(a) 減值貸款 (a) Impaired advances

當有客觀證據反

映貸款出現一項

或多項損失事

件經過評估有關

損失事件已影響

其預期可靠的未

來現金流則該貸

款已出現減值損

失如有客觀證據反

映貸款已出現減

值損失有關損失

按賬面值與未來

現金流折現值兩

者間之差額計

量貸款已出現減

值損失的客觀證

據包括那些已有

明顯訊息令資產

持有人知悉發生

了損失事件

Advances are impaired and impairment losses are incurred if and only if there is objective evidence of impairment as a result of one or more events that occurred and that loss event(s) has an impact on the estimated future cash flows of the advances that can be reliably estimated If there is objective evidence that an impairment loss on advances has been incurred the amount of loss is measured as the difference between the carrying amount and the present value of estimated future cash flows generated by the advances Objective evidence that advances are impaired includes observable data that comes to the attention of the holder of the asset about the loss events

12



3 金融風險管理（續） 3 Financial risk management (continued)

31 信貸風險（續） 31 Credit Risk (continued)

(A) 總貸款及其他賬項

（續） (A) Gross advances and other accounts (continued)

(a) 減值貸款（續） (a) Impaired advances (continued)

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011

港幣千元港幣千元


減值之客戶貸款總額

Gross impaired advances to customers 256103 132853

就上述貸款作個別

評估之貸款減值準備

Individually assessed loan impairment allowances made in respect of such advances 100865 87615

就上述有抵押品覆

蓋的客戶貸款之抵押品市值

Current market value of collateral held against the covered portion of such advances to customers 260737 75765

上述有抵押品覆蓋

之客戶貸款 Covered portion of such advances to

customers 145651 35646 上述沒有抵押品覆

蓋之客戶貸款Uncovered portion of such advances to

customers 110452 97207

總減值之客戶貸款

對總客戶貸款比率

Gross impaired advances to customers as a percentage of gross advances to customers 020 011

貸款減值準備之撥

備已考慮有關貸款

之抵押品價值

The loan impairment allowances were made after taking into account the value of collateral in respect of impaired advances

13








特定分類或減值

之客戶貸款分析

如下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011



特定分類或減值之客戶貸款總額

Gross classified or impaired advances to customers

284508 165966 總特定分類或減

值之客戶貸款對總客戶貸款比率

Gross classified or impaired advances to customers as a percentage of gross advances to customers

023 014


之客戶貸款乃按

《銀行業條例》

項下《銀行業（披

露）規則》內的

定義界定及按本

集團放款質量分

類的「次級」

「呆滯」或「虧

損」貸款或已被

個別評估為減值

貸款

Classified or impaired advances to customers follow the definitions set out in the Banking (Disclosure) Rules under the Banking Ordinance and represent advances which are either classified as ldquosubstandardrdquo ldquodoubtfulrdquo or ldquolossrdquo under the Grouprsquos classification of loan quality or individually assessed to be impaired

14







(b) 逾期超過 3 個月之

貸款 (b) Advances overdue for more than three months

有明確到期日之貸

款若其本金或利

息已逾期及仍未償

還則列作逾期貸

款須定期分期償

還之貸款若其中

一次分期還款已逾

期及仍未償還則

列作逾期處理須

即期償還之貸款若

已向借款人送達還

款通知但借款人

未按指示還款或

貸款一直超出借款

人獲通知之批准貸

款限額亦列作逾

期處理

Advances with a specific repayment date are classified as overdue when the principal or interest is past due and remains unpaid Advances repayable by regular instalments are classified as overdue when an instalment payment is past due and remains unpaid Advances repayable on demand are classified as overdue either when a demand for repayment has been served on the borrower but repayment has not been made in accordance with the instruction or when the advances have remained continuously outside the approved limit that was advised to the borrower

15








貸款（續） (b) Advances overdue for more than three months (continued)

逾期超過 3 個月之

貸款總額分析如

下


於 2012 年 6 月 30 日於 2011 年 12 月 31 日 At 30 June 2012 At 31 December 2011 佔客戶貸款總額

百分比佔客戶貸款總額

百分比

of gross of gross 金額 advances to 金額 advances to Amount customers Amount customers 港幣千元港幣千元 HK$rsquo000 HK$rsquo000

客戶貸款總額已逾

期 Gross advances

to customers which have been overdue for

- 超過 3 個月但不

超過 6 個月 - six months or

less but over three months 95663 008 11900 001


超過 1 年 - one year or

less but over six months 52080 004 5490 000

- 超過 1 年 - over one year 86733 007 88155 008

逾期超過 3 個月之貸

款 Advances overdue

for over three months 234476 019 105545 009

就上述之貸款作個別

評估之貸款減值準

備

Individually assessed loan impairment allowances madein respect of such advances 89117 84606

16









於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011



就上述有抵押品覆蓋的客戶貸款之抵押品市值


上述有抵押品覆蓋之客戶貸款

Covered portion of such advances to customers 139588 11416

上述沒有抵押品覆蓋之客戶貸款

Uncovered portion of such advances to customers 94888 94129

逾期貸款或減值

貸款的抵押品主

要包括公司授信

戶項下的商用資

產如商業及住宅

樓宇個人授信戶

項下的住宅按揭

物業於 2012 年 6 月 30日及 2011 年 12月 31 日沒有逾

期超過 3 個月之銀

行及其他金融機

構貸款

Collateral held against overdue or impaired loans is principally represented by charges over business assets such as commercial and residential premises for corporate loans and mortgages over residential properties for personal loans As at 30 June 2012 and 31 December 2011 there were no advances to banks and other financial institutions overdue for more than three months

17







(c) 經重組貸款 (c) Rescheduled advances

於 2012 年 6 月 30 日及 2011 年 12 月31 日沒有經重組

之銀行及其他金融

機構貸款經重組貸款乃指客

戶因為財政困難或無能力如期還款而

經雙方同意達成重

整還款計劃之貸款修訂還款計劃

後之經重組貸款如

仍逾期超過 3 個月則包括在逾期

貸款內

As at 30 June 2012 and 31 December 2011 there were no rescheduled advances to banks and other financial institutions Rescheduled advances are those advances that have been restructured or renegotiated because of deterioration in the financial position of the borrower or of the inability of the borrower to meet the original repayment schedule Rescheduled advances which have been overdue for more than three months under the revised repayment terms are included in overdue advances



百分比


經重組客戶貸款淨額（已扣減包

含於「逾期超過

3 個月之貸款」部分）

Rescheduled advances to customers net of amounts included in ldquoAdvances overdue for more than three monthsrdquo 13210 001 20514 002

18







(d) 客戶貸款集中度 (d) Concentration of advances to customers

(i) 按行業分類之

客戶貸款總額

根據在香港境

內或境外以及

借貸人從事之

業務作出分類

之客戶貸款總

額分析如下


The information concerning gross advances to customers has been analysed into loans used inside or outside Hong Kong by industry sectors of the borrowers as follows

於 2012 年 6 月 30 日 At 30 June 2012

客戶貸款總額

Gross advances

to customers

抵押品覆蓋之百分比

Covered by

collateral or other security


Classified or

impaired逾期

Overdue

個別評估之貸款減值準備 Individually

assessed impairment allowances

組合評估之貸款減值準備Collectively


港幣千元港幣千元港幣千元港幣千元港幣千元


在香港使用之貸款 Loans for use in Hong Kong

工商金融業 Industrial commercial and financial

- 物業發展 - Property development 1911501 4305 - - - 6284- 物業投資 - Property investment 10631332 8849 6423 84960 170 105257- 金融業 - Financial concerns 1936088 4929 - - - 5381- 股票經紀 - Stockbrokers 2251 10000 - - - 9- 批發及零售業 - Wholesale and retail trade 17607711 6053 25716 68238 10122 113085- 製造業 - Manufacturing 4716364 3787 10113 21283 2829 36847- 運輸及運輸設備 - Transport and transport

equipment 4306460 1560 1289 4023 329 17700- 休閒活動 - Recreational activities 68118 000 - - - 183- 資訊科技 - Information technology 1393554 208 2136 2136 571 3828- 其他 - Others 7458962 5051 18913 23794 1480 40126

個人 Individuals - 購買居者有其屋計劃

私人機構參建居屋計

劃及租者置其屋計劃

樓宇之貸款


- 購買其他住宅物業之貸

款 - Loans for purchase of

other residential properties 11311278 9997 2157 69901 - 4465

- 其他 - Others 2911580 7483 2509 16455 805 1856

在香港使用之貸款總額 Total loans for use in Hong Kong 65037314 6514 73182 315047 16306 335502

貿易融資 Trade finance 6603525 2638 31692 37882 6186 57810

在香港以外使用之貸款 Loans for use outside Hong Kong 53541414 3729 179634 198868 78373 404133

客戶貸款總額 Gross advances to customers 125182253 5119 284508 551797 100865 797445

19







(d) 客戶貸款集中度

（續） (d) Concentration of advances to customers (continued)


客戶貸款總額

（續）


於 2011 年 12 月 31 日 At 31 December 2011

客戶貸款總額

Gross advances

to customers


Covered by



Classified or

impaired逾期

Overdue

個別評估之貸款減值準備



組合評估之貸款減值準備







- 物業發展 - Property development 2738332 5871 - - - 8510- 物業投資 - Property investment 10942261 7938 - 45685 - 110811- 金融業 - Financial concerns 3005772 3570 - - - 8392- 股票經紀 - Stockbrokers 3241 10000 - - - 12- 批發及零售業 - Wholesale and retail trade 18064963 6152 8032 48960 2492 109024- 製造業 - Manufacturing 4412357 3810 9409 14854 2214 39747- 運輸及運輸設備 - Transport and transport

equipment 3542563 1055 - 2466 - 18360- 休閒活動 - Recreational activities 70162 - - - - 194- 資訊科技 - Information technology 1091930 248 2173 2173 552 3215- 其他 - Others 5427639 6295 977 30140 725 39451




樓宇之貸款





- 其他 - Others 2477768 8341 2625 10544 825 2084




客戶貸款總額 Gross advances to customers 119844229 5201 165966 479116 87615 705132 有明確到期日之貸

款若其本金或利息

已逾期及仍未償


款

Advances with a specific repayment date are classified as overdue when the principal or interest is past due and remains unpaid

20









(ii) 按地理區域分

類之客戶貸款

總額下列關於客戶

貸款之地理區

域分析是根據

交易對手之所

在地並已顧

及風險轉移因

素一般而

言假如客戶

貸款之擔保人

所處國家與客

戶不同則會

確認有關貸款

之風險轉移


The following geographical analysis of advances to customers is based on the location of the counterparties after taking into account the transfer of risk In general such transfer of risk takes place if the advances to customers are guaranteed by a party in a country which is different from that of the customer

客戶貸款總額 Gross advances to customers

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011



香港 Hong Kong 66149913 65296349中國內地 Mainland China 53519461 48409389其他 Others 5512879 6138491

125182253 119844229

就客戶貸款

總額作組合

評估之貸款

減值準備



797445 705132

21










類之客戶貸款

總額（續）


逾期貸款 Overdue advances

就逾期貸款

作個別評

估之貸款

減值準備



94328 84873

就逾期貸款

作組合評

估之貸款

減值準備



4747 5933

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011




551797 479116

22










類之客戶貸款

總額（續）


特定分類或減

值貸款 Classified or impaired advances

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011




284508 165966

就特定分類或

減值貸款作

個別評估之

貸款減值準

備



100865 87615

就特定分類或

減值貸款作

組合評估之

貸款減值準

備


香港 Hong Kong 354 362中國內地 Mainland China 546 214

900 576

23





(B) 收回資產 (B) Repossessed assets

本集團於 2012 年 6月 30 日持有的收回

資產之估值為港幣

5222000 元（2011年 12 月 31 日港幣

2530000 元）這包

括本集團通過對抵押

取得處置或控制權的

物業（如通過法律程

序或業主自願交出抵

押資產方式取得）而

對借款人的債務進行

全數或部分減除

The estimated market value of repossessed assets held by the Group as at 30 June2012 amounted to HK$5222000 (31 December 2011 HK$2530000) They comprise properties in respect of which the Group has acquired access or control (eg through court proceedings or voluntary actions by the borrowers concerned) for release in full or in part of the obligations of the borrowers

24





(C) 債務證券 (C) Debt securities

下表為以發行評級及

信貸風險性質分析之

債務證券賬面值

The tables below represent an analysis of the carrying value of debt securities by issuerating and credit risk characteristic

於 2012 年 6 月 30 日

At 30 June 2012

無評級

Unrated

Aaa

Aa1 至Aa3

Aa1 toAa3

A1 至A3

A1 toA3

A3 以下Lower than

A3

香港政府及其機構


and government

bodies

其他國家政府及其機構

Other governments

and government

agencies其他

Others總計Total

港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000證券投資 Investment in securities 住房貸款資產抵

押債券 MBSABS

- 14027 - 1282 - - - 15309其他債券 Other debt securities 822253 15122017 5852219 205394 1649701 1728663 11347218 36727465

小計 Subtotal 822253 15136044 5852219 206676 1649701 1728663 11347218 36742774 公平值變化計入損

益之金融資產 Financial assets at fair

value through profit or loss

其他債券 Other debt securities 610 2886780 579044 267198 1368657 - 299261 5401550

小計 Subtotal 610 2886780 579044 267198 1368657 - 299261 5401550

總計 Total 822863 18022824 6431263 473874 3018358 1728663 11646479 42144324

25





(C) 債務證券（續） (C) Debt securities (continued)

於 2011 年 12 月 31 日

At 31 December 2011

無評級

Unrated

Aaa

Aa1 至 Aa3Aa1 to

Aa3

A1 至A3

A1 toA3

A3 以下Lower than

A3



and government

bodies


Other governments

and government

agencies其他

Others總計Total



押債券 MBSABS

- 20335 - 1699 - - - 22034

其他債券 Other debt securities 622547 10594378 3879203 202942 5005270 678604 9133727 30116671




住房貸款資產抵

押債券 MBSABS

- - 5046 - - - - 5046


小計 Subtotal 500 521205 575547 267066 587575 - 293868 2245761

總計 Total 623047 11135918 4454750 471707 5592845 678604 9427595 32384466

於 2012 年 6 月 30 日無評級之總金

額為港幣 16393500000 元

（2011 年 12 月 31 日港幣

15699044000 元）其中沒有發

行人評級僅為港幣 3065445000元（2011 年 12 月 31 日港幣

2741631000 元）詳情請參閱

第 26 頁

The total amount of unrated issues amounted to HK$16393500000 (31 December 2011 HK$15699044000) as at 30 June 2012 of which only HK$3065445000 (31 December 2011 HK$2741631000) were without issuer ratings For details please refer to page 26

26






就以上沒有評級的

債務證券按發行

人之評級分析如

下


於 2012 年 6 月 30 日 At 30 June 2012

Aaa

Aa1 至 Aa3Aa1 to Aa3

A1 至 A3A1 to A3

A3 以下 Lower

than A3 無評級

Unrated 總計

Total 港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 可供出售證券 Available-for-sale

securities 55440 5108725 4874366 - 3065195 13103726持有至到期日證券 Held-to-maturity

securities - 309143 1312463 - 250 1621856公平值變化計入損


value through profit or loss - 1368657 - 299261 - 1667918

總計 Total 55440 6786525 6186829 299261 3065445 16393500

於 2011 年 12 月 31 日 At 31 December 2011

Aaa


A1 至 A3A1 to A3

A3 以下 Lower

than A3 無評級

Unrated 總計



securities - 8069695 1699982 - 2741381 12511058持有至到期日證券 Held-to-maturity

securities - 204679 225695 - 250 430624貸款及應收款 Loans and

receivables - - 1875919 - - 1875919公平值變化計入損


value through profit or loss - 587575 293868 - - 881443

總計 Total - 8861949 4095464 - 2741631 15699044

27






於 2012 年 6 月 30日及 2011 年 12 月

31 日沒有減值債

務證券

於 2012 年 6 月 30日及 2011 年 12 月

31 日沒有逾期之

債務證券

As at 30 June 2012 and 31 December 2011 there were no impaired debt securities As at 30 June 2012 and 31 December 2011 there were no overdue debt securities

28




32 市場風險 32 Market Risk

(A) 外匯風險 (A) Currency risk

本集團的資產及負

債均以主要貨幣為

主尤其集中在港

元美元及人民幣

為確保外匯風險承

擔保持在可接受水

平集團利用風險限

額（例如頭盤限額）

作為監控工具此

外集團致力於減少

相同貨幣資產與負

債的錯配並通常利

用外匯合約（例如外

匯掉期）管理由外幣

資產負債所產生的

外匯風險

The Grouprsquos assets and liabilities are denominated in major currencies particularly the HK dollar the US dollar and Renminbi To ensure the currency risk exposure of the Group is kept to an acceptable level risk limits (eg Position limit) are used to serve as a monitoring tool Moreover the Group seeks to minimise the gap between asset and liability in the same currency Foreign exchange contracts (eg FX swap) are usually used to manage FX risk associated with foreign currency-denominated assets and liabilities

29




32 市場風險（續） 32 Market Risk (continued)

(A) 外匯風險（續） (A) Currency risk (continued)

下表概述了本集團於

2012 年 6 月 30 日及

2011 年 12 月 31 日之

外幣匯率風險承擔

表內以折合港元賬面

值列示資產及負債

並按原幣分類

The tables below summarise the Grouprsquos exposure to foreign currency exchange rate risk as at 30 June 2012 and 31 December 2011 Included in the tables are the assets and liabilities at carrying amounts in HK dollars equivalent categorised by the original currency

於 2012 年 6 月 30 日 At 30 June 2012

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計

Total 港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 資產 Assets 庫存現金及存放銀行及其他金融機

構的結餘 Cash and balances with banks and

other financial institutions 25298848 4941409 6196139 317954 42357 697943 757796 38252446在銀行及其他金融機構一至十二個

月內到期之定期存放 Placements with banks and other


公平值變化計入損益之金融資產 Financial assets at fair value through profit or loss - 769228 4555308 - - - 77014 5401550

衍生金融工具 Derivative financial instruments 76366 2561 676985 - - - - 755912貸款及其他賬項 Advances and other accounts 32846569 39006349 63223282 506979 226355 13489 586147 136409170證券投資 Investment in securities

- 可供出售證券 - Available-for-sale securities 10118077 7047591 9927207 361025 2161526 109394 4456545 34181365- 持有至到期日證券 - Held-to-maturity securities 1170071 1114674 15559 - - - 316415 2616719

投資物業 Investment properties 45263 - 872680 - - - - 917943物業器材及設備 Properties plant and equipment 456811 3146 4698430 - - - - 5158387其他資產（包括應收稅項及

遞延稅項資產） Other assets (including current

and deferred tax assets) 202599 4114 1938282 425 16 5 4203 2149644 資產總額 Total assets 88625497 58195700 93056040 1186383 2430254 820831 6198120 250512825

30






於 2012 年 6 月 30 日 At 30 June 2012

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 負債 Liabilities 銀行及其他金融機構之存款及結餘 Deposits and balances from banks

and other financial institutions 9312721 15388894 1099177 197662 172517 1143 13585 26185699公平值變化計入損益之金融負債 Financial liabilities at fair value

through profit or loss - - 3996035 - - - - 3996035衍生金融工具 Derivative financial instruments 63537 158834 415103 - - - - 637474客戶存款 Deposits from customers 66682613 31787617 76215438 2724918 145144 797694 4301590 182655014其他賬項及準備（包括應付稅項及

遞延稅項負債） Other accounts and provisions


負債總額 Total liabilities 80825774 48144029 84833848 2973185 848632 808853 4473107 222907428 資產負債表頭寸淨值 Net on-balance sheet position 7799723 10051671 8222192 (1786802) 1581622 11978 1725013 27605397 表外資產負債頭寸淨值 Off-balance sheet net notional

position (465754) (8014713) 10268281 1789719 (1580676) (11100) (1705313) 280444 或然負債及承擔 Contingent liabilities and

commitments 20911086 24491258 20908331 361959 305348 12372 13055 67003409

31






於 2011 年 12 月 31 日 At 31 December 2011

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計








衍生金融工具 Derivative financial instruments 65299 6001 745103 - - - - 816403貸款及其他賬項 Advances and other accounts 26669960 40465402 64321827 272602 297283 - 887151 132914225證券投資 Investment in securities

- 可供出售證券 - Available-for-sale securities 6381679 6339356 11184833 511059 - 93761 2245297 26755985- 持有至到期日證券 - Held-to-maturity securities 980163 121596 104580 225695 - - 118666 1550700- 貸款及應收款 - Loans and receivables - - - 1875919 - - - 1875919

投資物業 Investment properties 45688 - 802260 - - - - 847948物業器材及設備 Properties plant and equipment 463161 1065 4119185 - - - - 4583411其他資產（包括遞延稅項資產） Other assets (including deferred

tax assets) 165459 57198 649071 - 1316 1 4146 877191 資產總額 Total assets 86960566 53127847 90818184 4022818 433499 194152 4074390 239631456

32






於 2011 年 12 月 31 日 At 31 December 2011

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計







負債總額 Total liabilities 80413906 44500108 78296748 4094922 469196 1104818 4615562 213495260 資產負債表頭寸淨值 Net on-balance sheet position 6546660 8627739 12521436 (72104) (35697) (910666) (541172) 26136196

表外資產負債頭寸淨值 Off-balance sheet net notional

position (2216052) (7515536) 8491862 74164 36636 911189 533472 315735

或然負債及承擔 Contingent liabilities and

commitments 19225118 29009786 19190225 386957 255138 2741 2182 68072147

表外資產負債頭寸淨值指

外匯衍生金融工具的名義

合約數額淨值外匯衍生

金融工具主要用來減低本

集團之匯率變動風險

Off-balance sheet net notional position represents the net notional amounts of foreign currency derivative financial

instruments which are principally used to reduce the Grouprsquos exposure to currency movements

33





(B) 利率風險 (B) Interest rate risk

下表概述了本集團

於 2012 年 6 月 30日及 2011 年 12 月

31 日的利率風險承

擔表內以賬面值列

示資產及負債並按

合約重定息率日期

或到期日（以較早者

為準）分類

The tables below summarise the Grouprsquos exposure to interest rate risk as at 30 June 2012 and 31 December 2011 Included in the tables are the assets and liabilities at carrying amounts categorised by the earlier of contractual repricing or maturity dates

於 2012 年 6 月 30 日

At 30 June 2012

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5 years

不計息

Non-interest

bearing總計

Total 港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 資產 Assets 庫存現金及存放銀行及其他金融機


other financial institutions 36128869 - - - - 2123577 38252446在銀行及其他金融機構一至十二個


financial institutions maturing between one and twelve months - 12105216 12564473 - - - 24669689

公平值變化計入損益之金融資產 Financial assets at fair value through profit or loss 1094998 3050925 557389 439853 258385 - 5401550

衍生金融工具 Derivative financial instruments - - - - - 755912 755912貸款及其他賬項 Advances and other accounts 73919992 30915679 28731698 2826910 14891 - 136409170證券投資 Investment in securities

- 可供出售證券 - Available-for-sale securities 6441596 9409978 5291127 9498292 3485062 55310 34181365- 持有至到期日證券 - Held-to-maturity securities 723916 1024464 321730 546609 - - 2616719

投資物業 Investment properties - - - - - 917943 917943物業器材及設備 Properties plant and equipment - - - - - 5158387 5158387其他資產（包括應收稅項及


and deferred tax assets) - - - - - 2149644 2149644 資產總額 Total assets 118309371 56506262 47466417 13311664 3758338 11160773 250512825

34





(B) 利率風險（續） (B) Interest rate risk (continued)

於 2012 年 6 月 30 日

At 30 June 2012

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000負債 Liabilities 銀行及其他金融機構之存款及結餘 Deposits and balances from banks

and other financial institutions 9274602 8018945 8091386 - - 800766 26185699公平值變化計入損益之金融負債 Financial liabilities at fair value

through profit or loss 499988 2575604 920443 - - - 3996035衍生金融工具 Derivative financial instruments - - - - - 637474 637474客戶存款 Deposits from customers 100533837 33918070 34948739 5828594 37042 7388732 182655014其他賬項及準備（包括應付稅項及



負債總額 Total liabilities 112202234 45347751 45730976 5891961 37042 13697464 222907428 利率敏感度缺口 Interest sensitivity gap 6107137 11158511 1735441 7419703 3721296 (2536691) 27605397

35






於 2011 年 12 月 31 日

At 31 December 2011

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計




other financial institutions 41830459 - - - - 2163874 43994333 在銀行及其他金融機構一至十二個




衍生金融工具 Derivative financial instruments - - - - - 816403 816403 貸款及其他賬項 Advances and other accounts 74162458 27424388 25002509 6324626 244 - 132914225 證券投資 Investment in securities

- 可供出售證券 - Available-for-sale securities 6444004 7053021 5138085 6277450 1799526 43899 26755985 - 持有至到期日證券 - Held-to-maturity securities 247729 241049 503474 558448 - - 1550700 - 貸款及應收款 - Loans and receivables 1875919 - - - - - 1875919

投資物業 Investment properties - - - - - 847948 847948 物業器材及設備 Properties plant and equipment - - - - - 4583411 4583411 其他資產（包括遞延稅項資產） Other assets (including deferred

tax assets) - - - - - 877191 877191 資產總額 Total assets 124660558 45365166 44550999 13674337 2047670 9332726 239631456

36






於 2011 年 12 月 31 日 At 31 December 2011

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計



and other financial institutions 12962586 4011804 10741870 - - 350028 28066288 公平值變化計入損益之金融負債 Financial liabilities at fair value

through profit or loss 299981 389850 388065 - - - 1077896 衍生金融工具 Derivative financial instruments - - - - - 672618 672618 客戶存款 Deposits from customers 96775799 33370694 29479124 7432118 162148 7249585 174469468 其他賬項及準備（包括應付稅項及




37




33 流動資金風險 33 Liquidity Risk

(A) 流動資金比率 (A) Liquidity ratio

半年結算至半年結算至

2012 年

6 月 30 日

2011 年

6 月 30 日


30 June

201230 June

2011

平均流動資金比率 Average liquidity ratio 4303 3939

平均流動資金比率

是以本銀行期內每

月平均流動資金比

率的簡單平均值計

算流動資金比率是根

據《銀行業條例》附

表四及以單獨基準

（即只包括香港辦

事處）計算

The average liquidity ratio is calculated as the simple average of each calendar monthrsquos average liquidity ratio of the Bank for the period The liquidity ratio is computed on the solo basis (the Hong Kong offices only) and is in accordance with the Fourth Schedule to the Banking Ordinance

38


Notes to the Interim Financial Information (continued) 3 金融風險管理（續） 3 Financial risk management (continued)

33 流動資金風險（續） 33 Liquidity Risk (continued)

(B) 到期日分析 (B) Maturity analysis

下表為本集團之資產

及負債於 2012 年 6月 30 日及 2011 年 12月 31 日的到期日分

析並按於結算日

時資產及負債相距

合約到期日的剩餘期

限分類

Tables below analyse assets and liabilities of the Group as at 30 June 2012 and 31 December 2011 into relevant maturity groupings based on the remaining period at balance sheet date to the contractual maturity date

於 2012 年 6 月 30 日 At 30 June 2012

即期

Ondemand

一個月內

Up to 1 month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不確定

日期

Indefinite總計


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000資產 Assets 庫存現金及存放銀行及其他金融

機構的結餘 Cash and balances with banks and

other financial institutions 16549870 21702576 - - - - - 38252446在銀行及其他金融機構一至十二個


financial institutions maturing between one and twelve months - - 12105216 12564473 - - - 24669689

公平值變化計入損益之金融資產 Financial assets at fair value through profit or loss

- 交易性債務證券 - debt securities held for trading - 其他 - others - 1017983 2751664 485790 610 - - 4256047

- 界定為以公平值變化計入損益之債務證券

- debt securities designated at fair value through profit or loss

- 其他 - others - - 299261 71599 516258 258385 - 1145503衍生金融工具 Derivative financial instruments 547452 32257 34201 128431 13571 - - 755912貸款及其他賬項 Advances and other accounts

- 客戶貸款 - advances to customers 5104975 4677839 10914815 33084272 46335022 23970708 196312 124283943- 貿易票據 - trade bills 27939 3707287 6079054 2310947 - - - 12125227

證券投資 Investment in securities - 可供出售之債務證券 - debt securities held for

available-for-sale - 持有之存款證 - certificates of deposit held - 1210 156766 1758510 489720 - - 2406206- 其他 - others - 4275337 5810044 5350407 12798999 3485062 - 31719849

- 持有至到期日之債務證券 - debt securities held for held-to-maturity

- 持有之存款證 - certificates of deposit held - 708607 603856 - - - - 1312463- 其他 - others - - 301981 440357 561668 250 - 1304256

- 股份證券 - equity securities - - - - - - 55310 55310投資物業 Investment properties - - - - - - 917943 917943物業器材及設備 Properties plant and equipment - - - - - - 5158387 5158387其他資產（包括應收稅項

及遞延稅項資產） Other assets (including current

and deferred tax assets) 181131 1922071 1847 40364 1393 - 2838 2149644 資產總額 Total assets 22411367 38045167 39058705 56235150 60717241 27714405 6330790 250512825

39





(B) 到期日分析（續） (B) Maturity analysis (continued)

於 2012 年 6 月 30 日 At 30 June 2012

即期

Ondemand

一個月內

Up to 1 month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不確定

日期

Indefinite總計


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000負債 Liabilities 銀行及其他金融機構之存款及

結餘 Deposits and balances from banks

and other financial institutions 2792148 7283222 8018943 8091386 - - - 26185699公平值變化計入損益之金融負債 Financial liabilities at fair value

through profit or loss - 其他 - others - 499988 2575604 920443 - - - 3996035

衍生金融工具 Derivative financial instruments 227963 81309 33979 147654 98123 48446 - 637474客戶存款 Deposits from customers 57775493 47621962 32550233 36545207 8125070 37049 - 182655014其他賬項及準備（包括應付稅項及


(including current and deferred tax liabilities) 2673201 2015194 1536582 2483922 724307 - - 9433206

負債總額 Total liabilities 63468805 57501675 44715341 48188612 8947500 85495 - 222907428 流動資金缺口 Net liquidity gap (41057438) (19456508) (5656636) 8046538 51769741 27628910 6330790 27605397

40






於 2011 年 12 月 31 日 At 31 December 2011

即期

On demand

一個月內

Up to1 month

一至

三個月

1-3 months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over

5 years

不確定

日期

Indefinite總計




other financial institutions 27545031 16449302 - - - - - 43994333 在銀行及其他金融機構一至十二個







- 其他 - others - - - 293869 594712 247900 - 1136481 衍生金融工具 Derivative financial instruments 587300 11605 32901 116818 67779 - - 816403 貸款及其他賬項 Advances and other accounts

- 客戶貸款 - advances to customers 2846884 6935770 11001742 35122628 38924531 24124709 95218 119051482 - 貿易票據 - trade bills 115 1617566 4995685 6705121 - - - 13318487 - 銀行及其他金融機構貸款 - advances to banks and other

financial institutions - - - 544256 - - - 544256 證券投資 Investment in securities

- 可供出售之債務證券 - debt securities held for available-for-sale

- 持有之存款證 - certificates of deposit held - - 269994 112756 968039 - - 1350789 - 其他 - others - 5275152 3685012 6247984 8353623 1799526 - 25361297


- 持有之存款證 - certificates of deposit held - 225695 - - - - - 225695 - 其他 - others - - 122383 503474 697199 1949 - 1325005

- 貸款及應收款之債務證券 - debt securities held for loans and receivables - 1875919 - - - - - 1875919

- 股份證券 - equity securities - - - - - - 43899 43899 投資物業 Investment properties - - - - - - 847948 847948 物業器材及設備 Properties plant and equipment - - - - - - 4583411 4583411 其他資產（包括遞延稅項資產） Other assets (including deferred

tax assets) 157936 638654 9348 27823 40899 - 2531 877191 資產總額 Total assets 31137266 33129652 30388505 63581660 49647282 26174084 5573007 239631456

41






於 2011 年 12 月 31 日 At 31 December 2011

即期

On demand

一個月內

Up to1 month

一至

三個月

1-3 months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over

5 years

不確定

日期

Indefinite總計




and other financial institutions 740877 12571737 4005861 10747813 - - - 28066288 公平值變化計入損益之金融負債 Financial liabilities at fair value


衍生金融工具 Derivative financial instruments 247907 59349 28939 122358 166556 47509 - 672618 客戶存款 Deposits from customers 56822738 44447805 32384158 31577957 9074613 162197 - 174469468 其他賬項及準備（包括應付稅項及




42






上述到期日分類乃

按照《銀行業（披露）

規則》之相關條文而

編製本集團將逾期

不超過 1 個月之資

產例如貸款及債務

證券申報為「即期」

資產對於按不同款

額或分期償還之資

產只有該資產中實

際逾期之部分被視

作逾期其他未到期

之部分仍繼續根據

剩餘期限申報但假

若對該資產之償還

能力有疑慮則將該

等款項列為「不確定

日期」上述列示之

資產已扣除任何相

關準備（如有）按尚餘到期日對債

務證券之分析是為

符合《銀行業（披露）


披露的所作披露不

代表此等證券將持

有至到期日

The above maturity classifications have been prepared in accordance with relevant provisions under the Banking (Disclosure) Rules The Group has reported assets such as advances and debt securities which have been overdue for not more than one month as ldquoRepayable on demandrdquo In the case of an asset that is repayable by different payments or instalments only that portion of the asset that is actually overdue is reported as overdue Any part of the asset that is not due is reported according to the residual maturity unless the repayment of the asset is in doubt in which case the amount is reported as ldquoIndefiniterdquo The above assets are stated after deduction of provisions if any The analysis of debt securities by remaining period to maturity is disclosed in order to comply with relevant provisions under the Banking (Disclosure) Rules The disclosure does not imply that the securities will be held to maturity

43




34 資本管理 34 Capital Management

本集團由 2011 年 1 月 1 日

起採用基礎內部評級基準

計算法計算大部分非證券

化風險承擔的信用風險資

本要求而對於證券化風險

承擔使用內部評級基準

（證券化）計算法計算證券


本要求小部分信貸風險承

擔則按標準（信用風險）計

算法計算本集團採用標準

（巿場風險）計算法及標準

（業務操作風險）計算法計

算市場風險及操作風險最

低資本要求以上之計算方

法在 2012 年 6 月 30 日沒

有改變為配合巴塞爾協定二優化

措施的實施《2011 年銀行

業（資本）（修訂）規則》

自 2012 年 1 月 1 日起生

效新規則主要涉及市場風

險框架的修訂及優化巴塞

爾協定二框架中的其他規

定本集團已根據有關監管

規定計算風險資本要求

From 1 January 2011 the Group has adopted the foundation internal ratings-based (ldquoFIRBrdquo) approach to calculate the credit risk capital charge for the majority of its non-securitisation exposures and the internal ratings-based (securitisation) approach to calculate the credit risk capital charge for its securitisation exposures A small residual credit exposures has adopted standardised (credit risk) (ldquoSTCrdquo) approach The Group adopts standardised (market risk) (ldquoSTMrdquo) approach and standardised (operational risk) (ldquoSTOrdquo) approach to calculate the minimum capital charge for market risk and operational risk There are no changes in the above approaches on 30 June 2012 In response to the implementation of Basel II Enhancements the Banking (Capital) (Amendment) Rules 2011 became effective on 1 January 2012 The amendments were mainly to revise the market risk framework and incorporate other enhancements to the Basel II framework The Group has calculated the capital charge according to the related regulatory requirements

(A) 資本充足比率


於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011

資本充足比率 Capital adequacy ratio 1637 1706

核心資本比率 Core capital ratio 1566 1642

44




34 資本管理（續） 34 Capital Management (continued)

(A) 資本充足比率（續） (A) Capital adequacy ratio (continued)

資本比率乃根據

《銀行業（資本）

規則》及按金管局

就監管規定要求以

綜合基準計算本銀

行及其指定之附屬

公司財務狀況的比

率按會計及監管要求

所採用不同之綜合

基礎對其差異之

描述見於第 104 頁

「其他資料 ndash 本

銀行之附屬公司」

The capital ratios are computed on the consolidated basis that comprises the positions of the Bank and certain subsidiaries specified by the HKMA for its regulatory purposes and in accordance with the Banking (Capital) Rules The differences between the basis of consolidation for accounting and regulatory purposes are described in ldquoAdditional Information ndash Subsidiaries of the Bankrdquo on page 104

45





(B) 扣減後的資本基礎成

份 (B) Components of capital base after deductions

用於計算以上2012年

6 月 30 日及 2011 年

12 月 31 日之資本充

足比率及已匯報金管

局之扣減後的綜合資

本基礎分析如下

The consolidated capital base after deductions used in the calculation of the above capital adequacy ratio as at 30 June 2012 and 31 December 2011 and reported to the HKMA is analysed as follows

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011


HK$rsquo000 HK$rsquo000核心資本 Core capital

繳足股款的普通股

股本 Paid up ordinary share capital 700000 700000

儲備 Reserves 19264706 17334150損益賬 Profit and loss account 1140597 2319287可扣減項目 Deductible item - -

21105303 20353437核心資本之扣減 Deductions from core capital (29786) (23795)

核心資本 Core capital 21075517 20329642

附加資本 Supplementary capital 重估可供出售證券

之公平值收益 Fair value gains arising from holdings of

available-for-sale securities 156449 51862重估界定為以公平

值變化計入損益

之證券公平值收

益


17847 10768按組合評估之貸款

減值準備 Collective loan impairment allowances

37839 25260監管儲備 Regulatory reserve 63010 49961過剩準備 Surplus provisions 705605 668424

980750 806275附加資本之扣減 Deductions from supplementary capital (29787) (23795)

附加資本 Supplementary capital 950963 782480

扣減後的資本基礎總額

Total capital base after deductions 22026480 21112122

46






份（續） (B) Components of capital base after deductions (continued)

不納入計算資本充足

比率之附屬公司見於

第 104 頁「其他資料 ndash本銀行之附屬公司」

該等附屬公司之投資

成本會從資本基礎中

扣減

Subsidiaries which are not included in the consolidation group for the calculation of capital adequacy ratios are denoted in ldquoAdditional Information ndash Subsidiaries of the Bankrdquo on page 104 Investment costs in such subsidiaries are deducted from the capital base

47


Notes to the Interim Financial Information (continued) 4 淨利息收入 4 Net interest income


2012 年 6 月 30 日

2011 年

6 月 30 日

Half-year ended Half-year ended 30 June

2012 30 June


HK$rsquo000 HK$rsquo000 利息收入 Interest income 存放於同業及其他

金融機構的款項 Due from banks and other financial institutions

1299946 477809客戶貸款 Advances to customers 2038502 1610154上市證券投資 Listed investments 155819 146095非上市證券投資 Unlisted investments 317330 197930其他 Others 11603 32263

3823200 2464251

利息支出 Interest expense 同業及其他金融機構

存放的款項 Due to banks and other financial institutions

(345554) (126314)客戶存款 Deposit from customers (1464121) (769761)其他 Others (74348) (48532)

(1884023) (944607)

淨利息收入 Net interest income 1939177 1519644

2012 年上半年之利息收入

包括港幣 3069000 元

（ 2011 年上半年港幣

417000 元）被界定為減值

貸款的確認利息無減值證

券投資產生的利息收入


31000 元）

Included within interest income is HK$3069000 (first half of 2011 HK$417000) of interest with respect to income recognised on advances classified as impaired for the first half of 2012 None of interest income accrued on impaired investment in securities (first half of 2011 HK$31000)

非以公平值變化計入損益之

金融資產與金融負債所產生

的利息收入及利息支出分別

為港幣 3793074000 元


2436007000 元）及港幣

1879225000 元（2011 年

上半年港幣 943582000元）

Included within interest income and interest expense are HK$3793074000 (first half of 2011 HK$2436007000) and HK$1879225000 (first half of 2011 HK$943582000) for financial assets and financial liabilities that are not recognised at fair value through profit or loss respectively

48



5 淨服務費及佣金收入 5 Net fee and commission income

半年結算至半年結算至 2012 年

6 月 30 日2011 年

6 月 30 日 Half-year ended Half-year ended 30 June

201230 June

2011 港幣千元港幣千元 HK$rsquo000 HK$rsquo000

服務費及佣金收入 Fee and commission income 貸款佣金 Loan commissions 101303 113370證券經紀 Securities brokerage 80545 117584匯票佣金 Bills commissions 71702 85504保險 Insurance 41536 41481繳款服務 Payment services 36028 38003基金分銷 Funds distribution 30693 24375保管箱 Safe deposit box 10197 9603信用卡 Credit cards 483 320買賣貨幣 Currency exchange 319 371其他 Others 34141 31336

406947 461947

服務費及佣金支出 Fee and commission expense 證券經紀 Securities brokerage (14528) (20130)繳款服務 Payment services (3231) (3290)其他 Others (15137) (14182)

(32896) (37602)

淨服務費及佣金收入 Net fee and commission income 374051 424345

其中源自 Of which arise from - 非以公平值變化計入損益之

金融資產或金融負債 - financial assets or financial liabilities not at fair value

through profit or loss - 服務費及佣金收入 - Fee and commission income 113741 133648- 服務費及佣金支出 - Fee and commission expense (278) (358)

113463 133290 - 信託及其他受託活動 - trust and other fiduciary activities

- 服務費及佣金收入 - Fee and commission income 6197 7218- 服務費及佣金支出 - Fee and commission expense (580) (530)

5617 6688

49



6 淨交易性收益 6 Net trading gain


2012 年 6 月 30 日

2011 年

6 月 30 日


2012 30 June



淨收益（虧損）源自 Net gain(loss) from - 外匯交易及外匯交易產品 - foreign exchange and foreign exchange

products

52567 69021- 利率工具 - interest rate instruments (3170) (40557)

49397 28464

50



7 其他金融資產之淨收益 7 Net gain on other financial assets


2012 年

6 月 30 日 2011 年

6 月 30 日


30 June

2012 30 June


HK$rsquo000 HK$rsquo000 出售可供出售證券之淨收益 Net gain from disposal of available-for-sale securities 1038 53559其他 Others 1796 - 2834 53559

8 其他經營收入 8 Other operating income


2012 年6 月 30 日

2011 年6 月 30 日


201230 June


HK$rsquo000 HK$rsquo000 證券投資股息收入 Dividend income from investment in securities

- 非上市證券投資 - unlisted investments 4086 3358投資物業之租金總收入 Gross rental income from investment properties 19108 15555減有關投資物業之支出 Less Outgoings in respect of investment properties (1156) (655)其他 Others 1297 2997

23335 21255

「有關投資物業之支出」包括

港幣 60000 元（2011 年上半

年港幣 45000 元）屬於期

內未出租投資物業之直接經

營支出

Included in the ldquoOutgoings in respect of investment propertiesrdquo is HK$60000 (first half of 2011 HK$45000) of direct operating expenses related to investment properties that were not let during the period

51



9 減值準備淨（撥備）

撥回 9 Net (charge)reversal of impairment allowances


6 月 30 日 2011 年


2012 30 June



客戶貸款 Advances to customers

個別評估 Individually assessed

- 新提準備 - new allowances (23089) (2476)- 撥回 - releases 5445 1279- 收回已撇銷賬項 - recoveries 3568 11137

按個別評估貸款減值準

備淨（撥備）撥回 Net (charge)reversal of individually assessed loan

impairment allowances (14076) 9940

組合評估 Collectively assessed - 新提準備 - new allowances (95596) -- 撥回 - releases - 6728

按組合評估貸款減值準備

淨（撥備）撥回 Net (charge)reversal of collectively assessed loan


貸款減值準備淨（撥備）

撥回 Net (charge)reversal of loan impairment

allowances (109672) 16668

持有至到期日證券 Held-to-maturity securities 持有至到期日證券減值準

備淨撥回 Net reversal of impairment allowances on

held-to-maturity securities

- 個別評估 - Individually assessed - 55

減值準備淨（撥備）撥回 Net (charge)reversal of impairment allowances (109672) 16723

52



10 經營支出 10 Operating expenses


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June



人事費用（包括董事酬金） Staff costs (including directorsrsquo emoluments) - 薪酬及其他費用 - salaries and other costs 418928 362639- 退休成本 - pension cost 51658 42973

470586 405612

房產及設備支出（不包括折舊）

Premises and equipment expenses (excluding depreciation)

- 房產租金 - rental of premises 94672 79532- 資訊科技 - information technology 53113 50360- 其他 - others 19321 18373

167106 148265

折舊 Depreciation 78736 54784核數師酬金 Auditorrsquos remuneration

- 審計服務 - audit services 670 650- 非審計服務 - non-audit services 260 304

雷曼兄弟相關產品 Lehman Brothers related products 687 (452177)其他經營支出 Other operating expenses 172358 149372

890403 306810

有關若干雷曼迷債系列的最

終處理方案已於 2011 年 6 月

15 日公佈本集團扣除特惠

款項及對受託人的撥備支出

後從雷曼迷債的相關押品取

回的淨額為港幣

454296000 元並於 2011

年上半年經營支出內沖回

The final resolution of certain series of Lehman Brothers minibonds was announced on 15 June 2011

The net amount of HK$454296000 recovered by the Group from the underlying collateral of the

Lehman Brothers minibonds after deducting the ex gratia payments and provision for trustee expenses

was credited to operating expenses for the first half of 2011

53



11 投資物業出售公平

值調整之淨收益 11 Net gain from disposal offair value adjustments on investment

properties


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June


HK$rsquo000 HK$rsquo000 出售投資物業之淨虧損 Net loss from disposal of investment properties - (209)投資物業公平值調整之淨收

益 Net gain from fair value adjustments on investment

properties 70493 95971 70493 95762

12 出售重估物業器材

及設備之淨虧損 12 Net loss from disposalrevaluation of properties plant and

equipment


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June


HK$rsquo000 HK$rsquo000 出售房產之淨收益 Net gain from disposal of premises - 31出售其他固定資產之淨虧損 Net loss from disposal of other fixed assets (16) (311)重估房產之淨虧損 Net loss from revaluation of premises (1559) (390) (1575) (670)

54



13 稅項 13 Taxation

簡要綜合收益表內之稅項組

成如下 Taxation in the condensed consolidated income statement represents


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June


HK$rsquo000 HK$rsquo000香港利得稅 Hong Kong profits tax

本期稅項 Current tax - 期內計入稅項 - current period taxation 186583 264891- 往期（超額）不足

撥備 - (over)under-provision in prior periods

(226) 149遞延稅項計入 Deferred tax charge 48480 3517 234837 268557 海外稅項 Overseas taxation 13471 46505

248308 315062

香港利得稅乃按照截至

2012 年上半年估計應課稅

溢利依稅率 165（2011年165）提撥準備海

外溢利之稅款按照 2012 年

上半年估計應課稅溢利依

集團經營業務所在國家之

現行稅率計算

Hong Kong profits tax has been provided at the rate of 165 (2011 165) on the estimated assessable profits arising in Hong Kong for the first half of 2012 Taxation on overseas profits has been calculated on the estimated assessable profits for the first half of 2012 at the rates of taxation prevailing in the countries in which the Group operates

55



13 稅項（續） 13 Taxation (continued)

本集團除稅前溢利產生的

實際稅項與根據香港利得

稅率計算的稅項差異如下

The taxation on the Grouprsquos profit before taxation that differs from the theoretical amount that would arise using the taxation rate of Hong Kong is as follows


2012 年

6 月 30 日 2011 年

6 月 30 日


30 June

2012 30 June


HK$rsquo000 HK$rsquo000 除稅前溢利 Profit before taxation 1473473 1860684

按稅率 165（2011

年165）計算的稅項 Calculated at a taxation rate of 165 (2011 165)

243123 307013其他國家稅率差異的影響 Effect of different taxation rates in other countries 12151 17809無需課稅之收入 Income not subject to taxation (24888) (16471)稅務上不可扣減之開支 Expenses not deductible for taxation purposes 13916 4863未確認的稅務虧損 Tax losses not recognised 362 1往期（超額）不足撥備 (Over)under-provision in prior periods (226) 149海外預提稅 Foreign withholding tax 3870 1698

計入稅項 Taxation charge 248308 315062

實際稅率 Effective tax rate 1685 1693

56



14 股息 14 Dividends

半年結算至

2012 年 6 月 30 日半年結算至

2011 年 6 月 30 日 Half-year ended

30 June 2012 Half-year ended 30 June 2011

每股總額每股總額

港幣港幣千元港幣港幣千元

Per share Total Per share Total HK$ HK$rsquo000 HK$ HK$rsquo000

中期股息 Interim dividend 56 392000 - -

15 庫存現金及存放銀行

及其他金融機構的結餘

15 Cash and balances with banks and other financial institutions

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011


HK$rsquo000 HK$rsquo000 庫存現金 Cash 546600 590818存放中央銀行的結餘 Balances with central banks 13745124 10554122存放銀行及其他金融機構

的結餘 Balances with banks and other financial

institutions 11897734

16400091在銀行及其他金融機構一

個月內到期之定期存放 Placements with banks and other financial

institutions maturing within one month 12062988

16449302 38252446 43994333

根據 2012 年 6 月 12 日所召開之會議董事會宣告

派發 2012 年上半年每股普

通股港幣 56 元中期股息

總額為港幣 392000000 元

At a meeting held on 12 June 2012 the Board declared an interim dividend of HK$56 per ordinary share for the first half of 2012 amounting to HK$392000000

57



16 公平值變化計入損益

之金融資產 16 Financial assets at fair value through profit or loss

交易性證券 Trading securities

界定為以公平值變化計入損益之金融資產

Financial assets designated at fair value through profit or loss

總計 Total

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31December

2011

At 30 June 2012

At 31December

2011

At 30 June 2012

At 31December

2011 港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000按公平值入賬 At fair value 債務證券 Debt securities

- 於香港上市 - Listed in Hong Kong - - 258385 247900 258385 247900

- 於海外上市 - Listed outside Hong Kong - - 510843 518359 510843 518359

- - 769228 766259 769228 766259 - 非上市 - Unlisted 4256047 1109280 376275 370222 4632322 1479502

總計 Total 4256047 1109280 1145503 1136481 5401550 2245761

58




之金融資產（續） 16 Financial assets at fair value through profit or loss (continued)

公平值變化計入損益之金融

資產按發行機構之分類如

下

Financial assets at fair value through profit or loss are analysed by type of issuer as follows

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



官方實體 Sovereigns 4255437 1108780公營單位 Public sector entities 610 500銀行及其他金融機構 Banks and other financial institutions 299261 293869公司企業 Corporate entities 846242 842612

5401550 2245761

包括在公平值變化計入損

益之金融資產港幣

610000 元（2011 年 12月 31 日港幣 500000 元）

在《銀行業（資本）規則》

內認可為公營單位

Included financial assets at fair value through profit or loss of HK$610000 (31 December2011 HK$500000) which are eligible to be classified as public sector entities under the Banking (Capital) Rules


資產分類如下 Financial assets at fair value through profit or loss are analysed as follows

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



庫券 Treasury bills 4255437 1108780其他公平值變化計入損益之

金融資產 Other financial assets at fair value through

profit or loss 1146113

1136981

5401550 2245761

59



17 衍生金融工具 17 Derivative financial instruments

本集團訂立下列匯率利

率貴金屬及股份權益相關

的衍生金融工具合約用作

買賣及風險管理之用遠期外匯合約是指於未來

某一日期買或賣外幣的承

諾貨幣及利率掉期是指交換

不同現金流量的承諾掉期

的結果是不同貨幣利率

（如固定利率與浮動利率）

的交換或以上的所有組合

（如交叉貨幣利率掉期）

除某些貨幣掉期合約外該

等交易無需交換本金外匯及股份權益期權是指

期權的賣方（出讓方）爲買

方（持有方）提供在未來某

一特定日期或未來一定時

期內按約定的價格買進（認

購期權）或賣出（認沽期權）

一定數量的金融工具的權

利（而非承諾）的一種協

定考慮到外匯風險期權

的賣方從購買方收取一定

的期權費本集團期權合約

是與對手方在場外協商達

成協定的或透過交易所進

行（如於交易所進行買賣之

期權）

The Group enters into the following exchange rate interest rate precious metal and equity related derivative financial instrument contracts for trading and risk management purposes Currency forwards represent commitments to purchase and sell foreign currency on a future date Currency and interest rate swaps are commitments to exchange one set of cash flows for another Swaps result in an exchange of currencies interest rates (for example fixed rate for floating rate) or a combination of all these (for example cross-currency interest rate swaps) Except for certain currency swap contracts no exchange of principal takes place Foreign currency and equity options are contractual agreements under which the seller (writer) grants the purchaser (holder) the right but not the obligation either to buy (a call option) or sell (a put option) at or by a set date or during a set period a specific amount of the financial instrument at a predetermined price In consideration for the assumption of foreign exchange the seller receives a premium from the purchaser Options are negotiated over-the-counter (ldquoOTCrdquo) between the Group and its counterparty or traded through the stock exchange (for example exchange-traded stock option)

60



17 衍生金融工具（續） 17 Derivative financial instruments (continued)

本集團之衍生金融工具合

約名義合約數額及其公

平值詳列於下表資產負債

表日各類型金融工具的合

約名義合約數額僅顯示

了於資產負債表日之未完

成交易量而若干金融工具

之合約名義合約數額則

提供了一個與簡要綜合資

產負債表內所確認的公平

值資產或負債的對比基

礎但是這並不代表所涉

及的未來的現金流量或當

前的公平值因而也不能反

映本集團所面臨的信用風

險或市場風險隨著與衍生

金融工具合約條款相關的

匯率巿場利率貴金屬價

格或股份權益價格的波

動衍生金融工具的估值可

能產生對銀行有利（資產）

或不利（負債）的影響這

些影響可能在不同期間有

較大的波動

The contractnotional amounts and fair values of derivative financial instruments held by the Group are set out in the following tables The contractnotional amounts of these instruments indicate the volume of transactions outstanding at the balance sheet dates and certain of them provide a basis for comparison with fair value instruments recognised on the condensed consolidated balance sheet However they do not necessarily indicate the amounts of future cash flows involved or the current fair values of the instruments and therefore do not indicate the Grouprsquos exposure to credit or market risks The derivative financial instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in foreign exchange rates market interest rates metal prices or equity prices relative to their terms The aggregate fair values of derivative financial instruments assets and liabilities can fluctuate significantly from time to time

61




下表概述各類衍生金融工

具於 2012 年 6 月 30 日及

2011 年 12 月 31 日之合約

名義合約數額

The following tables summarise the contractnotional amounts of each class of derivative financial instrument as at 30 June 2012 and 31 December 2011

於 2012 年 6 月 30 日 At 30 June 2012

買賣

Trading

不符合採用對沖會計法


accounting 總計

Total 港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000

匯率合約 Exchange rate contracts 即期及遠期 Spot and forwards 36859243 - 36859243掉期 Swaps 16624963 - 16624963外匯交易期權 Foreign currency options

- 買入期權 - Options purchased 15298 - 15298 - 賣出期權 - Options written 15298 - 15298 53514802 - 53514802 利率合約 Interest rate contracts

掉期 Swaps 40671353 720518 41391871 貴金屬合約 Bullion contracts 157520 - 157520 股份權益合約 Equity contracts 3339 - 3339 其他合約 Other contracts 5655 - 5655 總計 Total 94352669 720518 95073187

不符合採用對沖會計法為

符合《銀行業（披露）規則》

要求需分別披露不符合採

用對沖會計法資格但與指

定以公平價值經收益表入

賬的金融工具一併管理的

衍生金融工具

Not qualified for hedge accounting derivative transactions which do not qualify as hedges for accounting purposes but are managed in conjunction with the financial instruments designated at fair value through profit or loss are separately disclosed in compliance with the requirements set out in the Banking (Disclosure) Rules

62




於 2011 年 12 月 31 日 At 31 December 2011

買賣

Trading



accounting 總計



匯率合約 Exchange rate contracts 即期及遠期 Spot and forwards 38126849 - 38126849 掉期 Swaps 12343293 - 12343293 外匯交易期權 Foreign currency options


掉期 Swaps 28510868 721698 29232566 貴金屬合約 Bullion contracts 305772 - 305772 其他合約 Other contracts 5705 - 5705 總計 Total 79326817 721698 80048515

63





具於 2012 年 6 月 30 日及

2011 年 12 月 31 日之公平

值

The following tables summarise the fair values of each class of derivative financial instrument as at 30 June 2012 and 31 December 2011

於 2012 年 6 月 30 日 At 30 June 2012

公平值資產 Fair value assets

公平值負債 Fair value liabilities

買賣

Trading

不符合採用

對沖會計法

Notqualified

for hedge accounting

總計

Total買賣

Trading



accounting 總計



匯率合約 Exchange rate contracts 即期及遠期 Spot and forwards 692142 - 692142 (349447) - (349447)掉期 Swaps 12719 - 12719 (65143) - (65143)外匯交易期權 Foreign currency

options - 買入期權 - Options purchased 71 - 71 - - -

- 賣出期權 - Options written - - - (71) - (71) 704932 - 704932 (414661) - (414661) 利率合約 Interest rate contracts

掉期 Swaps 48752 - 48752 (138109) (83546) (221655) 貴金屬合約 Bullion contracts 2202 - 2202 (1136) - (1136) 股份權益合約 Equity contracts 22 - 22 (22) - (22) 其他合約 Other contracts 4 - 4 - - - 總計 Total 755912 - 755912 (553928) (83546) (637474)

64




於 2011 年 12 月 31 日 At 31 December 2011



買賣

Trading

不符合採用

對沖會計法

Notqualified


總計

Total買賣

Trading



accounting 總計

Total

港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元


匯率合約 Exchange rate contracts 即期及遠期 Spot and forwards 760384 - 760384 (400191) - (400191)掉期 Swaps 10841 - 10841 (57385) - (57385) 外匯交易期權 Foreign currency

options - 買入期權 - Options purchased 72 - 72 - - - - 賣出期權 - Options written - - - (72) - (72)

771297 - 771297 (457648) - (457648) 利率合約 Interest rate contracts

掉期 Swaps 40998 - 40998 (120847) (91464) (212311) 貴金屬合約 Bullion contracts 4095 - 4095 (2659) - (2659) 其他合約 Other contracts 13 - 13 - - - 總計 Total 816403 - 816403 (581154) (91464) (672618)

65




上述衍生金融工具之信貸

風險加權數額如下 The credit risk weighted amounts of the above derivative financial instruments are as follows

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 匯率合約 Exchange rate contracts

遠期 Forwards 345013 619563掉期 Swaps 35765 25906

利率合約 Interest rate contracts 掉期 Swaps 35428 21507

416206 666976

信貸風險加權數額是根據

《銀行業（資本）規則》計

算該數額與交易對手之情

況及各類合約之期限特徵

有關衍生金融工具之公平值或

信貸風險加權數額並沒有

受有效雙邊淨額結算協議

所影響

The credit risk weighted amounts are calculated in accordance with the Banking (Capital) Rules The amounts are dependent upon the status of the counterparty and the maturity characteristics of each type of contract There is no effect of valid bilateral netting agreement on the fair values or the credit risk weighted amounts of the derivative financial instruments

66



18 貸款及其他賬項 18 Advances and other accounts

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 個人貸款 Personal loans and advances 21360076 20863287公司貸款 Corporate loans and advances 103822177 98980942 客戶貸款 Advances to customers 125182253 119844229 貸款減值準備 Loan impairment allowances

- 按個別評估 - Individually assessed (100865) (87615)- 按組合評估 - Collectively assessed (797445) (705132)

124283943 119051482 貿易票據 Trade bills 12125227 13318487銀行及其他金融機構貸款 Advances to banks and other financial institutions - 544256 總計 Total 136409170 132914225

於 2012 年 6 月 30 日客

戶貸款包括應計利息港幣 653519000 元（2011 年

12 月 31 日港幣

533810000 元）於 2012 年 6 月 30 日及

2011 年 12 月 31 日對貿

易票據和銀行及其他金融

機構之貸款並無作出任何

貸款減值準備包括港元客戶貸款港幣

63078753000 元（2011年 12 月 31 日港幣

61458683000 元）及美

元客戶貸款折合港幣

35463496000 元（2011年 12 月 31 日港幣

34285493000 元）

As at 30 June 2012 advances to customers included accrued interest of HK$653519000 (31 December 2011 HK$533810000) As at 30 June 2012 and 31 December 2011 no impairment allowance was made in respect of trade bills and advances to banks and other financial institutions Included advances to customers denominated in HK dollars of HK$63078753000 (31

December 2011 HK$61458683000) and US dollars equivalent to HK$35463496000 (31 December 2011 HK$34285493000)

67



19 證券投資 19 Investment in securities

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 (a) 可供出售證券 (a) Available-for-sale securities

債務證券按公平值入賬

Debt securities at fair value

- 於香港上市 - Listed in Hong Kong 2236559 1402102- 於海外上市 - Listed outside Hong Kong 5591501 4487726 7828060 5889828 - 非上市 - Unlisted 26297995 20822258

34126055 26712086 股份證券按公平值

入賬 Equity securities at fair value

- 非上市 - Unlisted 55310 43899 34181365 26755985 (b) 持有至到期日證券 (b) Held-to-maturity securities

上市按攤銷成本入賬 Listed at amortised cost - 於海外上市 - outside Hong Kong - 121596

非上市按攤銷成本

入賬 Unlisted at amortised cost

2616719

1429104 2616719 1550700 (c) 貸款及應收款 (c) Loans and receivables



-

1875919 總計 Total 36798084 30182604 持有至到期日之上市證券

市值 Market value of listed held-to-maturity securities

-

118147

68



19 證券投資（續） 19 Investment in securities (continued)

證券投資按發行機構之分

類如下 Investment in securities is analysed by type of issuer as follows

於 2012 年 6 月 30 日 At 30 June 2012

可供出售證券

Available- for-sale

securities

持有至到期日證券

Held-to- maturity

securities 總計


HK$rsquo000 HK$rsquo000 HK$rsquo000 官方實體 Sovereigns 12240284 1170071 13410355公營單位 Public sector entities 438114 - 438114銀行及其他金融機構 Banks and other financial institutions 14200704 1327772 15528476公司企業 Corporate entities 7302263 118876 7421139

34181365 2616719 36798084

於 2011 年 12 月 31 日 At 31 December 2011

可供出售證券

Available-for-sale

securities

持有至

到期日證券

Held-to-maturity

securities

貸款及應收款

Loans and

receivables 總計

Total 港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 官方實體 Sovereigns 10439564 980163 - 11419727公營單位 Public sector entities 175915 - - 175915銀行及其他金融機構 Banks and other financial

institutions 11344638 330025 1875919 13550582公司企業 Corporate entities 4795868 240512 - 5036380 26755985 1550700 1875919 30182604

包括在可供出售證券港幣

438114000 元（2011 年

12 月 31 日港幣

175915000 元）在《銀行

業（資本）規則》內認可

為公營單位

Included avaliable-for-sale securities of HK$438114000 (31 December 2011 HK$175915000) which are eligible to be classified as public sector entities under theBanking (Capital) Rules

69




可供出售及持有至到期日

證券分類如下 Available-for-sale and held-to-maturity securities are analysed as follows

可供出售證券


持有至到期日證券 Held-to-maturity

securities

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011

At 30 June 2012

At 31 December 2011

港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 庫券 Treasury bills 11884193 10214915 1170071 980163持有之存款證 Certificates of

deposit held 2406206 1350789 1312463 225695其他 Others 19890966 15190281 134185 344842 34181365 26755985 2616719 1550700

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



於 1 月 1 日 At 1 January 847948 618263增置 Additions - 13105出售 Disposals - (6208)公平值收益 Fair value gains 70493 136553重新分類轉自物業器材

及設備（附註 21） Reclassification from properties plant and

equipment (Note 21) - 84461匯兌差額 Exchange difference (498) 1774 於期年末 At periodyear end 917943 847948

20 投資物業 20 Investment properties

70



21 物業器材及設備 21 Properties plant and equipment

房產

Premises

設備固定設施及裝備


fittings 總計


HK$rsquo000 HK$rsquo000 HK$rsquo000 於 2012 年 1 月 1 日之

賬面淨值 Net book value at

1 January 2012 4231342 352069 4583411增置 Additions 13637 34563 48200出售 Disposals - (90) (90)重估 Revaluation 610447 - 610447本期折舊（附註 10） Depreciation for the period (Note 10) (34917) (43819) (78736)匯兌差額 Exchange difference (2082) (2763) (4845) 於 2012 年 6 月 30 日之


30 June 2012 4818427 339960 5158387 於 2012 年 6 月 30 日 At 30 June 2012 成本或估值 Cost or valuation 4818427 685739 5504166累計折舊 Accumulated depreciation - (345779) (345779) 於 2012 年 6 月 30 日之


30 June 2012 4818427 339960 5158387 於 2011 年 1 月 1 日之


1 January 2011 3196912 242468 3439380增置 Additions 21416 177135 198551出售 Disposals (67242) (13079) (80321)重估 Revaluation 1211838 - 1211838年度折舊 Depreciation for the year (55383) (60058) (115441)重新分類轉至

投資物業（附註 20） Reclassification to investment

properties (Note 20) (84461) - (84461)匯兌差額 Exchange difference 8262 5603 13865 於 2011 年 12 月 31 日之


31 December 2011 4231342 352069 4583411 於 2011 年 12 月 31 日 At 31 December 2011 成本或估值 Cost or valuation 4231342 663934 4895276累計折舊 Accumulated depreciation - (311865) (311865) 於 2011 年 12 月 31 日之


31 December 2011 4231342 352069 4583411

71



21 物業器材及設備

（續） 21 Properties plant and equipment (continued)

上述資產之成本值或估值

分析如下 The analysis of cost or valuation of the above assets is as follows

房產

Premises



fittings 總計


HK$rsquo000 HK$rsquo000 HK$rsquo000 於 2012 年 6 月 30 日 At 30 June 2012 按成本值 At cost - 685739 685739按估值 At valuation 4818427 - 4818427 4818427 685739 5504166 於 2011 年 12 月 31 日 At 31 December 2011 按成本值 At cost - 663934 663934按估值 At valuation 4231342 - 4231342 4231342 663934 4895276

22 其他資產 22 Other assets

於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 收回資產 Repossessed assets 2253 942應收賬項及預付費用 Accounts receivable and prepayments 2145282 818535 2147535 819477

72




之金融負債 23 Financial liabilities at fair value through profit or loss

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 交易性負債 Trading liabilities

- 外匯基金票據及債券

短盤 - Short positions in Exchange Fund Bills and Notes

3996035 1077896

於 2012 年 6 月 30 日並沒

有界定為以公平值變化計

入損益之金融負債（2011年 12 月 31 日無）

As at 30 June 2012 there was no financial liabilities designated at fair value through profit or loss (31 December 2011 Nil)

73



24 客戶存款 24 Deposits from customers

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 往來儲蓄及其他存款 Current savings and other deposit accounts 182655014 174469468 分類 Analysed by 即期存款及往來存款 Demand deposits and current accounts

- 公司 - corporate 11623401 11847789- 個人 - personal 1828826 1628352

13452227 13476141

儲蓄存款 Savings deposits


44172772 43190182 定期短期及通知存款 Time call and notice deposits


125030015 117803145 182655014 174469468

74



25 其他賬項及準備 25 Other accounts and provisions

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 應付股息 Dividend Payable 392000 -其他應付賬項 Other accounts payable 7955808 8334637準備 Provisions 55276 62033 8403084 8396670

26 已抵押資產 26 Assets pledged as security

截至 2012 年 6 月 30 日

本集團之負債港幣

3537228000 元（2011年 12 月 31 日港幣

872412000 元）是以存放

於中央保管系統以利便結

算之資產作抵押此外

本集團沒有通過售後回購

協議的債務證券抵押之負

債（2011 年 12 月 31 日

港幣 617973000 元）本

集團為擔保此等負債而質

押之資產金額為港幣

3550952000 元（2011年 12 月 31 日港幣

1495704000 元）並於

「交易性證券」及「可供

出售證券」內列賬

As at 30 June 2012 liabilities of the Group amounting to HK$3537228000 (31 December 2011 HK$872412000) were secured by assets deposited with central depositories to facilitate settlement operations In addition none of the liabilities of the Group was secured by debt securities related to sale and repurchase arrangements (31 December 2011 HK$617973000) The amount of assets pledged by the Group to secure these liabilities was HK$3550952000 (31 December 2011 HK$1495704000) included in ldquoTrading securitiesrdquo and ldquoAvailable-for-sale securitiesrdquo

75



27 遞延稅項 27 Deferred taxation

遞延稅項是根據香港會計

準則第 12 號「所得稅」計

算就資產負債之稅務基礎

與其在本中期財務資料內

賬面值兩者之暫時性差額

作提撥簡要綜合資產負債表內之

遞延稅項（資產）負債主

要組合以及其在 2012 年

上半年及於截至 2011 年

12 月 31 日止年度之變動

如下

Deferred tax is recognised in respect of the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in this interim financial information in accordance with HKAS 12 ldquoIncome Taxesrdquo The major components of deferred tax (assets)liabilities recorded in the condensed consolidated balance sheet and the movements during the first half of 2012 and the year ended 31 December 2011 are as follows

於 2012 年 6 月 30 日 At 30 June 2012

加速

折舊免稅額

Acceleratedtax

depreciation

物業重估

Propertyrevaluation

虧損

Losses

減值準備 Impairment

allowance

其他暫時性差額

Other temporary

differences 總計



於 2012 年 1 月 1 日

At 1 January 2012 18231 674564 - (146369) (21747) 524679

於收益表內支取（撥回）

（附註 13）

Charged(credited)to income statement (Note 13) 396 3524 (361) 29895 15026 48480

借記其他全面收益 Charged to other comprehensive income - 97184 - - 40691 137875

匯兌差額 Exchange difference 2 (432) - 769 197 536

於 2012 年 6 月 30 日

At 30 June 2012 18629 774840 (361) (115705) 34167 711570

76



27 遞延稅項（續） 27 Deferred taxation (continued)

於 2011 年 12 月 31 日 At 31 December 2011

加速

折舊免稅額

Acceleratedtax

depreciation

物業重估

Propertyrevaluation

虧損

Losses

減值準備 Impairment allowance


Other temporary

differences 總計



於 2011 年 1 月 1 日

At 1 January 2011 12554 495653 - (94197) 6844 420854


Charged(credited) to income statement 5717 4594 - (50220) (16702) (56611)

借記（貸記）其他全面收益

Charged(credited) to other comprehensive income - 172968 - - (11131) 161837

匯兌差額 Exchange difference (40) 1349 - (1952) (758) (1401)

於 2011 年 12 月 31 日

At 31 December 2011 18231 674564 - (146369) (21747) 524679

77




當有法定權利可將現有稅

項資產與現有稅項負債抵

銷而遞延稅項涉及同一財

政機關則可將個別法人的

遞延稅項資產與遞延稅項

負債互相抵銷下列在簡要

綜合資產負債表內列賬之

金額已計入適當抵銷

Deferred tax assets and liabilities are offset on an individual entity basis when there is a legal right to set off current tax assets against current tax liabilities and when the deferred taxation relates to the same authority The following amounts determined after appropriate offsetting are shown in the condensed consolidated balance sheet

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 遞延稅項資產 Deferred tax assets (1011) (57714)遞延稅項負債 Deferred tax liabilities 712581 582393

711570 524679

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 遞延稅項資產（超過 12 個

月後收回） Deferred tax assets to be recovered after more than

twelve months (3273) (40052)遞延稅項負債（超過 12 個

月後支付） Deferred tax liabilities to be settled after more than

twelve months 677729 583494 674456 543442

於 2012 年 6 月 30 日本

集團因扣減機會不大而未

確認遞延稅項資產之稅務

虧損為港幣 5422000 元

（2011 年 12 月 31 日港

幣 5314000 元）其中

按照現行稅例沒有作廢

期限的有關稅務虧損為港

幣 133000 元（2011 年

12 月 31 日港幣 116000元）於五年內作廢的有關

稅務虧損為港幣

5289000 元（2011 年 12月 31 日港幣 5198000元）

As at 30 June 2012 the Group has not recognised deferred tax assets in respect of tax losses amounting to HK$5422000 (31 December 2011 HK$5314000) which is considered unlikely to be utilised Of this amount HK$133000 (31 December 2011 HK$116000) do not expire and HK$5289000 (31 December 2011 HK$5198000) is scheduled to expire within five years under the current tax legislation

78



28 股本 28 Share capital

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 法定 Authorised 7000000 股每股面值

港幣 100 元之普通股 7000000 ordinary shares

of HK$100 each 700000 700000

已發行及繳足 Issued and fully paid 7000000 股每股面值


of HK$100 each 700000 700000

29 儲備 29 Reserves

本集團本期及往期的儲備

金額及變動情況載於第 4至 5 頁之簡要綜合權益變

動表

The Grouprsquos reserves and the movements therein for the current and prior periods are presented in the condensed consolidated statement of changes in equity on pages 4 to 5

79



30 簡要綜合現金流量表

附註 30 Notes to condensed consolidated cash flow statement

(a) 經營溢利與除稅前經營現金之流入對賬



2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June


HK$rsquo000 HK$rsquo000 經營溢利 Operating profit 1404555 1765592折舊 Depreciation 78736 54784減值準備淨撥備（撥回） Net charge(reversal) of impairment allowances 109672 (16723)折現減值準備回撥 Unwind of discount on impairment allowances (3069) (417)已撇銷之貸款（扣除收回款額）

Advances written off net of recoveries 2832 (13894)

原到期日超過 3 個月之存放銀行及其他金融

機構的結餘之變動

Change in balances with banks and other financial institutions with original maturity over three months 1827799 (1747447)

原到期日超過 3 個月之在銀行及其他金融機

構之定期存放之變動

Change in placements with banks and other financial institutions with original maturity over three months 930644 (1884105)

公平值變化計入損益之

金融資產之變動 Change in financial assets at fair value through

profit or loss (396543) (86730)衍生金融工具之變動 Change in derivative financial instruments 25347 (210195)貸款及其他賬項之變動 Change in advances and other accounts (3600508) (4871266)證券投資之變動 Change in investment in securities (6605200) 120140其他資產之變動 Change in other assets (1328058) (3117366)銀行及其他金融機構之

存款及結餘之變動 Change in deposits and balances from banks

and other financial institutions (1880589) 1627778公平值變化計入損益之

金融負債之變動 Change in financial liabilities at fair value

through profit or loss 2918139 (242553)客戶存款之變動 Change in deposits from customers 8185546 22056594其他賬項及準備之變動 Change in other accounts and provisions (385586) 2377639匯率變動之影響 Effect of changes in exchange rates 170306 (479656) 除稅前經營現金之流入 Operating cash inflow before taxation 1454023 15332175 經營業務之現金流量中

包括 Cash flows from operating activities included

ndash 已收利息 ndash Interest received 3549152 2131581

ndash 已付利息 ndash Interest paid (1746042) (705927)ndash 已收股息 ndash Dividend received 4085 3358

80




附註（續） 30 Notes to condensed consolidated cash flow statement (continued)

(b) 現金及等同現金項目

結存分析 (b) Analysis of the balances of cash and cash equivalents

於 2012 年

6 月 30 日

於 2011 年

6 月 30 日

At 30 June 2012

At 30 June 2011


HK$rsquo000 HK$rsquo000 庫存現金及原到期日

在 3 個月內之存放

銀行及其他金融機

構的結餘

Cash and balances with banks and other financial institutions with original maturity within three months

28041307 31671165原到期日在 3 個月內之

在銀行及其他金融

機構之定期存放

Placements with banks and other financial institutions with original maturity within three months 5810939 3591412

原到期日在 3 個月內之

庫券 Treasury bills with original maturity within three

months 8008463 4570863原到期日在 3 個月內之

持有之存款證 Certificates of deposit held with original maturity

within three months 925520 - 42786229 39833440

期內上述分析的基準及

呈報方式已作完善比較

數字因而相應作出修訂

匯率變動對現金及等同現

金項目的影響亦一併於簡

要綜合現金流量表中獨立

列示

During the period the basis and presentation of the above analyses have been refined and the comparative amounts have been revised accordingly The effect of exchange rate changes on cash and cash equivalents has also been separately presented on the condensed consolidated cash flow statement

81



31 或然負債及承擔 31 Contingent liabilities and commitments

或然負債及承擔中每項重

要類別之合約數額及總信

貸風險加權數額概述如下

The following is a summary of the contractual amounts of each significant class of contingentliability and commitment and the aggregate credit risk weighted amount

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011


HK$rsquo000 HK$rsquo000 直接信貸替代項目 Direct credit substitutes 7567575 7190596與交易有關之或然負債 Transaction-related contingencies 1567464 1683929與貿易有關之或然負債 Trade-related contingencies 8114923 8694396不需事先通知的無條件撤

銷之承諾 Commitments that are unconditionally cancellable

without prior notice 42671886 43938343其他承擔原到期日為 Other commitments with an original maturity of

- 1 年或以下 - up to one year 2010516 1486232- 1 年以上 - over one year 5071045 5078651

67003409 68072147

信貸風險加權數額 Credit risk weighted amount 10013245 9276672


《銀行業（資本）規則》

計算該數額與交易對手

之情況及各類合約之期限

特徵有關

The credit risk weighted amount is calculated in accordance with the Banking (Capital)Rules The amount is dependent upon the status of the counterparty and the maturitycharacteristics of each type of contract

82



32 資本承擔 32 Capital commitments

本集團未於本中期財務資

料中撥備之資本承擔金額

如下

The Group has the following outstanding capital commitments not provided for in this interim financial information

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



已批准及簽約但未撥備 Authorised and contracted for but not provided for 19126 12106已批准但未簽約 Authorised but not contracted for 23 3255

19149 15361

以上資本承擔大部分為將購

入之電腦硬件及軟件及本

集團之樓宇裝修工程之承

擔

The above capital commitments mainly relate to commitments to purchase computer equipment and software and to renovate the Grouprsquos premises

33 經營租賃承擔 33 Operating lease commitments

(a) 作為承租人 (a) As lessee

根據不可撤銷之經營

租賃合約下列為本集

團未來有關租賃承擔

所須支付之最低租金

The Group has commitments to make the following future minimum lease payments under non-cancellable operating leases

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



土地及樓宇 Land and buildings - 不超過 1 年 - not later than one year 207808 177452- 1 年以上至 5 年內 - later than one year but not later than five

years 557309 468675- 5 年後 - later than five years 336755 244365

1101872 890492 其他承擔 Other commitments

- 不超過 1 年 - not later than one year 56 56- 1 年以上至 5 年內 - later than one year but not later than five

years 61 65 1101989 890613

83



33 經營租賃承擔（續） 33 Operating lease commitments (continued)

(b) 作為出租人 (b) As lessor

根據不可撤銷之經營租

賃合約下列為本集團與

租客簽訂合約之未來有

關租賃之最低應收租金

The Group has contracted with tenants for the following future minimum leasereceivables under non-cancellable operating leases

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




years 30088 32416- 5 年後 - later than five years 2012 -

74731 72393

本集團以經營租賃形式

租出投資物業（附註

20）租賃年期通常由 1年至 3 年租約條款一

般要求租客提交保證

金所有租約並不包括或

有租金

The Group leases its investment properties (Note 20) under operating lease arrangements with leases typically for a period from one to three years The terms of the leases generally require the tenants to pay security deposits None of the leases include contingent rentals

84



34 分類報告 34 Segmental reporting

(a) 按業務劃分 (a) By class of business 現時集團業務共分為四個

業務分類它們分別是個人

銀行業務企業銀行業務

財資業務和投資業務業務

線的分類是基於不同客戶

層及產品種類這與集團推

行的 RPC（客戶關係產

品管理及分銷渠道）管理模

型是一致的個人銀行和企業銀行業務

線均會提供全面的銀行服

務包括各類存款透支

貸款信用卡與貿易相關

的產品及其他信貸服務投

資及保險產品外幣業務及

衍生產品等個人銀行業務

線主要是服務個人客戶而

企業銀行業務線主要是服

務公司客戶至於財資業務

線除了自營買賣外還負

責管理集團的流動資金利

率和外匯敞口

Currently four business segments are identified which are Personal Banking Corporate Banking Treasury and Investment The classification of the Grouprsquos operating segments is based on customer segment and product type which is aligned with the RPC (relationship product and channel) management model of the Group Both Personal Banking and Corporate Banking provide general banking services including various deposit products overdrafts loans credit cards trade related products and other credit facilities investment and insurance products and foreign currency and derivative products etc Personal Banking mainly serves retail customers while Corporate Banking mainly deals with corporate customers Treasury manages the funding and liquidity and the interest rate and foreign exchange positions of the Group in addition to proprietary trades

85



34 分類報告（續） 34 Segmental reporting (continued)

(a) 按業務劃分（續） (a) By class of business (continued)

投資包括本集團的房地產

和支援單位所使用的設

備對於佔用本集團的物

業其他業務線需要按照每

平方呎的市場價格向投資

業務線支付費用由本集團

附屬公司－南洋商業銀行

（中國）有限公司之資本金

所產生及已於收益賬確認

的貨幣換算差額已包括於

此業務分類內「其他」為集團其他營運及

主要包括有關本集團整體

但與其餘四個業務線無關

的項目本集團的主要收入來源為

利息收入並且高層管理人

員主要以淨利息收入來評

估各業務分類的業績因此

所有業務分類的利息收入

及支出以淨額列示業務線的資產負債收

入支出經營成果及資本

性支出是基於集團會計準

則進行計量分類資料包括

直接屬於該業務線的績效

以及可以合理攤分至該業

務線的績效跨業務線資金

的定價按集團內部資金轉

移價格機制釐定主要是以

市場利率為基準並考慮有

關產品的特性

Investment includes bank premises and equipment used by supporting units Charges are paid to this segment from other business segments based on market rates per square foot for their occupation of the Grouprsquos premises The exchange difference arising from capital of our subsidiary Nanyang Commercial Bank (China) Limited that is recognised in its income statement is also included in this class ldquoOthersrdquo refers to other group operations and mainly comprises of items related to the Group as a whole and totally independent of the other four business segments As the Grouprsquos major revenue is derived from interest and the senior management relies primarily on net interest income to assess the performance of the segment interest income and expense for all reportable segments are presented on a net basis Measurement of segment assets liabilities income expenses results and capital expenditure is based on the Grouprsquos accounting policies The segment information includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis Inter-segment funding is charged according to the internal funds transfer pricing mechanism of the Group which is primarily based on market rates with the consideration of specific features of the product

86





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment 其他

Others 小計

Subtotal 合併抵銷

Eliminations綜合

Consolidated 港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 半年結算至 2012 年 6 月 30 日

Half-year ended 30 June 2012

淨利息（支出）收入 Net interest (expense)income - 外來 - external (363400) 1050960 1251615 2 - 1939177 - 1939177 - 跨業務 - inter-segment 727750 (118735) (609015) - - - - - 364350 932225 642600 2 - 1939177 - 1939177 淨服務費及佣金收入

（支出） Net fee and commission

income(expense) 152393 214147 8944 53 (1486) 374051 - 374051 淨交易性收益（虧損） Net trading gain(loss) 14192 43994 4992 (14034) 253 49397 - 49397 界定為以公平值變化計

入損益之金融工具淨

收益

Net gain on financial instruments designated at fair value through profit or loss - - 15836 - - 15836 - 15836

其他金融資產之淨收益 Net gain on other financial assets - 1796 575 463 - 2834 - 2834

其他經營收入 Other operating income 1 - - 71698 521 72220 (48885) 23335

提取減值準備前之淨經

營收入（支出） Net operating

income(expense) before impairment allowances 530936 1192162 672947 58182 (712) 2453515 (48885) 2404630

減值準備淨撥備 Net charge of impairment allowances (2185) (107487) - - - (109672) - (109672)

淨經營收入（支出） Net operating

income(expense) 528751 1084675 672947 58182 (712) 2343843 (48885) 2294958 經營支出 Operating expenses (287218) (394785) (195934) (36863) (24488) (939288) 48885 (890403)

經營溢利（虧損） Operating profit(loss) 241533 689890 477013 21319 (25200) 1404555 - 1404555投資物業出售公平值

調整之淨收益 Net gain from disposal offair

value adjustments on investment properties - - - 70493 - 70493 - 70493

出售重估物業器材

及設備之淨虧損 Net loss from disposal

revaluation of properties plant and equipment - - - (1575) - (1575) - (1575)

除稅前溢利（虧損）

Profit(loss) before taxation 241533 689890 477013 90237 (25200) 1473473 - 1473473

87





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 於 2012 年 6 月 30 日 At 30 June 2012 資產 Assets 分部資產 Segment assets 23582148 115100749 105573848 6156754 99326 250512825 - 250512825 負債 Liabilities 分部負債 Segment liabilities 92356941 96950650 31752902 398368 1448567 222907428 - 222907428 半年結算至 2012 年 6 月 30 日


其他資料 Other information 資本性支出 Capital expenditure - - - 48200 - 48200 - 48200折舊 Depreciation 10429 18834 12665 34917 1891 78736 - 78736 證券攤銷 Amortisation of securities - - 107943 - - 107943 - 107943

88





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合




淨利息（支出）收入 Net interest (expense)income - 外來 - external (37653) 881260 657986 2 18049 1519644 - 1519644- 跨業務 - inter-segment 276380 (87494) (188886) - - - - - 238727 793766 469100 2 18049 1519644 - 1519644 淨服務費及佣金收入


income(expense) 166721 246678 11274 1027 (1355) 424345 - 424345淨交易性收益（虧損） Net trading gain(loss) 32285 46094 (19542) (30361) (12) 28464 - 28464界定為以公平值變化計


收益


其他金融資產之淨收益 Net gain on other financial assets - - 53559 - - 53559 - 53559

其他經營收入 Other operating income 1 1 - 60915 6315 67232 (45977) 21255 提取減值準備前之淨經

營收入 Net operating income before

impairment allowances 437734 1086539 522803 31583 22997 2101656 (45977) 2055679減值準備淨（撥備）

撥回 Net (charge)reversal of

impairment allowances (16123) 32791 55 - - 16723 - 16723 淨經營收入 Net operating income 421611 1119330 522858 31583 22997 2118379 (45977) 2072402 經營支出 Operating expenses (281527) (384530) (97572) (24486) 435328 (352787) 45977 (306810) 經營溢利 Operating profit 140084 734800 425286 7097 458325 1765592 - 1765592投資物業出售公平值




及設備之淨收益

（虧損）


除稅前溢利

Profit before taxation 140084 734824 425286 102165 458325 1860684 - 1860684

89





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合


HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 於 2011 年 12 月 31

日 At 31 December 2011

資產 Assets 分部資產 Segment assets 22429651 112100397 99468390 5498528 134490 239631456 - 239631456 負債 Liabilities 分部負債 Segment liabilities 85905585 96627683 29648616 5741 1307635 213495260 - 213495260 半年結算至 2011 年 6 月 30 日


其他資料 Other information 資本性支出 Capital expenditure - - - 57604 - 57604 - 57604折舊 Depreciation 8708 14577 4515 24616 2368 54784 - 54784證券攤銷 Amortisation of securities - - 42831 - - 42831 - 42831

(b) 按地理區域劃分 (b) By geographical area

以下資料是根據附屬

公司的主要營業地點

分類如屬本銀行之資

料則依據負責申報業

績或將資產記賬之分

行所在地分類

The following information is presented based on the principal places of operations of the subsidiaries or in the case of the Bank on the locations of the branches responsible for reporting the results or booking the assets

半年結算至 2012 年 6 月 30 日半年結算至 2011 年 6 月 30 日 Half-year ended 30 June 2012 Half-year ended 30 June 2011

提取減值準備前

之淨經營收入



除稅前

溢利

Profit before

taxation

提取減值準備前之淨經營收入 Net operating

income before impairment allowances

除稅前

溢利

Profit before

taxation 港幣千元港幣千元港幣千元港幣千元

HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 香港 Hong Kong 1652378 1287150 1489981 1612348中國內地 Mainland China 734976 173941 553672 244095其他 Others 17276 12382 12026 4241 合計 Total 2404630 1473473 2055679 1860684

於 2011 年下半年上述

分析的基準已作完善比

較數字因而相應重新分

類

During the second half of 2011 the basis of the above analyses has been refined and the comparative amounts have been reclassified accordingly

90




(b) 按地理區域劃分（續） (b) By geographical area (continued)

於 2012 年 6 月 30 日 At 30 June 2012

總資產

Total assets

總負債

Total liabilities

非流動資產 Non-current

assets

或然負債和承擔


andcommitments



於 2011 年 12 月 31 日 At 31 December 2011

總資產

Total assets

總負債

Total liabilities


assets



andcommitments



91



35 主要之有關連人士交

易 35 Significant related party transactions

中華人民共和國國務院通

過中國投資有限責任公司

（「中投」）其全資附屬公

司中央匯金投資有限責任

公司（「匯金」）及匯金擁有

控制權益之中國銀行對本

集團實行控制

The Group is subject to the control of the State Council of the PRC Government through China Investment Corporation (ldquoCICrdquo) its wholly-owned subsidiary Central Huijin Investment Ltd (ldquoCentral Huijinrdquo) and BOC in which Central Huijin has controlling equity interests

(a) 與母公司及母公司

控制之其他公司進

行的交易


母公司的基本資料

本集團之直接控股公

司是中銀香港而中銀

香港是受中國銀行控

制匯金是中國銀行之

主要控股公司亦是中

投的全資附屬公司而

中投是從事外匯資金

投資管理業務的國有

獨資公司匯金於某些內地企業

均擁有控制權益本集團在正常業務中

與該等企業進行銀行

業務交易包括貸款

證券投資及貨幣市場

交易

General information of the parent companies The Grouprsquos immediate holding company is BOCHK which is controlled by BOC Central Huijin is the controlling entity of BOC and it is a wholly-owned subsidiary of CIC which is a wholly state-owned company engaging in foreign currency investment management Central Huijin has controlling equity interests in certain other entities in the PRC The Group enters into banking transactions with these entities in the normal course of business which include loans investment securities and money market transactions

92




易（續） 35 Significant related party transactions (continued)

(b) 與政府機構代理機

構附屬機構及其他

國有控制實體的交

易


中華人民共和國國務

院通過中投及匯金對

本集團實施控制而中

華人民共和國國務院

亦通過政府機構代理

機構附屬機構及其他

國有控制實體直接或

間接控制大量其他實

體本集團按一般商業

條款與政府機構代理


國有控制實體之間進

行常規銀行業務交易

這些交易包括但不局

限於下列各項 - 借貸提供貸項及擔

保和接受存款 - 銀行同業之存放及結

餘 - 售賣購買包銷及

贖回由其他國有控制

實體所發行之債券

- 提供外匯匯款及相

關投資服務 - 提供信託業務及 - 購買公共事業交通

工具電信及郵政服

務

The Group is subject to the control of the State Council of the PRC Government through CIC and Central Huijin which also directly and indirectly controls a significant number of entities through its government authorities agencies affiliates and other state controlled entities The Group enters into banking transactions with government authorities agencies affiliates and other state controlled entities in the normal course of business at commercial terms These transactions include but are not limited to the following - lending provision of credits and guarantees and deposit taking - inter-bank balance taking and placing - sales purchase underwriting and redemption of bonds issued by other state controlled entities

- rendering of foreign exchange remittance and investment related services - provision of fiduciary activities and - purchase of utilities transport telecommunication and postage services

93





(c) 與其他有關連人士

在正常業務範圍內

進行之交易摘要


與本集團之其他有關

連人士達成之有關連

人士交易所產生之總

收入支出及結餘概

述如下

The aggregate incomeexpenses and balances arising from related party transactions with other related parties of the Group are summarised as follows

半年結算至 2012 年

6 月 30 日

半年結算至

2011 年

6 月 30 日


2012


2011 其他有關連人士

Other related parties

其他有關連人士

Other relatedparties


HK$rsquo000 HK$rsquo000收益表項目 Income statement items

利息收入 Interest income 5209 3644利息支出 Interest expense (46723) (22791)已付保險費用已收

保險佣金（淨額）

Insurance premium paidinsurance commission received (net) 2143 2819

已付應付行政服務

費用 Administrative services fees paidpayable

(7261) (7541)已收應收租金 Rental fees receivedreceivable 9065 8638已付應付證券經紀

佣金（淨額） Securities brokerage commission

paidpayable (net) (7061) (10825)已付應付租金 Rental paidpayable (148) (148)已收基金銷售佣金 Funds selling commission received 3477 3721其他支出 Other expense (6952) (1851)其他佣金收入 Other commission income 6008 3292其他費用及佣金支出 Other fees and commission expense (1903) (1460)股息收入 Dividend income 3110 2545淨交易性收益 Net trading gains (95) (38)

94








（續）

(c) Summary of transactions entered into during the ordinary course of business with other related parties (continued)

於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011

其他有關連人士 Other related

parties




HK$rsquo000 HK$rsquo000 資產負債表項目 Balance sheet items

庫存現金及在銀行及其他金融機構的結

餘

Cash and balances with banks and other financial institutions

1979 282778衍生金融工具資產 Derivative financial instruments assets 557 1348貸款及其他賬項 Advances and other accounts 398877 1346438證券投資 Investment in securities 53472 41490其他資產 Other assets 177489 45034銀行及其他金融機構

之存款及結餘 Deposits and balances of banks and

other financial institutions (392784) (792681)客戶存款 Deposits from customers (8705581) (7776861)其他賬項及準備 Other accounts and provisions (144017) (80834)

95





(d) 主要高層人員 (d) Key management personnel

主要高層人員是指某

些能直接或間接擁有

權力及責任來計劃指

導及掌管集團業務之

人士包括董事及高層

管理人員本集團在正

常業務中會接受主要

高層人員存款及向其

提供貸款及信貸融

資於期內及往期本

集團並沒有與本銀行

及其控股公司之主要

高層人員或其有關連

人士進行重大交易

主要高層人員之薪酬

如下

Key management are those persons having authority and responsibility for planning directing and controlling the activities of the Group directly or indirectly including directors and senior management The Group accepts deposits from and grants loans and credit facilities to key management personnel in the ordinary course of business During both the current and prior periods no material transaction was conducted with key management personnel of the Bank its holding companies and parties related to them The key management compensation is detailed as follows


2012 年

6 月 30 日

2011 年


201230 June



薪酬及其他短期員工福利

Salaries and other short-term employee benefits 20776 16683

退休福利 Post-employment benefits 820 817 21596 17500

96



36 貨幣風險 36 Currency concentrations

下表列出因自營交易非

自營交易及結構性倉盤而

產生之主要外幣風險額

並參照金管局報表「認可

機構持有外匯情況」的填

報指示而編製

The following is a summary of the major foreign currency exposures arising from trading non-trading and structural positions and is prepared with reference to the Completion Instructions for the prudential return ldquoForeign Currency Position of an Authorized Institutionrdquo issued by the HKMA

於 2012 年 6 月 30 日 At 30 June 2012 港幣千元等值 Equivalent in thousand of HK$

美元

US Dollars人民幣

Renminbi

其他外幣 Others foreign

currencies

外幣總計

Totalforeign

currencies 現貨資產 Spot assets 60820875 83358323 10685170 154864368 現貨負債 Spot liabilities (51578721) (82112093) (9153358) (142844172)遠期買入 Forward purchases 23067601 19166394 6163970 48397965 遠期賣出 Forward sales (30559019) (20591557) (7671340) (58821916)

長（短）盤淨額 Net long(short) position 1750736 (178933) 24442 1596245 結構性倉盤淨額 Net structural position 321223 7794151 - 8115374

於 2011 年 12 月 31 日 At 31 December 2011 港幣千元等值 Equivalent in thousand of HK$

美元

US Dollars人民幣

Renminbi


currencies

外幣總計

Totalforeign


長（短）盤淨額 Net long(short) position 831844 (204314) (4177) 623353 結構性倉盤淨額 Net structural position 315414 4712402 - 5027816

97



37 跨國債權 37 Cross-border claims

跨國債權資料顯示對海外

交易對手之最終風險之地

區分佈並會按照交易對手

所在地計入任何風險轉

移一般而言假如債務之

擔保人所處國家與借貸人

不同或債務由某銀行之海

外分行作出而其總公司位

處另一國家則會確認跨國

債權風險之轉移佔總跨國

債權 10或以上之地區方

作分析及披露如下

The information on cross-border claims discloses exposures to foreign counterparties on which the ultimate risk lies and is derived according to the location of the counterparties after taking into account any transfer of risk In general such transfer of risk takes place if the claims are guaranteed by a party in a country which is different from that of the counterparty or if the claims are on an overseas branch of a bank whose head office is located in another country Only regions constituting 10 or more of the aggregate cross-border claims are analysed by geographical areas and disclosed as follows

於 2012 年 6 月 30 日 At 30 June 2012 公營單位銀行 Public sector 其他總計

Banks entities Others Total 港幣千元港幣千元港幣千元港幣千元


亞洲不包括香港 Asia other than Hong Kong

- 中國內地 - Mainland China 29225751 505875 35219642 64951268- 其他 - Others 12819076 2161526 2238495 17219097

42044827 2667401 37458137 82170365

98



37 跨國債權（續） 37 Cross-border claims (continued)

於 2011 年 12 月 31 日 At 31 December 2011 公營單位銀行 Public sector 其他總計



亞洲不包括香港 Asia other than

Hong Kong - 中國內地 - Mainland China 32081508 309716 31847007 64238231- 其他 - Others 8475580 - 3011115 11486695

40557088 309716 34858122 75724926

在中國內地的誇國債權並

無《銀行業（資本）規則》

內認可的公營單位（2011年 12 月 31 日無）

None of cross-border claims on Mainland China is eligible to be classified as public sector entities under the Banking (Capital) Rules (31 December 2011 Nil)

99



38 非銀行的中國內地風險承擔


對非銀行交易對手的內地相

關風險承擔之分析乃參照金

管局有關報表所列之機構類

別及直接風險之類別以分

類此報表計及本銀行及中國

內地附屬公司之內地風險承

擔

The analysis of non-bank Mainland China exposures is based on the categories of non-bank counterparties and the type of direct exposures with reference to the HKMA return for non-bank Mainland China exposures which includes the Mainland China exposures extended by the Bank and its subsidiary in Mainland China

於 2012 年 6 月 30 日 At 30 June 2012 資產負債

表內的

風險承擔

On-balancesheet

exposure

資產負債表外的

風險承擔 Off-balance

sheetexposure

總風險承擔

Totalexposure

個別評估

之減值準備




HK$rsquo000 HK$rsquo000 HK$rsquo000 HK$rsquo000 中國內地機構 Mainland China entities 29481754 1893488 31375242 -中國境外公司及個人用於境內

的信貸 Companies and individuals outside

Mainland China where the credit is granted for use in Mainland China 4447214 2125196 6572410 1541

其他非銀行的中國內地風險承擔

Other non-bank Mainland China exposures 9482760 377615 9860375 9062

43411728 4396299 47808027 10603

本行內地附屬公司之風險承擔 Exposures incurred by the Bankrsquos mainland subsidiary 44094814 14348347 58443161 80974

於 2011 年 12 月 31 日 At 31 December 2011 資產負債

表內的

風險承擔

On-balancesheet

exposure



sheetexposure

總風險承擔

Totalexposure

個別評估

之減值準備









37993178 4289418 42282596 4257

本行內地附屬公司之風險承擔 Exposures incurred by the Bankrsquos

mainland subsidiary 39466478 15136892 54603370 75963

期內上述分析的基準已作完

善比較數字因而相應重新分

類

During the period the basis of the above analyses has been refined and the comparative amounts have been reclassified accordingly

100



39 符合香港會計準則第

34 號 39 Compliance with HKAS 34

截至 2012 年上半年止的

未經審核中期財務資料符

合香港會計師公會所頒佈

之香港會計準則第 34 號

「中期財務報告」之要求

The unaudited interim financial information for the first half of 2012 complies with HKAS 34 ldquoInterim Financial Reportingrdquo issued by the HKICPA

40 法定賬目 40 Statutory accounts

此中期業績報告所載為未

經審核資料並不構成法

定賬目截至 2011 年 12月 31 日止之法定賬目已

送呈公司註冊處及金管

局該法定賬目載有於

2012 年 3 月 23 日發出之

無保留意見的核數師報

告

The information in this interim report is unaudited and does not constitute statutory accounts The statutory accounts for the year ended 31 December 2011 have been delivered to the Registrar of Companies and the HKMA The auditor expressed an unqualified opinion on those statutory accounts in their report dated 23 March 2012

101

獨立審閱報告

中期財務資料的審閱報告

致南洋商業銀行有限公司董事會（於香港註冊成立的有限公司）

引言

本核數師（以下簡稱「我們」）已審閱列載於第 1 至 100 頁的中期財務資料此中期財務資料包括南洋商業銀行有限公司（「貴銀行」）

及其子公司（合稱「貴集團」）於二零一二年六月三十日的簡要綜合資產負債表與截至該日止六個月期間的相關簡要綜合收益表簡要

綜合全面收益表簡要綜合權益變動表和簡要綜合現金流量表以及主要會計政策概要和其他附註解釋貴銀行董事須負責根據香港會

計準則第 34 號「中期財務報告」編製及列報該等中期財務資料我們的責任是根據我們的審閱對該等中期財務資料作出結論並按照

委聘之條款僅向整體董事會報告除此之外本報告別無其他目的我們不會就本報告的內容向任何其他人士負上或承擔任何責任

審閱範圍

我們已根據香港會計師公會頒佈的香港審閱準則第 2410 號「由實體的獨立核數師執行中期財務資料審閱」進行審閱審閱中期財務資

料包括主要向負責財務和會計事務的人員作出查詢及應用分析性和其他審閱程序審閱的範圍遠較根據香港審計準則進行審核的範圍

為小故不能令我們可保證我們將知悉在審核中可能被發現的所有重大事項因此我們不會發表審核意見

結論

按照我們的審閱我們並無發現任何事項令我們相信中期財務資料在各重大方面未有根據香港會計準則第 34 號「中期財務報告」編

製

羅兵咸永道會計師事務所

執業會計師

香港2012 年 8 月 15 日

102

INDEPENDENT REVIEW REPORT

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

TO THE BOARD OF DIRECTORS OF Nanyang Commercial Bank Limited (incorporated in Hong Kong with limited liability) Introduction

We have reviewed the interim financial information set out on pages 1 to 100 which comprises the condensed consolidated balance

sheet of Nanyang Commercial Bank Limited (the ldquoBankrdquo) and its subsidiaries (together the ldquoGrouprdquo) as at 30 June 2012 and the

related condensed consolidated income statement the condensed consolidated statement of comprehensive income the condensed

consolidated statement of changes in equity and the condensed consolidated cash flow statement for the six-month period then

ended and a summary of significant accounting policies and other explanatory notes The directors of the Bank are responsible for

the preparation and presentation of this interim financial information in accordance with Hong Kong Accounting Standard 34 ldquoInterim

Financial Reportingrdquo Our responsibility is to express a conclusion on this interim financial information based on our review and to

report our conclusion solely to you as a body in accordance with our agreed terms of engagement and for no other purpose We do


Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 ldquoReview of Interim Financial

Information Performed by the Independent Auditor of the Entityrdquo issued by the Hong Kong Institute of Certified Public Accountants A

review of interim financial information consists of making inquiries primarily of persons responsible for financial and accounting

matters and applying analytical and other review procedures A review is substantially less in scope than an audit conducted in

accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become

aware of all significant matters that might be identified in an audit Accordingly we do not express an audit opinion

Conclusion

Based on our review nothing has come to our attention that causes us to believe that the interim financial information is not prepared

in all material respects in accordance with Hong Kong Accounting Standard 34 ldquoInterim Financial Reportingrdquo



Hong Kong 15 August 2012

103

其他資料 Additional Information 1 董事會 1 Board of Directors

於 2012 年 8 月 15 日本銀

行之董事會成員為周載群先

生（董事長）方紅光先生（副

董事長兼行政總裁）高迎欣

先生卓成文先生

李久仲

先生朱燕來女士

陳細明

先生（於 2012 年 5 月 22 日

獲委任）張信剛先生藍鴻

震先生及劉漢銓先生非執行董事

獨立非執行董事

As at 15 August 2012 the Board of Directors of the Bank comprises Mr ZHOU Zaiqun (Chairman) Mr FANG Hongguang (Vice Chairman and Chief Executive) Mr GAO Yingxin Mr ZHUO Chengwen Mr LI Jiuzhong Ms ZHU Yanlai Mr CHAN Sai Ming (appointed on 22 May 2012) Mr CHANG Hsin Kang Mr LAN Hong Tsung David and Mr LAU Hon Chuen Non-executive Director

Independent Non-executive Director

104

其他資料（續） Additional Information (continued) 2 本銀行之附屬公司 2 Subsidiaries of the Bank

本銀行附屬公司的具體情況

如下 The particulars of our subsidiaries are as follows

本銀行持有股權比例 Equity interest

held by the Bank 公司名稱 Name

註冊營業地點 Place of incorporation operation

已發行及已繳足股本 Particulars of issued and paid up ordinary share capital

直接持有 Directly

主要業務 Principal activities

南洋商業銀行（中國）有限公司 Nanyang Commercial Bank

(China) Limited

中國 The Peoplersquos Republic

of China

註冊資本人民幣 6500000000 元


100

銀行業務 Banking business

南洋商業銀行信託有限公司 Nanyang Commercial Bank

Trustee Limited

香港 Hong Kong

300000 普通股每股面值港幣 10 元

300000 shares of HK$10 each

100

信託服務 Trustee services

廣利南投資管理有限公司 Kwong Li Nam Investment

Agency Limited

香港 Hong Kong



100

投資代理 Investment agency

南洋商業銀行（代理人）有限公司 Nanyang Commercial Bank

(Nominees) Limited

香港 Hong Kong



100

代理人服務 Nominee services

南洋財務有限公司及南商有限公司

已於 2012 年 2 月 16 日正式解散

百信有限公司已於 2012 年 3 月 19

日正式解散

備註

以上表內的附屬公司名稱附有

者表示該公司並無納入按監管在計

算資本充足率所要求的綜合基礎

內本銀行及其按金管局指定的附屬

公司根據《銀行業（資本）規則》組

成綜合基礎在會計處理方面附屬

公司則按照會計準則進行綜合有關

會計準則乃由香港會計師公會依據

《專業會計師條例》18A 所頒佈的

Nanyang Finance Company Limited and Nan Song Company Limited were dissolved on 16 February 2012

Patson (HK) Limited was dissolved on 19 March 2012

Remarks

Name of subsidiaries which are not included in the consolidation group for regulatory purposes in respect of

capital adequacy is marked with in the above table The Bank and its subsidiaries specified by the HKMA

form the basis of consolidation for its regulatory purposes in accordance with the Banking (Capital) Rules

For accounting purposes subsidiaries are consolidated in accordance with the accounting standards issued

by the HKICPA pursuant to section 18A of the Professional Accountants Ordinance

3 符合《銀行業（披露）

規則》 3 Compliance with the Banking (Disclosure) Rules

本未經審核之中期業績報告符

合《銀行業條例》項下《銀行

業（披露）規則》之有關要求

The unaudited interim report complies with the applicable requirements set out in the Banking (Disclosure) Rules under the Banking Ordinance

105

業務回顧 Business Review

上半年全球經濟疲軟歐債危

機蔓延内地經濟放緩本港物

業市場亦呈現調整的格局投資

市場則隨經濟前景惡化呈現震盪

下跌態勢香港經濟已難以避免

全球化不景氣的影響按年經濟

增長由 2011 年第四季的 30減

慢至 2012 第 1 季的 04 在此經濟背景下本集團管理層

要求認清形势把握政策把落

實ldquo穩中求進突出重點統籌

兼顧協調發展作爲發展主線貫穿於各項業務中去圍繞全年

的任務指標調整思路創新管

理加強溝通落實措施上半

年各項重點業務穩步發展經

營業績保持增長財務摘要截至 2012 年 6 月底本集團稅

後盈利 1225 億港元若剔除雷

曼兄弟相關產品收支的影響較

去年同期增長 1211實現淨利

息收入 1939 億比上年同期增

長 2761非利息收入 465億比上年同期下降 1317

其中淨手續費收入下跌

1185本集團期內資本回報率

912資產回報率 100若

剔除雷曼兄弟相關產品收支的

影響分別比上年同期下跌 015個百分點及 006 個百分點淨利

息收益率 162較去年同期上

升 007 個百分點主要業務由於經濟疲弱股市低迷銀行

業經營舉步維艱我行管理層在

年初就審時度勢提出重點業

務積極進取各項業務協調

發展的工作方針強調調整業務

結構精細核算資金成本努力

提高定價水平上半年本集團

各項業務穩步發展

In the first half of the year due to the weak economy around the globe the spreading European debt crisis and the domestic economic slowdown adjustment was seen in the local property market and the investment market showed a spirally downward trend along with the deteriorating economic outlook The economy in Hong Kong which is inevitably influenced by the global downturn witnessed its annual growth slow down to 04 for the first quarter of 2012 from 30 for the fourth quarter of 2011 Under such economic environment the management of the Group requested staff members to have a clear understanding of the situation capitalize on every policy adopt the implementation of ldquoadvancing based on firm foundation concentrating on focus areas while maintaining overall planning to achieve coordinated developmentrdquo as the main line of development and carry it out throughout the businesses Due to the strategic changes innovative management communication enhancement and measures implemented all aimed at the targets of the year every major business recorded steady development and results of operations maintained growth in the first half of the year FINANCIAL HIGHLIGHTS As of the end of June 2012 the Grouprsquos profit after tax was HK$1225 million If the impact of incomeexpenses of Lehman Brothers related products were excluded it would be an increase of 1211 as compared with the corresponding period of last year Net interest income amounted to HK$1939 million representing an increase of 2761 as compared with the corresponding period of last year non-interest income amounted to HK$465 million representing a decrease of 1317 as compared with the corresponding period of last year of which net fees income was down by 1185 The Group had return on capital and return on assets of 912 and 100 during the period respectively If the impact of incomeexpenses of Lehman Brothers related products were excluded it would be a decrease of 015 percentage points and 006 percentage points respectively as compared with the corresponding period of last year net interest margin was 162 representing an increase of 007 percentage points as compared with the corresponding period of last year MAJOR BUSINESSES The banking industry underwent difficulty owing to the weary economy and the depressed stock market At the beginning of the year the management of the Group set the strategy of being aggressive in focus businesses while developing in a coordinated manner The management put emphasis on adjusting the business structure delicately calculated the funding costs and strived to increase the level of pricing In the first half of the year the Grouprsquos businesses developed steadily

106

業務回顧（續） Business Review (continued)

主要業務（續）截至 2012 年 6 月底貸款總餘

額達 125182 億港元較上年底

增加 5338 億港元增幅

445存款總餘額達 182655億港元較上年底增加 8186 億

港元增幅 469 穩固資金來源務實發展基礎上半年本港存款市場呈現兩極

化一方面受到內地經濟下行

人民幣升值勢頭放緩的影響整

體銀行體系內的人民幣存款出現

流失另一方面同業間仍然持

續激烈爭奪基礎存款港元及美

元存款雖仍是爭奪的重點但人

民幣存款競爭更激烈利率於上

半年首次突破 3 厘水平應對激

烈的市場競爭本集團提前部

署針對市場需求期內推出不

同品種的人民幣定期存款吸納計

劃部份推廣計劃設計優於同

業受到客戶歡迎提前完成推

廣計劃在穩固資金來源的同

時面對資金成本不斷攀升本

集團亦注重調整資金結構持續

跟蹤市場情況透過多維度吸存

措施鞏固了存款規模並有效控

制資金成本上半年本集團整

體存款市佔率保持穩定專注跨境合作拓展業務亮點上半年本集團在跨境業務合作

上取得不少突破為業務發展注

入新的活力以「南商理財」為

載體的跨境合作也取得重大進

展融入更多的增值服務及產品

安排我們與南商（中國）於 3月初攜手推出全新的銀聯借記卡

服務「南商財互通」卡創新

性地集「一卡兩地賬戶」及「聯

動扣賬」功能於一卡使客戶盡

享兩地消費靈活理財的便利

MAJOR BUSINESSES (continued) As of the end of June 2012 the total balance of loans amounted to HK$125182 million representing an increase of HK$5338 million or 445 as compared with the end of last year the total balance of deposits amounted to HK$182655 million representing an increase of HK$8186 million or 469 as compared with the end of last year To secure sources of funding to lay a solid foundation for development In the first half of the year the deposit market in Hong Kong was rather extreme On the one hand due to the domestic economic downturn and the slowdown in the momentum of RMB appreciation overall RMB deposits in the banking system declined on the other hand competitions for HKD and USD core deposits in the industry remained fierce but competition for RMB deposits was even greater as interest rates exceeded the 3 level in the first half of the year for the first time In response to the drastic market competitions the Group launched a variety of programs for attracting RMB time deposits to address market demand in the early stage Some promotion programs were better than those in the market and were welcome by customers thus the Group achieved the targets of the promotion programs ahead of schedule While securing sources of funding in the rise of funding costs the Group also paid attention to adjust the capital structure and to keep track of market conditions The deposits scale was then reinforced and the funding costs were effectively controlled through various measures In the first half of the year the deposits market share of the Group remained stable To focus on cross-border cooperation to expand business highlights In the first half of the year the Group obtained considerable breakthroughs in cross-border business cooperation which has injected new vitality to the business development The cross-border cooperation with ldquoNCB Wealth Managementrdquo as a carrier has also made significant progress incorporating more value-added services and product arrangements We launched a card named ldquoNCB Wealth Express Cardrdquo a new UnionPay debit card with NCB (China) in early March The card has innovative functions of ldquoone card with accounts in both Hong Kong and Mainlandrdquo and ldquointelligent debitingrdquo enabling customers to enjoy spending in both Hong Kong and Mainland and the convenience of flexible wealth management

107


主要業務（續）專注跨境合作拓展業務亮點

（續）期內順應內地金融業務全面對

外開放的形勢我們與中國銀行

廣東省分行經過友好誠摯的協

商正式簽署ltlt跨境業務聯動協

議書gtgt確立了兩行業務全面進

一步合作的方向與原則為雙方

聯動合作奠定了良好的基礎通

過跨境合作吸引貿易戶更多利

用本港的融資管道敘做放款及

貿易融資授信同時亦帶動存

款兌換等相關業務增長調整業務結構提高綜合收益為應對持續低息及低迷市場環

境及時調整業務結構將有限

的資源向重點業務傾斜提高綜

合收益是本集團今年重點任務之

一各業務單位密切配合積極

調整業務策略重點抓收益較好

的中小企業務並重檢提高貸款

定價水平精細核算資金成本

合理擺佈資金不斷改善淨利息

收益率截至 2012 年 6 月底

雖然本集團手續費淨收入下滑較

大但淨利息收益率 162同

比上升 007 個百分點淨經營收

入同比上升 1074 強化營銷功能提高發展效率 1 加強網點建設優化業務功能

針對中資及本地同業不斷擴大服

務網絡的情況我們也開啓了優

化網點計劃1 月份新增設九龍

灣分行重點開拓工商中小企業

務及企業個人戶的理財業務開

業半年業務發展良好對於舊

有網點繼續加強網點基礎建

設優化業務流程不斷適應新

的功能需求在比鄰海外的三藩

市分行為提升分行未來的業務

發展動力我們聯動中國銀行紐

約分行轄下的美洲信息中心實

現了分行電腦系統的全面提升

並因應未來業務發展需要積極

為開辦人民幣業務作準備

MAJOR BUSINESSES (continued) To focus on cross-border cooperation to expand business highlights (continued) During the period to meet the full opening-up of the domestic financial business in the Mainland we formally signed a ldquoCo-operative Agreement on Cross-border Businessesrdquo with Guangdong Branch of Bank of China through friendly and sincere negotiation determining the direction and principles for further comprehensive cooperation between the two banks which has laid a good foundation for interactive cooperation between both parties Through the cross-border co-operation trade customers were attracted to make more use of our local financing channels and to apply for loans and trade financing facilities while the growth of relevant businesses including deposits and exchange were also driven To adjust business structure to improve comprehensive income In response to the sluggish market environment with persisted low interest rates one of the Grouprsquos key tasks this year was to improve comprehensive income by timely adjustment of its business structure and allocating its limited resources to key businesses All business units cooperated closely adjusted business strategies proactively focused on the businesses of SMEs with higher yields improved loan pricing level concerned about funding costs allocated capital rationally and improved net interest margin consistently As of the end of June 2012 although the net fees income of the Group suffered from a substantial decline our net interest margin reached 162 representing an increase of 007 percentage points and our net operating income experienced a 1074 year-on-year increase To enhance marketing capacity to improve development efficiency 1 To strengthen network building to improve business capacity Given the continuous expansion of service networks of the PRC banks and local banks we also started to optimize our networks according to our plan In January we opened our Kowloon Bay Branch to focus on exploration of industrial and commercial SME businesses as well as corporate and personal wealth management businesses During the half year of its opening it has been in sound operations With respect to the existing outlets we continued to strengthen basic network building improve business procedures and consistently meet new functional requirements In the San Francisco Branch with a view to improve business development momentum in future we cooperated with the America Data Center of New York Branch of the Bank of China to comprehensively upgrade the computer system in the Branch and to actively prepare for RMB business according to future business needs

108


主要業務（續）強化營銷功能提高發展效率

（續） 2 利用科技手段創新營銷方式

上半年我們利用個金客戶資訊

系統與網上銀行系統結合指定

客戶群組可在登入自身網上銀行

帳戶後接收個性化產品訊息服

務更快捷地掌握最新推廣動

態此舉實現了超越時空的營

銷同時通過電子化渠道更

有效地開展離行式銷售工作突

破分行網點的限制實現了更為

科學的銷售管理模式本年至

今已推出了多個行銷活動涵

蓋存款壽險證券中小企

理財授信等業務 3 調整營銷策略應對市場變化

上半年香港股市平均每日成交

額持續下跌且本集團客戶買賣

多以傳統股票為主本集團代客

戶買賣股票的業務受到一定影

響針對客戶的交易特性我們

積極與業務伙伴合作持續分層推

出各項證券優惠措施改造提升

現有系統功能強化電子交易平

台以擴大證券基礎戶的增長

應對成交下降的影響同時積

極利用集團投資產品專家團隊專

業優勢提升前線同事的營銷技

巧及投資分析能力改善處理市

況急轉的應變力同時持續組

織不同形式的投資及基金講座

重建客戶對理財服務的信心上

半年組織籌劃了各類講座共 6場參與客戶人次達數百人

MAJOR BUSINESSES (continued) To enhance marketing capacity to improve development efficiency (continued) 2 To utilize technologies to innovate marketing methods In the first half of the year through the integration of personal banking information system and internet banking system we allowed designated customer groups after logging in with their own internet banking accounts to receive customized product information services so that they can have quicker access to the latest marketing information Thus enable us to market our products without restriction on time and space In the meantime through electronic channels we also conducted sales outside the bank premises more effectively which broke the limitation of our branch network and attained a more scientific sales management model So far this year the Group launched several marketing activities covering deposits life insurance securities SMEs wealth management and credit business etc 3 To adjust marketing strategies to tackle market changes In the first half of the year the average daily turnover of the stock market in Hong Kong continued to fall In addition the Grouprsquos customers mainly traded in traditional stocks so the Grouprsquos stock brokerage business was affected to a certain extent With respect to the trading characteristics of our customers we proactively cooperated with business partners to launch series of securities preferential measures at different levels to alterimprove the functions of the existing system and strengthen the electronic trading platform so as to accelerate the increase in core securities accounts and to minimize the influence of decline in turnover Meanwhile capitalizing on the Grouprsquos advantages in professions of our team of experts in investment products we also enhanced marketing techniques investment analysis capabilities and abilities to tackle the drastic decline in the market of our sales teams Furthermore we also organized investment and fund seminars in different forms to rebuild customersrsquo confidence in our wealth management services In the first half of the year we organized 6 seminars in various forms attracting hundreds of customers

109


風險管控由於市場環境的轉變監管要求

不斷提高本集團積極應對不

斷強化合規的第一道防線今年

以來在加強合規檢查引導前

線分行提高合規意識的同時加

大制度建設的力度修訂優化了

一系列管理制度並持續監察各

類風險指標為配合新防洗錢條

例的實行我們與中銀香港集團

一致修訂及更新相關政策規章並

同步頒佈實施並組織人員分階

段做好自查工作此外本集團

持續維護及優化內部評級法及資

本計算系統應用內部評級資

訊做好信貸風險及資本管理

截至 2012 年 6 月底本集團特

定分類或減值貸款比率 023

綜合資本充足比率及平均流動資

金比率（只計香港）分別為

1637及 4303處於穩健水

平企業社會責任本集團在推進業務發展的同時

通過捐助教育公益組織義工隊

參與慈善公益及社區公益等方式

持續積極地履行企業社會責

任幾年來與慈善團體「愛心

力量」合作持續資助羊坪學校

的教學事業今年 5 月資助了

該校五名教師前往北京市東城區

和平裡第一小學進行教師培訓計

劃進一步提高該校的師資素

質取得了良好的成效

RISK MANAGEMENT AND CONTROL In view of the change in market environment and the increasing regulatory requirements the Group responded proactively to strengthen the first line of defense in respect of compliance continuously Since this year in addition to conducting more compliance reviews and raising awareness of compliance among its front branches the Group also allocated more resources in setting up system particularly in the amendment and improvement on a series of management systems Furthermore various risk indicators were under constant monitoring To cope with the requirements of the new anti-money laundering ordinance the Group promulgated and implemented amendments and updates for relevant policies and regulations with BOCHK simultaneously and arranged adequate personnel for internal review in various stages Moreover the Group continued to maintain and improve its internal rating method and capital calculation system and to adopt the internal rating information in its normal operation in order to enhance its credit risks control and capital management As of the end of June 2012 the classified or impaired loans of the Group represented 023 of its total loans and its consolidated capital adequacy ratio and the average liquidity ratio (for Hong Kong only) being 1637 and 4303 respectively remained at stable level CORPORATE SOCIAL RESPONSIBILITY Not only focusing on business operations the Group also performed its social responsibility as a corporate on a constant and active basis by making donations to public education and organizing volunteers to participate in charity services and community services Yangping School has obtained continuous assistances for its teaching undertakings in recent years thanks to the cooperation between the Group and the charity organization ldquoPower of Loverdquo In particular in order to further enhance the teacher resources of this school five teachers from this school were sponsored to attend teacher training programs held in the first primary school of Heping Li Dongcheng District Beijing this May and satisfactory effects were achieved

110


企業社會責任（續）此外NCB 義工隊本著ldquo以人為

本關心社會的核心價值觀

積極參與公益活動今年春節期

間義工隊參與「彩龍慶豐年」

活動為香港島南區之獨居長者

送上溫暖讓長者在節日中感受

到社會的關懷5 月義工參與

了「親切」mdashmdash《雜耍家計劃》

訓練並與兩所特殊學校的同學

一起參加了在沙田公園舉辦的

ldquo親切共融之旅 2012 嘉年華

活動同時NCB 義工隊連續第

二年獲邀參與由香港銀行公會和

香港社會服務聯會攜手舉辦的

ldquo智有「財」能教育坊活動

成為輪流主持的 12 家會員銀行

之一為本港低收入家庭灌輸正

面的理財觀念並於七月初主持

了一場為小學生家長舉辦的教育

坊

前景展望展望 2012 年下半年全球經濟

仍存在很大的不確定性內地經

濟增速放緩本港經濟亦充滿挑

戰本集團仍將堅持致力於調整

業務結構改善客戶基礎繼續

推動中小企及「南商理財」等核

心業務增長配合人民幣政策的

發展努力拓展人民幣業務並

在粤港兩地長期合作的良好基礎

下加強全面合作謀求共贏

CORPORATE SOCIAL RESPONSIBILITY (continued) In addition based on the core values ldquopeople oriented and society caredrdquo the NCB volunteers participated in public services vigorously During the spring festival the volunteers through the participation in the special subject activity named ldquoColorful Dragon Dances to Usher the Chinese New Yearrdquo brought warmness to the elders living alone in the south district of Hong Kong Island and made them feel being cared from the society during the festival In May volunteers took part in ldquoTREATSrdquo ndash ldquoCircus for ALLrdquo training and engaged in the ldquoTREATS Journey to Integration 2012rdquo held in Sha Tin Park with those students from two special care schools Meanwhile it was the second successive year for NCB volunteers to be invited to take part in the ldquoFinancial Education Workshopsrdquo jointly organized by The Hong Kong Association of Banks and the Hong Kong Council of Social Service making NCB one of the 12 member banks chairing such activity by rotation Local families in Hong Kong with low disposable income pursuant to the above activity were injected with correct financing values Also NCB presided over an education seminar oriented for parents of primary students in early July PROSPECT AND OUTLOOK Looking forward to the second half of 2012 uncertainty sustains in the global economy In particular the economic growth in Mainland will slow down and economy in Hong Kong will also meet various challenges The Group will continue to devote itself to adjusting its business structure and improving its customer base Furthermore it will continue to focus on growth of its core businesses including SMEs and ldquoNCB Wealth Managementrdquo By taking advantage of the development of RMB related policies it will strive to expand its RMB related businesses In virtue of the long term cooperation between Guangdong province and Hong Kong the Group will strengthen comprehensive cooperation seeking for a win-win partnership

111

釋義在本中期業績報告中除非文義另有所指否則下列詞彙具有以下涵義

詞彙涵義

「本銀行」南洋商業銀行有限公司根據香港法例註冊成立之公司並為中銀香港之全資附屬公司

「董事會」本銀行的董事會

「中國銀行」中國銀行股份有限公司一家根據中國法例成立之商業銀行及股份制有限責任公司其

H 股及 A 股股份分別於香港聯交所及上海證券交易所掛牌上市

「中銀香港」中國銀行（香港）有限公司根據香港法例註冊成立之公司並為中銀香港（控股）有

限公司之全資附屬公司

「中銀香港（控股）」中銀香港（控股）有限公司根據香港法例註冊成立之公司

「中投」中國投資有限責任公司

「匯金」中央匯金投資有限責任公司

「本集團」本銀行及其附屬公司

「金管局」香港金融管理局

「香港」香港特別行政區

「內地」或「中國內地」中華人民共和國內地

「南商（中國）」南洋商業銀行（中國）有限公司根據中國法例註冊成立之公司並為本銀行之全資附

屬公司

「中國」中華人民共和國

「人民幣」人民幣中國法定貨幣

「香港聯交所」香港聯合交易所有限公司

112

Definitions In this Interim Report unless the context otherwise requires the following terms shall have the meanings set out below Terms Meanings


ldquoNCBrdquo or ldquothe Bankrdquo Nanyang Commercial Bank Limited a company incorporated under the laws of Hong Kong and a wholly-owned subsidiary of BOCHK

ldquoBoardrdquo or ldquoBoard of Directorsrdquo the Board of Directors of the Bank


ldquoBOCHKrdquo Bank of China (Hong Kong) Limited a company incorporated under the laws of Hong Kong and a wholly-owned subsidiary of BOCHK (Holdings)



ldquoCentral Huijinrdquo Central Huijin Investment Ltd


ldquothe Grouprdquo the Bank and its subsidiaries collectively referred as the Group








113


ldquoNCB (China)rdquo Nanyang Commercial Bank (China) Limited a company incorporated under the laws of the PRC and a wholly-owned subsidiary of the Bank






ldquoHong Kong Stock Exchangerdquo The Stock Exchange of Hong Kong Limited


IMPORTANT

If you are in any doubt about any of the contents of this document you should obtain independent

professional advice

References to the ldquoBankrdquo ldquowerdquo or ldquousrdquo in this document mean Nanyang Commercial BankLimited

This Financial Disclosure Document sets out financial information relating to the Bank No EquityLinked Deposits are being offered by this document alone If you would like to make an investmentin any Equity Linked Deposits you must read the principal brochure dated 4 May 2012 (including anyaddendum to the principal brochure) issued by the Bank relating to the Equity Linked Deposits andthe relevant termsheet together with this Financial Disclosure Document each as indicated in therelevant termsheet from time to time (together ldquoOffering Documentsrdquo) Printed copies CD-Romcopies (if available) andor electronic copies (if available) of the Offering Documents are availablefrom (in the case of printed copies and CD-Rom copies) our branches or (in the case of electroniccopies) on our website at httpwwwncbcomhk as specified on the relevant termsheet You shouldread and understand all of the Offering Documents for an Equity Linked Deposit before decidingwhether to make an investment

You are warned that the value of our Equity Linked Deposits may fluctuate and you may sustain atotal loss of your investment You should therefore ensure that you understand the nature of ourEquity Linked Deposits and carefully study the risk factors set out in the Offering Documents for ourEquity Linked Deposits and where necessary seek independent professional advice before youdecide whether to invest in our Equity Linked Deposits

The Offering Documents of the Equity Linked Deposits include particulars given in compliance withthe Code on Unlisted Structured Investment Products issued by the SFC (ldquoCoderdquo) for the purpose ofgiving information with regard to the Bank (as the Offeror and the Product Arranger) and the EquityLinked Deposits We (as the Offeror and the Product Arranger) accept full responsibility for thecontents of and the completeness and accuracy of the information contained in each of the OfferingDocuments and confirm having made all reasonable enquiries that to the best of our knowledgeand belief there is no untrue or misleading statement or other facts the omission of which wouldmake any statement therein untrue or misleading We (as the Offeror and the Product Arranger) alsoconfirm that the Equity Linked Deposits comply with the Code We confirm that we (as the Offeror)meet the eligibility requirements applicable to issuers set out in the Code and we (as the ProductArranger) meet the eligibility requirements applicable to product arrangers set out in the Code

None of the Offering Documents constitute a prospectus under the Companies Ordinance (Cap 32Laws of Hong Kong)

The Bankrsquos independent auditor PricewaterhouseCoopers (the certified public accountants) of 22ndFloor Princersquos Building 10 Chater Road Central Hong Kong has given and has not withdrawn itswritten consent to the inclusion of its independent auditorrsquos report dated 23 March 2012 on theconsolidated financial statements of the Bank for the year ended 31 December 2011 and theauditorrsquos review report dated 15 August 2012 on the unaudited consolidated interim financialstatements of the Bank for the six months ended 30 June 2012 (collectively the ldquoReportsrdquo) andorthe references to its name in this document in the form and context in which they are included TheReports were not prepared for incorporation in this document The Bank confirms thatPricewaterhouseCoopers was engaged by the Bank as its independent auditor in respect of itsaudited consolidated financial statements for the year ended 31 December 2011 and unauditedconsolidated interim financial statements for the six months ended 30 June 2012 and the Bank is notaware of to the best of its knowledge any conflict of interests for the auditor in the preparation ofthe Reports

We confirm that the unaudited consolidated interim financial statements for the six months ended30 June 2012 were prepared in accordance with the Bankrsquos usual accounting policies and procedures

The Bankrsquos financial year runs from 1 January to 31 December

If English is not your preferred language you may request for copies of this Financial DisclosureDocument written in Chinese from our sales staff at our designated branches 倘若英文並非閣下屬意的語言閣下可向本行指定分行的銷售人員索取本財務披露文件的中文語言版本

minus 1 minus

CONTENTS




June 2012

minus 2 minus

2011






Definitions 202

1













Statements



Board of Directors



Zeng Xiaoping



Zhuo Chengwen

Li Jiuzhong

Zhu Yanlai

Yuen Wai Keung

Chang Hsin Kang


Lau Hon Chuen


2
















Zhou Zaiqun

Chairman


3




























4


Opinion







5






6








7









8


At

31 December At





Director Director


Director Secretary

9

Balance Sheet

At

31 December At






Director Director


Director Secretary

10


Share capital

Share premium

Capital reserve

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve







Share capital

Share premium

Capital reserve

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve









11


Share capital

Share premium

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve

Retained earnings




Share capital

Share premium

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve

Retained earnings







12











13
















Ordinance









14





on 1 January 2011





1 January 2011 Yes



1 July 2010 No



1 January 2011 No


1 July 2010 No





15





the Group in 2011



Standard Content







1 January 2013 No


1 January 2014 Yes


1 July 2011 No


1 July 2011 Yes


1 January 2013 Yes


1 January 2015 Yes






16
















Statementsrsquo


Arrangementsrsquo










17























instrument











18































19

































20











Standard Content




HKAS 12 (Amendment)







a nil tax rate

22 Consolidation


31 December

Subsidiaries







21


















by the Group















22









income



















negative



23











26 Hedge accounting


















24
















interest income






29 Financial assets













25




























26
































27































28


































29






























30



























statement







31
























reporting date











32



























change








33























appropriate



34



218 Leases








(2) Finance leases

















220 Provisions




35












ORSO schemes










(3) Bonus plans












36













profit or loss








loss













37














226 Related parties






38

































39











40






measure these risks















41







environment



activities

Product development













41 Credit Risk









42























Loans and advances











43



























repayment





44















45











to meet obligations



46






















occurs









47






The Group






The Bank














48
















loans and advances

49







The Group

2011

PassSpecial

mentionSubstandard

or below






The Group

2010

PassSpecial

mentionSubstandard

or below






50






The Bank

2011

PassSpecial

mentionSubstandard

or below






The Bank

2010

PassSpecial

mentionSubstandard

or below









51







The Group 2011

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 352958 2767 64 211 356000

The Group 2010

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 293820 1180 126 2791 297917

52






The Bank 2011

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 282121 1818 64 - 284003

The Bank 2010

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 276595 1180 126 - 277901

53







The Group 2011 2010

Grossadvances

Marketvalue of

collateral Gross

advances

Marketvalue of






The Bank 2011 2010

Grossadvances

Marketvalue of

collateral Gross

advances

Marketvalue of







advances

54













The Group 2011 2010




The Bank 2011 2010







55







The Group 2011 2010

Amount


customers Amount



been overdue for




The Bank 2011 2010

Amount


customers Amount



been overdue for




56














personal loans



57






The Group 2011 2010

Amount


customers Amount




The Bank 2011 2010

Amount


customers Amount










58









The Group 2011

Gross

advances


or othersecurity












Individuals






customers 119844229 5201 165966 479116 87615 705132

59







The Group 2010

Gross

advances


or othersecurity












Individuals






customers 116200644 5172 158892 414616 105289 528310

60







The Bank 2011

Gross

advances


or othersecurity












Individuals






customers 84235941 5620 57870 304498 11652 428451

61







The Bank 2010

Gross

advances


or othersecurity












Individuals






customers 77374903 5523 58424 298287 12447 342818


unpaid

62









The Group 2011 2010



written off






Individuals




63







The Bank 2011 2010



written off






Individuals




64












119844229 116200644




705132 528310


428451 342818

65







Overdue advances


479116 414616


304498 298287



84873 103469


8910 10627

66










5933 4652


5183 4574



165966 158892


57870 58424

67










87615 105289


11652 12447



576 77


81 76



68






year (2010 Nil)






alternatives




69







their equivalent



21196827 3347416 7269516 31813759



12562242 2086454 7197310 21846006



70




(E) Debt securities




Aaa Aa1 to

Aa3A1 to

A3Lower

than A3


and government

bodies

Other governments

and government




Aaa Aa1 to

Aa3A1 to

A3Lower than

A3


and government

bodies

Other governments

and government






71






Aaa Aa1 to

Aa3A1 to

A3Lower

than A3


and government

bodies

Other governments

and government




Aaa Aa1 to

Aa3A1 to

A3Lower than

A3


and government

bodies

Other governments

and government






72






The Group 2011


than A3 Unrated



The Group 2010


than A3 Unrated



941715 Total 19903 9320748 3677937 54487 987628 14060703

The Bank 2011


than A3 Unrated



The Bank 2010


than A3 Unrated



941715 Total 19903 8253441 3677937 54487 987628 12993396

73







The Group 2011


than A3 Unrated



The Group 2010


than A3 Unrated



2252783 Total 2881262 7173001 4096501 1147719 14060703 29359186

The Bank 2011


than A3 Unrated



The Bank 2010


than A3 Unrated



2252783 Total 2881262 6818787 4096501 1147719 12993396 27937665

74








Lower than A3








75



42 Market Risk
























76




(A) Currency risk





77








The Group 2011

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 19225118 29009786 19190225 386957 255138 2741 2182 68072147

78





The Group 2010

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 7214879 24187953 18581172 724921 737367 4166 8825 51459283

79





The Bank 2011

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 120827 16531470 18749692 262351 39428 2741 333 35706842

80





The Bank 2010

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments - 12023253 18346577 513897 661528 3951 7642 31556848



81



















economic value













82






















reported to ALCO

83






















84







maturity dates

The Group 2011

Up to 1month

1-3months

3-12months

1-5years

Over 5 years















85





The Group 2010

Up to 1month

1-3months

3-12months

1-5years

Over 5 years















86





The Bank 2011

Up to 1 month

1-3 months

3-12 months

1-5 years

Over 5 years














87





The Bank 2010

Up to 1 month

1-3 months

3-12 months

1-5 years

Over 5 years

Non- interest














88



43 Liquidity Risk





















89



















reported to ALCO

90




(A) Liquidity ratio

2011 2010






91




















held - - 269994 112756 968039 - - 1350789 - others - 5275152 3685012 6247984 8353623 1799526 - 25361297








92












93


















held - - - 880265 1194204 - - 2074469- others - 5160435 1496013 3616135 10226755 1134494 - 21633832








94












95


















held - - 269994 112756 968039 - - 1350789 - others - 4946370 3425073 5326208 7170688 1306548 - 22174887









96












97


















held - - - 880265 1194204 - - 2074469- others - 5042678 899185 3200938 9935016 1134494 - 20212311









98


















provisions if any



maturity

99















100













101

















(250649) (41279) (186940) (67747) (5482) (552097)



(436415) (38213) (139676) (53609) (21078) (688991)

102









(249163) (35951) (153337) (67747) (5482) (511680)



(435413) (37334) (129135) (49656) (21078) (672616)

103








currency options





The Group 2011 Up to 1 1-3 3-12 1-5



- Outflow (11417779) (1925850) (4816609) - (18160238)- Inflow 11367954 1928099 4828157 - 18124210


The Group 2010 Up to 1 1-3 3-12 1-5



- Outflow (14506757) (7394285) (3345066) (34332) (25280440)- Inflow 14541213 7387103 3350384 34392 25313092


104







The Bank 2011 Up to 1 1-3 3-12 1-5



- Outflow (10758766) (1652950) (621855) - (13033571)- Inflow 10710899 1654478 624204 - 12989581


The Bank 2010 Up to 1 1-3 3-12 1-5



- Outflow (13647452) (5999636) (557364) - (20204452)- Inflow 13682848 5993963 557262 - 20234073



Loan commitments



to HK$50503226000 (2010 HK$41155065000) and HK$31434914000 (2010 HK$28530515000)




to HK$17568921000 (2010 HK$10304218000) and HK$4271928000 (2010 HK$3026333000)


105

































106
















20353437 18015416



51862 74499







107










value













108













components











109

























110
























111










securities

Debt

securities Equity









securities

Debt

securities Equity









112










113



2011 2010







12777 18127




80349 (36185)

114

















115










1284837 1433785








116


14 Taxation




403743 312687


347132 325238











117


16 Dividends











summary dismissal








118




















119























Exchange

120











121












Total 13844 260 14104 7055 - 7055







Total 12677 12677 8835 8835


personnel

Remark





122





2011 2010





260 - - -



adjustments - - - -













16449302 9396869 8864144 9498294

43994333 24455981 26941578 20338471

123




Trading securities




Kong - - 518359 699388 518359 699388 - 152 766259 951777 766259 951929

- Unlisted 1109280 942296 370222 358558 1479502 1300854 Total 1109280 942448 1136481 1310335 2245761 2252783



124






















125










December

The Group 2011

Trading








126



The Group 2010

Trading





127



The Bank 2011

Trading





The Bank 2010

Trading





128





Trading

Notqualified


Not qualified







The Group


Trading

Notqualified


Not qualified







129




Trading

Notqualified


Not qualified







The Bank


Trading

Notqualified


Not qualified







130




The Group The Bank


Forwards 619563 715286 566541 672931Swaps 25906 77199 22902 65682


666976 818716 593593 746871








131




















132











133





5889828 7100192 5889828 7100192

- Unlisted 20822258 16608109 17635848 15186588


- Unlisted 43899 34915 43899 34915 26755985 23743216 23569575 22321695




1550700 2385878 570537 2385878



134




The Group 2011

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and


The Group 2010

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and



The Bank 2011

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and


135



The Bank 2010

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and





The Group

2011

Available-

for-salesecurities

Held-to- maturity



The Group

2010

Available-

for-salesecurities

Held-to- maturity



136



The Bank

2011

Available-

for-salesecurities

Held-to- maturity



The Bank

2010

Available-

for-salesecurities

Held-to- maturity



137




The Group




The Bank










138



The Bank












847948 618263 802260 579940






139



The Group

Premises



Premises



140



The Bank

Premises



Premises



141




The Group The Bank





4231342 3196912 4038737 3015655








The Group The Bank







142


29 Other assets

The Group The Bank









The Group The Bank



143





















year are as follows

The Group 2011

Accelerated

tax depreciation



Other temporary




144



Accelerated

tax depreciation



Other temporary




The Bank 2011

Accelerated

tax depreciation

Propertyrevaluation


Other temporary



The Bank 2010

Accelerated

tax depreciation

Propertyrevaluation


Other temporary



145









twelve months 583494 424688 574394 415242 543442 398484 573738 414615





146


35 Share capital




36 Reserves




147















148





The Group The Bank












The Group The Bank




149



(a) As lessee



The Group The Bank






five years 65 - - - 890613 226658 80482 75553

(b) As lessor



The Group The Bank



five years 32416 40425 19215 32214 72393 71558 52633 60477




150


41 Litigation





































151




The Group

2011

Personal Banking


Subtotal















152




The Group

2010

Personal Banking


Subtotal















153




The Bank

2011

Personal Banking


Subtotal















154




The Bank

2010

Personal Banking


Subtotal















155






The Group 2011 2010



Profit before

taxation



Profit before


The Group 2011

Total

assetsTotal


assets


andcommitments


The Group 2010

Total

assetsTotal


assets


andcommitments


156




The Bank 2011 2010



Profit before

taxation



Profit before


The Bank 2011

Total

assetsTotal


assets


andcommitments


The Bank 2010

Total

assetsTotal


assets


andcommitments


157

















158















159






2011 2010

Other related




Balance sheet items











160







USOther

foreign Total



USOther

foreign Total








161



2011

BanksPublic sector

entities Others


2010

BanksPublic sector

entities Others




162






2011

On-balance

sheetexposure

Off-balance

sheetexposure

Total exposure






71331184 18606615 89937799 79555

2010

On-balance

sheetexposure

Off-balance

sheetexposure

Total exposure






67780708 11956937 79737645 98886


accordingly








163














164














Securitisation 51 -






28727 596740


approach


165












Corporate exposures








Retail exposures


Retail IRB Approach

















166





(continued)













equivalent 1 1A AAA

2A AA+ 2B AA

2

2C


AA- 3A A+ 3B A

3

3C


A-

4A BBB+ 4B BBB

4

4C


BBB-


5

5F


BB- 6A B+ 6B B+ 6C B 6D B 6E B-

6F B-

6

6G


B-

7A CCC 7B CC

7

7C


C


167






information etc





















168























169













performance review




170






2011

FoundationIRB

Approach


Approach

RetailIRB

Approach


Approach Total






Others - - - 6158687 6158687 Total 193029549 1893758 21139678 6158687 222221672




of IRB approach

2011 HK$rsquo000


201081994

171




















172






Exposure- weighted

average risk-weight

Exposure-weighted



2011


Exposure-weighted

average risk-weight





Exposure-weighted

average risk-weight

Exposure-weighted


173





December 2011




174









175










Actual default

rate during 2011









standards








176






- Sovereign













177




2011


Total



collateral


orrecognised










exposures 432601 97127 335474 66037 296109 184182 4357


exposures 30688589 23527574 6814645 643444 4553840 530552 31103


178




(continued)

2010


Total



collateral


orrecognised










exposures 9087667 2448418 6639249 1863965 6413997 1725194 1320674


exposures 198635438 72866515 117334702 21264924 99223115 10170590 10380059



179













transactions




180





style transactions













181













3061 818717

182









- 824973





183







exposures





2011 Securitisation


amount Capital


184




2010 Securitisation


amount Capital



December 2010


(2010 Nil)





185
















2011 2010




186

Management of Risks

The Overview









policies











187















mitigation













satisfactory

188
























regulations






189















are given below

Executive Committee








company



Notes



March 2011

190


Audit Committee





















Notes


2011


28 March 2011

191







from time to time







192






management








Managers














193


























mechanism


Adjustmentrdquo




post perspectives





194














indicators
















195



















196

Business Review





















Principal Business






197
































198



































199




(continued)






Risk Management

















200















Outlook





201

Appendix




Name





Republic of China





















Remarks





Ordinance

202

Definitions



















203






















204













Interim Report 2012




in Equity 4



7


10





53


institutions56




statement 79





1



2012 年 6 月 30 日

2011 年

6 月 30 日


Notes30 June

2012 30 June






















之組成部分


2




2012 年 6 月 30 日

2011 年

6 月 30 日


30 June

2012 30 June
















之組成部分


3



於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

附註

NotesAt 30 June

2012 At 31 December












組成部分


4



股本

Share capital

股本溢價

Share premium

資本儲備

Capital reserve

房產

重估儲備

Premisesrevaluation

reserve

可供出售

證券公平值

變動儲備



for-sale securities

監管儲備

Regulatory reserve

換算儲備

Translation reserve

留存盈利

Retained earnings

總計





















5




股本

Share capital

股本溢價

Share premium

資本儲備

Capital reserve

房產

重估儲備

Premisesrevaluation

reserve

可供出售

證券公平值

變動儲備



for-sale securities

監管儲備

Regulatory reserve

換算儲備

Translation reserve

留存盈利

Retained earnings

總計















期風險）



組成部分


6




2012 年 6 月 30 日

2011 年

6 月 30 日

附註

Notes


2012







(48200) (45670)


and equipment


properties




cash equivalents



部分


7


























則









訊



8









準則 Standard

內容 Content





2012 年 7 月 1 日 1 July 2012

香港會計準則第 19 號（2011） HKAS 19 (2011)


2013 年 1 月 1 日 1 January 2013

香港會計準則第 27 號（2011） HKAS 27 (2011)


2013 年 1 月 1 日 1 January 2013

香港會計準則第 28 號（2011） HKAS 28 (2011)


2013 年 1 月 1 日 1 January 2013




2014 年 1 月 1 日 1 January 2014




2013 年 1 月 1 日 1 January 2013




2015 年 1 月 1 日 1 January 2015



2015 年 1 月 1 日 1 January 2015



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013





9








（續）












10





policies



一致


11









這些風險承擔







或多項損失事











者間之差額計






了損失事件


12








於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011





















之抵押品價值


13










如下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011





284508 165966 總特定分類或減



023 014








類的「次級」




貸款


14

























期處理


15











下




百分比



期 Gross advances








- 超過 1 年 - over one year 86733 007 88155 008






備


16









於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011
















物業於 2012 年 6 月 30日及 2011 年 12月 31 日沒有逾



構貸款


17








於 2012 年 6 月 30 日及 2011 年 12 月31 日沒有經重組








貸款內




百分比






18









客戶貸款總額

根據在香港境

內或境外以及

借貸人從事之

業務作出分類

之客戶貸款總

額分析如下



於 2012 年 6 月 30 日 At 30 June 2012

客戶貸款總額

Gross advances

to customers


Covered by



Classified or

impaired逾期

Overdue














樓宇之貸款





- 其他 - Others 2911580 7483 2509 16455 805 1856





19










客戶貸款總額

（續）


於 2011 年 12 月 31 日 At 31 December 2011

客戶貸款總額

Gross advances

to customers


Covered by



Classified or

impaired逾期

Overdue
















樓宇之貸款





- 其他 - Others 2477768 8341 2625 10544 825 2084








款


20










類之客戶貸款


貸款之地理區

域分析是根據

交易對手之所

在地並已顧

及風險轉移因

素一般而

言假如客戶

貸款之擔保人

所處國家與客

戶不同則會

確認有關貸款

之風險轉移




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011




125182253 119844229

就客戶貸款

總額作組合

評估之貸款

減值準備



797445 705132

21










類之客戶貸款

總額（續）



就逾期貸款

作個別評

估之貸款

減值準備



94328 84873

就逾期貸款

作組合評

估之貸款

減值準備



4747 5933

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011




551797 479116

22










類之客戶貸款

總額（續）


特定分類或減


於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011




284508 165966

就特定分類或

減值貸款作

個別評估之

貸款減值準

備



100865 87615

就特定分類或

減值貸款作

組合評估之

貸款減值準

備



900 576

23








5222000 元（2011年 12 月 31 日港幣

2530000 元）這包









24










於 2012 年 6 月 30 日

At 30 June 2012

無評級

Unrated

Aaa

Aa1 至Aa3

Aa1 toAa3

A1 至A3

A1 toA3

A3 以下Lower than

A3



and government

bodies


Other governments

and government

agencies其他

Others總計Total



押債券 MBSABS






小計 Subtotal 610 2886780 579044 267198 1368657 - 299261 5401550

總計 Total 822863 18022824 6431263 473874 3018358 1728663 11646479 42144324

25






於 2011 年 12 月 31 日

At 31 December 2011

無評級

Unrated

Aaa

Aa1 至 Aa3Aa1 to

Aa3

A1 至A3

A1 toA3

A3 以下Lower than

A3



and government

bodies


Other governments

and government

agencies其他

Others總計Total



押債券 MBSABS

- 20335 - 1699 - - - 22034






押債券 MBSABS

- - 5046 - - - - 5046


小計 Subtotal 500 521205 575547 267066 587575 - 293868 2245761

總計 Total 623047 11135918 4454750 471707 5592845 678604 9427595 32384466


額為港幣 16393500000 元

（2011 年 12 月 31 日港幣

15699044000 元）其中沒有發

行人評級僅為港幣 3065445000元（2011 年 12 月 31 日港幣

2741631000 元）詳情請參閱

第 26 頁


26









下


於 2012 年 6 月 30 日 At 30 June 2012

Aaa


A1 至 A3A1 to A3

A3 以下 Lower

than A3 無評級

Unrated 總計







總計 Total 55440 6786525 6186829 299261 3065445 16393500

於 2011 年 12 月 31 日 At 31 December 2011

Aaa


A1 至 A3A1 to A3

A3 以下 Lower

than A3 無評級

Unrated 總計








總計 Total - 8861949 4095464 - 2741631 15699044

27






於 2012 年 6 月 30日及 2011 年 12 月


務證券

於 2012 年 6 月 30日及 2011 年 12 月


債務證券


28





















外匯風險


29







2012 年 6 月 30 日及

2011 年 12 月 31 日之




並按原幣分類


於 2012 年 6 月 30 日 At 30 June 2012

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計













30






於 2012 年 6 月 30 日 At 30 June 2012

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計









commitments 20911086 24491258 20908331 361959 305348 12372 13055 67003409

31






於 2011 年 12 月 31 日 At 31 December 2011

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計












32






於 2011 年 12 月 31 日 At 31 December 2011

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計









position (2216052) (7515536) 8491862 74164 36636 911189 533472 315735


commitments 19225118 29009786 19190225 386957 255138 2741 2182 68072147








33







於 2012 年 6 月 30日及 2011 年 12 月






為準）分類


於 2012 年 6 月 30 日

At 30 June 2012

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不計息

Non-interest

bearing總計













34






於 2012 年 6 月 30 日

At 30 June 2012

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計








35






於 2011 年 12 月 31 日

At 31 December 2011

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計












36






於 2011 年 12 月 31 日 At 31 December 2011

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計








37







2012 年

6 月 30 日

2011 年

6 月 30 日


30 June

201230 June

2011










事處）計算


38










限分類


於 2012 年 6 月 30 日 At 30 June 2012

即期

Ondemand

一個月內

Up to 1 month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不確定

日期

Indefinite總計




















39






於 2012 年 6 月 30 日 At 30 June 2012

即期

Ondemand

一個月內

Up to 1 month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不確定

日期

Indefinite總計










40






於 2011 年 12 月 31 日 At 31 December 2011

即期

On demand

一個月內

Up to1 month

一至

三個月

1-3 months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over

5 years

不確定

日期

Indefinite總計





















41






於 2011 年 12 月 31 日 At 31 December 2011

即期

On demand

一個月內

Up to1 month

一至

三個月

1-3 months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over

5 years

不確定

日期

Indefinite總計










42































有至到期日


43





本集團由 2011 年 1 月 1 日















法在 2012 年 6 月 30 日沒




自 2012 年 1 月 1 日起生









於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011



44




















45








6 月 30 日及 2011 年






於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011













益









46












扣減


47




2012 年 6 月 30 日

2011 年

6 月 30 日


2012 30 June





3823200 2464251




(1884023) (944607)



包括港幣 3069000 元






31000 元）





為港幣 3793074000 元


2436007000 元）及港幣

1879225000 元（2011 年

上半年港幣 943582000元）


48





6 月 30 日2011 年


201230 June



406947 461947


(32896) (37602)







5617 6688

49





2012 年 6 月 30 日

2011 年

6 月 30 日


2012 30 June




products


49397 28464

50





2012 年

6 月 30 日 2011 年

6 月 30 日


30 June

2012 30 June





2012 年6 月 30 日

2011 年6 月 30 日


201230 June




23335 21255


港幣 60000 元（2011 年上半



營支出


51






6 月 30 日 2011 年


2012 30 June





















52





2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




470586 405612




167106 148265




890403 306810







454296000 元並於 2011






53





properties


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




properties 70493 95971 70493 95762



equipment


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June



54







2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June






248308 315062







現行稅率計算


55









2012 年

6 月 30 日 2011 年

6 月 30 日


30 June

2012 30 June



按稅率 165（2011





56




半年結算至











於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011








16449302 38252446 43994333




總額為港幣 392000000 元


57








總計 Total

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31December

2011

At 30 June 2012

At 31December

2011

At 30 June 2012

At 31December





- - 769228 766259 769228 766259 - 非上市 - Unlisted 4256047 1109280 376275 370222 4632322 1479502

總計 Total 4256047 1109280 1145503 1136481 5401550 2245761

58







下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




5401550 2245761



610000 元（2011 年 12月 31 日港幣 500000 元）






於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






1136981

5401550 2245761

59






























期權）


60



























較大的波動


61





具於 2012 年 6 月 30 日及

2011 年 12 月 31 日之合約

名義合約數額


於 2012 年 6 月 30 日 At 30 June 2012

買賣

Trading



accounting 總計












衍生金融工具


62




於 2011 年 12 月 31 日 At 31 December 2011

買賣

Trading



accounting 總計






63





具於 2012 年 6 月 30 日及

2011 年 12 月 31 日之公平

值


於 2012 年 6 月 30 日 At 30 June 2012



買賣

Trading

不符合採用

對沖會計法

Notqualified


總計

Total買賣

Trading



accounting 總計







64




於 2011 年 12 月 31 日 At 31 December 2011



買賣

Trading

不符合採用

對沖會計法

Notqualified


總計

Total買賣

Trading



accounting 總計

Total







65






於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





416206 666976








所影響


66




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





於 2012 年 6 月 30 日客


12 月 31 日港幣

533810000 元）於 2012 年 6 月 30 日及

2011 年 12 月 31 日對貿




63078753000 元（2011年 12 月 31 日港幣

61458683000 元）及美


35463496000 元（2011年 12 月 31 日港幣

34285493000 元）



67




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






34126055 26712086 股份證券按公平值






2616719




-



-

118147

68






於 2012 年 6 月 30 日 At 30 June 2012

可供出售證券

Available- for-sale

securities


Held-to- maturity

securities 總計



34181365 2616719 36798084

於 2011 年 12 月 31 日 At 31 December 2011

可供出售證券

Available-for-sale

securities

持有至

到期日證券

Held-to-maturity

securities

貸款及應收款

Loans and

receivables 總計





438114000 元（2011 年

12 月 31 日港幣

175915000 元）在《銀行


為公營單位


69






可供出售證券



securities

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011

At 30 June 2012

At 31 December 2011




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011







70




房產

Premises



fittings 總計








30 June 2012 4818427 339960 5158387 於 2011 年 1 月 1 日之








31 December 2011 4231342 352069 4583411

71







房產

Premises



fittings 總計




於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



72





於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





3996035 1077896

於 2012 年 6 月 30 日並沒




73




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




13452227 13476141





125030015 117803145 182655014 174469468

74




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




截至 2012 年 6 月 30 日


3537228000 元（2011年 12 月 31 日港幣

872412000 元）是以存放





債（2011 年 12 月 31 日

港幣 617973000 元）本



3550952000 元（2011年 12 月 31 日港幣

1495704000 元）並於




75














如下


於 2012 年 6 月 30 日 At 30 June 2012

加速

折舊免稅額

Acceleratedtax

depreciation

物業重估

Propertyrevaluation

虧損

Losses


allowance


Other temporary

differences 總計



於 2012 年 1 月 1 日

At 1 January 2012 18231 674564 - (146369) (21747) 524679


（附註 13）




於 2012 年 6 月 30 日

At 30 June 2012 18629 774840 (361) (115705) 34167 711570

76




於 2011 年 12 月 31 日 At 31 December 2011

加速

折舊免稅額

Acceleratedtax

depreciation

物業重估

Propertyrevaluation

虧損

Losses



Other temporary

differences 總計



於 2011 年 1 月 1 日

At 1 January 2011 12554 495653 - (94197) 6844 420854






於 2011 年 12 月 31 日

At 31 December 2011 18231 674564 - (146369) (21747) 524679

77













於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



711570 524679

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






twelve months 677729 583494 674456 543442

於 2012 年 6 月 30 日本




（2011 年 12 月 31 日港

幣 5314000 元）其中



幣 133000 元（2011 年



5289000 元（2011 年 12月 31 日港幣 5198000元）


78




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




of HK$100 each 700000 700000



of HK$100 each 700000 700000




動表


79








2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




















80







於 2012 年

6 月 30 日

於 2011 年

6 月 30 日

At 30 June 2012

At 30 June 2011





構的結餘


28041307 31671165原到期日在 3 個月內之















列示


81








於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






67003409 68072147






特徵有關


82






如下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




19149 15361




擔









於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011







years 61 65 1101989 890613

83










於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





74731 72393






有租金


84
























率和外匯敞口


85

































關產品的特性


86





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment 其他

Others 小計


Eliminations綜合








收益


















87





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合





88





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合








收益












（虧損）


除稅前溢利


89





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合













行所在地分類




之淨經營收入



除稅前

溢利

Profit before

taxation



除稅前

溢利

Profit before






類


90





於 2012 年 6 月 30 日 At 30 June 2012

總資產

Total assets

總負債

Total liabilities


assets



andcommitments



於 2011 年 12 月 31 日 At 31 December 2011

總資產

Total assets

總負債

Total liabilities


assets



andcommitments



91











集團實行控制




行的交易
















交易


92








易
























務



93













述如下



6 月 30 日

半年結算至

2011 年

6 月 30 日


2012
















94








（續）


於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011


parties






餘





95





















如下



2012 年

6 月 30 日

2011 年


201230 June






96









報指示而編製



美元

US Dollars人民幣

Renminbi


currencies

外幣總計

Totalforeign




美元

US Dollars人民幣

Renminbi


currencies

外幣總計

Totalforeign



97






















42044827 2667401 37458137 82170365

98









40557088 309716 34858122 75724926





99











擔


於 2012 年 6 月 30 日 At 30 June 2012 資產負債

表內的

風險承擔

On-balancesheet

exposure



sheetexposure

總風險承擔

Totalexposure

個別評估

之減值準備









43411728 4396299 47808027 10603



表內的

風險承擔

On-balancesheet

exposure



sheetexposure

總風險承擔

Totalexposure

個別評估

之減值準備









37993178 4289418 42282596 4257





類


100

















2012 年 3 月 23 日發出之


告


101

獨立審閱報告



引言






審閱範圍




結論


製


執業會計師

香港2012 年 8 月 15 日

102













Scope of Review







Conclusion






103


於 2012 年 8 月 15 日本銀





李久仲


陳細明

先生（於 2012 年 5 月 22 日






104











(China) Limited


of China



100



Trustee Limited

香港 Hong Kong



100



Agency Limited

香港 Hong Kong



100



(Nominees) Limited

香港 Hong Kong



100





日正式解散

備註












Remarks












105





































106





































107











































108



































109


































110





















坊












111


詞彙涵義















屬公司




112



















113










CONTENTS




June 2012

minus 2 minus

2011






Definitions 202

1













Statements



Board of Directors



Zeng Xiaoping



Zhuo Chengwen

Li Jiuzhong

Zhu Yanlai

Yuen Wai Keung

Chang Hsin Kang


Lau Hon Chuen


2
















Zhou Zaiqun

Chairman


3




























4


Opinion







5






6








7









8


At

31 December At





Director Director


Director Secretary

9

Balance Sheet

At

31 December At






Director Director


Director Secretary

10


Share capital

Share premium

Capital reserve

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve







Share capital

Share premium

Capital reserve

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve









11


Share capital

Share premium

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve

Retained earnings




Share capital

Share premium

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve

Retained earnings







12











13
















Ordinance









14





on 1 January 2011





1 January 2011 Yes



1 July 2010 No



1 January 2011 No


1 July 2010 No





15





the Group in 2011



Standard Content







1 January 2013 No


1 January 2014 Yes


1 July 2011 No


1 July 2011 Yes


1 January 2013 Yes


1 January 2015 Yes






16
















Statementsrsquo


Arrangementsrsquo










17























instrument











18































19

































20











Standard Content




HKAS 12 (Amendment)







a nil tax rate

22 Consolidation


31 December

Subsidiaries







21


















by the Group















22









income



















negative



23











26 Hedge accounting


















24
















interest income






29 Financial assets













25




























26
































27































28


































29






























30



























statement







31
























reporting date











32



























change








33























appropriate



34



218 Leases








(2) Finance leases

















220 Provisions




35












ORSO schemes










(3) Bonus plans












36













profit or loss








loss













37














226 Related parties






38

































39











40






measure these risks















41







environment



activities

Product development













41 Credit Risk









42























Loans and advances











43



























repayment





44















45











to meet obligations



46






















occurs









47






The Group






The Bank














48
















loans and advances

49







The Group

2011

PassSpecial

mentionSubstandard

or below






The Group

2010

PassSpecial

mentionSubstandard

or below






50






The Bank

2011

PassSpecial

mentionSubstandard

or below






The Bank

2010

PassSpecial

mentionSubstandard

or below









51







The Group 2011

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 352958 2767 64 211 356000

The Group 2010

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 293820 1180 126 2791 297917

52






The Bank 2011

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 282121 1818 64 - 284003

The Bank 2010

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 276595 1180 126 - 277901

53







The Group 2011 2010

Grossadvances

Marketvalue of

collateral Gross

advances

Marketvalue of






The Bank 2011 2010

Grossadvances

Marketvalue of

collateral Gross

advances

Marketvalue of







advances

54













The Group 2011 2010




The Bank 2011 2010







55







The Group 2011 2010

Amount


customers Amount



been overdue for




The Bank 2011 2010

Amount


customers Amount



been overdue for




56














personal loans



57






The Group 2011 2010

Amount


customers Amount




The Bank 2011 2010

Amount


customers Amount










58









The Group 2011

Gross

advances


or othersecurity












Individuals






customers 119844229 5201 165966 479116 87615 705132

59







The Group 2010

Gross

advances


or othersecurity












Individuals






customers 116200644 5172 158892 414616 105289 528310

60







The Bank 2011

Gross

advances


or othersecurity












Individuals






customers 84235941 5620 57870 304498 11652 428451

61







The Bank 2010

Gross

advances


or othersecurity












Individuals






customers 77374903 5523 58424 298287 12447 342818


unpaid

62









The Group 2011 2010



written off






Individuals




63







The Bank 2011 2010



written off






Individuals




64












119844229 116200644




705132 528310


428451 342818

65







Overdue advances


479116 414616


304498 298287



84873 103469


8910 10627

66










5933 4652


5183 4574



165966 158892


57870 58424

67










87615 105289


11652 12447



576 77


81 76



68






year (2010 Nil)






alternatives




69







their equivalent



21196827 3347416 7269516 31813759



12562242 2086454 7197310 21846006



70




(E) Debt securities




Aaa Aa1 to

Aa3A1 to

A3Lower

than A3


and government

bodies

Other governments

and government




Aaa Aa1 to

Aa3A1 to

A3Lower than

A3


and government

bodies

Other governments

and government






71






Aaa Aa1 to

Aa3A1 to

A3Lower

than A3


and government

bodies

Other governments

and government




Aaa Aa1 to

Aa3A1 to

A3Lower than

A3


and government

bodies

Other governments

and government






72






The Group 2011


than A3 Unrated



The Group 2010


than A3 Unrated



941715 Total 19903 9320748 3677937 54487 987628 14060703

The Bank 2011


than A3 Unrated



The Bank 2010


than A3 Unrated



941715 Total 19903 8253441 3677937 54487 987628 12993396

73







The Group 2011


than A3 Unrated



The Group 2010


than A3 Unrated



2252783 Total 2881262 7173001 4096501 1147719 14060703 29359186

The Bank 2011


than A3 Unrated



The Bank 2010


than A3 Unrated



2252783 Total 2881262 6818787 4096501 1147719 12993396 27937665

74








Lower than A3








75



42 Market Risk
























76




(A) Currency risk





77








The Group 2011

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 19225118 29009786 19190225 386957 255138 2741 2182 68072147

78





The Group 2010

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 7214879 24187953 18581172 724921 737367 4166 8825 51459283

79





The Bank 2011

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 120827 16531470 18749692 262351 39428 2741 333 35706842

80





The Bank 2010

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments - 12023253 18346577 513897 661528 3951 7642 31556848



81



















economic value













82






















reported to ALCO

83






















84







maturity dates

The Group 2011

Up to 1month

1-3months

3-12months

1-5years

Over 5 years















85





The Group 2010

Up to 1month

1-3months

3-12months

1-5years

Over 5 years















86





The Bank 2011

Up to 1 month

1-3 months

3-12 months

1-5 years

Over 5 years














87





The Bank 2010

Up to 1 month

1-3 months

3-12 months

1-5 years

Over 5 years

Non- interest














88



43 Liquidity Risk





















89



















reported to ALCO

90




(A) Liquidity ratio

2011 2010






91




















held - - 269994 112756 968039 - - 1350789 - others - 5275152 3685012 6247984 8353623 1799526 - 25361297








92












93


















held - - - 880265 1194204 - - 2074469- others - 5160435 1496013 3616135 10226755 1134494 - 21633832








94












95


















held - - 269994 112756 968039 - - 1350789 - others - 4946370 3425073 5326208 7170688 1306548 - 22174887









96












97


















held - - - 880265 1194204 - - 2074469- others - 5042678 899185 3200938 9935016 1134494 - 20212311









98


















provisions if any



maturity

99















100













101

















(250649) (41279) (186940) (67747) (5482) (552097)



(436415) (38213) (139676) (53609) (21078) (688991)

102









(249163) (35951) (153337) (67747) (5482) (511680)



(435413) (37334) (129135) (49656) (21078) (672616)

103








currency options





The Group 2011 Up to 1 1-3 3-12 1-5



- Outflow (11417779) (1925850) (4816609) - (18160238)- Inflow 11367954 1928099 4828157 - 18124210


The Group 2010 Up to 1 1-3 3-12 1-5



- Outflow (14506757) (7394285) (3345066) (34332) (25280440)- Inflow 14541213 7387103 3350384 34392 25313092


104







The Bank 2011 Up to 1 1-3 3-12 1-5



- Outflow (10758766) (1652950) (621855) - (13033571)- Inflow 10710899 1654478 624204 - 12989581


The Bank 2010 Up to 1 1-3 3-12 1-5



- Outflow (13647452) (5999636) (557364) - (20204452)- Inflow 13682848 5993963 557262 - 20234073



Loan commitments



to HK$50503226000 (2010 HK$41155065000) and HK$31434914000 (2010 HK$28530515000)




to HK$17568921000 (2010 HK$10304218000) and HK$4271928000 (2010 HK$3026333000)


105

































106
















20353437 18015416



51862 74499







107










value













108













components











109

























110
























111










securities

Debt

securities Equity









securities

Debt

securities Equity









112










113



2011 2010







12777 18127




80349 (36185)

114

















115










1284837 1433785








116


14 Taxation




403743 312687


347132 325238











117


16 Dividends











summary dismissal








118




















119























Exchange

120











121












Total 13844 260 14104 7055 - 7055







Total 12677 12677 8835 8835


personnel

Remark





122





2011 2010





260 - - -



adjustments - - - -













16449302 9396869 8864144 9498294

43994333 24455981 26941578 20338471

123




Trading securities




Kong - - 518359 699388 518359 699388 - 152 766259 951777 766259 951929

- Unlisted 1109280 942296 370222 358558 1479502 1300854 Total 1109280 942448 1136481 1310335 2245761 2252783



124






















125










December

The Group 2011

Trading








126



The Group 2010

Trading





127



The Bank 2011

Trading





The Bank 2010

Trading





128





Trading

Notqualified


Not qualified







The Group


Trading

Notqualified


Not qualified







129




Trading

Notqualified


Not qualified







The Bank


Trading

Notqualified


Not qualified







130




The Group The Bank


Forwards 619563 715286 566541 672931Swaps 25906 77199 22902 65682


666976 818716 593593 746871








131




















132











133





5889828 7100192 5889828 7100192

- Unlisted 20822258 16608109 17635848 15186588


- Unlisted 43899 34915 43899 34915 26755985 23743216 23569575 22321695




1550700 2385878 570537 2385878



134




The Group 2011

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and


The Group 2010

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and



The Bank 2011

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and


135



The Bank 2010

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and





The Group

2011

Available-

for-salesecurities

Held-to- maturity



The Group

2010

Available-

for-salesecurities

Held-to- maturity



136



The Bank

2011

Available-

for-salesecurities

Held-to- maturity



The Bank

2010

Available-

for-salesecurities

Held-to- maturity



137




The Group




The Bank










138



The Bank












847948 618263 802260 579940






139



The Group

Premises



Premises



140



The Bank

Premises



Premises



141




The Group The Bank





4231342 3196912 4038737 3015655








The Group The Bank







142


29 Other assets

The Group The Bank









The Group The Bank



143





















year are as follows

The Group 2011

Accelerated

tax depreciation



Other temporary




144



Accelerated

tax depreciation



Other temporary




The Bank 2011

Accelerated

tax depreciation

Propertyrevaluation


Other temporary



The Bank 2010

Accelerated

tax depreciation

Propertyrevaluation


Other temporary



145









twelve months 583494 424688 574394 415242 543442 398484 573738 414615





146


35 Share capital




36 Reserves




147















148





The Group The Bank












The Group The Bank




149



(a) As lessee



The Group The Bank






five years 65 - - - 890613 226658 80482 75553

(b) As lessor



The Group The Bank



five years 32416 40425 19215 32214 72393 71558 52633 60477




150


41 Litigation





































151




The Group

2011

Personal Banking


Subtotal















152




The Group

2010

Personal Banking


Subtotal















153




The Bank

2011

Personal Banking


Subtotal















154




The Bank

2010

Personal Banking


Subtotal















155






The Group 2011 2010



Profit before

taxation



Profit before


The Group 2011

Total

assetsTotal


assets


andcommitments


The Group 2010

Total

assetsTotal


assets


andcommitments


156




The Bank 2011 2010



Profit before

taxation



Profit before


The Bank 2011

Total

assetsTotal


assets


andcommitments


The Bank 2010

Total

assetsTotal


assets


andcommitments


157

















158















159






2011 2010

Other related




Balance sheet items











160







USOther

foreign Total



USOther

foreign Total








161



2011

BanksPublic sector

entities Others


2010

BanksPublic sector

entities Others




162






2011

On-balance

sheetexposure

Off-balance

sheetexposure

Total exposure






71331184 18606615 89937799 79555

2010

On-balance

sheetexposure

Off-balance

sheetexposure

Total exposure






67780708 11956937 79737645 98886


accordingly








163














164














Securitisation 51 -






28727 596740


approach


165












Corporate exposures








Retail exposures


Retail IRB Approach

















166





(continued)













equivalent 1 1A AAA

2A AA+ 2B AA

2

2C


AA- 3A A+ 3B A

3

3C


A-

4A BBB+ 4B BBB

4

4C


BBB-


5

5F


BB- 6A B+ 6B B+ 6C B 6D B 6E B-

6F B-

6

6G


B-

7A CCC 7B CC

7

7C


C


167






information etc





















168























169













performance review




170






2011

FoundationIRB

Approach


Approach

RetailIRB

Approach


Approach Total






Others - - - 6158687 6158687 Total 193029549 1893758 21139678 6158687 222221672




of IRB approach

2011 HK$rsquo000


201081994

171




















172






Exposure- weighted

average risk-weight

Exposure-weighted



2011


Exposure-weighted

average risk-weight





Exposure-weighted

average risk-weight

Exposure-weighted


173





December 2011




174









175










Actual default

rate during 2011









standards








176






- Sovereign













177




2011


Total



collateral


orrecognised










exposures 432601 97127 335474 66037 296109 184182 4357


exposures 30688589 23527574 6814645 643444 4553840 530552 31103


178




(continued)

2010


Total



collateral


orrecognised










exposures 9087667 2448418 6639249 1863965 6413997 1725194 1320674


exposures 198635438 72866515 117334702 21264924 99223115 10170590 10380059



179













transactions




180





style transactions













181













3061 818717

182









- 824973





183







exposures





2011 Securitisation


amount Capital


184




2010 Securitisation


amount Capital



December 2010


(2010 Nil)





185
















2011 2010




186

Management of Risks

The Overview









policies











187















mitigation













satisfactory

188
























regulations






189















are given below

Executive Committee








company



Notes



March 2011

190


Audit Committee





















Notes


2011


28 March 2011

191







from time to time







192






management








Managers














193


























mechanism


Adjustmentrdquo




post perspectives





194














indicators
















195



















196

Business Review





















Principal Business






197
































198



































199




(continued)






Risk Management

















200















Outlook





201

Appendix




Name





Republic of China





















Remarks





Ordinance

202

Definitions



















203






















204













Interim Report 2012




in Equity 4



7


10





53


institutions56




statement 79





1



2012 年 6 月 30 日

2011 年

6 月 30 日


Notes30 June

2012 30 June






















之組成部分


2




2012 年 6 月 30 日

2011 年

6 月 30 日


30 June

2012 30 June
















之組成部分


3



於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

附註

NotesAt 30 June

2012 At 31 December












組成部分


4



股本

Share capital

股本溢價

Share premium

資本儲備

Capital reserve

房產

重估儲備

Premisesrevaluation

reserve

可供出售

證券公平值

變動儲備



for-sale securities

監管儲備

Regulatory reserve

換算儲備

Translation reserve

留存盈利

Retained earnings

總計





















5




股本

Share capital

股本溢價

Share premium

資本儲備

Capital reserve

房產

重估儲備

Premisesrevaluation

reserve

可供出售

證券公平值

變動儲備



for-sale securities

監管儲備

Regulatory reserve

換算儲備

Translation reserve

留存盈利

Retained earnings

總計















期風險）



組成部分


6




2012 年 6 月 30 日

2011 年

6 月 30 日

附註

Notes


2012







(48200) (45670)


and equipment


properties




cash equivalents



部分


7


























則









訊



8









準則 Standard

內容 Content





2012 年 7 月 1 日 1 July 2012

香港會計準則第 19 號（2011） HKAS 19 (2011)


2013 年 1 月 1 日 1 January 2013

香港會計準則第 27 號（2011） HKAS 27 (2011)


2013 年 1 月 1 日 1 January 2013

香港會計準則第 28 號（2011） HKAS 28 (2011)


2013 年 1 月 1 日 1 January 2013




2014 年 1 月 1 日 1 January 2014




2013 年 1 月 1 日 1 January 2013




2015 年 1 月 1 日 1 January 2015



2015 年 1 月 1 日 1 January 2015



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013





9








（續）












10





policies



一致


11









這些風險承擔







或多項損失事











者間之差額計






了損失事件


12








於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011





















之抵押品價值


13










如下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011





284508 165966 總特定分類或減



023 014








類的「次級」




貸款


14

























期處理


15











下




百分比



期 Gross advances








- 超過 1 年 - over one year 86733 007 88155 008






備


16









於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011
















物業於 2012 年 6 月 30日及 2011 年 12月 31 日沒有逾



構貸款


17








於 2012 年 6 月 30 日及 2011 年 12 月31 日沒有經重組








貸款內




百分比






18









客戶貸款總額

根據在香港境

內或境外以及

借貸人從事之

業務作出分類

之客戶貸款總

額分析如下



於 2012 年 6 月 30 日 At 30 June 2012

客戶貸款總額

Gross advances

to customers


Covered by



Classified or

impaired逾期

Overdue














樓宇之貸款





- 其他 - Others 2911580 7483 2509 16455 805 1856





19










客戶貸款總額

（續）


於 2011 年 12 月 31 日 At 31 December 2011

客戶貸款總額

Gross advances

to customers


Covered by



Classified or

impaired逾期

Overdue
















樓宇之貸款





- 其他 - Others 2477768 8341 2625 10544 825 2084








款


20










類之客戶貸款


貸款之地理區

域分析是根據

交易對手之所

在地並已顧

及風險轉移因

素一般而

言假如客戶

貸款之擔保人

所處國家與客

戶不同則會

確認有關貸款

之風險轉移




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011




125182253 119844229

就客戶貸款

總額作組合

評估之貸款

減值準備



797445 705132

21










類之客戶貸款

總額（續）



就逾期貸款

作個別評

估之貸款

減值準備



94328 84873

就逾期貸款

作組合評

估之貸款

減值準備



4747 5933

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011




551797 479116

22










類之客戶貸款

總額（續）


特定分類或減


於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011




284508 165966

就特定分類或

減值貸款作

個別評估之

貸款減值準

備



100865 87615

就特定分類或

減值貸款作

組合評估之

貸款減值準

備



900 576

23








5222000 元（2011年 12 月 31 日港幣

2530000 元）這包









24










於 2012 年 6 月 30 日

At 30 June 2012

無評級

Unrated

Aaa

Aa1 至Aa3

Aa1 toAa3

A1 至A3

A1 toA3

A3 以下Lower than

A3



and government

bodies


Other governments

and government

agencies其他

Others總計Total



押債券 MBSABS






小計 Subtotal 610 2886780 579044 267198 1368657 - 299261 5401550

總計 Total 822863 18022824 6431263 473874 3018358 1728663 11646479 42144324

25






於 2011 年 12 月 31 日

At 31 December 2011

無評級

Unrated

Aaa

Aa1 至 Aa3Aa1 to

Aa3

A1 至A3

A1 toA3

A3 以下Lower than

A3



and government

bodies


Other governments

and government

agencies其他

Others總計Total



押債券 MBSABS

- 20335 - 1699 - - - 22034






押債券 MBSABS

- - 5046 - - - - 5046


小計 Subtotal 500 521205 575547 267066 587575 - 293868 2245761

總計 Total 623047 11135918 4454750 471707 5592845 678604 9427595 32384466


額為港幣 16393500000 元

（2011 年 12 月 31 日港幣

15699044000 元）其中沒有發

行人評級僅為港幣 3065445000元（2011 年 12 月 31 日港幣

2741631000 元）詳情請參閱

第 26 頁


26









下


於 2012 年 6 月 30 日 At 30 June 2012

Aaa


A1 至 A3A1 to A3

A3 以下 Lower

than A3 無評級

Unrated 總計







總計 Total 55440 6786525 6186829 299261 3065445 16393500

於 2011 年 12 月 31 日 At 31 December 2011

Aaa


A1 至 A3A1 to A3

A3 以下 Lower

than A3 無評級

Unrated 總計








總計 Total - 8861949 4095464 - 2741631 15699044

27






於 2012 年 6 月 30日及 2011 年 12 月


務證券

於 2012 年 6 月 30日及 2011 年 12 月


債務證券


28





















外匯風險


29







2012 年 6 月 30 日及

2011 年 12 月 31 日之




並按原幣分類


於 2012 年 6 月 30 日 At 30 June 2012

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計













30






於 2012 年 6 月 30 日 At 30 June 2012

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計









commitments 20911086 24491258 20908331 361959 305348 12372 13055 67003409

31






於 2011 年 12 月 31 日 At 31 December 2011

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計












32






於 2011 年 12 月 31 日 At 31 December 2011

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計









position (2216052) (7515536) 8491862 74164 36636 911189 533472 315735


commitments 19225118 29009786 19190225 386957 255138 2741 2182 68072147








33







於 2012 年 6 月 30日及 2011 年 12 月






為準）分類


於 2012 年 6 月 30 日

At 30 June 2012

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不計息

Non-interest

bearing總計













34






於 2012 年 6 月 30 日

At 30 June 2012

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計








35






於 2011 年 12 月 31 日

At 31 December 2011

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計












36






於 2011 年 12 月 31 日 At 31 December 2011

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計








37







2012 年

6 月 30 日

2011 年

6 月 30 日


30 June

201230 June

2011










事處）計算


38










限分類


於 2012 年 6 月 30 日 At 30 June 2012

即期

Ondemand

一個月內

Up to 1 month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不確定

日期

Indefinite總計




















39






於 2012 年 6 月 30 日 At 30 June 2012

即期

Ondemand

一個月內

Up to 1 month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不確定

日期

Indefinite總計










40






於 2011 年 12 月 31 日 At 31 December 2011

即期

On demand

一個月內

Up to1 month

一至

三個月

1-3 months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over

5 years

不確定

日期

Indefinite總計





















41






於 2011 年 12 月 31 日 At 31 December 2011

即期

On demand

一個月內

Up to1 month

一至

三個月

1-3 months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over

5 years

不確定

日期

Indefinite總計










42































有至到期日


43





本集團由 2011 年 1 月 1 日















法在 2012 年 6 月 30 日沒




自 2012 年 1 月 1 日起生









於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011



44




















45








6 月 30 日及 2011 年






於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011













益









46












扣減


47




2012 年 6 月 30 日

2011 年

6 月 30 日


2012 30 June





3823200 2464251




(1884023) (944607)



包括港幣 3069000 元






31000 元）





為港幣 3793074000 元


2436007000 元）及港幣

1879225000 元（2011 年

上半年港幣 943582000元）


48





6 月 30 日2011 年


201230 June



406947 461947


(32896) (37602)







5617 6688

49





2012 年 6 月 30 日

2011 年

6 月 30 日


2012 30 June




products


49397 28464

50





2012 年

6 月 30 日 2011 年

6 月 30 日


30 June

2012 30 June





2012 年6 月 30 日

2011 年6 月 30 日


201230 June




23335 21255


港幣 60000 元（2011 年上半



營支出


51






6 月 30 日 2011 年


2012 30 June





















52





2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




470586 405612




167106 148265




890403 306810







454296000 元並於 2011






53





properties


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




properties 70493 95971 70493 95762



equipment


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June



54







2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June






248308 315062







現行稅率計算


55









2012 年

6 月 30 日 2011 年

6 月 30 日


30 June

2012 30 June



按稅率 165（2011





56




半年結算至











於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011








16449302 38252446 43994333




總額為港幣 392000000 元


57








總計 Total

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31December

2011

At 30 June 2012

At 31December

2011

At 30 June 2012

At 31December





- - 769228 766259 769228 766259 - 非上市 - Unlisted 4256047 1109280 376275 370222 4632322 1479502

總計 Total 4256047 1109280 1145503 1136481 5401550 2245761

58







下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




5401550 2245761



610000 元（2011 年 12月 31 日港幣 500000 元）






於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






1136981

5401550 2245761

59






























期權）


60



























較大的波動


61





具於 2012 年 6 月 30 日及

2011 年 12 月 31 日之合約

名義合約數額


於 2012 年 6 月 30 日 At 30 June 2012

買賣

Trading



accounting 總計












衍生金融工具


62




於 2011 年 12 月 31 日 At 31 December 2011

買賣

Trading



accounting 總計






63





具於 2012 年 6 月 30 日及

2011 年 12 月 31 日之公平

值


於 2012 年 6 月 30 日 At 30 June 2012



買賣

Trading

不符合採用

對沖會計法

Notqualified


總計

Total買賣

Trading



accounting 總計







64




於 2011 年 12 月 31 日 At 31 December 2011



買賣

Trading

不符合採用

對沖會計法

Notqualified


總計

Total買賣

Trading



accounting 總計

Total







65






於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





416206 666976








所影響


66




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





於 2012 年 6 月 30 日客


12 月 31 日港幣

533810000 元）於 2012 年 6 月 30 日及

2011 年 12 月 31 日對貿




63078753000 元（2011年 12 月 31 日港幣

61458683000 元）及美


35463496000 元（2011年 12 月 31 日港幣

34285493000 元）



67




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






34126055 26712086 股份證券按公平值






2616719




-



-

118147

68






於 2012 年 6 月 30 日 At 30 June 2012

可供出售證券

Available- for-sale

securities


Held-to- maturity

securities 總計



34181365 2616719 36798084

於 2011 年 12 月 31 日 At 31 December 2011

可供出售證券

Available-for-sale

securities

持有至

到期日證券

Held-to-maturity

securities

貸款及應收款

Loans and

receivables 總計





438114000 元（2011 年

12 月 31 日港幣

175915000 元）在《銀行


為公營單位


69






可供出售證券



securities

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011

At 30 June 2012

At 31 December 2011




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011







70




房產

Premises



fittings 總計








30 June 2012 4818427 339960 5158387 於 2011 年 1 月 1 日之








31 December 2011 4231342 352069 4583411

71







房產

Premises



fittings 總計




於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



72





於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





3996035 1077896

於 2012 年 6 月 30 日並沒




73




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




13452227 13476141





125030015 117803145 182655014 174469468

74




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




截至 2012 年 6 月 30 日


3537228000 元（2011年 12 月 31 日港幣

872412000 元）是以存放





債（2011 年 12 月 31 日

港幣 617973000 元）本



3550952000 元（2011年 12 月 31 日港幣

1495704000 元）並於




75














如下


於 2012 年 6 月 30 日 At 30 June 2012

加速

折舊免稅額

Acceleratedtax

depreciation

物業重估

Propertyrevaluation

虧損

Losses


allowance


Other temporary

differences 總計



於 2012 年 1 月 1 日

At 1 January 2012 18231 674564 - (146369) (21747) 524679


（附註 13）




於 2012 年 6 月 30 日

At 30 June 2012 18629 774840 (361) (115705) 34167 711570

76




於 2011 年 12 月 31 日 At 31 December 2011

加速

折舊免稅額

Acceleratedtax

depreciation

物業重估

Propertyrevaluation

虧損

Losses



Other temporary

differences 總計



於 2011 年 1 月 1 日

At 1 January 2011 12554 495653 - (94197) 6844 420854






於 2011 年 12 月 31 日

At 31 December 2011 18231 674564 - (146369) (21747) 524679

77













於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



711570 524679

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






twelve months 677729 583494 674456 543442

於 2012 年 6 月 30 日本




（2011 年 12 月 31 日港

幣 5314000 元）其中



幣 133000 元（2011 年



5289000 元（2011 年 12月 31 日港幣 5198000元）


78




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




of HK$100 each 700000 700000



of HK$100 each 700000 700000




動表


79








2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




















80







於 2012 年

6 月 30 日

於 2011 年

6 月 30 日

At 30 June 2012

At 30 June 2011





構的結餘


28041307 31671165原到期日在 3 個月內之















列示


81








於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






67003409 68072147






特徵有關


82






如下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




19149 15361




擔









於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011







years 61 65 1101989 890613

83










於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





74731 72393






有租金


84
























率和外匯敞口


85

































關產品的特性


86





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment 其他

Others 小計


Eliminations綜合








收益


















87





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合





88





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合








收益












（虧損）


除稅前溢利


89





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合













行所在地分類




之淨經營收入



除稅前

溢利

Profit before

taxation



除稅前

溢利

Profit before






類


90





於 2012 年 6 月 30 日 At 30 June 2012

總資產

Total assets

總負債

Total liabilities


assets



andcommitments



於 2011 年 12 月 31 日 At 31 December 2011

總資產

Total assets

總負債

Total liabilities


assets



andcommitments



91











集團實行控制




行的交易
















交易


92








易
























務



93













述如下



6 月 30 日

半年結算至

2011 年

6 月 30 日


2012
















94








（續）


於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011


parties






餘





95





















如下



2012 年

6 月 30 日

2011 年


201230 June






96









報指示而編製



美元

US Dollars人民幣

Renminbi


currencies

外幣總計

Totalforeign




美元

US Dollars人民幣

Renminbi


currencies

外幣總計

Totalforeign



97






















42044827 2667401 37458137 82170365

98









40557088 309716 34858122 75724926





99











擔


於 2012 年 6 月 30 日 At 30 June 2012 資產負債

表內的

風險承擔

On-balancesheet

exposure



sheetexposure

總風險承擔

Totalexposure

個別評估

之減值準備









43411728 4396299 47808027 10603



表內的

風險承擔

On-balancesheet

exposure



sheetexposure

總風險承擔

Totalexposure

個別評估

之減值準備









37993178 4289418 42282596 4257





類


100

















2012 年 3 月 23 日發出之


告


101

獨立審閱報告



引言






審閱範圍




結論


製


執業會計師

香港2012 年 8 月 15 日

102













Scope of Review







Conclusion






103


於 2012 年 8 月 15 日本銀





李久仲


陳細明

先生（於 2012 年 5 月 22 日






104











(China) Limited


of China



100



Trustee Limited

香港 Hong Kong



100



Agency Limited

香港 Hong Kong



100



(Nominees) Limited

香港 Hong Kong



100





日正式解散

備註












Remarks












105





































106





































107











































108



































109


































110





















坊












111


詞彙涵義















屬公司




112



















113










2011






Definitions 202

1













Statements



Board of Directors



Zeng Xiaoping



Zhuo Chengwen

Li Jiuzhong

Zhu Yanlai

Yuen Wai Keung

Chang Hsin Kang


Lau Hon Chuen


2
















Zhou Zaiqun

Chairman


3




























4


Opinion







5






6








7









8


At

31 December At





Director Director


Director Secretary

9

Balance Sheet

At

31 December At






Director Director


Director Secretary

10


Share capital

Share premium

Capital reserve

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve







Share capital

Share premium

Capital reserve

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve









11


Share capital

Share premium

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve

Retained earnings




Share capital

Share premium

Premisesrevaluation

reserve



for-sale securities

Regulatory reserve

Translation reserve

Retained earnings







12











13
















Ordinance









14





on 1 January 2011





1 January 2011 Yes



1 July 2010 No



1 January 2011 No


1 July 2010 No





15





the Group in 2011



Standard Content







1 January 2013 No


1 January 2014 Yes


1 July 2011 No


1 July 2011 Yes


1 January 2013 Yes


1 January 2015 Yes






16
















Statementsrsquo


Arrangementsrsquo










17























instrument











18































19

































20











Standard Content




HKAS 12 (Amendment)







a nil tax rate

22 Consolidation


31 December

Subsidiaries







21


















by the Group















22









income



















negative



23











26 Hedge accounting


















24
















interest income






29 Financial assets













25




























26
































27































28


































29






























30



























statement







31
























reporting date











32



























change








33























appropriate



34



218 Leases








(2) Finance leases

















220 Provisions




35












ORSO schemes










(3) Bonus plans












36













profit or loss








loss













37














226 Related parties






38

































39











40






measure these risks















41







environment



activities

Product development













41 Credit Risk









42























Loans and advances











43



























repayment





44















45











to meet obligations



46






















occurs









47






The Group






The Bank














48
















loans and advances

49







The Group

2011

PassSpecial

mentionSubstandard

or below






The Group

2010

PassSpecial

mentionSubstandard

or below






50






The Bank

2011

PassSpecial

mentionSubstandard

or below






The Bank

2010

PassSpecial

mentionSubstandard

or below









51







The Group 2011

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 352958 2767 64 211 356000

The Group 2010

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 293820 1180 126 2791 297917

52






The Bank 2011

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 282121 1818 64 - 284003

The Bank 2010

Overdue for

threemonths or less


or less but over

threemonths

Overduefor one year

or lessbut over

six months

Overdue for over





Total 276595 1180 126 - 277901

53







The Group 2011 2010

Grossadvances

Marketvalue of

collateral Gross

advances

Marketvalue of






The Bank 2011 2010

Grossadvances

Marketvalue of

collateral Gross

advances

Marketvalue of







advances

54













The Group 2011 2010




The Bank 2011 2010







55







The Group 2011 2010

Amount


customers Amount



been overdue for




The Bank 2011 2010

Amount


customers Amount



been overdue for




56














personal loans



57






The Group 2011 2010

Amount


customers Amount




The Bank 2011 2010

Amount


customers Amount










58









The Group 2011

Gross

advances


or othersecurity












Individuals






customers 119844229 5201 165966 479116 87615 705132

59







The Group 2010

Gross

advances


or othersecurity












Individuals






customers 116200644 5172 158892 414616 105289 528310

60







The Bank 2011

Gross

advances


or othersecurity












Individuals






customers 84235941 5620 57870 304498 11652 428451

61







The Bank 2010

Gross

advances


or othersecurity












Individuals






customers 77374903 5523 58424 298287 12447 342818


unpaid

62









The Group 2011 2010



written off






Individuals




63







The Bank 2011 2010



written off






Individuals




64












119844229 116200644




705132 528310


428451 342818

65







Overdue advances


479116 414616


304498 298287



84873 103469


8910 10627

66










5933 4652


5183 4574



165966 158892


57870 58424

67










87615 105289


11652 12447



576 77


81 76



68






year (2010 Nil)






alternatives




69







their equivalent



21196827 3347416 7269516 31813759



12562242 2086454 7197310 21846006



70




(E) Debt securities




Aaa Aa1 to

Aa3A1 to

A3Lower

than A3


and government

bodies

Other governments

and government




Aaa Aa1 to

Aa3A1 to

A3Lower than

A3


and government

bodies

Other governments

and government






71






Aaa Aa1 to

Aa3A1 to

A3Lower

than A3


and government

bodies

Other governments

and government




Aaa Aa1 to

Aa3A1 to

A3Lower than

A3


and government

bodies

Other governments

and government






72






The Group 2011


than A3 Unrated



The Group 2010


than A3 Unrated



941715 Total 19903 9320748 3677937 54487 987628 14060703

The Bank 2011


than A3 Unrated



The Bank 2010


than A3 Unrated



941715 Total 19903 8253441 3677937 54487 987628 12993396

73







The Group 2011


than A3 Unrated



The Group 2010


than A3 Unrated



2252783 Total 2881262 7173001 4096501 1147719 14060703 29359186

The Bank 2011


than A3 Unrated



The Bank 2010


than A3 Unrated



2252783 Total 2881262 6818787 4096501 1147719 12993396 27937665

74








Lower than A3








75



42 Market Risk
























76




(A) Currency risk





77








The Group 2011

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 19225118 29009786 19190225 386957 255138 2741 2182 68072147

78





The Group 2010

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 7214879 24187953 18581172 724921 737367 4166 8825 51459283

79





The Bank 2011

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments 120827 16531470 18749692 262351 39428 2741 333 35706842

80





The Bank 2010

Renminbi

US Dollars

HK Dollars Euro

Japanese Yen
















commitments - 12023253 18346577 513897 661528 3951 7642 31556848



81



















economic value













82






















reported to ALCO

83






















84







maturity dates

The Group 2011

Up to 1month

1-3months

3-12months

1-5years

Over 5 years















85





The Group 2010

Up to 1month

1-3months

3-12months

1-5years

Over 5 years















86





The Bank 2011

Up to 1 month

1-3 months

3-12 months

1-5 years

Over 5 years














87





The Bank 2010

Up to 1 month

1-3 months

3-12 months

1-5 years

Over 5 years

Non- interest














88



43 Liquidity Risk





















89



















reported to ALCO

90




(A) Liquidity ratio

2011 2010






91




















held - - 269994 112756 968039 - - 1350789 - others - 5275152 3685012 6247984 8353623 1799526 - 25361297








92












93


















held - - - 880265 1194204 - - 2074469- others - 5160435 1496013 3616135 10226755 1134494 - 21633832








94












95


















held - - 269994 112756 968039 - - 1350789 - others - 4946370 3425073 5326208 7170688 1306548 - 22174887









96












97


















held - - - 880265 1194204 - - 2074469- others - 5042678 899185 3200938 9935016 1134494 - 20212311









98


















provisions if any



maturity

99















100













101

















(250649) (41279) (186940) (67747) (5482) (552097)



(436415) (38213) (139676) (53609) (21078) (688991)

102









(249163) (35951) (153337) (67747) (5482) (511680)



(435413) (37334) (129135) (49656) (21078) (672616)

103








currency options





The Group 2011 Up to 1 1-3 3-12 1-5



- Outflow (11417779) (1925850) (4816609) - (18160238)- Inflow 11367954 1928099 4828157 - 18124210


The Group 2010 Up to 1 1-3 3-12 1-5



- Outflow (14506757) (7394285) (3345066) (34332) (25280440)- Inflow 14541213 7387103 3350384 34392 25313092


104







The Bank 2011 Up to 1 1-3 3-12 1-5



- Outflow (10758766) (1652950) (621855) - (13033571)- Inflow 10710899 1654478 624204 - 12989581


The Bank 2010 Up to 1 1-3 3-12 1-5



- Outflow (13647452) (5999636) (557364) - (20204452)- Inflow 13682848 5993963 557262 - 20234073



Loan commitments



to HK$50503226000 (2010 HK$41155065000) and HK$31434914000 (2010 HK$28530515000)




to HK$17568921000 (2010 HK$10304218000) and HK$4271928000 (2010 HK$3026333000)


105

































106
















20353437 18015416



51862 74499







107










value













108













components











109

























110
























111










securities

Debt

securities Equity









securities

Debt

securities Equity









112










113



2011 2010







12777 18127




80349 (36185)

114

















115










1284837 1433785








116


14 Taxation




403743 312687


347132 325238











117


16 Dividends











summary dismissal








118




















119























Exchange

120











121












Total 13844 260 14104 7055 - 7055







Total 12677 12677 8835 8835


personnel

Remark





122





2011 2010





260 - - -



adjustments - - - -













16449302 9396869 8864144 9498294

43994333 24455981 26941578 20338471

123




Trading securities




Kong - - 518359 699388 518359 699388 - 152 766259 951777 766259 951929

- Unlisted 1109280 942296 370222 358558 1479502 1300854 Total 1109280 942448 1136481 1310335 2245761 2252783



124






















125










December

The Group 2011

Trading








126



The Group 2010

Trading





127



The Bank 2011

Trading





The Bank 2010

Trading





128





Trading

Notqualified


Not qualified







The Group


Trading

Notqualified


Not qualified







129




Trading

Notqualified


Not qualified







The Bank


Trading

Notqualified


Not qualified







130




The Group The Bank


Forwards 619563 715286 566541 672931Swaps 25906 77199 22902 65682


666976 818716 593593 746871








131




















132











133





5889828 7100192 5889828 7100192

- Unlisted 20822258 16608109 17635848 15186588


- Unlisted 43899 34915 43899 34915 26755985 23743216 23569575 22321695




1550700 2385878 570537 2385878



134




The Group 2011

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and


The Group 2010

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and



The Bank 2011

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and


135



The Bank 2010

Available-

for-salesecurities

Held-to-maturity

securitiesLoans and





The Group

2011

Available-

for-salesecurities

Held-to- maturity



The Group

2010

Available-

for-salesecurities

Held-to- maturity



136



The Bank

2011

Available-

for-salesecurities

Held-to- maturity



The Bank

2010

Available-

for-salesecurities

Held-to- maturity



137




The Group




The Bank










138



The Bank












847948 618263 802260 579940






139



The Group

Premises



Premises



140



The Bank

Premises



Premises



141




The Group The Bank





4231342 3196912 4038737 3015655








The Group The Bank







142


29 Other assets

The Group The Bank









The Group The Bank



143





















year are as follows

The Group 2011

Accelerated

tax depreciation



Other temporary




144



Accelerated

tax depreciation



Other temporary




The Bank 2011

Accelerated

tax depreciation

Propertyrevaluation


Other temporary



The Bank 2010

Accelerated

tax depreciation

Propertyrevaluation


Other temporary



145









twelve months 583494 424688 574394 415242 543442 398484 573738 414615





146


35 Share capital




36 Reserves




147















148





The Group The Bank












The Group The Bank




149



(a) As lessee



The Group The Bank






five years 65 - - - 890613 226658 80482 75553

(b) As lessor



The Group The Bank



five years 32416 40425 19215 32214 72393 71558 52633 60477




150


41 Litigation





































151




The Group

2011

Personal Banking


Subtotal















152




The Group

2010

Personal Banking


Subtotal















153




The Bank

2011

Personal Banking


Subtotal















154




The Bank

2010

Personal Banking


Subtotal















155






The Group 2011 2010



Profit before

taxation



Profit before


The Group 2011

Total

assetsTotal


assets


andcommitments


The Group 2010

Total

assetsTotal


assets


andcommitments


156




The Bank 2011 2010



Profit before

taxation



Profit before


The Bank 2011

Total

assetsTotal


assets


andcommitments


The Bank 2010

Total

assetsTotal


assets


andcommitments


157

















158















159






2011 2010

Other related




Balance sheet items











160







USOther

foreign Total



USOther

foreign Total








161



2011

BanksPublic sector

entities Others


2010

BanksPublic sector

entities Others




162






2011

On-balance

sheetexposure

Off-balance

sheetexposure

Total exposure






71331184 18606615 89937799 79555

2010

On-balance

sheetexposure

Off-balance

sheetexposure

Total exposure






67780708 11956937 79737645 98886


accordingly








163














164














Securitisation 51 -






28727 596740


approach


165












Corporate exposures








Retail exposures


Retail IRB Approach

















166





(continued)













equivalent 1 1A AAA

2A AA+ 2B AA

2

2C


AA- 3A A+ 3B A

3

3C


A-

4A BBB+ 4B BBB

4

4C


BBB-


5

5F


BB- 6A B+ 6B B+ 6C B 6D B 6E B-

6F B-

6

6G


B-

7A CCC 7B CC

7

7C


C


167






information etc





















168























169













performance review




170






2011

FoundationIRB

Approach


Approach

RetailIRB

Approach


Approach Total






Others - - - 6158687 6158687 Total 193029549 1893758 21139678 6158687 222221672




of IRB approach

2011 HK$rsquo000


201081994

171




















172






Exposure- weighted

average risk-weight

Exposure-weighted



2011


Exposure-weighted

average risk-weight





Exposure-weighted

average risk-weight

Exposure-weighted


173





December 2011




174









175










Actual default

rate during 2011









standards








176






- Sovereign













177




2011


Total



collateral


orrecognised










exposures 432601 97127 335474 66037 296109 184182 4357


exposures 30688589 23527574 6814645 643444 4553840 530552 31103


178




(continued)

2010


Total



collateral


orrecognised










exposures 9087667 2448418 6639249 1863965 6413997 1725194 1320674


exposures 198635438 72866515 117334702 21264924 99223115 10170590 10380059



179













transactions




180





style transactions













181













3061 818717

182









- 824973





183







exposures





2011 Securitisation


amount Capital


184




2010 Securitisation


amount Capital



December 2010


(2010 Nil)





185
















2011 2010




186

Management of Risks

The Overview









policies











187















mitigation













satisfactory

188
























regulations






189















are given below

Executive Committee








company



Notes



March 2011

190


Audit Committee





















Notes


2011


28 March 2011

191







from time to time







192






management








Managers














193


























mechanism


Adjustmentrdquo




post perspectives





194














indicators
















195



















196

Business Review





















Principal Business






197
































198



































199




(continued)






Risk Management

















200















Outlook





201

Appendix




Name





Republic of China





















Remarks





Ordinance

202

Definitions



















203






















204













Interim Report 2012




in Equity 4



7


10





53


institutions56




statement 79





1



2012 年 6 月 30 日

2011 年

6 月 30 日


Notes30 June

2012 30 June






















之組成部分


2




2012 年 6 月 30 日

2011 年

6 月 30 日


30 June

2012 30 June
















之組成部分


3



於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

附註

NotesAt 30 June

2012 At 31 December












組成部分


4



股本

Share capital

股本溢價

Share premium

資本儲備

Capital reserve

房產

重估儲備

Premisesrevaluation

reserve

可供出售

證券公平值

變動儲備



for-sale securities

監管儲備

Regulatory reserve

換算儲備

Translation reserve

留存盈利

Retained earnings

總計





















5




股本

Share capital

股本溢價

Share premium

資本儲備

Capital reserve

房產

重估儲備

Premisesrevaluation

reserve

可供出售

證券公平值

變動儲備



for-sale securities

監管儲備

Regulatory reserve

換算儲備

Translation reserve

留存盈利

Retained earnings

總計















期風險）



組成部分


6




2012 年 6 月 30 日

2011 年

6 月 30 日

附註

Notes


2012







(48200) (45670)


and equipment


properties




cash equivalents



部分


7


























則









訊



8









準則 Standard

內容 Content





2012 年 7 月 1 日 1 July 2012

香港會計準則第 19 號（2011） HKAS 19 (2011)


2013 年 1 月 1 日 1 January 2013

香港會計準則第 27 號（2011） HKAS 27 (2011)


2013 年 1 月 1 日 1 January 2013

香港會計準則第 28 號（2011） HKAS 28 (2011)


2013 年 1 月 1 日 1 January 2013




2014 年 1 月 1 日 1 January 2014




2013 年 1 月 1 日 1 January 2013




2015 年 1 月 1 日 1 January 2015



2015 年 1 月 1 日 1 January 2015



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013



2013 年 1 月 1 日 1 January 2013





9








（續）












10





policies



一致


11









這些風險承擔







或多項損失事











者間之差額計






了損失事件


12








於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011





















之抵押品價值


13










如下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011





284508 165966 總特定分類或減



023 014








類的「次級」




貸款


14

























期處理


15











下




百分比



期 Gross advances








- 超過 1 年 - over one year 86733 007 88155 008






備


16









於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011
















物業於 2012 年 6 月 30日及 2011 年 12月 31 日沒有逾



構貸款


17








於 2012 年 6 月 30 日及 2011 年 12 月31 日沒有經重組








貸款內




百分比






18









客戶貸款總額

根據在香港境

內或境外以及

借貸人從事之

業務作出分類

之客戶貸款總

額分析如下



於 2012 年 6 月 30 日 At 30 June 2012

客戶貸款總額

Gross advances

to customers


Covered by



Classified or

impaired逾期

Overdue














樓宇之貸款





- 其他 - Others 2911580 7483 2509 16455 805 1856





19










客戶貸款總額

（續）


於 2011 年 12 月 31 日 At 31 December 2011

客戶貸款總額

Gross advances

to customers


Covered by



Classified or

impaired逾期

Overdue
















樓宇之貸款





- 其他 - Others 2477768 8341 2625 10544 825 2084








款


20










類之客戶貸款


貸款之地理區

域分析是根據

交易對手之所

在地並已顧

及風險轉移因

素一般而

言假如客戶

貸款之擔保人

所處國家與客

戶不同則會

確認有關貸款

之風險轉移




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011




125182253 119844229

就客戶貸款

總額作組合

評估之貸款

減值準備



797445 705132

21










類之客戶貸款

總額（續）



就逾期貸款

作個別評

估之貸款

減值準備



94328 84873

就逾期貸款

作組合評

估之貸款

減值準備



4747 5933

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011




551797 479116

22










類之客戶貸款

總額（續）


特定分類或減


於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011




284508 165966

就特定分類或

減值貸款作

個別評估之

貸款減值準

備



100865 87615

就特定分類或

減值貸款作

組合評估之

貸款減值準

備



900 576

23








5222000 元（2011年 12 月 31 日港幣

2530000 元）這包









24










於 2012 年 6 月 30 日

At 30 June 2012

無評級

Unrated

Aaa

Aa1 至Aa3

Aa1 toAa3

A1 至A3

A1 toA3

A3 以下Lower than

A3



and government

bodies


Other governments

and government

agencies其他

Others總計Total



押債券 MBSABS






小計 Subtotal 610 2886780 579044 267198 1368657 - 299261 5401550

總計 Total 822863 18022824 6431263 473874 3018358 1728663 11646479 42144324

25






於 2011 年 12 月 31 日

At 31 December 2011

無評級

Unrated

Aaa

Aa1 至 Aa3Aa1 to

Aa3

A1 至A3

A1 toA3

A3 以下Lower than

A3



and government

bodies


Other governments

and government

agencies其他

Others總計Total



押債券 MBSABS

- 20335 - 1699 - - - 22034






押債券 MBSABS

- - 5046 - - - - 5046


小計 Subtotal 500 521205 575547 267066 587575 - 293868 2245761

總計 Total 623047 11135918 4454750 471707 5592845 678604 9427595 32384466


額為港幣 16393500000 元

（2011 年 12 月 31 日港幣

15699044000 元）其中沒有發

行人評級僅為港幣 3065445000元（2011 年 12 月 31 日港幣

2741631000 元）詳情請參閱

第 26 頁


26









下


於 2012 年 6 月 30 日 At 30 June 2012

Aaa


A1 至 A3A1 to A3

A3 以下 Lower

than A3 無評級

Unrated 總計







總計 Total 55440 6786525 6186829 299261 3065445 16393500

於 2011 年 12 月 31 日 At 31 December 2011

Aaa


A1 至 A3A1 to A3

A3 以下 Lower

than A3 無評級

Unrated 總計








總計 Total - 8861949 4095464 - 2741631 15699044

27






於 2012 年 6 月 30日及 2011 年 12 月


務證券

於 2012 年 6 月 30日及 2011 年 12 月


債務證券


28





















外匯風險


29







2012 年 6 月 30 日及

2011 年 12 月 31 日之




並按原幣分類


於 2012 年 6 月 30 日 At 30 June 2012

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計













30






於 2012 年 6 月 30 日 At 30 June 2012

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計









commitments 20911086 24491258 20908331 361959 305348 12372 13055 67003409

31






於 2011 年 12 月 31 日 At 31 December 2011

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計












32






於 2011 年 12 月 31 日 At 31 December 2011

人民幣

Renminbi

美元

US Dollars

港元

HK Dollars

歐羅

Euro

日圓 Japanese

Yen

英鎊 Pound

Sterling 其他

Others 總計









position (2216052) (7515536) 8491862 74164 36636 911189 533472 315735


commitments 19225118 29009786 19190225 386957 255138 2741 2182 68072147








33







於 2012 年 6 月 30日及 2011 年 12 月






為準）分類


於 2012 年 6 月 30 日

At 30 June 2012

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不計息

Non-interest

bearing總計













34






於 2012 年 6 月 30 日

At 30 June 2012

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計








35






於 2011 年 12 月 31 日

At 31 December 2011

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計












36






於 2011 年 12 月 31 日 At 31 December 2011

一個月內

Up to 1month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over 5

years

不計息

Non-interest

bearing總計








37







2012 年

6 月 30 日

2011 年

6 月 30 日


30 June

201230 June

2011










事處）計算


38










限分類


於 2012 年 6 月 30 日 At 30 June 2012

即期

Ondemand

一個月內

Up to 1 month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不確定

日期

Indefinite總計




















39






於 2012 年 6 月 30 日 At 30 June 2012

即期

Ondemand

一個月內

Up to 1 month

一至

三個月

1-3months

三至

十二個月

3-12months

一至五年 1-5

years


不確定

日期

Indefinite總計










40






於 2011 年 12 月 31 日 At 31 December 2011

即期

On demand

一個月內

Up to1 month

一至

三個月

1-3 months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over

5 years

不確定

日期

Indefinite總計





















41






於 2011 年 12 月 31 日 At 31 December 2011

即期

On demand

一個月內

Up to1 month

一至

三個月

1-3 months

三至

十二個月

3-12months

一至五年 1-5

years

五年以上 Over

5 years

不確定

日期

Indefinite總計










42































有至到期日


43





本集團由 2011 年 1 月 1 日















法在 2012 年 6 月 30 日沒




自 2012 年 1 月 1 日起生









於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011



44




















45








6 月 30 日及 2011 年






於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June2012

At 31 December2011













益









46












扣減


47




2012 年 6 月 30 日

2011 年

6 月 30 日


2012 30 June





3823200 2464251




(1884023) (944607)



包括港幣 3069000 元






31000 元）





為港幣 3793074000 元


2436007000 元）及港幣

1879225000 元（2011 年

上半年港幣 943582000元）


48





6 月 30 日2011 年


201230 June



406947 461947


(32896) (37602)







5617 6688

49





2012 年 6 月 30 日

2011 年

6 月 30 日


2012 30 June




products


49397 28464

50





2012 年

6 月 30 日 2011 年

6 月 30 日


30 June

2012 30 June





2012 年6 月 30 日

2011 年6 月 30 日


201230 June




23335 21255


港幣 60000 元（2011 年上半



營支出


51






6 月 30 日 2011 年


2012 30 June





















52





2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




470586 405612




167106 148265




890403 306810







454296000 元並於 2011






53





properties


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




properties 70493 95971 70493 95762



equipment


2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June



54







2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June






248308 315062







現行稅率計算


55









2012 年

6 月 30 日 2011 年

6 月 30 日


30 June

2012 30 June



按稅率 165（2011





56




半年結算至











於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011








16449302 38252446 43994333




總額為港幣 392000000 元


57








總計 Total

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31December

2011

At 30 June 2012

At 31December

2011

At 30 June 2012

At 31December





- - 769228 766259 769228 766259 - 非上市 - Unlisted 4256047 1109280 376275 370222 4632322 1479502

總計 Total 4256047 1109280 1145503 1136481 5401550 2245761

58







下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




5401550 2245761



610000 元（2011 年 12月 31 日港幣 500000 元）






於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






1136981

5401550 2245761

59






























期權）


60



























較大的波動


61





具於 2012 年 6 月 30 日及

2011 年 12 月 31 日之合約

名義合約數額


於 2012 年 6 月 30 日 At 30 June 2012

買賣

Trading



accounting 總計












衍生金融工具


62




於 2011 年 12 月 31 日 At 31 December 2011

買賣

Trading



accounting 總計






63





具於 2012 年 6 月 30 日及

2011 年 12 月 31 日之公平

值


於 2012 年 6 月 30 日 At 30 June 2012



買賣

Trading

不符合採用

對沖會計法

Notqualified


總計

Total買賣

Trading



accounting 總計







64




於 2011 年 12 月 31 日 At 31 December 2011



買賣

Trading

不符合採用

對沖會計法

Notqualified


總計

Total買賣

Trading



accounting 總計

Total







65






於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





416206 666976








所影響


66




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





於 2012 年 6 月 30 日客


12 月 31 日港幣

533810000 元）於 2012 年 6 月 30 日及

2011 年 12 月 31 日對貿




63078753000 元（2011年 12 月 31 日港幣

61458683000 元）及美


35463496000 元（2011年 12 月 31 日港幣

34285493000 元）



67




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






34126055 26712086 股份證券按公平值






2616719




-



-

118147

68






於 2012 年 6 月 30 日 At 30 June 2012

可供出售證券

Available- for-sale

securities


Held-to- maturity

securities 總計



34181365 2616719 36798084

於 2011 年 12 月 31 日 At 31 December 2011

可供出售證券

Available-for-sale

securities

持有至

到期日證券

Held-to-maturity

securities

貸款及應收款

Loans and

receivables 總計





438114000 元（2011 年

12 月 31 日港幣

175915000 元）在《銀行


為公營單位


69






可供出售證券



securities

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011

At 30 June 2012

At 31 December 2011




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011







70




房產

Premises



fittings 總計








30 June 2012 4818427 339960 5158387 於 2011 年 1 月 1 日之








31 December 2011 4231342 352069 4583411

71







房產

Premises



fittings 總計




於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



72





於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





3996035 1077896

於 2012 年 6 月 30 日並沒




73




於 2012 年

6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




13452227 13476141





125030015 117803145 182655014 174469468

74




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




截至 2012 年 6 月 30 日


3537228000 元（2011年 12 月 31 日港幣

872412000 元）是以存放





債（2011 年 12 月 31 日

港幣 617973000 元）本



3550952000 元（2011年 12 月 31 日港幣

1495704000 元）並於




75














如下


於 2012 年 6 月 30 日 At 30 June 2012

加速

折舊免稅額

Acceleratedtax

depreciation

物業重估

Propertyrevaluation

虧損

Losses


allowance


Other temporary

differences 總計



於 2012 年 1 月 1 日

At 1 January 2012 18231 674564 - (146369) (21747) 524679


（附註 13）




於 2012 年 6 月 30 日

At 30 June 2012 18629 774840 (361) (115705) 34167 711570

76




於 2011 年 12 月 31 日 At 31 December 2011

加速

折舊免稅額

Acceleratedtax

depreciation

物業重估

Propertyrevaluation

虧損

Losses



Other temporary

differences 總計



於 2011 年 1 月 1 日

At 1 January 2011 12554 495653 - (94197) 6844 420854






於 2011 年 12 月 31 日

At 31 December 2011 18231 674564 - (146369) (21747) 524679

77













於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011



711570 524679

於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






twelve months 677729 583494 674456 543442

於 2012 年 6 月 30 日本




（2011 年 12 月 31 日港

幣 5314000 元）其中



幣 133000 元（2011 年



5289000 元（2011 年 12月 31 日港幣 5198000元）


78




於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




of HK$100 each 700000 700000



of HK$100 each 700000 700000




動表


79








2012 年

6 月 30 日

2011 年

6 月 30 日


201230 June




















80







於 2012 年

6 月 30 日

於 2011 年

6 月 30 日

At 30 June 2012

At 30 June 2011





構的結餘


28041307 31671165原到期日在 3 個月內之















列示


81








於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011






67003409 68072147






特徵有關


82






如下


於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011




19149 15361




擔









於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011







years 61 65 1101989 890613

83










於 2012 年

6 月 30 日於 2011 年

12 月 31 日

At 30 June 2012

At 31 December 2011





74731 72393






有租金


84
























率和外匯敞口


85

































關產品的特性


86





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment 其他

Others 小計


Eliminations綜合








收益


















87





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合





88





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合








收益












（虧損）


除稅前溢利


89





個人銀行

PersonalBanking

企業銀行

CorporateBanking

財資業務

Treasury投資

Investment其他

Others 小計


Eliminations綜合













行所在地分類




之淨經營收入



除稅前

溢利

Profit before

taxation



除稅前

溢利

Profit before






類


90





於 2012 年 6 月 30 日 At 30 June 2012

總資產

Total assets

總負債

Total liabilities


assets



andcommitments



於 2011 年 12 月 31 日 At 31 December 2011

總資產

Total assets

總負債

Total liabilities


assets



andcommitments



91











集團實行控制




行的交易
















交易


92








易
























務



93













述如下



6 月 30 日

半年結算至

2011 年

6 月 30 日


2012
















94








（續）


於 2012 年 6 月 30 日

於 2011 年

12 月 31 日

At 30 June 2012

At 31 December2011


parties






餘





95





















如下



2012 年

6 月 30 日

2011 年


201230 June






96









報指示而編製



美元

US Dollars人民幣

Renminbi


currencies

外幣總計

Totalforeign




美元

US Dollars人民幣

Renminbi


currencies

外幣總計

Totalforeign



97






















42044827 2667401 37458137 82170365

98









40557088 309716 34858122 75724926





99











擔


於 2012 年 6 月 30 日 At 30 June 2012 資產負債

表內的

風險承擔

On-balancesheet

exposure



sheetexposure

總風險承擔

Totalexposure

個別評估

之減值準備









43411728 4396299 47808027 10603



表內的

風險承擔

On-balancesheet

exposure



sheetexposure

總風險承擔

Totalexposure

個別評估

之減值準備









37993178 4289418 42282596 4257





類


100

















2012 年 3 月 23 日發出之


告


101

獨立審閱報告



引言






審閱範圍




結論


製


執業會計師

香港2012 年 8 月 15 日

102













Scope of Review







Conclusion






103


於 2012 年 8 月 15 日本銀





李久仲


陳細明

先生（於 2012 年 5 月 22 日






104











(China) Limited


of China



100



Trustee Limited

香港 Hong Kong



100



Agency Limited

香港 Hong Kong



100



(Nominees) Limited

香港 Hong Kong



100





日正式解散

備註












Remarks












105





































106





































107











































108



































109


































110





















坊












111


詞彙涵義















屬公司




112



















113










Equity Linked Deposits (Put Option)

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