28 February 2005

Hang Seng Bank Limited 2004 Annual Results - Highlights

• Operating profit before provisions up 3.1 per cent to HK$11,830 million
  (HK$11,475 million in 2003)

  Operating profit up 18.4 per cent to HK$12,644 million
  (HK$10,683 million in 2003)

  Pre-tax profit up 20.0 per cent to HK$13,367 million
  (HK$11,137 million in 2003)

  Attributable profit up 19.5 per cent to HK$11,395 million
  (HK$9,539 million in 2003)

  Return on average shareholders' funds of 27.6 per cent
  (23.4 per cent in 2003)

  Total assets up 9.1 per cent to HK$548.6 billion
  (HK$503.0 billion at 31 December 2003)

  Earnings per share up 19.4 per cent to HK$5.96
  (HK$4.99 per share in 2003)

  Fourth interim dividend of HK$1.90 per share; total dividends of HK$5.20
  per share for 2004
  (HK$4.90 per share in 2003)

  Total capital ratio of 12.0 per cent (13.2 per cent at 31 December 2003);
  tier 1 capital ratio of 10.8 per cent (11.3 per cent at 31 December 2003)

• Cost:income ratio of 26.3 per cent
  (25.4 per cent in 2003)

Comment by David Eldon, Chairman

“Hang Seng achieved strong growth in 2004, supported by the recovery of Hong Kong’s economy. Attributable profit grew by 19.5 per cent to a record HK$11,395 million, underpinned by a robust increase in other operating income of 22.4 per cent, and the release of provisions for bad and doubtful debts.

“The rise in other operating income resulted from the growth in investment services income as we invested in our wealth management business. This more than offset a drop in net interest income of 4.8 per cent, arising from the reduction in deposit spreads caused by exceptionally low Hong Kong dollar interest rates. “We made substantial progress during the year in the development of our Mainland business with the completion of the acquisition of a 15.98 per cent interest in Industrial Bank Co., Ltd. We are well positioned to take advantage of growth opportunities arising from the liberalisation of the Mainland’s financial markets and we will continue to expand our network and services there.

“Hong Kong’s economy is expected to grow steadily in 2005, supported by the closer economic relationship with the Mainland. In the face of the challenges of sustained margin pressure and intense competition we will build on our financial strength, quality customer service and growing wealth management capabilities to deliver value to our shareholders and customers.”

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