1 March 2004

Hang Seng Bank Limited 2003 Annual Results - Highlights

• Operating profit before provisions up 2.0 per cent to HK$11,475 million
  (HK$11,255 million in 2002)

  Operating profit of HK$10,683 million, maintained at 2002 level
  (HK$10,684 million in 2002)

  Pre-tax profit down 0.9 per cent to HK$11,137 million
  (HK$11,242 million in 2002)

  Attributable profit down 3.8 per cent to HK$9,539 million
  (HK$9,920 million in 2002)

  Return on average shareholders' funds of 23.4 per cent
  (23.1 per cent in 2002)

  Total assets up 6.0 per cent to HK$503.0 billion
  (HK$474.7 billion at 31 December 2002)

  Earnings per share down 3.9 per cent to HK$4.99
  (HK$5.19 per share in 2002)

  Dividend per share of HK$4.90
  (HK$5.40 per share in 2002, including a special dividend of HK$0.50 per
  share)

  Total capital ratio of 13.2 per cent (14.2 per cent at 31 December 2002);
  tier 1 capital ratio of 11.3 per cent (11.9 per cent at 31 December 2002)

• Cost:income ratio maintained at 25.4 per cent
  (25.4 per cent in 2002)

Note: Certain figures for 2002 have been restated to reflect the adoption of Hong Kong Statement of Standard Accounting Practice 12 (revised) (HKSSAP 12) on “Income taxes”.

Comment by David Eldon, Chairman

“Hang Seng remained resilient in a year affected by SARS. Attributable profit for 2003, at HK$9,539 million, was 3.8 per cent lower than the previous year. Excluding the increase in the profits tax rate for the year and a large release in general provisions in 2002, attributable profit actually increased marginally by 0.7 per cent.

“For the period 1999 to 2003, the Bank exceeded its managing for value target of doubling shareholder value in five years. The total return for shareholders was 106.3 per cent as measured by share price appreciation and reinvested dividends. In the next five years of 2004 to 2008, the Bank will be guided by our new strategic plan to achieve strong competitive growth in earnings per share and operating efficiency in terms of the cost:income ratio.“The Hong Kong economy rebounded in the second half of 2003, benefiting from the closer economic partnership between mainland China and the territory. While unemployment is improving and deflation is receding, the banking industry is facing the challenges of rising customer expectations, subdued credit and depressed margins. Hang Seng will sustain profitability by deepening relationships, diversifying income, implementing robust cost discipline and expanding its foothold in mainland China. The announced deal to acquire 15.98 per cent of Industrial Bank Co. Ltd.’s enlarged capital is part of our plan to grow through partnerships as well as organically in the mainland.”