Contents Financial Highlights 1 99 Corporate Information 2 100 Interim Results 3 101 Consolidated Income Statement 3 101 Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Condensed Consolidated Cash Flow Statement 4 102 5 103 6 104 7 105 Notes to the Interim Financial Statements 8 106 Supplementary Financial Information 55 153 Independent Review Report 66 164 Interim Dividend 67 165 Closure of Register of Members 67 165 Financial Review 67 165 Economic Overview 68 166 Operations Review 69 167 Risk Management 74 172 Corporate Social Responsibility Report 82 180 Recognition 84 182 Changes to Information in respect of Directors 86 184 Interests of Directors and Chief Executive 88 186 Information on Share Options 91 189 Interests of Substantial Shareholders and Other Persons 95 193 Dealings in Listed Securities of the Bank 97 195 Compliance with Corporate Governance Code 97 195 Compliance with Model Code 97 195 Publication of Interim Report 98 196 Glossary 197 197
FINANCIAL HIGHLIGHTS 30 June 30 June 31 December 2015 2014 2014 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 1.28 1.48 1.24 Dividends 0.38 0.43 0.68 Key Ratios % % % Return on average assets (annualised) 0.8 0.9 0.8 Return on average equity (annualised) 9.2 11.2 9.0 Cost-to-income ratio 53.1 53.2 54.9 Cost-to-income ratio (excluding business tax and surcharges of China Operations) 49.5 49.4 51.5 Average liquidity ratio N.A. 50.2 50.2 1 Average liquidity coverage ratio Second quarter 137.5 N.A. N.A. At period/year end Balance Sheet Strength HK$ Mn HK$ Mn HK$ Mn Advances to customers and trade bills 498,868 505,574 503,966 Total assets 815,986 805,349 795,891 Total deposits 597,889 608,203 592,582 Total equity 82,869 71,210 73,444 Key Ratios % % % Loan to deposit ratio 75.7 72.1 74.8 Impaired loan ratio 1.03 0.44 0.62 Common Equity Tier 1 capital ratio 13.2 11.6 11.8 Tier 1 capital ratio 13.8 12.2 12.5 Total capital ratio 17.6 15.7 16.7 1 Average for the full year of 2014. 1 The Bank of East Asia, Limited Interim Report 2015
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) 2980 1768 Facsimile: (852) 2861 1465 ADR DEPOSITARY BANK BNY Mellon Telephone: 1-888-BNY-ADRS E-mail: shrrelations@cpushareownerservices.com REGISTERED OFFICE 10 Des Voeux Road Central, Hong Kong Telephone: (852) 3608 3608 Facsimile: (852) 3608 6000 Website: www.hkbea.com E-mail: info@hkbea.com 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 2015 2
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, 2015. 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 30/6/2015 30/6/2014 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 9 410 336 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 11 54 68 Net loss on sale of loans and receivables (2) Net gain/(loss) on disposal of fixed assets 12 112 (3) Valuation gains on investment properties 20 340 115 Share of profits less losses of associates 254 309 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 26 162 (37) Profit for the period after taxation 3,415 3,632 Attributable to: Owners of the parent 3,354 3,580 Non-controlling interests 61 52 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$1.48 3 The Bank of East Asia, Limited Interim Report 2015
Consolidated Statement of Comprehensive Income 6 months ended 6 months ended 30/6/2015 30/6/2014 Notes HK$ 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 338 732 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 53 52 3,299 3,617 The Bank of East Asia, Limited Interim Report 2015 4
Consolidated Statement of Financial Position 30/6/2015 31/12/2014 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 17 493,143 482,140 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 26 122 96 Total Assets 815,986 795,891 EQUITY AND LIABILITIES Deposits and balances of banks and other financial institutions 36,982 33,323 Deposits from customers 551,409 548,184 Demand deposits and current accounts 77,675 67,337 Savings deposits 107,053 100,782 Time, call and notice deposits 366,681 380,065 Trading liabilities 21 2,461 21 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 26 582 686 Other accounts and provisions 22 53,501 50,081 Loan capital at amortised cost 23 17,273 17,335 Total Liabilities 733,117 722,447 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 815,986 795,891 5 The Bank of East Asia, Limited Interim Report 2015
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, 2015 25,217 84 1,970 1,660 1,642 228 13,930 4,300 19,849 68,880 4,564 73,444 Changes in equity Profit for the period 3,354 3,354 61 3,415 Other comprehensive income (341) 223 (14) 24 (108) (8) (116) Total comprehensive income (341) 223 (14) 24 3,354 3,246 53 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)) 131 131 131 Equity settled share-based transaction 12 12 12 Transfer 13 (13) 2 114 (116) Dividends declared or approved during the period (Note 1(d)) (1,762) (1,762) (47) (1,809) At 30th June, 2015 33,153 83 1,629 1,883 1,628 230 13,930 4,438 21,325 78,299 4,570 82,869 At 1st January, 2014 5,724 17,770 69 2,874 978 1,642 200 13,877 3,770 16,778 63,682 4,552 68,234 Changes in equity Profit for the period 3,580 3,580 52 3,632 Other comprehensive income (473) 564 (2) (104) (15) (15) Total comprehensive income (473) 564 (2) (104) 3,580 3,565 52 3,617 Shares issued in lieu of dividend 1,096 1,096 1,096 Shares issued under Staff Share Option Schemes 26 26 26 Equity settled share-based transaction 11 11 11 Transfer 6 (6) 30 56 32 (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, 2014 24,622 74 2,401 1,542 1,640 230 13,933 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 2015 6
Condensed Consolidated Cash Flow Statement 6 months ended 6 months ended 30/6/2015 30/6/2014 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 13 18 Purchase of equity securities (1,523) (800) Proceeds from sale of equity securities 1,123 703 Purchase of fixed assets (143) (152) Purchase of investment properties (43) Proceeds from disposal of fixed assets 156 3 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 131 26 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 38 44 7 The Bank of East Asia, Limited Interim Report 2015
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, 2015. 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, 2015. (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$0.43 per share on 2,329 million shares) 994 1,001 The interim dividend has not been recognised as a liability at the end of the reporting period. The Bank of East Asia, Limited Interim Report 2015 8
Notes to the Interim Financial Statements (Continued) 1. (d) Dividends (Continued) (ii) Dividends payable to equity owners of the parent attributable to the previous financial year, approved and paid during the interim period 6 months ended 30/6/2015 HK$ 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 165 165 (e) Share Capital The transition to the no-par value regime under the Companies Ordinance occurred automatically on 3rd March, 2014. 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 4 131 2 50 Transition to no-par value regime on 3rd March, 2014 17,770 Transfer of the fair value of options from capital reserve share options issued 13 9 Share issued in lieu of dividend 42 1,216 55 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
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 2010-2012 Cycle Annual Improvements to HKFRSs 2011-2013 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 88 93 Financial assets designated at fair value through profit or loss 74 139 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$12,394 million), before hedging effect, for financial assets that are not recognised at fair value through profit or loss. For the transactions where interest rate risk is hedged, the periodic payments and receipts arising from interest rate contracts which are qualifying hedging instruments for or individually managed in conjunction with interest bearing financial assets are first netted together and then combined with the interest income from the corresponding financial assets. 4. Interest Expense 6 months ended 6 months ended 30/6/2015 30/6/2014 Restated HK$ 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 146 137 Subordinated notes carried at amortised cost 317 280 Financial instruments designated at fair value through profit or loss 147 66 Other borrowings 10 1 6,145 6,339 The Bank of East Asia, Limited Interim Report 2015 10
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$6,368 million), before hedging effect, for financial liabilities that are not recognised at fair value through profit or loss. For the transactions where interest rate risk is hedged, the periodic payments and receipts arising from interest rate contracts which are qualifying hedging instruments for or individually managed in conjunction with interest bearing financial liabilities are first netted together and then combined with the interest expense from the corresponding financial liabilities. 5. Fee and Commission Income Fee and commission income arises from the following services: 6 months ended 6 months ended 30/6/2015 30/6/2014 HK$ Mn HK$ Mn Corporate services 597 559 Loans, overdrafts and guarantees 479 500 Credit cards 460 437 Securities and brokerage 274 158 Trade finance 270 364 Other retail banking services 212 233 Trust and other fiduciary activities 87 84 Others 274 244 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 30/6/2015 30/6/2014 Restated HK$ Mn HK$ Mn Loss on dealing in foreign currencies and funding swaps (601) (68) Profit on trading securities 277 80 Net gain on derivatives 263 493 Dividend income from listed trading securities 25 26 (36) 531 11 The Bank of East Asia, Limited Interim Report 2015
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 30/6/2015 30/6/2014 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 30/6/2015 30/6/2014 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, 2014. 9. Other Operating Income 6 months ended 6 months ended 30/6/2015 30/6/2014 HK$ Mn HK$ Mn Dividend income from available-for-sale financial assets listed 5 7 unlisted 8 11 Rental from safe deposit boxes 43 39 Net revenue from insurance activities 203 174 Rental income on properties 103 65 Others 48 40 410 336 The Bank of East Asia, Limited Interim Report 2015 12
Notes to the Interim Financial Statements (Continued) 10. Operating Expenses 6 months ended 6 months ended 30/6/2015 30/6/2014 HK$ Mn HK$ Mn Contributions to defined contribution plan Hong Kong 80 77 Outside Hong Kong 176 172 Equity-settled share-based payment expenses 12 11 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 346 331 Maintenance, repairs and others 289 297 Total premises and equipment expenses excluding depreciation 635 628 Depreciation on fixed assets* (Note 20) 266 328 Amortisation of intangible assets 16 16 Other operating expenses Stamp duty, overseas and PRC business taxes, and value added taxes 338 399 Legal and professional fees 193 180 Communications, stationery and printing 157 158 Advertising expenses 121 143 Business promotions and business travel 81 84 Card related expenses 63 29 Insurance expenses 33 24 Administration expenses of corporate services 10 8 Membership fees 8 8 Bank charges 4 5 Donations 3 3 Bank licence 2 2 Others 128 143 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, 2015 2nd half, 2015 2016 2017 2018 2019 Later HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn (47) (40) (36) 4 21 34 64 13 The Bank of East Asia, Limited Interim Report 2015
Notes to the Interim Financial Statements (Continued) 11. Net Profit on Sale of Available-for-Sale Financial Assets 6 months ended 6 months ended 30/6/2015 30/6/2014 HK$ Mn HK$ Mn Net revaluation gain transferred from reserves 102 43 (Loss)/Profit arising in the period (48) 25 54 68 12. Net Gain/(Loss) on Disposal of Fixed Assets 6 months ended 6 months ended 30/6/2015 30/6/2014 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 30/6/2015 31/12/2014 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 50,769 14. Trade Bills 30/6/2015 31/12/2014 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 2015 14
Notes to the Interim Financial Statements (Continued) 15. Trading Assets 30/6/2015 31/12/2014 HK$ Mn HK$ Mn Treasury bills (including Exchange Fund Bills) 2,454 78 Certificates of deposit held 1,985 Debt securities 2,704 1,412 Equity securities 1,729 1,374 Investment funds 21 21 8,893 2,885 Issued by: Central governments and central banks 2,462 129 Public sector entities 8 52 Banks and other financial institutions 3,698 1,170 Corporate entities 2,702 1,501 Other entities 23 33 8,893 2,885 Analysed by place of listing: Debt securities Listed in Hong Kong 8 13 Listed outside Hong Kong 25 113 33 126 Unlisted 7,110 1,364 7,143 1,490 Equity securities Listed in Hong Kong 1,488 1,131 Listed outside Hong Kong 241 243 1,729 1,374 Investment funds Listed in Hong Kong 7 7 Listed outside Hong Kong 14 14 21 21 8,893 2,885 15 The Bank of East Asia, Limited Interim Report 2015
Notes to the Interim Financial Statements (Continued) 16. Financial Assets Designated at Fair Value through Profit or Loss 30/6/2015 31/12/2014 HK$ Mn HK$ Mn Certificates of deposit held 621 1,495 Debt securities 4,462 6,792 Equity securities 329 353 Investment funds 128 73 5,540 8,713 Issued by: Central governments and central banks 92 94 Banks and other financial institutions 2,444 5,072 Corporate entities 2,875 3,474 Other entities 129 73 5,540 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 120 128 Listed outside Hong Kong 209 225 329 353 Investment funds Listed in Hong Kong 30 Listed outside Hong Kong 4 9 34 9 Unlisted 94 64 128 73 5,540 8,713 The Bank of East Asia, Limited Interim Report 2015 16
Notes to the Interim Financial Statements (Continued) 17. Advances to Customers and Other Accounts (a) Advances to customers and other accounts 30/6/2015 31/12/2014 HK$ Mn HK$ Mn (i) Advances to customers 452,889 443,287 Less: Impairment allowances Individual (562) (419) Collective (1,091) (935) 451,236 441,933 (ii) Other accounts Advances to banks and other financial institutions 20 55 Less: Impairment allowances Individual (1) (1) 19 54 Notes and bonds 1 1 Certificates of deposit held 77 116 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 40,153 493,143 482,140 17 The Bank of East Asia, Limited Interim Report 2015
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 30/6/2015 31/12/2014 % of secured advances Gross advances % of secured advances HK$ Mn % HK$ Mn % Loans for use in Hong Kong Industrial, commercial and financial Property development 15,039 66.86 17,177 71.40 Property investment 38,418 85.73 38,906 86.53 Financial concerns 12,949 72.41 15,562 82.32 Stockbrokers 9,538 95.53 1,901 95.94 Wholesale and retail trade 21,631 52.82 21,070 56.15 Manufacturing 5,620 40.96 7,090 50.93 Transport and transport equipment 6,449 67.86 6,835 67.01 Recreational activities 143 54.36 138 56.53 Information technology 1,132 27.34 836 15.53 Others 22,526 70.65 19,113 69.23 Sub-total 133,445 71.85 128,628 73.10 Individuals Loans for the purchase of flats in the Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme 1,067 100.00 1,058 100.00 Loans for the purchase of other residential properties 39,845 100.00 33,052 100.00 Credit card advances 4,390 0.00 5,079 0.00 Others 20,986 84.84 19,181 82.12 Sub-total 66,288 88.58 58,370 85.42 Total loans for use in Hong Kong 199,733 77.40 186,998 76.95 Trade finance 5,727 53.59 5,527 59.14 Loans for use outside Hong Kong* 247,429 69.24 250,762 71.38 Total advances to customers 452,889 72.64 443,287 73.57 * Loans for use outside Hong Kong include the following loans for use in Mainland China. Gross advances 30/6/2015 31/12/2014 % of secured advances Gross advances % of secured advances HK$ Mn % HK$ Mn % Property development 42,265 59.55 40,010 60.01 Property investment 32,185 97.88 32,701 98.51 Wholesale and retail trade 26,918 77.77 32,072 80.53 Manufacturing 9,824 53.46 11,224 61.73 Others 73,851 60.18 73,200 61.45 185,043 68.80 189,207 70.80 The Bank of East Asia, Limited Interim Report 2015 18
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: 30/6/2015 31/12/2014 HK$ Mn HK$ Mn (i) Property development a. Individually impaired loans 623 42 b. Individual impairment allowance 138 10 c. Collective impairment allowance 158 116 d. Provision charged to income statement individual impairment loss 128 1 collective impairment loss 55 67 e. Written off (ii) Property investment a. Individually impaired loans 562 299 b. Individual impairment allowance 9 3 c. Collective impairment allowance 205 175 d. Provision charged to income statement individual impairment loss 5 13 collective impairment loss 51 67 e. Written off 9 (iii) Loans for purchase of residential properties a. Individually impaired loans 304 236 b. Individual impairment allowance 20 12 c. Collective impairment allowance 110 82 d. Provision charged to income statement individual impairment loss 10 23 collective impairment loss 26 29 e. Written off 1 11 (iv) Wholesale and retail trade a. Individually impaired loans 1,082 633 b. Individual impairment allowance 193 74 c. Collective impairment allowance 129 124 d. Provision charged to income statement individual impairment loss 239 318 collective impairment loss 36 57 e. Written off 133 286 (v) Hotels a. Individually impaired loans 831 637 b. Individual impairment allowance 24 58 c. Collective impairment allowance 55 49 d. Provision charged to income statement individual impairment loss 29 59 collective impairment loss 14 22 e. Written off 62 19 The Bank of East Asia, Limited Interim Report 2015
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 193,896 247 471 96 252 People s Republic of China 215,545 2,997 3,941 446 731 Other Asian Countries 20,714 70 165 19 52 Others 22,734 12 82 1 56 Total 452,889 3,326 4,659 562 1,091 % 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 186,000 226 404 95 248 People s Republic of China 213,984 1,784 2,108 307 563 Other Asian Countries 20,813 79 143 17 68 Others 22,490 7 81 56 Total 443,287 2,096 2,736 419 935 % 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 2015 20
Notes to the Interim Financial Statements (Continued) 18. Available-for-Sale Financial Assets 30/6/2015 31/12/2014 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 557 273 90,282 86,816 Issued by: Central governments and central banks 15,732 28,238 Public sector entities 595 691 Banks and other financial institutions 32,992 27,788 Corporate entities 40,368 29,788 Other entities 595 311 90,282 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 899 766 Listed outside Hong Kong 1,487 1,376 2,386 2,142 Unlisted 748 753 3,134 2,895 Investment funds Listed in Hong Kong 140 Listed outside Hong Kong 19 29 159 29 Unlisted 398 244 557 273 90,282 86,816 21 The Bank of East Asia, Limited Interim Report 2015
Notes to the Interim Financial Statements (Continued) 19. Held-to-Maturity Investments 30/6/2015 31/12/2014 HK$ Mn HK$ Mn Treasury bills (including Exchange Fund Bills) 873 737 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 22 22 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 2015 22
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, 2015 4,544 8,729 5,003 13,732 18,276 Additions 2 1 142 143 145 Revaluation surplus 340 340 Redevelopment cost (2) (2) Disposals (42) (43) (85) (85) Exchange adjustments 1 (14) (4) (18) (17) At 30th June, 2015 4,885 8,674 5,098 13,772 18,657 Accumulated depreciation and amortisation At 1st January, 2015 1,491 3,668 5,159 5,159 Charge for the period (Note 10) 89 177 266 266 Written off on disposal (7) (34) (41) (41) Exchange adjustments (1) (3) (4) (4) At 30th June, 2015 1,572 3,808 5,380 5,380 Net book value at 30th June, 2015 4,885 7,102 1,290 8,392 13,277 Net book value at 31st December, 2014 4,544 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 1989 812 812 812 At professional valuation 2015 4,885 4,885 4,885 8,674 5,098 13,772 18,657 21. Trading Liabilities 30/6/2015 31/12/2014 HK$ Mn HK$ Mn Exchange fund bills sold 2,445 1 Shares sold 16 20 2,461 21 23 The Bank of East Asia, Limited Interim Report 2015
Notes to the Interim Financial Statements (Continued) 22. Other Accounts and Provisions 30/6/2015 31/12/2014 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 50,081 23. Loan Capital 30/6/2015 31/12/2014 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, 2020. 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, 2022. 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, 2022. 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, 2024. 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 2015 24
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
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 1,191 100 190 35 160 2,534 561 4 6,117 69 6,186 Non-interest income/ (expense) 432 351 (433) 244 8 409 631 85 596 2,323 373 (183) 2,513 Operating income 1,774 1,542 (333) 434 43 569 3,165 646 600 8,440 442 (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) 347 37 252 1,366 414 192 4,597 (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) 348 37 220 682 429 188 3,828 (531) 3,297 Profit/(Loss) on sale of fixed assets, loans and receivables, held-to-maturity investments and available-for-sale financial assets (2) 4 46 3 1 52 115 167 Valuation gains on investment properties 16 16 324 340 Share of profits less losses of associates 1 108 144 1 254 254 Profit/(Loss) before taxation 869 1,438 (335) 348 37 224 791 589 189 4,150 (92) 4,058 Depreciation for the period (32) (1) (1) (1) (12) (117) (10) (14) (188) (78) (266) At 30th June, 2015 Segment assets 66,462 176,012 150,368 28,362 10,675 21,677 351,679 87,758 2,276 895,269 17,482 (102,854) 809,897 Investments in associates 56 1,078 4,934 21 6,089 6,089 Total assets 66,462 176,012 150,368 28,362 10,675 21,733 352,757 92,692 2,297 901,358 17,482 (102,854) 815,986 Total liabilities 285,834 1,054 96,778 24,574 4 17,340 307,117 75,357 372 808,430 2,636 (77,949) 733,117 The Bank of East Asia, Limited Interim Report 2015 26
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) 136 89 118 2,982 547 2 6,163 85 6,248 Non-interest income 372 339 134 180 12 310 811 79 565 2,802 321 (169) 2,954 Operating income 1,602 1,451 81 316 101 428 3,793 626 567 8,965 406 (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 1,356 14 226 94 144 1,613 368 180 4,832 (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 3 3 3 Operating profit/(loss) after impairment losses 784 1,337 18 224 94 133 1,445 303 178 4,516 (523) 3,993 Profit/(Loss) on sale of fixed assets and available-for-sale financial assets 24 41 2 (2) 65 65 Valuation gains on investment properties 1 1 114 115 Share of profits less losses of associates (2) 97 213 1 309 309 Profit/(Loss) before taxation 784 1,361 59 224 94 133 1,540 517 179 4,891 (409) 4,482 Depreciation for the period (37) (1) (2) (2) (13) (161) (10) (13) (239) (89) (328) At 31st December, 2014 Segment assets 58,929 173,050 140,170 29,917 9,813 17,536 372,623 102,380 2,222 906,640 18,030 (134,862) 789,808 Investments in associates 55 972 5,036 20 6,083 6,083 Total assets 58,929 173,050 140,170 29,917 9,813 17,591 373,595 107,416 2,242 912,723 18,030 (134,862) 795,891 Total liabilities 278,557 1,164 94,513 23,218 4 13,355 328,698 91,134 387 831,030 2,379 (110,962) 722,447 27 The Bank of East Asia, Limited Interim Report 2015
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 30/6/2015 5 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 20,277 2 45,975 Trading assets 2,004 1,857 1,874 1,284 124 1,750 8,893 Financial assets designated at fair value through profit or loss 210 188 1,951 2,711 23 457 5,540 Positive fair value of derivatives 4,083 4,083 Advances to customers and other accounts 8,671 64,666 39,723 112,274 167,043 91,026 9,740 493,143 Available-for-sale financial assets 317 2,678 9,868 14,454 46,107 13,167 3,691 90,282 Held-to-maturity investments 2,239 582 2,742 2,017 199 7,779 Undated assets 23,415 23,415 Total assets 36,653 137,690 76,357 166,642 219,162 104,539 74,943 815,986 Liabilities Deposits and balances of banks and other financial institutions 3,594 18,308 5,248 7,561 2,213 58 36,982 Deposits from customers 187,231 114,326 118,531 103,776 27,545 551,409 Demand deposits and current accounts 77,675 77,675 Savings deposits 107,053 107,053 Time, call and notice deposits 2,503 114,326 118,531 103,776 27,545 366,681 Trading liabilities 1,788 657 16 2,461 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 3,133 710 5,455 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 192,008 148,591 145,751 161,855 63,149 7,527 14,236 733,117 Net gap (155,355) (10,901) (69,394) 4,787 156,013 97,012 The Bank of East Asia, Limited Interim Report 2015 28