Contents Financial Highlights 1 99 Corporate Information Interim Results Consolidated Income Statement Consolidated Statement of Com

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2 Contents Financial Highlights 1 99 Corporate Information Interim Results Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Condensed Consolidated Cash Flow Statement Notes to the Interim Financial Statements Supplementary Financial Information Independent Review Report Interim Dividend Closure of Register of Members Financial Review Economic Overview Operations Review Risk Management Corporate Social Responsibility Report Recognition Changes to Information in respect of Directors Interests of Directors and Chief Executive Information on Share Options Interests of Substantial Shareholders and Other Persons Dealings in Listed Securities of the Bank Compliance with Corporate Governance Code Compliance with Model Code Publication of Interim Report Glossary

3 FINANCIAL HIGHLIGHTS 30 June 30 June 31 December For the half year ended Profitability HK$ Mn HK$ Mn HK$ Mn Total operating income 8,699 9,202 9,030 Profit attributable to owners of the parent 3,354 3,580 3,081 Earnings Per Share and Dividends Per Share HK$ HK$ HK$ Basic earnings Dividends Key Ratios % % % Return on average assets (annualised) Return on average equity (annualised) Cost-to-income ratio Cost-to-income ratio (excluding business tax and surcharges of China Operations) Average liquidity ratio N.A Average liquidity coverage ratio Second quarter N.A. N.A. At period/year end Balance Sheet Strength HK$ Mn HK$ Mn HK$ Mn Advances to customers and trade bills 498, , ,966 Total assets 815, , ,891 Total deposits 597, , ,582 Total equity 82,869 71,210 73,444 Key Ratios % % % Loan to deposit ratio Impaired loan ratio Common Equity Tier 1 capital ratio Tier 1 capital ratio Total capital ratio Average for the full year of The Bank of East Asia, Limited Interim Report 2015

4 CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors Dr. the Hon. Sir David LI Kwok-po (Chairman & Chief Executive) Mr. Adrian David LI Man-kiu (Deputy Chief Executive) Mr. Brian David LI Man-bun (Deputy Chief Executive) Non-executive Directors Professor Arthur LI Kwok-cheung (Deputy Chairman) Mr. Aubrey LI Kwok-sing Mr. Eric LI Fook-chuen Mr. Stephen Charles LI Kwok-sze Dr. Isidro FAINÉ CASAS Dr. Peter LEE Ka-kit Mr. Masayuki OKU Independent Non-executive Directors Dr. Allan WONG Chi-yun (Deputy Chairman) Mr. WONG Chung-hin Mr. Winston LO Yau-lai Tan Sri Dr. KHOO Kay-peng Mr. Richard LI Tzar-kai Mr. Kenneth LO Chin-ming Mr. William DOO Wai-hoi Mr. KUOK Khoon-ean Mr. Valiant CHEUNG Kin-piu Mr. Daryl NG Win-kong AUDITORS KPMG Certified Public Accountants SHARE LISTING The Stock Exchange of Hong Kong Limited SHARE REGISTRARS Tricor Standard Limited Telephone: (852) Facsimile: (852) ADR DEPOSITARY BANK BNY Mellon Telephone: BNY-ADRS REGISTERED OFFICE 10 Des Voeux Road Central, Hong Kong Telephone: (852) Facsimile: (852) Website: SENIOR ADVISORS Mr. Joseph PANG Yuk-wing Mr. CHAN Kay-cheung Mr. CHAN Tze-ching SENIOR MANAGEMENT Mr. Adrian David LI Man-kiu Executive Director & Deputy Chief Executive Mr. Brian David LI Man-bun Executive Director & Deputy Chief Executive Mr. Samson LI Kai-cheong Deputy Chief Executive & Chief Investment Officer Mr. TONG Hon-shing Deputy Chief Executive & Chief Operating Officer COMPANY SECRETARY Mr. Alson LAW Chun-tak The Bank of East Asia, Limited Interim Report

5 INTERIM RESULTS The Board of Directors of the Bank is pleased to announce the unaudited results (Note 1(a)) of the Group for the six months ended 30th June, The interim financial report is prepared on a basis consistent with the accounting policies and methods adopted in the 2014 audited accounts, except for the accounting policy changes that are expected to be reflected in the 2015 audited accounts. Details of these changes in accounting policies are set out in Note 2. The interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the HKICPA. KPMG s independent review report to the Board is included on page 66. Consolidated Income Statement 6 months ended 6 months ended 30/6/ /6/2014 Restated Notes HK$ Mn HK$ Mn Interest income 3 12,331 12,587 Interest expense 4 (6,145) (6,339) Net interest income 6,186 6,248 Fee and commission income 5 2,653 2,579 Fee and commission expense (467) (438) Net fee and commission income 2,186 2,141 Net trading (losses)/profits 6 (36) 531 Net result from financial instruments designated at fair value through profit or loss 7 (24) (53) Net hedging loss 8 (23) (1) Other operating income Non-interest income 2,513 2,954 Operating income 8,699 9,202 Operating expenses 10 (4,620) (4,893) Operating profit before impairment losses 4,079 4,309 Impairment losses on loans and advances (781) (319) Write back of impairment losses on held-to-maturity investments 3 Impairment losses on available-for-sale financial assets (1) Impairment losses (782) (316) Operating profit after impairment losses 3,297 3,993 Net profit on sale of held-to-maturity investments 3 Net profit on sale of available-for-sale financial assets Net loss on sale of loans and receivables (2) Net gain/(loss) on disposal of fixed assets (3) Valuation gains on investment properties Share of profits less losses of associates Profit for the period before taxation 4,058 4,482 Income tax Current tax 1(b) Hong Kong (423) (406) Outside Hong Kong (382) (407) Deferred tax (37) Profit for the period after taxation 3,415 3,632 Attributable to: Owners of the parent 3,354 3,580 Non-controlling interests Profit after taxation 3,415 3,632 Profit for the Bank 2,193 1,790 Per share Basic earnings 1(c) HK$1.28 HK$1.48 Diluted earnings 1(c) HK$1.28 HK$ The Bank of East Asia, Limited Interim Report 2015

6 Consolidated Statement of Comprehensive Income 6 months ended 6 months ended 30/6/ /6/2014 Notes HK$ Mn HK$ Mn Net profit 3,415 3,632 Other comprehensive income for the period: Item that will not be reclassified to income statement: Premises: exchange differences (2) Items that may be reclassified subsequently to income statement: Premises: deferred taxes 26 (14) Available-for-sale investment revaluation reserve: fair value changes recognised to equity fair value changes reclassified from/(to) income statement: on impairment and amortisation 10 1 on disposal 11 (102) (43) deferred taxes 26 (23) (131) exchange differences 5 Share of changes in equity of associates 24 (24) Exchange differences on other reserves (80) Exchange differences on translation of: accounts of overseas branches, subsidiaries and associates (349) (473) Other comprehensive income (116) (15) Total comprehensive income 3,299 3,617 Total comprehensive income attributable to: Owners of the parent 3,246 3,565 Non-controlling interests ,299 3,617 The Bank of East Asia, Limited Interim Report

7 Consolidated Statement of Financial Position 30/6/ /12/2014 Notes HK$ Mn HK$ Mn ASSETS Cash and balances with banks and other financial institutions 59,391 70,358 Placements with banks and other financial institutions 13 77,485 50,769 Trade bills 14 45,975 60,675 Trading assets 15 8,893 2,885 Financial assets designated at fair value through profit or loss 16 5,540 8,713 Positive fair value of derivatives 31(a) 4,083 3,537 Advances to customers and other accounts , ,140 Available-for-sale financial assets 18 90,282 86,816 Held-to-maturity investments 19 7,779 6,747 Investments in associates 6,089 6,083 Fixed assets 20 13,277 13,117 Investment properties 4,885 4,544 Other property and equipment 8,392 8,573 Goodwill and intangible assets 3,927 3,955 Deferred tax assets Total Assets 815, ,891 EQUITY AND LIABILITIES Deposits and balances of banks and other financial institutions 36,982 33,323 Deposits from customers 551, ,184 Demand deposits and current accounts 77,675 67,337 Savings deposits 107, ,782 Time, call and notice deposits 366, ,065 Trading liabilities 21 2, Negative fair value of derivatives 31(a) 6,065 4,823 Certificates of deposit issued 46,480 44,398 Designated at fair value through profit or loss 17,439 14,444 At amortised cost 29,041 29,954 Current taxation 1,693 1,172 Debt securities issued 16,671 22,424 Designated at fair value through profit or loss 4,513 7,595 At amortised cost 12,158 14,829 Deferred tax liabilities Other accounts and provisions 22 53,501 50,081 Loan capital at amortised cost 23 17,273 17,335 Total Liabilities 733, ,447 Share capital 1(e) 33,153 25,217 Reserves 27 45,146 43,663 Total equity attributable to owners of the parent 78,299 68,880 Non-controlling interests 4,570 4,564 Total Equity 82,869 73,444 Total Equity and Liabilities 815, ,891 5 The Bank of East Asia, Limited Interim Report 2015

8 Consolidated Statement of Changes in Equity Capital reserve staff share options issued Revaluation reserve of bank premises Exchange Investment Noncontrolling Share Share revaluation revaluation Capital General Other Retained Total capital premium reserve reserve reserve reserve reserves* profits Total interests Equity HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn At 1st January, , ,970 1,660 1, ,930 4,300 19,849 68,880 4,564 73,444 Changes in equity Profit for the period 3,354 3, ,415 Other comprehensive income (341) 223 (14) 24 (108) (8) (116) Total comprehensive income (341) 223 (14) 24 3,354 3, ,299 Shares issued in lieu of dividend (Note 1(e)) 1,216 1,216 1,216 Subscription of new shares (Note 1(e)) 6,576 6,576 6,576 Shares issued under Staff Share Option Schemes (Note 1(e)) Equity settled share-based transaction Transfer 13 (13) (116) Dividends declared or approved during the period (Note 1(d)) (1,762) (1,762) (47) (1,809) At 30th June, , ,629 1,883 1, ,930 4,438 21,325 78,299 4,570 82,869 At 1st January, ,724 17, , , ,877 3,770 16,778 63,682 4,552 68,234 Changes in equity Profit for the period 3,580 3, ,632 Other comprehensive income (473) 564 (2) (104) (15) (15) Total comprehensive income (473) 564 (2) (104) 3,580 3, ,617 Shares issued in lieu of dividend 1,096 1,096 1,096 Shares issued under Staff Share Option Schemes Equity settled share-based transaction Transfer 6 (6) (118) Dividends declared or approved during the period (Note 1(d)) (1,722) (1,722) (53) (1,775) Purchase of interests in businesses from non-controlling interests investors 1 1 Transition to no-par value regime on 3rd March, 2014 (Note 1(e)) 17,770 (17,770) At 30th June, , ,401 1,542 1, ,933 3,698 18,518 66,658 4,552 71,210 * Other reserves include statutory reserve and other reserves. The Bank of East Asia, Limited Interim Report

9 Condensed Consolidated Cash Flow Statement 6 months ended 6 months ended 30/6/ /6/2014 Notes HK$ Mn HK$ Mn NET CASH INFLOW/(OUTFLOW) FROM OPERATIONS 16,894 (38,182) Income tax paid Hong Kong profits tax paid (3) (89) Outside Hong Kong profits tax paid (283) (556) NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES 16,608 (38,827) INVESTING ACTIVITIES Dividends received from associates 9 19 Dividends received from available-for-sale equity securities Purchase of equity securities (1,523) (800) Proceeds from sale of equity securities 1, Purchase of fixed assets (143) (152) Purchase of investment properties (43) Proceeds from disposal of fixed assets Purchase of shareholding in associates (61) (698) Purchase of subsidiaries 28(a) (2) Purchase of interests in business from non-controlling interests investors 1 NET CASH USED IN INVESTING ACTIVITIES (426) (951) FINANCING ACTIVITIES Ordinary dividends paid (428) (514) Distribution to Hybrid Tier 1 issue holders 1(d) (165) (165) Issue of ordinary share capital Subscription of new shares 6,576 Issue of certificates of deposit 43,695 41,264 Issue of debt securities 9,167 22,100 Redemption of certificates of deposit issued (41,837) (35,439) Redemption of debt securities issued (14,814) (2,784) Interest paid on loan capital (451) (375) Interest paid on certificates of deposit issued (466) (260) Interest paid on debt securities issued (288) (99) NET CASH GENERATED FROM FINANCING ACTIVITIES 1,120 23,754 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 17,302 (16,024) CASH AND CASH EQUIVALENTS AT 1ST JANUARY 71,986 90,007 CASH AND CASH EQUIVALENTS AT 30TH JUNE 28(b) 89,288 73,983 Cash flows from operating activities included: Interest received 12,379 13,470 Interest paid 6,442 6,941 Dividend received The Bank of East Asia, Limited Interim Report 2015

10 Notes to the Interim Financial Statements 1. (a) This interim report has been prepared in accordance with the same accounting policies adopted in the 2014 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2015 annual financial statements. Details of these changes in accounting policies are set out in Note 2 below. The financial information relating to the financial year ended 31st December, 2014 that is included in the interim financial report as comparative information does not constitute the Bank s statutory annual consolidated financial statements for that financial year but is derived from those financial statements. Further information relating to these statutory financial statements disclosed in accordance with section 436 of the Companies Ordinance is as follows: The Bank has delivered the financial statements for the year ended 31st December, 2014 to the Registrar of Companies in accordance with section 662(3) of, and Part 3 of Schedule 6 to, the Companies Ordinance. The Bank s auditor has reported on those financial statements. The auditor s report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under section 406(2), 407(2) or (3) of the Companies Ordinance (or under their equivalent requirements found in section 141 of the predecessor Companies Ordinance (Cap.32)). (b) The provision for Hong Kong profits tax is calculated at 16.5% of the estimated assessable profits for the six months ended 30th June, Taxation for overseas branches and subsidiaries is charged at the appropriate current rates of taxation ruling in the relevant countries. (c) (i) The calculation of basic earnings per share is based on earnings of HK$3,189 million (six months ended 30th June, 2014: HK$3,415 million) after the distribution of HK$165 million (six months ended 30th June, 2014: HK$165 million) to Hybrid Tier 1 issue holders and on the weighted average of 2,489 million (six months ended 30th June, 2014: 2,309 million) ordinary shares outstanding during the six months ended 30th June, (ii) The calculation of diluted earnings per share is based on earnings of HK$3,189 million (six months ended 30th June, 2014: HK$3,415 million) after the distribution of HK$165 million (six months ended 30th June, 2014: HK$165 million) to Hybrid Tier 1 issue holders and on 2,490 million (six months ended 30th June, 2014: 2,309 million) ordinary shares, being the weighted average number of ordinary shares outstanding during the six months ended 30th June, 2015, adjusted for the effects of all dilutive potential shares. (d) Dividends (i) Dividends payable to equity owners of the parent attributable to the interim period 6 months ended 30/6/2015 HK$ Mn 6 months ended 30/6/2014 HK$ Mn Interim dividend declared after the interim period of HK$0.38 per share on 2,616 million shares (six months ended 30th June, 2014: HK$0.43 per share on 2,329 million shares) 994 1,001 The interim dividend has not been recognised as a liability at the end of the reporting period. The Bank of East Asia, Limited Interim Report

11 Notes to the Interim Financial Statements (Continued) 1. (d) Dividends (Continued) (ii) Dividends payable to equity owners of the parent attributable to the previous financial year, approved and paid during the interim period 6 months ended 30/6/2015 HK$ Mn 6 months ended 30/6/2014 HK$ Mn Second interim dividend paid in respect of the previous financial year on shares issued under the share option schemes subsequent to the end of the reporting period and before the close of the Register of Members of the Bank, of HK$0.68 per share (2014: HK$0.68 per share) 1 Second interim dividend of HK$0.68 per share on 2,347 million shares (2014: HK$0.68 per share on 2,290 million shares) 1,596 1,557 1,597 1,557 (iii) Distribution to holders of Hybrid Tier 1 capital instruments 6 months ended 30/6/2015 HK$ Mn 6 months ended 30/6/2014 HK$ Mn Interest payable on the Hybrid Tier 1 capital instruments (e) Share Capital The transition to the no-par value regime under the Companies Ordinance occurred automatically on 3rd March, On that date, the share premium account and any capital redemption reserve were subsumed into share capital in accordance with section 37 of Schedule 11 to the Companies Ordinance. These changes did not impact on the number of shares in issue or the relative entitlement of any of the members. Since that date, all changes in share capital have been made in accordance with the requirements of Parts 4 and 5 of the Companies Ordinance. Movement of the Bank s ordinary shares is set out below: At 30th June, 2015 At 31st December, 2014 No. of shares No. of shares Mn HK$ Mn Mn HK$ Mn Ordinary shares, issued and fully paid: At 1st January 2,347 25,217 2,290 5,724 Subscription of new shares 223 6,576 Shares issued under Staff Share Option Schemes Transition to no-par value regime on 3rd March, ,770 Transfer of the fair value of options from capital reserve share options issued 13 9 Share issued in lieu of dividend 42 1, ,664 At 30th June/31st December 2,616 33,153 2,347 25,217 9 The Bank of East Asia, Limited Interim Report 2015

12 Notes to the Interim Financial Statements (Continued) 2. Changes in Accounting Policies The HKICPA has issued the following amendments to HKFRSs that are first effective for the current accounting period of the Group: Annual Improvements to HKFRSs Cycle Annual Improvements to HKFRSs Cycle None of these developments have had a material effect on how the Group s results and financial position for the current or prior periods have been prepared or presented. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period. 3. Interest Income 6 months ended 30/6/2015 HK$ Mn 6 months ended 30/6/2014 Restated HK$ Mn Securities classified as held-to-maturity or available-for-sale 1,249 1,113 Trading assets Financial assets designated at fair value through profit or loss Loans, deposits with banks and financial institutions, and trade bills 10,920 11,242 12,331 12,587 Included above is interest income accrued on impaired financial assets of HK$87 million (six months ended 30th June, 2014: HK$53 million). Included within interest income is HK$12,252 million (six months ended 30th June, 2014: HK$12,394 million), before hedging effect, for financial assets that are not recognised at fair value through profit or loss. For the transactions where interest rate risk is hedged, the periodic payments and receipts arising from interest rate contracts which are qualifying hedging instruments for or individually managed in conjunction with interest bearing financial assets are first netted together and then combined with the interest income from the corresponding financial assets. 4. Interest Expense 6 months ended 6 months ended 30/6/ /6/2014 Restated HK$ Mn HK$ Mn Customer deposits, deposits of banks and other financial institutions and certificates of deposit issued which are stated at amortised cost 5,525 5,855 Debt securities issued Subordinated notes carried at amortised cost Financial instruments designated at fair value through profit or loss Other borrowings ,145 6,339 The Bank of East Asia, Limited Interim Report

13 Notes to the Interim Financial Statements (Continued) 4. Interest Expense (Continued) Included within interest expense is HK$6,131 million (six months ended 30th June, 2014: HK$6,368 million), before hedging effect, for financial liabilities that are not recognised at fair value through profit or loss. For the transactions where interest rate risk is hedged, the periodic payments and receipts arising from interest rate contracts which are qualifying hedging instruments for or individually managed in conjunction with interest bearing financial liabilities are first netted together and then combined with the interest expense from the corresponding financial liabilities. 5. Fee and Commission Income Fee and commission income arises from the following services: 6 months ended 6 months ended 30/6/ /6/2014 HK$ Mn HK$ Mn Corporate services Loans, overdrafts and guarantees Credit cards Securities and brokerage Trade finance Other retail banking services Trust and other fiduciary activities Others Total fee and commission income 2,653 2,579 of which: Net fee income, other than amounts included in determining the effective interest rate, arising from financial assets or financial liabilities that are not held for trading nor designated at fair value through profit or loss 2,200 2,152 Fee income 2,653 2,579 Fee expenses (453) (427) 6. Net Trading (Losses)/Profits 6 months ended 6 months ended 30/6/ /6/2014 Restated HK$ Mn HK$ Mn Loss on dealing in foreign currencies and funding swaps (601) (68) Profit on trading securities Net gain on derivatives Dividend income from listed trading securities (36) The Bank of East Asia, Limited Interim Report 2015

14 Notes to the Interim Financial Statements (Continued) 7. Net Result from Financial Instruments Designated at Fair Value through Profit or Loss 6 months ended 6 months ended 30/6/ /6/2014 HK$ Mn HK$ Mn Revaluation (loss)/gain on debts issued (40) 19 Profit on sale of debts issued 3 2 Revaluation gain/(loss) on financial assets 15 (73) Loss on sale of financial assets (2) (1) (24) (53) 8. Net Hedging Loss 6 months ended 6 months ended 30/6/ /6/2014 HK$ Mn HK$ Mn Fair value hedges Net loss on hedged items attributable to the hedged risk (21) (2) Net (loss)/gain on hedging instruments (2) 1 (23) (1) There was insignificant ineffectiveness recognised in the Group s income statement arising from cash flow hedge for the six months ended 30th June, 2015 and 30th June, Other Operating Income 6 months ended 6 months ended 30/6/ /6/2014 HK$ Mn HK$ Mn Dividend income from available-for-sale financial assets listed 5 7 unlisted 8 11 Rental from safe deposit boxes Net revenue from insurance activities Rental income on properties Others The Bank of East Asia, Limited Interim Report

15 Notes to the Interim Financial Statements (Continued) 10. Operating Expenses 6 months ended 6 months ended 30/6/ /6/2014 HK$ Mn HK$ Mn Contributions to defined contribution plan Hong Kong Outside Hong Kong Equity-settled share-based payment expenses Salaries and other staff costs 2,294 2,475 Total staff costs 2,562 2,735 Premises and equipment expenses excluding depreciation Rental of premises Maintenance, repairs and others Total premises and equipment expenses excluding depreciation Depreciation on fixed assets* (Note 20) Amortisation of intangible assets Other operating expenses Stamp duty, overseas and PRC business taxes, and value added taxes Legal and professional fees Communications, stationery and printing Advertising expenses Business promotions and business travel Card related expenses Insurance expenses Administration expenses of corporate services 10 8 Membership fees 8 8 Bank charges 4 5 Donations 3 3 Bank licence 2 2 Others Total other operating expenses 1,141 1,186 Total operating expenses 4,620 4,893 * During the period, the Group revised the useful lives of certain fixed assets. The revisions were accounted for prospectively as a change in accounting estimates and as a result, the impact for current period and expected impact for future periods on depreciation charges are as follows: Increase/(decrease) in depreciation charges Current period Future periods 1st half, nd half, Later HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn (47) (40) (36) The Bank of East Asia, Limited Interim Report 2015

16 Notes to the Interim Financial Statements (Continued) 11. Net Profit on Sale of Available-for-Sale Financial Assets 6 months ended 6 months ended 30/6/ /6/2014 HK$ Mn HK$ Mn Net revaluation gain transferred from reserves (Loss)/Profit arising in the period (48) Net Gain/(Loss) on Disposal of Fixed Assets 6 months ended 6 months ended 30/6/ /6/2014 HK$ Mn HK$ Mn Net gain/(loss) on disposal of bank premises, furniture, fixtures and equipment 112 (3) 112 (3) 13. Placements with Banks and Other Financial Institutions 30/6/ /12/2014 HK$ Mn HK$ Mn Placements with banks and authorised institutions 77,485 50,769 Placements with central banks 77,485 50,769 Maturing within one month 55,538 26,536 between one month and one year 21,947 24,233 77,485 50, Trade Bills 30/6/ /12/2014 HK$ Mn HK$ Mn Gross trade bills 45,979 60,679 Less: Individual impairment allowances (4) (4) 45,975 60,675 The Bank of East Asia, Limited Interim Report

17 Notes to the Interim Financial Statements (Continued) 15. Trading Assets 30/6/ /12/2014 HK$ Mn HK$ Mn Treasury bills (including Exchange Fund Bills) 2, Certificates of deposit held 1,985 Debt securities 2,704 1,412 Equity securities 1,729 1,374 Investment funds ,893 2,885 Issued by: Central governments and central banks 2, Public sector entities 8 52 Banks and other financial institutions 3,698 1,170 Corporate entities 2,702 1,501 Other entities ,893 2,885 Analysed by place of listing: Debt securities Listed in Hong Kong 8 13 Listed outside Hong Kong Unlisted 7,110 1,364 7,143 1,490 Equity securities Listed in Hong Kong 1,488 1,131 Listed outside Hong Kong ,729 1,374 Investment funds Listed in Hong Kong 7 7 Listed outside Hong Kong ,893 2, The Bank of East Asia, Limited Interim Report 2015

18 Notes to the Interim Financial Statements (Continued) 16. Financial Assets Designated at Fair Value through Profit or Loss 30/6/ /12/2014 HK$ Mn HK$ Mn Certificates of deposit held 621 1,495 Debt securities 4,462 6,792 Equity securities Investment funds ,540 8,713 Issued by: Central governments and central banks Banks and other financial institutions 2,444 5,072 Corporate entities 2,875 3,474 Other entities ,540 8,713 Analysed by place of listing: Debt securities Listed in Hong Kong 1,213 1,093 Listed outside Hong Kong 2,191 3,597 3,404 4,690 Unlisted 1,679 3,597 5,083 8,287 Equity securities Listed in Hong Kong Listed outside Hong Kong Investment funds Listed in Hong Kong 30 Listed outside Hong Kong Unlisted ,540 8,713 The Bank of East Asia, Limited Interim Report

19 Notes to the Interim Financial Statements (Continued) 17. Advances to Customers and Other Accounts (a) Advances to customers and other accounts 30/6/ /12/2014 HK$ Mn HK$ Mn (i) Advances to customers 452, ,287 Less: Impairment allowances Individual (562) (419) Collective (1,091) (935) 451, ,933 (ii) Other accounts Advances to banks and other financial institutions Less: Impairment allowances Individual (1) (1) Notes and bonds 1 1 Certificates of deposit held Accrued interest 2,856 2,904 Customer liabilities under acceptances 27,361 26,460 Other accounts 11,630 10,703 41,925 40,184 Less: Impairment allowances Individual (17) (13) Collective (20) (18) 41,888 40, , , The Bank of East Asia, Limited Interim Report 2015

20 Notes to the Interim Financial Statements (Continued) 17. Advances to Customers and Other Accounts (Continued) (b) Advances to customers by industry sectors The analysis of gross advances to customers and the percentage of secured advances by industry sector is based on the categories and definitions used by the HKMA. Gross advances 30/6/ /12/2014 % of secured advances Gross advances % of secured advances HK$ Mn % HK$ Mn % Loans for use in Hong Kong Industrial, commercial and financial Property development 15, , Property investment 38, , Financial concerns 12, , Stockbrokers 9, , Wholesale and retail trade 21, , Manufacturing 5, , Transport and transport equipment 6, , Recreational activities Information technology 1, Others 22, , Sub-total 133, , Individuals Loans for the purchase of flats in the Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme 1, , Loans for the purchase of other residential properties 39, , Credit card advances 4, , Others 20, , Sub-total 66, , Total loans for use in Hong Kong 199, , Trade finance 5, , Loans for use outside Hong Kong* 247, , Total advances to customers 452, , * Loans for use outside Hong Kong include the following loans for use in Mainland China. Gross advances 30/6/ /12/2014 % of secured advances Gross advances % of secured advances HK$ Mn % HK$ Mn % Property development 42, , Property investment 32, , Wholesale and retail trade 26, , Manufacturing 9, , Others 73, , , , The Bank of East Asia, Limited Interim Report

21 Notes to the Interim Financial Statements (Continued) 17. Advances to Customers and Other Accounts (Continued) (b) Advances to customers by industry sectors (Continued) Individually impaired loans, as well as relevant information, in respect of industry sectors which constitute 10% or more of total advances to customers are as follows: 30/6/ /12/2014 HK$ Mn HK$ Mn (i) Property development a. Individually impaired loans b. Individual impairment allowance c. Collective impairment allowance d. Provision charged to income statement individual impairment loss collective impairment loss e. Written off (ii) Property investment a. Individually impaired loans b. Individual impairment allowance 9 3 c. Collective impairment allowance d. Provision charged to income statement individual impairment loss 5 13 collective impairment loss e. Written off 9 (iii) Loans for purchase of residential properties a. Individually impaired loans b. Individual impairment allowance c. Collective impairment allowance d. Provision charged to income statement individual impairment loss collective impairment loss e. Written off 1 11 (iv) Wholesale and retail trade a. Individually impaired loans 1, b. Individual impairment allowance c. Collective impairment allowance d. Provision charged to income statement individual impairment loss collective impairment loss e. Written off (v) Hotels a. Individually impaired loans b. Individual impairment allowance c. Collective impairment allowance d. Provision charged to income statement individual impairment loss collective impairment loss e. Written off The Bank of East Asia, Limited Interim Report 2015

22 Notes to the Interim Financial Statements (Continued) 17. Advances to Customers and Other Accounts (Continued) (c) Advances to customers by geographical areas The information concerning the breakdown of the gross amount of advances to customers by countries or geographical areas 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. Total advances to customers Advances overdue for over three months 30/6/2015 Impaired advances to customers Individual impairment allowance Collective impairment allowance HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Hong Kong 193, People s Republic of China 215,545 2,997 3, Other Asian Countries 20, Others 22, Total 452,889 3,326 4, ,091 % of total advances to customers 1.03% Market value of security held against impaired advances to customers 8,527 Total advances to customers Advances overdue for over three months 31/12/2014 Impaired advances to customers Individual impairment allowance Collective impairment allowance HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Hong Kong 186, People s Republic of China 213,984 1,784 2, Other Asian Countries 20, Others 22, Total 443,287 2,096 2, % of total advances to customers 0.62% Market value of security held against impaired advances to customers 4,680 Impaired loans and advances are individually assessed loans with objective evidence of impairment on an individual basis. The above information by countries or geographical areas is derived according to the location of the counterparties after taking into account any transfer of risk. The Bank of East Asia, Limited Interim Report

23 Notes to the Interim Financial Statements (Continued) 18. Available-for-Sale Financial Assets 30/6/ /12/2014 HK$ Mn HK$ Mn Treasury bills (including Exchange Fund Bills) 16,664 27,906 Certificates of deposit held 3,640 1,626 Debt securities 66,287 54,116 Equity securities 3,134 2,895 Investment funds ,282 86,816 Issued by: Central governments and central banks 15,732 28,238 Public sector entities Banks and other financial institutions 32,992 27,788 Corporate entities 40,368 29,788 Other entities ,282 86,816 Analysed by place of listing: Debt securities Listed in Hong Kong 17,843 12,511 Listed outside Hong Kong 18,535 11,391 36,378 23,902 Unlisted 50,213 59,746 86,591 83,648 Equity securities Listed in Hong Kong Listed outside Hong Kong 1,487 1,376 2,386 2,142 Unlisted ,134 2,895 Investment funds Listed in Hong Kong 140 Listed outside Hong Kong Unlisted ,282 86, The Bank of East Asia, Limited Interim Report 2015

24 Notes to the Interim Financial Statements (Continued) 19. Held-to-Maturity Investments 30/6/ /12/2014 HK$ Mn HK$ Mn Treasury bills (including Exchange Fund Bills) Certificates of deposit held 3,993 2,710 Debt securities 2,913 3,300 7,779 6,747 Issued by: Central governments and central banks 1,602 1,546 Public sector entities Banks and other financial institutions 3,828 2,495 Corporate entities 2,327 2,684 7,779 6,747 Analysed by place of listing: Debt securities Listed in Hong Kong 1,812 1,905 Listed outside Hong Kong 1,347 1,590 3,159 3,495 Unlisted 4,620 3,252 7,779 6,747 Fair value: Listed securities 3,208 3,516 Unlisted securities 4,625 3,218 7,833 6,734 The Bank of East Asia, Limited Interim Report

25 Notes to the Interim Financial Statements (Continued) 20. Fixed Assets Investment properties Bank premises 30/6/2015 Furniture, fixtures and equipment Sub-total Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Cost or valuation At 1st January, ,544 8,729 5,003 13,732 18,276 Additions Revaluation surplus Redevelopment cost (2) (2) Disposals (42) (43) (85) (85) Exchange adjustments 1 (14) (4) (18) (17) At 30th June, ,885 8,674 5,098 13,772 18,657 Accumulated depreciation and amortisation At 1st January, ,491 3,668 5,159 5,159 Charge for the period (Note 10) Written off on disposal (7) (34) (41) (41) Exchange adjustments (1) (3) (4) (4) At 30th June, ,572 3,808 5,380 5,380 Net book value at 30th June, ,885 7,102 1,290 8,392 13,277 Net book value at 31st December, ,544 7,238 1,335 8,573 13,117 The gross amounts of the above assets are stated: At cost 7,862 5,098 12,960 12,960 At Directors valuation At professional valuation ,885 4,885 4,885 8,674 5,098 13,772 18, Trading Liabilities 30/6/ /12/2014 HK$ Mn HK$ Mn Exchange fund bills sold 2,445 1 Shares sold , The Bank of East Asia, Limited Interim Report 2015

26 Notes to the Interim Financial Statements (Continued) 22. Other Accounts and Provisions 30/6/ /12/2014 HK$ Mn HK$ Mn Accrued interest payable 4,556 4,853 Acceptance draft payable 27,361 26,460 Other accounts 21,584 18,768 53,501 50, Loan Capital 30/6/ /12/2014 HK$ Mn HK$ Mn USD600 million subordinated notes, measured at amortised cost 4,896 4,899 USD500 million subordinated notes (under the Euro Medium Term Note Programme), measured at amortised cost 3,911 3,907 SGD800 million subordinated notes (under the Euro Medium Term Note Programme), measured at amortised cost 4,583 4,667 USD500 million subordinated notes (under the Euro Medium Term Note Programme), measured at amortised cost 3,883 3,862 17,273 17,335 Two tranches of loan capital of face value totalling HK$4,651 million (USD600 million) and carrying amount totalling HK$4,896 million (31/12/2014: HK$4,899 million) were issued on 16th July, 2010 (USD450 million) and on 23rd July, 2010 (USD150 million) by the Bank. These subordinated notes carrying a coupon rate of 6.125% qualifying as Tier 2 capital are listed on the Singapore Stock Exchange and will mature on 16th July, Hedge ineffectiveness of HK$3 million loss in the first half of 2015 (first half 2014: HK$2 million loss) was recorded under fair value hedge accounting. Loan capital of face value of HK$3,876 million (USD500 million) and carrying amount of HK$3,911 million (31/12/2014: HK$3,907 million) represents 6.375% subordinated notes (under the Euro Medium Term Note Programme) qualifying as Tier 2 capital issued on 4th November, 2011 by the Bank. The notes are listed on the Singapore Stock Exchange and will mature on 4th May, Hedge ineffectiveness of HK$0.1 million loss in the first half of 2015 (first half 2014: HK$0.1 million loss) was recorded under the fair value hedge accounting for the USD400 million subordinated notes. The fair value as of 30th June, 2015 for the USD100 million subordinated notes was HK$828 million (USD106.8 million) (31/12/2014: HK$837 million (USD107.9 million)). Loan capital of face value of HK$4,611 million (SGD800 million) and carrying amount of HK$4,583 million (31/12/2014: HK$4,667 million) represents two tranches of 4.25% subordinated notes (under the Euro Medium Term Note Programme) qualifying as Tier 2 capital issued on 13th March, 2012 (SGD600 million) and on 27th April, 2012 (SGD200 million) by the Bank. The notes are listed on the Singapore Stock Exchange and will mature on 13th September, Hedge ineffectiveness of HK$3 million loss in the first half of 2015 (first half 2014: HK$2 million profit) was recorded under the fair value hedge accounting. Loan capital of face value of HK$3,876 million (USD500 million) and carrying amount of HK$3,883 million (31/12/2014: HK$3,862 million) represents 4.25% subordinated notes (under the Euro Medium Term Note Programme) qualifying as Tier 2 capital issued on 20th November, 2014 by the Bank. The notes are listed on the Stock Exchange and will mature on 20th November, Hedge ineffectiveness of HK$0.003 million profit in the first half of 2015 was recorded under the fair value hedge accounting. The Bank of East Asia, Limited Interim Report

27 Notes to the Interim Financial Statements (Continued) 24. Segment Reporting The Group manages its businesses by divisions, which are organised by a mixture of both business lines and geography. In a manner consistent with the way in which information is reported internally to the Group s senior management for the purposes of resource allocation and performance assessment, the Group has presented the following nine reportable segments. No operating segments have been aggregated to form the following reportable segments. Personal banking, which includes branch operations, personal internet banking, consumer finance, property loans and credit card business in Hong Kong. Corporate banking, which includes corporate lending and loan syndication, asset based lending, commercial lending and securities lending in Hong Kong. Treasury markets, which include treasury operations and securities dealing in Hong Kong. Wealth management, which includes private banking business and related assets in Hong Kong. Financial institutions, which includes trade financing activities with correspondent banks in Hong Kong. Other Hong Kong banking operations, which mainly include insurance business, trust business, securities & futures broking, money lender activities and corporate financial advisory in Hong Kong. China operations mainly include the back office unit for China operations in Hong Kong, all branches, subsidiaries and associates operated in China, except those subsidiaries carrying out corporate services, data processing and other back office operations in China. Overseas operations include the back office unit for overseas banking operations in Hong Kong, all branches, subsidiaries and associates operated in overseas, except those subsidiaries carrying out corporate services in overseas. Corporate services include company secretarial services, share registration and business services, and offshore corporate and trust services. Other businesses include property-related business, supporting units of Hong Kong operations, investment properties, bank premises, the net results of other subsidiaries in Hong Kong except for those subsidiaries which are included in other Hong Kong banking operations. For the purposes of assessing segment performance and allocating resources between segments, the Group s senior management monitors the results, assets and liabilities attributable to each reportable segment on the following bases: Segment assets include all tangible assets, intangible assets and financial assets with the exception of interests in associates, deferred tax assets and other corporate assets. Segment liabilities include deposits, financial liabilities and other liabilities attributable to the individual segments. Revenue and expenses are allocated to the reportable segments with reference to interest and fee and commission income generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation or amortisation of assets attributable to those segments. Segment revenue and expenses do not include the Group s share of revenue and expenses arising from the activities of the Group s associates. Other than reporting inter-segment income, assistance provided by one segment to another, including sharing of assets, is not measured. In addition to receiving segment information concerning profit before taxation, management is provided with segment information concerning revenue (including inter-segment lending), interest expense, depreciation, amortisation and impairment losses and additions to non-current segment assets used by the segments in their operations. 25 The Bank of East Asia, Limited Interim Report 2015

28 Notes to the Interim Financial Statements (Continued) 24. Segment Reporting (Continued) Hong Kong banking operations Total reportable segments Intersegment elimination Personal Corporate Treasury Wealth Financial China Overseas Corporate banking banking markets management institutions Others operations operations services Others Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn 6 months ended 30th June, 2015 Net interest income 1,342 1, , , ,186 Non-interest income/ (expense) (433) , (183) 2,513 Operating income 1,774 1,542 (333) , , (183) 8,699 Operating expenses (833) (100) (61) (87) (6) (317) (1,799) (232) (408) (3,843) (960) 183 (4,620) Operating profit/(loss) before impairment losses 941 1,442 (394) , ,597 (518) 4,079 (Charge for)/write back of impairment losses on loans and advances and other accounts (70) (8) 13 1 (31) (684) 15 (4) (768) (13) (781) Impairment losses on available-for-sale financial assets (1) (1) (1) Operating profit/(loss) after impairment losses 871 1,434 (381) ,828 (531) 3,297 Profit/(Loss) on sale of fixed assets, loans and receivables, held-to-maturity investments and available-for-sale financial assets (2) Valuation gains on investment properties Share of profits less losses of associates Profit/(Loss) before taxation 869 1,438 (335) ,150 (92) 4,058 Depreciation for the period (32) (1) (1) (1) (12) (117) (10) (14) (188) (78) (266) At 30th June, 2015 Segment assets 66, , ,368 28,362 10,675 21, ,679 87,758 2, ,269 17,482 (102,854) 809,897 Investments in associates 56 1,078 4, ,089 6,089 Total assets 66, , ,368 28,362 10,675 21, ,757 92,692 2, ,358 17,482 (102,854) 815,986 Total liabilities 285,834 1,054 96,778 24, , ,117 75, ,430 2,636 (77,949) 733,117 The Bank of East Asia, Limited Interim Report

29 Notes to the Interim Financial Statements (Continued) 24. Segment Reporting (Continued) Hong Kong banking operations Personal banking Corporate banking Treasury markets Wealth management Financial institutions Others China operations Overseas operations Corporate services Total reportable segments Others Intersegment elimination Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn 6 months ended 30th June, 2014 (Restated) Net interest income/ (expense) 1,230 1,112 (53) , , ,248 Non-interest income , (169) 2,954 Operating income 1,602 1, , , (169) 9,202 Operating expenses (765) (95) (67) (90) (7) (284) (2,180) (258) (387) (4,133) (929) 169 (4,893) Operating profit/(loss) before impairment losses 837 1, , ,832 (523) 4,309 (Charge for)/write back of impairment losses on loans and advances and other accounts (53) (19) 1 (2) (11) (168) (65) (2) (319) (319) Write back of impairment losses on heldto-maturity investments Operating profit/(loss) after impairment losses 784 1, , ,516 (523) 3,993 Profit/(Loss) on sale of fixed assets and available-for-sale financial assets (2) Valuation gains on investment properties Share of profits less losses of associates (2) Profit/(Loss) before taxation 784 1, , ,891 (409) 4,482 Depreciation for the period (37) (1) (2) (2) (13) (161) (10) (13) (239) (89) (328) At 31st December, 2014 Segment assets 58, , ,170 29,917 9,813 17, , ,380 2, ,640 18,030 (134,862) 789,808 Investments in associates , ,083 6,083 Total assets 58, , ,170 29,917 9,813 17, , ,416 2, ,723 18,030 (134,862) 795,891 Total liabilities 278,557 1,164 94,513 23, , ,698 91, ,030 2,379 (110,962) 722, The Bank of East Asia, Limited Interim Report 2015

30 Notes to the Interim Financial Statements (Continued) 25. Analysis of Assets and Liabilities by Remaining Maturity Repayable on demand Within 1 month 3 months or less but over 1 month 1 year or less but over 3 months 30/6/ years or less but over 1 year Over 5 years Undated or overdue Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Assets Cash and balances with banks and other financial institutions 27,586 31,805 59,391 Placements with banks and other financial institutions 54 55,484 8,877 13,070 77,485 Trade bills 25 10,409 15,262 20, ,975 Trading assets 2,004 1,857 1,874 1, ,750 8,893 Financial assets designated at fair value through profit or loss ,951 2, ,540 Positive fair value of derivatives 4,083 4,083 Advances to customers and other accounts 8,671 64,666 39, , ,043 91,026 9, ,143 Available-for-sale financial assets 317 2,678 9,868 14,454 46,107 13,167 3,691 90,282 Held-to-maturity investments 2, ,742 2, ,779 Undated assets 23,415 23,415 Total assets 36, ,690 76, , , ,539 74, ,986 Liabilities Deposits and balances of banks and other financial institutions 3,594 18,308 5,248 7,561 2, ,982 Deposits from customers 187, , , ,776 27, ,409 Demand deposits and current accounts 77,675 77,675 Savings deposits 107, ,053 Time, call and notice deposits 2, , , ,776 27, ,681 Trading liabilities 1, ,461 Negative fair value of derivatives 6,065 6,065 Certificates of deposit issued 4,517 12,989 23,427 5,547 46,480 Current taxation 1,693 1,693 Debt securities issued 3, ,455 7,373 16,671 Loan capital 12,377 4,896 17,273 Other liabilities 1,183 6,519 7,616 19,943 8,094 2,573 8,155 54,083 Total liabilities 192, , , ,855 63,149 7,527 14, ,117 Net gap (155,355) (10,901) (69,394) 4, ,013 97,012 The Bank of East Asia, Limited Interim Report