中银香港（02388.HK）刊出《2026年中期报告》：1H26 归母净利 237.39 亿港元同比 +7.1%，确认每股 0.2388 港元特别股息及 2026–2028 不少于 105 亿港元额外股东回报，但该等内容属已披露预期的正式文本化

2026




Stock Codes: 2388 (HKD counter) and 82388 (RMB counter)
CONTENTS

PAGE
Financial Highlights 2
Management Discussion and Analysis 3
Condensed Consolidated Income Statement 39
Condensed Consolidated Statement of Comprehensive Income 40
Condensed Consolidated Balance Sheet 41
Condensed Consolidated Statement of Changes in Equity 42
Condensed Consolidated Cash Flow Statement 44
Notes to the Interim Financial Information 45
Corporate Governance and Other Information 115
Independent Review Report 122
Appendix – Subsidiaries of the Company 123
Definitions 126




Interim Report 2026 BOC Hong Kong (Holdings) Limited 1
FINANCIAL HIGHLIGHTS

30 June 2026 30 June 2025
For the period HK$’m HK$’m

Net operating income before impairment allowances 39,903 40,137
Operating profit 28,451 28,403
Profit before taxation 28,772 27,284
Profit for the period 24,356 22,804
Profit attributable to equity holders of the Company 23,739 22,160

Per share HK$ HK$

Basic earnings per share 2.2453 2.0959
Dividend per share 0.8188 0.5800

30 June 2026 31 December 2025
At period/year end HK$’m HK$’m

Total assets 4,773,371 4,495,238
Issued and fully paid up share capital 52,864 52,864
Capital and reserves attributable to equity holders of the Company 360,366 360,336

30 June 2026 30 June 2025
Financial ratios for the period % %

Return on average total assets1 1.08 1.05
Return on average shareholders’ equity2 13.18 12.86
Cost to income ratio 22.50 20.97
Average value of liquidity coverage ratio3
First quarter 180.46 231.50
Second quarter 168.42 185.34

30 June 2026 31 December 2025
Financial ratios at period/year end % %

Loan to deposit ratio4 59.88 58.32
Quarter-end value of net stable funding ratio3
First quarter 143.35 140.67
Second quarter 143.89 139.34
Total capital ratio5 25.71 25.98

Profit for the period
1. Return on average total assets =
Daily average balance of total assets


2. Return on average shareholders’ equity

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


3. Liquidity coverage ratio and net stable funding ratio are computed on the consolidated basis which comprises the positions of BOCHK and certain
subsidiaries specified by the HKMA in accordance with the Banking (Liquidity) Rules.


4. Loan to deposit ratio is calculated as at period/year end. Loan represents gross advances to customers. Deposits from customers include structured
deposits reported as “Financial liabilities at fair value through profit or loss”.


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


6. The Group has applied the merger accounting method in the preparation of financial statements for the combination with entity under common
control in 2026. The comparative information for the year 2025 has been restated accordingly.




2 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Following the completion of the Group’s acquisition of all the issued shares of Bank of China International Limited (“BOCI
Private Bank”) on 30 January 2026, the comparative information for 2025 has been restated accordingly.


Financial Performance and Conditions at a Glance
The following table is a summary of the Group’s key financial results for the first half of 2026 as compared with the
previous two half-year periods of 2025.


Profit attributable to equity Return on Average Shareholders’ Basic Earnings Per Share (“Basic
holders Equity1 (“ROE”) and Return on EPS”) and Dividend Per Share
Average Total Assets1 (“ROA”) (“DPS”)

HK$’m % HK$

12.86 13.18 2.2453
2.0959
10.15 1.7014
1.5450


23,739 0.2388
22,160 17,988 0.5800
1.05 1.08
0.85
0.5800
1H2025 2H2025 1H2026 ROE ROA Basic EPS DPS
1H2025 2H2025 1H2026 1H2025 2H2025 1H2026


Profit attributable to equity holders
• In the first half of 2026, profit attributable to equity holders amounted to HK$23,739 million, representing an
increase of 7.1% compared to the same period of the previous year, and an increase of 32.0% compared to the
second half of 2025.
• ROE and ROA were 13.18% and 1.08% respectively.
• Basic EPS was HK$2.2453. Both the first and second interim dividends were HK$0.2900 per share, totalling
HK$0.5800 per share in aggregate. The Board has approved the three-year shareholder return programme for
2026-2028, which includes an orderly increase in the regular dividend payout ratio within the established dividend
payout range, and plans to deliver additional shareholder returns of no less than HK$10.5 billion over this three-
year period. Under the programme, the Company will distribute a special dividend of HK$0.2388 per share for the
year 2026.

Net Interest Margin (“NIM”) Cost to Income Ratio Impaired Loan Ratio

% % %


1.47 1.48 1.54 1.62 1.57
1.34 26.85
20.97 22.50 1.14
1.02
0.89




Reported Adjusted 1H2025 2H2025 1H2026 2025.06.30 2025.12.31 2026.06.30
1H2025 2H2025 1H2026


Proactively managed assets and liabilities, leading to a stable increase in NIM
• NIM was 1.48%. If the funding income or cost of foreign exchange swap contracts 2 were included, NIM would have
been 1.57%, up 3 basis points year-on-year. The Group strengthened deposit pricing and tenor management while
actively growing its CASA deposits to optimise its deposit mix, which led to year-on-year growth in NIM.
Maintained satisfactory operating efficiency by optimising cost management
• Cost to income ratio was 22.50%, remaining at a satisfactory level compared to local industry peers.
Maintained benign asset quality by optimising comprehensive risk management
• The impaired loan ratio was 0.89%, remaining below the market average.

Interim Report 2026 BOC Hong Kong (Holdings) Limited 3
MANAGEMENT DISCUSSION AND ANALYSIS

Capital Ratio Average Value of Liquidity Quarter-end Value of Net Stable
Coverage Ratio Funding Ratio

% % %
25.69 142.30 143.35 143.89
184.39 180.46
25.98 25.71 168.42
23.69 23.69
24.01 23.80 24.01 23.80




Common Equity Tier 1 Total 4Q2025 1Q2026 2Q2026 4Q2025 1Q2026 2Q2026
Tier 1 Capital Ratio Capital Ratio
Capital Ratio
2025.06.30 2025.12.31 2026.06.30



Capital ratios remained solid
• The Group’s total capital ratio was 25.71%, while the Tier 1 capital ratio and Common Equity Tier 1 capital ratio
both stood at 23.80%.
Maintained ample liquidity
• The average value of the Group’s liquidity coverage ratio and the quarter-end value of its net stable funding ratio
in both the first and second quarter of 2026 met regulatory requirements.

1. Return on average shareholders’ equity and return on average total assets as defined in “Financial Highlights”.
2. Foreign exchange swap contracts are normally used for the Group’s liquidity management and funding activities. In foreign exchange swap contracts, the
Group exchanges one currency (original currency) for another (swapped currency) at the spot exchange rate (spot transaction) and commits to reverse the
spot transaction by exchanging the same currency pair at a future maturity date at a predetermined rate (forward transaction). In this way, surplus funds
in the original currency are swapped into another currency for liquidity and funding purposes with minimal foreign exchange risk. The exchange difference
(funding income or cost) between the spot and forward contracts is recognised as a foreign exchange gain or loss (as included in “net trading gain”),
while the corresponding interest differential between the surplus funds in the original currency and swapped currency is reflected in net interest income.




4 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Operating Environment
In the first half of 2026, elevated and volatile energy prices again put upward pressure on global inflation and inflation
expectations, prompting major central banks to adopt a tighter monetary policy stance. While investments in artificial
intelligence (“AI”) and advances in technology continued to enhance productivity, economic growth remained uneven
across jurisdictions. The Chinese Mainland economy demonstrated steady growth, with production and supply expanding
robustly, market demand stabilising with the help of stimulus policy measures, and foreign trade growing rapidly.


Hong Kong’s economy maintained its expansionary growth momentum. Private consumption expenditure recorded a
steady recovery, gross domestic fixed capital formation sustained a rapid growth, with external merchandise trade activities
continued to grow at a high pace and the Composite Consumer Price Index remained within a moderate growth range.


Hong Kong’s financial system remained sound. Total deposits of the Hong Kong banking sector continued to grow, while
total loans showed an ongoing recovery. The Hong Kong dollar gradually weakened against the US dollar, while Hong Kong
dollar interest rates remained relatively stable. In 2025, Hong Kong becomes the world’s largest cross-border wealth
management centre.


Trading and fundraising activity in the Hong Kong stock market remained brisk. The average daily turnover of the
Hong Kong stock market rose by 17.8% year-on-year. The Initial Public Offerings (“IPOs”) market remained strong, with
total funds raised through IPOs and the number of newly listed companies growing by 92.1% and 97.7% year-on-year
respectively.


The Hong Kong property market recovered steadily. The residential property market continued to strengthen with overall
residential property prices rising year-on-year, transaction volumes increasing significantly and the residential rents reaching
record highs. Commercial property market showed signs of stabilisation. Prices of private office saw a slight rebound after
bottoming out with transaction volumes rising year-on-year, while rents stabilised following a period of decline.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 5
MANAGEMENT DISCUSSION AND ANALYSIS

Consolidated Financial Review
Financial Highlights
(Restated) (Restated)
Half-year ended Half-year ended Half-year ended
HK$’m 30 June 2026 31 December 2025 30 June 2025

Net operating income before impairment allowances 39,903 37,095 40,137
Operating expenses (8,980) (9,959) (8,416)

Operating profit before impairment allowances 30,923 27,136 31,721
Operating profit after impairment allowances 28,451 22,160 28,403
Profit before taxation 28,772 21,321 27,284
Profit for the period 24,356 18,412 22,804
Profit attributable to equity holders of the Company 23,739 17,988 22,160


In the first half of 2026, profit attributable to equity holders of the Company was HK$23,739 million, an increase of
HK$1,579 million or 7.1% year-on-year. During the period, the mark-to-market value of foreign exchange related products
declined as a result of market volatility, causing net operating income before impairment allowances to decrease by 0.6%
year-on-year to HK$39,903 million. If the funding income or cost of foreign exchange swap contracts were included, net
interest income would have recorded a year-on-year increase, driven by growth in average interest-earning assets and an
increase in net interest margin. The Group strengthened deposit pricing and tenor management while actively growing
its CASA deposits to optimise its deposit mix, which contributed to the year-on-year increase in net interest margin. Net
fee and commission income declined year-on-year, primarily due to lower commission income from insurance. However,
commission income from securities brokerage, funds distribution and funds management showed year-on-year growth,
driven by the robust expansion of the Group’s wealth management business. There was also a significant growth in the sales
volume of BOC Life’s insurance products, which resulted in a year-on-year growth of insurance service result. Operating
expenses increased, while operational efficiency remained satisfactory. Meanwhile, the Group recorded a year-on-year
decrease in net charge of impairment allowances and recognised a net gain from fair value adjustments on investment
properties, contributing to overall profit growth.


Compared with the second half of 2025, the Group’s net operating income before impairment allowances increased by
HK$2,808 million or 7.6%. This was mainly attributable to an increase in net fee and commission income and a rise in net
trading gain, which more than offset a decline in net interest income, if the funding income or cost of foreign exchange
swap contracts were included. At the same time, both operating expenses and net charge of impairment allowances
decreased, while there was a net gain from fair value adjustments on investment properties. As a result, profit attributable
to equity holders of the Company increased by HK$5,751 million or 32.0% compared to the second half of last year.




6 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Income Statement Analysis
Net Interest Income and Net Interest Margin
(Restated) (Restated)
Half-year ended Half-year ended Half-year ended
HK$’m, except percentages 30 June 2026 31 December 2025 30 June 2025

Interest income 58,144 58,383 62,179
Interest expense (29,962) (30,484) (37,060)

Net interest income 28,182 27,899 25,119

Average interest-earning assets 3,843,722 3,762,168 3,790,681
Net interest spread 1.20% 1.18% 1.01%
Net interest margin 1.48% 1.47% 1.34%
Net interest margin (adjusted)1 1.57% 1.62% 1.54%


Net interest income amounted to HK$28,182 million in the first half of 2026. If the funding income or cost of foreign exchange
swap contracts2 were included, net interest income would have increased by 3.3% year-on-year to HK$29,934 million,
due to growth in average interest-earning assets and net interest margin. Average interest-earning assets expanded by
HK$53,041 million or 1.4% year-on-year. If the funding income or cost of foreign exchange swap contracts were included,
net interest margin would have been 1.57%, up 3 basis points year-on-year. The Group strengthened deposit pricing and
tenor management while actively growing its CASA deposits to optimise its deposit mix. These efforts partially mitigated
the impact of a decline in asset yield driven by lower market interest rates.


Compared with the second half of 2025, net interest income would have decreased by 2.8% and net interest margin
would have declined by 5 basis points if the funding income or cost of foreign exchange swap contracts were included,
mainly due to a decline in asset yield driven by lower market interest rates. Growth in its CASA ratio partially offset the
negative impact mentioned above.


1. Including the funding income or cost of foreign exchange swap contracts.
2. Foreign exchange swap contracts are normally used for the Group’s liquidity management and funding activities. In foreign exchange swap contracts, the
Group exchanges one currency (original currency) for another (swapped currency) at the spot exchange rate (spot transaction) and commits to reverse the
spot transaction by exchanging the same currency pair at a future maturity date at a predetermined rate (forward transaction). In this way, surplus funds
in the original currency are swapped into another currency for liquidity and funding purposes with minimal foreign exchange risk. The exchange difference
(funding income or cost) between the spot and forward contracts is recognised as a foreign exchange gain or loss (as included in “net trading gain”),
while the corresponding interest differential between the surplus funds in the original currency and swapped currency is reflected in net interest income.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 7
MANAGEMENT DISCUSSION AND ANALYSIS

The table below summarises the average balances and average interest rates of individual categories of assets and liabilities:


(Restated) (Restated)
Half-year ended Half-year ended Half-year ended
30 June 2026 31 December 2025 30 June 2025

Average Average Average Average Average Average
balance yield balance yield balance yield
Assets HK$’m % HK$’m % HK$’m %

Balances and placements with banks
and other financial institutions 484,080 2.16 447,009 2.20 635,043 2.14
Debt securities investments and
other debt instruments 1,599,319 3.10 1,617,441 3.02 1,470,353 3.26
Advances to customers and other
accounts 1,725,899 3.27 1,681,032 3.36 1,667,155 3.78
Other interest-earning assets 34,424 2.13 16,686 3.51 18,130 4.33

Total interest-earning assets 3,843,722 3.05 3,762,168 3.08 3,790,681 3.31
Non interest-earning assets 659,163 – 581,958 – 552,507 –

Total assets 4,502,885 2.60 4,344,126 2.67 4,343,188 2.89

Average Average Average Average Average Average
balance rate balance rate balance rate
Liabilities HK$’m % HK$’m % HK$’m %

Deposits and balances from banks
and other financial institutions 310,651 1.38 249,198 1.22 275,486 1.55
Current, savings and time deposits 2,726,722 1.89 2,722,330 1.95 2,778,824 2.37
Subordinated liabilities 77,875 2.16 75,166 2.14 73,324 2.15
Other interest-bearing liabilities 146,659 2.04 130,267 2.14 116,560 2.60

Total interest-bearing liabilities 3,261,907 1.85 3,176,961 1.90 3,244,194 2.30
Shareholders’ funds* and other
non interest-bearing deposits
and liabilities 1,240,978 – 1,167,165 – 1,098,994 –

Total liabilities 4,502,885 1.34 4,344,126 1.39 4,343,188 1.72

* Shareholders’ funds represent capital and reserves attributable to the equity holders of the Company.




8 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Net Fee and Commission Income
(Restated) (Restated)
Half-year ended Half-year ended Half-year ended
HK$’m 30 June 2026 31 December 2025 30 June 2025

Securities brokerage 1,610 1,711 1,579
Credit card business 1,474 1,446 1,314
Loan commissions 1,378 513 1,355
Insurance 691 829 1,162
Funds distribution 690 512 445
Payment services 401 388 388
Trust and custody services 397 393 509
Currency exchange 252 256 247
Bills commissions 246 238 214
Safe deposit box 143 147 146
Funds management 98 93 55
Others 622 561 729

Fee and commission income 8,002 7,087 8,143
Fee and commission expense (2,023) (2,062) (1,798)

Net fee and commission income 5,979 5,025 6,345


In the first half of 2026, net fee and commission income amounted to HK$5,979 million, a decrease of HK$366 million
or 5.8% year-on-year, mainly due to year-on-year declines in commission income from insurance and trust and custody
services of 40.5% and 22.0% respectively. Focusing on customer demand for inheritance-oriented whole life insurance, the
Group enriched its insurance product offering with enhanced product promotion and complementary inheritance planning
services. This resulted in significant growth in the sales volume of BOC Life’s insurance products during the period, with
the value of standard new premiums increasing by 27.9% year-on-year to HK$18,962 million and the balance of the
Group’s contractual service margin (“CSM”) rising 23.6% compared to the end of last year. It continuously expanded its
fund product range to meet customers’ diverse needs in asset allocation and risk management, with commission income
from funds distribution and management increasing by 55.1% and 78.2% year-on-year respectively. Meanwhile, the
Group captured the opportunities arising from Hong Kong’s retail sales recovery, with its credit card business recording
steady year-on-year growth in total local retail spending and achieving a year-on-year increase of 12.2% in credit card
commission income. Commission income from bills, payment services and currency exchange also increased. Fee and
commission expenses grew, mainly driven by higher business volumes.


Compared with the second half of 2025, net fee and commission income increased by HK$954 million or 19.0%, which
was mainly attributable to an increase in commission income from loans, funds distribution and management, credit card
business and payment services. This was partly offset by a decline in commission income from securities brokerage and
insurance.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 9
MANAGEMENT DISCUSSION AND ANALYSIS

Net Trading Gain
(Restated) (Restated)
Half-year ended Half-year ended Half-year ended
HK$’m 30 June 2026 31 December 2025 30 June 2025

Net trading gain 6,825 4,573 12,237


In the first half of 2026, the Group’s net trading gain amounted to HK$6,825 million, a decrease of HK$5,412 million or
44.2% year-on-year. This was primarily due to a decline in foreign exchange swap contract transactions which resulted
from the Group’s higher deployment of funding in local currency during the period, as well as a higher mark-to-market
value of foreign exchange related products and interest rate instruments in the same period last year.


Compared with the second half of 2025, net trading gain increased by HK$2,252 million or 49.2%, mainly owing to an
increase in the mark-to-market value of foreign exchange related products and interest rate instruments.


Net Gain on Other Financial Instruments at Fair Value through Profit or Loss
Half-year ended Half-year ended Half-year ended
HK$’m 30 June 2026 31 December 2025 30 June 2025

Net gain on other financial instruments at fair
value through profit or loss 2,404 4,446 3,527


In the first half of 2026, the Group recorded a net gain of HK$2,404 million on other financial instruments at fair value
through profit or loss, a decrease of HK$1,123 million or 31.8% year-on-year. The change was primarily due to a decline
in the mark-to-market value of BOC Life’s debt securities investments, caused by market interest rate movements. However,
this change in the mark-to-market value of debt securities investments related to BOC Life’s participating insurance business
was offset by changes to its insurance contract liabilities, also caused by market interest rate movements, which have been
reflected in changes in insurance finance expenses.


Compared with the second half of 2025, net gain on other financial instruments at fair value through profit or loss
decreased by HK$2,042 million or 45.9%, which was mainly attributable to a decrease in the mark-to-market value of
BOC Life’s debt securities investments resulting from market interest rate movements.




10 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Operating Expenses
(Restated) (Restated)
Half-year ended Half-year ended Half-year ended
HK$’m 30 June 2026 31 December 2025 30 June 2025

Staff costs 5,938 6,638 5,546
Premises and equipment expenses (excluding
depreciation and amortisation) 864 866 758
Depreciation and amortisation 1,388 1,367 1,374
Other operating expenses 1,471 1,752 1,298
Less: Costs directly attributable to insurance contracts (681) (664) (560)

Operating expenses 8,980 9,959 8,416



At 30 June At 31 December At 30 June
2026 2025 2025

Staff headcount measured in full-time equivalents 15,469 15,585 15,228


Focusing on its strategic growth initiatives, the Group allocated resources to key areas including digitalisation, regional
development, business integration and talent cultivation, giving priority to supporting major projects and business
development. Meanwhile, the Group enhanced resource utilisation and acquisition through resource reallocation to support
its strategic development initiatives. It optimised its branch network by advancing branch transformation and asset-light
business models, promoted business process automation and intelligent business capabilities by accelerated AI application
and technological transformation, and achieved scale benefits through centralised operations by further integrating its
regional operating platforms. In the first half of 2026, operating expenses amounted to HK$8,980 million, an increase of
HK$564 million or 6.7% year-on-year. The cost to income ratio was 22.50%, remaining at a satisfactory level relative to
local industry peers.


Staff costs increased by 7.1% year-on-year, mainly due to increased staff headcount and a rise in salary costs.


Premises and equipment expenses rose 14.0%, primarily due to increased investment in information technology and higher
expenditures on construction projects for branches and office premises.


Depreciation and amortisation increased by 1.0%, mainly due to an increase in the amortisation of intangible assets and
higher depreciation charges on certain computer equipment, partly offset by a decline in depreciation charges resulting
from the downward revaluation of certain premises.


Other operating expenses increased by 13.3%, driven by an increase in marketing and promotion expenses, professional
consultancy fees, insurance premium and charitable donations.


Compared with the second half of 2025, operating expenses decreased by HK$979 million or 9.8%. The decrease was
mainly due to a reduction in staff costs, advertising and promotion expenses, professional consultancy fees and charitable
donations.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 11
MANAGEMENT DISCUSSION AND ANALYSIS

Net Charge of Impairment Allowances on Advances and Other Accounts
Half-year ended Half-year ended Half-year ended
HK$’m 30 June 2026 31 December 2025 30 June 2025

Stage 1 104 250 643
Stage 2 524 2,754 763
Stage 3 1,757 1,980 1,858

Net charge of impairment allowances on
advances and other accounts 2,385 4,984 3,264


In the first half of 2026, the Group’s net charge of impairment allowances on advances and other accounts amounted
to HK$2,385 million, a decrease of HK$879 million or 26.9% year-on-year. This was mainly due to a higher base for
comparison resulting from impairment allowances made in relation to changes in the loan portfolio, downgrades to the
internal ratings of certain customers in the real estate sector amid weakness in the commercial real estate market, and
deteriorating business conditions or debt restructuring of certain non-performing customers in the same period last year. The
annualised credit cost of advances to customers and other accounts was 0.27%, down 0.12 percentage points year-on-year.
As at 30 June 2026, the Group’s total loan impairment allowances as a percentage of advances to customers was 1.12%.


Compared with the second half of 2025, the Group’s net charge of impairment allowances on advances and other accounts
decreased by HK$2,599 million or 52.1%. This was mainly attributable to a higher base for comparison resulting from
impairment allowances made in relation to downgrades to the internal ratings of certain customers in the real estate sector
amid continued weakness in the commercial real estate market in the second half of 2025.




12 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Analysis of Assets and Liabilities
The table below summarises the Group’s asset composition. Please refer to Note 20 to the Interim Financial Information
for the contract/notional amounts and fair values of the Group’s derivative financial instruments. Please refer to Note 35
to the Interim Financial Information for the contractual amounts of each significant class of contingent liability and
commitment, and the aggregate credit risk-weighted amount.


Asset Composition
(Restated)
At 30 June 2026 At 31 December 2025
HK$’m, except percentages Balance % of total Balance % of total

Cash and balances and placements with
banks and other financial institutions 570,298 11.9 567,599 12.6
Hong Kong SAR Government certificates
of indebtedness 252,790 5.3 243,190 5.4
Securities investments and other debt
instruments1 1,810,751 37.9 1,735,905 38.6
Advances and other accounts 1,808,518 37.9 1,706,477 38.0
Properties, plant and equipment as well
as investment properties 46,344 1.0 46,369 1.0
Other assets2 284,670 6.0 195,698 4.4

Total assets 4,773,371 100.0 4,495,238 100.0

1. Securities investments and other debt instruments comprise investment in securities and financial assets at fair value through profit or loss.
2. Other assets comprise derivative financial instruments, interests in associates and joint ventures, current tax assets and deferred tax assets, etc.



As at 30 June 2026, the total assets of the Group amounted to HK$4,773,371 million, an increase of HK$278,133 million
or 6.2% from the end of last year. Advances and other accounts increased by HK$102,041 million or 6.0%, with advances
to customers increasing by HK$101,526 million or 5.9%. Securities investments and other debt instruments increased by
HK$74,846 million or 4.3%, mainly due to the Group’s increased investment in banks and other financial institution bonds.
Other assets increased by HK$88,972 million or 45.5%, mainly due to higher balances of accounts receivable.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 13
MANAGEMENT DISCUSSION AND ANALYSIS

Advances to Customers
(Restated)
At 30 June 2026 At 31 December 2025
HK$’m, except percentages Balance % of total Balance % of total

Loans for use in Hong Kong 1,367,507 75.2 1,300,808 75.8
Industrial, commercial and financial 732,792 40.3 689,368 40.2
Individuals 634,715 34.9 611,440 35.6
Trade financing 49,755 2.7 41,202 2.4
Loans for use outside Hong Kong 401,356 22.1 375,082 21.8

Total advances to customers 1,818,618 100.0 1,717,092 100.0


In the first half of 2026, the Group seized market opportunities and remained committed to serving the real economy. Leveraging
its customer resources and professional service strengths, it focused on the Hong Kong, cross-border, Southeast Asian
and other key overseas markets to drive steady growth in its loan business. Capitalising on business opportunities arising from
the development of new quality productive forces and industrial chain relocation, the Group strengthened collaboration with
BOC’s entities in the Chinese Mainland as well as its Southeast Asian entities to support the needs of Chinese enterprises
“Going Global”, delivering integrated financial services through the service mechanism of “featuring global expertise and
services accessible at any point of contact”. It leveraged its strengths in RMB business to expand RMB application scenarios
in trade and capital markets, meeting its corporate customers’ diverse offshore RMB financing needs and promoting
the international use of RMB. During the period, it remained the top mandated arranger in the Hong Kong-Macao
syndicated loan market. It also enhanced the functionality of its “Home Expert” mobile app to provide customers with
comprehensive property purchase planning and online mortgage application services alongside streamlined payment
solutions, thus making property transactions more efficient. As a result, BOCHK maintained its leading market position in
terms of the total number of new residential mortgage loans in Hong Kong. As at 30 June 2026, advances to customers
amounted to HK$1,818,618 million, an increase of HK$101,526 million or 5.9% from the end of last year.


Loans for use in Hong Kong grew by HK$66,699 million or 5.1%.


• Lending to the industrial, commercial and financial sectors increased by HK$43,424 million or 6.3%, mainly driven
by an increase in loans for use in manufacturing, transport and transport equipment, information technology and
financial concerns which more than offset a decrease in loans for use in property investment and wholesale and
retail trade.


• Lending to individuals increased by HK$23,275 million or 3.8%, mainly due to growth in loans for the purchase
of flats in Home Ownership Scheme and other government-sponsored home purchase schemes, and loans for the
purchase of other residential properties.


Trade financing increased by HK$8,553 million or 20.8%. Loans for use outside Hong Kong increased by HK$26,274 million
or 7.0%, mainly due to an increase in loans for use in Southeast Asia.




14 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Loan Quality
(Restated)
At 30 June At 31 December
HK$’m, except percentages 2026 2025

Advances to customers 1,818,618 1,717,092
Impaired loan ratio 0.89% 1.14%

Total impairment allowances1 20,288 18,759
Total impairment allowances as a percentage of advances to customers 1.12% 1.09%

Residential mortgage loans2 – delinquency and rescheduled loan ratio3 0.06% 0.08%
Card advances – delinquency ratio3 0.34% 0.26%



Half-year ended Half-year ended
30 June 2026 30 June 2025

Card advances – charge-off ratio4 1.95% 1.94%

1. Total impairment allowances include those for advances at fair value through other comprehensive income.
2. Residential mortgage loans exclude those under the Home Ownership Scheme and other government-sponsored home purchasing schemes.
3. The delinquency ratio is the ratio of the total amount of overdue advances (more than three months) to total outstanding advances.
4. The charge-off ratio is the ratio of total write-offs made during the period to the average of the beginning and ending balance of card receivables.



The Group closely monitored market information and customer updates and enhanced its credit risk management
mechanisms and measures, including strengthening its oversight of higher-risk credit portfolios and conducting timely
reviews of customers’ internal ratings, with a view to maintaining solid asset quality. As at 30 June 2026, the Group’s
impaired loan ratio was 0.89%, down 0.25 percentage points from the end of last year. Impaired loans decreased by
HK$3,304 million from the prior year-end to HK$16,254 million, mainly due to write-offs following debt restructuring or
loan repayment by certain non-performing customers. The delinquency and rescheduled loan ratio of the Group’s residential
mortgage loans was 0.06%. The charge-off ratio of card advances was 1.95%.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 15
MANAGEMENT DISCUSSION AND ANALYSIS

Deposits from Customers*
(Restated)
At 30 June 2026 At 31 December 2025
HK$’m, except percentages Balance % of total Balance % of total

Demand deposits and current accounts 328,086 10.8 291,926 9.9
Savings deposits 1,305,669 43.0 1,278,679 43.4
Time, call and notice deposits (excluding
structured deposits) 1,401,927 46.2 1,366,622 46.5

3,035,682 100.0 2,937,227 99.8
Structured deposits 1,492 0.0 6,961 0.2

Total deposits from customers 3,037,174 100.0 2,944,188 100.0

* Including structured deposits



In the first half of 2026, the Group developed its deposits business by offering diversified products and services to customers
and continuously consolidating and expanding its high-quality customer base. It strengthened intra-group collaboration
and deepened relationships with customers including large corporates, financial institutions, government authorities,
and public entities, enabling the Group to understand and meet those clients’ needs in settlement, custody and treasury
services. Focusing on key customer segments including high-net-worth individuals, young customers and cross-border
customers, the Group advanced its intelligent business capability in financial services to enhance customer experience and
actively expanded its payroll, cash management, wealth management and IPO businesses to strengthen its deposit base.
As at 30 June 2026, total deposits from customers amounted to HK$3,037,174 million, an increase of HK$92,986 million
or 3.2% from the prior year-end. Demand deposits and current accounts increased by 12.4%. Savings deposits rose by
2.1%. Time, call and notice deposits (excluding structured deposits) increased by 2.6%. The CASA ratio was 53.8%, up
0.5 percentage points from the end of last year.


Capital and Reserves Attributable to Equity Holders of the Company
(Restated)
At 30 June At 31 December
HK$’m 2026 2025

Share capital 52,864 52,864

Premises revaluation reserve 31,920 31,984
Reserve for financial assets at fair value through
other comprehensive income (3,691) 1,157
Regulatory reserve 2,272 2,236
Translation reserve (2,104) (1,644)
Cash flow hedge reserve (6) 71
Insurance finance reserve 1,184 1,008
Merger reserve – 1,009
Retained earnings 277,927 271,651

Reserves 307,502 307,472

Capital and reserves attributable to equity holders of the Company 360,366 360,336


As at 30 June 2026, capital and reserves attributable to equity holders of the Company amounted to HK$360,366 million,
broadly unchanged from the end of 2025. The reserve for financial assets at fair value through other comprehensive
income shifted from a surplus to a deficit, primarily due to changes in market interest rates. The merger reserve as of
31 December 2025 arose from the Group’s application of the merger accounting method in connection with its acquisition
of all the issued shares of BOCI Private Bank. Retained earnings rose by HK$6,276 million or 2.3% from the end of 2025.



16 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Capital Ratio
At 30 June At 31 December
HK$’m, except percentages 2026 2025

Consolidated capital after deductions
Common Equity Tier 1 capital 311,629 295,716
Tier 1 capital 311,629 295,716
Total capital 336,536 319,967

Total risk-weighted assets 1,309,167 1,231,680

Common Equity Tier 1 capital ratio 23.80% 24.01%
Tier 1 capital ratio 23.80% 24.01%
Total capital ratio 25.71% 25.98%


As at 30 June 2026, the Group’s Common Equity Tier 1 (“CET1”) capital increased by 5.4% from the end of 2025, primarily
driven by profits recorded in the first half of 2026, which was partially offset by a decline in the reserve for financial assets
at fair value through other comprehensive income as a result of market volatility during the period. Total capital increased
by 5.2% from the previous year-end. Total risk-weighted assets (“RWAs”) increased by 6.3% from the end of last year,
mainly owing to RWA growth from business development. The CET1 capital ratio and Tier 1 capital ratio both stood at
23.80% while the total capital ratio was 25.71%. The Group dynamically optimised the allocation of its capital resources
and prudently managed its RWAs to improve return on capital, with a view to meeting regulatory requirements, while
ensuring sustainable business development and long-term, stable growth in shareholder returns.


Liquidity Coverage Ratio and Net Stable Funding Ratio
2026 2025

Average value of liquidity coverage ratio
First quarter 180.46% 231.50%
Second quarter 168.42% 185.34%
Third quarter N/A 191.26%
Fourth quarter N/A 184.39%



2026 2025

Quarter-end value of net stable funding ratio
First quarter 143.35% 140.67%
Second quarter 143.89% 139.34%
Third quarter N/A 143.07%
Fourth quarter N/A 142.30%


The Group’s liquidity position remained sound, with the average value of its liquidity coverage ratio and the quarter-end
value of its net stable funding ratio in both the first and second quarter of 2026 meeting regulatory requirements.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 17
MANAGEMENT DISCUSSION AND ANALYSIS

Business Review
In the first half of 2026, the Group continued to deepen its presence in the Hong Kong market, further explored customer
needs, and strengthened its wealth management business. Leveraging its cross-border synergies, the Group actively
supported Chinese Mainland enterprises “Going Global” and maintained its leading position in RMB business. Strengthening
its leading role as a regional headquarters, it optimised regional management and advanced integrated development in the
Southeast Asian region. The Group continued to implement its sustainable development strategy, deepened digital and
technological empowerment and enhanced its comprehensive service capabilities. Upholding the fundamental principles
of risk management, the Group remained committed to improving the quality of its development and creating value for
stakeholders.


Business Segment Performance
Profit before Taxation by Business Segment

(Restated)
Half-year ended 30 June 2026 Half-year ended 30 June 2025
HK$’m, except percentages Amount % of total Amount % of total

Personal Banking 8,884 30.9 8,437 30.9
Corporate Banking 7,262 25.2 6,699 24.6
Treasury 8,926 31.0 10,042 36.8
Insurance 1,283 4.5 1,098 4.0
Others 2,417 8.4 1,008 3.7

Total profit before taxation 28,772 100.0 27,284 100.0

Note: For additional segmental information, see Note 39 to the Interim Financial Information.



Personal Banking
Financial Results
Personal Banking achieved a profit before tax of HK$8,884 million in the first half of 2026, an increase of HK$447 million
or 5.3% year-on-year. Net interest income increased by 8.4%, mainly driven by deposit growth. Net fee and commission
income declined by 6.9%, primarily due to a decrease in commission income from insurance. Meanwhile, commission
income from funds distribution showed year-on-year growth, driven by the robust expansion of the Group’s wealth
management business during the period. There was also a significant growth in the sales volume of BOC Life’s insurance
products, which resulted in a year-on-year growth of insurance service result. Operating expenses rose by 5.3%, mainly
driven by higher staff costs and an increase in business-related expenses.




18 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Business Operations
Enriching exclusive services for different customer segments and strengthening brand position in wealth
management
The Group steadily enhanced both the scope and quality of its personal finance business by enriching exclusive products
and services for different customer segments in order to build a distinctive wealth management brand. The Group was
committed to meeting the comprehensive wealth and “Wealth+” needs of high-end customers by providing them with
value-added services and unique offerings that extend beyond finance, including holistic family wealth management,
physical and mental wellbeing support and bespoke lifestyle experiences, delivered through a dedicated team of
professionals, personalised solutions, exclusive privileges and premium services. It also made concerted efforts to develop its
premium “Private Wealth” brand. In response to high-end customers prioritising wealth inheritance and appreciation, the
Group offered exclusive inheritance solutions and private banking-level investment products while continuously expanding
its network of “Private Wealth Centres” with its flagship “Private Wealth Centre” officially opened in the prime location
of Tsim Sha Tsui in July 2026. As at the end of June 2026, the customer base of the Group’s high-end customer brands
of “Private Wealth” and “Wealth Management” recorded steady growth, with the total relationship balance of high-end
customers increasing by more than 10% year-on-year. To reinforce the market positioning of “FamilyMAX”, its premier
family finance brand, the Group launched various promotional offers targeting family accounts and organised a series
of “Wealth+” events to deliver one-of-a-kind experiences. As at the end of June 2026, the number of “FamilyMAX”
customers grew by nearly 10% year-on-year and total relationship balance of “FamilyMAX” customers grew by more
than 10% year-on-year. Through its youth-focused brand “Banking TrendyToo”, it provided digital wealth management
experiences, accessible financial knowledge, entry-level investment products and exclusive offers to young customers to
help them make an early start to wealth planning. This included launching the “Treat Day 22” and the “Three Treasures
for New Account Opening” promotions exclusively for new customers via its mobile banking app to encourage more
young customers to access wealth management services. The number of young customers has steadily increased since the
launch of “Banking TrendyToo”. BOCHK was awarded “Outstanding Wealth Management Brand for Young Segment”
in the finance, banking and insurance categories at the “01 Gold Medal Awards” organised by “HK01” for the third
consecutive year, further demonstrating the brand’s popularity among young customers. As at the end of June 2026, the
number of young customers increased by nearly 20% year-on-year. The Group also opened a new chapter in anti-fraud
education by deepening its cooperation and collaboration with banks, regulators, police, and the government. It rolled
out its “Anti-Fraud Education” and “Anti-Fraud Armor” promotion trucks and introduced “Trusty”, BOCHK’s anti-fraud
ambassador, promoting anti-fraud and anti-money laundering information via an interactive approach to help the general
public stay vigilant against fraud. During the period, BOCHK was awarded “Best Retail Bank in Hong Kong” at the
TAB Global Excellence in Retail Financial Services Awards 2026 organised by The Asian Banker.


The Group’s private banking business maintained steady growth by comprehensively addressing the core needs of
high-net-worth clients. It enhanced collaboration with BOC, other business units and Southeast Asian entities within
the Group to optimise its service chain and provide diversified and professional products and services to high-net-worth
clients and family offices. In support of the HKSAR Government’s policies to promote the development of family offices,
it partnered with third-party experts to attract global family offices to establish a presence in Hong Kong. It organised
a series of exclusive seminars and cultural activities for clients, constructed a family office ecosystem and cultivated a
high-net-worth client community. The Group also provided clients with tailor-made, comprehensive wealth management
services by optimising service models and enhancing digital platforms, delivering an outstanding customer experience while
improving its competitiveness in wealth management business. During the period, the Group completed the acquisition
of all the issued shares of BOCI Private Bank and advanced the integration process in an orderly manner, thus enhancing
the overall competitiveness of its private banking services. As at the end of June 2026, assets under management of the
Group’s private banking business increased by 20% compared to the end of 2025, while operating income in the first
half of 2026 maintained double-digit year-on-year growth, benefitting from the consolidating impact of the acquisition.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 19
MANAGEMENT DISCUSSION AND ANALYSIS

Capturing market trends and meeting customer needs with diversified products and services
In response to changes in market conditions and investor sentiment, the Group continuously expanded its fund
product range to meet customers’ diverse needs in asset allocation and risk management, including launching various
market-focused thematic funds and extending private placement bond services to general retail customers. Capitalising on
a buoyant Hong Kong stock market and a surge in IPO activity, it organised thematic ETF investment seminars and provided
its “IPO Easy” service via mobile banking to enhance customers’ investment experience. Focusing on customer demand for
inheritance-oriented whole life insurance, it enriched related insurance product offerings with enhanced product promotion
and complementary inheritance planning services to assist customers in managing risks as they enter early old age. At
the same time, it provided one-stop, cross-regional, personalised and integrated pension financial services to customers,
supporting the development of the silver economy. It also launched a HIBOR-based asset-pledged loan solution, offering
more flexible and competitive pricing arrangements to customers seeking policy collateral loans, premium financing and
wealth portfolio financing. In the first half of 2026, wealth management income in the Personal Banking segment rose by
14% year-on-year, with investment product distribution income increasing by 50% year-on-year. To promote customer use
of BOC credit card services across a broader range of scenarios, the Group kept pace with market dynamics and enhanced
its product competitiveness. This included launching the brand new “BOC Bliss Card”, which focuses on online spending
to better align with customers’ online shopping habits, while expanding “Amazing Travel Rewards” and upgrading the
cross-border spending promotions of “BOC GO Card”, which created consumption scenarios in the Greater Bay Area.
The Group extended its promotional campaigns for “Amazing Local Rewards” and “Amazing Global Rewards”. “Amazing
Local Rewards”, which promotes local online spending, introduced two new scenarios for pet lifestyle and leisure &
entertainment, while “Amazing Global Rewards”, which promotes cross-border and overseas spending, enhanced customer
acquisition and engagement through priority ticketing and spend-to-win ticket promotions, with priority concert ticketing
is now extended to credit card holders in the Chinese Mainland and Macao, further reinforcing the Group’s competitive
advantages in cross-border services. In the first half of 2026, the Group’s credit card business recorded steady year-on-year
growth in both total local retail spending and merchant acquiring transaction volumes in Hong Kong.


Seizing opportunities from regional interconnectivity and steadily promoting cross-border business
The Group continued to leverage its advantages in cross-border financial services. Taking the New Capital Investment
Entrant Scheme and various quality migrant admission schemes as entry points, it provided comprehensive and professional
financial services to eligible individuals relocating to Hong Kong. This included meeting newcomers’ needs in areas such as
daily living, children’s education, property purchase, retirement planning and pensions, thus helping them fully integrate
into the city’s life circle. Leveraging its synergies with BOC, the Group rolled out its “Global Integrated Services”, which
included the “Global Account Service” launched in tandem with BOC, the “Global Witness Account Opening” and “Global
Mutual Recognition” services jointly provided with overseas branches of BOC, and the “Global Money Transfer” service
available through BOCHK’s mobile banking platform, providing customers with greater flexibility in wealth management
while meeting their global asset allocation needs. The Group also enriched its cross-border wealth management
product suite and actively launched qualified investment products to help customers capture cross-border wealth
management opportunities. As at the end of June 2026, the number of cross-border customers increased steadily from
the end of 2025, and the cumulative number of accounts opened and volume of funds remitted or transferred under
Southbound and Northbound Cross-boundary Wealth Management Connect services maintained solid growth momentum.
During the period, the sales volume of the Group’s RMB fund distribution business rose by nearly 50% year-on-year. At the
same time, it comprehensively rolled out its “RMB Remittance for Property Purchase in Mainland China” service, extending
coverage to all cities across the Mainland and broadening the scope of eligible customers. This service enabled customers
to remit funds to receiving banks in all Chinese Mainland cities to settle property purchase payments for both primary and
secondary property sales, catering to the property purchasing needs of offshore individuals and improving the cross-border
financial services ecosystem. In its Southeast Asian business, the Group continued to deepen digitalisation across the region,
optimising mobile banking and cross-border digital payment features including UnionPay QR code, WeChat QR code and
aggregated QR code. In the first half of 2026, the transaction volume of the Group’s digital channels in Southeast Asia
grew by over 30% year-on-year. It also actively strengthened its regional brand development by collaborating with external
financial institutions and implementing an integrated branding and marketing strategy to enhance its “Wealth+” service
capabilities, so as to promote its wealth management business in Southeast Asia and provide customers with cross-regional
and personalised wealth management services.

20 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Innovating and optimising digital products to provide multi-channel digital banking services
The Group actively pushed forward its development as a digital bank by leveraging innovative technologies to enhance its
online service capacity, leading to a steady growth in the customer base of its digital platforms. As at the end of June 2026,
over 80% of customers had activated digital platform services. This included a year-on-year increase of over 10% in mobile
banking users. The cumulative number of financial transactions conducted through mobile banking also increased by 10%
year-on-year. Adhering to a data-driven approach across all channels, the Group actively harnessed the power of AI to
advance the optimisation of frontline operations and workflows while continuously enhancing the service capabilities of
“Bonnie”, its virtual assistant, and “BOCHK iService”, its remote service platform. At the same time, it upgraded multiple
mobile banking functions, including streamlining online investment procedures, optimising facial recognition authentication
features and adding a brand new e-ticketing function. It also enhanced its “Home Expert” mobile app to provide customers
with comprehensive property purchase planning and online mortgage application services. To promote the integration of
business and technology, the Group has introduced a streamlined mortgage application process by leveraging account
data shared between participating banks via the Interbank Account Data Sharing (“IADS”) programme as a supplementary
source of income verification for mortgage application assessments, and continued to expand its application scenarios
in order to make its services more transparent and convenient. To strengthen its competitive advantages in mortgage
services, the Group extended the scope of its “Payment Arrangements for Property Transactions” service to secondary
sales transactions for private residential properties, further safeguarding the security of mortgage payments, enhancing
efficiency in property transactions and advancing the digitalisation of its mortgage business. In the first half of 2026,
BOCHK maintained its leading market position in terms of the total number of new residential mortgage loans in Hong Kong.
Seizing opportunities in cross-border business, BOCHK launched the market-first “NFC-QRC all-in-one” service for payments
with BOC UnionPay credit cards via the Samsung Wallet mobile app, making it the first card-issuing bank in Hong Kong to
support this service. To enrich the application scenarios of BoC Pay+, the Group collaborated with UnionPay International
to integrate UnionPay’s real-time exchange rate system into BoC Pay+, offering Hong Kong users of BoC Pay+ with a
one-stop, real-time cross-border RMB payment experience. In addition, BoC Pay+ payment functions are now supported on
major platforms, such as “China Railway 12306”, “Ctrip”, “DiDi Chuxing” and “Qunar”, so as to satisfy customer demand
for more diverse payment options when travelling. As at the end of June 2026, the number of BoC Pay+ users increased
by 8.1% year-on-year. Transaction volume for BoC Pay+ in the first half of 2026 increased by 2.9% year-on-year, with
RMB-denominated transaction volume growing by 15.5%. The Group successfully acquired international brand merchants
for BoC Bill and continued to expand BoC Bill’s merchant acquiring business in the public sector, providing comprehensive
payment support for the government, statutory bodies and the public transportation system. In the first half of 2026, the
transaction volume of BoC Bill increased by 17.6% year-on-year.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 21
MANAGEMENT DISCUSSION AND ANALYSIS

Corporate Banking
Financial Results
Corporate Banking achieved a profit before tax of HK$7,262 million in the first half of 2026, an increase of
HK$563 million or 8.4% year-on-year. Net operating income before impairment allowances decreased by HK$119 million
or 1.0% year-on-year, mainly owing to a decrease in commission income from trust and custody services. The net charge
of impairment allowances decreased by HK$834 million year-on-year, mainly due to a higher base for comparison resulting
from impairment allowances made in relation to downgrades to the internal ratings of certain customers, as well as
deteriorating business conditions or debt restructuring of certain non-performing customers in the same period last year.


Business Operations
Upholding a customer-centric approach to enhance integrated service capabilities
The Group continued to enhance its professional services and strengthened bank-enterprise partnerships with its corporate
customers, providing integrated financial solutions to meet the demands of corporate customers from Hong Kong, the
Chinese Mainland, Southeast Asia and other overseas countries. In the first half of 2026, it remained the top mandated
arranger in the Hong Kong-Macao syndicated loan market and maintained its market leadership as an IPO main receiving
bank in terms of total funds raised on the Main Board. The Group participated in a number of bond issuance projects with
significant market influence, including assisting the Airport Authority Hong Kong in issuing the largest HKD-denominated
public bond offering in Hong Kong to date and assisting Hong Kong Mortgage Corporation Limited in issuing digital
bonds denominated in HKD and RMB. It continued to promote the development of key businesses such as trade finance
and cash management, maintaining a leading position in cash pooling business. It deepened its cooperation with various
types of financial institutions and maintained an extensive network of global correspondent banks, continuing to rank
first in terms of the number of indirect participants in the Cross-Border Interbank Payment System (“CIPS”). The Group
actively participated in the HKMA’s RMB Business Facility (“RBF”). Leveraging its role as the Group’s Southeast Asian
regional headquarters, it strengthened cross-regional business collaboration to effectively meet the RMB financing needs
of corporate clients overseas. In recognition of its excellence in professional services, BOCHK received multiple awards
from The Asian Banker, including “Best Cash Management Bank in Hong Kong” for the 12th time, “Best Transaction
Bank in Hong Kong” for the eighth time, “Best Corporate, Investment and Wholesale Bank in Hong Kong” for the second
time, as well as “Best Regional Cash Management Bank in Asia Pacific” and “Best Trade and Supply Chain Finance Bank
in Hong Kong” for the first time.


Strengthening synergy to consolidate competitive advantages in regional services
The Group gave full play to BOC Group’s global service mechanism of “featuring global expertise and services accessible
at any point of contact” by strengthening collaboration with BOC’s entities in the Chinese Mainland and jointly developing
work plans for key regions. The Group joined the “Northern Metropolis Financial Advisory Taskforce” established by the
HKMA and The Hong Kong Association of Banks, leveraging its financial expertise in capital financing, technology and
innovation development, investment promotion, and interconnectivity to fully support the accelerated construction of the
Northern Metropolis. To meet the core financial needs of enterprises in Guangdong Province (“Guangdong enterprises”)
“Going Global”, BOCHK launched the “BOC Guangdong Enterprise Treasury Centre Service Solution”, which enables
Guangdong enterprises to access worldwide cross-border financial services. The Group focused on developing technology
finance, strengthening collaboration with BOC’s entities in the Chinese Mainland and earnestly implementing the
“BOC Sci-Tech Holistic Customer Cultivation Programme” to fully support the sustainable and high-quality development of
technology enterprises. As at the end of June 2026, the innovative technology customer base of the Group grew steadily
from the end of 2025. In its Southeast Asian business, the Group implemented a dual-track client strategy targeting Chinese
enterprises “Going Global” and local corporates. Capitalising on business opportunities arising from industrial supply chain
relocation, it delivered robust support for the Belt and Road initiative and provided comprehensive financial services for
Chinese enterprises “Going Global”, while targeting on leading local corporates in Southeast Asia to tap into the region’s
market potential. Deepening the Group’s regional integrated development strategy, the Brunei Branch completed the
Group’s first Islamic syndicated financial project disbursement, while BOCHK and the Ho Chi Minh City Branch successfully
acted as lead arrangers of a USD-denominated syndicated loan facility for a leading Vietnamese securities firm. The Group
also progressively developed its custody network in Thailand, Malaysia and the Philippines to enhance the overall custody
service capabilities of its Southeast Asian entities.
22 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Advancing the development of global custody capabilities to enhance market competitiveness
The Group continuously enhanced the professionalism of its custody services and focused on expanding its business
coverage. As at the end of June 2026, its assets under custody increased by 35% compared to the end of 2025. During
the period, the Group successfully onboarded a number of portfolios from several key clients, consolidating its position
as a leading Chinese custodian bank. BOCI-Prudential Trustee Limited was appointed as custodian and fund administrator
for 15 new funds and it deepened the development of fund administration and services for international fund managers.
It rolled out an advanced service model for international fund managers, setting up a dedicated liaison team to deliver
professional services across-time zones, and liaising with multiple international fund managers for account opening,
market entry and asset transition. The Group received several awards in recognition of its highly efficient custody services,
including “Best Digital Asset Service Provider” and “Best Fund Administrator” at the AsianInvestor Asset Management
Awards 2026, “Best Custodian Bank – Hong Kong SAR (Domestic Category)” at the FinanceAsia Awards 2026 and “Best
Custodian Bank” at the Offshore China Fund Awards 2025 co-organised by Bloomberg and the Chinese Asset Management
Association of Hong Kong.


Deepening cooperation with commercial and SME customers to promote the development of inclusive finance
The Group was fully committed to supporting the business development of commercial and SME customers by streamlining
account opening procedures, significantly reducing account opening times and enhancing the efficiency of services
such as loan approval and post-loan management through the application of digital tools, thereby improving customer
experience for SMEs. It also actively supported the HKSAR Government’s “SME Financing Guarantee Scheme” and the
HKMA’s “Banking Sector SME Lending Coordination Mechanism” by launching a range of support measures to help more
SMEs obtain bank financing and accelerate their business upgrading and transformation. BOCHK’s dedication to providing
high-quality services to SMEs earned wide recognition from the market, including receiving the “Best SME’s Partner Award”
from the Hong Kong General Chamber of Small and Medium Business for the 19th consecutive year.


Integrating ESG concepts to promote sustainable development practices
The Group actively supported the implementation of the Hong Kong Taxonomy for Sustainable Finance (Phase 2A). It provided
green loans to a leading petrochemical and energy group as well as to the largest franchised bus operator in Hong Kong,
so as to contribute to the construction of Hong Kong’s green infrastructure and the transition of public transportation
towards carbon neutrality, thus driving forward green momentum in the society. As at the end of June 2026, the balance of
the Group’s green and sustainability-related loans to corporate customers increased by 5% compared to the end of 2025.
Acting again as the joint lead manager, it assisted a supranational organisation in issuing HKD-denominated sustainable
development bonds, which helped foster the development of Hong Kong’s sustainable bond market. BOCHK’s efforts to
advance corporates’ sustainable development were well received by the market, and was awarded “Excellent Brand of Green
and Sustainable Corporate Banking Services” at the Hong Kong Leaders’ Choice 2026 awards organised by Metro Finance.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 23
MANAGEMENT DISCUSSION AND ANALYSIS

Treasury
Financial Results
Treasury recorded a profit before tax of HK$8,926 million in the first half of 2026, a decline of HK$1,116 million or 11.1%
year-on-year. This was primarily due to a decline in net trading gain, caused by a decrease in foreign exchange swap
contract transactions resulted from higher deployment of funding in local currency during the period, as well as a higher
mark-to-market value of foreign exchange related products and interest rate instruments in the same period last year. This
was partly offset by an increase in net interest income of the banking book and a net gain from other financial instruments.

Business Operations
Enhancing treasury product and service capabilities to steadily develop global markets business
The Group continued to strengthen its treasury product infrastructure so as to enhance its treasury services and
market-making capabilities, therefore maintaining its market-leading advantages across various mutual market access
programmes. Seizing opportunities presented by enterprises “Going Global” and the HKSAR Government’s “Action Plan
to Promote Development of Corporate Treasury Centres”, it launched a variety of foreign exchange and risk hedging
products to provide diversified services for enterprises “Going Global” as well as financial institutions. Based on the four
pillars and ten measures outlined in the “Roadmap for the Development of Fixed Income and Currency Markets” jointly
released by the HKMA and the Securities and Futures Commission, it was committed to promoting Hong Kong as a global
hub for fixed income and currency products. During the period, it successfully assisted an offshore issuer to launch the
world’s first HKD-denominated Shanghai Pilot Free Trade Zone offshore bond. Acting as secondary custodian for such
bond issuance, it provided sub-custody services to offshore market investors via Shanghai Clearing House and offered
professional services in issuance coordination, custody arrangements, transaction clearing and other aspects to support
the issuer’s HKD financing needs and the HKD asset allocation needs of offshore market participants, thereby contributing
to the high-quality development of financial markets in the Chinese Mainland and Hong Kong. It once again assisted
the Indonesian government and a South Korean policy bank in issuing offshore RMB bonds (“Dim Sum bonds”) and
HKD bonds (“Wonton bonds”) respectively, and assisted an Australian commercial bank in issuing the first Wonton bonds
in Oceania. This broadened product range and issuer diversity in the primary fixed income market while providing issuers
and investors with complementary treasury products and services, therefore promoting the use of risk instruments and
liquidity management in the secondary market and contributing to the vigorous development of the fixed income market.
The Group consolidated and enhanced its precious metals storage capacity and physical transfer capability, and actively
participated in the construction of Hong Kong’s central clearing and settlement system for gold. BOCHK, as the settlement
institution and a direct participant of Hong Kong’s central clearing and settlement system for gold, as well as the designated
vault of Hong Kong Precious Metals Central Clearing Company Limited, actively leveraged its expertise to fully support the
HKSAR Government’s initiative to establish Hong Kong as an international gold trading hub.

Adhering to a robust, risk-aware investment strategy while proactively managing risks and enhancing returns
The Group maintained a robust and cautious approach to managing its banking book investments. It closely monitored
worldwide market interest rate adjustments and adopted a pre-emptive and proactive approach to managing risks, while
seeking fixed-income investment opportunities to enhance returns. At the same time, the Group actively diversified its
banking book investments, continuously optimising portfolio liquidity and strengthening its resilience against market
volatility.

Continuously developing innovative products and services and achieving steady growth in asset management
business
BOCHK Asset Management Limited (“BOCHK AM”) strengthened its core investment capabilities while promoting the
development of innovative products and services, thus achieving steady growth in assets under management. During the
period, BOCHK AM launched the “BOCHK All Weather Global Investment Grade Bond Fund” to provide investors with
new investment opportunities, and established a brand new venture capital fund to support the growth of Hong Kong
innovation and technology enterprises with promising development potential. In addition, BOCHK AM was approved by
the National Financial Regulatory Administration as an offshore investment manager for insurance funds, becoming a
partner institution for the offshore investment business of Chinese Mainland insurers, creating strong impetus for business
growth. Its professional expertise was widely recognised by the market. BOCHK AM was awarded “Best RMB Manager in
Hong Kong”, “Best China Asset Management Company in Hong Kong”, “Best Cross-Border Strategy (Greater Bay Area)
in Hong Kong” and “Best Climate Change Strategy in Hong Kong” at the 2026 Best of the Best Awards organised by
Asia Asset Management.


24 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Insurance
Financial Results
In the first half of 2026, the Group’s insurance segment actively optimised its product structure and service offering. The
value of standard new premiums increased by 27.9% year-on-year to HK$18,962 million. The value of new business grew
by 55.7% year-on-year to HK$3,390 million. Profit before taxation was up 16.8% year-on-year to HK$1,283 million, mainly
driven by business growth and an increase in investment income.


Business Operations
Enhancing multi-channel competitive advantages and committing to high-quality business development
BOC Life strengthened intra-group collaboration and focused on high-net-worth Personal Banking customers. It promoted
life insurance business growth by launching promotional campaigns, such as incentives for re-enrolment upon policy
maturity and sales offers with limited quotas, resulting in an increase in the sales volume of BOC Life’s insurance products
and contributing to the growth of 23.6% in the balance of the Group’s CSM from the end of last year. Deepening its
multi-channel competitive advantages, BOC Life delivered steady business growth by partnering with brokers with diversified
backgrounds and collaborating with international banks to promote the development of premium financing business. It
was also committed to building an elite tied-agency workforce comprising talents with regional experience, with a view
to enhancing customer experience through premium products and services. BOC Life optimised its product and service
offerings to meet the distinctive needs of different customer segments and distribution channels, thus enhancing its market
competitiveness. Products such as “Glamorous Glow Global Whole Life Insurance Plan” and “Elite Generations Global Whole
Life Insurance Plan” were well received by customers. In terms of BOCHK digital distribution channels, BOC Life raised
the upper eligible age limit for its core product “iTarget 3 Years Savings Insurance Plan” to expand its senior customer
base, added AUD, GBP and CAD as new policy currency options, and raised the maximum premium per policy in order
to improve the overall customer experience. BOC Life launched the “Sage Diamond Whole Life Insurance Plan” through
its brokers channel and the Group’s private banking channel, offering high-net-worth customers a lump-sum premium
payment option for USD-denominated policies. It also introduced the “Elite Generations Global Whole Life Insurance
Plan” across its offline channels, providing mass-affluent customers with a policy featuring multi-currency options and
12 death-benefit settlement options under the “Prosperity Wealth” Advance Policy Instruction, catering to the protection
and legacy planning needs of different customer segments. Furthermore, it launched the brand new BOC Life mobile app,
which seamlessly integrates with BOCHK’s mobile banking platform, offering services such as instant policy notifications,
policy overview, self-service policy management, claims submission and help and support. The mobile app also integrates
health management with premium rewards, creating a smart insurance ecosystem and delivering a secure and innovative
insurance management experience.


Promoting business innovation in pension finance and meeting customers’ diverse retirement needs
BOC Life actively promoted the development of the silver economy, helping customers to enjoy a high-quality lifestyle upon
retirement. Leveraging the synergies of “Bank + Insurance” and the strengths of its “BOC Silver Age” pension finance
branding strategy, it collaborated with BOCHK to launch “Redefine Retirement. Refine Life.”, an integrated retirement
financial service solution. Centring on the three core demands of “Wealth, Wellness, and Lifestyle”, this service solution
delivers a comprehensive “Wealth+” experience encompassing wealth management and value-added services. In alignment
with national policies in pension finance and the integrated development of the Guangdong-Hong Kong-Macao Greater
Bay Area, BOC Life partnered with a Chinese Mainland elderly care service provider to launch the “Peaceful Greater Bay
Area, Healthy Senior Living: Immersive Wellness Experience Programme”, which offered customers and their caregivers
complimentary wellness experiences, thus facilitating the emerging trend of retirement living in the Chinese Mainland.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 25
MANAGEMENT DISCUSSION AND ANALYSIS

Upholding the principle of “Business with Purpose” and steadfastly promoting sustainable development
BOC Life remained committed to fostering an ESG-led corporate culture and advancing sustainable development. In
support of climate action and green operations, it completed its first carbon audit and obtained independent third-party
audit certifications on energy and carbon from TÜV Rheinland. In addition, it launched new green office initiatives and
was awarded “Green Office” and “Eco-Healthy Workplace” awards labels under the “Green Office Awards Labelling
Scheme” of the World Green Organisation for the fourth consecutive year. Leveraging its industry influence, BOC Life
served as a strategic partner for the “Build4Asia Forum 2026”, bringing together stakeholders from the government,
commerce and community sectors to advance smart city development. Through a diverse range of flagship social welfare
projects, BOC Life continued to create long-term value for Hong Kong’s youth and underprivileged communities, including
collaborating with the Faculty of Business and Economics of the University of Hong Kong to launch the “Future Leader
Scholarship Programme”, which nurtures academically outstanding and socially responsible young talent. To foster holistic
development among the younger generation through sports, BOC Life title-sponsored the “BOC Life Hong Kong Premier
League” and the “BOC Life Wild in the City Orienteering Challenge 2026”. In addition, it supported the Hong Kong Guide
Dogs Association’s first “Charity Run for Little Q” to help raise awareness of the needs of people with visual impairments
and promote community inclusion.


Southeast Asian Business
Leveraging synergies in the Southeast Asian region to promote the collaborative development of its globalised
business
The Group remained focused on regional integrated development while adopting a differentiated management approach
across its regional entities through the organic combination of “One Branch, One Policy” strategies, thus deepening and
optimising its regional management model. It strengthened its leading role as a regional headquarters and enhanced
its capacity to empower the business development of its Southeast Asian entities. The Group remained dedicated to
strengthening its cross-border transaction and service network in the region. The Jakarta Branch acted as a primary dealer
in the Indonesian market and a major appointed cross-currency dealer for the China-Indonesia Local Currency Transaction
(“LCT”) framework. It actively participated in and promoted the development of RMB business in Indonesia, and was
appointed by the People’s Bank of China (“PBOC”) to act as the RMB Clearing Bank in Indonesia. During the period, the
Phnom Penh Branch officially launched its RMB acquiring business, making it the first commercial bank outside Hong Kong
to obtain regulatory approval and officially roll out RMB merchant acquiring services via point of sale (“POS”) terminals.
The Group actively promoted e-CNY product innovation in the Southeast Asia region, BOCHK was among the first direct
participants to connect to the Cross-border e-CNY Transfer Services (“CBETS”) platform operated by e-CNY Center
International Co., Ltd. It also became the world’s first offshore e-CNY custodian bank to provide liquidity transfer services
to offshore direct participants for their e-CNY settlement wallets, with its first production verification case completed
during the period. It also facilitated the participation of the Vientiane Branch and BOC Thailand as direct participants and
the Jakarta Branch as an indirect participant in the CBETS platform, further promoting the international use of e-CNY.
Furthermore, the Group enhanced the RMB outward remittance function of its intelligent Global Transaction Banking
(“iGTB”) platform in Southeast Asia, and became the first Chinese bank in the region to implement direct clearing between
iGTB and CIPS, thereby delivering solid results in promoting the international use of RMB. The Group’s regional brand
influence continued to grow, with the Vientiane Branch awarded the “2024-2025 Special Award for Foreign Exchange
Business in Laos” by the Bank of the Lao P.D.R, and BOC Thailand awarded “Best Bank for RMB Foreign Exchange Trading”
by leading local magazine BUSINESS+.


The Group’s Southeast Asian business recorded steady business growth. As at the end of June 2026, deposits and loans of
its Southeast Asian-related businesses1 increased by 4.0% and 9.6% respectively from the end of last year. Income from its
Southeast Asian-related businesses1 in the first half of 2026 increased by 1.0% year-on-year. As at the end of June 2026,
the non-performing loan ratio of the Group’s Southeast Asian entities2 was 2.08%.


1. Referring to the Group’s related businesses in Southeast Asia.
2. Referring to the nine Southeast Asian entities of BOC Thailand, BOC Malaysia, Ho Chi Minh City Branch, Manila Branch, Jakarta Branch, Phnom Penh Branch,
Vientiane Branch, Brunei Branch and Yangon Branch. The non-performing loan ratio was calculated in accordance with local regulatory requirements.




26 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Risk Management
Banking Group
Overview
The Group believes that sound risk management is crucial to the success of any organisation. In its daily operation, the
Group attaches a high degree of importance to risk management and emphasises that a balance must be struck between
risk control and business development. The principal types of risk inherent in the Group’s businesses are credit risk, market
risk, interest rate risk in the banking book, liquidity risk, operational risk, reputation risk, legal and compliance risk, and
strategic risk. The Group’s risk management objective is to enhance shareholder value by maintaining risk exposures within
acceptable limits. The Group has a defined risk appetite statement approved by the Board, which is an expression of the
types and level of risk that the Group is willing to take in a controllable way in order to achieve its business goals and to
meet the expectations of its stakeholders.

Risk management governance structure
The Group’s risk management governance structure is designed to cover all business processes and to ensure various risks
are properly managed and controlled in the course of conducting business. The Group has a robust risk management
organisational structure with a comprehensive set of policies and procedures to identify, measure, monitor and control
various risks that may arise. These risk management policies and procedures are regularly reviewed and updated to reflect
changes in markets and business strategies. Various groups of risk takers assume their respective responsibilities for risk
management.

The Board of Directors, representing the interests of shareholders, is the highest decision-making authority of the Group
and has the ultimate responsibility for risk management. The Board, with the assistance of its committees, has the primary
responsibility for the formulation of overall risk management strategies, risk appetite and risk culture and ensuring that
the Group has an effective risk management system to implement these strategies.

The Risk Committee (“RC”), a standing committee established by the Board of Directors, is responsible for overseeing
the Group’s comprehensive risk and various types of risks, including reviewing and approving of high level risk policies,
overseeing their implementation; reviewing and approving the Group’s risk data aggregation and risk reporting framework
and requirements and ensuring that adequate resources are deployed; reviewing and approving significant or high
risk exposures or transactions; determining its own risk reporting requirements and frequency and alerting the senior
management when risk reports do not meet its requirements; and if necessary, requesting for relevant information that will
allow it to fulfil its risk management mandate. The RC would refer any specific transaction to the Board if it is deemed so
significant that the Board’s approval is desirable. The Audit Committee assists the Board in fulfilling its role in overseeing
the internal control system.

The senior management is responsible for the implementation of enterprise risk management and various types of risk
management. The Chief Executive (“CE”) is responsible for managing the Group’s comprehensive and various types of
risks, and approving material risk exposures or transactions within his authority delegated by the Board of Directors. The
Deputy Chief Executives (“DCEs”) assist the CE in fulfilling his responsibilities on the day-to-day management of various
types of risk, and are responsible for approving material risk exposures or transactions within their authorities delegated by
the CE. The Chief Risk Officer (“CRO”) assists the CE in fulfilling his responsibilities on day-to-day management of various
types of risks and internal control; responsible for initiating new risk management strategies, projects and measures in
response to regulatory changes that will enable the Group to better manage and control any risks, whether arising from
new businesses, products and operating environment, and reviewing material risk exposures or transactions within the
delegated authority. In accordance with the principle of setting the hierarchy of risk management policies approved by the
Board, senior management is responsible for approving the detailed risk management policies of their responsible areas,
and promoting the identification, assessment and management of data quality risks as part of its overall risk management
framework as well as implementation of the relevant regulatory requirements.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 27
MANAGEMENT DISCUSSION AND ANALYSIS

Various units of the Group have their respective risk management responsibilities. Business units act as the first line of
defence while risk management units and supporting units, which are the second line of defence and are independent from
the business units, are responsible for the day-to-day management of different kinds of risks. Various single risk type risk
management units have the primary responsibility for drafting, reviewing and updating various risk management policies
and procedures. Group audit acts as the third line of defence of risk management, which is responsible for conducting
independent checking.

The Group’s principal banking subsidiaries are subjected to risk management policies that are consistent with those of the
Group. Moreover, the Group’s non-banking subsidiaries, such as BOC Life, are subject to the Group’s risk management
requirements. These subsidiaries are required to formulate their respective risk management policies based on the
characteristics of their own industries, perform daily risk management responsibilities and report to BOCHK on a regular
basis. Risk management units of BOCHK monitor the risk management status of these subsidiaries.


Credit risk management
Credit risk is the risk of loss that a customer or counterparty is unable to or unwilling to meet its contractual obligations.
Credit risk exists in the trading book and banking book, as well as from on- and off-balance sheet transactions of the
Group. It arises principally from lending, trade finance and treasury businesses. The Chief Credit Officer, who reports
directly to the CRO, takes charge of credit risk management and is also responsible for the control of credit risk exposures
of subsidiaries in line with the credit risk management principles and requirements set by the Group.


For advances, different credit approval and control procedures are adopted according to the level of risk associated with
the customer, counterparty or transaction. The Credit Risk Assessment Committee, comprising experts from credit and
other functions, is responsible for making an independent assessment of material credit applications which require the
approval of DCEs or above. Credit applications for non-retail exposures are independently reviewed and objectively assessed
by risk management units. Obligor ratings (in terms of probability of default) and facility ratings (in terms of loss given
default) are assigned to these portfolios to support credit approval. Retail internal rating systems are deployed in the risk
assessment of retail credit transactions, including small business loans under retail exposures, residential mortgage loans,
personal loans and credit cards, etc. Loan grades, obligor and facility ratings as well as loss estimates (if applicable) are
used to support credit approval.


The Group also uses loan grades, obligor ratings and loss estimates (if applicable) to support credit monitoring, reporting
and analysis of credit risk information. For non-retail exposures, more frequent rating review and closer monitoring are
required for higher-risk customers. For retail exposures, monthly updated internal ratings and loss estimates are used for
credit monitoring on a portfolio basis. More comprehensive review is required for obligors being identified under high-risk
pools. The Group adopts loan grading criteria which divide credit assets into five categories with reference to the HKMA’s
guidelines. The Risk Management Department (“RMD”) provides regular credit management information reports and ad hoc
reports to the Management Committee (“MC”), the RC and Board of Directors to facilitate their continuous monitoring of
credit risk. In addition, the Group identifies credit concentration risk by industry, geography, customer or counterparty. The
Group monitors changes to every counterparties credit risk, quality of the credit portfolio and credit risk concentrations,
and reports regularly to the Group’s Management.


The Group employs an internal master rating scale that can be mapped to Standard & Poor’s external credit ratings. The
structure of internal master rating scale is in compliance with the requirement of the Banking (Capital) Rules under the
Hong Kong Banking Ordinance.


The Group will write-off the financial asset when there is no realistic prospect of recovery or reasonable expectation of
full recovery upon assessment. After realisation of the collateral of secured financial assets, the net value of the financial
assets will be written-off if there is no prospect of recovery despite recovery efforts taken.




28 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

For investments in debt securities, the obligor ratings or external credit ratings and credit limits setting on customer/security
issuer basis are used for managing credit risk associated with the investment. For derivatives, the Group sets customer
limits to manage the credit risk involved and follows the same approval and control processes as applied for advances.
On-going monitoring and stop-loss procedures are established.


For impairment assessment, an impairment model is introduced in compliance with HKFRS 9, it requires the recognition of
Expected Credit Loss (“ECL”) for financial instruments held at amortised cost and fair value through other comprehensive
income. Under HKFRS 9, ECL is assessed in three stages and the financial assets, loan commitments and financial guarantees
are classified in one of the three stages.

Stage 1: if the financial instruments are not credit-impaired during origination and their credit risk has not increased
significantly since origination, and the impairment allowance is measured at an amount up to 12-month ECL;

Stage 2: if the financial instruments are not credit-impaired during origination but their credit risk has increased significantly
since origination, and the impairment allowance is measured at an amount equal to the lifetime ECL;

Stage 3: if the financial instruments are credit-impaired and their future cash flows of that financial instruments are
adversely affected by one or more events, and the impairment allowance is measured at an amount equal to the lifetime
ECL.

The Group has established the significant credit deterioration criteria framework to determine the stage of the financial
instruments. The framework incorporates both quantitative and qualitative assessment, taking into account of factors such
as number of days past due, change in Internal Ratings-Based (“IRB”) rating, low credit risk threshold and the watchlist.

The customer credit ratings in the internal model are classified into 27 grades. The lowest (27th) credit grading equates
to defaulted customers while the others are assigned to non-defaulted customers. The quantitative and qualitative criteria
considered in determining significant credit deterioration include:

Quantitative criteria
– Failure to make payments of principal or interest 30 days after the contractual due dates;

– At the reporting date, the credit risk is deemed to increase significantly when the remaining lifetime PD rises by more
than a certain range from initial recognition, and reflected as a drop in customer’s credit rating by corresponding
level according to the different PD at initial recognition. On average, there is a significant increase in credit risk
when the customer’s credit rating drops by 5 grades.

Qualitative criteria
– Significant adverse change in debtor’s operations or financial status;

– Customers with sign of credit deterioration are put into watchlist for staging review.

The Group leverages the parameters implemented under Basel IRB models and internal models where feasible and available
to assess ECL. For the portfolios without models, all other reasonable and supportable information such as historical
information, relevant loss experience or proxies are utilised. The measurement of ECL is the product of the financial
instrument’s probability of default (“PD”), loss given default (“LGD”) and exposure at default (“EAD”) discounted at the
effective interest rate to the reporting date.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 29
MANAGEMENT DISCUSSION AND ANALYSIS

ECL is measured at an unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes, the time value of money and reasonable and supportable information about past events, current conditions and
forecasts of future economic conditions. The Group adopts four economic scenarios in the ECL measurement, including
“Good”, “Baseline”, “Bad” and “Alternative” scenarios, to meet the requirements of HKFRS 9. The “Baseline” scenario
represents a most likely outcome. “Good” and “Bad” scenarios represent the estimated deviations of the “Baseline”
scenario, which are either more optimistic or more pessimistic as compared with “Baseline” scenario. The “Alternative”
scenario represents a more pessimistic scenario than the “Bad” scenario, to reflect the Management’s view on severe
downside risks of the idiosyncratic events that may have severe impact on the performance and asset quality of the credit
portfolio, when the Management considers the risk cannot be fully reflected in the three scenarios (i.e. “Good”, “Baseline”
and “Bad” scenarios) derived from forecasts and historical data.


The “Baseline” and “Alternative” scenarios are prepared by the Group’s Economics & Strategic Planning Department.
Historical data, economic trend, external economic forecast from governmental and non-governmental organisation, etc.
are also used as reference benchmarks to ensure the “Baseline” scenario is reasonable and supportable. For the “Good”
and “Bad” scenarios, the Group makes reference to the historical macroeconomics data for estimating the deviations. The
“Alternative” scenario reflects the Management’s review of the tail of the economic distribution, incorporating a number
of risk events, including further escalation of geopolitical tensions coupled with other uncertainties, worsening of global
supply chains, rising global inflation rate, the monetary tightening policy of Central Banks and interest rate hikes which
eventually pose a significant pressure on economy.


The core macroeconomic factors in the major countries/regions where the Group operates such as Gross Domestic
Product (“GDP”) growth, and other key macroeconomic factors such as Consumer Price Index, Property Price Index and
Unemployment Rate are applied in the economic scenarios. These macroeconomic factors are considered important to the
Group’s ECL in statistical analysis and business opinion.


The probability weight assigned for each scenario reflects the Group’s view for the economic environment, following the
Group’s prudent and consistent credit strategy of ensuring the adequacy of impairment allowance. A higher probability
weight is assigned to the “Baseline” scenario to reflect the most likely outcome and a lower probability weight is assigned
to the “Good”, “Bad” and “Alternative” scenarios to reflect the less likely outcomes. As of June 2026, the probability
weight of the Group’s “Baseline” scenario is higher than the sum of probability weight of “Good”, “Bad” and “Alternative”
scenarios.


The core macroeconomic factor used by the Group to assess ECL:


Macroeconomic Factor Good Scenario Baseline Scenario Bad Scenario Alternative Scenario

2026 Hong Kong GDP Growth 6.5% 3.0% -0.5% -6.0%


The calculation of ECL is affected by macroeconomic factors and economic scenarios. In principle, an increase in ECL would
be resulted if more pessimistic macroeconomic factors are applied in ECL assessment or a higher probability weight is
assigned to the “Bad” scenario. The Group reviews the macroeconomic factors used in the ECL model and the probability
weight of economic scenarios on a quarterly basis according to the established mechanism.


RC is responsible for approving ECL methodology and the Management is responsible for the ECL model implementation.
Credit Risk Management is responsible for the maintenance of ECL methodology including models review and parameters
update on a regular basis. Independent Model Validation Team is responsible for the annual validation of ECL models. If
there is any change in ECL methodology, the Group will follow the proper approval process.




30 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

As at 30 June 2026, the ECL will be increased by 1.69% (31 December 2025: 1.72%) if 5% of the probability weight is
shifted from “Baseline” scenario to “Bad” scenario; and will be decreased by 0.96% (31 December 2025: 0.99%) if 5%
of the probability weight is shifted from “Baseline” scenario to “Good” scenario.


Market risk management
Market risk refers to the risk of loss arising from movements in the value of foreign exchange, interest rate, equity and
commodity positions held by the Group due to the volatility of financial market price (foreign exchange rate, interest rate,
credit spreads, equity price, commodity price). The Group adopts a moderate market risk appetite to achieve a balance
between risk and return. The Group’s objective in managing market risk is to secure healthy growth of the treasury
business, by the effective management of potential market risk in the Group’s business, according to the Group’s overall
risk appetite and strategy of the treasury business on the basis of a well-established risk management regime and related
management measures.


In accordance with the Group’s corporate governance principles in respect of risk management, the Board and RC, senior
management and functional departments/units perform their duties and responsibilities to manage the Group’s market
risk. The RMD is responsible for the Group’s market risk management, assisting senior management to perform their
day-to-day duties, independently monitoring the market risk profile and compliance of management policies and limits of
the Group and BOCHK, and ensuring that the aggregate and individual market risks are within acceptable levels.


The Group’s market risk management covers BOCHK and its subsidiaries. The Group establishes market risk management
policies to regulate BOCHK’s and its subsidiaries’ market risk management; meanwhile, the Group sets up the Group’s
VaR and stress test limits, which are allocated and monitored across the Group according to the business requirements
and risk tolerance levels. In line with the requirements set in the Group’s policy, the subsidiaries formulate the detailed
policies and procedures and are responsible for managing their daily market risk.


The Group sets up market risk indicators and limits to identify, measure, monitor and control market risk. Major risk
indicators and limits include but are not limited to VaR, Stop Loss, Open Position, Stress Testing and Sensitivity Analysis
(Basis Point Value, Greeks), etc. To meet management’s requirements, major risk indicators and limits are classified into
three levels, and are approved by the RC, senior management or the head of the respective business unit respectively.
The treasury business units of BOCHK and subsidiaries (as for Group Limit) are required to conduct their business within
approved market risk indicators and limits.


The Group uses the VaR to measure and report general market risks to the RC and senior management on a periodic basis.
The Group adopts a uniformed VaR calculation model, using a historical simulation approach and two years of historical
market data, to calculate the VaR of the Group and its subsidiaries over a one-day holding period with a 99% confidence
level, and sets up the VaR limit of the Group and its subsidiaries.


The Group adopts back-testing to measure the accuracy of VaR model results. The back-testing compares the calculated
VaR figure of market risk positions of each business day with the actual and hypothetical gains or losses arising from those
positions on the next business day. Generally speaking, the number of back-testing exceptions in a rolling 12-month period
will not exceed four times, given a 99% confidence level.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 31
MANAGEMENT DISCUSSION AND ANALYSIS

Interest rate risk in the banking book management
Interest rate risk in the banking book (“IRRBB”) means the risks of loss to a bank’s earnings and economic value arising
from movements in interest rate and term structures of the banking book asset and liability positions. The Group’s IRRBB
exposures are mainly from structural positions. The major types of IRRBB from structural positions are:


– Gap risk: mismatches in the maturity or repricing periods of assets and liabilities that may affect net interest income
and economic value;


– Basis risk: different pricing basis for different transactions resulting that the yield on assets and cost of liabilities
may change by different amounts within the same repricing period; and


– Option risk: exercise of the options embedded in assets, liabilities or off-balance sheet items that can cause a change
in the cash flows of assets and liabilities.


The Group’s risk management framework applies also to IRRBB management. The Asset and Liability Management
Committee (“ALCO”) exercises its oversight of IRRBB in accordance with the “Banking Book Interest Rate Risk Management
Policy of BOCHK Group” approved by the RC. The RMD is responsible for the Group’s IRRBB management. With the
cooperation of the Financial Management Department and Investment Management, etc., RMD assists the ALCO to perform
day-to-day IRRBB management. Its roles include, but are not limited to, the formulation of management policies, selection
of methodologies, setting of risk indicators and limits, assessment of target balance sheet, monitoring of the compliance
with policies and limits, and submission of IRRBB management reports to senior management and the RC, etc.


The Group sets out IRRBB indicators and limits to identify, measure, monitor and control IRRBB on a daily basis. The key
indicators and limits include, but are not limited to, repricing gap, basis risk, duration, price value of a basis point (“PVBP”),
net interest income sensitivity ratio (“NII”), economic value sensitivity ratio (“EVE”), etc. The key indicators and limits are
classified into different levels, which are approved by the CFO, CRO, ALCO and RC accordingly. Risk-taking business units
are required to conduct their business within the boundary of the IRRBB limits. Before launching a new product or business
in the banking book, the relevant units are required to go through a risk assessment process, which includes the assessment
of underlying IRRBB and consideration of the adequacy of current risk monitoring mechanism. Any material impact on the
Group’s IRRBB noted during the risk assessment process will be submitted to the RC for approval.


NII and EVE assess the impact of interest rate movement on the Group’s net interest income and capital base. They are
the Group’s key IRRBB indicators. The former assesses the impact of interest rate movement on net interest income as a
percentage to the projected net interest income for the year. The latter assesses the impact of interest rate movement on
economic value (i.e. the net present value of expected cash flows of assets, liabilities and off-balance sheet items discounted
using the market interest rate) as a percentage to the latest Tier 1 capital. Limits are set by the RC on these two indicators
to monitor and control the Group’s IRRBB.


The Group uses scenario analyses and stress tests to assess the IRRBB that the Group would face under adverse
circumstances. Scenario analyses and stress tests are also used to assess the impact on net interest income and economic
value arising from non-maturity deposits, the prepayment of mortgage loans and the early redemption of debt securities
with embedded options, etc.




32 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Liquidity risk management
Liquidity risk is the risk that banks may not be able to obtain sufficient and timely funding at a reasonable cost to meet their
obligations as they fall due. The Group maintains a sound liquidity risk appetite to provide stable, reliable and adequate
sources of cash to meet liquidity needs under normal circumstances and stressed scenarios.


In accordance with the Group’s corporate governance principles in respect of risk management, the Board and the RC,
senior management and functional departments/units perform their duties and responsibilities to manage the Group’s
liquidity risk. The RC is the decision-making authority of liquidity risk management, and assumes the ultimate responsibility
of liquidity risk management. As authorised by the RC, ALCO exercises its oversight of liquidity risk and ensures the daily
operations of the Group are in accordance with the risk appetite and policies as set by the RC. The RMD is responsible
for the Group’s liquidity risk management. It cooperates with the Financial Management Department and Investment
Management, etc. to assist the ALCO to perform liquidity management functions according to their specific responsibilities.


The Group’s liquidity risk management objective is to effectively manage the liquidity of on- and off-balance sheet items
with a reasonable cost based on the liquidity risk appetite to achieve sound operation and sustainable profitability. Deposits
from customers are the Group’s primary source of funds. To ensure stable and sufficient sources of funds are in place,
the Group actively attracts new deposits, keeps the core deposit and obtains supplementary funding from the interbank
market and by issuing bills in the capital market. According to different term maturities and the results of funding needs
estimated from stressed scenarios, the Group adjusts its asset structure (including loans, bonds investment, interbank
placement, etc.) to maintain sufficient liquid assets which provides adequate funds in support of normal business needs and
ensure its ability to raise funds at a reasonable cost to serve external claims in case of emergency. The Group is committed
to diversify the sources, tenors and use of funding to avoid excessive concentration of assets and liabilities; and prevent
triggering liquidity risk due to the break of funding strand resulting from over-concentration of sources and use of funding
in a particular area where problems occur. In order to manage such risk, the Group sets concentration limits on collateral
pools and sources of funding such as Tier 1 high-quality readily liquefiable assets to total high-quality readily liquefiable
assets ratio, top ten depositors ratio and large depositors ratio. Whenever necessary, the Group could improve the liquidity
position by taking mitigation actions including, but not limited to obtaining funding through interbank borrowings or repos
in the money market, selling bonds or retaining existing and attracting new customer deposits. Apart from increasing the
funding, the Group would maintain good communication with the counterparties, the parent bank and the regulators to
enhance mutual confidence.


The Group has established intra-group liquidity risk management guidelines to manage the liquidity funding among different
entities within the Group, and to restrict their reliance of funding on each other. The Group also pays attention to manage
liquidity risk created by off-balance sheet activities, such as loan commitments, derivatives, options and other complex
structured products. The Group has an overall liquidity risk management strategy to cover the liquidity management of
foreign currency assets and liabilities, collateral, intra-day liquidity, intra-group liquidity, the liquidity risk arising from other
risks, etc., and has formulated corresponding contingency plan.


The Group established liquidity risk management indicators and limits to identify, measure, monitor and control liquidity
risk on a daily basis. These indicators and limits include, but are not limited to liquidity coverage ratio (“LCR”), net stable
funding ratio (“NSFR”), loan-to-deposit ratio, Maximum Cumulative Cash Outflow (“MCO”) and liquidity cushion. The
Group applies a cash flow analysis to assess the Group’s liquidity condition under normal conditions and also performs a
liquidity stress test (including institution specific, general market crisis and combined crisis) and other methods at least on
a monthly basis to assess the Group’s capability to withstand various severe liquidity crises. Also, relevant management
information systems such as the Assets and Liabilities Management System and the Basel Liquidity Ratio Management System
are developed to provide data and to prepare for regular management reports to facilitate liquidity risk management duties.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 33
MANAGEMENT DISCUSSION AND ANALYSIS

In accordance with the requirements of Supervisory Policy Manual LM-2 “Sound Systems and Controls for Liquidity Risk
Management” issued by the HKMA, the Group has implemented a behaviour model and assumptions of cash flow analysis
and stress test to enhance the Group’s cash flow analysis under both normal and stressed conditions. In cash flow analysis
under normal circumstances, assumptions have been made relating to on-balance sheet items (such as deposits from
customers) and off-balance sheet items (such as loan commitments). According to various characteristics of the assets,
liabilities and off-balance sheet items, the Group forecasts the future cash flow based on the contractual maturity date
and the assumptions of customer behaviour and balance sheet changes. The Group establishes the MCO indicator which
predicts the future 30 days maximum cumulative net cash outflow in normal situations based on the above assumptions,
to assess if the Group has sufficient financing capacity to meet the cash flow gap in order to achieve the objective of
continuing operations.


In the liquidity stress test, institution specific, general market crisis and combined crisis scenarios have been set up, a combined
crisis scenario is a combination of institution specific and general market crisis to assess the Group’s capability to withstand
a more severe liquidity crisis, with a more stringent set of assumptions being adopted. Stress test assumptions include
the run-off rate of retail, wholesale and interbank deposits; the drawdown rate of loan commitments and trade-related
contingent liabilities; the delinquency ratio and rollover rate of customer loans; and haircut of interbank placement and
marketable securities. As at 30 June 2026, the Group was able to maintain a net cash inflow under the three stressed
scenarios, indicating the Group has the ability to meet financing needs under stressed conditions. In addition, the Group
has a policy in place to maintain a liquidity cushion which includes high quality or comparable quality marketable securities
issued or guaranteed by sovereigns, central banks, public sector entities or multilateral development banks or marketable
securities issued by non-financial corporates to ensure funding needs even under stressed scenarios. A contingency plan is
being established which details the conditions to trigger the plan based on stress test results and early warning indicators,
the action plans and relevant procedures and responsibility of relevant departments.


The Group, being classified as a category 1 authorised institution by the HKMA, is required to calculate the LCR and NSFR
on a consolidated basis in accordance with the Banking (Liquidity) Rules. The Group is required to maintain a LCR and
NSFR not less than 100%.


In certain derivative contracts, the counterparties have the right to request from the Group additional collateral if they
have concerns about the Group’s creditworthiness.


The Group’s liquidity risk management also covers new products or business developments. Before launching a new product
or business, the relevant units are required to go through a risk assessment process, which includes the assessment of
underlying liquidity risk and consideration of the adequacy of the current risk management mechanism. Any material impact
on liquidity risk noted during the risk assessment process will be reported to the RC for approval.


The Group has established a set of uniform liquidity risk management policies which serve as standards and guidance to all
the Group’s members for liquidity risk management. On the basis of the Group’s uniform policies, each of the subsidiaries
develops its own liquidity management policies according to its own characteristics, and assumes its own liquidity risk
management responsibility. Subsidiaries are required to report their respective liquidity positions with relevant liquidity
ratios on a regular basis to the RMD of BOCHK, which consolidates this information and evaluates group-wide liquidity
risk to ensure relevant requirements are satisfied.




34 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Operational risk management
Operational risk is the risk of loss resulting from inadequate or failed internal process, people and system, or from external
events. The risk is inherent in all banking products, activities, processes and systems and confronted by the Group in its
day-to-day operational activities.

The Group has implemented the “Three Lines of Defence” system for its operational risk management. All departments as
the first line of defence are the primary parties responsible for operational risk management, and carry out the duties and
functions of risk management in the process of business operation through self assessment, self checking, self correction
and self development. The Legal & Compliance and Operational Risk Management Department (“LCO”), together with
certain specialist functional units in relation to operational risk management within the Group, including the Human
Resources Department, Corporate Services Department, Financial Crime Compliance Department, Financial Management
Department, Treasury and General Accounting & Accounting Policy Department (collectively known as “specialist
functional units”), are the second line of defence. They are responsible for assessing and monitoring the operational risk
conditions in the first line of defence, and providing them with guidance. LCO, being independent from the business
units, is responsible for assisting the Management in managing the Group’s operational risk, including the establishment
and review of the operational risk management policy and framework, designing the operational risk management tools
and reporting mechanism, reviewing and contributing to the monitoring and reporting the overall operational risk profile
to the Management and RC. Specialist functional units are required to carry out their designated managerial duties of
the second line of defence with respect to some specific aspects of operational risk and its related issues. Apart from
taking charge of operational risk management in their own units, these units are also required to provide other units with
professional advice/training in respect of certain operational risk categories and to lead the group-wide operational risk
management. Group Audit is the third line of defence which provides independent assessment to the effectiveness and
adequacy of the operational risk management framework and is required to conduct risk-based review of the operational
risk management activities of various departments within the Group regarding their compliance and effectiveness and to
put forward recommendations for remedial actions.

The Group has put in place an effective internal control process which requires the establishment of policies and control
procedures for all the key activities. The Group adheres to the fundamental principle of proper segregation of duties and
authorisation. The Group adopts various operational risk management tools or methodologies such as key operational risk
indicators, operational risk and control assessment, operational risk events management to identify, assess, monitor and
control the risks inherent in business activities and products, as well as purchase of insurance, etc. on an as-needed basis
to mitigate unforeseeable operational risks. In addition, each new product/service initiative and outsourcing arrangement
is subject to a risk assessment and governance process, where risks are firstly identified and assessed by business unit,
and reviewed and challenged by relevant second lines of defence, in accordance with the risk-based principle. Subsequent
changes on the existing products, services and outsourcing arrangements are also subject to a similar process. Business
continuity plans are established to support business operations in the event of an emergency or disaster. Adequate backup
facilities are maintained and periodic drills are conducted.

Reputation risk management
Reputation risk is the risk that negative publicity about the Group’s business practices, whether genuine or not, will cause
a potential decline in the customer base, or lead to costly litigation or revenue decrease. Reputation risk is inherent in
other types of risk and every aspect of business operation and covers a wide spectrum of issues.

In order to mitigate reputation risk, the Group has formulated and duly followed its Reputation Risk Management Policy. The
policy aims to identify and prevent reputation risk proactively at an early stage when an incident occurs. Since reputation
risk is often caused by various types of operational and strategic issues that negatively impact the trust and perception
of the Group, all operational and key risks identified are assessed through the established Key Control Self-Assessment
framework, including risk assessment tools, to evaluate the severity of their impact on the Group, including the damage
to reputation.

In addition, the Group has put in place a comprehensive framework to continuously monitor reputation risk incidents in the
financial industry. This continuous monitoring enables the Group to effectively manage, control and mitigate any potential
adverse impact from an incident. The Group also adopts robust disclosure practices to keep our stakeholders informed at
all times, which helps build confidence in the Group and establish a strong public image.



Interim Report 2026 BOC Hong Kong (Holdings) Limited 35
MANAGEMENT DISCUSSION AND ANALYSIS

Legal and compliance risk management
Legal risk is the risk that unenforceable contracts, lawsuits or adverse judgments may disrupt or otherwise negatively affect
the operations or financial conditions of the Group. Compliance risk is the risk of legal or regulatory sanctions, financial
losses or losses in reputation the Group may suffer as a result of its failure to comply with applicable laws and regulations.
Legal and compliance risks are managed by the LCO, while the risks related to money laundering, terrorist financing, fraud,
bribery and corruption are managed and monitored by the Financial Crime Compliance Department (“FCC”). Both LCO
and FCC report directly to the Chief Risk Officer. As part of the Group’s corporate governance framework, the policies for
the management of legal and compliance risks, and relevant financial crime compliance risks are approved by the RC as
delegated by the Board or relevant committees according to their functions.


Strategic risk management
Strategic risk generally refers to the risks that may cause negative impacts on the earnings, capital, reputation or market
position of the Group as a result of the failure of the Group to formulate, implement and adjust its strategies, including
macro strategies and policies, as well as the formulation of specific plans, programmes and systems for the implementation
of the strategies and policies. The Board reviews and approves the Strategic Risk Management Policy. Key strategic issues
have to be fully evaluated and properly endorsed by the senior management and the Board.


The Group regularly reviews its business strategies to cope with the latest market situation and developments.


Capital management
The major objective of the Group’s capital management is to maximise total shareholders’ return while maintaining a capital
adequacy position in relation to the Group’s overall risk profile. The ALCO periodically reviews the Group’s capital structure
and adjusts the capital mix where appropriate to maintain an optimal balance among risk, return and capital adequacy.


To comply with the HKMA’s requirements as stated in the Supervisory Policy Manual “Supervisory Review Process”, the
Group adopts the internal capital adequacy assessment process (“ICAAP”) and reviews it annually. Based on the HKMA’s
guidelines on Pillar II, ICAAP has been initiated to assess the extra capital needed to cover the material risks not captured
or not adequately captured under Pillar I, and therefore minimum Common Equity Tier 1 capital ratio, minimum Tier 1
capital ratio and minimum Total capital ratio are determined.


The HKMA has classified BOCHK as a material subsidiary of the BOC resolution group and required BOCHK to comply with
the applicable internal loss-absorbing capacity requirements under the Financial Institutions (Resolution) (Loss-absorbing
Capacity Requirements – Banking Sector) Rules (“LAC Rules”), with compliance period starting from 1 January 2023.




36 BOC Hong Kong (Holdings) Limited Interim Report 2026
MANAGEMENT DISCUSSION AND ANALYSIS

Stress testing
The Group supplements the analysis of various types of risks with stress testing. Stress testing is a risk management tool
for estimating risk exposures under stressed conditions arising from extreme but plausible market or macroeconomic
movements. These tests are conducted on a regular basis by the Group’s various risk management units in accordance
with the principles stated in the Supervisory Policy Manual “Stress-testing” published by the HKMA. The ALCO monitors
the results against the key risk limits approved by the RC. The Financial Management Department reports the combined
stress test results of the Group to the Board and RC regularly.


BOC Life
BOC Life’s principal business underwrites long-term insurance business in participating business, non-participating business,
linked long term business, retirement scheme management and other businesses as defined under the Insurance Ordinance
in Hong Kong. Major types of risk arising from BOC Life’s insurance business are insurance risk, interest rate risk, liquidity
risk, credit risk, equity and fund price risk, currency risk and compliance risk. BOC Life closely monitors these risks and
reports to its Risk Management Committee on a regular basis. Furthermore, BOC Life has regular communication with
the Group to ensure consistency with the Group’s risk management strategy. The key risks of its insurance business and
related risk control process are as follows:


Insurance risk management
BOC Life is in the business of insuring against the risk of mortality, morbidity, disability, critical illness, accidents and
related risks. These risks are managed through the application of underwriting strategy, reinsurance arrangements and
regular experience monitoring.


The underwriting strategy is intended to set premium pricing at an appropriate level that corresponds with the underlying
exposure of the risks underwritten, and BOC Life’s underwriting procedures include screening processes, such as the review
of health condition and family medical history, to ensure alignment with the underwriting strategy.


Uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance contracts arises
from the unpredictability of long-term changes in overall levels of mortality, morbidity and persistency. In this regard,
BOC Life has conducted relevant experience studies and researches regularly to identify emerging trends. Results would
be taken into account in pricing and underwriting management.


For details of the Group’s Insurance Risk Management, please refer to Note 3.4 to the Interim Financial Information.


Interest rate risk management
An increase in interest rates may result in the depreciation of the value of BOC Life’s investment assets. A decrease in
interest rates may result in an increase in insurance liability and customer dissatisfaction due to decrease in returns. BOC Life
manages the matching of assets and liabilities of its portfolios within an asset liability management framework that has
been developed to achieve investment returns that match its obligations under insurance contracts; and to manage the
adverse impact due to interest rate movement.


Liquidity risk management
BOC Life’s liquidity risk is the risk of not being able to meet payment obligations as they fall due. BOC Life’s asset and
liability management framework includes stress tests and cash flow management to preserve liquidity to fulfil policy
payment obligations from time to time.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 37
MANAGEMENT DISCUSSION AND ANALYSIS

Credit risk management
BOC Life has exposure to credit risk that a customer, debtor or counterparty will be unable to or unwilling to meet a
commitment that they have entered into. Key areas to which BOC Life’s insurance business is exposed include:


– Default risk associated with financial instruments or counterparties
– Credit spread widening as a result of credit migration (downgrade)
– Reinsurers’ share of unpaid insurance contract liabilities
– Amounts due from reinsurers in respect of claims already paid by BOC Life
– Amounts due from insurance contract holders
– Amounts due from insurance intermediaries


BOC Life manages credit risk by placing limits on its exposure to each investment counterparty or issuer. Such limits are
subject to review by the Management at least once a year.


The reinsurance arrangement transfers the insurance risk associated with the insurance contracts to the third party. It does
not, however, discharge BOC Life’s liability as the primary insurer. If a reinsurer fails to pay a claim for any reasons, BOC Life
remains liable for the payment to the policyholder. The creditworthiness of reinsurers is considered by reviewing the
reinsurers’ financial strength prior to finalisation of any reinsurance contract. Management of BOC Life directs its reinsurance
placement policy and assesses the creditworthiness of all reinsurers and intermediaries by reviewing credit grades provided
by rating agencies and other publicly available financial information. BOC Life also monitors the reinsurance counterparty
risk exposure on an ongoing basis.


Equity and fund price risk management
BOC Life’s equity and fund price risk refers to the risk of loss due to volatility of market price in equity securities, investments
on fund (including segregated unit-linked fund) and other alternative investments. For private investments where a readily
available market price does not exist, valuation uncertainties may arise. BOC Life’s asset and liability management framework
includes managing the adverse impact due to volatility of values in equity securities, investments on fund (including
segregated unit-linked fund) and other alternative investments through stress test and exposure limit.


Currency risk management
BOC Life’s currency risk refers to the risk of loss due to volatility of exchange rate. BOC Life’s asset and liability management
framework includes managing the adverse impact due to exchange rate movement through stress test, exposure limit and
risk limit.




38 BOC Hong Kong (Holdings) Limited Interim Report 2026
CONDENSED CONSOLIDATED INCOME STATEMENT

(Restated)
(Unaudited) (Unaudited)
Half-year ended Half-year ended
30 June 2026 30 June 2025
Notes HK$’m HK$’m

Interest income 58,144 62,179
Interest income calculated using the effective interest method 54,516 59,140
Others 3,628 3,039
Interest expense (29,962) (37,060)

Net interest income 5 28,182 25,119
Fee and commission income 8,002 8,143
Fee and commission expense (2,023) (1,798)

Net fee and commission income 6 5,979 6,345
Insurance revenue 2,159 1,548
Insurance service expense (719) (564)
Net income from reinsurance contracts held 193 119

Insurance service result 1,633 1,103
Net trading gain 7 6,825 12,237
Net gain on other financial instruments at fair value
through profit or loss 8 2,404 3,527
Net gain/(loss) on other financial instruments 9 631 (1,116)
Insurance finance expenses (6,083) (7,375)
Other operating income 10 332 297

Net operating income before impairment allowances 39,903 40,137
Net charge of impairment allowances 11 (2,472) (3,318)

Net operating income 37,431 36,819
Operating expenses 12 (8,980) (8,416)

Operating profit 28,451 28,403
Net gain/(loss) from disposal of/fair value adjustments on
investment properties 13 52 (991)
Net gain/(loss) from properties, plant and
equipment and other assets 14 253 (126)
Share of results after tax of associates and joint ventures 16 (2)

Profit before taxation 28,772 27,284
Taxation 15 (4,416) (4,480)

Profit for the period 24,356 22,804

Profit attributable to:
Equity holders of the Company 23,739 22,160
Non-controlling interests 617 644

24,356 22,804

HK$ HK$

Earnings per share
Basic and diluted 17 2.2453 2.0959



The notes on pages 45 to 114 are an integral part of this interim financial information.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 39
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Restated)
(Unaudited) (Unaudited)
Half-year ended Half-year ended
30 June 2026 30 June 2025
Notes HK$’m HK$’m
Profit for the period 24,356 22,804
Items that will not be reclassified subsequently to
income statement:

Premises:
Revaluation of premises (83) (2,204)
Related tax impact 19 431
(64) (1,773)
Equity instruments at fair value through other
comprehensive income:
Change in fair value (822) 186
Related tax impact (3) (15)
(825) 171
Actuarial (loss)/gain on retirement benefit plans (2) 1
(891) (1,601)
Items that may be reclassified subsequently to
income statement:

Advances and other accounts at fair value through
other comprehensive income:
Change in impairment allowances credited to
income statement 11 (2) –
Debt instruments at fair value through other
comprehensive income:
Change in fair value (4,365) 5,345
Change in impairment allowances charged to
income statement 11 31 38
Release upon disposal/redemption reclassified to
income statement 9 (643) 1,104
Amortisation of accumulated amount of fair value hedge
adjustment reclassified to income statement (14) (66)
Related tax impact 704 (759)
(4,287) 5,662
Cash flow hedges (77) 135
Insurance contracts:
Finance income/(expenses) from insurance contracts issued 549 (959)
Finance (expenses)/income from reinsurance contracts held (135) 37
Related tax impact (68) 153
346 (769)
Share of other comprehensive income of associates and
joint ventures (3) 6
Currency translation difference (344) 834
(4,367) 5,868
Other comprehensive income for the period, net of tax (5,258) 4,267
Total comprehensive income for the period 19,098 27,071

Total comprehensive income attributable to:
Equity holders of the Company 18,464 26,430
Non-controlling interests 634 641
19,098 27,071



The notes on pages 45 to 114 are an integral part of this interim financial information.

40 BOC Hong Kong (Holdings) Limited Interim Report 2026
CONDENSED CONSOLIDATED BALANCE SHEET

(Restated)
(Unaudited) (Audited)
At 30 June At 31 December
2026 2025
Notes HK$’m HK$’m

ASSETS
Cash and balances and placements with banks and
other financial institutions 18 570,298 567,599
Financial assets at fair value through profit or loss 19 324,744 306,069
Derivative financial instruments 20 73,620 65,255
Hong Kong SAR Government certificates of indebtedness 252,790 243,190
Advances and other accounts 21 1,808,518 1,706,477
Investment in securities 22 1,486,007 1,429,836
Interests in associates and joint ventures 857 844
Investment properties 23 12,585 12,599
Properties, plant and equipment 24 33,759 33,770
Current tax assets 2 16
Deferred tax assets 30 3,727 3,136
Other assets 25 206,464 126,447

Total assets 4,773,371 4,495,238

LIABILITIES
Hong Kong SAR currency notes in circulation 252,790 243,190
Deposits and balances from banks and other financial
institutions 427,622 349,305
Financial liabilities at fair value through profit or loss 26 68,839 99,584
Derivative financial instruments 20 59,886 57,528
Deposits from customers 27 3,035,682 2,937,227
Debt securities and certificates of deposit in issue 28 17,389 11,251
Other accounts and provisions 29 181,336 113,081
Current tax liabilities 10,365 7,419
Deferred tax liabilities 30 2,537 3,266
Insurance contract liabilities 31 271,736 232,347
Subordinated liabilities 32 79,372 75,757

Total liabilities 4,407,554 4,129,955

EQUITY
Share capital 33 52,864 52,864
Reserves 307,502 307,472

Capital and reserves attributable to equity holders of
the Company 360,366 360,336
Non-controlling interests 5,451 4,947

Total equity 365,817 365,283

Total liabilities and equity 4,773,371 4,495,238



The notes on pages 45 to 114 are an integral part of this interim financial information.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 41
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)
Attributable to equity holders of the Company
Reserves
Reserve for
Premises financial Cash flow Insurance Non-
Share revaluation assets at Regulatory Translation hedge finance Merger Retained controlling Total
capital reserve FVOCI reserve* reserve reserve reserve reserve** earnings Total interests equity
HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m
At 1 January 2025, as previously
reported 52,864 34,853 (5,105) 6,028 (2,199) – 1,132 – 251,143 338,716 3,514 342,230
Effect of merger of entity under
common control – – (5) 18 – – – 1,009 751 1,773 – 1,773
At 1 January 2025, as restated 52,864 34,853 (5,110) 6,046 (2,199) – 1,132 1,009 251,894 340,489 3,514 344,003
Profit for the period – – – – – – – – 22,160 22,160 644 22,804
Other comprehensive income:
Premises – (1,773) – – – – – – – (1,773) – (1,773)
Equity instruments at fair value
through other comprehensive
income – – 170 – – – – – – 170 1 171
Actuarial gain on retirement benefit
plans – – – – – – – – 1 1 – 1
Advances and other accounts at fair
value through other comprehensive
income – – – – – – – – – – – –
Debt instruments at fair value through
other comprehensive income – – 5,289 – – – – – – 5,289 373 5,662
Cash flow hedges – – – – – 135 – – – 135 – 135
Insurance contracts – – – – – – (392) – – (392) (377) (769)
Share of other comprehensive income
of associates and joint ventures – – 6 – – – – – – 6 – 6
Currency translation difference – – 71 – 763 – – – – 834 – 834
Total comprehensive income – (1,773) 5,536 – 763 135 (392) – 22,161 26,430 641 27,071
Transfer to retained earnings – – – (1,026) – – – – 1,026 – – –
Dividends – – – – – – – – (18,069) (18,069) (160) (18,229)
At 30 June 2025 52,864 33,080 426 5,020 (1,436) 135 740 1,009 257,012 348,850 3,995 352,845
Profit for the period – – – – – – – – 17,988 17,988 424 18,412
Other comprehensive income:
Premises – (1,096) – – – – – – – (1,096) – (1,096)
Equity instruments at fair value
through other comprehensive
income – – 213 – – – – – – 213 1 214
Actuarial loss on retirement benefit
plans – – – – – – – – (1) (1) – (1)
Advances and other accounts at fair
value through other comprehensive
income – – 6 – – – – – – 6 – 6
Debt instruments at fair value through
other comprehensive income – – 433 – – – – – – 433 346 779
Cash flow hedges – – – – – (64) – – – (64) – (64)
Insurance contracts – – – – – – 268 – – 268 258 526
Share of other comprehensive income
of associates and joint ventures – – (4) – – – – – – (4) – (4)
Currency translation difference – – 83 – (208) – – – – (125) – (125)
Total comprehensive income – (1,096) 731 – (208) (64) 268 – 17,987 17,618 1,029 18,647
Transfer to retained earnings – – – (2,784) – – – – 2,784 – – –
Dividends – – – – – – – – (6,132) (6,132) (77) (6,209)
At 31 December 2025 52,864 31,984 1,157 2,236 (1,644) 71 1,008 1,009 271,651 360,336 4,947 365,283




42 BOC Hong Kong (Holdings) Limited Interim Report 2026
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Unaudited)

Attributable to equity holders of the Company

Reserves

Reserve for
Premises financial Cash flow Insurance Non-
Share revaluation assets at Regulatory Translation hedge finance Merger Retained controlling Total
capital reserve FVOCI reserve* reserve reserve reserve reserve** earnings Total interests equity
HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m

At 1 January 2026, as previously
reported 52,864 31,984 1,154 2,223 (1,644) 71 1,008 – 270,868 358,528 4,947 363,475
Effect of merger of entity under
common control – – 3 13 – – – 1,009 783 1,808 – 1,808

At 1 January 2026, as restated 52,864 31,984 1,157 2,236 (1,644) 71 1,008 1,009 271,651 360,336 4,947 365,283
Profit for the period – – – – – – – – 23,739 23,739 617 24,356
Other comprehensive income:
Premises – (64) – – – – – – – (64) – (64)
Equity instruments at fair value
through other comprehensive
income – – (825) – – – – – – (825) – (825)
Actuarial loss on retirement benefit
plans – – – – – – – – (2) (2) – (2)
Advances and other accounts at fair
value through other comprehensive
income – – (2) – – – – – – (2) – (2)
Debt instruments at fair value through
other comprehensive income – – (4,134) – – – – – – (4,134) (153) (4,287)
Cash flow hedges – – – – – (77) – – – (77) – (77)
Insurance contracts – – – – – – 176 – – 176 170 346
Share of other comprehensive income
of associates and joint ventures – – (3) – – – – – – (3) – (3)
Currency translation difference – – 116 – (460) – – – – (344) – (344)

Total comprehensive income – (64) (4,848) – (460) (77) 176 – 23,737 18,464 634 19,098
Acquisition of entity under common
control – – – – – – – (2,099) – (2,099) – (2,099)
Transfer from retained earnings – – – 36 – – – 1,090 (1,126) – – –
Dividends – – – – – – – – (16,335) (16,335) (130) (16,465)

At 30 June 2026 52,864 31,920 (3,691) 2,272 (2,104) (6) 1,184 – 277,927 360,366 5,451 365,817


* In accordance with the requirements of the HKMA, the amounts are set aside for general banking risks, including future losses or other unforeseeable
risks, in addition to the loan impairment allowances recognised under HKFRS 9.


** Merger reserve was arising on the application of merger accounting method in relation to the combination with entity under common control.



The notes on pages 45 to 114 are an integral part of this interim financial information.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 43
CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Restated)
(Unaudited) (Unaudited)
Half-year ended Half-year ended
30 June 2026 30 June 2025
Notes HK$’m HK$’m

Cash flows from operating activities
Operating cash inflow/(outflow) before taxation 34(a) 118,927 (54,771)
Hong Kong profits tax paid (1,687) (1,317)
Outside Hong Kong profits tax paid (426) (433)

Net cash inflow/(outflow) from operating activities 116,814 (56,521)

Cash flows from investing activities
Additions of properties, plant and equipment (476) (184)
Proceeds from disposal of properties, plant and equipment 1 –
Additions of investment properties (5) (57)
Additions of intangible assets (821) (454)
Acquisition of entity under common control (2,099) –
Proceeds from disposal of subsidiary 448 –
Additions of associates and joint ventures – (15)

Net cash outflow from investing activities (2,952) (710)

Cash flows from financing activities
Dividend paid to equity holders of the Company (3,066) (3,066)
Dividend paid to non-controlling interests (130) (160)
Payment of lease liabilities (288) (271)

Net cash outflow from financing activities (3,484) (3,497)

Increase/(decrease) in cash and cash equivalents 110,378 (60,728)
Cash and cash equivalents at 1 January 550,142 650,449
Effect of exchange rate changes on cash and cash equivalents 8,057 13,791

Cash and cash equivalents at 30 June 34(b) 668,577 603,512

Cash flows from operating activities included
– interest received 56,550 60,962
– interest paid 30,052 39,222
– dividend received 44 57



The notes on pages 45 to 114 are an integral part of this interim financial information.




44 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

1. Basis of preparation and material accounting policies
(a) Basis of preparation
The unaudited interim financial information has been prepared in accordance with HKAS 34 “Interim
Financial Reporting” issued by the HKICPA.


(b) Material accounting policies
Except for the initial adoption of the below mentioned amendments, the accounting policies adopted and
methods of computation used in the preparation of the unaudited interim financial information are consistent
with those adopted and used in the Group’s annual financial statements for the year ended 31 December
2025 and shall be read in conjunction with the Group’s Annual Report for 2025.


Amendments that are relevant to the Group and are initially adopted for the financial year
beginning on 1 January 2026
The Group has initially applied the following amendments for the financial year beginning on 1 January 2026:


• HKFRS 9 and HKFRS 7 (Amendments), “Amendments to the Classification and Measurement of
Financial Instruments”. The amendments to HKFRS 9 include:


– Clarifications of the requirements for the timing of recognition and derecognition of financial
assets and liabilities and introduction of an accounting policy choice for entities to derecognise
financial liabilities that are settled through an electronic payment system before the settlement
date if specific conditions are met.


– Additional guidance on how the contractual cash flows for financial assets with contingent
features that linked to the achievement of environmental, social and corporate governance
targets or other similar contingent features should be assessed.


– Clarifications on what constitute non-recourse features and characteristics of contractually
linked instruments.


The amendments to HKFRS 7 require entities to provide additional disclosures regarding financial
instruments with contingent features and equity instruments designated at fair value through other
comprehensive income.


The application of these amendments does not have a material impact on the Group’s financial
statements.


• “Improvements to HKFRS Accounting Standards” contain a number of amendments to HKFRS
Accounting Standards which the HKICPA considers not urgent but necessary. It comprises
amendments that result in accounting changes for presentation, recognition or measurement purpose
as well as terminology or editorial amendments related to a variety of individual HKFRS Accounting
Standards. These improvements do not have a material impact on the Group’s financial statements.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 45
NOTES TO THE INTERIM FINANCIAL INFORMATION

1. Basis of preparation and material accounting policies (continued)
(c) Standards and amendments issued that are relevant to the Group but not yet
mandatorily effective and have not been early adopted by the Group in 2026

Applicable for
financial years
beginning on/
Standards/Amendments Content after

HKFRS 18 Presentation and Disclosure in Financial 1 January 2027
Statements

HKFRS 19 Subsidiaries without Public Accountability: 1 January 2027
Disclosures

HKAS 28 (2011) and Sale or Contribution of Assets between an To be determined
HKFRS 10 (Amendments) Investor and its Associate or Joint Venture


Please refer to Note 2.1(b) to the Financial Statements of the Group’s Annual Report for 2025 for brief
explanations of the above-mentioned standards and amendments.


2. Critical estimates and judgements in applying accounting policies
The nature and assumptions related to the Group’s estimates and judgements in this reporting period are consistent
with those used in the Group’s financial statements for the year ended 31 December 2025.


3. Financial risk management
The Group is exposed to financial risks as a result of engaging in a variety of business activities. The principal
financial risks are credit risk, market risk (including currency risk and interest rate risk in the banking book) and
liquidity risk. This note summarises the Group’s exposures to these risks.


A summary of the Group’s objectives, risk management governance structure, policies and processes for managing
and the methods used to measure these risks is set out in Note 4 to the Financial Statements of the Group’s Annual
Report for 2025.




46 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk
Financial instruments are considered to be in default when one or more events that have a detrimental
impact on the estimated future cash flows occurred such as past due for more than 90 days or the borrower
is unlikely to pay in full for its debt obligations to the Group.


Credit-impaired financial instruments are classified as Stage 3 and lifetime expected credit losses will be
recognised. Evidence that a financial instrument is credit-impaired include observable data about the
following events:


– Significant financial difficulty incurred by the borrower;


– A breach of contract, such as a default or delinquency in principal or interest payment;


– For economic or contractual reasons related to the borrower’s financial difficulty, the Group has
granted to the borrower a concession that it would not otherwise consider;


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


– The purchase or origination of a financial asset at a deep discount that reflects the incurred credit
losses; or


– Other observable data indicating that there is a measurable decrease in the estimated future cash
flows from such financial instruments.


(A) Advances and other accounts
Advances with a specific repayment date are classified as overdue when the principal or interest is
past due and remains unpaid. Advances repayable by regular instalments are classified as overdue
when an instalment payment is past due and remains unpaid. Advances repayable on demand
are classified as overdue either when a demand for repayment has been served on the borrower
but repayment has not been made in accordance with the instruction or when the advances have
remained continuously to exceed the approved limit that was advised to the borrower.


Advances classified as Stage 3 may not necessarily result in impairment loss where the advances are
fully collateralised.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 47
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
Gross advances and other accounts before impairment allowances are analysed by internal credit
grade and stage classification as follows:


At 30 June 2026

Stage 1 Stage 2 Stage 3 Total
HK$’m HK$’m HK$’m HK$’m

Advances to customers
Pass 1,736,387 27,166 – 1,763,553
Special mention 1,949 36,748 – 38,697
Substandard or below – – 16,254 16,254

1,738,336 63,914 16,254 1,818,504

Trade bills
Pass 2,284 – – 2,284
Special mention – – – –
Substandard or below – – – –

2,284 – – 2,284

Advances to banks and other
financial institutions
Pass 7,912 – – 7,912
Special mention – – – –
Substandard or below – – – –

7,912 – – 7,912

1,748,532 63,914 16,254 1,828,700



At 30 June 2026

Stage 1 Stage 2 Stage 3 Total
HK$’m HK$’m HK$’m HK$’m

Impairment allowances
Advances and other accounts
at amortised cost (4,164) (7,509) (8,623) (20,296)

Advances and other accounts
at fair value through other
comprehensive income (10) – – (10)




48 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)


At 31 December 2025

Stage 1 Stage 2 Stage 3 Total
HK$’m HK$’m HK$’m HK$’m

Advances to customers
Pass 1,632,013 27,817 – 1,659,830
Special mention 1,870 35,811 – 37,681
Substandard or below – – 19,558 19,558

1,633,883 63,628 19,558 1,717,069

Trade bills
Pass 3,157 – – 3,157
Special mention – – – –
Substandard or below – – – –

3,157 – – 3,157

Advances to banks and other
financial institutions
Pass 4,985 – – 4,985
Special mention – – – –
Substandard or below – – – –

4,985 – – 4,985

1,642,025 63,628 19,558 1,725,211



At 31 December 2025

Stage 1 Stage 2 Stage 3 Total
HK$’m HK$’m HK$’m HK$’m

Impairment allowances
Advances and other accounts
at amortised cost (4,023) (7,081) (7,653) (18,757)

Advances and other accounts
at fair value through other
comprehensive income (11) – (1) (12)



As at 30 June 2026 and 31 December 2025, advances and other accounts by internal credit grade
and stage classification did not include advances and other accounts mandatorily classified at fair
value through profit or loss.


As at 30 June 2026, included in the Stage 3 advances and other accounts at fair value through other
comprehensive income are purchased or originated credit-impaired (“POCI”) amounted to HK$170
million (31 December 2025: HK$169 million) and no impairment allowances made in respect of such
advances (31 December 2025: HK$1 million).




Interim Report 2026 BOC Hong Kong (Holdings) Limited 49
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
Reconciliation of impairment allowances for advances and other accounts is as follows:


Half-year ended 30 June 2026

Stage 1 Stage 2 Stage 3 Total
HK$’m HK$’m HK$’m HK$’m

Impairment allowances
At 1 January 2026 4,023 7,081 7,653 18,757

Transfer to Stage 1 38 (36) (2) –
Transfer to Stage 2 (42) 46 (4) –
Transfer to Stage 3 (3) (82) 85 –
Changes arising from transfer of
stage (27) 48 438 459
Charge for the period(i) 1,531 2,238 2,080 5,849
Reversal for the period(ii) (1,399) (1,762) (760) (3,921)
Write-offs – – (899) (899)
Recoveries – – 48 48
Exchange difference and others 43 (24) (16) 3

At 30 June 2026 4,164 7,509 8,623 20,296

Charged to income statement
(Note 11) 2,387



Year ended 31 December 2025

Stage 1 Stage 2 Stage 3 Total
HK$’m HK$’m HK$’m HK$’m

Impairment allowances
At 1 January 2025 5,459 1,551 7,950 14,960

Transfer to Stage 1 52 (49) (3) –
Transfer to Stage 2 (2,444) 2,448 (4) –
Transfer to Stage 3 (7) (384) 391 –
Changes arising from transfer of
stage (31) 3,018 1,364 4,351
Charge for the year(i) 3,263 898 3,032 7,193
Reversal for the year(ii) (2,344) (399) (559) (3,302)
Write-offs – – (4,798) (4,798)
Recoveries – – 151 151
Exchange difference and others 75 (2) 129 202

At 31 December 2025 4,023 7,081 7,653 18,757


(i) Charge for the period/year comprises the impairment losses attributable to new loans, remaining loans without stage
transfers, and changes to risk parameters, etc.


(ii) Reversal for the period/year comprises reversal of impairment losses attributable to loan repaid, remaining loans without
stage transfers, and changes to risk parameters, etc.




50 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
(a) Impaired advances
Impaired advances to customers are analysed as follows:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Gross impaired advances to customers 16,254 19,558

Percentage of gross advances to customers 0.89% 1.14%

Impairment allowances made in respect of
such advances 8,623 7,653



The impairment allowances were made after taking into account the value of collateral in
respect of the credit-impaired advances.


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Current market value of collateral held
against the covered portion of such
advances to customers 11,721 24,008

Covered portion of such advances to
customers 6,386 11,103

Uncovered portion of such advances to
customers 9,868 8,455



As at 30 June 2026, there were no impaired trade bills and advances to banks and other
financial institutions (31 December 2025: Nil).




Interim Report 2026 BOC Hong Kong (Holdings) Limited 51
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
(b) Advances overdue for more than three months
The gross amount of advances overdue for more than three months is analysed as follows:


At 30 June 2026 At 31 December 2025

% of gross % of gross
advances to advances to
Amount customers Amount customers
HK$’m HK$’m

Gross advances to customers
which have been overdue for:
– six months or less but over
three months 368 0.02% 4,213 0.24%
– one year or less but over six
months 3,519 0.19% 2,711 0.16%
– over one year 7,606 0.42% 8,404 0.49%

Advances overdue for over
three months 11,493 0.63% 15,328 0.89%

Impairment allowances made in
respect of such advances
– Stage 3 7,148 6,693



At 30 June At 31 December
2026 2025
HK$’m HK$’m

Current market value of collateral held
against the covered portion of such
advances to customers 5,797 13,705

Covered portion of such advances to
customers 4,771 9,462

Uncovered portion of such advances to
customers 6,722 5,866



Collateral held against overdue or impaired loans is principally represented by charges
over business assets such as commercial and residential premises for corporate loans and
mortgages over residential properties for personal loans.


As at 30 June 2026, there were no trade bills and advances to banks and other financial
institutions overdue for more than three months (31 December 2025: Nil).




52 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
(c) Rescheduled advances


At 30 June 2026 At 31 December 2025

% of gross % of gross
advances to advances to
Amount customers Amount customers
HK$’m HK$’m

Rescheduled advances to
customers net of amounts
included in “Advances
overdue for more than
three months” 243 0.01% 328 0.02%



Rescheduled advances are those advances that have been restructured and renegotiated
between the bank and borrowers because of deterioration in the financial position of the
borrower or the inability of the borrower to meet the original repayment schedule, and the
revised repayment terms, either of interest or the repayment period, are “non-commercial”
to the Group. Rescheduled advances, which have been overdue for more than three months
under the revised repayment terms, are included in “Advances overdue for more than three
months”.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 53
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
(d) Concentration of advances to customers
(i) Sectoral analysis of gross advances to customers
The following analysis of the gross advances to customers by industry sector is based
on the categories with reference to the completion instructions for the HKMA return
of loans and advances.


At 30 June 2026

% covered Impairment
Gross by collateral Impairment allowances
advances to or other allowances – Stages 1
customers security Impaired Overdue – Stage 3 and 2
HK$’m HK$’m HK$’m HK$’m HK$’m

Loans for use in Hong Kong

Industrial, commercial and financial
– Property development 156,874 23.04% 3,566 1,171 1,313 2,269
– Property investment 94,765 54.12% 4,254 3,983 1,925 1,355
– Financial concerns 33,667 0.86% – – – 63
– Stockbrokers 4,283 68.72% – – – 2
– Wholesale and retail trade 36,870 28.50% 413 386 121 124
– Manufacturing 70,005 4.72% 347 91 172 203
– Transport and transport equipment 76,257 9.99% 13 16 13 147
– Recreational activities 18 97.05% – – – –
– Information technology 41,228 0.46% 4 5 1 66
– Others 218,825 28.10% 3,252 3,869 2,834 704

Individuals
– Loans for the purchase of flats in
Home Ownership Scheme, Private
Sector Participation Scheme and
Tenants Purchase Scheme 73,060 99.89% 163 778 2 108
– Loans for purchase of other
residential properties 414,227 99.81% 422 2,281 32 354
– Credit card advances 11,495 – 111 371 70 218
– Others 135,933 96.06% 243 1,149 70 128

Total loans for use in Hong Kong 1,367,507 57.83% 12,788 14,100 6,553 5,741

Trade financing 49,755 16.00% 638 624 489 63

Loans for use outside Hong Kong 401,356 4.50% 2,828 2,141 1,581 5,851

Gross advances to customers 1,818,618 44.91% 16,254 16,865 8,623 11,655




54 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
(d) Concentration of advances to customers (continued)
(i) Sectoral analysis of gross advances to customers (continued)


At 31 December 2025

% covered Impairment
Gross by collateral Impairment allowances
advances to or other allowances – Stages 1
customers security Impaired Overdue – Stage 3 and 2
HK$’m HK$’m HK$’m HK$’m HK$’m

Loans for use in Hong Kong

Industrial, commercial and financial
– Property development 156,785 23.33% 4,321 2,092 798 2,297
– Property investment 95,904 59.17% 5,025 5,025 1,110 804
– Financial concerns 25,227 1.23% 50 – 16 45
– Stockbrokers 4,362 81.74% – – – 2
– Wholesale and retail trade 41,831 26.37% 414 352 92 123
– Manufacturing 59,046 5.28% 369 105 156 182
– Transport and transport equipment 66,265 11.62% 16 28 11 124
– Recreational activities 17 96.96% – – – –
– Information technology 32,339 0.63% 3 6 1 57
– Others 207,592 29.11% 4,166 4,629 2,869 598

Individuals
– Loans for the purchase of flats in
Home Ownership Scheme, Private
Sector Participation Scheme and
Tenants Purchase Scheme 63,926 99.85% 166 665 2 105
– Loans for purchase of other
residential properties 407,914 99.20% 454 2,366 58 377
– Credit card advances 13,035 – 100 437 61 236
– Others 126,565 95.67% 178 1,056 62 138

Total loans for use in Hong Kong 1,300,808 59.14% 15,262 16,761 5,236 5,088

Trade financing 41,202 18.13% 460 451 244 58

Loans for use outside Hong Kong 375,082 5.25% 3,836 3,125 2,173 5,948

Gross advances to customers 1,717,092 46.38% 19,558 20,337 7,653 11,094




Interim Report 2026 BOC Hong Kong (Holdings) Limited 55
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
(d) Concentration of advances to customers (continued)
(ii) Geographical analysis of gross advances to customers
The following geographical analysis of advances to customers is based on the locations
of the counterparties, after taking into account the transfer of risk. For an advance to
customer guaranteed by a party situated in a location different from the customer,
the risk will be transferred to the location of the guarantor.


Gross advances to customers


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Hong Kong, China 1,534,437 1,452,078
Chinese Mainland 100,802 90,606
Others 183,379 174,408

1,818,618 1,717,092

Impairment allowances made in
respect of the gross advances to
customers – Stages 1 and 2
Hong Kong, China 8,752 8,240
Chinese Mainland 1,414 1,370
Others 1,489 1,484

11,655 11,094



Overdue advances


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Hong Kong, China 14,558 17,865
Chinese Mainland 629 463
Others 1,678 2,009

16,865 20,337

Impairment allowances made in
respect of the overdue advances
– Stage 3
Hong Kong, China 6,268 5,486
Chinese Mainland 269 202
Others 963 1,063

7,500 6,751




56 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(A) Advances and other accounts (continued)
(d) Concentration of advances to customers (continued)
(ii) Geographical analysis of gross advances to customers (continued)


Impaired advances


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Hong Kong, China 13,245 17,020
Chinese Mainland 1,051 380
Others 1,958 2,158

16,254 19,558

Impairment allowances made in
respect of the impaired advances
– Stage 3
Hong Kong, China 6,954 6,057
Chinese Mainland 461 280
Others 1,208 1,316

8,623 7,653



(B) Repossessed assets
The estimated market value of repossessed assets held by the Group as at 30 June 2026 amounted
to HK$404 million (31 December 2025: HK$320 million). The repossessed assets mainly comprise
securities and properties in respect of which the Group has acquired access or control (e.g. through
court proceedings or voluntary actions by the proprietors concerned) and the carrying amount of
the loan concerned is reduced correspondingly.


(C) Balances and placements with banks and other financial institutions
As at 30 June 2026, gross overdue or impaired balances and placements with banks and other
financial institutions amounted to HK$30 million (31 December 2025: HK$30 million). The aforesaid
balances and placements have been overdue for more than one year as at 30 June 2026 and 31
December 2025.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 57
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.1 Credit risk (continued)
(D) Debt securities and certificates of deposit
The following tables present an analysis of the carrying value of debt securities and certificates of
deposit by issue rating and stage classification. In the absence of such issue ratings, the ratings
designated for the issuers are reported.


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Investment in securities at fair value through
other comprehensive income
– Stage 1
Aaa 179,296 143,645
Aa1 to Aa3 582,993 612,251
A1 to A3 508,554 473,056
Lower than A3 33,817 27,233
Unrated 4,374 4,422

1,309,034 1,260,607
– Stage 2 – –
– Stage 3 – –

1,309,034 1,260,607

Of which: impairment allowances (304) (270)

Investment in securities at amortised cost
– Stage 1
Aaa 78,932 78,074
Aa1 to Aa3 48,600 43,827
A1 to A3 25,023 24,741
Lower than A3 19,619 8,422
Unrated 325 9,049

172,499 164,113
– Stage 2 – –
– Stage 3 – –

172,499 164,113
Impairment allowances (92) (55)

172,407 164,058

Financial assets at fair value through
profit or loss
Aaa 3,490 3,327
Aa1 to Aa3 119,304 105,888
A1 to A3 92,048 109,960
Lower than A3 12,530 11,066
Unrated 7,239 2,377

234,611 232,618



As at 30 June 2026, there were no overdue or impaired debt securities and certificates of deposit
(31 December 2025: Nil).


58 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.2 Market risk
(A) VaR
The Group uses the VaR to measure and report general market risks to the RC and senior
management on a periodic basis. The Group adopts a uniformed VaR calculation model, using a
historical simulation approach and two years of historical market data, to calculate the VaR of the
Group and its subsidiaries over a one-day holding period with a 99% confidence level, and sets up
the VaR limit of the Group and its subsidiaries.


The following table sets out the VaR for all general market risk exposures1 of the Group.


Minimum Maximum Average
for the first for the first for the first
Year At 30 June half of year half of year half of year
HK$’m HK$’m HK$’m HK$’m

VaR for all market risk 2026 138.7 107.7 164.4 130.9
2025 120.4 93.9 151.5 118.0

VaR for foreign exchange risk 2026 48.3 19.8 67.4 44.3
2025 35.2 31.2 52.9 41.4

VaR for interest rate risk in 2026 115.6 87.4 146.1 107.5
the trading book 2025 121.7 99.6 134.3 113.4

VaR for equity risk in 2026 2.3 2.3 18.4 10.3
the trading book 2025 7.2 4.8 10.4 8.2

VaR for commodity risk 2026 89.1 50.3 99.4 71.8
2025 39.9 0.0 39.9 12.1


Note:
1. Structural FX positions have been excluded.



Although there is a valuable guide to market risk, VaR should always be viewed in the context of
its limitations. For example:


– the use of historical market data as a proxy for estimating future events may not encompass
all potential events, particularly those which are extreme in nature;


– the use of a one-day holding period assumes that all positions can be liquidated or hedged in
one day. This may not fully reflect the market risk arising at times of severe illiquidity, when
a one-day holding period may be insufficient to liquidate or hedge all positions fully;


– the use of a 99% confidence level, by definition, does not take into account losses that might
occur beyond this level of confidence; and


– VaR is calculated on the basis of exposures outstanding at the close of business and therefore
does not necessarily reflect intra-day exposures.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 59
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.2 Market risk (continued)
(A) VaR (continued)
The Group recognises these limitations by formulating stress test indicators and limits to assess and
manage the market risk uncovered by VaR. The stress testing programme of the market risk includes
sensitivity testing on changes in risk factors with various degrees of severity, as well as scenario
analysis on historical events including the 1987 Equity Market Crash, 1994 Bond Market Crash, 1997
Asian Financial Crisis, 2001 9-11 event and 2008 Financial Tsunami, etc.


(B) Currency risk
The Group’s assets and liabilities are denominated in major currencies, particularly HK Dollar, US
Dollar and Renminbi. To ensure the currency risk exposure of the Group is kept to an acceptable
level, risk limits (e.g. Position and VaR limit) are used to serve as a monitoring tool. Moreover,
the Group seeks to minimise the gap between assets and liabilities in the same currency. Foreign
exchange contracts (e.g. FX swaps) are usually used to manage FX risk associated with foreign
currency-denominated assets and liabilities.


The following is a summary of the Group’s major foreign currency exposures arising from trading,
non-trading and structural positions and is prepared with reference to the completion instructions
for the HKMA return of foreign currency position. The net options position is calculated based on
the basis of delta-weighted positions of all foreign exchange options contracts.


At 30 June 2026

Equivalent in million of HK$

Other Total
US Pound Japanese Australian foreign foreign
Dollars Sterling Yen Euro Renminbi Dollars currencies currencies

Spot assets 1,461,939 35,187 174,276 85,554 753,566 36,293 150,483 2,697,298
Spot liabilities (1,451,593) (28,886) (25,267) (46,357) (667,643) (59,854) (93,038) (2,372,638)
Forward purchases 2,420,017 32,657 171,862 114,597 1,237,255 119,829 147,772 4,243,989
Forward sales (2,396,012) (38,785) (314,715) (152,906) (1,321,244) (96,078) (204,413) (4,524,153)
Net options position 2,185 (237) (502) (652) 196 (32) (880) 78

Net long/(short) position 36,536 (64) 5,654 236 2,130 158 (76) 44,574



At 31 December 2025

Equivalent in million of HK$

Other Total
US Pound Japanese Australian foreign foreign
Dollars Sterling Yen Euro Renminbi Dollars currencies currencies

Spot assets 1,344,473 32,036 186,568 84,101 742,143 38,934 122,151 2,550,406
Spot liabilities (1,378,868) (28,700) (27,487) (42,946) (593,604) (34,371) (84,919) (2,190,895)
Forward purchases 2,471,267 46,505 123,629 103,620 1,432,113 45,735 92,187 4,315,056
Forward sales (2,409,504) (49,776) (278,462) (144,399) (1,578,794) (50,475) (129,671) (4,641,081)
Net options position (3,584) (137) 956 (40) (512) 68 482 (2,767)

Net long/(short) position 23,784 (72) 5,204 336 1,346 (109) 230 30,719




60 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.2 Market risk (continued)
(B) Currency risk (continued)


At 30 June 2026

Equivalent in million of HK$

Other Total
US Malaysian Philippine foreign foreign
Dollars Baht Ringgit Peso Rupiah currencies currencies

Net structural position 9,474 3,792 5,007 2,225 4,869 2,357 27,724



At 31 December 2025

Equivalent in million of HK$

Other Total
US Malaysian Philippine foreign foreign
Dollars Baht Ringgit Peso Rupiah currencies currencies

Net structural position 9,149 3,732 4,769 2,234 4,765 2,293 26,942



(C) Interest rate risk in the banking book
Interest rate risk in the banking book (“IRRBB”) means the risks of loss to a bank’s earnings and
economic value arising from movements in interest rate and term structures of the banking book
asset and liability positions. The Group’s IRRBB exposures are mainly from structural positions.


A summary of the Group’s policies and processes for managing and the methods used to measure
interest rate risk in the banking book is set out in Note 4.2(C) to the Financial Statements of the
Group’s Annual Report for 2025.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 61
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.3 Liquidity risk
(A) Liquidity coverage ratio and net stable funding ratio


2026 2025

Average value of liquidity coverage ratio
– First quarter 180.46% 231.50%
– Second quarter 168.42% 185.34%



Average value of liquidity coverage ratio is calculated based on the arithmetic mean of the liquidity
coverage ratio as at the end of each working day in the quarter and the calculation methodology
and instructions set out in the HKMA return of liquidity position.


2026 2025

Quarter-end value of net stable funding ratio
– First quarter 143.35% 140.67%
– Second quarter 143.89% 139.34%



Quarter-end value of net stable funding ratio is calculated based on the calculation methodology
and instructions set out in the HKMA return of stable funding position.


Liquidity coverage ratio and net stable funding ratio are computed on the consolidated basis which
comprise the positions of BOCHK and certain subsidiaries specified by the HKMA in accordance with
the Banking (Liquidity) Rules.




62 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.3 Liquidity risk (continued)
(B) Maturity analysis
The following analysis of the Group’s assets and liabilities into relevant maturity groupings is based
on the remaining period at balance sheet date to the contractual maturity date.


At 30 June 2026

On Up to 1 to 3 3 to 12 1 to 5 Over
demand 1 month months months years 5 years Indefinite Total
HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m

Assets
Cash and balances and placements with
banks and other financial institutions 325,100 60,885 90,933 90,761 2,619 – – 570,298
Financial assets at fair value through
profit or loss – 19,781 53,203 36,676 41,059 104,168 69,857 324,744
Derivative financial instruments 15,315 9,211 13,593 13,417 17,102 4,982 – 73,620
Hong Kong SAR Government certificates
of indebtedness 252,790 – – – – – – 252,790
Advances and other accounts 455,977 69,988 63,745 233,212 515,463 461,849 8,284 1,808,518
Investment in securities
– At FVOCI – 130,860 348,889 290,468 346,551 192,266 4,566 1,313,600
– At amortised cost – 7,272 6,041 28,958 98,008 32,128 – 172,407
Interests in associates and joint ventures – – – – – – 857 857
Investment properties – – – – – – 12,585 12,585
Properties, plant and equipment – – – – – – 33,759 33,759
Other assets (including current and
deferred tax assets) 104,228 62,333 1,675 9,203 18,931 10,858 2,965 210,193

Total assets 1,153,410 360,330 578,079 702,695 1,039,733 806,251 132,873 4,773,371

Liabilities
Hong Kong SAR currency notes in
circulation 252,790 – – – – – – 252,790
Deposits and balances from banks and
other financial institutions 269,902 138,771 10,956 7,993 – – – 427,622
Financial liabilities at fair value through
profit or loss – 38,721 12,837 12,485 433 4,363 – 68,839
Derivative financial instruments 12,256 7,326 7,098 11,843 16,663 4,700 – 59,886
Deposits from customers 1,634,629 682,985 497,755 214,468 5,845 – – 3,035,682
Debt securities and certificates of
deposit in issue – – – 5,852 11,537 – – 17,389
Other accounts and provisions (including
current and deferred tax liabilities) 89,080 88,760 290 11,469 4,399 240 – 194,238
Insurance contract liabilities – 1,221 3,647 7,989 37,463 194,350 – 244,670
Subordinated liabilities – – – 1,088 45,377 32,907 – 79,372

Total liabilities 2,258,657 957,784 532,583 273,187 121,717 236,560 – 4,380,488

Net liquidity gap (1,105,247) (597,454) 45,496 429,508 918,016 569,691 132,873 392,883




Interim Report 2026 BOC Hong Kong (Holdings) Limited 63
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.3 Liquidity risk (continued)
(B) Maturity analysis (continued)


At 31 December 2025

On Up to 1 to 3 3 to 12 1 to 5 Over
demand 1 month months months years 5 years Indefinite Total
HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m

Assets
Cash and balances and placements with
banks and other financial institutions 321,249 66,907 40,429 136,326 2,688 – – 567,599
Financial assets at fair value through
profit or loss – 30,945 44,113 27,530 59,012 89,761 54,708 306,069
Derivative financial instruments 16,619 7,773 9,435 14,262 13,257 3,909 – 65,255
Hong Kong SAR Government certificates
of indebtedness 243,190 – – – – – – 243,190
Advances and other accounts 387,586 69,839 67,029 189,246 534,834 445,902 12,041 1,706,477
Investment in securities
– At FVOCI – 183,931 268,641 324,208 314,057 169,770 5,171 1,265,778
– At amortised cost – 10,809 11,586 22,148 83,709 35,806 – 164,058
Interests in associates and joint ventures – – – – – – 844 844
Investment properties – – – – – – 12,599 12,599
Properties, plant and equipment – – – – – – 33,770 33,770
Other assets (including current and
deferred tax assets) 55,521 34,141 1,985 8,651 15,619 11,093 2,589 129,599

Total assets 1,024,165 404,345 443,218 722,371 1,023,176 756,241 121,722 4,495,238

Liabilities
Hong Kong SAR currency notes in
circulation 243,190 – – – – – – 243,190
Deposits and balances from banks and
other financial institutions 227,600 109,569 8,550 3,586 – – – 349,305
Financial liabilities at fair value through
profit or loss – 38,324 39,572 15,873 3,894 1,921 – 99,584
Derivative financial instruments 14,326 8,613 9,277 8,624 13,076 3,612 – 57,528
Deposits from customers 1,571,366 659,805 547,341 155,037 3,678 – – 2,937,227
Debt securities and certificates of
deposit in issue – – 56 5,630 5,565 – – 11,251
Other accounts and provisions (including
current and deferred tax liabilities) 74,697 35,057 2,949 6,390 4,411 262 – 123,766
Insurance contract liabilities – 1,533 2,834 10,805 35,102 160,169 – 210,443
Subordinated liabilities – – – 236 43,775 31,746 – 75,757

Total liabilities 2,131,179 852,901 610,579 206,181 109,501 197,710 – 4,108,051

Net liquidity gap (1,107,014) (448,556) (167,361) 516,190 913,675 558,531 121,722 387,187




64 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.3 Liquidity risk (continued)
(B) Maturity analysis (continued)
The analysis of debt securities by remaining period to maturity is based on contractual maturity date.
The disclosure does not imply that the securities will be held to maturity.


The above analysis in respect of insurance contract liabilities represents the estimated timing of
net cash outflows resulting from recognised insurance contract liabilities on the balance sheet and
excludes the contractual service margin and risk adjustment for non-financial risk.


3.4 Insurance risk
The Group is in the business of insuring against the risk of mortality, morbidity, disability, critical illness,
accidents and related risks. The Group manages these risks through the application of its underwriting
strategy, reinsurance arrangements and regular experience monitoring.


The underwriting strategy is intended to set premium pricing at an appropriate level that corresponds
with the underlying exposure of the risks underwritten and the Group’s underwriting procedures include
screening processes, such as the review of health condition and family medical history to ensure alignment
with the underwriting strategy.


Within the insurance process, concentrations of risk may arise where a particular event or a series of events
could impact heavily on the Group’s claim liabilities. Such concentrations may arise from a single insurance
contract or through a small number of related contracts, and relate to circumstances where significant claim
liabilities could arise.


For the in-force insurance contracts, most of the underlying insurance liabilities are related to endowment,
universal life, annuity, whole life and unit-linked insurance products. For most of the insurance policies
issued, the Group has a retention limit on any single life insured. The Group cedes the excess of the insured
benefit over the limit to reinsurer under an excess of loss reinsurance arrangement. For some of the insurance
business, the Group has entered into reinsurance arrangements that reinsure most of the insurance risk.


Uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance
contracts arises from the unpredictability of long-term changes in overall levels of mortality, morbidity and
persistency. In this regard, the Group has conducted relevant experience studies and researches regularly
to identify emerging trends. Results would be taken into account in pricing and underwriting management.
The results of such studies are also considered in determining the assumptions used in the estimates of
fulfilment cash flows.


Change in assumptions
The Group has updated the assumptions for acquisition expense and discount rates to reflect the changes
in Group’s experience and market conditions.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 65
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.5 Capital management
The HKMA supervises BOCHK and certain subsidiaries specified by the HKMA on a consolidated and solo
basis and, as such, receives information on the capital adequacy of, and sets capital requirements for
those companies as a whole. Individual overseas banking subsidiaries and branches are directly regulated
by their local banking supervisors, who set and monitor their capital adequacy requirements. Certain non-
banking financial subsidiaries are also subject to the supervision and capital requirements of local regulatory
authorities.


The Group has adopted the foundation internal ratings-based (“FIRB”) approach to calculate the credit
risk capital charge for the majority of its non-securitisation exposures. Small residual credit exposures
are remained under the standardised (credit risk) (“STC”) approach. The Group has adopted the reduced
basic credit valuation adjustment (“CVA”) approach to calculate the capital charge for the CVA risk of the
counterparty.


Effective from 1 January 2025, the Group has adopted the standardised approach to calculate market risk
capital requirements in accordance with the HKMA’s Supervisory Policy Manual MR-1 “Market Risk Capital
Charge”.


Effective from 1 January 2025, the Group has adopted the standardised approach under the Basel III final
reform package to calculate the operational risk capital charge.


The HKMA has classified BOCHK as a material subsidiary of the BOC resolution group and required BOCHK
to comply with the applicable internal loss-absorbing capacity requirements under the Financial Institutions
(Resolution) (Loss-absorbing Capacity Requirements – Banking Sector) Rules (“LAC Rules”), with compliance
period starting from 1 January 2023.


(A) Basis of regulatory consolidation
The consolidation basis for regulatory purposes comprises the positions of BOCHK and certain
subsidiaries specified by the HKMA in accordance with the Banking (Capital) Rules. For accounting
purposes, subsidiaries are consolidated in accordance with HKFRS Accounting Standards.


The Company, its subsidiaries (BOC Group Life Assurance Company Limited and BOCHK Asset
Management (Cayman) Limited (including their subsidiaries)) and certain subsidiaries of BOCHK are
included within the accounting scope of consolidation but not included within the regulatory scope
of consolidation.




66 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.5 Capital management (continued)
(A) Basis of regulatory consolidation (continued)
The particulars of the above-mentioned subsidiaries of BOCHK are as follows:


At 30 June 2026 At 31 December 2025

Total assets Total equity Total assets Total equity
Name HK$’m HK$’m HK$’m HK$’m

BOC Group Trustee Company Limited 201 201 201 201
BOCI-Prudential Trustee Limited 556 429 625 478
Bank of China (Hong Kong) Nominees
Limited – – – –
Bank of China (Hong Kong) Trustees Limited1 5 5 5 5
BOC Digital Services (Nanning) Company
Limited2 N/A N/A 524 416
BOCHK Information Technology (Shenzhen)
Co., Ltd. 371 261 361 255
Po Sang Financial Investment Services
Company Limited 347 347 347 347
Po Sang Securities Limited3 N/A N/A 589 395
Sin Hua Trustee Limited1 4 4 4 4
Billion Express Development Inc. – – – –
Billion Orient Holdings Ltd. – – – –
Elite Bond Investments Ltd. – – – –
Express Capital Enterprise Inc. – – – –
Express Charm Holdings Corp. – – – –
Express Shine Assets Holdings Corp. – – – –
Express Talent Investment Ltd. – – – –
Gold Medal Capital Inc. – – – –
Gold Tap Enterprises Inc. – – – –
Maxi Success Holdings Ltd. – – – –
Smart Linkage Holdings Inc. – – – –
Smart Union Capital Investments Ltd. – – – –
Success Trend Development Ltd. – – – –
Wise Key Enterprises Corp. – – – –


1. The winding-up petitions of Bank of China (Hong Kong) Trustee Limited and Sin Hua Trustees Limited were approved by
the High Court of Hong Kong on 10 June 2026.


2. BOC Digital Services (Nanning) Company Limited is included within the regulatory scope of consolidation specified by the
HKMA effective from 1 February 2026.


3. The disposal of Po Sang Securities Limited was completed on 30 January 2026.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 67
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.5 Capital management (continued)
(A) Basis of regulatory consolidation (continued)
The principal activities of the above subsidiaries are set out in “Appendix – Subsidiaries of the
Company”.


There were no subsidiaries which are included within the regulatory scope of consolidation but not
included within the accounting scope of consolidation as at 30 June 2026 (31 December 2025: Nil).


There were also no subsidiaries which are included within both the accounting scope of consolidation
and the regulatory scope of consolidation where the methods of consolidation differ as at 30 June
2026 (31 December 2025: Nil).


The Group operates subsidiaries in different countries/regions where capital is governed by local rules
and there may be restrictions on the transfer of funds or regulatory capital between the members
of the Group.


(B) Capital ratio
The capital ratios are analysed as follows:


At 30 June At 31 December
2026 2025

CET1 capital ratio 23.80% 24.01%

Tier 1 capital ratio 23.80% 24.01%

Total capital ratio 25.71% 25.98%




68 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.5 Capital management (continued)
(B) Capital ratio (continued)
The consolidated capital base after deductions used in the calculation of the above capital ratios is
analysed as follows:

At 30 June At 31 December
2026 2025
HK$’m HK$’m
CET1 capital: instruments and reserves
Directly issued qualifying CET1 capital instruments 43,043 43,043
Retained earnings 279,957 258,432
Disclosed reserves 32,222 37,186
CET1 capital before regulatory deductions 355,222 338,661
CET1 capital: regulatory deductions
Valuation adjustments (71) (47)
Other intangible assets (net of associated deferred
tax liabilities) (2,318) (2,012)
Deferred tax assets (net of associated deferred tax
liabilities) (222) (204)
Gains and losses due to changes in own credit risk
on fair valued liabilities (12) (5)
Cumulative fair value gains arising from the
revaluation of land and buildings (own-use and
investment properties) (37,603) (37,382)
Regulatory reserve for general banking risks (2,272) (2,223)
Regulatory deductions applied to CET1 capital due
to insufficient AT1 capital and Tier 2 capital to
cover deductions (1,095) (1,072)
Total regulatory deductions to CET1 capital (43,593) (42,945)
CET1 capital 311,629 295,716
AT1 capital: regulatory deductions
Significant LAC investments in AT1 capital
instruments issued by financial sector entities
that are outside the scope of regulatory
consolidation (1,095) (1,072)
Total regulatory deductions to AT1 capital (1,095) (1,072)
AT1 capital – –
Tier 1 capital 311,629 295,716
Tier 2 capital: instruments and provisions
Collective provisions and regulatory reserve for
general banking risks eligible for inclusion in Tier
2 capital 7,986 7,429
Tier 2 capital before regulatory deductions 7,986 7,429
Tier 2 capital: regulatory deductions
Add back of cumulative fair value gains arising
from the revaluation of land and buildings
(own-use and investment properties) eligible for
inclusion in Tier 2 capital 16,921 16,822
Total regulatory adjustments to Tier 2 capital 16,921 16,822
Tier 2 capital 24,907 24,251
Total regulatory capital 336,536 319,967




Interim Report 2026 BOC Hong Kong (Holdings) Limited 69
NOTES TO THE INTERIM FINANCIAL INFORMATION

3. Financial risk management (continued)
3.5 Capital management (continued)
(B) Capital ratio (continued)
The capital buffer ratios are analysed as follows:


At 30 June At 31 December
2026 2025

Capital conservation buffer ratio 2.500% 2.500%

Higher loss absorbency ratio 1.500% 1.500%

Countercyclical capital buffer ratio 0.426% 0.420%



(C) Leverage ratio
The leverage ratio is analysed as follows:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Tier 1 capital 311,629 295,716

Leverage ratio exposure 4,435,586 4,136,373

Leverage ratio 7.03% 7.15%




70 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

4. Fair values of financial assets and liabilities
All financial instruments for which fair values are measured or disclosed in the financial statements are categorised
within the fair value hierarchy as defined in HKFRS 13, “Fair value measurement”. The categorisation are determined
with reference to the observability and significance of the inputs used in the valuation methods and based on the
lowest level input that is significant to the fair value measurement as a whole:


– Level 1: based on quoted prices (unadjusted) in active markets for identical assets or liabilities. This category
includes equity securities listed on exchange, debt instruments issued by certain governments and certain
exchange-traded derivative contracts.


– Level 2: based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable, either directly or indirectly. This category includes majority of the over-the-
counter (“OTC”) derivative contracts, debt securities and certificates of deposit with quote from pricing
services vendors, issued structured deposits, advances and other accounts and other debt instruments. It
also includes certain foreign exchange contracts with insignificant adjustments or calibrations made to
observable market inputs.


– Level 3: based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable. This category includes equity investments, funds, advances and other accounts
and other debt instruments with significant unobservable inputs.


For financial instruments that are recognised in the financial statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end of each reporting period.


4.1 Financial instruments measured at fair value
The Group has an established governance structure and controls framework to ensure that fair values are
either determined or validated by control units independent of the front offices. Control units have overall
responsibility for independent verification of valuation results from front line businesses and all other
significant fair value measurements. Other specific controls include verification of observable pricing inputs;
review and approval for new models and changes to models; calibration and back-testing of models against
observed market transactions; analysis and investigation of significant daily valuation movements; review
of significant unobservable inputs and valuation adjustments. Significant valuation issues are reported to
senior management, Risk Committee and Audit Committee.


Generally, the unit of account for a financial instrument is the individual instrument. HKFRS 13 permits
a portfolio exception, through an accounting policy election, to measure the fair value of a portfolio of
financial assets and financial liabilities on the basis of the net open risk position when certain criteria are
met. The Group applies valuation adjustments at an individual instrument level, consistent with that unit of
account. According to its risk management policies and systems to manage derivative financial instruments,
the fair value adjustments of certain derivative portfolios that meet those criteria are measured on the basis
of the price to be received or paid for net open risk. Those portfolio-level adjustments are allocated to the
individual assets and liabilities on the basis of its relative net risk exposure to the portfolio.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 71
NOTES TO THE INTERIM FINANCIAL INFORMATION

4. Fair values of financial assets and liabilities (continued)
4.1 Financial instruments measured at fair value (continued)
The Group uses valuation techniques or broker/dealer quotations to determine the fair value of financial
instruments when unable to obtain the open market quotation in active markets.


The main parameters used in valuation techniques for financial instruments held by the Group include
bond prices, interest rates, foreign exchange rates, equity and stock prices, commodity prices, volatilities
and correlations, counterparty credit spreads and others, which are mostly observable and obtainable from
open market.


The techniques used to calculate the fair value of the following financial instruments are as below:


Debt securities and certificates of deposit, advances and other accounts and other debt instruments
The fair values of these instruments are determined by obtaining quoted market prices from exchange,
dealer or independent pricing service vendors or using discounted cash flow technique. Discounted cash
flow model is a valuation technique that measures present value using estimated expected future cash flows
from the instruments and then discounts these cash flows using a discount rate which may include a margin
that reflects the credit spreads required by the market for instruments with similar risk. These inputs are
observable or can be corroborated by observable or unobservable market data.


Mortgage backed securities
For this class of instruments, external prices are obtained from independent third parties. The valuation of
these securities, depending on the nature of transaction, is estimated from market standard cash flow models
with input parameters which include spreads to discount rates, default and recovery rates and prepayment
rates that may be observable or compiled through matrix pricing for similar issues.


Derivatives
OTC derivative contracts include forward, swap and option contracts on foreign exchange, interest rate,
equity, commodity or credit. The fair values of these contracts are mainly measured using valuation
techniques such as discounted cash flow models, option pricing models and accrual method. The inputs can
be observable or unobservable market data. Observable inputs include interest rate, foreign exchange rates,
bond, equity and stock prices, commodity prices, credit default swap spreads, volatilities and correlations.
Unobservable inputs may be used for less commonly traded option products which are embedded in
structured deposits. For certain complex derivative contracts, the fair values are determined based on broker/
dealer price quotations.


Credit valuation adjustments (“CVAs”) and debit valuation adjustments (“DVAs”) are applied to the
Group’s OTC derivatives. These adjustments reflect market factors movement, expectations of counterparty
creditworthiness and the Group’s own credit spread respectively. They are mainly determined for each
counterparty and are dependent on expected future values of exposures, default probabilities and recovery
rates.




72 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

4. Fair values of financial assets and liabilities (continued)
4.1 Financial instruments measured at fair value (continued)
(A) Fair value hierarchy


At 30 June 2026

Level 1 Level 2 Level 3 Total
HK$’m HK$’m HK$’m HK$’m

Financial assets
Trading assets (Note 19)
– Debt securities and certificates of deposit 6,647 115,068 – 121,715
– Equity securities 75 – – 75
– Funds 2 – – 2
– Other debt instruments – 4,399 – 4,399
Other financial assets mandatorily classified at
fair value through profit or loss (Note 19)
– Debt securities and certificates of deposit – 42,345 – 42,345
– Equity securities 9,479 – – 9,479
– Funds 12,385 15,815 31,752 59,952
Financial assets designated at fair value
through profit or loss (Note 19)
– Debt securities and certificates of deposit 11,120 59,431 – 70,551
– Other debt instruments – 16,226 – 16,226
Derivative financial instruments (Note 20) 412 73,208 – 73,620
Advances and other accounts at fair value – 4,711 284 4,995
Investment in securities at FVOCI (Note 22)
– Debt securities and certificates of deposit 237,784 1,071,250 – 1,309,034
– Equity securities 1,068 457 3,041 4,566

Financial liabilities
Financial liabilities at fair value through profit
or loss (Note 26)
– Trading liabilities 141 58,753 – 58,894
– Financial liabilities designated at fair value
through profit or loss – 9,945 – 9,945
Derivative financial instruments (Note 20) 30 59,856 – 59,886




Interim Report 2026 BOC Hong Kong (Holdings) Limited 73
NOTES TO THE INTERIM FINANCIAL INFORMATION

4. Fair values of financial assets and liabilities (continued)
4.1 Financial instruments measured at fair value (continued)
(A) Fair value hierarchy (continued)


At 31 December 2025

Level 1 Level 2 Level 3 Total
HK$’m HK$’m HK$’m HK$’m

Financial assets
Trading assets (Note 19)
– Debt securities and certificates of deposit 8,796 128,809 – 137,605
– Equity securities 21 – – 21
– Funds – – – –
– Other debt instruments – 3,812 – 3,812
Other financial assets mandatorily classified at
fair value through profit or loss (Note 19)
– Debt securities and certificates of deposit – 37,580 – 37,580
– Equity securities 5,024 – – 5,024
– Funds 13,175 12,726 23,462 49,363
Financial assets designated at fair value
through profit or loss (Note 19)
– Debt securities and certificates of deposit 7,807 49,626 – 57,433
– Other debt instruments – 15,231 – 15,231
Derivative financial instruments (Note 20) 22 65,233 – 65,255
Advances and other accounts at fair value – 5,109 192 5,301
Investment in securities at FVOCI (Note 22)
– Debt securities and certificates of deposit 303,750 956,857 – 1,260,607
– Equity securities 1,135 293 3,743 5,171

Financial liabilities
Financial liabilities at fair value through profit
or loss (Note 26)
– Trading liabilities 82 88,153 – 88,235
– Financial liabilities designated at fair value
through profit or loss – 11,349 – 11,349
Derivative financial instruments (Note 20) 21 57,507 – 57,528



There were no significant financial asset and liability transfers between level 1 and level 2 for the
Group during the period (31 December 2025: Nil).




74 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

4. Fair values of financial assets and liabilities (continued)
4.1 Financial instruments measured at fair value (continued)
(B) Reconciliation of level 3 items


Half-year ended 30 June 2026

Financial assets

Other financial assets mandatorily Investment in
classified at FVPL securities at FVOCI
Advances and
Debt other accounts Equity
securities Funds at fair value securities
HK$’m HK$’m HK$’m HK$’m

At 1 January 2026 – 23,462 192 3,743
Gains/(Losses)
– Income statement
– Net gain on other financial instruments at
fair value through profit or loss – 409 – –
– Other comprehensive income
– Change in fair value – – – (702)
Additions – 7,882 91 –
Disposals, redemptions and maturity – (1) – –
Exchange difference – – 1 –

At 30 June 2026 – 31,752 284 3,041

Total unrealised gains for the period included in
income statement for financial assets held as at
30 June 2026
– Net gain on other financial instruments at
fair value through profit or loss – 409 – –




Interim Report 2026 BOC Hong Kong (Holdings) Limited 75
NOTES TO THE INTERIM FINANCIAL INFORMATION

4. Fair values of financial assets and liabilities (continued)
4.1 Financial instruments measured at fair value (continued)
(B) Reconciliation of level 3 items (continued)


Year ended 31 December 2025

Financial assets

Other financial assets mandatorily Investment in
classified at FVPL securities at FVOCI
Advances and
Debt other accounts Equity
securities Funds at fair value securities
HK$’m HK$’m HK$’m HK$’m

At 1 January 2025 43 10,058 809 3,565
Gains
– Income statement
– Net gain on other financial instruments at
fair value through profit or loss – 429 – –
– Other comprehensive income
– Change in fair value – – – 178
Additions – 14,134 192 –
Disposals, redemptions and maturity (43) (1,159) (809) –
Exchange difference – – – –

At 31 December 2025 – 23,462 192 3,743

Total unrealised gains for the year included in
income statement for financial assets held as at
31 December 2025
– Net gain on other financial instruments at fair
value through profit or loss – 429 – –



As at 30 June 2026 and 31 December 2025, financial instruments categorised as level 3 are mainly
comprised of certain equity securities, funds, advances and other accounts and unlisted equity shares.


For certain illiquid funds, the fair values are determined with reference to net asset value, which may
be based on unobservable inputs with significant impact on valuation. For certain equity securities,
advances and other accounts, the multiples or credit spreads of comparable companies and discount
rates used in valuation techniques are unobservable inputs with significant impact on valuation.
Therefore, these instruments have been classified by the Group as level 3. The Group has established
internal control procedures to control the Group’s exposure to such financial instruments.




76 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

4. Fair values of financial assets and liabilities (continued)
4.1 Financial instruments measured at fair value (continued)
(B) Reconciliation of level 3 items (continued)
The fair values of unlisted FVOCI equity investments are determined with reference to (i) multiples of
comparable listed companies, including average of the price/earnings ratios or average of the price/
book values ratios of the comparables; or (ii) dividend discount model calculation of the underlying
equity investments; or (iii) net asset value with fair value adjustments on certain assets or liabilities
held (if applicable), if neither appropriate comparables nor dividend discount model calculation
is available or applicable. The significant unobservable inputs and their range applied in the fair
values measurement of the Group’s unlisted equity investments includes price/earnings ratios of
the comparables of 7.89x – 28.59x, price/book values ratios of the comparables of 0.52x – 0.74x,
liquidity discount of 25% – 30%, dividend payout ratio of 23.44% – 88.38% and discount rate of
8.50% – 11.69%. The fair value is positively correlated to the price/earnings ratios and price/book
value ratios of appropriate comparables, forecasted stream of future dividend payout or net asset
values, and is negatively correlated to the liquidity discount used in the average of price/earnings
ratios and price/book value ratios of comparables or discount rate used in dividend discount model
and net asset values.


Had all of the significant unobservable inputs applied on the valuation techniques favourably
changed/unfavourably changed by 5% (31 December 2025: 5%), the Group’s other comprehensive
income would have increased by HK$87 million and decreased by HK$90 million, respectively (31
December 2025: increased by HK$125 million and decreased by HK$124 million, respectively).


4.2 Financial instruments not measured at fair value
Fair value estimates are made at a specific point in time based on relevant market information and
information about various financial instruments. The following methods and assumptions have been used
to estimate the fair value of each class of financial instrument as far as practicable.


Balances with/from banks and other financial institutions and trade bills
Substantially all the financial assets and liabilities mature within one year from the balance sheet date and
their carrying value approximates fair value.


Hong Kong SAR Government certificates of indebtedness and Hong Kong SAR currency notes in circulation
The carrying value of Hong Kong SAR Government certificates of indebtedness and Hong Kong SAR currency
notes in circulation approximates their fair value.


Advances to customers and banks and other financial institutions
Substantially all the advances to customers and banks and other financial institutions are on floating rate
terms, bear interest at prevailing market interest rates and their carrying value approximates fair value.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 77
NOTES TO THE INTERIM FINANCIAL INFORMATION

4. Fair values of financial assets and liabilities (continued)
4.2 Financial instruments not measured at fair value (continued)
Investment in securities at amortised cost
The fair value of securities at amortised cost is determined by using the same approach as those debt
securities and certificates of deposit and mortgage backed securities measured at fair value as described
in Note 4.1.


Deposits from customers
Substantially all the deposits from customers mature within one year from the balance sheet date and their
carrying value approximates fair value.


Debt securities and certificates of deposit in issue
The fair value of these instruments is determined by using the same approach as those debt securities and
certificates of deposit measured at fair value as described in Note 4.1.


Subordinated liabilities
The fair value of subordinated liabilities is determined by using the same approach as those debt securities
and certificates of deposit measured at fair value as described in Note 4.1 and their carrying value
approximates fair value.


The following tables set out the carrying values and fair values of the financial instruments not measured
at fair value, except for the above with their carrying values being approximation of fair values.


At 30 June 2026 At 31 December 2025

Carrying value Fair value Carrying value Fair value
HK$’m HK$’m HK$’m HK$’m

Financial assets
Investment in securities at amortised
cost (Note 22) 172,407 171,155 164,058 164,132

Financial liabilities
Debt securities and certificates of
deposit in issue (Note 28) 17,389 17,437 11,251 11,264




78 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

5. Net interest income

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Interest income
Advances to customers, due from banks and
other financial institutions 33,171 38,021
Investment in securities and financial assets at fair value
through profit or loss 24,610 23,769
Others 363 389

58,144 62,179

Interest expense
Deposits from customers, due to banks and
other financial institutions (27,642) (34,772)
Debt securities and certificates of deposit in issue (119) (59)
Subordinated liabilities (834) (783)
Lease liabilities (26) (24)
Others (1,341) (1,422)

(29,962) (37,060)

Net interest income 28,182 25,119



Included within interest income are HK$36,818 million (first half of 2025: HK$41,359 million) and HK$17,698
million (first half of 2025: HK$17,781 million) for financial assets measured at amortised cost and at fair value
through other comprehensive income respectively.


Included within interest expense are HK$29,289 million (first half of 2025: HK$36,236 million) for financial liabilities
that are not measured at fair value through profit or loss.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 79
NOTES TO THE INTERIM FINANCIAL INFORMATION

6. Net fee and commission income

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Fee and commission income
Securities brokerage 1,610 1,579
Credit card business 1,474 1,314
Loan commissions 1,378 1,355
Insurance 691 1,162
Funds distribution 690 445
Payment services 401 388
Trust and custody services 397 509
Currency exchange 252 247
Bills commissions 246 214
Safe deposit box 143 146
Funds management 98 55
Others 622 729

8,002 8,143

Fee and commission expense
Credit card business (1,163) (999)
Securities brokerage (241) (230)
Others (619) (569)

(2,023) (1,798)

Net fee and commission income 5,979 6,345

Of which arise from:
Financial assets or financial liabilities not at fair value through
profit or loss
– Fee and commission income 1,519 1,473
– Fee and commission expense (5) (6)

1,514 1,467

Trust and other fiduciary activities
– Fee and commission income 488 604
– Fee and commission expense (41) (28)

447 576




80 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

7. Net trading gain

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Net gain/(loss) from:
Foreign exchange and foreign exchange products 5,638 11,359
Interest rate instruments and items under fair value hedge 508 769
Commodities 775 45
Equity instruments (96) 64

6,825 12,237



8. Net gain on other financial instruments at fair value through profit or loss

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Net gain on other financial instruments mandatorily
classified at fair value through profit or loss 3,579 3,109
Net (loss)/gain on financial instruments designated at fair value
through profit or loss (1,175) 418

2,404 3,527



9. Net gain/(loss) on other financial instruments

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Net gain/(loss) on disposal/redemption of investment
in securities at FVOCI 643 (1,104)
Net loss on redemption of investment
in securities at amortised cost (15) (12)
Others 3 –

631 (1,116)




Interim Report 2026 BOC Hong Kong (Holdings) Limited 81
NOTES TO THE INTERIM FINANCIAL INFORMATION

10. Other operating income

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Dividend income
– From investment in securities at FVOCI held at the end of the
period 44 57
Gross rental income from investment properties 209 211
Less: Outgoings in respect of investment properties (34) (33)
Gain from disposal of subsidiary 52 –
Others 61 62

332 297



Included in the “Outgoings in respect of investment properties” is HK$7 million (first half of 2025: HK$7 million)
of direct operating expenses related to investment properties that were not let during the period.


11. Net charge of impairment allowances

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Net reversal/(charge) of impairment allowances on:
Advances and other accounts
– At FVOCI 2 –
– At amortised cost (2,387) (3,264)

(2,385) (3,264)
Investment in securities
– At FVOCI (31) (38)
– At amortised cost (34) (13)

(65) (51)
Others (22) (3)

Net charge of impairment allowances (2,472) (3,318)




82 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

12. Operating expenses

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Staff costs (including directors’ emoluments)
– Salaries and other costs 5,611 5,236
– Pension cost 327 310

5,938 5,546
Premises and equipment expenses (excluding depreciation and
amortisation)
– Short-term leases, leases of low-value assets and variable
lease payments 16 16
– Others 848 742

864 758
Depreciation and amortisation 1,388 1,374
Auditor’s remuneration
– Audit services 3 3
– Non-audit services 3 1
Other operating expenses 1,465 1,294

9,661 8,976
Less: Costs directly attributable to insurance contracts (681) (560)

8,980 8,416



13. Net gain/(loss) from disposal of/fair value adjustments on investment
properties

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Net gain/(loss) from fair value adjustments on investment
properties 52 (991)



14. Net gain/(loss) from properties, plant and equipment and other assets

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Net loss from disposal of equipment, fixtures and fittings (1) (2)
Net gain/(loss) from revaluation of premises 256 (124)
Net loss from disposal of intangible assets (2) –

253 (126)




Interim Report 2026 BOC Hong Kong (Holdings) Limited 83
NOTES TO THE INTERIM FINANCIAL INFORMATION

15. Taxation
Taxation in the income statement represents:


Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Current tax
Hong Kong profits tax
– Current period taxation 4,693 4,272
– Over-provision in prior periods (172) (3)

4,521 4,269
Taxation outside Hong Kong
– Current period taxation 484 563
– Over-provision in prior periods (1) (21)

5,004 4,811
Deferred tax
Origination and reversal of temporary differences and unused
tax credits (698) (331)
Pillar Two top-up tax 110 –

4,416 4,480



Hong Kong profits tax has been provided at the rate of 16.5% (2025: 16.5%) on the estimated assessable profits
arising in Hong Kong for the first half of 2026. Taxation on profits outside Hong Kong has been calculated on the
estimated assessable profits for the first half of 2026 at the rates of taxation prevailing in the countries/regions in
which the Group operates.


The taxation on the Group’s profit before taxation that differs from the theoretical amount that would arise using
the taxation rate of Hong Kong is as follows:


Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Profit before taxation 28,772 27,284

Calculated at a taxation rate of 16.5% (2025: 16.5%) 4,747 4,502
Effect of different taxation rates in other countries/regions 106 115
Income not subject to taxation (869) (922)
Expenses not deductible for taxation purposes 431 553
Over-provision in prior periods (173) (24)
Tax losses not recognised 8 67
Withholding tax outside Hong Kong 51 174
Others 115 15

Taxation charge 4,416 4,480

Effective tax rate 15.3% 16.4%




84 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

15. Taxation (continued)
Organisation for Economic Co-operation and Development’s ( “OECD ”) Global Minimum
Tax ( “Pillar Two ”) model rules
The Group is within the scope of the OECD’s Pillar Two model rules. Pillar Two legislation was enacted in Vietnam,
Hong Kong, Indonesia, Malaysia and Thailand, among the jurisdictions in which the Group operates and has become
effective in Vietnam since 1 January 2024 and in Hong Kong, Indonesia, Malaysia and Thailand from 1 January 2025
respectively. Under the applicable rules of the Pillar Two legislation enacted in above-mentioned jurisdictions, the
Group is liable to pay a top-up tax for the difference between the Global Anti-Base Erosion (“GloBE”) effective tax
rate for the Group’s operating jurisdictions, and the 15% minimum rate.


The Group has performed an assessment of Pillar Two top-up tax based on the related financial information for
the current period, and assessed a related additional current income tax of approximately HK$110 million (first
half of 2025: Nil).


The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes, as provided in the amendments to HKAS 12 “Income Taxes” issued in July 2023.


16. Dividends

Half-year ended 30 June 2026 Half-year ended 30 June 2025

Per share Total Per share Total
HK$ HK$’m HK$ HK$’m

Interim dividend 0.5800 6,132 0.5800 6,132
Special dividend 0.2388 2,525 – –

0.8188 8,657 0.5800 6,132



At a meeting held on 29 April 2026, the Board declared 2026 first interim dividend of HK$0.2900 per ordinary
share amounting to approximately HK$3,066 million, and was paid on 28 May 2026.


At a meeting held on 28 August 2026, the Board declared 2026 second interim dividend of HK$0.2900 per ordinary
share amounting to approximately HK$3,066 million and a special dividend of HK$0.2388 per ordinary share
amounting to approximately HK$2,525 million. These declared dividends are not reflected as a dividend payable
in this interim financial information, but will be reflected as an appropriation of retained earnings for the year
ending 31 December 2026.


The final dividend of HK$1.2550 per ordinary share for the year ended 31 December 2025 amounting to
approximately HK$13,269 million was approved at the Annual General Meeting held on 25 June 2026 and was
paid on 17 July 2026.


17. Earnings per share
The calculation of basic earnings per share for the first half of 2026 is based on the consolidated profit for the period
attributable to equity holders of the Company of approximately HK$23,739 million (first half of 2025: HK$22,160
million) and on the ordinary shares in issue of 10,572,780,266 shares (2025: 10,572,780,266 ordinary shares).


There was no dilution of earnings per share as no potential ordinary shares were in issue for the first half of 2026
(first half of 2025: Nil).




Interim Report 2026 BOC Hong Kong (Holdings) Limited 85
NOTES TO THE INTERIM FINANCIAL INFORMATION

18. Cash and balances and placements with banks and other financial
institutions

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Cash 13,046 17,808

Balances with central banks 205,810 196,198
Placements with central banks maturing within one month 4,587 4,344
Placements with central banks maturing between one and twelve
months 20,247 746
Placements with central banks maturing over one year 1,195 2,213

231,839 203,501

Balances with other banks and other financial institutions 106,282 107,280
Placements with other banks and other financial institutions
maturing within one month 56,355 62,604
Placements with other banks and other financial institutions
maturing between one and twelve months 161,492 176,083
Placements with other banks and other financial institutions
maturing over one year 1,424 475

325,553 346,442

570,438 567,751
Less: Impairment allowances
– Stage 1 (110) (122)
– Stage 2 – –
– Stage 3 (30) (30)

570,298 567,599




86 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

19. Financial assets at fair value through profit or loss

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Securities
Trading assets
– Treasury bills 53,507 48,099
– Certificates of deposit 11,960 8,879
– Other debt securities 56,248 80,627

121,715 137,605
– Equity securities 75 21
– Funds 2 –

121,792 137,626

Other financial assets mandatorily classified at fair value
through profit or loss
– Certificates of deposit 395 405
– Other debt securities 41,950 37,175

42,345 37,580
– Equity securities 9,479 5,024
– Funds 59,952 49,363

111,776 91,967

Financial assets designated at fair value through profit or loss
– Treasury bills 1,455 926
– Certificates of deposit 806 1,129
– Other debt securities 68,290 55,378

70,551 57,433

Total securities 304,119 287,026

Other debt instruments
Trading assets 4,399 3,812
Financial assets designated at fair value through profit or loss 16,226 15,231

Total other debt instruments 20,625 19,043

324,744 306,069




Interim Report 2026 BOC Hong Kong (Holdings) Limited 87
NOTES TO THE INTERIM FINANCIAL INFORMATION

19. Financial assets at fair value through profit or loss (continued)
Total securities are analysed by place of listing as follows:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Debt securities and certificates of deposit
– Listed in Hong Kong 35,536 37,495
– Listed outside Hong Kong 77,944 66,579
– Unlisted 121,131 128,544

234,611 232,618

Equity securities
– Listed in Hong Kong 2,441 4,299
– Listed outside Hong Kong 7,113 746

9,554 5,045

Funds
– Listed in Hong Kong 5,531 6,842
– Listed outside Hong Kong 6,856 6,333
– Unlisted 47,567 36,188

59,954 49,363

Total securities 304,119 287,026



Total securities are analysed by type of issuer as follows:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Sovereigns 110,662 119,920
Public sector entities 10,874 6,362
Banks and other financial institutions 135,622 118,921
Corporate entities 46,961 41,823

Total securities 304,119 287,026



20. Derivative financial instruments
The Group enters into foreign exchange rate, interest rate, commodity, equity and credit related derivative financial
instrument contracts for trading and risk management purposes.


The contract/notional amounts and fair values of derivative financial instruments entered into by the Group are set
out in the following tables. The contract/notional amounts of these instruments indicate the volume of transactions
outstanding at the balance sheet dates and certain of them provide a basis for comparison with the fair values of
instruments recognised on the balance sheet. However, they do not necessarily indicate the amounts of future cash
flows involved or the current fair values of the instruments and, therefore, do not indicate the Group’s exposure to
credit or market risks. The derivative financial instruments become favourable (assets) or unfavourable (liabilities) as
a result of fluctuations in market interest rates, foreign exchange rates, commodity prices or equity prices relative
to their terms. The aggregated fair values of derivative financial instruments can fluctuate significantly from time
to time.


88 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

20. Derivative financial instruments (continued)
The following tables summarise the contract/notional amounts and fair values of each class of derivative financial
instrument as at 30 June 2026 and 31 December 2025:


At 30 June 2026

Contract/ Fair values
notional
amounts Assets Liabilities
HK$’m HK$’m HK$’m

Foreign exchange rate contracts
Spot, forwards and futures 325,259 15,386 (11,874)
Swaps 3,867,900 35,961 (28,356)
Options 95,005 363 (205)

4,288,164 51,710 (40,435)

Interest rate contracts
Futures 88,501 15 (23)
Swaps 4,717,637 16,204 (15,744)
Options 536 – –

4,806,674 16,219 (15,767)

Commodity contracts 95,971 5,678 (3,675)

Equity contracts 5,794 13 (9)

Credit derivative contracts 39 – –

9,196,642 73,620 (59,886)



At 31 December 2025

Contract/ Fair values
notional
amounts Assets Liabilities
HK$’m HK$’m HK$’m

Foreign exchange rate contracts
Spot, forwards and futures 266,548 15,000 (11,628)
Swaps 4,080,086 31,549 (25,906)
Options 81,946 346 (236)

4,428,580 46,895 (37,770)

Interest rate contracts
Futures 123,177 18 (8)
Swaps 4,200,952 13,875 (13,809)
Options 832 – –

4,324,961 13,893 (13,817)

Commodity contracts 78,812 4,461 (5,934)

Equity contracts 933 6 (7)

Credit derivative contracts – – –

8,833,286 65,255 (57,528)




Interim Report 2026 BOC Hong Kong (Holdings) Limited 89
NOTES TO THE INTERIM FINANCIAL INFORMATION

21. Advances and other accounts

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Personal loans and advances 650,228 624,450
Corporate loans and advances 1,168,390 1,092,642

Advances to customers 1,818,618 1,717,092
Less: Impairment allowances
– Stage 1 (4,146) (4,013)
– Stage 2 (7,509) (7,081)
– Stage 3 (8,623) (7,653)

1,798,340 1,698,345

Trade bills 2,284 3,157
Less: Impairment allowances
– Stage 1 (1) (1)
– Stage 2 – –
– Stage 3 – –

2,283 3,156

Advances to banks and other financial institutions 7,912 4,985
Less: Impairment allowances
– Stage 1 (17) (9)
– Stage 2 – –
– Stage 3 – –

7,895 4,976

1,808,518 1,706,477



As at 30 June 2026, advances to customers included accrued interest of HK$5,269 million (31 December 2025:
HK$5,111 million).


As at 30 June 2026, advances and other accounts at fair value through other comprehensive income and mandatorily
classified at fair value through profit or loss amounted to HK$4,881 million (31 December 2025: HK$5,278 million)
and HK$114 million (31 December 2025: HK$23 million) respectively.


As at 30 June 2026, impairment allowance of advances and other accounts at fair value through other
comprehensive income amounted to HK$10 million (31 December 2025: HK$12 million) and was credited to other
comprehensive income.




90 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

22. Investment in securities

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Investment in securities at fair value through
other comprehensive income
– Treasury bills 484,188 518,575
– Certificates of deposit 110,799 73,885
– Other debt securities 714,047 668,147

1,309,034 1,260,607
– Equity securities 4,566 5,171

1,313,600 1,265,778

Investment in securities at amortised cost
– Treasury bills 13,397 9,780
– Certificates of deposit 434 137
– Other debt securities 158,668 154,196

172,499 164,113
Less: Impairment allowances
– Stage 1 (92) (55)
– Stage 2 – –
– Stage 3 – –

172,407 164,058

1,486,007 1,429,836




Interim Report 2026 BOC Hong Kong (Holdings) Limited 91
NOTES TO THE INTERIM FINANCIAL INFORMATION

22. Investment in securities (continued)
Investment in securities is analysed by place of listing as follows:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Investment in securities at fair value through
other comprehensive income
Debt securities and certificates of deposit
– Listed in Hong Kong 97,233 104,186
– Listed outside Hong Kong 329,339 332,387
– Unlisted 882,462 824,034

1,309,034 1,260,607

Equity securities
– Listed in Hong Kong 1,201 1,266
– Listed outside Hong Kong 161 162
– Unlisted 3,204 3,743

4,566 5,171

1,313,600 1,265,778

Investment in securities at amortised cost
Debt securities and certificates of deposit
– Listed in Hong Kong 19,584 15,481
– Listed outside Hong Kong 99,014 100,033
– Unlisted 53,809 48,544

172,407 164,058

1,486,007 1,429,836

Market value of listed securities at amortised cost 118,455 116,478



Investment in securities is analysed by type of issuer as follows:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Sovereigns 716,008 768,047
Public sector entities 249,030 214,499
Banks and other financial institutions 448,256 369,236
Corporate entities 72,713 78,054

1,486,007 1,429,836




92 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

23. Investment properties

Half-year ended Year ended
30 June 31 December
2026 2025
HK$’m HK$’m

At 1 January 12,599 14,046

Additions 5 145
Fair value gain/(loss) 52 (1,607)
Reclassification (to)/from properties, plant and
equipment (Note 24) (71) 15

At period/year end 12,585 12,599



24. Properties, plant and equipment

Equipment,
fixtures and Right-of-use
Premises fittings assets* Total
HK$’m HK$’m HK$’m HK$’m

Net book value at 1 January 2026 31,086 1,075 1,609 33,770

Additions 152 338 233 723
Disposals – (2) – (2)
Revaluation 173 – – 173
Depreciation for the period (505) (203) (264) (972)
Reclassification from investment properties
(Note 23) 71 – – 71
Exchange difference – (2) (2) (4)

Net book value at 30 June 2026 30,977 1,206 1,576 33,759

At 30 June 2026
Cost or valuation 30,977 7,191 3,805 41,973
Accumulated depreciation and impairment – (5,985) (2,229) (8,214)

Net book value at 30 June 2026 30,977 1,206 1,576 33,759

The analysis of cost or valuation of the
above assets is as follows:

At 30 June 2026
At cost – 7,191 3,805 10,996
At valuation 30,977 – – 30,977

30,977 7,191 3,805 41,973




Interim Report 2026 BOC Hong Kong (Holdings) Limited 93
NOTES TO THE INTERIM FINANCIAL INFORMATION

24. Properties, plant and equipment (continued)

Equipment,
fixtures and Right-of-use
Premises fittings assets* Total
HK$’m HK$’m HK$’m HK$’m

Net book value at 1 January 2025 35,903 908 1,431 38,242

Additions 155 534 702 1,391
Disposals – (4) – (4)
Revaluation (3,889) – – (3,889)
Depreciation for the year (1,073) (366) (529) (1,968)
Reclassification to investment properties
(Note 23) (15) – – (15)
Exchange difference 5 3 5 13

Net book value at 31 December 2025 31,086 1,075 1,609 33,770

At 31 December 2025
Cost or valuation 31,086 6,913 3,649 41,648
Accumulated depreciation and impairment – (5,838) (2,040) (7,878)

Net book value at 31 December 2025 31,086 1,075 1,609 33,770

The analysis of cost or valuation of the
above assets is as follows:

At 31 December 2025
At cost – 6,913 3,649 10,562
At valuation 31,086 – – 31,086

31,086 6,913 3,649 41,648


* The right-of-use assets of the Group are mainly related to lease of properties.



25. Other assets

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Precious metals 53,331 28,594
Intangible assets 2,942 2,557
Accounts receivable, prepayments and others 114,514 61,045
Insurance contract assets (Note 31) 8 2
Reinsurance contract assets 35,669 34,249

206,464 126,447




94 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

26. Financial liabilities at fair value through profit or loss

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Trading liabilities
– Short positions in securities 58,894 88,235

Financial liabilities designated at fair value through profit or loss
– Repurchase agreements 8,453 4,388
– Structured deposits (Note 27) 1,492 6,961

9,945 11,349

68,839 99,584



As at 30 June 2026 and 31 December 2025, the difference between the carrying amount of financial liabilities
designated at fair value through profit or loss and the amount that the Group would be contractually required to
pay at maturity to the holders was not significant.


27. Deposits from customers

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Current, savings and other deposit accounts (per balance sheet) 3,035,682 2,937,227
Structured deposits reported as financial liabilities at fair value
through profit or loss (Note 26) 1,492 6,961

3,037,174 2,944,188

Analysed by:
Demand deposits and current accounts
– Corporate 227,347 195,594
– Personal 100,739 96,332

328,086 291,926

Savings deposits
– Corporate 745,300 708,119
– Personal 560,369 570,560

1,305,669 1,278,679

Time, call and notice deposits
– Corporate 734,471 743,280
– Personal 668,948 630,303

1,403,419 1,373,583

3,037,174 2,944,188




Interim Report 2026 BOC Hong Kong (Holdings) Limited 95
NOTES TO THE INTERIM FINANCIAL INFORMATION

28. Debt securities and certificates of deposit in issue

At 30 June At 31 December
2026 2025
HK$’m HK$’m

At amortised cost
– Certificates of deposit – 56
– Renminbi bonds(i) 5,840 5,577
– Renminbi bonds(ii) 5,773 5,618
– Renminbi bonds(iii) 5,776 –

17,389 11,251


(i) In November 2024, BOCHK issued RMB5 billion bonds, interest rate at 2% per annum payable annually, due in 2026.


(ii) In June 2025, BOCHK issued RMB5 billion bonds, interest rate at 1.79% per annum payable annually, due in 2028.


(iii) In May 2026, BOCHK issued RMB5 billion bonds, interest rate at 1.65% per annum payable annually, due in 2029.



29. Other accounts and provisions

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Dividend payable 13,269 –
Other accounts payable and provisions 166,148 111,151
Lease liabilities 1,565 1,594
Impairment allowances on loan commitments and
financial guarantee contracts
– Stage 1 279 248
– Stage 2 28 39
– Stage 3 44 43
Reinsurance contract liabilities 3 6

181,336 113,081




96 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

30. Deferred taxation
Deferred tax is recognised in respect of the temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in this interim financial information and unused tax credits in accordance with
HKAS 12 “Income Taxes”.


The major components of deferred tax (assets)/liabilities recorded in the balance sheet, and the movements during
the first half of 2026 and the year ended 31 December 2025 are as follows:


Half-year ended 30 June 2026

Accelerated
tax Property Impairment
depreciation revaluation Losses allowances Others Total
HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m

At 1 January 2026,
as previously reported 899 4,451 (1,936) (1,911) (1,370) 133
Effect of merger of entity under
common control – – (3) – – (3)

At 1 January 2026, as restated 899 4,451 (1,939) (1,911) (1,370) 130
Charged/(credited) to income
statement (Note 15) 65 3 1,918 (119) (2,565) (698)
Credited to other comprehensive
income – (19) – – (609) (628)
Exchange difference – – – 4 2 6

At 30 June 2026 964 4,435 (21) (2,026) (4,542) (1,190)



Year ended 31 December 2025

Accelerated
tax Property Impairment
depreciation revaluation Losses allowances Others Total
HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m

At 1 January 2025,
as previously reported 874 5,208 (998) (1,263) (1,832) 1,989
Effect of merger of entity under
common control – – (7) – (1) (8)

At 1 January 2025, as restated 874 5,208 (1,005) (1,263) (1,833) 1,981
Charged/(credited) to income
statement 25 (98) (934) (647) (444) (2,098)
(Credited)/charged to other
comprehensive income – (659) – – 913 254
Exchange difference – – – (1) (6) (7)

At 31 December 2025 899 4,451 (1,939) (1,911) (1,370) 130




Interim Report 2026 BOC Hong Kong (Holdings) Limited 97
NOTES TO THE INTERIM FINANCIAL INFORMATION

30. Deferred taxation (continued)
Deferred tax assets and liabilities are offset on an individual entity basis when there is a legal right to set off current
tax assets against current tax liabilities and when the deferred taxation relates to the same authority. The following
amounts, determined after appropriate offsetting, are shown in the balance sheet:

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Deferred tax assets (3,727) (3,136)
Deferred tax liabilities 2,537 3,266

(1,190) 130


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Deferred tax assets to be recovered after more than twelve months (3,722) (3,078)
Deferred tax liabilities to be settled after more than twelve months 3,444 3,501

(278) 423


As at 30 June 2026, the Group has not recognised deferred tax assets in respect of tax losses amounting to HK$442
million (31 December 2025: HK$390 million). All of the amount for the Group has no expiry date under the current
tax legislation in different countries/regions.

31. Insurance contracts
(a) Analysis of remaining coverage and incurred claims for insurance contracts issued

At 30 June 2026

Liabilities for
remaining coverage
Liabilities
Excluding loss Loss for incurred
component component claims Total
HK$’m HK$’m HK$’m HK$’m

Insurance contract liabilities 269,836 1,618 282 271,736
Insurance contract assets
(Note 25) (16) – 8 (8)

269,820 1,618 290 271,728


At 31 December 2025

Liabilities for
remaining coverage
Liabilities
Excluding Loss for incurred
loss component component claims Total
HK$’m HK$’m HK$’m HK$’m

Insurance contract liabilities 230,682 1,402 263 232,347
Insurance contract assets
(Note 25) (2) – – (2)

230,680 1,402 263 232,345



98 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

31. Insurance contracts (continued)
(b) Analysis of the measurement components of insurance contracts not measured under
the premium allocation approach

At 30 June 2026

Contractual service margin

Present value Contracts
of future cash measured
flows and risk Contracts under the
adjustment for recognised fair value
non-financial after transition approach at
risk date transition Total
HK$’m HK$’m HK$’m HK$’m

Insurance contract liabilities 245,400 21,576 4,760 271,736
Insurance contract assets (1) – – (1)

245,399 21,576 4,760 271,735



At 31 December 2025

Contractual service margin

Present value Contracts
of future cash measured
flows and risk Contracts under the
adjustment for recognised fair value
non-financial after transition approach at
risk date transition Total
HK$’m HK$’m HK$’m HK$’m

Insurance contract liabilities 211,043 16,192 5,111 232,346
Insurance contract assets (1) – – (1)

211,042 16,192 5,111 232,345




Interim Report 2026 BOC Hong Kong (Holdings) Limited 99
NOTES TO THE INTERIM FINANCIAL INFORMATION

32. Subordinated liabilities

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Subordinated loans, at amortised cost
RMB7.5 billion(i) 8,781 8,380
RMB7.5 billion(ii) 8,777 8,379
RMB17.0 billion(iii) 19,897 18,981
RMB7.3 billion(iv) 8,535 8,149
RMB28.5 billion(v) 33,382 31,868

79,372 75,757



In compliance with the applicable internal loss-absorbing capacity requirements under LAC rules, BOCHK early
repaid RMB28.5 billion non-capital loss-absorbing capacity debt instrument in 2025. On the same day, BOC has
granted RMB28.5 billion this instrument to BOCHK.

(i) Interest rate at 2.19% per annum payable annually, due in 2028 with early repayment option.


(ii) Interest rate at 2.13% per annum payable annually, due in 2028 with early repayment option.


(iii) Interest rate at 2.28% per annum payable annually, due in 2030 with early repayment option.


(iv) Interest rate at 2.10% per annum payable annually, due in 2030 with early repayment option.


(v) Interest rate at 2.13% per annum payable annually, due in 2031 with early repayment option.


33. Share capital

At 30 June At 31 December
2026 2025
HK$’m HK$’m

Issued and fully paid:
10,572,780,266 ordinary shares 52,864 52,864




100 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

34. Notes to condensed consolidated cash flow statement
(a) Reconciliation of operating profit to operating cash inflow/(outflow) before taxation

Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Operating profit 28,451 28,403

Depreciation and amortisation 1,388 1,374
Gain from disposal of subsidiary (52) –
Net charge of impairment allowances 2,472 3,318
Unwind of discount on impairment allowances (13) (45)
Advances written off net of recoveries (851) (3,496)
Net movements in cash flow hedge reserve (92) 132
Interest expense on lease liabilities 26 24
Change in subordinated liabilities 3,615 3,348
Change in balances and placements with banks and
other financial institutions with original maturity
over three months 6,243 20,587
Change in financial assets at fair value through profit or
loss (11,041) (57,541)
Change in derivative financial instruments (6,007) 19,308
Change in advances and other accounts (103,580) (35,327)
Change in investment in securities 39,464 (173,959)
Change in other assets (78,733) (11,251)
Change in deposits and balances from banks and
other financial institutions 78,317 (19,217)
Change in financial liabilities at fair value through
profit or loss (30,745) (3,746)
Change in deposits from customers 98,455 155,592
Change in debt securities and certificates of deposit in
issue 6,138 5,777
Change in other accounts and provisions 55,485 (1,768)
Change in insurance and reinsurance contract assets/
liabilities 38,374 26,563
Effect of changes in exchange rates (8,387) (12,847)

Operating cash inflow/(outflow) before taxation 118,927 (54,771)



(b) Analysis of the balances of cash and cash equivalents

At 30 June At 30 June
2026 2025
HK$’m HK$’m

Cash and balances and placements with banks and
other financial institutions with original maturity
within three months 411,739 386,231
Treasury bills, certificates of deposit and other debt
instruments with original maturity within three months
– financial assets at fair value through profit or loss 41,551 16,179
– investment in securities 215,287 201,102

668,577 603,512


Interim Report 2026 BOC Hong Kong (Holdings) Limited 101
NOTES TO THE INTERIM FINANCIAL INFORMATION

35. Contingent liabilities and commitments
The following is a summary of the contractual amounts of each significant class of contingent liability and
commitment and the aggregate credit risk-weighted amount and is prepared with reference to the completion
instructions for the HKMA return of capital adequacy ratio:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Direct credit substitutes 3,479 3,130
Transaction-related contingencies 36,108 32,110
Trade-related contingencies 13,084 14,343
Commitments that are unconditionally cancellable without
prior notice 640,838 629,356
Other commitments with an original maturity of
– up to one year 18,421 22,252
– over one year 143,468 158,253
Others 1,190 2,218

856,588 861,662

Credit risk-weighted amount 71,014 69,933



The credit risk-weighted amount is calculated in accordance with the Banking (Capital) Rules. The amount is
dependent upon the status of the counterparty and the maturity characteristics of each type of contract.


As of 30 June 2026, there is a litigation involving the handling of customer fund transfer instructions for which legal
proceedings are ongoing. This matter is disclosed as a contingent liability in accordance with HKAS 37 “Provisions,
Contingent Liabilities and Contingent Assets”, please refer to Note 38 for details.


36. Capital commitments
The Group has the following outstanding capital commitments not provided for in this interim financial information:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Authorised and contracted for but not provided for 767 795
Authorised but not contracted for 143 154

910 949



The above capital commitments mainly relate to commitments to purchase computer equipment and software, and
to renovate the Group’s premises.




102 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

37. Operating lease commitments
As lessor
The Group has contracted with tenants for the following future minimum lease receivables under non-cancellable
operating leases:


At 30 June At 31 December
2026 2025
HK$’m HK$’m

Properties and equipment
– Not later than one year 357 357
– One to two years 235 239
– Two to three years 76 106
– Three to four years 6 –
– Four to five years – –

674 702



The Group leases its investment properties under operating lease arrangements, with leases typically for a period
from one to three years. The terms of the leases generally require the tenants to pay security deposits and provide
for rent adjustments according to the prevailing market conditions upon the lease renewal.


38. Litigation
The Group has been served a number of claims and counterclaims by various independent parties. These claims
and counterclaims are in relation to the normal commercial activities of the Group.


As of 30 June 2026, based on the assessment of potential liabilities related to the aforementioned matters and the
advice provided by legal counsel, no material provision was made against these claims and counterclaims because
the Management believes that the Group has meritorious defences against the claimants or these claims and
counterclaims are still at an early stage of litigation or arbitration process that the estimation of ultimate outcomes
involves significant uncertainties. Among these matters, there is a litigation involving the handling of customer
fund transfer instructions for which legal proceedings are ongoing, and the trial is scheduled to take place after the
issuance of the interim financial information. This matter is disclosed as a contingent liability in accordance with
HKAS 37 “Provisions, Contingent Liabilities and Contingent Assets” and it is not practicable at this time for the
Group to predict the resolution of the matter. Should the ultimate outcomes of these matters differ from the initial
estimation, such differences will impact the profit or loss in the period during which such a determination is made.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 103
NOTES TO THE INTERIM FINANCIAL INFORMATION

39. Segmental reporting
The Group manages the business mainly from a business segment perspective and over 90% of the Group’s
revenues, profits before tax and assets are derived from Hong Kong. Currently, four operating segments are
identified: Personal Banking, Corporate Banking, Treasury and Insurance. The classification of the Group’s operating
segments is based on customer segment and product type, which is aligned with the RPC (relationship, product
and channel) management model of the Group.


Both Personal Banking and Corporate Banking provide general banking services including various deposit products,
overdrafts, loans, credit cards, trade related products and other credit facilities, investment and insurance products,
and foreign currency and derivative products. Personal Banking mainly serves retail customers and small enterprises,
while Corporate Banking mainly deals with corporate customers. Treasury manages the funding and liquidity, and
the interest rate and foreign exchange positions of the Group in addition to proprietary trades. The Insurance
segment represents business mainly relating to life insurance products, including individual life insurance and group
life insurance products. “Others” mainly represents the Group’s holdings of premises, investment properties, equity
investments, certain interests in associates and joint ventures and the businesses of the Southeast Asian entities.


Measurement of segment assets, liabilities, income, expenses, results and capital expenditure is based on the
Group’s accounting policies. The segment information includes items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Inter-segment funding is charged according to the internal
funds transfer pricing mechanism of the Group, which is primarily based on market rates with the consideration
of specific features of the product.


As the Group derives a majority of revenue from interest and the senior management relies primarily on net interest
income in managing the business, interest income and expense for all reportable segments are presented on a net
basis. Under the same consideration, insurance service result is also presented on a net basis.


Several products/businesses have been reclassified among operating segments in accordance with the latest
management model of the Group. Comparative amounts have been restated to conform with current period
presentation.




104 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

39. Segmental reporting (continued)

Personal Corporate
Banking Banking Treasury Insurance Others Subtotal Eliminations Consolidated
HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m

Half-year ended 30 June 2026
Net interest (expense)/income
– External (1,431) 2,988 21,982 2,885 1,758 28,182 – 28,182
– Inter-segment 11,248 5,573 (16,902) (8) 89 – – –

9,817 8,561 5,080 2,877 1,847 28,182 – 28,182
Net fee and commission income/(expense)
– External 6,229 2,132 175 (2,759) 202 5,979 – 5,979
– Inter-segment (2,697) 4 81 2,754 375 517 (517) –

3,532 2,136 256 (5) 577 6,496 (517) 5,979
Insurance service result 355 – – 1,173 – 1,528 105 1,633
Net trading gain 563 892 3,887 910 564 6,816 9 6,825
Net (loss)/gain on other financial instruments
at fair value through profit or loss (14) (1) 6 2,412 – 2,403 1 2,404
Net gain on other financial instruments – 3 610 14 4 631 – 631
Insurance finance expenses (20) – – (6,063) – (6,083) – (6,083)
Other operating income 2 – 16 12 829 859 (527) 332

Net operating income before
impairment allowances 14,235 11,591 9,855 1,330 3,821 40,832 (929) 39,903
Net charge of impairment allowances (102) (2,246) – (1) (123) (2,472) – (2,472)

Net operating income 14,133 9,345 9,855 1,329 3,698 38,360 (929) 37,431
Operating expenses (5,250) (2,083) (929) (46) (1,601) (9,909) 929 (8,980)

Operating profit 8,883 7,262 8,926 1,283 2,097 28,451 – 28,451
Net gain from disposal of/fair value adjustments
on investment properties – – – – 52 52 – 52
Net (loss)/gain from properties, plant and
equipment and other assets (1) – – – 254 253 – 253
Share of results after tax of associates and
joint ventures 2 – – – 14 16 – 16

Profit before taxation 8,884 7,262 8,926 1,283 2,417 28,772 – 28,772

At 30 June 2026
ASSETS
Segment assets 693,544 1,086,765 2,541,386 279,249 230,983 4,831,927 (59,413) 4,772,514
Interests in associates and joint ventures 108 – 4 – 745 857 – 857

693,652 1,086,765 2,541,390 279,249 231,728 4,832,784 (59,413) 4,773,371

LIABILITIES
Segment liabilities 1,503,821 1,503,886 1,012,867 268,637 177,756 4,466,967 (59,413) 4,407,554

Half-year ended 30 June 2026
Other information
Capital expenditure 27 12 1 46 1,463 1,549 – 1,549
Depreciation and amortisation 576 177 87 43 532 1,415 (27) 1,388




Interim Report 2026 BOC Hong Kong (Holdings) Limited 105
NOTES TO THE INTERIM FINANCIAL INFORMATION

39. Segmental reporting (continued)

Personal Corporate
Banking Banking Treasury Insurance Others Subtotal Eliminations Consolidated
HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m HK$’m

Half-year ended 30 June 2025
Net interest (expense)/income
– External (4,655) 2,206 23,129 2,622 1,817 25,119 – 25,119
– Inter-segment 13,714 6,293 (20,005) (61) 59 – – –

9,059 8,499 3,124 2,561 1,876 25,119 – 25,119
Net fee and commission income/(expense)
– External 5,526 2,184 111 (1,770) 294 6,345 – 6,345
– Inter-segment (1,734) 2 70 1,768 330 436 (436) –

3,792 2,186 181 (2) 624 6,781 (436) 6,345
Insurance service result 247 – – 775 – 1,022 81 1,103
Net trading gain 476 1,024 8,906 1,470 351 12,227 10 12,237
Net gain/(loss) on other financial instruments
at fair value through profit or loss 29 – (305) 3,802 – 3,526 1 3,527
Net gain/(loss) on other financial instruments – 1 (1,001) (116) – (1,116) – (1,116)
Insurance finance expenses – – – (7,375) – (7,375) – (7,375)
Other operating income 6 – 10 9 871 896 (599) 297

Net operating income before
impairment allowances 13,609 11,710 10,915 1,124 3,722 41,080 (943) 40,137
Net (charge)/reversal of impairment allowances (194) (3,080) (29) 8 (23) (3,318) – (3,318)

Net operating income 13,415 8,630 10,886 1,132 3,699 37,762 (943) 36,819
Operating expenses (4,984) (1,931) (844) (44) (1,556) (9,359) 943 (8,416)

Operating profit 8,431 6,699 10,042 1,088 2,143 28,403 – 28,403
Net loss from disposal of/fair value adjustments
on investment properties – – – – (991) (991) – (991)
Net loss from properties, plant and equipment
and other assets (2) – – – (124) (126) – (126)
Share of results after tax of associates and
joint ventures 8 – – 10 (20) (2) – (2)

Profit before taxation 8,437 6,699 10,042 1,098 1,008 27,284 – 27,284

At 31 December 2025
ASSETS
Segment assets 662,300 1,018,033 2,417,462 240,200 215,630 4,553,625 (59,231) 4,494,394
Interests in associates and joint ventures 106 – 4 – 734 844 – 844

662,406 1,018,033 2,417,466 240,200 216,364 4,554,469 (59,231) 4,495,238

LIABILITIES
Segment liabilities 1,463,092 1,455,978 890,466 230,673 148,977 4,189,186 (59,231) 4,129,955

Half-year ended 30 June 2025
Other information
Capital expenditure 28 3 – 32 877 940 – 940
Depreciation and amortisation 546 163 79 44 563 1,395 (21) 1,374




106 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

40. Assets pledged as security
As at 30 June 2026, the liabilities of the Group amounting to HK$29,357 million (31 December 2025: HK$58,002
million) were secured by assets deposited with central depositories to facilitate settlement operations. In addition, the
liabilities of the Group amounting to HK$127,324 million (31 December 2025: HK$85,300 million) were secured by
debt securities related to sale and repurchase arrangements. The amount of assets pledged by the Group to secure
these liabilities was HK$155,447 million (31 December 2025: HK$143,839 million) mainly included in “Financial
assets at fair value through profit or loss” and “Investment in securities”.


In addition, the Group pledges securities amounting to HK$5,694 million (31 December 2025: HK$5,644 million)
as margin for derivative transactions and for securities borrowing arrangements.


41. Significant related party transactions
The Group is subject to the control of the State Council of the PRC Government through China Investment
Corporation (“CIC”), its wholly-owned subsidiary Central Huijin Investment Ltd. (“Central Huijin”), and BOC in
which Central Huijin has controlling equity interests.


(a) Transactions with the parent companies and the other companies controlled by the
parent companies
General information of the parent companies:


The Group is controlled by BOC. Central Huijin is the controlling entity of BOC, and it is a wholly-owned
subsidiary of CIC which is a wholly state-owned company engaging in foreign currency investment
management.


Central Huijin has controlling equity interests in certain other entities in the PRC.


The Group enters into banking and other transactions with these entities in the normal course of business
which include loans, investment securities, money market and reinsurance transactions.


The majority of transactions with BOC arise from money market activities and are summarised as below:


Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Income statement items
– Interest income 1,721 1,451
– Interest expense 1,223 1,160



At 30 June At 31 December
2026 2025
HK$’m HK$’m

Balance sheet items
– Cash and balances and placements with
banks and other financial institutions 163,821 140,086
– Other assets 5,929 8,381
– Investment in securities 6,872 9,234
– Deposits and balances from banks and
other financial institutions 91,573 89,401



Interim Report 2026 BOC Hong Kong (Holdings) Limited 107
NOTES TO THE INTERIM FINANCIAL INFORMATION

41. Significant related party transactions (continued)
(a) Transactions with the parent companies and the other companies controlled by the
parent companies (continued)
Related party transactions with subsidiaries of BOC are summarised as below:


Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Income statement item
– Fee and commission expense 1,540 880



At 30 June At 31 December
2026 2025
HK$’m HK$’m

Balance sheet items
– Cash and balances and placements with banks and
other financial institutions 455 1,198
– Advances and other accounts 9,543 9,813
– Deposits and balances from banks and
other financial institutions 7,019 9,030



The acquisition of Bank of China International Limited and disposal of Po Sang Securities Limited took place
on 30 January 2026. These transactions with subsidiary of BOC constitute related party transactions as well
as connected transactions as defined in Chapter 14A of the Listing Rules. Announcement had been made
by the Company on 24 January 2025 and 28 January 2026.


For details of POCI advances and other accounts purchased from BOC, please refer to Note 3.1.


For details of subordinated liabilities granted by BOC, please refer to Note 32.


Except as disclosed above, other transactions with BOC and with companies controlled by BOC are not
considered significant.




108 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

41. Significant related party transactions (continued)
(b) Transactions with government authorities, agencies, affiliates and other state
controlled entities
The Group is subject to the control of the State Council of the PRC Government through CIC and Central
Huijin, which also directly or indirectly controls a significant number of entities through its government
authorities, agencies, affiliates and other state controlled entities. The Group enters into banking transactions
with government authorities, agencies, affiliates and other state controlled entities in the normal course of
business at commercial terms.


These transactions include, but are not limited to, the following:


– lending, provision of credits and guarantees, and deposit taking;


– inter-bank balance taking and placing;


– sales, purchases, underwriting and redemption of bonds issued by other state controlled entities;


– rendering of foreign exchange, remittance and investment related services;


– provision of fiduciary activities; and


– purchase of utilities, transport, telecommunication and postage services.


(c) Summary of transactions entered into during the ordinary course of business with
associates, joint ventures and other related parties
The Group enters into banking and other transactions with associates, joint ventures and other related
parties which include but are not limited to loans, investment securities and money market transactions.
The aggregate income/expenses and balances arising from related party transactions with these entities are
summarised as follows:


Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Income statement item
Associates and joint ventures
– Fee and commission income 12 7



At 30 June At 31 December
2026 2025
HK$’m HK$’m

Balance sheet items
Associates and joint ventures
– Investment in securities 1,095 1,072
– Deposits and balances from banks and
other financial institutions 70 75



Except as disclosed above, other transactions with associates, joint ventures and other related parties of the
Group are not considered significant.

Interim Report 2026 BOC Hong Kong (Holdings) Limited 109
NOTES TO THE INTERIM FINANCIAL INFORMATION

41. Significant related party transactions (continued)
(d) Key management personnel
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the Group, directly or indirectly, including directors and senior management.
The Group accepts deposits from and grants loans and credit facilities to key management personnel in
the ordinary course of business. During both the current and prior periods, no significant transaction was
conducted with key management personnel of the Company and its holding companies, as well as parties
related to them.


The compensation of key management personnel is detailed as follows:


Half-year ended Half-year ended
30 June 2026 30 June 2025
HK$’m HK$’m

Salaries and other short-term employee benefits 15 15



42. International claims
The below analysis is prepared with reference to the completion instructions for the HKMA return of international
banking statistics. International claims are exposures to counterparties on which the ultimate risk lies based on
the locations of the counterparties after taking into account the transfer of risk, and represent the sum of cross-
border claims in all currencies and local claims in foreign currencies. For a claim guaranteed by a party situated in
a location different from the counterparty, the risk will be transferred to the location of the guarantor. For a claim
on an overseas branch of a bank whose head office is located in another location, the risk will be transferred to
the location where its head office is located.


Claims on individual countries/regions, after risk transfer, amounting to 10% or more of the aggregate international
claims of the Group in either period/year end are shown as follows:


At 30 June 2026

Non-bank private sector

Non-bank
Official financial Non-financial
Banks sector institutions private sector Total
HK$’m HK$’m HK$’m HK$’m HK$’m

Chinese Mainland 381,443 295,914 22,730 82,971 783,058
Hong Kong, China 17,343 26,159 41,370 457,896 542,768
United States 28,117 89,457 104,784 11,112 233,470



At 31 December 2025

Non-bank private sector

Non-bank
Official financial Non-financial
Banks sector institutions private sector Total
HK$’m HK$’m HK$’m HK$’m HK$’m

Chinese Mainland 334,238 314,391 16,186 83,715 748,530
Hong Kong, China 16,792 27,749 35,321 386,615 466,477
United States 34,025 174,526 92,433 11,053 312,037

110 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

43. Non-bank Mainland exposures
The analysis of non-bank Mainland exposures is based on the categories of non-bank counterparties and the types
of direct exposures with reference to the completion instructions for the HKMA return of Mainland activities, which
includes the Mainland exposures extended by BOCHK’s Hong Kong office only.


At 30 June 2026

On-balance Off-balance
Items in sheet sheet Total
the HKMA exposure exposure exposure
return HK$’m HK$’m HK$’m

Central government, central
government-owned entities and
their subsidiaries and joint ventures 1 390,482 21,302 411,784
Local governments, local
government-owned entities and
their subsidiaries and joint ventures 2 70,974 4,987 75,961
PRC nationals residing in Mainland or
other entities incorporated in Mainland
and their subsidiaries and joint ventures 3 118,625 13,011 131,636
Other entities of central government
not reported in item 1 above 4 41,854 9,628 51,482
Other entities of local governments
not reported in item 2 above 5 – 44 44
PRC nationals residing outside Mainland
or entities incorporated outside
Mainland where the credit is granted
for use in Mainland 6 44,214 8,001 52,215
Other counterparties where
the exposures are considered to
be non-bank Mainland exposures 7 1,652 – 1,652

Total 8 667,801 56,973 724,774

Total assets after provision 9 4,377,324

On-balance sheet exposures
as percentage of total assets 10 15.26%




Interim Report 2026 BOC Hong Kong (Holdings) Limited 111
NOTES TO THE INTERIM FINANCIAL INFORMATION

43. Non-bank Mainland exposures (continued)

At 31 December 2025

On-balance Off-balance
Items in sheet sheet Total
the HKMA exposure exposure exposure
return HK$’m HK$’m HK$’m

Central government, central
government-owned entities and
their subsidiaries and joint ventures 1 366,846 27,270 394,116
Local governments, local
government-owned entities and
their subsidiaries and joint ventures 2 69,807 6,297 76,104
PRC nationals residing in Mainland or
other entities incorporated in Mainland
and their subsidiaries and joint ventures 3 102,842 31,258 134,100
Other entities of central government
not reported in item 1 above 4 34,478 6,517 40,995
Other entities of local governments
not reported in item 2 above 5 – 42 42
PRC nationals residing outside Mainland
or entities incorporated outside Mainland
where the credit is granted
for use in Mainland 6 44,284 10,543 54,827
Other counterparties where
the exposures are considered to
be non-bank Mainland exposures 7 1,376 – 1,376

Total 8 619,633 81,927 701,560

Total assets after provision 9 4,150,235

On-balance sheet exposures
as percentage of total assets 10 14.93%




112 BOC Hong Kong (Holdings) Limited Interim Report 2026
NOTES TO THE INTERIM FINANCIAL INFORMATION

44. Application of merger accounting
On 30 January 2026, BOCHK acquired all the issued shares of Bank of China International Limited for a total
consideration of HK$2,099 million in cash, which becomes an indirect wholly-owned subsidiary of the Company.
Bank of China International Limited and BOCHK are both under the common control of BOC before and after the
combination. The Group has applied the merger accounting method in accordance with the Accounting Guideline
5 “Merger Accounting for Common Control Combinations” issued by the HKICPA in the preparation of financial
statements. The comparative amounts for the year 2025 have been restated accordingly as if the combination had
occurred for the year 2025.


The statements of the adjustments to the consolidated equity as at 30 June 2026 and 31 December 2025 are as
follows:


At 30 June 2026

Entity under
Before common After
combination control Adjustment combination
HK$’m HK$’m HK$’m HK$’m

Share capital 52,864 1,000 (1,000) 52,864
Merger reserve – – (1,090) (1,090)
Retained earnings and other reserves 307,824 777 (9) 308,592

360,688 1,777 (2,099) 360,366
Non-controlling interests 5,451 – – 5,451

366,139 1,777 (2,099) 365,817



At 31 December 2025

Entity under
Before common After
combination control Adjustment combination
HK$’m HK$’m HK$’m HK$’m

Share capital 52,864 1,000 (1,000) 52,864
Merger reserve – – 1,009 1,009
Retained earnings and other reserves 305,664 808 (9) 306,463

358,528 1,808 – 360,336
Non-controlling interests 4,947 – – 4,947

363,475 1,808 – 365,283




Interim Report 2026 BOC Hong Kong (Holdings) Limited 113
NOTES TO THE INTERIM FINANCIAL INFORMATION

45. Compliance with HKAS 34
The unaudited interim financial information for the first half of 2026 complies with HKAS 34 “Interim Financial
Reporting” issued by the HKICPA.


46. Statutory accounts
The financial information relating to the year ended 31 December 2025 that is included in this Interim Report as
comparative information does not constitute the Company’s statutory annual consolidated financial statements for
that year but is derived from those financial statements. Further information relating to these statutory financial
statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is
as follows:


The Company has delivered the financial statements for the year ended 31 December 2025 to the Registrar of
Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance.


The Company’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 sections 406(2), 407(2) or (3) of the Hong Kong Companies
Ordinance.




114 BOC Hong Kong (Holdings) Limited Interim Report 2026
CORPORATE GOVERNANCE AND
OTHER INFORMATION
1. Corporate information
Board of Directors Share Registrar
Chairman Computershare Hong Kong Investor Services Limited
GE Haijiao# 17M Floor
Hopewell Centre
Vice Chairmen
183 Queen’s Road East
ZHANG Hui#
Wan Chai, Hong Kong
SUN Yu

Directors ADR Depositary Bank
CAI Zhao# Citibank, N.A.
CHOI Koon Shum* 388 Greenwich Street
FUNG Yuen Mei Anita*
26th Floor
LAW Yee Kwan Quinn*
New York, NY 10013
LEE Sunny Wai Kwong*
LIAO Cheung Kong Martin* United States of America
LIP Sai Wo*
MA Si Hang Frederick* Credit Ratings (Long Term)
Standard & Poor’s A+
#
Non-executive Directors
* Independent Non-executive Directors Moody’s Investors Service Aa3
Fitch Ratings A+
Senior Management
Index Constituent
Chief Executive
SUN Yu The Company is a constituent of the following
indices:
Deputy Chief Executives Hang Seng Index Series
XING Guiwei Hang Seng Corporate Sustainability Index Series
WANG Huabin
Hang Seng High Dividend Yield Index Series
CHAN Man
HSI ESG Index
LI Tong
MSCI Index Series

Chief Risk Officer FTSE Index Series
WANG Chunfei
Stock Codes
Chief Financial Officer
Ordinary shares:
LIU Chang
The Stock Exchange of 2388 (HKD Counter)
Hong Kong Limited 82388 (RMB Counter)
Company Secretary
Reuters 2388.HK (HKD Counter)
HUANG Xuefei 82388.HK (RMB Counter)
Bloomberg 2388 HK (HKD Counter)
Registered Office 82388 HK (RMB Counter)
53rd Floor
Bank of China Tower Level 1 ADR Programme:
1 Garden Road CUSIP No. 096813209
Hong Kong OTC Symbol BHKLY


Website
www.bochk.com




Interim Report 2026 BOC Hong Kong (Holdings) Limited 115
CORPORATE GOVERNANCE AND
OTHER INFORMATION
2. Second interim dividend, special dividend and closure of register of
members
The Board has declared a second interim dividend of HK$0.2900 per share (2025: HK$0.2900) and a special dividend
of HK$0.2388 per share (2025: Nil), payable on Friday, 25 September 2026 to shareholders whose names appear
on the Register of Members of the Company on Friday, 18 September 2026.


The Register of Members of the Company will be closed, for the purpose of determining shareholders’ entitlement
to the second interim dividend and the special dividend, from Monday, 14 September 2026 to Friday, 18 September
2026 (both days inclusive), during which period no transfer of shares will be registered. In order to qualify for
the second interim dividend and the special dividend, shareholders should ensure that all transfer documents,
accompanied by the relevant share certificates, are lodged with the Company’s Share Registrar, Computershare
Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East,
Wan Chai, Hong Kong, not later than 4:30 p.m. on Friday, 11 September 2026. Shares of the Company will be
traded ex-dividend as from Thursday, 10 September 2026.


3. Interest of substantial shareholders
The register maintained by the Company pursuant to section 336 of the SFO recorded that, as at 30 June 2026, the
following parties had the following interests (as defined in the SFO) in the Company set opposite their respective
names:


Approximate %
Number of shares held of the
Name of Corporation in the Company total issued shares

Central Huijin 6,984,274,213 66.06%
BOC 6,984,274,213 66.06%
BOCHKG 6,984,175,056 66.06%
BOC (BVI) 6,984,175,056 66.06%


Notes:
1. Following the reorganisation of BOC in August 2004, Central Huijin holds the controlling equity capital of BOC on behalf of the State.
Accordingly, for the purpose of the SFO, Central Huijin is deemed to have the same interests in the Company as BOC.


2. BOC holds the entire issued shares of BOCHKG, which in turn holds the entire issued shares of BOC (BVI). Accordingly, BOC and BOCHKG
are deemed to have the same interests in the Company as BOC (BVI) for the purpose of the SFO. BOC (BVI) beneficially held 6,984,175,056
shares of the Company.


3. BOC holds the entire issued shares of BOCI, which in turn holds the entire issued shares of BOCI Asia Limited and BOCI Financial Products
Limited. Accordingly, BOC is deemed to have the same interests in the Company as BOCI Asia Limited and BOCI Financial Products Limited
for the purpose of the SFO. BOCI Asia Limited had an interest in 24,479 shares of the Company and an interest in 72,000 shares held under
physically settled equity derivatives while BOCI Financial Products Limited had an interest in 2,678 shares of the Company.



All the interests stated above represented long positions. Apart from the disclosure above, according to the register
maintained by the Company pursuant to section 336 of the SFO, BOCI Financial Products Limited had an interest
in 143,522 shares which represented short positions. BOC and Central Huijin are deemed to be interested in such
number of shares for the purpose of the SFO. Save as disclosed, no other interests or short positions were recorded
in the register maintained by the Company under section 336 of the SFO as at 30 June 2026.




116 BOC Hong Kong (Holdings) Limited Interim Report 2026
CORPORATE GOVERNANCE AND
OTHER INFORMATION
4. Directors’ and Chief Executive’s interests in shares, underlying shares and
debentures
As at 30 June 2026, the interests and short positions of the Directors, Chief Executive and their respective associates
in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the
meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company pursuant to section
352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for
Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules (the “Model
Code”) are set out below:


Associated corporation of the Company:
Bank of China Limited (H Shares)


Number of shares/underlying shares held Approximate %
of the
Personal Family Corporate total issued
Name of Director interests interests interests Total H shares

SUN Yu 10,000 – – 10,000 0.00%1
CHOI Koon Shum 4,000,000 40,0002 1,120,0003 5,160,000 0.01%
FUNG Yuen Mei Anita 550,000 – – 550,000 0.00%4
LIP Sai Wo 201,000 – – 201,000 0.00%5


Notes:
1. Such shares held by Mr SUN Yu represent approximately 0.00001% of the total issued H shares of BOC.


2. Such shares are held by the spouse of Dr CHOI Koon Shum.


3. Dr CHOI Koon Shum is deemed to be interested in the 1,120,000 shares held through Choi Koon Shum Charitable Foundation Limited by
virtue of the SFO.


4. Such shares held by Mdm FUNG Yuen Mei Anita represent approximately 0.0007% of the total issued H shares of BOC.


5. Such shares held by Mr LIP Sai Wo represent approximately 0.0002% of the total issued H shares of BOC.


All the interests stated above represented long positions. Save as disclosed above, as at 30 June 2026, none of the
Directors, Chief Executive or their respective associates had any interests or short positions in the shares, underlying
shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the
SFO) as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO or as
otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 117
CORPORATE GOVERNANCE AND
OTHER INFORMATION
5. Changes of information in respect of Directors
In accordance with Rule 13.51B(1) of the Listing Rules, save as disclosed in the 2025 Annual Report, the changes
in information required to be disclosed by Directors pursuant to paragraphs (a) to (e) and (g) of Rule 13.51(2) of
the Listing Rules from 1 January 2026 to 28 August 2026 (being the approval date of this Interim Report) are set
out below:


(a) Mr ZHANG Hui, Vice Chairman and Non-executive Director of the Company, has been appointed as Chief
Compliance Officer of BOC with effect from 13 February 2026.


(b) Mdm CHENG Eva retired as Independent Non-executive Director, and ceased to be Chairlady of Sustainability
Committee and member of each of Audit Committee as well as Strategy and Budget Committee of the
Company and BOCHK with immediate effect from the conclusion of the respective annual general meetings
held on 25 June 2026.


(c) Prof LEE Sunny Wai Kwong, Independent Non-executive Director of the Company, has been appointed
as Chairman of Sustainability Committee of the Company and BOCHK with immediate effect from the
conclusion of the respective annual general meetings held on 25 June 2026. He ceased to be Council
Member of Hong Kong Professionals and Senior Executives Association Limited with effect from 24 March
2026 and has been appointed as Professor of Practice of City University of Hong Kong (“CityUHK”) and
ceased to be Adjunct Professor of CityUHK, both with effect from 1 July 2026.


The biographies of Directors are available under the section headed “About Us” on the Company’s website at
www.bochk.com.


6. Purchase, sale or redemption of the Company’s shares
During the period under review, neither the Company nor any of its subsidiaries has purchased, sold or redeemed
any of the Company’s shares.


7. Audit Committee
The Audit Committee consists of Independent Non-executive Directors only. It is chaired by Mr LIP Sai Wo. Other
members include Mdm CHENG Eva (retired on 25 June 2026), Mdm FUNG Yuen Mei Anita, Mr LAW Yee Kwan
Quinn and Prof LEE Sunny Wai Kwong.


Based on the principle of independence, the Audit Committee assists the Board in monitoring the financial reports,
internal control, internal audit and external audit of the Group.


At the request of the Audit Committee of the Company, the Group’s external auditor has carried out a review
of the interim financial information in accordance with the Hong Kong Standard on Review Engagements 2410
“Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the
HKICPA. The Audit Committee has reviewed with the Management the accounting principles and practices adopted
by the Group and discussed auditing, internal control and financial reporting matters including the review of the
unaudited interim reports.




118 BOC Hong Kong (Holdings) Limited Interim Report 2026
CORPORATE GOVERNANCE AND
OTHER INFORMATION
8. Compliance with the “Corporate Governance Code”
The Company is committed to embracing and enhancing good corporate governance principles and practices.
During the period under review, the Company has been in full compliance with all code provisions as set out in the
Corporate Governance Code contained in Appendix C1 of the Listing Rules (the “Corporate Governance Code”). The
Company has also complied with nearly all the recommended best practices set out in the Corporate Governance
Code throughout the period. For further details, please refer to the section titled “Corporate Governance” contained
in the Annual Report 2025 of the Company.


9. Compliance with the Codes for Securities Transactions by Directors
The Company has established and implemented the Code for Securities Transactions by Directors (the “Company’s
Code”) to govern the Directors’ dealings in securities transactions of the Company. Terms of the Company’s Code
are more stringent than the mandatory standards set out in the Model Code. Apart from the Directors’ dealings
in the securities of the Company, the Company’s Code has also been applied to the Directors’ dealings in the
securities of BOC and its listed close associates. Upon specific enquiry by the Company, all Directors confirmed
that they had strictly complied with the provisions as set out in both the Company’s Code and the Model Code
throughout the period under review.


10. Compliance with the Banking (Disclosure) Rules and the Listing Rules
This unaudited Interim Report complies with the applicable requirements set out in the Banking (Disclosure) Rules
under the Banking Ordinance and the applicable financial disclosure provisions of the Listing Rules.



11. Interim Report
This Interim Report is available in both English and Chinese. A copy prepared in the language different from that
in which you have received is available by writing to the Company’s Share Registrar, Computershare Hong Kong
Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong or email
to bochk.ecom@computershare.com.hk.


This Interim Report is also available (in both English and Chinese) on the Company’s website at www.bochk.com
and the Stock Exchange’s website at www.hkexnews.hk. You are encouraged to access the Interim Report and
other corporate communications of the Company through these websites in lieu of receiving printed copies to help
protect the environment. We believe that it is also the most efficient and convenient method of communication
with our shareholders.


If you have any queries about how to obtain copies of this Interim Report or how to access those corporate
communications on the Company’s website, please call the Company’s hotline at (852) 2846 2700.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 119
CORPORATE GOVERNANCE AND
OTHER INFORMATION
12. Reconciliation between HKFRS Accounting Standards vs IFRS Accounting
Standards/CASs
The Company understands that BOC, an intermediate holding company as well as controlling shareholder of
the Company, will prepare and disclose consolidated financial information in accordance with IFRS Accounting
Standards and CASs for which the Company and its subsidiaries will form part of the interim financial information.
The requirements of CASs have substantially converged with HKFRS Accounting Standards and IFRS Accounting
Standards.


The consolidated financial information of “BOC Hong Kong Group” for the periods disclosed by BOC in its interim
financial information is not the same as the interim consolidated financial information of the Group for the periods
published by the Company pursuant to applicable laws and regulations in Hong Kong. There are two reasons for this.


First, the definitions of “BOC Hong Kong Group” (as adopted by BOC for the purpose of its own financial disclosure)
and “Group” (as adopted by the Company in preparing and presenting its consolidated financial information) are
different: “BOC Hong Kong Group” refers to BOCHKG and its subsidiaries, whereas “Group” refers to the Company
and its subsidiaries (see the below organisation chart). Though there is difference in definitions between “BOC
Hong Kong Group” and “Group”, their financial results for the periods presented are substantially the same. This
is because BOCHKG and BOC (BVI) are holding companies only and have no substantive operations of their own.


BOC
100%

BOCHKG

100%

BOC (BVI)

approximately 66%
The Company


Second, the Group has prepared its interim financial information in accordance with HKFRS Accounting Standards;
whereas the consolidated financial information reported to BOC is prepared in accordance with IFRS Accounting
Standards and CASs respectively. There is a difference in the election of subsequent measurement basis of bank
premises by the Group and by BOC respectively.



The Board considers that the best way to ensure that shareholders and the investing public understand the material
differences between the interim consolidated financial information of the Group published by the Company on the
one hand, and the consolidated financial information of BOC Hong Kong Group disclosed by BOC in its interim
financial information on the other hand, is to present reconciliations of the profit after tax/net assets of the Group
prepared under HKFRS Accounting Standards to the profit after tax/net assets of the Group prepared under IFRS
Accounting Standards/CASs respectively for the periods presented.




120 BOC Hong Kong (Holdings) Limited Interim Report 2026
CORPORATE GOVERNANCE AND
OTHER INFORMATION
12. Reconciliation between HKFRS Accounting Standards vs IFRS Accounting
Standards/CASs (continued)
The major differences which arise from the difference in measurement basis relate to the following:


(a) Restatement of carrying value of bank premises
The Company has elected for a revaluation model rather than cost model to account for bank premises under
HKFRS Accounting Standards. On the contrary, BOC has elected for the cost model for bank premises under
IFRS Accounting Standards and CASs. Therefore, adjustments have been made to the carrying value of bank
premises as well as to re-calculate the depreciation charge and disposal gain/loss under IFRS Accounting
Standards and CASs.


(b) Deferred tax adjustments
These represent the deferred tax effect of the aforesaid adjustments.


Profit after tax/net assets reconciliation
HKFRS Accounting Standards vs IFRS Accounting Standards/CASs


Profit after tax Net assets

Half-year ended Half-year ended At 30 June At 31 December
30 June 2026 30 June 2025 2026 2025
HK$’m HK$’m HK$’m HK$’m

Profit after tax/net assets of
BOC Hong Kong (Holdings) Limited
prepared under HKFRS Accounting
Standards 24,356 22,804 365,817 365,283

Add: IFRS Accounting Standards/CASs
adjustments
Restatement of carrying value of
bank premises 64 489 (17,838) (20,117)
Deferred tax adjustments 9 (41) 3,064 3,401

Profit after tax/net assets of
BOC Hong Kong (Holdings) Limited
prepared under IFRS Accounting
Standards/CASs 24,429 23,252 351,043 348,567



13. Regulatory Disclosures
The Regulatory Disclosures, together with the disclosures in this Interim Report, contained all the disclosures
required by the Banking (Disclosure) Rules and Financial Institutions (Resolution) (Loss-absorbing Capacity
Requirements – Banking Sector) Rules issued by the HKMA. The Regulatory Disclosures is available under the
section “Regulatory Disclosures” on BOCHK’s website at www.bochk.com.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 121
INDEPENDENT REVIEW REPORT

Ernst & Young
27/F, One Taikoo Place
979 King’s Road
Quarry Bay, Hong Kong



To the Board of Directors of BOC Hong Kong (Holdings) Limited
(Incorporated in Hong Kong with limited liability)


Introduction
We have reviewed the interim financial information set out on pages 39 to 114, which comprises the condensed
consolidated balance sheet of BOC Hong Kong (Holdings) Limited (the “Company”) and its subsidiaries (the “Group”)
as at 30 June 2026 and the related condensed consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated cash flow
statement for the six-month period then ended, and other explanatory notes. The Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be
in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting
(“HKAS 34”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The directors of the Company
are responsible for the preparation and presentation of this interim financial information in accordance with HKAS 34. Our
responsibility is to express a conclusion on this interim financial information based on our review. Our report is made solely
to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume
responsibility towards or accept liability to any other person for the contents of this report.


Scope of Review
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity as issued by the HKICPA. A review of interim financial
information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with
Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.


Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is
not prepared, in all material respects, in accordance with HKAS 34.




Ernst & Young
Certified Public Accountants
Hong Kong
28 August 2026




122 BOC Hong Kong (Holdings) Limited Interim Report 2026
APPENDIX

Subsidiaries of the Company
The particulars of subsidiaries are as follows:


Place and date of
incorporation/ Issued
Name operation share capital Interest held Principal activities

Directly held:
Bank of China (Hong Kong) Hong Kong, China HK$43,042,840,858 100.00% Banking business
Limited 16 October 1964

BOC Group Life Assurance Hong Kong, China HK$3,538,000,000 51.00% Life insurance business
Company Limited 12 March 1997

BOCHK Asset Management Cayman Islands HK$383,000,000 100.00% Investment holding
(Cayman) Limited 7 October 2010



Indirectly held:
BOC Credit Card (International) Hong Kong, China HK$565,000,000 100.00% Credit card services
Limited 9 September 1980

BOC Group Trustee Company Hong Kong, China HK$200,000,000 66.00% Investment holding
Limited 1 December 1997

BOCI-Prudential Trustee Limited Hong Kong, China HK$300,000,000 42.24%* Trustee services
11 October 1999

Bank of China (Malaysia) Berhad Malaysia RM814,734,790 100.00% Banking business
14 April 2000

BOC Nominees (Asing) Sdn. Bhd. Malaysia RM1 100.00% Nominee services
30 March 2026

BOC Nominees (Tempatan) Sdn. Malaysia RM1 100.00% Nominee services
Bhd. 30 March 2026

Bank of China (Thai) Public Thailand Baht10,000,000,000 100.00% Banking business
Company Limited 1 April 2014

Bank of China International Hong Kong, China HK$1,000,000,000 100.00% Banking business
Limited 2 March 1979

Bank of China (Hong Kong) Hong Kong, China HK$2 100.00% Nominee services
Nominees Limited 1 October 1985

Bank of China (Hong Kong) Hong Kong, China HK$3,000,000 100.00% Trustee and agency
Trustees Limited 6 November 1987 services




Interim Report 2026 BOC Hong Kong (Holdings) Limited 123
APPENDIX

Subsidiaries of the Company (continued)
Place and date of
incorporation/ Issued
Name operation share capital Interest held Principal activities

BOC Digital Services (Nanning) Nanning, China Registered capital 100.00% Financial operational
Company Limited** 19 February 2019 HK$60,000,000 and information
technology services

BOCHK Information Technology Shenzhen, China Registered capital 100.00% Property holding
(Shenzhen) Co., Ltd.** 16 April 1990 HK$70,000,000

Po Sang Financial Investment Hong Kong, China HK$335,000,000 100.00% Gold trading and
Services Company Limited 23 September 1980 investment holding

Sin Hua Trustee Limited Hong Kong, China HK$3,000,000 100.00% Trustee services
27 October 1978

Billion Express Development Inc. British Virgin Islands US$1 100.00% Investment holding
7 February 2014

Billion Orient Holdings Ltd. British Virgin Islands US$1 100.00% Investment holding
3 February 2014

Elite Bond Investments Ltd. British Virgin Islands US$1 100.00% Investment holding
7 February 2014

Express Capital Enterprise Inc. British Virgin Islands US$1 100.00% Investment holding
3 February 2014

Express Charm Holdings Corp. British Virgin Islands US$1 100.00% Investment holding
7 February 2014

Express Shine Assets Holdings British Virgin Islands US$1 100.00% Investment holding
Corp. 3 January 2014

Express Talent Investment Ltd. British Virgin Islands US$1 100.00% Investment holding
13 February 2014

Gold Medal Capital Inc. British Virgin Islands US$1 100.00% Investment holding
3 January 2014

Gold Tap Enterprises Inc. British Virgin Islands US$1 100.00% Investment holding
13 February 2014

Maxi Success Holdings Ltd. British Virgin Islands US$1 100.00% Investment holding
7 February 2014

Smart Linkage Holdings Inc. British Virgin Islands US$1 100.00% Investment holding
13 February 2014




124 BOC Hong Kong (Holdings) Limited Interim Report 2026
APPENDIX

Subsidiaries of the Company (continued)
Place and date of
incorporation/ Issued
Name operation share capital Interest held Principal activities

Smart Union Capital Investments British Virgin Islands US$1 100.00% Investment holding
Ltd. 3 January 2014

Success Trend Development Ltd. British Virgin Islands US$1 100.00% Investment holding
18 February 2014

Wise Key Enterprises Corp. British Virgin Islands US$1 100.00% Investment holding
18 February 2014

BOCHK Asset Management Limited Hong Kong, China HK$372,500,000 100.00% Asset management
28 October 2010

Greater Bay Area Investment (GP) Hong Kong, China HK$1 100.00% Investment holding
Limited 4 February 2021



* BOCI-Prudential Trustee Limited is a subsidiary of a non-wholly-owned subsidiary of the Company and, accordingly, is accounted for as a subsidiary by
virtue of the Company’s control over it.


** It is registered as limited liability company in China.


The disposal of Po Sang Securities Limited was completed on 30 January 2026.


The acquisition of Bank of China International Limited was completed on 30 January 2026.


The winding-up petitions of Bank of China (Hong Kong) Trustee Limited and Sin Hua Trustees Limited were approved by the High Court of Hong Kong on 10
June 2026.




Interim Report 2026 BOC Hong Kong (Holdings) Limited 125
DEFINITIONS

In this Interim Report, unless the context otherwise requires, the following terms shall have the meanings set out below:


Terms Meanings

“ADR” American Depositary Receipt

“ADS(s)” American Depositary Share(s)

“ALCO” the Asset and Liability Management Committee

“AT1” Additional Tier 1

“Associates” has the meaning ascribed to “associates” in the Listing Rules

“BOC” Bank of China Limited, a joint stock commercial bank with limited
liability established under the laws of the PRC, the H shares and A
shares of which are listed on the Hong Kong Stock Exchange and
the Shanghai Stock Exchange respectively

“BOC (BVI)” BOC Hong Kong (BVI) Limited, a company incorporated under the
laws of the British Virgin Islands and a wholly-owned subsidiary of
BOCHKG

“BOCG Insurance” Bank of China Group Insurance Company Limited, a company
incorporated under the laws of Hong Kong and a wholly-owned
subsidiary of BOC

“BOCHKG” BOC Hong Kong (Group) Limited, a company incorporated under
the laws of Hong Kong and a wholly-owned subsidiary of BOC

“BOCHK” or “the Bank” Bank of China (Hong Kong) Limited, a company incorporated under
the laws of Hong Kong and a wholly-owned subsidiary of the
Company

“BOCI” BOC International Holdings Limited, a company incorporated under
the laws of Hong Kong and a wholly-owned subsidiary of BOC

“BOCI-Prudential Trustee” BOCI-Prudential Trustee Limited, a company incorporated under the
laws of Hong Kong, in which BOC Group Trustee Company Limited
and Prudential Corporation Holdings Limited hold equity interests
of 64% and 36% respectively

“BOC Life” BOC Group Life Assurance Company Limited, a company
incorpor