2 August 2004

Hang Seng Bank Limited 2004 Interim Results - Highlights

• Operating profit before provisions up 0.4 per cent to HK$6,096 million
  (HK$6,073 million for the first half of 2003)

  Operating profit up 22.1 per cent to HK$6,859 million
  (HK$5,617 million for the first half of 2003)

  Pre-tax profit up 23.5 per cent to HK$7,323 million
  (HK$5,928 million for the first half of 2003)

  Attributable profit up 24.4 per cent to HK$6,245 million
  (HK$5,022 million for the first half of 2003)

  Return on average shareholders' funds of 30.9 per cent
  (24.4 per cent for the first half of 2003)

  Total assets of HK$503.9 billion, in line with 2003 year-end
  (HK$503.0 billion at 31 December 2003)

  Earnings per share up 24.3 per cent to HK$3.27
  (HK$2.63 per share for the first half of 2003)

  Second interim dividend of HK$1.10 per share; total dividends of HK$2.20
  per share for the first half of 2004
  (HK$2.10 per share for the first half of 2003)

  Total capital ratio of 12.8 per cent (13.2 per cent at 31 December 2003);
  tier 1 capital ratio of 11.4 per cent (11.3 per cent at 31 December 2003)

• Cost:income ratio of 24.5 per cent
  (23.1 per cent for the first half of 2003)

Comment by David Eldon, Chairman

“Hang Seng’s performance improved in the first half of 2004, supported by Hong Kong’s recovery from the economic low point of early 2003. Attributable profit grew by 24.4 per cent, underpinned by growth in other operating income and the release of provisions for bad and doubtful debts.

“Although interest margins remained depressed, an increase of 25.7 per cent in other operating income more than offset the fall in net interest income. Operating profit before provisions grew by 0.4 per cent.“During the first half of 2004, we made a breakthrough in our mainland China business through the acquisition of a 15.98 per cent interest in Industrial Bank Co., Ltd. This strategic move opens the door for cooperation with a major mainland joint-stock commercial bank and complements Hang Seng’s mainland network and business expansion.“Buoyant exports and the revival in consumer spending will continue to support Hong Kong’s economy during the rest of the year. The pace of recovery will, however, be dependent to a large extent on the macro-economic realignment initiatives in mainland China and the strength of the recovery in the United States. Against this backdrop, Hang Seng will continue to deliver growth through service excellence, product diversification and cost efficiency.”

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