Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.This announcement is for information purposes only and does not constitute an invitation or offer to acquire purchase or subscribe for securities.This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or to or for the account or benefit of a U.S. person (asdefined in Regulation S under the United States Securities Act of 1933 as amended (the “SecuritiesAct”)). The securities referred to herein (the “Securities”) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state of the United States or other jurisdiction. The Securities are being offered and sold outside the United States in reliance on Regulation S under the Securities Act and may not be offered or sold within the United States or to or for the account or benefit of a U.S. person absent registration or an exemption from registration under the Securities Act. No public offering of the Securities will be made in the United States or in any other jurisdiction where such an offering is restricted or prohibited.This announcement and the listing documents referred to herein have been published for information purposes only as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and do not constitute an offer to sell nor a solicitation of an offer to buy any securities. Neither this announcement nor anything referred to herein (including the listing documents referred to herein) forms the basis for any contract or commitment whatsoever. For the avoidance of doubt the publication of this announcement and the listing documents referred to herein shall not be deemed to be an offer of securities made pursuant to a prospectus issued by or on behalf of the Issuer (as defined below) for the purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) nor shall it constitute an advertisement invitation or document containing an invitation to the public to enter into or offer to enter into an agreement to acquire dispose of subscribe for or underwrite securities for the purposes of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).Notice to Hong Kong investors: The Issuer confirms that the Notes (as defined below) are intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and have been listed on The Stock Exchange of Hong Kong Limited on that basis. Accordingly the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.PUBLICATION OF OFFERING CIRCULAR AND PRICING SUPPLEMENT The Bank of East Asia Limited东亚银行有限公司 (incorporated in Hong Kong with limited liability in 1918) (Stock Code: 23) (the “Issuer”) U.S.$650000000 Dated Subordinated Notes due 2034 (the “Notes”) under its U.S.$6000000000 Medium Term Note Programme (the “Programme”) (Stock Code: 5069)This announcement is issued pursuant to Rule 37.39A of the Listing Rules.Please refer to the offering circular dated 5th March 2024 (the “Offering Circular”) relating to the Programme and the pricing supplement dated 20th June 2024 (the “Pricing Supplement”) relating to the Notes each appended hereto. As disclosed in the Offering Circular and the Pricing Supplement the Notes are intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and have been listed on The Stock Exchange of Hong Kong Limited on that basis.The Offering Circular and the Pricing Supplement do not constitute a prospectus notice circular brochure or advertisement offering to sell any securities to the public in any jurisdiction nor are they an invitation to the public to make offers to subscribe for or purchase any securities nor are they circulated to invite offers by the public to subscribe for or purchase any securities.The Offering Circular and the Pricing Supplement must not be regarded as an inducement to subscribe for or purchase any securities and no such inducement is intended. In making an investment decision investors must rely on their own examination of the Issuer the Group (as defined in the Offering Circular) and the terms of the offering including the merits and risks involved.Hong Kong 28th June 2024 As at the date of this announcement the Board of Directors of the Issuer comprises Dr. the Hon. Sir David LI Kwok-po# (Executive Chairman) Professor Arthur LI Kwok-cheung* (Deputy Chairman) Dr.Allan WONG Chi-yun** (Deputy Chairman) Mr. Aubrey LI Kwok-sing* Mr. Winston LO Yau-lai* Mr.Stephen Charles LI Kwok-sze* Mr. Adrian David LI Man-kiu# (Co-Chief Executive) Mr. Brian David LI Man-bun# (Co-Chief Executive) Dr. Daryl NG Win-kong* Mr. Masayuki OKU* Dr. the Hon. Rita FAN HSU Lai-tai** Mr. Meocre LI Kwok-wing** Dr. the Hon. Henry TANG Ying-yen** Dr. Delman LEE** Mr. William Junior Guilherme DOO** Dr. David MONG Tak-yeung** and Dr. Francisco Javier SERRADO TREPAT*.# Executive Director * Non-executive Director ** Independent Non-executive DirectorTABLE OF CONTENTS APPENDIX 1 – OFFERING CIRCULAR DATED 5TH MARCH 2024 APPENDIX 2 – PRICING SUPPLEMENT DATED 20TH JUNE 2024APPENDIX 1 – OFFERING CIRCULAR DATED 5TH MARCH 2024IMPORTANT NOTICE NOT FOR DISTRIBUTION WITHIN THE UNITED STATES IMPORTANT: You must read the following before continuing. The following applies to the offering circular following this page (the “Offering Circular”) and you are therefore advised to read this carefully before reading accessing or making any other use of the attached Offering Circular. In accessing the attached Offering Circular you agree to be bound by the following terms and conditions including any modifications to them any time you receive any information from us as a result of such access.NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THE FOLLOWING OFFERING CIRCULAR MAY NOT BE DOWNLOADED FORWARDED OR DISTRIBUTED IN WHOLE OR IN PART TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY DOWNLOADING FORWARDING DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OF THE FOREGOING RESTRICTION YOU ARE NOT AUTHORISED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES DESCRIBED THEREIN.Confirmation and your Representation: In order to be eligible to view the attached Offering Circular or make an investment decision with respect to the securities investors must be purchasing the securities outside the United States in an offshore transaction in reliance on Regulation S under the Securities Act. By accepting the e-mail and accessing the attached Offering Circular you shall be deemed to have represented to The Hongkong and Shanghai Banking Corporation Limited (the “Arranger”) and Barclays Bank PLC CCB International Capital Limited Citigroup Global Markets Limited CLSA Limited Crédit Agricole Corporate and Investment Bank DBS Bank Ltd. Deutsche Bank AG Hong Kong Branch Goldman Sachs (Asia) L.L.C. J.P. Morgan Securities (Asia Pacific) Limited Merrill Lynch (Asia Pacific) Limited Mizuho Securities Asia Limited Morgan Stanley & Co. International plc Shinkin International Ltd.SMBC Nikko Securities (Hong Kong) Limited Société Générale Standard Chartered Bank Standard Chartered Bank (Hong Kong) Limited The Bank of East Asia Limited 东亚银行有限公司 The Hongkong and Shanghai Banking Corporation Limited UBS AG Hong Kong Branch United Overseas Bank Limited Hong Kong Branch and Wells Fargo Securities International Limited (the “Dealers”) and us (1) that you and any customers you represent are and that the electronic mail address that you gave us and to which this e-mail has been delivered is not located in the United States and (2) that you consent to delivery of the attached Offering Circular and any amendments or supplements thereto by electronic transmission.You are reminded that the attached Offering Circular has been delivered to you on the basis that you are a person into whose possession the attached Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor are you authorised to deliver or disclose the contents of the attached Offering Circular to any other person. You should not reply by e-mail to this notice and you may not purchase any securities by doing so. Any reply e-mail communications including those you generate by using the “Reply” function on your e-mail software will be ignored or rejected.The attached Offering Circular does not constitute and may not be used in connection with an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Arranger and Dealers or any affiliate of the Arranger or Dealers are a licensed broker or dealer in that jurisdiction the offering shall be deemed to be made by the Arranger or Dealers or such affiliate on behalf of The Bank of East Asia Limited 东亚银行有限公司 in such jurisdiction.The attached Offering Circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of The Bank of East Asia Limited 东亚银行有限公司 the Arranger the Dealers the Trustee or any of the Agents (each as defined in the attached Offering Circular) or any person who controls any of them or any director officer employee nor agent of any of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the attached Offering Circular distributed to you in electronic format and the hard copy version available to you on request from the Arranger or Dealers.You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.OFFERING CIRCULAR DATED 5 MARCH 2024 CONFIDENTIAL The Bank of East Asia Limited东亚银行有限公司 (incorporated with limited liability in Hong Kong) U.S.$6000000000 Medium Term Note Programme Under the Medium Term Note Programme described in this Offering Circular (the “Programme”) The Bank of East Asia Limited 东亚银行有限公司 (“BEA” or the “Issuer”) subject to compliance with all relevant laws regulations and directives may from time to time issue medium term notes (the “Notes”) and undated capital securities (the “Undated Capital Securities”). The Notes may include Senior (Preferred) Notes Non-Preferred Loss Absorbing Notes Dated Subordinated Notes (each as defined under “Terms and Conditions of the Notes other than the Undated Capital Securities”) and Undated Capital Securities (as defined under “Terms and Conditionsof the Undated Capital Securities”) issued by the Issuer which may qualify as regulatory capital of the Issuer. The aggregate principal amount of Notes and Undated Capital Securities outstanding will not at any time exceed U.S.$6000000000 (or the equivalent in other currencies).An investment in Notes or Undated Capital Securities issued under the Programme involves certain risks. For a discussion of these risks see “Investment Considerations”. The Notes and the Undated Capital Securities are complex and high risk financial instruments. There are risks inherent in the holding of any Notes or Undated Capital Securities including for example in respect of the Non-Preferred Loss Absorbing Notes the DatedSubordinated Notes and the Undated Capital Securities including the risks in relation to their subordination and the circumstances in which Noteholders (as defined in “Terms and Conditions of the Notes other than the UndatedCapital Securities”) or Securityholders (as defined in “Terms and Conditions of the Undated Capital Securities”) may suffer loss as a result of holding any Notes or Undated Capital Securities. Potential investors should have regard to the factors described under the section headed “Investment Considerations” in this Offering Circular for a discussion of certain considerations to be taken into account in connection with an investment in the Notes or the Undated Capital Securities. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in this Offering Circular and the relevant Pricing Supplement (as defined in “Summary of the Programme”) and the merits and risks of investing in the Notes or the Undated Capital Securities in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in the Notes or the Undated Capital Securities. Investors must not purchase the Notes or the Undated Capital Securities unless they understand and are able to bear risks associated with the Notes or the Undated Capital Securities.The Notes or the Undated Capital Securities may be issued on a continuing basis to one or more of the dealers appointed under the Programme from time to time by the Issuer (each a “Dealer” and together the “Dealers”) which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the “relevant Dealer” shall in the case of an issue of Notes or Undated Capital Securities being (or intended to be) subscribed for by more than one Dealer be to all Dealers agreeing to subscribe for such Notes or Undated Capital Securities.Application has been made to The Stock Exchange of Hong Kong Limited (the “HKSE”) for the listing of the Programme under which Notes or Undated Capital Securities may be issued by way of debt issues to Professional Investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”)) (“Professional Investors”) only during the 12-month period after the date of this Offering Circular on the HKSE. Separate application may be made for the listing of the Notes or the Undated Capital Securities on the HKSE. This document is for distribution to Professional Investors only.Notice to Hong Kong investors: The Issuer confirms that the Notes and the Undated Capital Securities to be issued under the Programme are intended for purchase by Professional Investors only and the Programme the Notes and the Undated Capital Securities (to the extent that such Notes and Undated Capital Securities are to be listed on the HKSE) will be listed on the HKSE on that basis. Accordingly the Issuer confirms that the Notes and the Undated Capital Securities are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.The HKSE has not reviewed the contents of this document other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Programme the Notes or the Undated Capital Securities on the HKSE is not to be taken as an indication of the commercial merits or credit quality of the Programme the Notes the Undated Capital Securities the Issuer the Group (as defined below) or the quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the HKSE take no responsibility for the contents of this document make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.Notice of the aggregate principal amount of Notes or Undated Capital Securities interest (if any) or distribution (if any) payable in respect of Notes or Undated Capital Securities (as applicable) the issue price of Notes or Undated Capital Securities and any other terms and conditions not contained herein which are applicable to each Tranche (as defined in “Summary of the Programme”) of Notes or Undated Capital Securities will be set out in a Pricing Supplement which with respect to Notes or Undated Capital Securities to be listed on the HKSE will be delivered to the HKSE on or before the date of issue of the Notes or the Undated Capital Securities of such Tranche.Each Series (as defined in “Summary of the Programme”) of Notes in bearer form will be represented on issue by a temporary global note in bearer form (each a “temporary Global Note”) or a permanent global note in bearer form (each a “permanent Global Note” and together with the temporary Global Notes the “Global Notes”). Notes or Undated Capital Securities in registered form (“Registered Notes”) will be represented by registered certificates (each a “Certificate”) one Certificate being issued in respect of each Noteholder’s entire holding of Registered Notes of one Series. The Notes or the Undated Capital Securities of each Series in registered form will initially be represented by a permanent global certificate (each a “Global Certificate”) without interest coupons. The Global Notes and Global Certificates may be deposited on the relevant issue date (a) in the case of a Series intended to be cleared through Euroclear and/or Clearstream with a common depositary on behalf of Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”) or with a sub-custodian for the Central Moneymarkets Unit Service operated by the Hong Kong Monetary Authority (the “Monetary Authority”) (the “CMU”) and (b) in the case of a Series intended to be cleared through a clearing system other than or in addition to Euroclear and/or Clearstream and/or the CMU or delivered outside a clearing system as agreed between the Issuer and the relevant Dealer. The provisions governing the exchange of interests in Global Notes for other Global Notes and Definitive Notes (as defined in “Summary of Provisions Relating to the Notes and the Undated Capital Securities while in Global Form”) or Global Certificates for Certificates are described in “Summary of Provisions Relating to the Notes and the Undated Capital Securities while in Global Form”.The Notes and the Undated Capital Securities have not been and will not be registered under the United States Securities Act of 1933 as amended (the “Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States and the Notes may include Bearer Notes that are subject to U.S. tax law requirements. Subject to certain exceptions the Notes and the Undated Capital Securities may not be offered sold or in the case of Bearer Notes delivered within the United States. Registered Notes are subject to certain restrictions on transfer see “Subscription and Sale”.MiFID II product governance / target market —The Pricing Supplement in respect of any Notes or Undated Capital Securities may include a legend entitled “MiFID II Product Governance” which will outline the target market assessment in respect of the Notes or the Undated Capital Securities and which channels for distribution of the Notes or the Undated Capital Securities are appropriate. Any person subsequently offering selling or recommending the Notes or the Undated Capital Securities (a “distributor”) should take into consideration the target market assessment; however a distributor subject to Directive 2014/65/EU (as amended “MiFID II”) is responsible for undertaking its own target market assessment in respect of the Notes or the Undated Capital Securities (by either adopting or refining the target market assessment) and determining appropriate distribution channels.A determination will be made in relation to each issue about whether for the purpose of the MiFID Product Governance rules under EU Delegated Directive 2017/593 (the “MiFID Product Governance Rules”) any Dealer subscribing for any Notes or Undated Capital Securities is a manufacturer in respect of such Notes or Undated Capital Securities but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MiFID Product Governance Rules.UK MiFIR product governance / target market — The Pricing Supplement in respect of any Notes or Undated Capital Securities may include a legend entitled “UK MiFIR Product Governance” which will outline the target market assessment in respect of the Notes or the Undated Capital Securities and which channels for distribution of the Notes or the Undated Capital Securities are appropriate. Any distributor should take into consideration the target market assessment; however a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR Product Governance Rules”) is responsible for undertaking its own target market assessment in respect of the Notes or the Undated Capital Securities (by either adopting or refining the target market assessment) and determining appropriate distribution channels.A determination will be made in relation to each issue about whether for the purpose of the UK MiFIR Product Governance Rules any Dealer subscribing for any Notes or Undated Capital Securities is a manufacturer in respect of such Notes or Undated Capital Securities but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the UK MIFIR Product Governance Rules.IMPORTANT — EEA RETAIL INVESTORS — If the Pricing Supplement in respect of any Notes or Undated Capital Securities includes a legend entitled “Prohibition of Sales to EEA Retail Investors” the Notes or the Undated Capital Securities are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended the “Insurance Distribution Directive”) where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended the “Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended the “PRIIPs Regulation”) for offering or selling the Notes or the Undated Capital Securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or Undated Capital Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.IMPORTANT — UK RETAIL INVESTORS — If the Pricing Supplement in respect of any Notes or Undated Capital Securities includes a legend entitled “Prohibition of Sales to UK Retail Investors” the Notes or the Undated Capital Securities are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the United Kingdom. For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (“FSMA”) and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA (the “UK MiFIR”); or (iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA (the “UK Prospectus Regulation”). Consequently no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Notes or the Undated Capital Securities or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling the Notes or Undated Capital Securities or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.Singapore Securities and Futures Act Product Classification: In connection with Section 309B of the Securities and Futures Act 2001 of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”) unless otherwise specified before an offer of Notes or Undated Capital Securities the Issuer has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA) that the Notes or the Undated Capital Securities are “prescribed capital markets products” (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).The Issuer may agree with any Dealer and the Trustee (as defined herein) that Notes or Undated Capital Securities may be issued in a form not contemplated by the terms and conditions of the Notes other than the Undated Capital Securities herein (the “Note Conditions”) and the terms and conditions of the Undated Capital Securities (the “Undated Capital Securities Conditions”) in which event a supplementary Offering Circular if appropriate will be made available which will describe the effect of the agreement reached in relation to such Notes or Undated Capital Securities.Investing in the Notes and the Undated Capital Securities issued under the Programme involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in this Offering Circular and in the relevant Pricing Supplement and the merits and risks of investing in a particular issue of Notes or Undated Capital Securities in the context of their financial position and particular circumstances. In particular investors should have sufficient knowledge and expertise to evaluate the effect or the likelihood of the occurrence of a Non-Viability Event for the Notes or the Undated Capital Securities and the relevant consequences of non-viability loss absorption. Investors also should have the financial capacity to bear the risks associated with an investment in the Notes or the Undated Capital Securities. Investors should not purchase the Notes or the Undated Capital Securities unless they understand and are able to bear risks associated with the Notes or the Undated Capital Securities. Potential investors should have regard to the factors described under the section headed “Investment Considerations” in this Offering Circular. Investors should be aware that the Undated Capital Securities are perpetual and have no fixed redemption date and there are various other risks relating to the Undated Capital Securities the Issuer the Group and their respective business and jurisdictions of operations which investors should familiarise themselves with before making an investment in the Undated Capital Securities. See “Investment Considerations” in relation to the Undated Capital Securities beginning on page 32 of this Offering Circular.Moody’s Investors Service Inc. (“Moody’s”) is expected to rate Dated Subordinated Notes to be issued under the Programme “Baa2” and Undated Capital Securities to be issued under the Programme “Ba2”. S&P Global Ratings (“S&P”) is expected to rate Dated Subordinated Notes to be issued under the Programme “BBB-” and Undated Capital Securities to be issued under the Programme “BB”. A rating is not a recommendation to buy sell or hold securities and may be subject to suspension reduction revision or withdrawal at any time by the assigning rating agency.Sole Arranger HSBC Dealers Barclays The Bank of East Asia Limited BofA Securities CCB International Citigroup CITIC Securities Crédit Agricole CIB DBS Bank Ltd.Deutsche Bank Goldman Sachs (Asia) L.L.C. HSBC J.P. Morgan Mizuho Morgan Stanley Shinkin International Ltd. SMBC Nikko Société Générale Standard Chartered Bank UBS Corporate & Investment Banking UOB Wells Fargo SecuritiesThe Issuer having made all reasonable enquiries confirms that this Offering Circular contains or incorporates all information which is material in the context of the issue and offering of the Notes or the Undated Capital Securities that the information contained or incorporated by reference in this Offering Circular is true and accurate in all material respects and is not misleading in any material respect that the opinions and intentions expressed in this Offering Circular are honestly held and that there are no other facts the omission of which would make this Offering Circular or any of such information or the expression of any such opinions or intentions misleading in any material respect and which in each case is material in the context of the issue and offering of the Notes or the Undated Capital Securities.This Offering Circular is to be read in conjunction with all documents which are incorporated herein by reference (see “Documents Incorporated by Reference”).MiFID II product governance / target market — The Pricing Supplement in respect of any Notes or Undated Capital Securities may include a legend entitled “MiFID II Product Governance” which will outline the target market assessment in respect of the Notes or the Undated Capital Securities and which channels for distribution of the Notes or the Undated Capital Securities are appropriate. A distributor should take into consideration the target market assessment; however a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes or the Undated Capital Securities (by either adopting or refining the target market assessment) and determining appropriate distribution channels.A determination will be made in relation to each issue about whether for the purpose of the MiFID Product Governance Rules any Dealer subscribing for any Notes or Undated Capital Securities is a manufacturer in respect of such Notes or Undated Capital Securities but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MiFID Product Governance Rules.UK MiFIR product governance / target market — The Pricing Supplement in respect of any Notes or Undated Capital Securities may include a legend entitled “UK MiFIR Product Governance” which will outline the target market assessment in respect of the Notes or the Undated Capital Securities and which channels for distribution of the Notes or the Undated Capital Securities are appropriate. A distributor should take into consideration the target market assessment; however a distributor subject to the UK MiFIR Product Governance Rules is responsible for undertaking its own target market assessment in respect of the Notes or the Undated Capital Securities (by either adopting or refining the target market assessment) and determining appropriate distribution channels.A determination will be made in relation to each issue about whether for the purpose of the UK MiFIR Product Governance Rules any Dealer subscribing for any Notes or Undated Capital Securities is a manufacturer in respect of such Notes or Undated Capital Securities but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the UK MIFIR Product Governance Rules.Important — EEA Retail Investors — If the Pricing Supplement in respect of any Notes or Undated Capital Securities includes a legend entitled “Prohibition of Sales to EEA Retail Investors” the Notes and the Undated Capital Securities are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the EEA. For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation. Consequently no key information document required by the PRIIPs Regulation for offering or selling the Notes or the Undated Capital Securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or the Undated Capital Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.? 2 ?Important — UK Retail Investors — If the Pricing Supplement in respect of any Notes or Undated Capital Securities includes a legend entitled “Prohibition of Sales to UK Retail Investors” the Notes and the Undated Capital Securities are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the United Kingdom. For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the EUWA; (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by the UK PRIIPs Regulation for offering or selling the Notes or the Undated Capital Securities or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling the Notes or the Undated Capital Securities or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.This Offering Circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Issuer and the Group. The Issuer accepts full responsibility for the accuracy of the information contained in this document and confirms having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.Admission to the HKSE and quotation of any Notes or Undated Capital Securities on the HKSE is not to be taken as an indication of the merits of the Programme the Notes or the Undated Capital Securities or the Issuer or the Group. In making an investment decision investors must rely on their own examination of the Issuer the Group and the terms of the offering including the merits and risks involved. See “Investment Considerations” for a discussion of certain factors to be considered in connection with an investment in the Notes or the Undated Capital Securities.Notice to Capital Market Intermediaries and Prospective Investors Pursuant to Paragraph 21 of the Hong Kong SFC Code of Conduct — Important Notice to Prospective Investors — Prospective investors should be aware that certain intermediaries in the context of certain offeringsof the Notes or the Undated Capital Securities pursuant to the Programme each such offering a “CMIOffering” including certain Dealers may be “capital market intermediaries” (“CMIs”) subject to Paragraph 21 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “SFC Code”). This notice to prospective investors is a summary of certain obligations the SFC Code imposes on such CMIs which require the attention and cooperation of prospective investors. Certain CMIs may also be acting as “overall coordinators” (“OCs”) for a CMI Offering and are subject to additional requirements under the SFC Code. The application of these obligations will depend on the role(s) undertaken by the relevant Dealer(s) in respect of each CMI Offering.Prospective investors who are the directors employees or major shareholders of the Issuer a CMI or its group companies would be considered under the SFC Code as having an association (“Association”) with the Issuer the CMI or the relevant group company. Prospective investors associated with the Issuer or any CMI (including its group companies) should specifically disclose this when placing an order for the relevant Notes or Undated Capital Securities and should disclose at the same time if such orders may negatively impact the price discovery process in relation to the relevant CMI Offering. Prospective investors who do not disclose their Associations are hereby deemed not to be so associated. Where prospective investors disclose their Associations but do not disclose that such order may negatively impact the price discovery process in relation to the relevant CMI Offering such order is hereby deemed not to negatively impact the price discovery process in relation to the relevant CMI Offering.? 3 ?Prospective investors should ensure and by placing an order prospective investors are deemed to confirm that orders placed are bona fide are not inflated and do not constitute duplicated orders (i.e.two or more corresponding or identical orders placed via two or more CMIs). A rebate may be offered by the Issuer to all private banks for orders they place (other than in relation to Notes or Undated Capital Securities subscribed by such private banks as principal whereby it is deploying its own balance sheet for onward selling to investors) payable upon closing of the relevant CMI Offering based on the principal amount of the Notes or the Undated Capital Securities distributed by such private banks to investors. Private banks are deemed to be placing an order on a principal basis unless they inform the CMIs otherwise. As a result private banks placing an order on a principal basis (including those deemed as placing an order as principal) will not be entitled to and will not be paid the rebate. Details of any such rebate will be set out in the applicable Pricing Supplement or otherwise notified to prospective investors. If a prospective investor is an asset management arm affiliated with any relevant Dealer such prospective investor should indicate when placing an order if it is for a fund or portfolio where the relevant Dealer or its group company has more than 50% interest in which case it will be classified as a “proprietary order” and subject to appropriate handling by CMIs in accordance with the SFC Code and should disclose at the same time if such “proprietary order” may negatively impact the price discovery process in relation to the relevant CMI Offering. Prospective investors who do not indicate this information when placing an order are hereby deemed to confirm that their order is not a “proprietary order”. If a prospective investor is otherwise affiliated with any relevant Dealer such that its order may be considered to be a “proprietary order” (pursuant to the SFC Code) such prospective investor should indicate to the relevant Dealer when placing such order.Prospective investors who do not indicate this information when placing an order are hereby deemed to confirm that their order is not a “proprietary order”. Where prospective investors disclose such information but do not disclose that such “proprietary order” may negatively impact the price discovery process in relation to the relevant CMI Offering such “proprietary order” is hereby deemed not to negatively impact the price discovery process in relation to the relevant CMI Offering.Prospective investors should be aware that certain information may be disclosed by CMIs (including private banks) which is personal and/or confidential in nature to the prospective investor. By placing an order prospective investors are deemed to have understood and consented to the collection disclosure use and transfer of such information by the relevant Dealers and/or any other third parties as may be required by the SFC Code including to the Issuer any OCs relevant regulators and/or any other third parties as may be required by the SFC Code it being understood and agreed that such information shall only be used for the purpose of complying with the SFC Code during the bookbuilding process for the relevant CMI Offering. Failure to provide such information may result in that order being rejected.No person has been authorised to give any information or to make any representation other than those contained in this Offering Circular in connection with the issue or sale of the Notes or the Undated Capital Securities and if given or made such information or representation must not be relied uponas having been authorised by the Issuer or any of the Arranger or the Dealers (as defined in “Summaryof the Programme”) or the Trustee or the Agents (each as defined in “Terms and Conditions of theNotes other than the Undated Capital Securities” and “Terms and Conditions of the Undated CapitalSecurities”). Neither this Offering Circular nor any other information supplied in connection with the Programme or the issue of any Notes or Undated Capital Securities constitutes an offer or invitation by or on behalf of the Issuer any Dealer any Arranger or the Trustee or the Agents to any person to subscribe for or to purchase any Notes or Undated Capital Securities.Neither the delivery of this Offering Circular nor any sale made in connection herewith shall under any circumstances create any implication that there has been no change in the affairs of the Issuer or the Group since the date hereof or the date upon which this Offering Circular has been most recently amended or supplemented or that there has been no adverse change in the financial position ? 4 ?of the Group since the date hereof or the date upon which this Offering Circular has been most recently amended or supplemented or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date on which it is supplied or if different the date indicated in the document containing the same.The distribution of this Offering Circular and the offering or sale of the Notes or the Undated Capital Securities in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer the Arranger and the Dealers to inform themselves about and to observe any such restriction.Singapore SFA Product Classification — In connection with Section 309B of the SFA and the CMP Regulations 2018 unless otherwise specified before an offer of Notes or Undated Capital Securities the Issuer has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA) that the Notes or the Undated Capital Securities are “prescribed capital markets products” (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).The Notes or the Undated Capital Securities are being offered and sold outside the United States in reliance on Regulation S (“Regulation S”) under the Securities Act. For a description of these and certain further restrictions on offers sales and transfers of Notes or Undated Capital Securities and distribution of this Offering Circular see “Subscription and Sale”.This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy any Notes or Undated Capital Securities in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. None of the Issuer any Dealer the Arranger the Trustee or the Agents makes any representation to any investor in the Notes or the Undated Capital Securities regarding the legality of its investment under any applicable law. The distribution of this Offering Circular and the offer or sale of Notes or Undated Capital Securities may be restricted by law in certain jurisdictions.None of the Issuer the Arranger the Dealers the Trustee or the Agents represents that this Offering Circular may be lawfully distributed or that any Notes or Undated Capital Securities may be lawfully offered in compliance with any applicable registration or other requirements in any such jurisdiction or pursuant to an exemption available thereunder or assumes any responsibility for facilitating any such distribution or offering. In particular unless specifically indicated to the contrary in the applicable Pricing Supplement no action has been taken by the Issuer the Dealers the Arranger the Trustee or the Agents which is intended to permit a public offering of any Notes or Undated Capital Securities or distribution of this Offering Circular in any jurisdiction where action for that purpose is required. Accordingly no Notes or Undated Capital Securities may be offered or sold directly or indirectly and neither this Offering Circular nor any advertisement or other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Offering Circular or any Notes or Undated Capital Securities may come must inform themselves about and observe any such restrictions on the distribution of this Offering Circular and the offering and sale of Notes or Undated Capital Securities. In particular there are restrictions on the distribution of this Offering Circular and the offer or sale of Notes or Undated Capital Securities in the United States the EEA the United Kingdom Hong Kong Singapore Japan PRC and Taiwan. See “Subscription and Sale”.To the fullest extent permitted by law none of the Arranger the Dealers the Trustee or the Agents accept any responsibility for the contents of this Offering Circular or for any other statement made or purported to be made by the Arranger or a Dealer or the Trustee or any Agent or on its behalf in connection with the Issuer the Group or the issue and offering of the Notes or the Undated Capital Securities. The Arranger each Dealer the Trustee and each Agent accordingly disclaim all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Offering Circular or any such statement. Neither this Offering ? 5 ?Circular nor any financial statements of the Issuer or the Group are intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuer the Arranger the Dealers the Trustee or the Agents that any recipient of this Offering Circular or any financial statements of the Issuer or the Group should purchase the Notes or the Undated Capital Securities. Each potential investor of Notes or Undated Capital Securities should determine for itself the relevance of the information contained in this Offering Circular and its purchase of Notes or Undated Capital Securities should be based upon such investigation as it deems necessary. None of the Arranger the Dealers the Trustee or the Agents undertakes to review the financial condition or affairs of the Issuer during the life of the arrangements contemplated by this Offering Circular nor to advise any investor or potential investor in the Notes or the Undated Capital Securities of any information coming to the attention of any of the Arranger the Dealers the Trustee or the Agents.From time to time in the ordinary course of business certain of the Dealers and their affiliates have provided advisory and investment banking services and entered into other commercial transactions with the Issuer and its affiliates including commercial banking services for which customary compensation has been received. It is expected that the Dealers and their affiliates will continue to provide such services to and enter into such transactions with the Issuer and its affiliates in the future.The Dealers or certain of their respective affiliates may purchase the Notes or the Undated Capital Securities and be allocated Notes or Undated Capital Securities for asset management and/or proprietary purposes but not with a view to distribution. References herein to the Notes or the Undated Capital Securities being offered should be read as including any offering of the Notes or the Undated Capital Securities to the Dealers and/or their respective affiliates acting in such capacity. In the ordinary course of their various business activities the Dealers and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Issuer. Such persons do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.In making an investment decision each potential investor must rely on its own examination of the Group and the terms of the Notes or the Undated Capital Securities being offered including the merits and risks involved. The Issuer does not and the Arranger the Dealers the Trustee and the Agents do not make any representation regarding the legality of investment under any applicable laws.Potential investors should be able to bear the economic risk of an investment in the Notes or the Undated Capital Securities for an indefinite period of time.? 6 ?WARNING The contents of this Offering Circular have not been reviewed by any regulatory authority of any jurisdiction. You are advised to exercise caution in relation to the offering of the Notes or the Undated Capital Securities. If you are in any doubt about any of the contents of this Offering Circular you should obtain independent professional advice.STABILISATION In connection with any Tranche of Notes or Undated Capital Securities one or more of the Dealers(or persons acting on their behalf) may act as the stabilisation manager(s) (the “StabilisationManager(s)”). The identity of the Stabilisation Manager(s) (if any) will be disclosed in the applicable Pricing Supplement.In connection with the issue of any Tranche of Notes or Undated Capital Securities one or more of the Dealers named as Stabilisation Manager (or persons acting on behalf of any Stabilisation Manager(s)) in the applicable Pricing Supplement may subject to applicable laws and regulations over-allot Notes or Undated Capital Securities or effect transactions with a view to supporting the market price of the Notes or the Undated Capital Securities at a level higher than that which might otherwise prevail. However there is no assurance that the Stabilisation Manager(s) (or persons acting on behalf of any Stabilisation Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes or Undated Capital Securities is made and if begun may be ended at any time but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes or Undated Capital Securities and 60 days after the date of the allotment of the relevant Tranche of Notes or Undated Capital Securities.PRESENTATION OF INFORMATION In this Offering Circular unless the context otherwise requires (i) references to “BEA” or the “Issuer” mean The Bank of East Asia Limited 东亚银行有限公司 and as the context may require its subsidiaries; (ii) references to “BEA (China)” mean The Bank of East Asia (China) Limited; and (iii) references to the “Group” mean The Bank of East Asia Limited 东亚银行有限公司 and its subsidiaries.Unless otherwise specified or the context otherwise requires references to “U.S.$” and to “U.S.dollars” are to the lawful currency of the United States of America (the “United States” or “U.S.”) references to “HK$” “Hong Kong dollars” and “HK dollars” are to the lawful currency of the Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong” or “HKSAR”) references to “RMB” and “Renminbi” are to the lawful currency of the People’s Republic of China references to “sterling” “GBP” and “?” are to the lawful currency of the United Kingdom references to “€” “EUR” and “Euro” are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community as amended from time to time references to “Australian dollars” are to the lawful currency of the Commonwealth of Australia references to the “PRC” “Chinese Mainland” and “Mainland China” are to the People’s Republic of China and for the purpose of this Offering Circular except where the context requires do not include Hong Kong Macau Special Administrative Region of the People’s Republic of China (“Macau”) and Taiwan and references to “PRC government” mean the central government of the PRC including all political subdivisions (including provincial municipal and other regional or local governmental entities) and instrumentalities thereof or where the context requires any of them.The English names of PRC nationals entities departments facilities laws regulations certificates titles and the like are translations of their Chinese names and are included for identification purpose only. In the event of any inconsistency the Chinese name prevails.? 7 ?In this Offering Circular where information has been presented in thousands or millions of units amounts may have been rounded up or down especially when rounding into another currency. Certain monetary amounts in this Offering Circular have been subject to rounding adjustments. Accordingly figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.The Hong Kong dollar has been linked to the U.S. dollar at the rate of HK$7.80 to U.S.$1.00 since 17 October 1983 (the “Linked Exchange Rate System”). In May 2005 the Monetary Authority broadened the 22-year old trading band from the original rate of HK$7.80 per U.S. dollar to a rate range of HK$7.75 to HK$7.85 per U.S. dollar.For convenience only all Hong Kong dollar amounts in this Offering Circular have been translated into U.S. dollar amounts at the rate of U.S.$1.00 = HK$7.80. Such translations should not be construed as representations that the Hong Kong dollar amounts referred to could have been or could be converted into U.S. dollars at that or any other rate or at all.INDUSTRY AND MARKET DATA Market data and certain industry forecasts and statistics used throughout this Offering Circular have been obtained from among other sources internal surveys market research publicly available information and industry publications. Industry publications generally state that the information that they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of that information is not guaranteed. Similarly internal surveys industry forecasts and market research while believed to be reliable have not been independently verified and none of the Issuer the Dealers the Arranger the Trustee or the Agents or their respective affiliates directors officers employees representatives advisers agents and each person who controls any of them makes any representation as to the correctness accuracy or completeness of that information. Such information may not be consistent with other information compiled. In addition third-party information providers may have obtained information from market participants and such information may not have been independently verified.FINANCIAL INFORMATION The consolidated financial statements of the Issuer as at and for the year ended 31 December 2022 (the “2022 Financial Statements”) and the consolidated financial statements of the Issuer as at and for the year ended 31 December 2023 (the “2023 Financial Statements”) which are included elsewhere in this Offering Circular were prepared and presented in accordance with the Hong Kong Financial Reporting Standards (“HKFRS”) and have been audited by KPMG.Save for the 2022 Financial Statements and the 2023 Financial Statements the financial information contained in this Offering Circular does not constitute specified financial statements (as defined in the Companies Ordinance (Cap. 622) of Hong Kong (the “CO”)) in relation to BEA. BEA has delivered its specified financial statements for the years ended 31 December 2021 and 2022 to the Registrar of Companies of Hong Kong and will deliver its specified financial statements for the year ended 31 December 2023 to the Registrar of Companies of Hong Kong in due course. KPMG the auditors of BEA has issued auditor’s reports on the specified financial statements in relation to BEA for the financial years ended 31 December 2021 2022 and 2023. Such reports were not qualified or otherwise modified did not refer to any matters to which the auditor drew attention by way of emphasis without qualifying the reports and did not contain any statement under Sections 406(2) or 407(2) or (3) of the CO.? 8 ?FORWARD-LOOKING STATEMENTSThis Offering Circular includes statements that are or may be deemed to be “forward-lookingstatements”. These forward-looking statements can be identified by the use of forward-looking terminology including the terms “believes” “estimates” “intends” “may” “will” or “should” or in each case their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Offering Circular and include statements regarding the intentions beliefs or current expectations of the Issuer concerning among other things the results of operations financial condition liquidity prospects growth strategies and the industries in which the Group operates. By their nature forward-looking statements are subject to numerous assumptions risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.Forward-looking statements are not guarantees of future performance and that the Group’s actual results of operations financial condition and liquidity and the development of the industries in which the Group operates may differ materially from those made in or suggested by the forward-looking statements contained in this Offering Circular. In addition even if the results of operations financial condition and liquidity and the development of the industries in which the Group operates are consistent with the forward-looking statements contained in this Offering Circular those results or developments may not be indicative of results or developments in subsequent periods. The Issuer and its directors employees and agents respectively do not assume: (i) any obligation or undertaking to release any updates or revisions to any forward-looking statements contained herein to reflect any change in the Issuer’s expectation with regard thereto or any change or events conditions or circumstances on which any such statements were based; or (ii) any liability in the event that any of the forward-looking statements does not materialise or turns out to be incorrect.The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that the Issuer or persons acting on its behalf may issue.The Issuer does not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Offering Circular.The following list includes some but not necessarily all of the factors that may cause actual results to differ from those anticipated or predicted: * changes in the general operating environment of the Hong Kong or Chinese Mainland banking industry; * changes in general economic market business and regulatory conditions in Hong Kong Chinese Mainland the United States and other countries; * changes in the monetary and credit policies of the United States Hong Kong and Chinese Mainland; * changes or volatility in interest rates foreign exchange rates equity prices or other rates or prices; * changes in Hong Kong or the PRC governmental policies laws or regulations in particular those affecting the banking industry in Hong Kong or Chinese Mainland; * the effects of intensifying competition in the banking industry in Hong Kong and Chinese Mainland; and * the performance of the real property and financial markets in Hong Kong and Chinese Mainland.? 9 ?Additional factors that could cause actual results performance or achievements to differ materially include but are not limited to those discussed under “Investment Considerations”.Any forward-looking statements that the Issuer make in this Offering Circular speak only as at the date of such statements and the Issuer undertakes no obligation to update such statements.Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance and should only be viewed as historical data.DOCUMENTS INCORPORATED BY REFERENCE The Issuer hereby incorporates by reference (i) each relevant Pricing Supplement (ii) the most recently published audited or reviewed consolidated financial statements of the Issuer and/or the Group published from time to time after the date of this Offering Circular in each case together with any audit or review reports prepared in connection therewith and (iii) all amendments and supplements from time to time to this Offering Circular each of which shall be deemed to be incorporated in and to form part of this Offering Circular and which shall be deemed to modify or supersede the contents of this Offering Circular to the extent that a statement contained in any such document is inconsistent with the contents of this Offering Circular.Any documents themselves incorporated by reference in the documents incorporated by reference in this Offering Circular shall not form part of this Offering Circular.Any statement contained in this Offering Circular or in a document incorporated by reference into this Offering Circular will be deemed to be modified or superseded for purposes of this Offering Circular to the extent that a statement contained in any such subsequent document modifies or supersedes that statement. Any statement that is modified or superseded in this manner will no longer be a part of this Offering Circular except as modified or superseded.Copies of all such documents which are so deemed to be incorporated in and to form part of this Offering Circular will be available for inspection free of charge at all reasonable times (upon prior written request and satisfactory proof of holding and identity) during usual business hours on any weekday (Saturdays Sundays and public holidays excepted) from the office of the Issuer and the specified offices of the Paying Agents set out at the end of this Offering Circular in the case of any inspection at the specified office of any Paying Agent subject to such Paying Agent having first been provided with copies of all such documents by the Issuer.? 10 ?SUPPLEMENTAL OFFERING CIRCULAR The Issuer has given an undertaking to the Arranger and the Dealers that unless it has notified the Permanent Dealers (as defined in “Summary of the Programme”) in writing that it does not intend to issue Notes or Undated Capital Securities under the Programme for the time being if at any time during the duration of the Programme a significant new factor material mistake or inaccuracy arises or is noted relating to the information included in this Offering Circular which is capable of affecting an assessment by investors of the assets and liabilities financial position profits and losses and prospects of the Issuer and/or of the rights attaching to the Notes or the Undated Capital Securities it shall (i) prepare and publish an amendment or supplement to this Offering Circular (ii) advise the Arranger and the Dealers promptly of any proposal to amend or replace this Offering Circular (iii) advise the Arranger and Dealers promptly of any proposal to supplement this Offering Circular and (iv) provide the Arranger and the Permanent Dealers with a copy of any such proposed amendment supplement or replacement immediately prior to its publication.? 11 ?TABLE OF CONTENTS Page SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SUMMARY OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SUMMARY FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 INVESTMENT CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 BUSINESS OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SELECTED STATISTICAL AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 91 BOARD OF DIRECTORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . 110 TERMS AND CONDITIONS OF THE NOTES OTHER THAN THE UNDATED CAPITAL SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 TERMS AND CONDITIONS OF THE UNDATED CAPITAL SECURITIES . . . . . . . . . . 181 SUMMARY OF PROVISIONS RELATING TO THE NOTES AND THE UNDATED CAPITAL SECURITIES WHILE IN GLOBAL FORM . . . . . . . . . . . . . . . . . . . . . . . . . 237 FORM OF PRICING SUPPLEMENT RELATING TO NOTES OTHER THAN THE UNDATED CAPITAL SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 FORM OF PRICING SUPPLEMENT RELATING TO UNDATED CAPITAL SECURITIES ONLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293 INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1 ? 12 ?SUMMARY The summary below is only intended to provide a limited overview of information described in more detail elsewhere in this Offering Circular. As it is a summary it does not contain all of the information that may be important to investors and terms defined elsewhere in this Offering Circular shall have the same meanings when used in this summary. Potential investors should therefore read this Offering Circular in its entirety.OVERVIEW Incorporated in 1918 BEA is a leading Hong Kong-based financial services group listed on the HKSE.The Group provides a comprehensive range of wholesale and personal banking financial and insurance services to a diverse customer base. The Group’s products and services include syndicated loans trade finance deposit-taking foreign currency savings remittances mortgage loans consumer loans credit cards Cyberbanking retail investment and wealth management services private banking Renminbi services foreign exchange margin trading broking services and Mandatory Provident Fund (“MPF”) services.BEA is one of the first foreign banks to have received approval to establish a locally-incorporated bank in Chinese Mainland. As a locally-incorporated bank and a wholly-owned subsidiary of BEA BEA (China) obtained the Financial Institution Business Permit from NFRA* on 20 March 2007 and the business licence from SAIC on 29 March 2007 and officially commenced business on 2 April 2007. BEA (China) provides comprehensive RMB and foreign currency banking services to its customers including but not limited to personal banking and wealth management loans and advances debit cards and credit cards cyberbanking and cash management investment and derivative products agency services for life and general insurance remittance and settlement RMB cross-border business trade finance facilities supply chain financing standby letters of credit bank guarantees and distribution of local mutual funds.STRATEGY BEA’s core objectives are to strengthen its position and to further develop its domestic franchise as the largest independent local bank in Hong Kong and to further diversify its operations and expand its operations in Chinese Mainland and other overseas countries. The Group will continue to enhance its sales force and digital capabilities to capture opportunities as social distancing measures and travel restrictions are relaxed striving for sustainable growth and enhanced shareholder returns. Given the increasingly close economic connection among Chinese Mainland Hong Kong and the countries of Southeast Asia the Group will continue to integrate its services across Hong Kong Chinese Mainland and international networks and capitalise new business opportunities in the Greater Bay Area. The key components of the Group’s strategy are below.* Further expansion in Chinese Mainland and other overseas countries; * Development of green and sustainable finance; * Diversification of non-interest income; * Enhancement of profitability via active capital management; * Transformation of its branch network; * Organic growth and partnerships; and * Focus on enhancing operational efficiency.* Officially established in May 2023 NFRA has replaced the former China Banking and Insurance Regulatory Commission and taken over certain functions of PBOC and the China Securities Regulatory Commission.? 13 ?SUMMARY OF THE PROGRAMME The following summary is qualified in its entirety by the remainder of this Offering Circular. Wordsand expressions defined in “Terms and Conditions of the Notes other than the Undated CapitalSecurities” and “Terms and Conditions of the Undated Capital Securities” below shall have the same meaning in this summary.The Issuer . . . . . . . . . . . . . . . . . The Bank of East Asia Limited 东亚银行有限公司.Description . . . . . . . . . . . . . . . . . Medium Term Note Programme.Size . . . . . . . . . . . . . . . . . . . . . . Up to U.S.$6000000000 (or the equivalent in other currencies at the date of issue) aggregate principal amount of Notes outstanding at any one time.Risk Factors . . . . . . . . . . . . . . . . There are certain factors that may affect the Issuer’s ability to fulfil its obligations under Notes or Undated Capital Securities issued under the Programme. These are set out under “Investment Considerations” below. In addition there are certain factors including for example in respect of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities (each as defined herein) including certain risks in relation to their subordination and the circumstances in which Noteholders or Securityholders may suffer loss as a result of holding any Notes or Undated Capital Securities which are material for the purpose of assessing the market risks associated with Notes or Undated Capital Securities issued under the Programme. These are set out under “Investment Considerations” and include the fact that the Notes or Undated Capital Securities may not be a suitable investment for all investors certain risks relating to the structure of particular Series (as defined below) of Notes or Undated Capital Securities and certain market risks.Arranger . . . . . . . . . . . . . . . . . . . The Hongkong and Shanghai Banking Corporation Limited Dealers . . . . . . . . . . . . . . . . . . . . Barclays Bank PLC CCB International Capital Limited Citigroup Global Markets Limited CLSA Limited 中信里昂证券有限公司 Crédit Agricole Corporate and Investment Bank DBS Bank Ltd.Deutsche Bank AG Hong Kong Branch Goldman Sachs (Asia) L.L.C. 高盛(亚洲)有限责任公司 The Hongkong and Shanghai Banking Corporation Limited J.P. Morgan Securities (Asia Pacific) Limited Merrill Lynch (Asia Pacific) Limited Mizuho Securities Asia Limited 瑞穗证券亚洲有限公司 Morgan Stanley & Co. International plc Shinkin International Ltd.SMBC Nikko Securities (Hong Kong) Limited Société Générale Standard Chartered Bank Standard Chartered Bank (Hong Kong) Limited 渣打银行(香 港)有限公司 The Bank of East Asia Limited 东亚银行有限公司 UBS AG Hong Kong Branch United Overseas Bank Limited Hong Kong Branch 大华银行有限公司香港分行 Wells Fargo Securities International Limited ? 14 ?The Issuer may from time to time terminate the appointment of any dealer under the Programme or appoint additional dealers either in respect of one or more Tranches or in respect of the whole Programme. References in this Offering Circular to “Permanent Dealers” are to the persons listed above as Dealers and to such additional persons that are appointed as dealers in respect of the whole Programme (and whose appointment has not been terminated) and to “Dealers” are to all Permanent Dealers and all persons appointed as a dealer in respect of one or more Tranches.Trustee . . . . . . . . . . . . . . . . . . . . DB Trustees (Hong Kong) Limited.Issuing and Paying Agent . . . . . . Deutsche Bank AG Hong Kong Branch.Transfer Agents . . . . . . . . . . . . . Deutsche Bank AG Hong Kong Branch.Deutsche Bank Luxembourg S.A.Registrars . . . . . . . . . . . . . . . . . . Deutsche Bank AG Hong Kong Branch.Deutsche Bank Luxembourg S.A.CMU Lodging and Paying Agent . Deutsche Bank AG Hong Kong Branch.Method of Issue . . . . . . . . . . . . . The Notes or the Undated Capital Securities may be issued on a syndicated or non-syndicated basis. The Notes or the Undated Capital Securities may be issued in series (each a “Series”) having one or more issue dates (each tranche within such Series a “Tranche”) and on terms otherwise identical (or identical other than in respect of the first payment of interest (in respect of Notes other than Undated Capital Securities) or Distributions (in respect of Undated Capital Securities only) as applicable) the Notes or the Undated Capital Securities of each Series being intended to be interchangeable with all other Notes or Undated Capital Securities of that Series. Each Series may be issued in tranches on the same or different issue dates. The specific terms of each Tranche (which will be supplemented where necessary with supplemental terms and conditions and save in respect of the issue date issue price first payment of interest (in respect of Notes other than Undated Capital Securities) or Distributions (in respect of Undated Capital Securities only) as applicable) and nominal amount of the Tranche will be identical to the terms of other Tranches of the same Series) will be set out in a pricing supplement (a “Pricing Supplement”).Issue Price . . . . . . . . . . . . . . . . . The Notes or the Undated Capital Securities may be issued at their principal amount or at a discount or premium to their principal amount. Partly Paid Notes may be issued the issue price of which will be payable in two or more instalments.? 15 ?Form of Notes . . . . . . . . . . . . . . The Notes may be issued in bearer form (“Bearer Notes”) or in registered form (“Registered Notes”). The Undated Capital Securities may be issued in registered form (“Registered Certificates”). Registered Notes will not be exchangeable for Bearer Notes and vice versa. Any Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities shall be issued in registered form only.Each Tranche of Bearer Notes will initially be in the form of either a temporary Global Note or a permanent Global Note in each case as specified in the relevant Pricing Supplement.Each Global Note will be deposited on or around the relevant issue date with a common depositary for Euroclear and Clearstream or as the case may be a sub-custodian for the CMU and/or any other relevant clearing system. Each Temporary Global Note will be exchangeable for a Permanent Global Note or if so specified in the relevant Pricing Supplement for Definitive Notes. If the TEFRA D Rules are specified in the relevant Pricing Supplement as applicable certification as to non-U.S. beneficial ownership will be a condition precedent to any exchange of an interest in a Temporary Global Note or receipt of any payment of interest in respect of a Temporary Global Note. Each Permanent Global Note will be exchangeable for Definitive Notes in accordance with its terms. Definitive Notes will if interest-bearing have Coupons attached and if appropriate aTalon for further Coupons. See “Summary of ProvisionsRelating to the Notes and the Undated Capital Securitieswhile in Global Form”.Registered Notes will be represented by Certificates one Certificate being issued in respect of each Noteholder’s entire holding of Registered Notes of one Series. Certificates representing Registered Notes that are registered in the name of a nominee for one or more clearing systems are referred to as “Global Certificates”.Registered Notes sold in an “offshore transaction” within the meaning of Regulation S will initially be represented by a Global Certificate.Clearing Systems . . . . . . . . . . . . The CMU Clearstream Euroclear and in relation to any Tranche such other clearing system as may be agreed between the Issuer the Issuing and Paying Agent the Trustee and the relevant Dealer.Initial Delivery of Notes . . . . . . . On or before the issue date for each Tranche the Global Note representing Bearer Notes or the Global Certificate representing Registered Notes may be deposited with a common depositary for Euroclear and Clearstream or deposited with a sub-custodian for the Monetary Authority as operator of the CMU or deposited with a depositary or sub-custodian for any other clearing system or may be delivered outside any clearing system provided that the method of such delivery has been agreed in advance by the Issuer the Trustee the Issuing and Paying Agent and the relevant Dealers. Registered Notes that are to be credited to one or more clearing systems on issue will be registered in the name of or in the name of nominees or a common nominee for such clearing systems.? 16 ?Currencies . . . . . . . . . . . . . . . . . Subject to compliance with all relevant laws regulations and directives Notes and Undated Capital Securities may be issued in any currency agreed between the Issuer and the relevant Dealers.Maturities . . . . . . . . . . . . . . . . . . Subject to compliance with all relevant laws regulations and directives any maturity including for the avoidance of doubt Undated Capital Securities with no fixed maturity.Specified Denomination . . . . . . . Definitive Notes or Undated Capital Securities will be in such denominations as may be specified in the relevant Pricing Supplement save that unless otherwise permitted by then current laws and regulations Notes (including Notes denominated in sterling) which must be redeemed before the first anniversary of their date of issue and in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of section 19 of the FSMA will have a minimum denomination of ?100000 (or its equivalent in other currencies).Fixed Rate Notes or Fixed Rate Fixed interest will be payable (in respect of Notes other than Undated Capital Securities . . . Undated Capital Securities) or confer the right to receive Distributions (in respect of Undated Capital Securities only) as applicable in arrear on the date or dates in each year specified in the relevant Pricing Supplement.Floating Rate Notes or Floating Floating Rate Notes or Floating Rate Undated Capital Rate Undated Capital Securities will bear interest (in respect of Notes other than Securities . . . . . . . . . . . . . . . . . Undated Capital Securities) or confer the right to receive Distributions (in respect of Undated Capital Securities only) as applicable determined separately for each Series as follows: (i) on the same basis as the floating rate under a notional interest rate swap transaction in the relevant Specified Currency governed by an agreement incorporating the 2006 ISDA Definitions as published by the International Swaps and Derivatives Association Inc.as amended supplemented or replaced; or (ii) by reference to LIBOR or EURIBOR or HIBOR or CNH HIBOR or SHIBOR or SOFR Benchmark or SONIA Benchmark or such other benchmark as may be specified in the relevant Pricing Supplement (in relation to Screen Rate Determination for Floating Rate Notes or Floating Rate Undated Capital Securities where the Reference Rate is specified as being SOFR Benchmark please see Condition 5(b)(iii)(C) of the Note Conditions or Condition 4(b)(iii)(C) of the Undated Capital Securities Conditions; and in relation to Screen Rate Determination for Floating Rate Notes or Floating Rate Undated Capital Securities where the Reference Rate is specified as being SONIA Benchmark please see Condition 5(b)(iii)(D) of the Note Conditions or Condition 4(b)(iii)(D) of the Undated Capital Securities Conditions) as adjusted for any applicable margin.? 17 ?Interest periods (in respect of Notes other than Undated Capital Securities) or Distribution Periods (in respect of Undated Capital Securities only) as applicable will be specified in the relevant Pricing Supplement.Zero Coupon Notes . . . . . . . . . . . Zero Coupon Notes may be issued at their nominal amount or at a discount to it and will not bear interest (in respect of Notes other than Undated Capital Securities).Dual Currency Notes . . . . . . . . . Payments (whether in respect of principal or interest and whether at maturity or otherwise) in respect of Dual Currency Notes will be made in such currencies and based on such rates of exchange as may be specified in the relevant Pricing Supplement.Index Linked Notes . . . . . . . . . . Payments of principal in respect of Index Linked Redemption Notes or of interest in respect of Index Linked Interest Notes will be calculated by reference to such index and/or formula as may be specified in the relevant Pricing Supplement.Other Notes . . . . . . . . . . . . . . . . Terms applicable to instalment Notes Non-Preferred Loss Absorbing Notes Dated Subordinated Notes Undated Capital Securities dual currency Notes partly paid Notes and any other type of Note that the Issuer and any Dealer or Dealers may agree to issue under the Programme will be set out in the relevant Pricing Supplement.Interest Periods/Distribution The length of the interest periods for the Notes or the Periods and Interest distribution periods for the Undated Capital Securities and Rates/Distribution Rates . . . . . . the applicable interest rate or distribution rate or its method of calculation may differ from time to time or be constant for any Series. Notes or Undated Capital Securities may have a maximum interest rate a minimum interest rate or both. The use of interest accrual periods permits the Notes or Undated Capital Securities to bear interest or distribution at different rates in the same interest period. All such information will be set out in the relevant Pricing Supplement.Redemption and Redemption The relevant Pricing Supplement will specify the basis for Amounts . . . . . . . . . . . . . . . . . . calculating the redemption amounts payable. Unless permitted by then current laws and regulations Notes or Undated Capital Securities (including Notes or Undated Capital Securities denominated in sterling) which must be redeemed before the first anniversary of their date of issue and in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of section 19 of the FSMA must have a minimum redemption amount of ?100000 (or its equivalent in other currencies).? 18 ?Redemption of Senior (Preferred) The relevant Pricing Supplement will indicate either that the Notes . . . . . . . . . . . . . . . . . . . . Senior (Preferred) Notes cannot be redeemed prior to their stated maturity (other than in specified instalments if applicable or for taxation reasons or following an Event of Default) or that such Senior (Preferred) Notes will be redeemable at the option of the Issuer and/or the holders of any such Senior (Preferred) Note upon giving notice to the holder of any such Senior (Preferred) Note or the Issuer as the case may be on a date or dates specified prior to such stated maturity and at a price or prices and on such terms as are indicated in the relevant Pricing Supplement.Redemption of Dated The relevant Pricing Supplement issued in respect of each Subordinated Notes . . . . . . . . . . issue of Dated Subordinated Notes will indicate that the Dated Subordinated Notes cannot be redeemed prior to their stated maturity other than with the prior approval of the Monetary Authority at the option of the Issuer: (i) for taxation reasons; (ii) following a Capital Event; (iii) following a Loss Absorption Disqualification Event; (iv) on a date or dates specified prior to such stated maturity and at a price or prices and on such terms as are indicated in the applicable Pricing Supplement; or (v) on such other terms as may be indicated in the applicable Pricing Supplement.The relevant Pricing Supplement will specify the basis for calculating the redemption amounts payable.Redemption of Non-Preferred The relevant Pricing Supplement issued in respect of each Loss Absorbing Notes . . . . . . . . issue of Non-Preferred Loss Absorbing Notes will indicate that the Non-Preferred Loss Absorbing Notes cannot be redeemed prior to their stated maturity other than with the prior approval of the Monetary Authority at the option of the Issuer: (i) for taxation reasons; (ii) following a Loss Absorption Disqualification Event; or (iii) on a date or dates specified prior to such stated maturity and at a price or prices and on such terms as are indicated in the applicable Pricing Supplement; or (iv) on such other terms as may be indicated in the applicable Pricing Supplement.The relevant Pricing Supplement will specify the basis for calculating the redemption amounts payable.? 19 ?Redemption of Undated Capital The relevant Pricing Supplement issued in respect of each Securities . . . . . . . . . . . . . . . . issue of Undated Capital Securities will indicate that the Undated Capital Securities cannot be redeemed other than with the prior approval of the Monetary Authority at the option of the Issuer: (i) for taxation reasons; (ii) following a Capital Event; (iii) following a Loss Absorption Disqualification Event; (iv) on a date or dates specified prior to such stated maturity and at a price or prices and on such terms as are indicated in the applicable Pricing Supplement; or (v) on such other terms as may be indicated in the applicable Pricing Supplement.The relevant Pricing Supplement will specify the basis for calculating the redemption amounts payable.Redemption by Instalments . . . . . The Pricing Supplement issued in respect of each issue of Notes or Undated Capital Securities that are redeemable in two or more instalments will set out the dates on which and the amounts in which such Notes or Undated Capital Securities may be redeemed.Notes or Undated Capital The Issuer may issue Senior (Preferred) Notes and/or Securities that can be issued Non-Preferred Loss Absorbing Notes and/or Dated under the Programme . . . . . . . . Subordinated Notes and/or Undated Capital Securities.Status of the Senior (Preferred) The Senior (Preferred) Notes issued by the Issuer and the Notes . . . . . . . . . . . . . . . . . . . Receipts and the Coupons relating to them will constitute direct unconditional unsubordinated and (subject to Note Condition 4) unsecured obligations of the Issuer and will rank pari passu without any preference among themselves and pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer other than any such obligations as are preferred by law all as further described in Note Condition 3(a).Status of the Non-Preferred Loss The Non-Preferred Loss Absorbing Notes issued by the Issuer Absorbing Notes . . . . . . . . . . . . will constitute direct and unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves all as further described in Note Condition 3(b)(i).? 20 ?Status of the Dated Subordinated The Dated Subordinated Notes issued by the Issuer will Notes . . . . . . . . . . . . . . . . . . . constitute direct unsecured and subordinated obligations of the Issuer and shall at all times rank pari passu without any preference among themselves. The rights of the holders of the Dated Subordinated Notes will in the event of the Winding-Up of the Issuer be subordinated in right of payment in the manner provided in Note Condition 3 and the Trust Deed all as further described in Note Condition 3(e).Subordination of the Dated Applicable to Dated Subordinated Notes only. See “TermsSubordinated Notes . . . . . . . . . . and Conditions of the Notes other than the Undated CapitalSecurities — Subordination of Dated Subordinated Notes”.Status of the Undated Capital The Undated Capital Securities issued by the Issuer will Securities . . . . . . . . . . . . . . . . constitute direct unsecured and subordinated obligations of the Issuer and shall at all times rank pari passu without any preference among themselves. The rights of the holders of the Undated Capital Securities will in the event of the Winding-Up of the Issuer be subordinated in right of payment in the manner provided in Undated Capital Securities Condition 3 and the Trust Deed all as further described in Undated Capital Securities Condition 3(b).Subordination of the Undated Applicable to Undated Capital Securities only. See “TermsCapital Securities . . . . . . . . . . and Conditions of the Undated Capital Securities —Subordination of Undated Capital Securities”.Negative Pledge in respect of Applicable to Senior (Preferred) Notes only. See “Terms andSenior (Preferred) Notes . . . . . . Conditions of the Notes other than the Undated Capital Securities — Negative Pledge in respect of Senior (Preferred)Notes only”.Set-off in respect of Applicable to Non-Preferred Loss Absorbing Notes and DatedNon-Preferred Loss Absorbing Subordinated Notes only. See “Terms and Conditions of theNotes and Dated Subordinated Notes other than the Undated Capital Securities — Set-off Notes . . . . . . . . . . . . . . . . . . . . and Payment Void in respect of Non-Preferred LossAbsorbing Notes and Dated Subordinated Notes”.Ranking in respect of Applicable to Non-Preferred Loss Absorbing Notes only. SeeNon-Preferred Loss Absorbing “Terms and Conditions of the Notes other than the UndatedNotes . . . . . . . . . . . . . . . . . . . . Capital Securities — Ranking of Non-Preferred LossAbsorbing Notes”.Non-Viability Loss Absorption The applicable Pricing Supplement issued in respect of each upon a Non-Viability Event in issue of Dated Subordinated Notes may provide that the Loss respect of Dated Subordinated Absorption Option shall be a Write-off in accordance with Notes . . . . . . . . . . . . . . . . . . . . Note Condition 7(a)(i) for Dated Subordinated Notes issued by the Issuer.“Non-Viability Event” means the earlier of (a) the Monetary Authority notifying the Issuer in writing that the Monetary Authority is of the opinion that a Write-off or conversion is necessary without which the Issuer would become non-viable; and ? 21 ?(b) the Monetary Authority notifying the Issuer in writing that a decision has been made by the government body a government officer or other relevant regulatory body with the authority to make such a decision that a public sector injection of capital or equivalent support is necessary without which the Issuer would become non-viable.Consequence of Non-Viability Once the principal amount of and any accrued but unpaid Loss Absorption in respect of interest in respect of the Dated Subordinated Notes has been Dated Subordinated Notes . . . . Written-off it will not be restored in any circumstances including where the relevant Non-Viability Event ceases to continue. Any Write-off pursuant to Note Condition 7(a) shall not constitute an Event of Default under the Dated Subordinated Notes.Concurrently with the giving of a Non-Viability Event Notice the Issuer shall undertake to unless otherwise directed by the Monetary Authority (i) issue a similar notice of Write-off in respect of other Dated Subordinated Capital Instruments in accordance with their terms and (ii) procure a Write-off concurrently and rateably with the Write-off of the Dated Subordinated Notes in respect of the aggregate principal amount of such other Parity Capital Instruments on a pro rata basis with the Dated Subordinated Notes.No holder of the Dated Subordinated Notes may exercise claim or plead any right to any Non-Viability Event Write-off Amount and each holder of the Dated Subordinated Notes shall by virtue of its holding of any Dated Subordinated Notes be deemed to have waived all such rights to such Non-Viability Event Write-off Amount.Non-Viability Loss Absorption The applicable Pricing Supplement issued in respect of each upon a Non-Viability Event in issue of Undated Capital Securities may provide that the Loss respect of Undated Capital Absorption Option shall be a Write-off in accordance with Securities . . . . . . . . . . . . . . . . Undated Capital Securities Condition 7(a)(i) for Undated Capital Securities issued by the Issuer.“Non-Viability Event” means the earlier of: (a) the Monetary Authority notifying the Issuer in writing that the Monetary Authority is of the opinion that a Write-off or conversion is necessary without which the Issuer would become non-viable; and (b) the Monetary Authority notifying the Issuer in writing that a decision has been made by the government body a government officer or other relevant regulatory body with the authority to make such a decision that a public sector injection of capital or equivalent support is necessary without which the Issuer would become non-viable.? 22 ?Consequence of Non-Viability Once the principal amount of and any accrued but unpaid Loss Absorption in respect of interest in respect of the Undated Capital Securities has been Undated Capital Securities . . . Written-off it will not be restored in any circumstances including where the relevant Non-Viability Event ceases to continue. Any Write-off pursuant to Undated Capital Securities Condition 7(a) shall not constitute an Event of Default under the Undated Capital Securities.Concurrently with the giving of a Non-Viability Event Notice the Issuer shall undertake to unless otherwise directed by the Monetary Authority (i) issue a similar notice of Write-off in respect of other Undated Capital Securities Instruments in accordance with their terms and (ii) procure a Write-off concurrently and rateably with the Write-off of the Undated Capital Securities in respect of the aggregate principal amount of such other Parity Capital Instruments on a pro rata basis with the Undated Capital Securities.No holder of the Undated Capital Securities may exercise claim or plead any right to any Non-Viability Event Write-off Amount and each holder of the Undated Capital Securities shall by virtue of its holding of any Undated Capital Securities be deemed to have waived all such rights to such Non-Viability Event Write-off Amount.Hong Kong Resolution Authority Notwithstanding any other term of the Non-Preferred Loss Power in respect of Absorbing Notes or the Dated Subordinated Notes or any Non-Preferred Loss Absorbing other agreement or arrangement including without limitation Notes and Dated Subordinated Note Condition 7(a) or any other agreement or arrangement Notes . . . . . . . . . . . . . . . . . . . . each holder of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes and the Trustee shall be subject and shall be deemed to agree be bound by and acknowledge that they are each subject to having the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes held by each being written off cancelled converted or modified or to having its form changed in the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority without prior notice and which may include (without limitation) and result in any of the following or some combination thereof: (a) the reduction or cancellation of all or a part of the principal amount of or interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes; (b) the conversion of all or a part of the principal amount of or interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes into shares or other securities or other obligations of the Issuer or another person (and the issue to or conferral on the holder of such shares securities or obligations) including by means of an amendment modification or variation of the terms of the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes; and ? 23 ?(c) the amendment or alteration of the maturity of the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes or amendment or alteration of the amount of interest payable on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes or the date on which the interest becomes payable including by suspending payment for a temporary period or any other amendment or alteration of the Note Conditions.With respect to (a) (b) and (c) above references to principal and interest shall include payments of principal and interest that have become due and payable (including principal that has become due and payable at the Maturity Date) but which have not been paid prior to the exercise of any Hong Kong Resolution Authority Power. The rights of the holders of the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes and the Trustee under the Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes and the Note Conditions are subject to and will be amended and varied if necessary solely to give effect to the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority.No repayment of the principal amount of the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes or payment of interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes shall become due and payable or be paid after the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes unless at the time that such repayment or payment respectively is scheduled to become due such repayment or payment would be permitted to be made by the Issuer under the laws and regulations applicable to the Issuer and the Group.Upon the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes the Issuer shall provide a written notice not more than two Business Days after the occurrence of such exercise of the Hong Kong Resolution Authority Power to the holders of Dated Subordinated Notes in accordance with Note Condition 17 and to the Trustee and the Principal Paying Agent in writing.? 24 ?Neither the reduction or cancellation in part or in full of the principal amount of or interest on the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes the conversion thereof into another security or obligation of the Issuer or another person or any other amendment or alteration of the Note Conditions or any other modification or change in the form of the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes as a result of the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Issuer nor the exercise of the Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Dated Subordinated Notes shall constitute a Default under Note Condition 11.Hong Kong Resolution Authority Notwithstanding any other term of the Undated Capital Power in respect of Undated Securities including without limitation Undated Capital Capital Securities . . . . . . . . . . . Securities Condition 7(a) or any other agreement or arrangement each Securityholder and the Trustee shall be subject and shall be deemed to agree be bound by and acknowledge that they are each subject to having the Undated Capital Securities being written off cancelled converted or modified or to having the form of the Undated Capital Securities changed in the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority without prior notice and which may include (without limitation) and result in any of the following or some combination thereof: (a) the reduction or cancellation of all or a part of the principal amount of or Distributions on the Undated Capital Securities; (b) the conversion of all or a part of the principal amount of or Distributions on the Undated Capital Securities into shares or other securities or other obligations of the Issuer or another person (and the issue to or conferral on the holder of such shares securities or obligations) including by means of an amendment modification or variation of the terms of the Undated Capital Securities; and (c) the amendment or alteration of the maturity of the Undated Capital Securities or amendment or alteration of the amount of Distributions payable on the Undated Capital Securities or the date on which the Distributions become payable including by suspending payment for a temporary period or any other amendment or alteration of the Undated Capital Securities Conditions.? 25 ?With respect to (a) (b) and (c) above references to principal and Distributions shall include payments of principal and Distributions that have become due and payable but which have not been paid prior to the exercise of any Hong Kong Resolution Authority Power. The rights of the Securityholders and the Trustee under the Undated Capital Securities and these Undated Capital Securities Conditions are subject to and will be amended and varied if necessary solely to give effect to the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority.No repayment of the principal amount of the Undated Capital Securities or payment of Distributions on the Undated Capital Securities shall become due and payable or be paid after the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Undated Capital Securities unless at the time that such repayment or payment respectively is scheduled to become due such repayment or payment would be permitted to be made by the Issuer under the laws and regulations applicable to the Issuer and the Group.Upon the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Undated Capital Securities the Issuer shall provide a written notice not more than two Business Days after the occurrence of such exercise of the Hong Kong Resolution Authority Power to the Securityholders in accordance with Undated Capital Securities Condition 15 and to the Trustee and the Principal Paying Agent in writing.Neither the reduction or cancellation in part or in full of the principal amount of or Distributions on the Undated Capital Securities the conversion thereof into another security or obligation of the Issuer or another person or any other amendment or alteration of these Conditions or any other modification or change in form of the Undated Capital Securities as a result of the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Issuer nor the exercise of the Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Undated Capital Securities shall constitute a Default under Undated Capital Securities Condition 11.Events of Default and Default . . . Applicable to Senior (Preferred) Notes Non-Preferred LossAbsorbing Notes and Dated Subordinated Notes. See “Termsand Conditions of the Notes other than the Undated CapitalSecurities — Events of Default and Default” and “Terms andCondition of the Undated Capital Securities — Default andEnforcement”.? 26 ?Cross Default . . . . . . . . . . . . . . . Applicable to Senior (Preferred) Notes only. See the relevantsub-condition under “Terms and Conditions of the Notesother than the Undated Capital Securities — Events ofDefault and Default”.Ratings . . . . . . . . . . . . . . . . . . . . Moody’s is expected to rate Dated Subordinated Notes to be issued under the Programme “Baa2” and Undated Capital Securities to be issued under the Programme “Ba2”. S&P is expected to rate Dated Subordinated Notes to be issued under the Programme “BBB-” and Undated Capital Securities to be issued under the Programme “BB”. Where a Tranche of Notes or Undated Capital Securities is to be rated such rating will be specified in the relevant Pricing Supplement.A rating is not a recommendation to buy sell or hold securities and may be subject to suspension reduction revision or withdrawal at any time by the assigning rating agency.Withholding Tax . . . . . . . . . . . . . All payments of principal and interest (in respect of the Notes other than Undated Capital Securities) or Distributions (in respect of Undated Capital Securities only) as applicable and the Receipts and the Coupons (in respect of the Notes) will be made free and clear of withholding taxes of Hong Kongsubject to customary exceptions all as described in “Termsand Conditions of the Notes other than the Undated CapitalSecurities — Taxation” and “Terms and Conditions of theUndated Capital Securities — Taxation”.Governing Law . . . . . . . . . . . . . . English law except that the provisions of the Notes or the Undated Capital Securities relating to subordination shall be governed by Hong Kong law.Listing . . . . . . . . . . . . . . . . . . . . . Application has been made to the HKSE for the listing of the Programme under which Notes or Undated Capital Securities may be issued by way of debt issues to Professional Investors only during the 12-month period after the date of this Offering Circular on the HKSE.Separate application may be made for the listing of the Notes or the Undated Capital Securities on the HKSE. However unlisted Notes or Undated Capital Securities and Notes or Undated Capital Securities to be listed traded or quoted on or by any other competent authority stock exchange or quotation system may be issued pursuant to the Programme.The relevant Pricing Supplement in respect of the issue of any Notes or Undated Capital Securities will specify whether or not such Notes or Undated Capital Securities will be listed on the HKSE or listed traded or quoted on or by any other competent authority exchange or quotation system.Notes or Undated Capital Securities listed on the HKSE will be traded on the HKSE in a board lot size of at least HK$500000 (or its equivalent in other currencies).? 27 ?Legal Entity Identifier . . . . . . . . . CO6GC26LCGGRTUESIP55 Capital Treatment of Dated The applicable Pricing Supplement issued in respect of each Subordinated Notes issue of Dated Subordinated Notes or Non-Preferred Loss Non-Preferred Loss Absorbing Absorbing Notes or Undated Capital Securities as Notes and Undated Capital applicable may provide that the Dated Subordinated Notes Securities . . . . . . . . . . . . . . . . will qualify in full as Tier 2 capital of the Issuer and/or a Loss Absorbing Instrument or that the Non-Preferred Loss Absorbing Notes will qualify as a Loss Absorbing Instrument or that the Undated Capital Securities will qualify as Additional Tier 1 capital of the Issuer as applicable in accordance with the requirements of the Banking (Capital) Rules (Cap. 155L) of Hong Kong and as amended by the Banking (Capital)(Amendment) Rules 2018.Selling Restrictions . . . . . . . . . . . For a description of certain restrictions on offers sales and deliveries of Notes or Undated Capital Securities and on the distribution of offering material in the United States the EEA the United Kingdom Hong Kong Singapore and Japan See “Subscription and Sale” below.Transfer Restrictions . . . . . . . . . . In relation to Notes or Undated Capital Securities in respect of which the relevant Pricing Supplement specifies Regulation S Category 2 as being applicable there are restrictions on the transfer of such Notes or Undated Capital Securities prior to the expiration of the relevant distribution compliance period. See “Subscription and Sale”.? 28 ?SUMMARY FINANCIAL INFORMATION The summary audited consolidated financial information of the Issuer as at and for the years ended 31 December 2021 2022 and 2023 set forth below is derived from the 2022 Financial Statements and the 2023 Financial Statements. The 2022 Financial Statements and the 2023 Financial Statements were prepared and presented in accordance with HKFRS and have been audited by KPMG.The information set out below should be read in conjunction with and is qualified in its entirety by reference to the relevant consolidated financial statements of the Issuer including the notes thereto incorporated in this Offering Circular by reference.? 29 ?CONSOLIDATED INCOME STATEMENT For the year ended 31 December 202120222023 (in HK$ (in HK$ (in HK$ million) million) million) Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18055 24848 39685 Interest income calculated using the effective interest method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19123 24871 36788 Related interest expense . . . . . . . . . . . . . . . . . . . . . . . . . (1068) (23) 2897 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6870) (11340) (22811) Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11185 13508 16874 Fee and commission income . . . . . . . . . . . . . . . . . . . . . . . . 3916 3372 3361 Fee and commission expense . . . . . . . . . . . . . . . . . . . . . . . (847) (619) (721) Net fee and commission income . . . . . . . . . . . . . . . . . . . . . 3069 2753 2640 Net trading profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 879 943 1225 Net result on financial instruments at FVTPL(1) . . . . . . . . . 234 (68) (262) Net result on financial assets measured at FVOCI(2) . . . . . . 45 175 (26) Net loss on sale of investments measured at amortised cost. (14) (6) (22) Net hedging profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 201 30 Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . 741 448 287 Non-interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5098 4446 3872 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16283 17954 20746 Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9321) (9224) (9432) Operating profit before impairment losses . . . . . . . . . . . . . 6962 8730 11314 Impairment losses on financial instruments . . . . . . . . . . . . (1679) (5923) (5483) Impairment losses on associate . . . . . . . . . . . . . . . . . . . . . . — — (726) Impairment losses on other assets . . . . . . . . . . . . . . . . . . . . — (3) (6) Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1679) (5926) (6215) Operating profit after impairment losses . . . . . . . . . . . . . . . 5283 2804 5099 Net profit on sale of assets held for sale . . . . . . . . . . . . . . 1042 1445 2 Net profit/(loss) on disposal of subsidiaries/associates . . . . 181 (1) (12) Net (loss)/profit on disposal of fixed assets . . . . . . . . . . . . (4) 17 14 Valuation losses on investment properties . . . . . . . . . . . . . . (132) (179) (86) Share of profits less losses of associates and joint ventures . (234) 855 293 Profit for the year before taxation . . . . . . . . . . . . . . . . . . . 6136 4941 5310 Income tax credit/(expense) . . . . . . . . . . . . . . . . . . . . . . . . (823) (563) (1174) Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5313 4378 4136 Attributable to: Owners of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . 5270 4359 4118 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . 43 19 18 Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5313 4378 4136 Earnings per share Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$1.53 HK$1.32 HK$1.32 Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$1.53 HK$1.32 HK$1.32 Notes: (1) Fair value through profit or loss (“FVTPL”). (2) Fair value through other comprehensive income (“FVOCI”). ? 30 ?CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 202120222023 (in HK$ (in HK$ (in HK$ million) million) million) ASSETS Cash and balances with banks . . . . . . . . . . . . . . . . . . . . . . . 55088 54579 45903 Placements with and advances to banks . . . . . . . . . . . . . . . . 74742 60203 43691 Trade bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10772 529 373 Trading assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2483 1530 3049 Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3381 11092 9056 Loans and advances to customers . . . . . . . . . . . . . . . . . . . . 544437 542394 526984 Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147507 147007 167270 Investments in associates and joint ventures . . . . . . . . . . . . 8947 9061 8384 Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13844 13476 13493 - Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . 4992 5166 5105 - Other properties and equipment . . . . . . . . . . . . . . . . . . . 8015 7593 7603 - Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837 717 785 Goodwill and intangible assets . . . . . . . . . . . . . . . . . . . . . . 1885 1870 1852 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1861 1849 1836 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42523 39235 38470 Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 907470 882825 860361 EQUITY AND LIABILITIES Deposits and balances of banks . . . . . . . . . . . . . . . . . . . . . . 31766 25478 25619 - Designated at fair value through profit or loss . . . . . . . . 3639 4545 3199 - At amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28127 20933 22420 Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . 633505 648093 628598 - Demand deposits and current accounts . . . . . . . . . . . . . 79657 65899 65643 - Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196662 145107 118163 - Time call and notice deposits . . . . . . . . . . . . . . . . . . . . 357186 437087 444792 Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 — Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5050 4145 4007 Certificates of deposit issued . . . . . . . . . . . . . . . . . . . . . . . 64327 32662 27618 - Designated at fair value through profit or loss . . . . . . . . 32618 19001 9415 - At amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31709 13661 18203 Current taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958 1252 1602 Debt securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5847 2892 844 - Designated at fair value through profit or loss . . . . . . . 620 811 688 - At amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5227 2081 156 Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 226 468 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42915 49799 47312 Loan capital — at amortised cost . . . . . . . . . . . . . . . . . . . . 6488 11927 15967 Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 791420 776479 752035 ------------------------------------ Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41645 41856 41915 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60133 54131 56058 Total equity attributable to owners of the parent . . . . . . . . . 101778 95987 97973 Additional equity instruments . . . . . . . . . . . . . . . . . . . . . . . 13968 10090 10090 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . 304 269 263 Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116050 106346 108326 ------------------------------------ Total Equity and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 907470 882825 860361 ? 31 ?INVESTMENT CONSIDERATIONS Potential investors should carefully take into account the following considerations in addition to the other information contained this Offering Circular before investing in the Notes or the Undated Capital Securities. The occurrence of one or more events described below could have an adverse effect on the Group’s business financial condition or results of operations and could affect its ability to make payments of principal premium and/or interest or distribution (as the case may be) (if any) under the Notes or the Undated Capital Securities. The following considerations and uncertainties may not be exhaustive. Additional considerations and uncertainties not currently known to BEA or which BEA currently deems immaterial may also have an adverse effect on an investment in the Notes or the Undated Capital Securities.CONSIDERATIONS RELATING TO THE GROUP Hong Kong PRC and Global Economies The Group conducts most of its operations(1) and generates most of its revenue in Hong Kong. Its performance and the quality and growth of its assets are necessarily dependent on the overall economy and the local social and political stability in Hong Kong. As a result any downturn in the Hong Kong economy or any instability in the local social political legal and regulatory landscape of Hong Kong may have a material adverse effect on the Group’s business financial condition or results of operations. For example the COVID-19 pandemic and the government policies implemented in response to the pandemic have materially and adversely affected the global economy and financial markets in recent years. Although the World Health Organization declared in May 2023 that COVID-19 is no longer a public health emergency of international concern (PHEIC) the magnitude of the residual impact of the COVID-19 pandemic remains uncertain and any resurgence of the COVID-19 pandemic or outbreak of other contagious diseases could materially and adversely affect the progress of economic and financial recovery if at all.Given the inherent connection between the economies of Hong Kong and the PRC the Group’s performance is influenced by economic conditions in the PRC as well as economic measures undertaken by the PRC government. In recent years there has been a slowdown in the overall growth of the PRC’s economy. Apart from the residual impact of the COVID-19 pandemic the economic slowdown could be caused by a combination of other factors which are beyond the Group’s control including but not limited to global economic conditions governmental policies and changes in market dynamics globally and regionally. If the PRC’s economy experiences a continued slowdown in growth or a downturn in the future the Group’s business and financial performance could be materially and adversely affected.In addition the Hong Kong economy is sensitive to global economic conditions and depends in part upon economic performance of the United States the PRC and other developed countries.Geopolitical events such as the recent Russia-Ukraine and Hamas-Israel military conflicts continued tensions in the Middle East and Korean peninsula as well as disputes between the United States and the PRC over trade policies political and other issues have undermined the stability of the global economy and led to volatility in the global financial markets as well as prices of energy oil and other commodities. The global credit markets have experienced and may continue to experience volatility and liquidity disruptions which have resulted in the consolidation failure or near failure of a number of institutions in the banking and insurance industries such as the collapse of a number of U.S.regional banks and the acquisition of Credit Suisse Group AG by UBS Group AG. The U.S. Federal Reserve has increased the target range for the federal funds rate a number of times which have adversely affected and may continue to adversely affect the global economy and financial markets.Note: (1) Operations based on size of total assets. ? 32 ?It is impossible to predict how the Hong Kong PRC and global economies will develop in the future and whether they may slow down due to adverse economic conditions. Any or all of the geopolitical risks would add to the uncertainties relating to the overall prospects for the Hong Kong PRC and global economies and could have a negative impact on the macroeconomic factors which affect the Group’s business results of operations cash flows financial condition and prospects.Competition The banking and financial services industry in Hong Kong is a mature market and the Group is subject to significant and increasing competition from many other banks and financial institutions including but not limited to Hong Kong-incorporated banks and Hong Kong branches of international and PRC banks. There can be no assurance that the Group will be able to compete effectively in the face of such competition. In particular some of the Group’s competitors may have significantly more financial and other capital resources greater market share and stronger brand recognition than the Group. Many of the international and local banks and niche players operating in Hong Kong compete for substantially the same customers as the Group. Consequently there is a limited market especially for retail banking products such as investment and insurance products home mortgage loans credit cards personal loans and transport lending businesses. Intense competition may make it difficult for the Group to increase the size of its loan portfolio and deposit base and may cause intense pricing competition.There can be no assurance that increased competition will not have a material adverse effect on the Group’s business financial condition or results of operations.Competition among banks and financial institutions in Hong Kong has intensified in recent years. As a result BEA has experienced downward pressure on its margins in recent years. To counter the effects of increased competition BEA has actively pursued a strategy of diversifying its income sources by focusing on increasing its fee-based income introducing innovative products and at the same time improving the cost efficiency of its operations. However there can be no assurance that BEA will be able to compete successfully in the mature Hong Kong banking market and sustain its profitability in future.In addition the Group is also likely to face increasing competition in the PRC market from existing local PRC banks and other foreign banks entering the market. As part of the PRC government’s initiative to develop a more open and internationally competitive financial system by further expanding participation by foreign investors in its financial markets the single shareholding cap in domestic banks and foreign banks was removed in May 2019. Furthermore the regulatory environment in the PRC may change from time to time and there can be no assurance that the Group will be able to maintain its current position or continue to develop its business successfully in the PRC if competition in the PRC banking sector intensifies as a result of such changes.The intensified competition in the markets where the Group operates may adversely affect the Group’s business and prospects the effectiveness of its strategies its results of operations and financial condition by potentially: * reducing the Group’s market share in the principal products and services which it offers; * reducing the growth and quality of the Group’s loan and deposit portfolios and other products and services; * reducing the Group’s interest income and net interest margin; * reducing the Group’s fee and commission income; * increasing the Group’s non-interest and operating expenses; and * increasing competition for qualified managers and employees.? 33 ?Other than the traditional banking institutions the Group also faces intense competition from innovative technology-based financial technology (“FinTech”) companies which are usually start-up companies or technology companies marketplace lenders payment system providers and internet companies. The increasing popularity of FinTech companies is disrupting the way in which traditional banking is conducted. Furthermore FinTech companies have increased their expansion in Hong Kong and the PRC. These jurisdictions have each to varying degrees introduced progressive policy initiatives and received support from their respective regulatory regimes over the past few years. For example the granting of virtual banking licences the entry and increasing presence of virtual banks in the market and the recognition of virtual banking companies as financial institutions have further exacerbated competition in the markets in which the Group operates. Customer expectations are also changing in favour of technology and solutions that provide convenience and immediacy to individual needs which challenges the conventional banking model. If FinTech companies continue to increase in popularity as a source of financing the Group’s business and prospects in particular the revenue it derives from its loan business its payment services fee income and its ability to attract and retain customers may be adversely affected. There can be no assurance that the Group will be able to effectively compete with FinTech companies for customers as a preferred source of financing.Expansion in the Hong Kong and the Chinese Mainland Markets The Group’s strategy involves expansion of its business in the Hong Kong and Chinese Mainland markets organically and through mergers and acquisitions (“M&A”) and alliances if suitable opportunities arise. BEA (China) obtained the Financial Institution Business Permit from the National Financial Regulatory Administration (“NFRA”)* on 20 March 2007 and the business licence from State Administration for Industry and Commerce (“SAIC”) on 29 March 2007 as a locally-incorporated bank. BEA (China) officially commenced business on 2 April 2007. The establishment of a locally-incorporated bank is one of the prerequisites for providing RMB personal banking service in Chinese Mainland.BEA (China)’s operating income from the PRC as well as its advances to companies that have business interests in the PRC may be influenced by the general state of the PRC economy and may be affected by significant political social or legal uncertainties or changes in the PRC (including but not limited to changes in political leadership inflation rate exchange controls and exchange rate and the impact on the changes in regulations governing banking and other businesses). For example the PRC government has adopted a series of stimulus measures including among other things reductions in the reserve requirement ratio and interest rates in response to the economic slowdown in the PRC in recent years. In addition while a multi-year appreciation of the Renminbi exchange rate had already started to give way to two-way fluctuations the decision of the People’s Bank of China (“PBOC”) to change its daily rate fixing mechanism triggered a noticeable downward pressure on the Renminbi exchange rate and fuelled expectations of currency fluctuation ahead. There can be no assurance that the economic and political environment in the PRC will remain favourable to the Group’s business in the PRC in the future and the Group’s continued exposure to the PRC or its strategy to grow its business in the PRC could have a negative impact on the Group’s earnings or an adverse effect on the Group’s business financial condition or results of operations.Further expansion into Chinese Mainland may present the Group with new risks and challenges such as interest rate liberalisation slowdown in credit growth margin compression asset quality deterioration more stringent and changing regulatory requirements and new competition from internet finance players and online money market funds. Expansion and integration of new M&A and alliances in the Hong Kong and Chinese Mainland markets may also require significant financial * Officially established in May 2023 NFRA has replaced the former China Banking and Insurance Regulatory Commission and taken over certain functions of PBOC and the China Securities Regulatory Commission.? 34 ?operational administrative and management resources. The success of any M&A and alliances will depend in part on the ability of BEA’s management to integrate the operations of newly acquired businesses with its existing operations and where applicable to integrate various departments systems and processes. Consequently the Group’s ability to implement its business strategy may be constrained and the timing of such implementation may be affected due to the demand placed on existing resources by the process. There can be no assurance that the acquired entities will achieve the level of performance that BEA anticipates or that the projected demand for and margins of the Group’s products and services will be realised. The failure to manage expansion effectively could have an adverse effect on the Group’s business financial condition and results of operations.Changes in Regulations in the Chinese Mainland Market The regulations which apply to the Group’s business in the PRC are extensive complex and frequently changing. The PRC banking regulatory regime has been evolving continuously. Some of the changes in rules and regulations may result in additional costs or restrictions on BEA (China)’s operations and business expansion in Chinese Mainland and there can be no assurance that such changes will not materially and adversely affect the Group’s business financial condition and results of operations.BEA (China)’s business and operations are directly affected by the changes in laws rules regulations or policies relating to the PRC banking industry. As some of the banking laws rules regulations or policies are relatively new there are uncertainties regarding their interpretation and application. If BEA (China) fails to comply with any of these laws rules regulations or policies it may result in enforcement actions which may include fines to be imposed on BEA (China) restrictions on its business activities or in extreme cases suspension or revocation of its business licences which would materially and adversely affect BEA (China)’s operations reputation business and financial position.BEA (China) operates in a highly regulated industry. The principal regulators of the PRC banking industry include NFRA PBOC and the State Administration of Foreign Exchange (“SAFE”). NFRA requires all commercial banks in the PRC to maintain certain financial ratios including but not limited to liquidity coverage ratio (“LCR”) liquidity ratio net stable funding ratio (“NSFR”) and capital adequacy ratio (“CAR”).In accordance with the amended Commercial Banking Law of the PRC the previous requirement that all commercial banks in the PRC should maintain a loan-to-deposit ratio of not more than 75 per cent.has been removed and loan-to-deposit ratio has been changed from a supervisory indicator to a liquidity monitoring indicator. However NFRA will use other indicators such as LCR liquidity ratio and NSFR to monitor the liquidity status of commercial banks. If BEA (China) fails to fulfil these mandatory requirements it may result in restrictions on its business expansion imposed by NFRA such as suspension of new business application and establishment of new branch or sub-branch.In addition NFRA issues regulations and guidelines governing the capital management of all commercial banks in the PRC from time to time. If the regulatory capital requirements liquidity restrictions or ratios applicable to BEA (China) increase in the future any failure of BEA (China) to comply with the relevant requirements restrictions or ratios could result in administrative actions or sanctions which may have a material adverse impact on the Group’s business financial condition and results of operations. A shortage of available capital might also restrict the Group’s opportunities for expansion.Dependence on Key Personnel and Recruitment The Group’s ability to sustain its growth and meet future business demands depends on its ability to attract recruit and retain suitably skilled and qualified staff. Given the Group’s rapid expansion in the Chinese Mainland market there can be no assurance that the Group will be able to recruit staff in sufficient numbers or with sufficient experience or that pressure on recruitment will not lead to significant increases in the Group’s employment costs. Competition for suitably skilled and qualified ? 35 ?staff is particularly acute in Chinese Mainland. Any of these factors could adversely affect the Group’s business financial condition and results of operations.In addition the Group also faces strong competition to retain skilled and qualified staff and the loss of key personnel or any inability to manage attrition levels in different employee categories may have an adverse effect on the Group’s business its ability to grow increased employment and training and development costs and its control over various business functions. There can be no assurance that there will be no departures of personnel from the senior management of BEA and that if future departures do occur the Group’s business and operations will not be adversely affected.Expanding Range of Products and Services In order to meet the needs of the Group’s customers and to diversify its business portfolio the Group has been expanding the range of products and services it offers to its customers. Expansion of the Group’s business is subject to certain risks and challenges including but not limited to the following: * if the Group fails to promptly identify and expand into new areas of business to meet the increasing demand for certain products and services the Group may fail to maintain its market share or lose some of its existing customers; * the Group may not have sufficient experience expertise or resources in certain new products and services and may not be able to compete effectively in these areas; * new products and services offered by the Group may not be well-received by the Group’s customers or meet its expectations for profitability; * new products and services offered by the Group may give rise to potential disputes or claims from customers; * the Group may face difficulties in recruiting and retaining experienced professionals or qualified personnel necessary to conduct its new business activities; * the Group may fail to obtain the necessary regulatory approval for its new products or services; and * the Group may not be successful in enhancing its risk management capabilities and information technology systems to support a broader range of products and services.The continuous rapid growth of the Group’s business imposes additional demand on the management and operation levels of the Group and increases the number of risks and challenges faced by the Group. Regardless of the Group’s active efforts in improving its corporate structure and governance it takes time for the Group to implement appropriate and relevant measures and such measures may be unable to enhance aspects of the Group’s corporate structure and governance in the manner anticipated.In addition the Group may require additional capital in order to sustain its business growth. The ability of the Group to increase capital is subject to various factors including the Group’s future financial conditions approval from governmental and regulatory authorities and the overall conditions of the market.If the Group fails to keep growing at the current speed manage its integration and expansion effectively or increase capital to address the risks and challenges brought by its rapid growth or if any new business activity fails to achieve the intended results the Group’s business financial condition results of operations and prospects may be adversely affected.? 36 ?Exposure to the Chinese Mainland Market As at 31 December 2023 BEA’s wholly-owned subsidiary BEA (China) headquartered in Shanghai operated 30 branches in Shanghai Beijing Tianjin Harbin Dalian Shenyang Qingdao Shijiazhuang Zhengzhou Urumqi Hangzhou Nanjing Suzhou Chengdu Chongqing Wuhan Hefei Xi’an Shenzhen Shenzhen Qianhai Guangzhou Zhuhai Xiamen Changsha Kunming Ningbo Jinan Fuzhou Nanning and Nanchang as well as 32 sub-branches covering 38 cities in the PRC. BEA (China) operates 20 outlets covering nine Chinese Mainland cities (including Dongguan Foshan Guangzhou Huizhou Jiangmen Shenzhen Zhaoqing Zhongshan and Zhuhai) in the Guangdong — Hong Kong — Macau Greater Bay Area (the “Greater Bay Area”).As at 31 December 2021 2022 and 2023 loans and advances to customers made by the Group’s operations in Chinese Mainland collectively amounted to approximately HK$150030 million HK$147364 million and HK$141630 million respectively representing approximately 27.3 per cent. 26.8 per cent. and 26.6 per cent. respectively of the Group’s total loans and advances to customers. The value of the Group’s advances in Chinese Mainland as well as its advances to companies that have business interests in Chinese Mainland may be influenced by the general state of the PRC economy and may be affected by significant political social or legal uncertainties or changes in Chinese Mainland (including inflation rate exchange controls and exchange rate and the impact on the changes in regulations governing banking and other businesses). As at 31 December 2021 2022 and 2023 the impaired loan ratio of the Group’s advances in Chinese Mainland was approximately 1.5 per cent. 2.8 per cent. and 2.7 per cent. respectively. The high impaired loan ratio of the Group’s advances in Chinese Mainland as at these dates was as a result of among other factors the economic slowdown in the PRC resulting in deterioration of the asset quality in Chinese Mainland.While the Group has tightened its credit policies such as remaining cautious on extending credit and continuing to actively manage the impaired loan portfolio and has put more focus on lending to state-owned enterprises and large-scale enterprises targeted strategic industries supported by national policies and/or green and sustainable finance there can be no assurance that the impaired loan ratio of the Group’s advances in Chinese Mainland will not increase in the future nor can there be any assurance that the Group’s continued exposure to Chinese Mainland or its strategy to grow its business in Chinese Mainland will not have a negative impact on the Group’s earnings or an adverse effect on the Group’s business financial condition or results of operations or that the economic and political environment in Chinese Mainland will remain favourable to the Group’s business in Chinese Mainland in the future.Concentration Risk — Exposure to the Property Market The Group has significant direct and indirect exposure to the property market particularly in Hong Kong and Chinese Mainland through its portfolio of property related advances and property used as collateral. As at 31 December 2023 the Group’s property related loans (comprising property developments and property investment advances) amounted to approximately HK$158074 million representing approximately 29.7 per cent. of the Group’s total loan portfolio.The Hong Kong and the PRC property markets are highly cyclical and property prices in general have been volatile. The property-related sectors in Hong Kong have experienced significant fluctuations in property prices and transaction volumes. Property prices in Hong Kong are affected by a number of factors including but not limited to the supply of and demand for comparable properties the rate and prospects of economic growth in Hong Kong the policies of the Government of HKSAR (the “HKSARG”) Hong Kong interest rate movements which are largely dependent on the timing and pace of the U.S. interest rate hikes capital outflow pressures in relation to global competitive monetary easing and currency depreciation political economic monetary and property market developments in the PRC and the relationship between the PRC Hong Kong and other countries.? 37 ?In Hong Kong the Monetary Authority has implemented regulatory measures in recent years to mitigate risks in residential mortgage lending in the banking sector. In addition the HKSARG has tried to increase land supply and the supply of real estate. As the introduction of these measures are subject to policy changes reflecting domestic political or economic circumstances there can be no assurance that the HKSARG will not introduce further measures in the future that may have a significant impact on the Hong Kong property market which may in turn have a negative impact on the Group’s asset quality or an adverse effect on the Group’s business.The property market in the PRC has showed significant volatility in recent years. In particular the recent defaults by a number of property developers the financial turmoil within the property sector and the non-payment of mortgage loans on pre-sale properties by a growing number of homebuyers have caused concern over the sustainability and future direction of the property market in the PRC.The PRC government has launched and may from time to time launch various initiatives targeting to stabilise sound development of the real estate market in the PRC.Accordingly any prolonged decrease or fluctuations in property values or liquidity of the Hong Kong and the PRC property markets could adversely affect the Group’s business financial condition and results of operations.Liquidity and Funding Sources The Group endeavours to diversify its funding sources in order to maintain the stability of its liquidity. However the majority of the Group’s funding requirements are met in the form of deposits from customers. In particular as at 31 December 2021 2022 and 2023 approximately 84.8 per cent. 74.1 per cent. and 79.5 per cent. respectively of the Group’s deposits from customers had a remaining maturity of three months or less. Historically a substantial portion of such deposits from customers has been rolled over upon maturity and these deposits have been in essence a stable source of long-term funding. However there can be no assurance that this pattern will continue. If a substantial number of depositors do not roll over deposited funds upon maturity the Group’s liquidity position would be adversely affected and the Group may need to seek alternative sources of short-term or long-term funding to finance its operations which may be more expensive than existing deposits.Although the Group has issued debt securities to diversify its funding sources customer deposits remain its primary funding source in Hong Kong. In Chinese Mainland the Group’s strategy is to maintain a diversified pool of RMB deposits fund in order to stabilise its funding sources to minimise costs associated with interbank borrowing having considered the size of loan business and funding needs going forward. From 31 December 2021 to 31 December 2023 the Group’s total of deposits from customers and certificates of deposits issued decreased from approximately HK$697832 million to approximately HK$656216 million and the Group’s deposits from customers decreased from approximately HK$633505 million to approximately HK$628598 million. There are many factors affecting the movement of the Group’s deposits some of which are beyond the Group’s control such as economic and political conditions the availability of alternative investment choices (including but not limited to securities issued by governmental or corporate entities unit trusts and mutual funds investment-linked assurance schemes and structured investment products) changes in government monetary policy and retail customers’ changing perceptions towards savings. There can be no assurance that the Group will be able to maintain its customer deposits to support its business.As part of its measures to maintain the liquidity of and confidence in the Hong Kong financial markets the Hong Kong Deposit Protection Board enhanced the Deposit Protection Scheme with an increased protection limit of HK$500000 and expanded coverage including deposits pledged as security came into effect on 1 January 2011. On 24 March 2016 the Deposit Protection Scheme (Amendment) Ordinance 2016 (the “2016 Amendment Ordinance”) came into effect. Among other things a gross payout approach is adopted for the determination of compensation under the Deposit Protection Scheme in case the scheme is triggered. Under this approach any compensation paid to ? 38 ?depositors is determined on the basis of their aggregate protected deposits held with a failed bank (up to HK$500000 per depositor) without deducting the amount of liabilities owed by those depositors to the same bank. The gross payout approach enables the affected depositors to have faster access to their deposits. There can be no assurance that the level of customer deposits and therefore of the Group’s liquidity will not be adversely affected by the withdrawal of or any changes to the Deposit Protection Scheme in the future.In addition the statutory LCR and NSFR requirements came into effect on 1 January 2015 and 1 January 2018 respectively. The Group endeavours to comply with the regulatory requirements including these ratios at all times. The Group holds sufficient high quality liquidity assets (“HQLA”) which consist of cash exchange fund bills and notes high quality government debt securities and other equivalent liquid marketable assets to fulfil the LCR and NSFR requirements. In times of liquidity stress the stock of HQLA can be easily and immediately converted into cash to meet unexpected and material cash outflows.The Monetary Authority acts as the lender of last resort to all authorized institutions in Hong Kong to provide liquidity support in the banking system generally as well as to specific institutions.Although the HKSARG has in the past taken measures on a case-by-case basis to maintain or restore public confidence in individual banks with an isolated liquidity crisis there can be no assurance that the Monetary Authority will provide such assistance in the future or that it would elect to provide such assistance in the future to BEA in the event of a liquidity crisis.If the Group fails to maintain its expected growth rate in deposits or if a substantial portion of the Group’s depositors withdraw their demand deposits or do not roll over their time deposits upon maturity the liquidity position financial condition and results of operations of the Group may be materially and adversely affected and the Group may need to seek more expensive sources of funding to meet its funding requirements.Interest Rate Risk As with most banks the Group’s net interest income is a significant factor in determining its overall financial performance. For the years ended 31 December 2021 2022 and 2023 the Group’s net interest income represented approximately 68.7 per cent. 75.2 per cent. and 81.3 per cent.respectively of its operating income.There have been significant fluctuations in market interest rates in recent years. Since the first quarter of 2022 the Federal Open Market Committee of the United States has made upward adjustments to the target federal funds rate to tackle inflation. While interest rates are believed to have peaked the possibility of a rate cut by the Federal Reserve would depend on upcoming employment and inflation data. The fluctuations in interest rates may result in continued volatilities in global capital markets which in turn could adversely affect business and consumer confidence.For example an increase or decrease in interest rates may affect the Group’s interest income and yields from interest-earning investments. Nevertheless a substantial increase in interest rates may decrease the value of the Group’s debt securities portfolio and raise the Group’s funding costs and vice versa. In addition a continued rise in interest rate levels may adversely affect the economy in Hong Kong and the financial condition and repayment ability of the Group’s corporate and individual borrowers including credit card holders which in turn may lead to a deterioration in the Group’s credit portfolio. The interest rate movements in different markets may also be different which may make it more difficult for the Group to hedge interest rate risk effectively. Moreover the Group is also subject to interest rate risk as a result of mismatches in pricing and duration of its assets and liabilities. As a result volatility in interest rates could have an adverse effect on its business financial condition liquidity and results of operations.? 39 ?Classification of Advances and Adequacy of Allowance for Advance Losses In 2007 Hong Kong implemented the Revised Framework of International Convergence of Capital Measurement and Capital Standards (“Basel II”). In 2013 Hong Kong further implemented the reform of capital standards (known as “Basel III”) issued by the Basel Committee on Banking Supervision (the “Basel Committee”) in the local banking regulation.In accordance with guidelines set by the Monetary Authority BEA obtained approval to adopt the Foundation Internal Ratings-based Approach and classifies its advances into twenty grades under which impaired loans are classified into one of the following three categories corresponding to levels of risk: “sub-standard” “doubtful” and “loss”. Please see “Selected Statistical and OtherInformation” in this Offering Circular for further information. The classification of impaired advances depends on various quantitative and qualitative factors including the number of months by which payments have fallen into arrears the type of advance the tenor of the advance and the expected recovery status of the advance.Since 2018 BEA has adopted a forward-looking expected credit loss model and has established a framework to determine whether the credit risk on a particular advance has increased significantly since initial recognition for measuring and recognising impairment loss to meet the requirement of HKFRS 9 — Financial instruments (“HKFRS 9”). BEA conducts regular review to monitor the effectiveness of the model and the framework.The laws regulations and guidelines governing the banking industry in Hong Kong differ from those applicable in certain other countries in certain respects and may result in particular advances being classified as impaired loan advances at a different time or being classified in a category reflecting a different degree of risk than would be required in certain other countries. While BEA strictly follows the spirit of statutory compliance in different aspects when formulating and executing its credit policies and control guidelines the Group is not required to maintain such policies at levels above those generally applicable to banks in Hong Kong.Minimum Regulatory Capital and Liquidity Requirements The Issuer is subject to the risk inherent in all regulated financial businesses of having insufficient capital resources to meet the minimum regulatory capital requirements. Capital requirements are more sensitive to market movements than under previous regimes and capital requirements will increase if economic conditions or negative trends in the financial markets worsen. Any failure of the Issuer to maintain its minimum regulatory capital requirements could result in administrative actions or sanctions which in turn may have a material adverse impact on the Issuer’s results of operations. A shortage of available capital might restrict the Issuer’s opportunities for expansion.On 16 December 2010 and on 13 January 2011 the Basel Committee issued its final guidance on Basel III. The Basel Committee’s package of reforms includes increasing the minimum common equity (or equivalent) requirement and the total Tier 1 capital requirement. In addition banks are required to maintain a capital conservation buffer on top of the minimum regulatory capital to withstand future periods of stress. If there is excess credit growth in any given country resulting in a system-wide build-up of risk a countercyclical buffer on top of the minimum regulatory capital is to be applied as an extension of the conservation buffer. Furthermore systemically important banks should have loss absorbing capacity beyond these standards. The Basel III reforms also require banks’ capital instruments to be more loss-absorbing. The reforms therefore increase the minimum quantity and quality of capital which banks are obliged to maintain. There can be no assurance as to the availability or cost of such capital. The capital requirements are supplemented by other financial measures such as leverage ratio liquidity coverage ratio and net stable funding ratio. The reforms have been adopted in Hong Kong through a series of legislative amendments with many of the new rules having taken effect from 2013. The implementation of the revised or new standards associated with credit risk operational risk market risk credit valuation adjustment risk and the output floor under the Basel III final reform package will take effect on 1 January 2025.? 40 ?Aside from its compliance with Basel III regulatory capital requirements the Issuer is also required to comply with the Financial Institutions (Resolution) (Loss-absorbing Capacity Requirements — Banking Sector) Rules (Cap. 628B) of Hong Kong (the “LAC Rules”) which came into operation on 14 December 2018. The LAC Rules introduced an additional loss absorbing capacity ratio which the Issuer is required to maintain in addition to existing capital and liquidity requirements implemented under Basel III. The Issuer may in the future need to issue other loss absorbency capital instruments to meet the relevant requirements in the LAC Rules. However the definitive loss-absorbing capacity requirements that apply to a particular authorized institution will be determined depending on institution-specific circumstances of that authorized institution in a way which supports the preferred resolution strategy of the authorized institution and imposed in accordance with the LAC Rules.There can be no assurance that the Issuer will be able to obtain additional capital in a timely manner on acceptable terms or at all. Further the Monetary Authority may implement the package of reforms in a manner that is different from that which is currently envisaged or may impose additional capital requirements on authorized institutions.If the regulatory capital and liquidity requirements applied to the Group become more stringent in the future any failure of the Group to maintain such tightened regulatory capital requirements or liquidity requirements within the applicable timeline could result in administrative actions or sanctions which may have an adverse effect on the Group’s results of operations.Currency Risks The majority of the Group’s revenue is generated in Hong Kong dollars. Nonetheless as at 31 December 2023 the Group held a substantial part of its spot assets in U.S. dollars amounting to approximately HK$242291 million and Renminbi amounting to approximately HK$224078 million.The Hong Kong dollar has been linked to the U.S. dollar since 1983 and the HKSARG has in the past expressed its commitment to maintaining exchange rate stability under the Linked Exchange Rate System which is an automatic interest rate adjustment mechanism. However there can be no assurance that the Hong Kong dollar will continue to be linked to the U.S. dollar or that in the event of a liquidity complication affecting the Hong Kong dollar the automatic interest rate adjustment mechanism will help to maintain adequate liquidity for the Hong Kong dollar. The Group’s business financial condition and results of operations could be adversely affected by the impact on the Hong Kong economy of the discontinuation of the link of the Hong Kong dollar to the U.S. dollar or any revaluation of the Hong Kong dollar.In addition the Group generates some of its revenue in the PRC and a portion of its assets and liabilities are denominated in Renminbi. As a result fluctuations in the exchange rate of Renminbi against the Hong Kong dollar or the U.S. dollar could affect the Group’s profitability and financial condition. The volatility in exchange rates of Renminbi against the U.S. dollar and other currencies is affected by among other factors changes in the PRC’s and international political and economic conditions and the fiscal and monetary policies of the PRC government. Also it is difficult to predict how the Renminbi exchange rates may change in the future. There can be no assurance that Renminbi will not experience significant fluctuations against the U.S. dollar or other currencies in the future.The Group’s Unsecured Lending Portfolio A part of the Group’s corporate loan portfolio comprises unsecured loans the repayment of which is largely dependent on the cash flow of the borrowers and adherence to the financial covenants contained in the loans. The majority of the Group’s personal banking loan portfolio comprises loans secured by properties while the remaining portion comprises mainly unsecured personal loans and credit card receivables which generally carry higher rates of interest. As at 31 December 2021 2022 and 2023 approximately 56.1 per cent. 55.8 per cent. and 56.4 per cent. respectively of the Group’s total loans and advances to customers were covered by collateral. Although the Group carefully assesses the repayment ability of such borrowers loan products which are not secured by any collateral entail a higher degree of credit risk than secured loan products. If there is a downturn in the economy the credit quality and charge-off rates experienced by the Group may deteriorate.? 41 ?Quality of the Group’s Loan Portfolio Investment Securities Investments in Associates and Joint Ventures or Other Assets The Group’s business could be materially and adversely affected by any deterioration in the quality of its loan portfolio investment securities investments in associates and joint ventures or other assets. Risks arising from changes in credit quality and the recoverability of loans and amounts due from counterparties as well as risks from the Group’s investment activities are inherent in a wide range of the Group’s businesses. The Group’s impaired loans represented approximately 2.69 per cent.of its total loans and advances to customers as at 31 December 2023. The Group may not be able to control effectively the level of impaired loans in its current loan portfolio or the level of new loans that may become impaired in the future. In particular the amount of the Group’s impaired loans the ratio of its impaired loans to its loans and advances to customers may increase in the future due to deterioration in the quality of its loan portfolio or a substantial increase in the amount of its new loans. Deterioration in the quality of the Group’s loan portfolio investment securities investments in associates and joint ventures or other assets may occur for a variety of reasons including factors that are beyond the Group’s control such as a slowdown in growth of the Hong Kong or global economies a relapse of the global credit crisis volatility in interest rates and market liquidity and other adverse macroeconomic trends and financial conditions in Hong Kong and other parts of the world. Such factors may cause operational financial and liquidity problems for the Group’s borrowers and the issuers of the Group’s investment securities which may materially and adversely affect their ability to service their outstanding debt and fulfil their payment obligations associated with the securities issued. Other factors including an actual or perceived failure or worsening credit of counterparties (in particular those counterparties to which the Group has substantial exposure) declines in residential and commercial property prices higher unemployment rates a decline in credit quality the Group’s participation in overseas markets and reduced profitability of corporate borrowers may also materially and adversely affect the quality of the Group’s loan portfolio investment securities and investments in associates and joint ventures as well as the Group’s business financial condition and results of operations. For example as at 31 December 2023 the fair value of the Group’s investment in AFFIN Bank Berhad based on the quoted market price had been persistently below the carrying amount. As a result the Group performed an impairment test on the investment using a value-in-use methodology and an additional impairment charge of HK$726 million was recognised in 2023. Please refer to Note 30 to the 2023 Financial Statements for further information. There can be no assurance that the Group will be able to take any effective mitigating or preventative action ahead of any unexpected and uncontrollable external factors.In addition to the extent that a material portion of the Group’s loans has been extended to a relatively small number of counterparties the overall quality of its loan portfolio could be adversely affected by a decline in the credit quality of such borrowers. Moreover the Group’s expansion in the Chinese Mainland and overseas markets may potentially impact the quality of its loan portfolio where the Group is less able to control its loan portfolio quality and where uncertainties in economic and monetary policies are likely to severely affect its borrowers. Furthermore in connection with its periodic examinations of BEA’s operations the Monetary Authority may in the future require BEA to change the classification of some of its loans which may increase the level of the Group’s impaired loans. If the level of the Group’s impaired loans or write-offs in its investment securities and other assets increases the Group’s business financial condition and results of operations may be materially and adversely affected.The Group may not be able to realise the full value of its collateral as a result of a downturn in the real estate markets delays in bankruptcy and foreclosure proceedings fraudulent transfers by borrowers and other factors beyond its control. Any decline in the value of the collateral securing the Group’s loans may result in an increase in its impairment allowances and/or a reduction in the recovery from collateral realisation any of which may adversely affect its business financial condition and results of operations.? 42 ?Different Loan Classification and Provisioning System The Group’s impaired loans are sub-divided into three categories: “sub-standard” (Grade 18) “doubtful” (Grade 19) and “loss” (Grade 20). When the repayment of an advance is uncertain (for example there is a past-due record of 90 days or more) the Group downgrades the advance to “sub-standard”. If full recovery of the advance is in doubt and the Group expects to sustain a loss of principal or interest the Group classifies the advance as doubtful. Loss advances are those which are considered non-collectible after exhausting all collection efforts such as the realisation of collateral and the institution of legal proceedings and the liquidator or official receiver has ascertained the relevant recovery ratio.The laws regulations and guidelines governing banking business in Hong Kong differ from those applicable in certain other countries in certain respects and may result in particular loans being classified at a different time or being classified in a category reflecting a different degree of risk than would be required in certain other countries. In addition the typical procedures for writing off loans in Hong Kong may result in loans being written-off later than would be the case for banks in certain other countries. Banks in Hong Kong may accrue interest on “sub-standard” loans in situations where such interest would not be accrued by banks in certain other countries. Whilst BEA believes that its loan provisioning policies are more prudent than those which are required under Hong Kong laws and regulations the Group is not required to maintain such policies at levels above those generally applicable to banks in Hong Kong.Investments in Debt Securities The Group holds a portfolio of debt securities with different investment grades. The Group has analysed its investments in debt securities according to the designation of external credit institutions such as Moody’s. As at 31 December 2023 the Group had a total investment in debt securities of approximately HK$168963 million of which approximately 5.4 per cent. were rated Aaa approximately 20.1 per cent. were rated between Aa1 to Aa3 approximately 42.3 per cent. were rated between A1 to A3 approximately 28.8 per cent. were rated lower than A3 and approximately 3.4 per cent. were unrated.Given the uncertainties in the current credit and capital markets there can be no assurance that the Group will not suffer any future marked-to-market losses on its original investment amount in its portfolio of debt securities.Operational Risks Associated with the Group’s Industry As with most financial institutions the Group is exposed to many types of operational risks including but not limited to the risk of theft forgery fraud unauthorised transactions or other misconducts by employees (including but not limited to the violation of regulations for the prevention of corrupt practices and other regulations governing the Group’s business activities) and operational errors including but not limited to clerical or record-keeping errors and errors resulting from faulty computer or telecommunications systems. Given the high volume of transactions entered into by the Group certain errors may be repeated or compounded before they could be discovered and successfully rectified. Although the Group maintains a system of controls designed to manage operational risks to a reasonable level the design of the controls and procedures may be inadequate or circumvented which may cause delays in the detection of such errors. If such risks or errors do materialise or occur the Group’s business reputation results of operations financial conditions and prospects will be adversely affected.? 43 ?In addition the Group may use direct marketing agents to market its retail credit products and would outsource some functions to other companies from time to time. Consequently the Group is exposed to the risk that such third parties may be unable to fulfil their contractual obligations or will be subject to similar risks of fraud or operational errors by their employees. Moreover the Group is exposed to the risk that its or its counterparties’ business continuity and data security systems are proven not to be robust enough in the event of a system failure or natural disaster.The Group’s dependence upon automated systems to record and process transactions may further increase its exposure to the risk of technical system flaws or human tampering or manipulation of those systems any of which could result in losses that may be difficult to detect. Furthermore the Group’s operating systems could be disrupted by events which are wholly or partially beyond the Group’s control (including for example computer viruses or electrical or telecommunication outages) and such disruptions may undermine the quality of the Group’s customer services and/or cause the Group to suffer losses or incur substantial liability. The Group’s reputation could be adversely affected by the occurrence of any operational events involving its employees customers or third parties. In addition to internal factors that may affect the Group’s operations the rapid growth and expansion of the Group’s business in recent years may have also added complexity to the Group’s internal and external control systems and risk management measures thereby further increasing the operational risks which the Group is subject to.Legal Litigation and Regulatory Proceedings The Group is required to comply with legal and regulatory requirements including but not limited to regulations on potential conflicts of interest anti-money laundering and anti-terrorism laws and regulations sales and trading practices ethical issues privacy laws information security policies and conduct by companies with which it is associated. Failure to address these issues appropriately may give rise to legal and compliance risks which may increase the number of litigation claims and the amount of damages asserted against the Group and/or subject the Group to regulatory enforcement actions fines penalties or reputational damage.The Group is involved from time to time in legal proceedings arising in the ordinary course of its operations. Please see “Business of the Group — Litigation” for further information. Litigation arising from any failure injury or damage of the Group’s operations including but not limited to inadequate or failed internal processes people or systems or from external events may result in the relevant member of the Group being named as defendant in lawsuits involving large claims or subject such member of the Group to significant regulatory penalties. These risks are often difficult to assess or quantify and their existence and magnitude could remain unknown for a substantial period of time.Actions or investigations brought against the Group or BEA’s directors officers or employees may result in settlements injunctions fines penalties or other results adverse to the Group’s reputation financial condition and results of operations. Even if the Group is successful in defending these actions or investigations the costs of such defence may be significant. The number of legal claims and amount of damages sought in litigation and regulatory proceedings may also increase at times of market downturn. A significant judgment arbitration award or regulatory action against the Group or a disruption in the Group’s business arising from investigations or adverse adjudications in proceedings against BEA’s directors senior management or key employees would materially and adversely affect the Group’s liquidity business financial condition results of operations and prospects.In addition certain products and services provided by the Group are regulated by regulators including but not limited to the Securities and Futures Commission (the “SFC”) in Hong Kong. From time to time regulators in Hong Kong may introduce recommendations which are intended to provide tighter control and more transparency in the Hong Kong banking sector in particular in relation to the selling of investment products to retail customers. Further any failure of the Group to comply with relevant laws or regulations could result in administrative actions or sanctions which may have an adverse effect on the Group’s results of operations. There can be no assurance that breaches of relevant laws ? 44 ?or regulations by the Group will not occur and to the extent that such breaches do occur that the Group will not be subject to significant liabilities or penalties. Apart from the above the Group may have disagreements with regulatory bodies in the course of its operations which may subject it to administrative proceedings and unfavourable decrees that could cause the Group to incur liabilities.Compliance Risks Associated with the Bank’s Staff Customers or Other Entities The Bank may be unable to fully detect and completely prevent any fraudulent act and other misconduct committed by the Bank’s staff customers or other entities which could therefore subject the Bank to lawsuits financial losses and sanctions imposed by governmental authorities as well as result in serious harm to the Bank’s reputation. Such misconduct could take a variety of forms including among others: * improper extension of loans; * misapplying or failing to apply the loan classification standards thereby resulting in mis-classifications within the Bank’s loan portfolio; * deposit fraud; * falsifying or concealing information including illegal or unlawful activities or credit information during the credit application or loan classification process; * engaging in misrepresentation or fraudulent deceptive or otherwise improper activities when marketing or selling products to the Bank’s customers; * hiding unauthorised or illegal activities that may result in unknown and unmanaged risks or losses; * engaging in unauthorised transactions to the Bank’s detriment breaching applicable laws or its internal control procedures or violating financial accounting rules; * binding the Bank to transactions that exceed authorised limits; * illegal fund-raising and other financing activities; * settlement sale and payment of foreign exchange in violation of the relevant regulations; and * opening of bank acceptance bills without underlying transactions.The misconducts may also include making or accepting bribery activities conducting insider dealing improperly using or disclosing confidential information and otherwise not complying with applicable laws and regulations. In recent years there have been instances previously where employees current or former senior management of the Bank have been investigated for bribery or otherwise not complying with applicable laws and regulations. There can be no assurance by the Bank that there will be no such investigations against the employees of the Bank in the future. Types of misconduct conducted by other entities against the Bank include among others fraud theft and robbery.Compliance Risks Associated with Sanctions The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. State Department are primarily responsible for administering various economic or financial sanctions trade embargoes and related restrictive measures imposed by the U.S. government. For instance United States persons can be prohibited from engaging in any transactions with a designated target of certain sanctions including the purchase and sale of and the receipt of payments under securities issued by such designated target. The United Nations Security Council the European Union the United ? 45 ?Kingdom the PRC and other governments and international or regional organisations also administer similar sanctions. These sanctions are intended to address a variety of policy concerns including but not limited to denying certain countries and certain individuals and entities the ability to support international terrorism and to pursue weapons of mass destruction and missile programmes. For example countries and territories such as Cuba Iran North Korea Syria Crimea and the Luhansk region the Donetsk region the Kherson region and the Zaporizhzhia region of Ukraine are the subject of or subject to sanctions for different reasons. The Group may incur higher costs and face greater compliance risks in structuring and operating its businesses to comply with the laws and regulations in relation to these sanctions.The Group may from time to time engage in business activities in countries or territories or with entities and individuals that are the subject of or subject to sanctions. For example the Group had banking relationships with customers that were designated as Specially Designated Nationals by OFAC that have since been terminated. In addition certain existing customers of the Group have been identified on the Entity List administered by the United States Department of Commerce’s Bureau of Industry and Security. Notwithstanding that such relationships do not themselves subject the Group to primary U.S. economic sanctions the Group may face secondary U.S. economic sanctions if it is determined to be providing material support to countries territories entities or individuals that are the subject of or subject to U.S. economic sanctions. If the Group engages in any prohibited transactions by any means or if it is otherwise determined that any of the Group’s transactions violated OFAC-administered sanctions other sanctions regulations or export administration regulations the Group could be directly or indirectly subject to penalties. The Group’s reputation and ability to conduct future business in the United States or with U.S. entities or in other relevant jurisdictions could be affected which may materially and adversely affect the Group’s business financial condition and results of operations. BEA’s ability to service payments under the Notes and the Undated Capital Securities and to satisfy its other obligations under the Notes and the Undated Capital Securities may also be adversely affected.Other Compliance Risks The Group is required to comply with applicable anti-money laundering and anti-terrorism laws and regulations in Hong Kong and other jurisdictions in which the Group operates. Financial institutions in Hong Kong and the PRC are required to establish sound internal control policies and procedures with respect to anti-money laundering and anti-terrorism monitoring and reporting suspicious activities. Such policies and procedures require the Group to among other things designate an independent compliance officer establish a customer identification system in accordance with relevant rules record the details of customer activities and report suspicious transactions to relevant authorities.While the Group has already adopted policies and procedures to monitor its operations and detect and prevent the use of the Group’s network for money laundering activities and by terrorists and terrorist-related organisations and individuals generally such policies and procedures may not completely eliminate instances where the Group may be used by other parties to engage in money laundering and other illegal or improper activities. To the extent the Group fails to fully comply with applicable laws rules and regulations the relevant government agencies to which the Group reports have the power and authority to impose fines and other penalties (such as an asset freeze) on the Group. There can be no assurance that the Group will be able to detect any money laundering or other illegal or improper activities in a timely manner or at all which may adversely affect the Group’s business reputation financial condition and results of operations.The Implementation of new HKFRS including but not limited to the Phase 2 Amendments adopted from 1 January 2021 Accounting standards applicable to the Group’s business may change or be amended from time to time. Any changes in these accounting standards may result in changes in the recognition measurement and/or classification of the Group’s revenue expenses assets and liabilities which could have material effects on the Group’s results of operations and financial position.? 46 ?For example the Group has adopted the Phase 2 Amendments from 1 January 2021. A number of new standards are effective for annual periods beginning after 1 January 2021 but the Group has not early adopted the new or amended standards in preparing the consolidated financial statements of the Issuer as at and for the year ended 31 December 2021. The Group applied the Phase 2 Amendments retrospectively and has elected not to restate the comparative information presented for the year ended 31 December 2020. The consolidated financial information of the Issuer as at and for the year ended 31 December 2020 is not directly comparable to that for the years ended 31 December 2021 and 2022. The Hong Kong Institute of Certified Public Accountants may issue new and revised standards and interpretations in the future. Interpretations on the application of HKFRS will also continue to develop. These factors may require the Group to adopt new accounting policies from time to time. The adoption of new and revised accounting standards and interpretations or changes in interpretations on the application of HKFRS in the future may have a material impact on the Group’s results of operations and financial position.Information Technology Systems The Group is highly dependent on the ability of its information technology systems to process a large number of transactions accurately across numerous and diverse markets and its broad range of products in a timely manner. The proper functioning of its financial control risk management accounting customer service and other data processing systems together with the communication networks between its various branches and sub-branches and its main data processing centres are critical to its business and its ability to compete effectively. Any disruption to or malfunction in the operation of the Group’s information technology systems could have a material adverse impact on the Group’s business operations and would limit the Group’s ability to monitor and manage data control financial and operation conditions monitor and manage its risk exposures keep accurate records provide quality customer services and develop and sell profitable products and services. Recovery from such disruptions or malfunctions may not be effective and insurances or other precaution measures taken may only indemnify the Group’s losses in part if at all.Although there is backup data for key data processing systems and the Group has established a backup system to carry on principal functions in the event of a catastrophe or a failure of its primary systems there can be no assurance that the Group’s operations will not be materially disrupted if there is a partial or complete failure of any of its primary information technology systems or communications networks. Such failures could be caused by among other things hardware failures software programme errors computer virus attacks network failures or conversion errors due to system upgrading system relocation failures to implement new information technology initiatives human errors natural disasters war terrorist attacks blackouts and unanticipated problems of facilities many of which are beyond the Group’s control. In addition any security breach caused by unauthorised access to information or systems loss or corruption of data and malfunction of software hardware or other computer equipment could have a material adverse effect on the Group’s business reputation financial condition and results of operations.In addition the information available to and received by the Group through its existing information technology systems may not be timely or sufficient for the Group to manage risks and plan for and respond to market changes and other developments in its current operating environment. The Group’s ability to remain competitive will depend in part on its ability to upgrade its information technology systems in a timely and cost-effective manner. While the Group is making and intends to continue to make investments to improve or upgrade its information technology systems delays system failures or other accidents may occur during system upgrades or renovation. In addition the upgraded or new systems may not be able to achieve the anticipated processing capacity and availability and may not be able to meet the needs of the Group’s growth strategies. The Group’s failure to address ? 47 ?these problems promptly and effectively could result in its inability to perform or delays in performing critical business operational functions the loss of key business data or a failure to comply with regulatory requirements any of which could have a material adverse effect on the Group’s business competitiveness financial condition and results of operations.Moreover the Group provides online financial services such as securities brokerage services to its customers. Security breaches disruption to or instability of the Group’s online service platforms could impair its ability to serve its customers and execute trades on their behalf and on its own account any of which could materially and adversely affect the Group’s results of operations and reputation. The Group’s networks may be vulnerable to unauthorised access computer viruses and other disruptive problems. Costs incurred in rectifying any such disruptive problems may be high and may adversely affect the Group’s business financial condition and results of operations. Concerns regarding security risks in general may also deter the Group’s existing and potential customers from using its internet banking products and services which may in turn have a material adverse effect on the Group’s internet banking business.Internet Banking Services To the extent that the Group’s internet banking activities involve the storage and transmission of confidential information security breaches or cyber-attacks could expose it to possible liability and reputation damage from among other things the unauthorised dissemination of customer information and identity theft. The Group’s information technology systems may be vulnerable to unauthorised access computer viruses or other disruptive problems that may affect the proper functioning of its information technology systems. Costs incurred in rectifying any such disruptive problems may be high and may adversely affect the Group’s business reputation financial condition and results of operations. Concerns regarding security risks may deter the Group’s existing and potential customers from using its internet banking products and services. Eliminating computer viruses and alleviating other security problems may also result in interruptions delays or termination of services to users accessing the Group’s internet banking services. There can be no assurance that the Group’s internet banking services will not experience any further disruptions or delays or that its internet banking service will not experience other security problems in the future. If the Group cannot detect security risks in advance or adequately protect its information systems against software leaks or computer viruses or its information systems sustain a high volume of network traffic its internet banking business may be materially and adversely affected.Different Corporate Disclosure and Regulatory Requirements BEA’s issued shares are listed on the HKSE and as such BEA is required to publish annual audited and semi-annual unaudited financial information. However the extent of publicly available information of issuers in Hong Kong may be less than that publicly available for comparable banks in certain other countries.Under the Banking Ordinance (Cap. 155) of Hong Kong (the “Banking Ordinance”) the Monetary Authority regulates the business activities and operations of authorized institutions and has the ability to influence banking and financial markets. Since the Group operates in the highly regulated banking and securities industries in Hong Kong potential investors should be aware that the regulatory requirements in Hong Kong may differ from those that prevail in other countries and the regulatory authorities have been consistently imposing higher standards and formulating new guidelines and regulatory requirements. In addition to the above-mentioned Hong Kong regulatory requirements the Group is also required to comply with regulatory requirements applicable in each of the countries in which it operates which may be different from and in some cases more stringent than Hong Kong regulatory requirements. The Group has taken steps to implement the recommendations by relevant regulators and to comply with any new or modified regulations. Increased regulations and the requirements for more stringent investor protections have increased the Group’s operational and compliance expenses. Any changes in regulations governmental policies income tax laws or rules and accounting principles as well as international conventions and standards relating to commercial ? 48 ?banking operations in Hong Kong or as otherwise applicable to the Group could affect the Group’s operations. There can be no assurance that the relevant regulatory authorities will not implement further regulations and that such changes will not materially increase the Group’s operational and compliance costs or adversely affect its business or operations. There can also be no assurance that breaches of legislation or regulations by the Group will not occur and to the extent that such a breach does occur that significant liability or penalties will not be incurred.Occurrence (or escalation and/or intensification) of any force majeure events such as political unrest civil disobedience movements war natural disasters or outbreaks of health epidemics and contagious diseases in Asia or elsewhere Any future political unrest civil disobedience movements war natural disasters or outbreaks of health epidemics and contagious diseases including but not limited to avian influenza the Ebola virus Severe Acute Respiratory Syndrome (“SARS”) H1N1 Flu and COVID-19 may adversely affect the Group’s business financial condition and results of operations. Possible force majeure events may also give rise to additional costs to be borne by the Group and have adverse effects on the quality of the Group’s assets business financial condition and results of operations. An outbreak of a health epidemic or contagious disease could result in a widespread health crisis and restrict the level of business activity in affected areas which may in turn adversely affect the Group’s business. In addition the occurrence of severe natural disasters in any of the regions in which the Group operates may adversely affect the local economy and in turn the Group’s business. There can be no assurance that any future occurrence of political unrest civil disobedience movements war natural disasters or outbreaks of health epidemics and contagious diseases or the measures taken by any relevant government or other countries in response to such events will not interrupt the Group’s operations or those of its customers which may have an adverse effect on its business financial condition and results of operations.Further Issuance of Securities The Group’s financial condition results of operations and capital position are affected by a range of factors such as economic conditions interest rates the credit environment asset quality operating income and level of provisioning. A slowdown in the economy could lead to a deterioration in the Group’s asset quality and an increase in provisions for bad and doubtful debts which may result in a deterioration of BEA’s capital adequacy position or breach of capital requirements under Hong Kong laws rules and regulations (including guidelines issued by the Monetary Authority). In addition the Monetary Authority may increase BEA’s required capital adequacy ratio levels in the future in response to among other things an adverse economic or credit environment or regulatory changes.In order to strengthen its capital adequacy position or to ensure that it remains in compliance with applicable capital requirements under Hong Kong laws rules and regulations (including guidelines issued by the Monetary Authority) the Group may from time to time raise additional capital through such means and in such manner as it may consider appropriate including but not limited to the issue of further subordinated notes or other hybrid capital instruments subject to any regulatory approval that may be required. There can be no assurance that such future capital raising activities will not adversely affect the market price of the Undated Capital Securities in the secondary market. There can also be no assurance that the Group will be able to obtain additional capital in a timely manner on acceptable terms or at all.OECD’s Common Reporting Standard The Organisation for Economic Co-operation and Development (the “OECD”) has developed a common reporting standard (the “CRS”) and model competent authority agreement to enable the multilateral and automatic exchange of financial account information. The CRS does not include a potential withholding element. Under the CRS financial institutions are required to identify and report the tax residence status of customers in all the countries that have endorsed the CRS.? 49 ?The adoption of the CRS in the PRC and Hong Kong became effective on 1 January 2017. The PRC and Hong Kong financial institutions have begun collecting tax residency information from their account holders from 1 January 2017 for submission of information on reportable account holders in 2018. The increased due diligence of customer information and the reporting of information to the tax authorities will continue to increase operational and compliance costs for banks including the Group.CONSIDERATIONS RELATING TO THE NOTES AND THE UNDATED CAPITAL SECURITIES The establishment of a resolution regime in Hong Kong may override the contractual terms of the Notes and the Undated Capital Securities On 7 July 2017 the Financial Institutions (Resolution) Ordinance (Cap. 628) of Hong Kong (the “FIRO”) came into operation. The FIRO provides for among other things the establishment of a resolution regime for authorized institutions and other within scope financial institutions in Hong Kong as may be designated by the relevant resolution authorities which includes the Issuer as the issuer of the Notes and the Undated Capital Securities. The resolution regime seeks to provide the relevant resolution authorities with administrative powers to bring about timely and orderly resolution in order to stabilise and secure continuity for a failing authorized institution or within scope financial institution in Hong Kong. In particular and subject to certain safeguards the relevant resolution authority is provided with powers to affect contractual and property rights as well as payments (including in respect of any priority of payment) that creditors would receive in resolution. These may include but are not limited to powers to cancel write off modify convert or replace all or a part of the Notes and the Undated Capital Securities or the principal amount of or interest or distribution on the Notes and the Undated Capital Securities and powers to amend or alter the contractual provisions of the Notes and the Undated Capital Securities all of which may adversely affect the value of the Notes and the Undated Capital Securities and the holders thereof may suffer a loss of some or all of their investment as a result. Holders of Notes and the Undated Capital Securities will be subject to and bound by the FIRO. The implementation of the FIRO remains untested and certain details relating to the FIRO will be set out through secondary legislation and supporting rules. Therefore the Issuer is unable to assess the full impact of the FIRO on the financial system generally the Issuer’s counterparties the Issuer any of its consolidated subsidiaries its operations and/or its financial position.The Notes and Undated Capital Securities may not be a suitable investment for all investors The Notes and the Undated Capital Securities are complex and high risk. Each potential investor in the Notes and the Undated Capital Securities must determine the suitability of that investment in light of its own circumstances. In particular each potential investor should: (a) have sufficient knowledge and experience to make a meaningful evaluation of Notes and the Undated Capital Securities the merits and risks of investing in the Notes and the Undated Capital Securities and the information contained or incorporated by reference in this Offering Circular or any applicable supplement; (b) have access to and knowledge of appropriate analytical tools to evaluate in the context of its particular financial situation an investment in the Notes and the Undated Capital Securities and the impact such investment will have on its overall investment portfolio; (c) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes and the Undated Capital Securities including where the currency for principal interest or distribution payments is different from the potential investor’s currency; (d) understand thoroughly the terms of the Notes and the Undated Capital Securities and be familiar with the behaviour of any relevant indices and financial markets; and ? 50 ?(e) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic and other factors that may affect its investment and its ability to bear the applicable risks.The Notes and the Undated Capital Securities are complex financial instruments. A potential investor must not invest in the Notes and the Undated Capital Securities unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Notes and the Undated Capital Securities will perform under changing conditions including the effects of inflation the resulting effects on the value of the Notes and the Undated Capital Securities and the impact this investment will have on the potential investor’s overall investment portfolio.Decisions that may be made on behalf of all Noteholders and Securityholders may be adverse to the interests of individual holders of the Notes and the Undated Capital Securities. Modifications and waivers may be made in respect of the Note Conditions the Undated Capital Securities Conditions the Trust Deed or the Agency Agreement by the Trustee or less than all of the Noteholders or the Securityholders The Note Conditions and the Undated Capital Securities Conditions contain provisions for calling meetings of Noteholders and Securityholders to consider matters affecting their interests generally.These provisions permit defined majorities to bind all Noteholders and Securityholders including Noteholders and Securityholders who did not attend and vote at the relevant meeting and Noteholders and Securityholders who voted in a manner contrary to the majority. The Note Conditions and the Undated Capital Securities Conditions also provide that the Trustee may agree without the consent of the Noteholders and Securityholders to (i) any modification of any of the provisions of the Trust Deed the Note Conditions or the Undated Capital Securities Conditions which is of a formal minor or technical nature or is made to correct a manifest error or to comply with any mandatory provision of law or (ii) any other modification (except as mentioned in the Trust Deed) of any provisions of the Trust Deed and/or the Note Conditions and/or the Undated Capital Securities Conditions that is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders and/or Securityholders. In addition the Note Conditions and the Undated Capital Securities Conditions may be amended modified or varied in relation to any Series of Notes and the Undated Capital Securities by the terms of the relevant Pricing Supplement in relation to such Series.The Trustee may agree without the consent of the Noteholders and Securityholders to the substitution in place of the Issuer as principal debtor under the Notes or the Undated Capital Securities The Note Conditions and the Undated Capital Securities Conditions provide that the Trustee may agree without the consent of the Noteholders and Securityholders to the substitution of the Issuer’s successor in business or certain subsidiary of the Issuer or its successor in business or any holding company of the Issuer or any other subsidiary of any such holding company or their respective successor in business in place of the Issuer as principal debtor under the Notes or the Undated Capital Securities. In the case of such a substitution the Trustee may agree without the consent of the Noteholders and Securityholders to a change of the governing law of the Notes the Undated Capital Securities and/or the Trust Deed provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Noteholders and/or Securityholders.Change of Law The Note Conditions and the Undated Capital Securities Conditions and any non-contractual obligations arising out of or in connection with them are governed by English law (except for the provisions relating to subordination Non-Viability Events and the exercise of Hong Kong Resolution Authority Power which are governed by Hong Kong law). No assurance can be given as to the impact of any possible judicial decision or change to English or Hong Kong law or administrative practice after the date of issue of the relevant Notes and the Undated Capital Securities Conditions.? 51 ?Secondary Market The Notes and the Undated Capital Securities may have no established trading market when issued and one may never develop. If a market does develop it may not be liquid. Therefore investors may not be able to sell their Notes and the Undated Capital Securities easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market.Illiquidity may have a material adverse effect on the market value of Notes and the Undated Capital Securities.The Trustee may request Noteholders or Securityholders to provide an indemnity and/or security and/or prefunding to its satisfaction In certain circumstances (including without limitation the giving of notice to the Issuer pursuant to Condition 11 and the taking of actions and/or enforcement steps under Condition 13 of the Note Conditions and the Undated Capital Securities Conditions) the Trustee may (at its sole discretion) request Noteholders or Securityholders to provide an indemnity and/or security and/or prefunding to its satisfaction before it takes actions on behalf of Noteholders or Securityholders. The Trustee shall not be obliged to take any such actions if not indemnified and/or secured and/or prefunded to its satisfaction. Negotiating and agreeing to an indemnity and/or security and/or prefunding can be a lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take actions notwithstanding the provision of an indemnity or security or prefunding to it in breach of the terms of the Trust Deed (as defined in the Note Conditions and the Undated Capital Securities Conditions) and in such circumstances or where there is uncertainty or dispute as to applicable laws or regulations and/or its rights to do so under the Trust Deed and/or the Note Conditions and the Undated Capital Securities Conditions and to the extent permitted by the Trust Deed and the Note Conditions and the Undated Capital Securities Conditions and applicable law and regulations it will be for the Noteholders and Securityholders to take such actions directly.Exchange rate risks and exchange controls may result in a potential investor receiving less interest distribution or principal than expected The Issuer will pay principal and interest on the Notes and principal and distribution on the Undated Capital Securities in the currency specified. This presents certain risks relating to currency conversions if a potential investor’s financial activities are denominated principally in a currency or currency unit (the “Investor’s Currency”) other than the currency in which the Notes and the Undated Capital Securities are denominated. These include the risk that exchange rates may significantly change (including changes due to devaluation of the currency in which the Notes or the Undated Capital Securities are denominated or revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls. An appreciation in the value of the Investor’s Currency relative to the currency in which the Notes and the Undated Capital Securities are denominated would decrease (i) the Investor’s Currency equivalent yield on the Notes and the Undated Capital Securities (ii) the Investor’s Currency equivalent value of the principal payable on the Notes and the Undated Capital Securities and (iii) the Investor’s Currency equivalent market value of the Notes and the Undated Capital Securities.Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result a potential investor may receive less interest distribution or principal than expected or no interest distribution or principal. In addition there may be tax consequences for investors as a result of any foreign currency gains resulting from any investment in the Notes and the Undated Capital Securities.? 52 ?Lack of Public Market for the Notes and the Undated Capital Securities There can be no assurance as to the liquidity of the Notes and the Undated Capital Securities or that an active trading market will develop. The liquidity of the Notes and the Undated Capital Securities will be adversely affected if they are held or allocated to a single investor or limited investors. If such a market were to develop where a significant portion of the aggregate principal amount of the Notes and the Undated Capital Securities are held by limited investors the Notes and the Undated Capital Securities may trade at prices that may be higher or lower than the initial issue price depending on many factors including prevailing interest rates the Group’s operations and the market for similar securities. The Dealers are not obliged to make a market in the Notes and the Undated Capital Securities and any such market making if commenced may be discontinued at any time at the sole discretion of the relevant Dealers. No assurance can be given as to the liquidity of or trading market for the Notes and the Undated Capital Securities.The liquidity and price of the Notes and the Undated Capital Securities following the offering may be volatile The price and trading volume of the Notes and the Undated Capital Securities may be highly volatile.Factors such as variations in the Group’s turnover earnings and cash flows proposals for new investments strategic alliances and/or acquisitions changes in interest rates fluctuations in price for comparable companies changes in government regulations and changes in general economic conditions nationally or internationally could cause the price of the Notes and the Undated Capital Securities to change. Any such developments may result in large and sudden changes in the trading volume and price of the Notes and the Undated Capital Securities. There is no assurance that these developments will not occur in the future.Developments in other markets may adversely affect the market price of the Notes and the Undated Capital Securities The market price of the Notes and the Undated Capital Securities may be adversely affected by declines in the international financial markets and world economic conditions. The market for the Notes and the Undated Capital Securities is to varying degrees influenced by economic and market conditions in other markets especially those in Asia. Although economic conditions are different in each country investors’ reactions to developments in one country can affect the securities markets and the securities of issuer in other countries including the PRC. Since the global financial crisis in 2008 and 2009 the international financial markets have experienced significant volatility. If similar developments occur in the international financial markets in the future the market price of the Notes and the Undated Capital Securities could be adversely affected.Inability to comply with the restrictions and covenants contained in the Group’s debt agreements If the Group is unable to comply with the restrictions and covenants in its current or future debt and other agreements there could be a default under the terms of these agreements. In the event of a default under these agreements the holders of the debt could terminate their commitments to lend to the Group accelerate the debt and declare all amounts borrowed due and payable or terminate the agreements whichever the case may be.Ratings of the Notes and the Undated Capital Securities may not reflect all risks One or more independent credit rating agencies may assign credit ratings to the Notes and the Undated Capital Securities. The ratings represent the opinions of the rating agencies and their assessment of the ability of the Issuer to perform their respective obligations under the Notes and the Undated Capital Securities and the credit risks in determining the likelihood that payments will be made when due under the Notes and the Undated Capital Securities. Such ratings may not reflect the potential impact of all risks related to structure market additional factors discussed above and other factors that may affect the value of the Notes and the Undated Capital Securities. A credit rating is not a ? 53 ?recommendation to buy sell or hold securities and may be revised or withdrawn by the rating agency at any time. Rating agencies may also revise or replace entirely the methodology applied to derive credit ratings. There can be no assurance that the ratings assigned to any Notes or Undated Capital Securities will remain in effect for any given period or that the ratings will not be suspended lowered revised or withdrawn by the rating agencies in the future if in their judgment the circumstances so warrant. The Issuer is not obligated to inform the Noteholders or the Securityholders of any such downgrade suspension revision or withdrawal. A suspension downgrade revision or withdrawal of the ratings of any Notes or Undated Capital Securities at any time may materially and adversely affect the market price of the Notes and the Undated Capital Securities and the Issuer’s ability to access the debt capital markets.The regulation and reform of “benchmark” rates of interest and indices may adversely affect the value of Notes linked to or referencing such “benchmarks” Interest rates and indices which are deemed to be or used as “benchmarks” have been the subject of recent international regulatory guidance and proposals for reform. Some of these reforms are already effective while others have yet to be implemented. These reforms may cause such benchmarks to perform differently than in the past or to disappear entirely or have other consequences which cannot be predicted. Any such consequence could have a material adverse effect on any Notes or UndatedCapital Securities linked to or referencing such a benchmark. Regulation (EU) 2016/1011 (the “EUBenchmarks Regulation”) applies subject to certain transitional provisions to the provision of benchmarks the contribution of input data to a benchmark and the use of a benchmark within the European Union. Among other things it (i) requires benchmark administrators to be authorised or registered (or if non-European-Union based to be subject to an equivalent regime or otherwise recognised or endorsed) and (ii) prevents certain uses by European Union supervised entities of benchmarks of administrators that are not authorised or registered (or if non-European-Union based not deemed equivalent or recognised or endorsed).The EU Benchmarks Regulation as it forms part of domestic law by virtue of the EUWA (the “UKBenchmarks Regulation”) among other things applies to the provision of benchmarks and the use of a benchmark in the United Kingdom. Similarly it prohibits the use in the United Kingdom by United Kingdom supervised entities of benchmarks of administrators that are not authorised by the United Kingdom Financial Conduct Authority (the “FCA”) or registered on the FCA register (or if non-UK based not deemed equivalent or recognised or endorsed).The EU Benchmarks Regulation and/or the UK Benchmarks Regulation as applicable could have a material impact on any Notes or Undated Capital Securities linked to or referencing a benchmark in particular if the methodology or other terms of the benchmark are changed in order to comply with the requirements of the EU Benchmarks Regulation and/or the UK Benchmarks Regulation as applicable. Such changes could among other things have the effect of reducing increasing or otherwise affecting the volatility of the published rate or level of the relevant benchmark.More broadly any of the international reforms or the general increased regulatory scrutiny of benchmarks could increase the costs and risks of administering or otherwise participating in the setting of a benchmark and complying with any such regulations or requirements. Any potential elimination of any benchmark or any other consequential changes as a result of international reforms or other initiatives or investigations could have a material adverse effect on the value of and return on any Notes or Undated Capital Securities linked to or referencing a benchmark.Other interbank offered rates suffer from similar weaknesses to LIBOR and although work continues on reforming their respective methodologies to make them more grounded in actual transactions they may be discontinued or be subject to changes in their administration.? 54 ?Changes to the administration of an IBOR or the emergence of alternatives to an IBOR may cause such IBOR to perform differently than in the past or there could be other consequences which cannot be predicted. The discontinuation of an IBOR or changes to its administration could require changes to the way in which the Rate of Interest is calculated in respect of any Floating Rate Notes and Floating Rate Undated Capital Securities referencing or linked to such IBOR. The development of alternatives to an IBOR may result in Floating Rate Notes and Floating Rate Undated Capital Securities linked to or referencing such IBOR performing differently than would otherwise have been the case if the alternatives to such IBOR had not developed. Any such consequence could have a material adverse effect on the value of and return on any Floating Rate Notes and Floating Rate Undated Capital Securities linked to or referencing such IBOR.Whilst alternatives to certain IBORs for use in the bond market are being developed outstanding Floating Rate Notes and Floating Rate Undated Capital Securities linked to or referencing an IBOR may transition away from such IBOR in accordance with the particular fallback arrangements set out in their terms and conditions. The operation of these fallback arrangements could result in a different return for Noteholders and Securityholders (which may include payment of a lower Rate of Interest) than they might receive under other similar securities which contain different or no fallback arrangements (including which they may otherwise receive in the event that legislative measures or other initiatives (if any) are introduced to transition from any given IBOR to an alternative rate).Where Screen Rate Determination is specified as the manner in which the Rate of Interest in respect of Floating Rate Notes or Floating Rate Undated Capital Securities is to be determined the Note Conditions and the Undated Capital Securities Conditions provide that the Rate of Interest shall be determined by reference to the Relevant Screen Page (or its successor or replacement). In circumstances where such Original Reference Rate is discontinued neither the Relevant Screen Page nor any successor or replacement may be available.Where the Relevant Screen Page is not available and no successor or replacement for the Relevant Screen Page is available the Note Conditions and the Undated Capital Securities Conditions provide for the Rate of Interest to be determined by the Calculation Agent by reference to quotations from banks communicated to the Calculation Agent.Where such quotations are not available (as may be the case if the relevant banks are not submitting rates for the determination of such Original Reference Rate) the Rate of Interest may ultimately revert to the Rate of Interest applicable as at the last preceding Interest Determination Date before the Original Reference Rate was discontinued. Uncertainties as to the continuation of the Original Reference Rate the availability of quotes from reference banks and the rate that would be applicable if the Original Reference Rate is discontinued may adversely affect the value of and return on the Floating Rate Notes and Floating Rate Undated Capital Securities.Benchmark Events include (among other events) permanent discontinuation of an Original Reference Rate. If a Benchmark Event occurs the Issuer shall use its reasonable endeavours to appoint an Independent Adviser. The Independent Adviser shall endeavour to determine a Successor Rate or Alternative Rate to be used in place of the Original Reference Rate. The use of any such Successor Rate or Alternative Rate to determine the Rate of Interest is likely to result in Floating Rate Notes and Floating Rate Undated Capital Securities initially linked to or referencing the Original Reference Rate performing differently (which may include payment of a lower Rate of Interest) than they would do if the Original Reference Rate were to continue to apply in its current form.Furthermore if a Successor Rate or Alternative Rate for the Original Reference Rate is determined by the Independent Adviser the Note Conditions and the Undated Capital Securities Conditions provide that the Issuer may vary the Note Conditions and the Undated Capital Securities Conditions as necessary to ensure the proper operation of such Successor Rate or Alternative Rate without any requirement for consent or approval of the Noteholders or the Securityholders.? 55 ?If a Successor Rate or Alternative Rate is determined by the Independent Adviser the Note Conditions and the Undated Capital Securities Conditions also provide that an Adjustment Spread will be determined by the Independent Adviser and applied to such Successor Rate or Alternative Rate.The Adjustment Spread is (i) the spread formula or methodology which is formally recommended in relation to the replacement of the Original Reference Rate with the Successor Rate by any Relevant Nominating Body (which may include a relevant central bank supervisory authority or group of central banks/supervisory authorities) (ii) if no such recommendation has been made or in the case of an Alternative Rate the spread formula or methodology which the Independent Adviser determines is customarily applied to the relevant Successor Rate or the Alternative Rate (as the case may be) in international debt capital markets transactions to produce an industry-accepted replacement rate for the Original Reference Rate or (iii) if the Independent Adviser determines that no such spread is customarily applied the spread formula or methodology which the Independent Adviser determines and which is recognised or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate where such rate has been replaced by the Successor Rate or the Alternative Rate as the case may be.Accordingly the application of an Adjustment Spread may result in the Floating Rate Notes or the Floating Rate Undated Capital Securities performing differently (which may include payment of a lower Rate of Interest) than they would do if the Original Reference Rate were to continue to apply in its current form.The Issuer may be unable to appoint an Independent Adviser or the Independent Adviser may not be able to determine a Successor Rate or Alternative Rate in accordance with the Note Conditions and the Undated Capital Securities Conditions.Where the Issuer is unable to appoint an Independent Adviser in a timely manner or the Independent Adviser is unable to determine a Successor Rate or Alternative Rate before the next Interest Determination Date the Rate of Interest for the next succeeding Interest Period will be the Rate of Interest applicable as at the last preceding Interest Determination Date before the occurrence of the Benchmark Event or where the Benchmark Event occurs before the first Interest Determination Date the Rate of Interest will be the initial Rate of Interest.Where the Issuer has been unable to appoint an Independent Adviser or the Independent Adviser has failed to determine a Successor Rate or Alternative Rate in respect of any given Interest Period it will continue to attempt to appoint an Independent Adviser in a timely manner before the next succeeding Interest Determination Date and/or to determine a Successor Rate or Alternative Rate to apply the next succeeding and any subsequent Interest Periods as necessary.Applying the initial Rate of Interest or the Rate of Interest applicable as at the last preceding Interest Determination Date before the occurrence of the Benchmark Event is likely to result in Floating Rate Notes and Floating Rate Undated Capital Securities linked to or referencing the relevant benchmark performing differently (which may include payment of a lower Rate of Interest) than they would do if the relevant benchmark were to continue to apply or if a Successor Rate or Alternative Rate could be determined.If the Issuer is unable to appoint an Independent Adviser or the Independent Adviser fails to determine a Successor Rate or Alternative Rate for the life of the relevant Floating Rate Notes or the relevant Floating Rate Undated Capital Securities the initial Rate of Interest or the Rate of Interest applicable as at the last preceding Interest Determination Date before the occurrence of the Benchmark Event will continue to apply to maturity. This will result in the Floating Rate Notes and the Floating Rate Undated Capital Securities in effect becoming Fixed Rate Notes and Fixed Rate Undated Capital Securities respectively.? 56 ?Where ISDA Determination is specified as the manner in which the Rate of Interest in respect of Floating Rate Notes and Floating Rate Undated Capital Securities is to be determined the Note Conditions and Undated Capital Securities Conditions provide that the Rate of Interest in respect of the Notes and the Undated Capital Securities shall be determined by reference to the relevant Floating Rate Option in the 2006 ISDA Definitions. Where the Floating Rate Option specified is an “IBOR” Floating Rate Option the Rate of Interest may be determined by reference to the relevant screen rate or the rate determined on the basis of quotations from certain banks. If the relevant IBOR is permanently discontinued and the relevant screen rate or quotations from banks (as applicable) are not available the operation of these provisions may lead to uncertainties as to the Rate of Interest that would be applicable and may adversely affect the value of and return on the Floating Rate Notes and the Floating Rate Undated Capital Securities.The use of Secured Overnight Financing Rate (“SOFR”) as a reference rate is subject to important limitations The rate of interest on the Floating Rate Notes and the Floating Rate Undated Capital Securities may be calculated on the basis of SOFR (as further described under Condition 5(b)(iii)(C) of the Note Conditions and Condition 4(b)(iii)(C) of the Undated Capital Securities Conditions).In June 2017 the New York Federal Reserve’s Alternative Reference Rates Committee (the “ARRC”) announced SOFR as its recommended alternative to U.S. dollar LIBOR. However the composition and characteristics of SOFR are not the same as those of LIBOR. SOFR is a broad U.S. Treasury repofinancing rate that represents overnight secured funding transactions. This means that SOFR is fundamentally different from LIBOR for two key reasons. First SOFR is a secured rate while LIBOR is an unsecured rate. Second SOFR is an overnight rate while LIBOR represents interbank funding over different maturities. As a result there can be no assurance that SOFR will perform in the same way as LIBOR would have at any time including but not limited to as a result of changes in interest and yield rates in the market market volatility or global or regional economic financial political or regulatory events. For example since publication of SOFR began in April 2018 daily changes in SOFR have on occasion been more volatile than daily changes in comparable benchmark or other market rates.As SOFR is an overnight funding rate interest on SOFR-based Notes and Undated Capital Securities with interest periods longer than overnight will be calculated on the basis of either the arithmetic mean of SOFR over the relevant interest period or compounding SOFR during the relevant interest period. As a consequence of this calculation method the amount of interest payable on each interest payment date and the amount of distribution payable on each distribution payment date will only be known a short period of time prior to the relevant interest payment date and the relevant distribution payment date respectively. Noteholders and Securityholders therefore will not know in advance the interest amount and the distribution amount which will be payable on such Notes and Undated Capital Securities.Although the Federal Reserve Bank of New York has published historical indicative SOFR information going back to 2014 such prepublication of historical data inherently involves assumptions estimates and approximations. Noteholders and Securityholders should not rely on any historical changes or trends in the SOFR as an indicator of future changes in the SOFR.The Federal Reserve Bank of New York notes on its publication page for SOFR that use of the SOFR is subject to important limitations and disclaimers including that the Federal Reserve Bank of New York may alter the methods of calculation publication schedule rate revision practices or availability of the SOFR at any time without notice. In addition SOFR is published by the Federal Reserve Bank of New York based on data received from other sources. There can be no guarantee that the SOFR will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of the Noteholders and the Securityholders. If the manner in which the SOFR is calculated is changed or if SOFR is discontinued that change or discontinuance may result in a reduction or elimination of ? 57 ?the amount of interest payable on the Notes and the amount of distribution payable on the Undated Capital Securities and a reduction in the trading prices of the Notes and the Undated Capital Securities which would negatively impact the Noteholders and the Securityholders who could lose part of their investment.The Note Conditions and the Undated Capital Securities Conditions provide for certain fallback arrangements in the event that a SOFR Benchmark Event occurs which is based on the ARRC recommended language. There is however no guarantee that the fallback arrangements will operate as intended at the relevant time or operate on terms commercially acceptable to all Noteholders and Securityholders. Investors should consult their own independent advisers and make their own assessment about the potential risks in making any investment decision with respect to any Notes or Undated Capital Securities linked to SOFR.The market continues to develop in relation to risk-free rates (including SONIA and SOFR) as reference rates for Floating Rate Notes and Floating Rate Undated Capital Securities Investors should be aware that the market continues to develop in relation to risk-free rates such as the Sterling Overnight Index Average (“SONIA”) and the Secured Overnight Financing Rates (“SOFR”) as reference rates in the capital markets and their adoption as alternatives to the relevant interbank offered rates. For example on 29 November 2017 the Bank of England and the United Kingdom Financial Conduct Authority announced that the Bank of England’s Working Group on Sterling Risk-Free Rates had been mandated with implementing a broad-based transition to SONIA over the following four years across sterling bond loan and derivatives markets so that SONIA is established as the primary sterling interest rate benchmark by the end of 2021. The New York Federal Reserve (the “NY Federal Reserve”) also began to publish SOFR in April 2018 and although the New York Federal Reserve has also begun publishing historical indicative SOFR going back to 2014 such historical indicative data inherently involves assumptions estimates and approximations.Therefore such risk-free rates have a limited performance history and the future performance of such risk-free rates is impossible to predict. As a consequence no future performance of the relevant risk-free rate or Notes or Undated Capital Securities referencing such risk-free rate may be inferred from any of the hypothetical or actual historical performance data. In addition investors should be aware that risk-free rates may behave materially differently to interbank offered rates as interest reference rates. For example since publication of SOFR began daily changes in SOFR have on occasion been more volatile than daily changes in comparable benchmarks or other market rates.Market participants and relevant working groups are exploring alternative reference rates based on risk-free rates examples of which include term SONIA reference rates and term SOFR reference rates (which seek to measure the market’s forward expectation of a SONIA or SOFR rate over a designated term). The market or a significant part thereof may adopt an application of risk-free rates that differs significantly from that set out in the Note Conditions and the Undated Capital Securities Conditions.In addition the manner of adoption or application of risk-free rates in the markets may differ materially compared with the application and adoption of risk-free rates in other markets such as the derivatives and loan markets. Investors should carefully consider how any mismatch between the adoption of such risk-free rates in the bond loan and derivatives markets may impact any hedging or other financial arrangements which they may put in place in connection with any acquisition holding or disposal of any Notes or Undated Capital Securities referencing risk-free rates.The use of risk-free rates as reference rates for notes and undated capital securities is nascent and may be subject to change and development both in terms of the substance of the calculation and in the development and adoption of market infrastructure for the issuance and trading of notes and undated capital securities referencing such rates. Notes and Undated Capital Securities referencing risk-free rates may have no established trading market when issued and an established trading market may never develop or may not be very liquid which in turn may reduce the trading price of such Notes and Undated Capital Securities or mean that investors in such Notes and Undated Capital Securities may not be able to sell such Notes and Undated Capital Securities at all or may not be able ? 58 ?to sell such Notes and Undated Capital Securities at prices that will provide them with a yield comparable to similar investments that have a developed secondary market and may consequently suffer from increased pricing volatility and market risk. Investors should consider these matters when making their investment decision with respect to Notes or Undated Capital Securities referencing risk-free rates.Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (i) Notes and the Undated Capital Securities are legal investments for it (ii) Notes and the Undated Capital Securities can be used as collateral for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of any Note or Undated Capital Security. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes and the Undated Capital Securities under any applicable risk-based capital or similar rules.CONSIDERATION RELATING TO THE UNDATED CAPITAL SECURITIES The Undated Capital Securities are perpetual securities and investors have no right to require redemption The Undated Capital Securities are perpetual securities and have no maturity date. Securityholders have no right to require the Issuer to redeem their Undated Capital Securities whereas the Issuer can redeem the Undated Capital Securities in certain circumstances as described in the Undated Capital Securities Conditions. However the Issuer is under no obligation to redeem the Undated Capital Securities at any time. The ability of the Issuer to redeem the Undated Capital Securities is subject to the Issuer (a) obtaining the prior written consent of the Monetary Authority (if then required) to the redemption and (b) satisfying any conditions that the Monetary Authority may impose at that time.This means that Securityholders have no ability to cash in their investment in the Undated Capital Securities except if the Issuer exercises its right to redeem the Undated Capital Securities pursuant to the Undated Capital Securities Conditions or by selling their Undated Capital Securities. However there can be no guarantee that the Issuer will exercise its option to redeem the Undated Capital Securities or the Issuer will be able to meet the conditions for redemption of the Undated Capital Securities. Securityholders who wish to sell their Undated Capital Securities may be unable to do so at a price at or above the amount they have paid for them or at all if insufficient liquidity exists in the market for the Undated Capital Securities.In addition upon the occurrence of a withholding tax event (as described in Condition 6(c)(i) of the Undated Capital Securities Conditions) a tax deduction event (as described in Condition 6(c)(ii) of the Undated Capital Securities Conditions) or a Capital Event (as defined in Condition 6(e) of the Undated Capital Securities Conditions) the Undated Capital Securities may be redeemed at the relevant redemption amounts as more particularly described in the Undated Capital Securities Conditions. Also if any Non-Viability Event occurs or Hong Kong Resolution Authority Power isexercised as more fully described in “— Considerations Relating to Non-Preferred Loss AbsorbingNotes Dated Subordinated Notes And Undated Capital Securities — The terms of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities may containnon-viability loss absorption and Hong Kong Resolution Authority Power provisions” and in the Undated Capital Securities Conditions Securityholders may lose up to the full principal amount of the Undated Capital Securities.There can be no assurance that Securityholders will be able to reinvest the amount received upon redemption at a rate that will provide the same rate of return as their investment in the Undated Capital Securities.? 59 ?Distributions in respect of the Undated Capital Securities will not be cumulative and may be cancelled The Undated Capital Securities Conditions provide that no amount may be claimed in respect of any Distribution that has been cancelled pursuant to a Mandatory Distribution Cancellation Event (as defined in Condition 5(b) of the Undated Capital Securities Conditions) or an Optional Distribution Cancellation Event (as defined in Condition 5(a) of the Undated Capital Securities Conditions). In case of such Mandatory Distribution Cancellation Event or Optional Distribution Cancellation Event the Issuer shall have no obligation to pay a Distribution on any Distribution Payment Date and any such failure shall not constitute a default under the Undated Capital Securities Conditions. In addition Distributions in relation to Undated Capital Securities are non-cumulative and any Distribution which is cancelled in accordance with the Undated Capital Securities Conditions shall not be payable at any time thereafter. Investors should consider these matters when making their investment decision with respect to the Undated Capital Securities.CONSIDERATIONS RELATING TO THE STRUCTURE OF A PARTICULAR ISSUE OF NOTES OR UNDATED CAPITAL SECURITIES A wide range of Notes and Undated Capital Securities may be issued under the Programme. A number of these Notes or Undated Capital Securities may have features which contain particular risks for potential investors. Set out below is a description of certain of such features: Notes or Undated Capital Securities subject to optional redemption by the Issuer may have a lower market value than Notes or Undated Capital Securities that cannot be redeemed An optional redemption feature is likely to limit the market value of Notes or Undated Capital Securities. During any period when the Issuer may elect to redeem Notes or Undated Capital Securities the market value of those Notes or Undated Capital Securities generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period.The Issuer may be expected to redeem Notes or Undated Capital Securities when its cost of borrowing is lower than the interest rate on the Notes or the distribution rate on the Undated Capital Securities.At those times a potential investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes or the distribution rate on the Undated Capital Securities being redeemed and may only be able to do so at a significantly lower rate.Potential investors should consider reinvestment risk in light of other investments available at that time.Dual Currency Notes or Undated Capital Securities have features which are different from single currency issues The Issuer may issue Notes or Undated Capital Securities with principal or interest payable in one or more currencies which may be different from the currency in which the Notes or the Undated Capital Securities are denominated. Each potential investor should be aware that: (i) the market price of such Notes or Undated Capital Securities may be volatile; (ii) they may receive no interest; (iii) payment of principal or interest may occur at a different time or in a different currency than expected; (iv) the amount of principal payable at redemption may be less than the nominal amount of such Notes or Undated Capital Securities or even zero; ? 60 ?(v) a Relevant Factor (as defined below) may be subject to significant fluctuations that may not correlate with changes in interest rates currencies or other indices; (vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or contains some other leverage factor the effect of changes in the Relevant Factor on principal or interest payable likely will be magnified; and (vii) the timing of changes in a Relevant Factor may affect the actual yield to investors even if the average level is consistent with their expectations. In general the earlier the change in the Relevant Factor the greater the effect on yield.Failure by a potential investor to pay a subsequent instalment of partly-paid Notes may result in it losing all of its investment The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in a potential investor losing all of its investment.The market price of floating rate Notes and floating rate Undated Capital Securities with a multiplier or other leverage factor may be volatile Notes and Undated Capital Securities with floating interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors or caps or floors or any combination of those features or other similar related features their market values may be even more volatile than those for securities that do not include those features.Notes or Undated Capital Securities the interest rate of which may be converted from fixed to floating interest rates and vice-versa may have lower market values than other Notes or Undated Capital Securities Fixed or Floating Rate Notes or Undated Capital Securities may bear interest at a rate that the Issuer may elect to convert from a fixed rate to a floating rate or from a floating rate to a fixed rate. The Issuer’s ability to convert the interest rate will affect the secondary market and the market value of such Notes or Undated Capital Securities since it may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing.If the Issuer converts from a fixed rate to a floating rate the spread on the Fixed or Floating Rate Notes Undated Capital Securities may be less favourable than then prevailing spreads on comparable Floating Rate Notes or Floating Rate Undated Capital Securities tied to the same reference rate. In addition the new floating rate at any time may be lower than the rates on other Notes and Undated Capital Securities. If the Issuer converts from a floating rate to a fixed rate the fixed rate may be lower than then prevailing rates on its Notes and Undated Capital Securities.The market prices of Notes and the Undated Capital Securities issued at a substantial discount or premium tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities The market values of securities issued at a substantial discount or premium to their nominal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally the longer the remaining term of the securities the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.? 61 ?Risks associated with Index Linked Notes and Dual Currency Notes The Issuer may issue Notes with principal or interest determined by reference to an index or formula to changes in the prices of securities or commodities to movements in currency exchange rates or other factors (each a “Relevant Factor”). In addition the Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that: (i) the market price of such Notes may be volatile; (ii) they may receive no interest; (iii) the payment of principal or interest may occur at a different time or in a different currency than expected; (iv) the amount of principal payable at redemption may be less than the nominal amount of such Notes or even zero; (v) a Relevant Factor may be subject to significant fluctuations that may not correlate with changes in interest rates currencies or other indices; (vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or contains some other leverage factor the effect of changes in the Relevant Factor on principal or interest payable will likely be magnified; and (vii) the timing of changes in a Relevant Factor may affect the actual yield to investors even if the average level is consistent with their expectations. In general the earlier the change in the Relevant Factor the greater the effect on yield.The historical experience of an index should not be viewed as an indication of the future performance of such index during the term of any Index Linked Notes. Accordingly each potential investor should consult its own financial and legal advisers about the risk entailed by an investment in any Index Linked Notes and the suitability of such Notes in light of its particular circumstances.Partly-paid Notes The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in an investor losing all of its investment.Variable rate Notes and the Undated Capital Securities with a multiplier or other leverage factor Notes and the Undated Capital Securities with variable interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors or caps or floors or any combination of those features or other similar related features their market values may be even more volatile than those for securities that do not include those features.Bearer Notes where denominations involve integral multiples: Definitive Notes In relation to any issue of Bearer Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount it is possible that such Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case a holder who as a result of trading such amounts holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a Definitive Note in respect of such holding (should Definitive Notes be printed) and would need to purchase a principal amount of Notes such that its holding amounts to a Specified Denomination.? 62 ?If Definitive Notes are issued each potential investor should be aware that Definitive Notes which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade.CONSIDERATIONS RELATING TO NON-PREFERRED LOSS ABSORBING NOTES DATED SUBORDINATED NOTES AND UNDATED CAPITAL SECURITIES Certain considerations relating to enforcement In most circumstances the sole remedy against the Issuer available to the Trustee (on behalf of the holders of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities) to recover any amounts owing in respect of the principal of or interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes or the principal of or distribution on the Undated Capital Securities will be to institute proceedings for the winding-up ofthe Issuer in Hong Kong. See “Terms and Conditions of the Notes other than the Undated CapitalSecurities — Events of Default and Default” and “Terms and Conditions of the Undated CapitalSecurities — Default and Enforcement”.If the Issuer defaults on the payment of principal or interest on the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes or any amount of principal or distributions on the Undated Capital Securities the Trustee will only institute a proceeding in Hong Kong for the winding-up of the Issuer if it is so contractually obliged. The Trustee will have no right to accelerate payment of the Non-Preferred Loss Absorbing Notes the Dated Subordinated Notes or the Undated Capital Securities in the case of default in payment or failure to perform a covenant except as they may be so permitted in the Trust Deed.To the extent that the Trustee or the holders of the Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities are entitled to any recovery with respect to the Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities in any Hong Kong proceedings the Trustee and such holders of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities might not be entitled in such proceedings to a recovery in U.S. dollars and might be entitled only to a recovery in Hong Kong dollars.In Hong Kong proceedings if the Issuer’s assets become subject to the control of a court-appointed receiver interest or distributing on the Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities would cease to accrue on the date of the court order and the relevant U.S. dollar amounts would be converted to Hong Kong dollars as at such date for purpose of claims.Subordination of the Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities could impair an investor’s ability to enforce its rights or realise any claims on the Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities The Non-Preferred Loss Absorbing Notes will be direct and unsecured obligations of the Issuer and shall rank subsequent in priority to all unsubordinated creditors of the Issuer. The Dated Subordinated Notes will be direct unsecured and subordinated obligations of the Issuer and shall rank subordinate and junior in priority to the claims of all unsubordinated creditors of the Issuer and the holders of Non-Preferred Loss Absorbing Instruments.Upon the occurrence of any winding-up proceeding the rights of the holders of the relevant Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities to payments on such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities will be subordinated in right of payment to the prior payment in full of all deposits and other liabilities of the Issuer except those liabilities which rank equally with or junior to the relevant Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities. In a ? 63 ?winding-up proceeding the holders of the relevant Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities may recover less than the holders of deposit liabilities or the holders of other unsubordinated liabilities of the Issuer. As there is no precedent for a winding-up of a major financial institution in Hong Kong there are uncertainties as to the manner in which such a proceeding would occur and the results thereof. Although Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities may pay a higher rate of interest or distribution than comparable instruments which are not subordinated there is a risk that an investor in Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities will lose all or some of its investment should the Issuer become insolvent.In addition payments of principal interest and distribution in respect of the Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities are conditional upon the Issuer being solvent. No such principal interest or distribution will be payable in respect of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities except to the extent that the Issuer could make such payment in whole or in part and still be solventimmediately thereafter. See Condition 3 of “Terms and Conditions of the Notes other than the UndatedCapital Securities” for a full description of subordination and the payment obligations of the Issuer under the Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes and see Condition 3 of “Terms and Conditions of the Undated Capital Securities”.The terms of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities may contain non-viability loss absorption and Hong Kong Resolution Authority Power provisions To the extent that a series of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities contains provisions relating to loss absorption and Hong Kong Resolution Authority Power upon the occurrence of a Non-Viability Event of the Issuer as determined by the relevant Hong Kong Resolution Authority the Issuer may be required subject to the terms of the relevant series of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities irrevocably (without the need for the consent of the holders of such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities) to effect either a full write-off of the outstanding principal and accrued and unpaid interest or distribution in respect of such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities or a conversion of such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities into the ordinary shares of the Issuer. To the extent relevant in the event that Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities are written off any written-off amount shall be irrevocably lost and holders of such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities will cease to have any claims for any principal amount and accrued but unpaid interest or distribution which has been subject to write-off. In the event that Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities feature a conversion to the ordinary shares of the Issuer upon the occurrence of a Non-Viability Event holders would not be entitled to any reconversion of ordinary shares to Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities.The occurrence of a Non-Viability Event and the exercise of Hong Kong Resolution Authority Power may be inherently unpredictable and may depend on a number of factors which may be outside of the Group’s control The occurrence of a Non-Viability Event and the exercise of Hong Kong Resolution Authority Power are dependent on a determination by the relevant Hong Kong Resolution Authority (a) that a write-off without which the Issuer would become non-viable is necessary; or (b) a decision has been made to make a public sector injection of capital or equivalent support without which the Issuer would have become non-viable. As a result the relevant Hong Kong Resolution Authority may require or may cause a write-off in circumstances that are beyond the control of the Issuer and the Group and with ? 64 ?which neither the Issuer nor the Group agree. Because of the inherent uncertainties regarding the determination of whether a Non-Viability Event exists it will be difficult to predict when if at all a write-off will occur. Accordingly the trading behaviour in respect of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities which have the non-viability loss absorption feature is not necessarily expected to follow trading behaviour associated with other types of securities. Any indication that the Issuer is trending towards a Non-Viability Event could have a material adverse effect on the market price of the relevant Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities.Potential investors should consider the risk that a holder of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities which have the non-viability loss absorption feature may lose all of their investment in such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities including the principal amount plus any accrued but unpaid interest or distribution in the event that a Non-Viability Event occurs.There is no assurance that any contractual provisions with non-viability loss absorption or Hong Kong Resolution Authority Power features to the extent applicable will be sufficient to satisfy the Basel III-compliant requirements that the relevant Hong Kong Resolution Authorities may implement in the future. There is a risk that any relevant Hong Kong Resolution Authority may deviate from the Basel III proposals by implementing reforms which differ from those envisaged by the Basel Committee.The Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities may be subject to a full or partial Write-off Investors may lose the entire amount of their investment in any Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities in which Write-off (as defined in the Note Conditions and the Undated Capital Securities Conditions) upon the occurrence of a Non-Viability Event or the exercise of Hong Kong Resolution Authority Power is specified which will lead to a full or partial Write-off. Upon the occurrence of a Write-off the principal amount and any accrued but unpaid interest or distribution of such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities will automatically be written down and if there is a full Write-off the principal amount and any accrued but unpaid interest or distribution may be written down completely and such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities will be automatically cancelled.In addition the subordination and set-off provisions set out in Condition 3 of the Note Conditions and the Undated Capital Securities Conditions are effective only upon the occurrence of any winding-up proceedings of the Issuer. In the event that a Non-Viability Event occurs or the Hong Kong Resolution Authority Power is exercised the rights of holders of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities and the Receipts and Coupons relating to the Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes shall be subject to Condition 7.This may not result in the same outcome for Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities as would otherwise occur under Condition 3 upon the occurrence of any winding-up proceedings of the Issuer.Furthermore upon the occurrence of a Write-off of any Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities interest or distribution will cease to accrue and all interest or distribution amounts that were not due and payable prior to the Write-off shall become null and void. Consequently Noteholders or Securityholders will not be entitled to receive any interest or distribution that has accrued on such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities from (and including) the last Interest Payment Date or last Distribution Payment Date falling on or prior to the Non-Viability Event Notice.? 65 ?Any such Write-off will be irrevocable and the Noteholders or Securityholders will upon the occurrence of a Write-off not receive any shares or other participation rights of the Issuer or be entitled to any other participation in the upside potential of any equity or debt securities issued by the Issuer or any other member of the Group or be entitled to any subsequent write-up or any other compensation in the event of a potential recovery of the Issuer or the Group.Any failure to provide a Non-Viability Event Notice whether at all or otherwise in accordance with the prescribed time period in the Note Conditions or the Undated Capital Securities Conditions shall not invalidate any Write-off.Upon the occurrence of a Non-Viability Event clearance and settlement of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities will be suspended and there may be a delay in updating the records of the relevant clearing system to reflect the amount written-off Following the receipt of a Non-Viability Event Notice all clearance and settlement of the Non-Preferred Loss Absorbing Notes the Dated Subordinated Notes and the Undated Capital Securities will be suspended. As a result Noteholders or Securityholders will not be able to settle the transfer of any Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated CapitalSecurities from the commencement of the Suspension Period (as defined in “Terms and Conditions ofthe Notes other than the Undated Capital Securities” and “Terms and Conditions of the UndatedCapital Securities”) and any sale or other transfer of the Non-Preferred Loss Absorbing Notes the Dated Subordinated Notes and the Undated Capital Securities that a holder may have initiated prior to the commencement of the Suspension Period that is scheduled to settle during the Suspension Period will be rejected by the relevant clearing system and will not be settled within the relevant clearing systems.While a Tranche of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities that contains non-viability loss absorption or Hong Kong Resolution Authority Power provisions is represented by one or more Global Notes or Global Certificates (as applicable) and a Non-Viability Event occurs the records of Euroclear and Clearstream or any other clearing system (other than the CMU) in respect of their respective participants’ position held in such Tranche of Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities may not be immediately updated to reflect the amount to be written-off (where applicable) and may continue to reflect the nominal amount of such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities prior to the Write-off as being outstanding for a period of time. The update process of the relevant clearing system may only be completed after the date on which the Write-off is scheduled. Notwithstanding such delay holders of such Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities may lose the entire value of their investment in Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities on the date on which the Write-off occurs. No assurance can be given as to the period of time required by the relevant clearing system to complete the update of their records.Further the conveyance of notices and other communications by the relevant clearing system to their respective participants by those participants to their respective indirect participants and by the participants and indirect participants to beneficial owners of interests in the Global Bond or Global Certificate (as applicable) will be governed by arrangements among them subject to any statutory or regulatory requirements as may be in effect from time to time.? 66 ?The operation of the resolution regime in Hong Kong may override the contractual terms of the Notes and the Undated Capital Securities In Hong Kong the FIRO became effective on 7 July 2017. The Monetary Authority is the relevant Hong Kong Resolution Authority in relation to banking sector entities in Hong Kong such as the Issuer. The Monetary Authority’s powers under FIRO include but are not limited to powers to write off or convert all or a part of the principal amount of or interest or distribution on the Notes or the Undated Capital Securities and powers to amend or alter the contractual provisions of the Notes or the Undated Capital Securities. Whilst the FIRO sets out a framework of the resolution regime in Hong Kong much of the detail is to be legislated through secondary legislation and supporting rules and as such the impact of it on the Notes and the Undated Capital Securities cannot currently be fully accurately assessed.The operation of the resolution regime in Hong Kong may affect the rights of the Noteholders and Securityholders and could result in the Noteholders and Securityholders losing their rights in relationto accrued and future interest or distribution without compensation. See “— The terms ofNon-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities maycontain non-viability loss absorption and Hong Kong Resolution Authority Power provisions”.Regulations on non-viability loss absorption and Hong Kong Resolution Authority Power are new untested and subject to interpretation and application by regulations in Hong Kong The regulations on non-viability loss absorption and Hong Kong Resolution Authority Power are new and untested and will be subject to the interpretation and application by the relevant Hong Kong Resolution Authority. It is uncertain how the relevant Hong Kong Resolution Authority would determine the occurrence of a Non-Viability Event and the exercise of the Hong Kong Resolution Authority Power and it is possible that the grounds that constitute Non-Viability Events may change (including that additional grounds are introduced).Accordingly the operation of any such future legislation may have an adverse effect on the position of holders of any Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities.A potential investor must not invest in any Non-Preferred Loss Absorbing Notes Dated Subordinated Notes or Undated Capital Securities unless it has the knowledge and expertise to evaluate how the Non-Preferred Loss Absorbing Notes the Dated Subordinated Notes and the Undated Capital Securities will perform under changing conditions the resulting effects on the likelihood of a Write-off and the value of the Non-Preferred Loss Absorbing Notes the Dated Subordinated Notes and the Undated Capital Securities and the impact this investment will have on the potential investor’s overall investment portfolio. Prior to making an investment decision potential investors should consider carefully in light of their own financial circumstances and investment objectives all the information contained in this Offering Circular.CONSIDERATIONS RELATING TO RENMINBI-DENOMINATED NOTES AND UNDATED CAPITAL SECURITIESNotes and the Undated Capital Securities denominated in Renminbi (“Renminbi Notes and UndatedCapital Securities”) may be issued under the Programme. Renminbi Notes and Undated Capital Securities contain particular risks for potential investors.? 67 ?Renminbi is not freely convertible. There are significant restrictions on remittance of Renminbi into and outside the PRC which may adversely affect the liquidity of Renminbi Notes and Undated Capital Securities Renminbi is not freely convertible at present. The PRC government continues to regulate conversion between Renminbi and foreign currencies including the Hong Kong dollar. However there has been significant reduction in control by the PRC government in recent years particularly over trade transactions involving import and export of goods and services as well as other frequent routine foreign exchange transactions. These transactions are known as current account items.On the other hand remittance of Renminbi into or out of the PRC for the purposes of capital account items such as capital contributions debt financing and securities investment is generally only permitted upon obtaining specific approvals from or completing specific registrations or filings with the relevant authorities on a case-by-case basis and is subject to a strict monitoring system.Regulations in the PRC on the remittance of Renminbi into the PRC for settlement of capital account items are developing gradually.In respect of Renminbi foreign direct investments (“FDI”) the PBOC promulgated the Administrative Measures on Renminbi Settlement of Foreign Direct Investment (the “PBOC FDI Measures”) on 13 October 2011 as part of the PBOC’s detailed Renminbi FDI accounts administration system. The system covers almost all aspects in relation to FDI including capital injections payments for the acquisition of PRC domestic enterprises repatriation of dividends and other distributions as well as Renminbi denominated cross-border loans. On 14 June 2012 the PBOC issued a circular setting out the operational guidelines for FDI. Under the PBOC FDI Measures special approval for FDI and shareholder loans from the PBOC which was previously required is no longer necessary. In some cases however post-event filing with the PBOC is still necessary. On 5 June 2015 the PBOC further issued the amendment rules for the PBOC FDI Measures as well as its implementing rules under which the registered capital verification requirement and the precondition of full contribution of the registered capital in respect of the borrowing of foreign debt denominated in Renminbi are cancelled.On 3 December 2013 the Ministry of Commerce of the PRC (“MOFCOM”) promulgated the Circularon Issues in relation to Cross-border Renminbi Foreign Direct Investment (the “MOFCOMCircular”) which became effective on 1 January 2014 to further facilitate FDI by simplifying and streamlining the applicable regulatory framework. Pursuant to the MOFCOM Circular the appropriate office of MOFCOM and/or its local counterparts will grant written approval for each FDI and specify “Renminbi Foreign Direct Investment” and the amount of capital contribution in the approval. Unlike previous MOFCOM regulations on FDI the MOFCOM Circular removes the approval requirement for foreign investors who intend to change the currency of its existing capital contribution from a foreign currency to Renminbi. In addition the MOFCOM Circular also clearly prohibits the FDI funds from being used for any investment in securities and financial derivatives (except for investment in the PRC listed companies as strategic investors) or for entrustment loans in the PRC. Effective 30 July 2017 pursuant to the Decision on Revision of the Provisional Measures on Administration of Filing for Establishment and Change of Foreign Investment Enterprises the establishment and change of foreign invested enterprises other than those subject to special administration measures only needs to be filed with the local arm of MOFCOM. As such the aforesaid written approval requirement regarding “Renminbi Foreign Direct Investment” set forth in the MOFCOM Circular has been replaced with a simplified record filing requirement.The PBOC FDI Measures the MOFCOM Circular and other PRC laws regulations and policies in relation to the general administration of Renminbi will be subject to interpretation and application by the relevant authorities in the PRC.? 68 ?There is no assurance that the PRC government will continue to gradually liberalise control over cross-border remittance of Renminbi in the future that any schemes for Renminbi cross-border utilisation will not be discontinued or that new regulations in the PRC will not be promulgated in the future which have the effect of restricting or eliminating the remittance of Renminbi into or outside the PRC. In the event that any regulatory restrictions inhibit the ability of the Issuer to repatriate funds outside the PRC to meet its obligations under Renminbi Notes and Undated Capital Securities the Issuer will need to source Renminbi offshore to finance such obligations under the relevant Renminbi Notes and Undated Capital Securities and its ability to do so will be subject to the overall availability of Renminbi outside the PRC.There is only limited availability of Renminbi outside the PRC which may affect the liquidity of Renminbi Notes and Undated Capital Securities and the Issuer’s ability to source Renminbi outside the PRC to service such Renminbi Notes and Undated Capital Securities As a result of the restrictions imposed by the PRC government on cross-border Renminbi fund flows the availability of Renminbi outside of the PRC is limited. Since February 2004 in accordance with arrangements between the PRC central government and HKSARG licensed banks in Hong Kong may offer limited Renminbi denominated banking services to Hong Kong residents and specified business customers. The PBOC has also established a Renminbi clearing and settlement system for participating banks in Hong Kong. On July 2010 further amendments were made to the Settlement Agreement on the Clearing of RMB Business (the “Settlement Agreement”) between the PBOC and Bank of China (Hong Kong) Limited (the “RMB Clearing Bank”) to further expand the scope of Renminbi business for participating banks in Hong Kong. Pursuant to the revised arrangements all corporations are allowed to open Renminbi accounts in Hong Kong; there is no longer any limit on the ability of corporations to convert Renminbi; and there will no longer be any restriction on the transfer of Renminbi funds between different accounts in Hong Kong. In addition the PBOC has now established Renminbi clearing and settlement systems with financial institutions in other major global financial centres (each also a “RMB Clearing Bank”) including London Frankfurt and Singapore to further internationalise the Renminbi.There are restrictions imposed by the PBOC on Renminbi business participating banks in respect of cross-border Renminbi settlement such as those relating to direct transactions with PRC enterprises.Furthermore Renminbi business participating banks do not have direct Renminbi liquidity support from the PBOC although the PBOC has gradually allowed participating banks to access the PRC’s onshore inter-bank market for the purchase and sale of Renminbi. The Renminbi Clearing Banks only have limited access to onshore liquidity support from the PBOC for the purpose of squaring open positions of participating banks for limited types of transactions and are not obliged to square for participating banks any open positions resulting from other foreign exchange transactions or conversion services. In such cases where the participating banks cannot source sufficient Renminbi through the above channels the participating banks will need to source Renminbi from outside the PRC to square such open positions.Although it is expected that the offshore Renminbi market will continue to grow in depth and size its growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange.There is no assurance that new PRC regulations will not be promulgated or the settlement arrangements will not be terminated or amended in the future which will have the effect of restricting availability of Renminbi outside the PRC. The limited availability of Renminbi outside the PRC may affect the liquidity of the Renminbi Notes and Undated Capital Securities. To the extent the Issuer is required to source Renminbi in the offshore market to service its Renminbi Notes and Undated Capital Securities there is no assurance that the Issuer will be able to source such Renminbi on satisfactory terms if at all.? 69 ?Investment in Renminbi Notes and Undated Capital Securities is subject to exchange rate risks The value of the Renminbi against the U.S. dollar and other foreign currencies fluctuates from time to time and is affected by changes in the PRC by international political and economic conditions and by many other factors. All payments of interest and principal will be made with respect to Renminbi Notes and Undated Capital Securities in Renminbi. As a result the value of these Renminbi payments in U.S. dollars or other foreign currencies may vary with the prevailing exchange rates in the marketplace. If the value of Renminbi depreciates against the U.S. dollar or other foreign currencies the value of investment in U.S. dollars or other applicable foreign currencies will decline. In August 2015 the PBOC changed the way it calculates the mid-point price of Renminbi against the U.S. dollar requiring the market-makers who submit for the PBOC’s reference rates to consider the previous day’s closing spot rate foreign-exchange demand and supply as well as changes in major currency rates.This change and other changes such as widening the trading band that may be implemented may increase volatility in the value of the Renminbi against foreign currencies. In May 2017 the PBOC further decided to introduce counter-cyclical factors to offset the market pro-cyclicality so that the midpoint quotes could adequately reflect China’s actual economic performance. However the volatility in the value of the Renminbi against other currencies still exists.Investment in Renminbi Notes and Undated Capital Securities is subject to interest rate risks The PRC government has gradually liberalised its regulation of interest rates in recent years. Further liberalisation may increase interest rate volatility. In addition the interest rate for Renminbi in markets outside the PRC may significantly deviate from the interest rate for Renminbi in the PRC as a result of foreign exchange controls imposed by PRC laws and regulations and prevailing market conditions.As Renminbi Notes and Undated Capital Securities may carry a fixed interest rate or distribution rate the trading price of Renminbi Notes and Undated Capital Securities will consequently vary with the fluctuations in the Renminbi interest rates. If holders of Renminbi Notes and Undated Capital Securities propose to sell their Renminbi Notes and Undated Capital Securities before their maturity they may receive an offer lower than the amount they have invested.Payments in respect of Renminbi Notes and Undated Capital Securities will only be made to investors in the manner specified in such Renminbi Notes and Undated Capital Securities All payments to investors in respect of Renminbi Notes and Undated Capital Securities will be made solely by (i) when Renminbi Notes and Undated Capital Securities are represented by a global certificate transfer to a Renminbi bank account maintained in Hong Kong in accordance with prevailing CMU rules and procedures or (ii) when Renminbi Notes and Undated Capital Securities are in definitive form transfer to a Renminbi bank account maintained in Hong Kong in accordance with prevailing rules and regulations. The Issuer cannot be required to make payment by any other means (including in any other currency or in bank notes by cheque or draft or by transfer to a bank account in the PRC).There may be PRC tax consequences with respect to investment in the Renminbi Notes and Undated Capital Securities In considering whether to invest in the Renminbi Notes and Undated Capital Securities investors should consult their individual tax advisers with regard to the application of PRC tax laws to their particular situations as well as any tax consequences arising under the laws of any other tax jurisdictions. The value of the holder’s investment in the Renminbi Notes and Undated Capital Securities may be materially and adversely affected if the holder is required to pay PRC tax with respect to acquiring holding or disposing of and receiving payments under those Renminbi Notes and Undated Capital Securities.? 70 ?USE OF PROCEEDS The Issuer intends to use the net proceeds from each issue of Notes or Undated Capital Securities for its general corporate purposes.? 71 ?CAPITALISATION AND INDEBTEDNESS As at 31 December 2023 BEA had an issued and fully paid up share capital of approximately HK$41915 million consisting of approximately 2650 million ordinary shares.The following table sets forth the Group’s consolidated capitalisation and indebtedness as at 31 December 2023: As at 31 December 2023 Actual Actual HK$ (in millions) U.S.$ (in millions)(5) (unaudited) (unaudited) Short-term borrowings(1) Customer deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . 613370 78638 Certificates of deposits in issue . . . . . . . . . . . . . . . . . . . . 16930 2171 Deposits from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25619 3284 Debt securities issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461 59 Loan capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1649 211 Total short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . 658029 84363 Medium-term borrowings(2) Customer deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . 15228 1952 Certificates of deposits in issue . . . . . . . . . . . . . . . . . . . . 10688 1370 Deposits from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Debt securities issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 49 Loan capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14318 1836 Total medium-term borrowings . . . . . . . . . . . . . . . . . . . . . . 40617 5207 Long-term borrowings(3) Customer deposit accounts . . . . . . . . . . . . . . . . . . . . . . . — — Total long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . — — Equity Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41915 5374 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56058 7187 Total equity attributable to owners of the parent . . . . . . . 97973 12561 Additional equity instruments. . . . . . . . . . . . . . . . . . . . . . 10090 1294 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . 263 33 Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108326 13888 Total capitalisation(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82532 10581 Short-term borrowings and total capitalisation . . . . . . . . . . 740561 94944 Notes: (1) Short-term borrowings represent the remaining maturity not more than one year. (2) Medium-term borrowings represent the remaining maturity between one year to five years. (3) Long-term borrowings represent the remaining maturity more than five years. (4) Total capitalisation comprises total medium-term borrowings total long-term borrowings and total equity. (5) This amount has been translated into U.S.$ for convenience purpose at a rate of U.S.$1.00 to HK$7.8. Save as disclosed in this Offering Circular there has been no material adverse change in the Group’s total capitalisation and indebtedness since 31 December 2023.? 72 ?BUSINESS OF THE GROUP INTRODUCTION Overview Incorporated in 1918 BEA is a leading Hong Kong-based financial services group listed on the HKSE.The Group provides a comprehensive range of wholesale and personal banking financial and insurance services to a diverse customer base. The Group’s products and services include syndicated loans trade finance deposit-taking foreign currency savings remittances mortgage loans consumer loans credit cards Cyberbanking retail investment and wealth management services private banking Renminbi services foreign exchange margin trading broking services and MPF services.BEA is one of the first foreign banks to have received approval to establish a locally-incorporated bank in Chinese Mainland. As a locally-incorporated bank and a wholly-owned subsidiary of BEA BEA (China) obtained the Financial Institution Business Permit from NFRA on 20 March 2007 and the business licence from SAIC on 29 March 2007 and officially commenced business on 2 April 2007. BEA (China) provides comprehensive RMB and foreign currency banking services to its customers including but not limited to personal banking and wealth management loans and advances debit cards and credit cards cyberbanking and cash management investment and derivative products agency services for life and general insurance remittance and settlement RMB cross-border business trade finance facilities supply chain financing standby letters of credit bank guarantees and distribution of local mutual funds.History Since its founding in 1918 BEA has dedicated itself to delivering professional banking services to the local community in Hong Kong particularly small and medium enterprises. BEA set up its first branch in Chinese Mainland in Shanghai in 1920 and has operated in Chinese Mainland ever since. BEA’s shares started trading on the local stock exchanges in Hong Kong in the early 1920s.In 1975 BEA launched the first Hong Kong dollar credit card in conjunction with Bank of America called the East Asia BankAmericard/VISA. In 1979 the East Asia BankAmericard/VISA credit card became the first credit card that was accepted in Chinese Mainland as a result of an agreement between BEA and the Bank of China on foreign currency credit card settlement services.BEA is one of the founders of Joint Electronic Teller Services Ltd. (“JETCO”) which was formed to set up a network of ATMs in Hong Kong and Macau. BEA is also one of the founders of EPS Company (Hong Kong) Limited (“EPSCO”) in Hong Kong which was formed to facilitate the electronic transfer of funds at the points of sale. In 1999 BEA was the first bank in Hong Kong to launch online stock trading through its wholly-owned subsidiary East Asia Securities Company Limited (“East Asia Securities”). BEA was also the first bank in Hong Kong to provide comprehensive internet banking services to its customers through its award-winning Cyberbanking service.In 2008 BEA (China) became the first foreign bank to launch RMB debit cards and RMB credit cards in Chinese Mainland.In June 2009 BEA entered into a number of strategic cooperation agreements with Criteria CaixaCorp S.A. (which changed its name to CaixaBank S.A. on 30 June 2011) (“CaixaBank”) a Spanish listed holding company controlled by “la Caixa”. The agreements enable BEA to leverage the ? 73 ?extensive resources of CaixaBank to further develop its business including cross-border referrals training and knowledge transfer as well as funding. The alliance with “la Caixa” group also enhances BEA’s access to the financial industry in Spain Europe and Latin America and creates opportunities for potential joint business development in the Asia-Pacific region.In July 2009 BEA (China) became the first locally-incorporated foreign bank to issue RMB retail bonds to retail investors and raised RMB4 billion through its debut issue of RMB bonds in Hong Kong. In September 2009 BEA (China) was granted the status of Domestic Settlement Bank and Domestic Agent Bank for cross-border RMB trade settlement services and completed its first cross-border RMB trade settlement transaction. In November 2010 BEA (China) completed its first cross-border RMB transaction for foreign direct investment.In June 2013 BEA (China) was among the first batch of foreign banks to be granted a local mutual fund distribution licence in Chinese Mainland. In February 2014 BEA (China) became the first foreign bank approved by PBOC to act as a reserve bank for payment institutions. In October 2015 BEA (China) was one of the first foreign banks to be qualified as a direct participating bank of the Cross-border Interbank Payment System.In December 2017 East Asia Qianhai Securities Company Limited (“EA Qianhai Securities”) received licence from the China Securities Regulatory Commission for commencement of operation.BEA is the largest shareholder of EA Qianhai Securities with a 49 per cent. interest. EA Qianhai Securities is incorporated in Qianhai Shenzhen with issued capital of RMB1.5 billion. EA Qianhai Securities is one of the few fully licensed securities companies established under Supplement X of the PRC’s Closer Economic Partnership Arrangement with Hong Kong and Macau (the “CEPA”).As the first foreign bank to enter Qianhai BEA (China) took the lead in setting up its Qianhai Sub-branch in early 2013 focusing on supporting and serving the development of the zone. In July 2018 BEA (China) became the first foreign bank to receive approval to open a full branch in Qianhai. In January 2024 BEA Tower in Qianhai officially opened. BEA’s new Greater Bay Area headquarters serves the rapidly expanding financial needs in the region and facilitates the delivery of seamless cross-boundary services to customers. BEA Tower also houses BEA’s fintech platform ? BEAST (BEA + Startups) connecting the Bank with the Mainland’s robust fintech community. BEAST Qianhai benefits BEA and its customers with co-created solutions while also facilitating broader intragroup collaboration.STRATEGY BEA’s core objectives are to strengthen its position and to further develop its domestic franchise as the largest independent local bank in Hong Kong and to further diversify its operations and expand its operations in Chinese Mainland and other overseas countries. The Group will continue to enhance its sales force and digital capabilities to capture opportunities in the market striving for sustainable growth and enhanced shareholder returns. Given the increasingly close economic connection among Chinese Mainland Hong Kong and the countries of Southeast Asia the Group will continue to integrate its services across the Hong Kong Chinese Mainland and international networks and capitalise new business opportunities in the Greater Bay Area. The key components of the Group’s strategy are below.Further Expansion in Chinese Mainland and Other Overseas Countries BEA intends to continue to develop the Group’s business in the Chinese Mainland and other overseas markets. The Chinese Mainland market remains an important focus for the Group. BEA intends to consolidate and strengthen the Group’s position in Chinese Mainland through capitalising on opportunities arising from the liberalisation of the banking sector and the internationalisation of RMB. Through the establishment of a locally-incorporated bank BEA (China) the Group is able to provide a comprehensive range of RMB and foreign currency banking products and services to ? 74 ?customers in Chinese Mainland. BEA (China) will continue to optimise the use of its assets and its Chinese Mainland — Hong Kong connection to deliver a wide range of tailored services for its customers in particular to meet the demands of high net worth and corporate customers in Chinese Mainland seeking to expand their businesses in Hong Kong and overseas. As a key driver of growth of the Group BEA (China) will further strengthen cross-border businesses among Chinese Mainland Hong Kong and overseas to capture opportunities arising from increasing business flows to and from Chinese Mainland. Leveraging the Group’s international banking experience and long history ofpresence in Chinese Mainland BEA (China) aims to position itself as “the most localised foreign bankin Chinese Mainland”.Given the size of the Chinese Mainland market and the extensive physical presence of the domestic banks BEA does not intend to compete with the domestic banks directly by opening an extensive branch network. Instead the Group will accelerate digitalisation with variant mobile platforms such as mobile banking WeChat banking and tablet banking to extend its reach to customers. BEA (China) focuses on lending to high quality customers such as state-owned enterprises listed companies customers who have long-standing business relationship with the Group and privately-owned enterprises with good credit standing stemming from emerging pillar industries such as green energy auto healthcare technology media and telecommunications. BEA (China) has focused on growing its credit exposure to selected strategic sectors including technology-media-telecom medicine and health fast moving consumer goods as well as automobiles and parts. Moreover BEA believes that BEA (China) responded swiftly to new opportunities arising from green finance. In addition BEA (China) focuses on enhancing its product and service capabilities in areas such as trade finance transaction banking and investment banking. Treasury products are another promising area for growth.BEA (China) has made significant inroads into the onshore RMB options market.In view of the internationalisation of RMB the Group continues to further strengthen collaboration among its business units in Hong Kong Chinese Mainland and overseas. To capture opportunities arising from increasing business flows to and from Chinese Mainland BEA (China) provides integrated cross-border financial services for both trade and non-trade transactions so as to meet clients’ growing needs in overseas acquisitions and business expansion. Furthermore BEA (China) is working closely with other business units of the Group to capture opportunities arising from the Greater Bay Area initiative in particular.The aforementioned BEA’s new Greater Bay Area headquarters serves the rapidly expanding financial needs in the region and facilitates the delivery of seamless cross-boundary services to customers. BEA Tower also houses BEA’s fintech platform ? BEAST (BEA + Startups) connecting the Bank with the Mainland’s robust fintech community. BEAST Qianhai benefits BEA and its customers with co-created solutions while also facilitating broader intragroup collaboration.BEA (China) intends to optimise its branch network and maintain a strong presence in Chinese Mainland improve its outlet productivity carry out a cost-effective branch network and readjust the layout of its sub-branches according to business needs. In the Greater Bay Area BEA (China) operates 20 outlets and will continue to leverage on the Group’s extensive network to capture opportunities that arise from the region. By streamlining its operations through digitalisation and process enhancement BEA (China) is well-positioned to capture more opportunities with similar resource bases.Improving operating efficiency through various transformation initiatives will be the main focus of BEA (China) in the future. BEA (China) has increased its investments in information technology as well as digital and data analytics capabilities in order to drive cost efficiency improve workflow and strengthen core infrastructure. These initiatives will lay the essential foundation to enhance customer experience strengthen risk management and improve productivity of BEA (China) in the long run.In line with BEA’s digitalisation strategies BEA’s overseas branches have been actively investing in technologies to streamline their business processes. BEA’s overseas branches will continue to capture new businesses prudently and optimise the mix of risk-weighted assets to enhance returns amid a challenging business landscape.? 75 ?BEA’s long-term objectives include facilitating the development of cross-border financial services between Hong Kong Chinese Mainland and beyond. In addition the Group has been diversifying its businesses into strategic sectors with policy support and targets to strengthen its wealth management capabilities across the Greater China region. BEA believes that its international network of branches and strategic partnerships will continue to serve its clients with overseas investment and business needs.Development of Green and Sustainable Finance The Group has supported and will continue to support the development of green and sustainable finance (“GSF”) in Hong Kong. The proportion of green lending and green bond investments in BEA’s total portfolio has increased last year as BEA collaborated with clients to fund sustainability-linked projects and carbon emission reduction projects. BEA aims to further diversify its portfolio into new sectors and industries to enhance sustainable long-term growth.Committed to achieving its goal of net zero financed emissions by 2050 BEA has developed a net zero roadmap which includes target-setting for all high-carbon emitting sectors by 2025. In December 2023 BEA became the first bank headquartered in Hong Kong to become signatory to the industry-led UN-convened Net-Zero Banking Alliance (“NZBA”) reinforcing our commitment to aligning our lending and investment portfolios with net zero emissions by 2050. Currently BEA is driving GSF development by increasing the amount of corporate GSF loans and environmental social and governance (“ESG”) bond investments held as a percentage of total loan and bond investment assets.BEA’s overseas operations have been actively exploring and participating in GSF opportunities in line with BEA’s ESG strategies.Diversification of Non-interest Income In light of the challenging operating environment caused by various factors including the globalmonetary tightening and geopolitical tensions BEA is transitioning towards a more “digital-ledasset-efficient” business model with a greater focus on fee income. The Group implements its strategy in Hong Kong by continuing to broaden its product range upgrading product features and exploring new market opportunities. The Group’s businesses of wealth management private banking trade finance and hedging solutions will continue to be the focus of the Group’s core business development in the near future. The Group will also continue to intensify cross-selling opportunities to its existing customer base.Enhancement of Profitability via Active Capital Management BEA intends to continue to optimise the Group’s asset mix through active capital management andallocation in order to enhance its profitability and net worth with the special emphasis on the “Returnon Risk-weighted Assets”. The Group will also absorb low-cost deposits across all business units and implement multi-pronged strategy to reduce funding costs.Transformation of its Branch Network Through repositioning and rationalising its branch network and re-distributing resources the Group seeks to transform its Hong Kong branches into deposit taking centres and sales centres to provide banking products and services to its customers and in particular to target high net worth customers.The Group will endeavour to enhance its appeal to further penetrate affluent young professionals and millennials high net worth individuals mid-cap and cash flow-rich companies as well as cross-border customers.? 76 ?BEA intends to increase the Group’s investments in digital strategy to reduce the costs of banking operations and continue to embrace technology in driving mobile transactions with payment and lifestyle features. For example BEA offers an extensive range of products and services to its customers via its mobile banking platform and upgraded digital channels are delivered to provide full digital banking experience thereby enabling standard transactions to be completed easily and instantaneously online. In addition the Group has further optimised its physical presence reduced the number of branches and established new centralised/mobile workspaces to facilitate meetings between BEA’s relationship managers and its customers.In addition the Group has made investments in digitalising operations implementing advanced data analytics and developing new service platforms to enhance customer experience. The Group has also recruited additional frontline sales staff to meet the potential growth in business demand from individuals corporates and high net worth PRC clients. BEA (China) also reallocates its resources to the construction of its online infrastructure in alignment with customer trends. The Group aims to continue the strategy of developing innovative and user-friendly services and tools to best serve its customers furthering its business focus on being a customer-centric financial services provider.Organic Growth and Partnerships BEA aims to grow organically by providing one-stop financial services to customers and through partnerships by establishing partnerships to generate new business across the Group. BEA will continue to take a disciplined approach to partnerships and investments as well as capture new business opportunities and enhance service quality by tapping into the strength and expertise of its shareholders and strategic partners. The Group continuously explores close collaboration opportunities with its key strategic partners SMBC Group and CaixaBank which seek to take advantage of the respective strengths and geographical coverage of each institution.The Group maintains a close focus on creating value for customers and investors providing high quality financial services and seeking investment opportunities that generate favourable returns. In particular BEA aims to mitigate concentration risk by developing business relationships with emerging market players in the strategic sectors with policy support. For example BEA’s wholesale banking team in Hong Kong is collaborating with BEA (China) to develop coordinated onshore/offshore solutions for customers across the value chain in different sectors. Moreover BEA has further strengthened its private banking team to capitalise on the return of business opportunities following the lifting of COVID-19 related restrictive measures. BEA has also enhanced its discretionary portfolio management and advisory capabilities and has dedicated significant resources to further improve its securities trading services. Going forward BEA will continue to enhance its wealth management offerings for both retail and private banking customers. In addition BEA believes that the Group will continue to benefit from its bancassurance partnership with AIA Company Limited (“AIA”).BEA will continue to conduct periodic reviews on its business portfolio business lines and investments in order to ensure optimal allocation of its resources.Focus on Enhancing Operational Efficiency BEA aims to further enhance efficiency and market competitiveness. The Group will continue to maintain strict control over costs throughout the Group and maintain cost discipline while investing in areas that offer good growth potential. The Group will also continue to embark on a digital transformation journey remaking the way for services delivery to enhance efficiency. More banking products will be sold with the transactions processed via a wide range of e-channels. The Group will focus on growth across its operations and implement strategies to optimise its asset and portfolio mix as well as remaining vigilant in managing its risks and striving to enhance efficiency and productivity.In addition the Group will continue to allocate more resources to proactively manage its credit risk control and protect asset quality with a continued focus on de-risking its asset portfolio as well as conduct strategic workforce planning from time to time to enhance its staff capacity and capability.? 77 ?BUSINESS OVERVIEW BEA has long been known for the comprehensive range of wholesale banking personal banking financial services and insurance services that it provides to its diverse customer base. BEA’s products and services include syndicated loans trade finance deposit-taking foreign currency savings remittances mortgage loans consumer loans credit cards Cyberbanking retail investment and wealth management services private banking Renminbi services foreign exchange margin trading brokerage services and MPF services.As at 31 December 2023 BEA had 48 branches 42 SupremeGold Centres and three i-Financial Centres in Hong Kong. BEA is a founding member of JETCO which provided about 3000 ATMs throughout Hong Kong and Macau as at 31 December 2023. BEA is also one of the founding members of EPSCO which processes debit card transactions at more than 30000 acceptance locations in Hong Kong Macau and Shenzhen.As at 31 December 2023 headquartered in Shanghai BEA (China) operated 30 branches and 32 sub-branches in 38 cities across Chinese Mainland. BEA (China) provides comprehensive RMB and foreign currency banking services to all customers. Services include but are not limited to personal banking and wealth management loans and advances debit cards and credit cards cyberbanking and cash management investment and derivative products agency services for life and general insurance remittance and settlement RMB cross-border business trade finance facilities supply chain financing standby letters of credit bank guarantees and distribution of local mutual funds.As at 31 December 2023 BEA has also established a presence in Macau Taiwan Southeast Asia the United Kingdom and the United States.The following tables set forth the Group’s operating income and profit before taxation for the years ended 31 December 2021 2022 and 2023 by business segment: Operating income For the year ended 31 December 2021 (Restated(11)) 2022 (Restated(12)) 2023 (in HK$ millions) Hong Kong Operations(1) Personal Banking(2) . . . . . . . . . . . . . . . . . . . . 3391 5256 6842 Wholesale Banking(3) . . . . . . . . . . . . . . . . . . 3174 3516 3564 Treasury Markets(4) . . . . . . . . . . . . . . . . . . . . 547 354 1310 Wealth Management(5) . . . . . . . . . . . . . . . . . . 999 932 941 Centralised Operations(6) . . . . . . . . . . . . . . . . 273 — — Others(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871 486 94 Chinese Mainland Operations(8) . . . . . . . . . . . . 4757 4857 5060 Overseas Macau and Taiwan Operations(9) . . . . 1989 2356 2839 Corporate Management(10) . . . . . . . . . . . . . . . . 321 226 126 Inter-segment Elimination . . . . . . . . . . . . . . . . (39) (29) (30) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16283 17954 20746 ? 78 ?Profit/(Loss) before taxation For the year ended 31 December 2021 (Restated(11)) 2022 (Restated(12)) 2023 (in HK$ millions) Hong Kong Operations(1) Personal Banking(2) . . . . . . . . . . . . . . . . . . . . 1583 3400 4918 Wholesale Banking(3) . . . . . . . . . . . . . . . . . . 1771 (242) (573) Treasury Markets(4) . . . . . . . . . . . . . . . . . . . . 372 116 1211 Wealth Management(5) . . . . . . . . . . . . . . . . . . 687 534 281 Centralised Operations(6) . . . . . . . . . . . . . . . . (1796) — — Others(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1299 (656) (2374) Chinese Mainland Operations(8) . . . . . . . . . . . . 399 (354) 54 Overseas Macau and Taiwan Operations(9) . . . . 1500 1917 1667 Corporate Management(10) . . . . . . . . . . . . . . . . 321 226 126 Inter-segment Elimination . . . . . . . . . . . . . . . . — — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6136 4941 5310 Notes: (1) Hong Kong operations include Hong Kong banking business and other business operations dividing into the following reportable segments. (2) Personal banking includes branch operations personal internet banking consumer finance property loans MPF business and credit card business. (3) Wholesale banking includes corporate lending and loan syndication asset based lending commercial lending securities lending and trade financing activities with correspondent banks and corporates. (4) Treasury markets include treasury operations and securities dealing. (5) Wealth management includes private banking business investment products & advisory and securities & futures broking. (6) Centralised operations include supporting units of banking operations in Hong Kong. Starting from the year ended 31 December 2023 previous “Centralised operations” segment and “Others” segment are combined into one single “Others” segment under Hong Kong operations. (7) Others mainly include insurance business and trust business carried out by subsidiaries operating in Hong Kong and other supporting units of Hong Kong operations. (8) Chinese Mainland operations mainly include the back office unit for Chinese Mainland operations in Hong Kong all subsidiaries and associates operating in Chinese Mainland except those subsidiaries carrying out data processing and other back office operations for Hong Kong operations in Chinese Mainland. (9) Overseas Macau and Taiwan operations mainly include the back office unit for Overseas Macau and Taiwan operations in Hong Kong Macau Branch Taiwan Branch and all branches subsidiaries and associates operating overseas. (10) Corporate management absorbs the regulatory capital cost of loan capital issued by BEA and receives from Hong Kong operations the interest income on business activities funded by capital instruments issued by BEA. (11) The financials of Hong Kong operations and Chinese Mainland operations for the year ended 31 December 2021 have been restated to conform to the presentation of the figures in the consolidated financial statements of the Issuer for the year ended 31 December 2022 which reflected the organisational restructure and other minor reallocations among business segments in 2022. The restructure mainly includes the reorganisation of the securities and futures broking businesses from Others segment to Wealth Management segment under Hong Kong operations. However the financials of Hong Kong operations for the year ended 31 December 2021 has not been further restated to conform to the presentation of the figures in the consolidated financial statements of the Issuer for the year ended 31 December 2023 (see note 12 below) such financials may not be directly comparable to those for the years ended 31 December 2022 and 2023 in this Offering Circular. (12) The financials of Hong Kong operations for the year ended 31 December 2022 have been restated to conform to the presentation of the figures for the year ended 31 December 2023 that reflected the organisational restructure during 2023. The restructure includes regrouping MPF business from Others segment to Personal banking segment regrouping merchant acquiring business from Personal banking segment to Wholesale banking segment and combining previous Centralised operations segment and Others segment into one single Others segment under Hong Kong operations.However the financials of Hong Kong operations for the year ended 31 December 2021 has not been restated to conform to the presentation of the figures in the consolidated financial statements of the Issuer for the year ended 31 December 2023 such financials may not be directly comparable to those for the years ended 31 December 2022 and 2023 in this Offering Circular.? 79 ?The following tables set forth the Group’s operating income and profit before taxation for the years ended 31 December 2021 2022 and 2023 by geographical location: Operating income For the year ended 31 December 202120222023 (in HK$ millions) Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9955 11081 13181 Chinese Mainland(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 4749 4832 5031 Other Asian Countries and Regions . . . . . . . . . . . . . . . . 607 770 888 Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1339 1590 1953 Inter-segment Elimination . . . . . . . . . . . . . . . . . . . . . . . (367) (319) (307) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16283 17954 20746 Profit/(Loss) before taxation For the year ended 31 December 202120222023 (in HK$ millions) Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4332 3167 3512 Chinese Mainland(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 (179) 83 Other Asian Countries and Regions . . . . . . . . . . . . . . . . 506 938 (188) Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 984 1015 1903 Inter-segment Elimination . . . . . . . . . . . . . . . . . . . . . . . — — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6136 4941 5310 Note: (1) This excludes Hong Kong Macau and Taiwan. The following table sets forth certain financial data and related ratios as at the dates indicated or for the periods indicated: As at or for the year ended 31 December 202120222023 (in HK$ millions except percentages) Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 907470 882825 860361 Total customers’ deposits and certificates of deposit issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697832 680755 656216 Total loans and advances to customers and trade bills(1) 559580 549543 532484 Total operating income . . . . . . . . . . . . . . . . . . . . . . . . . 16283 17954 20746 Profit attributable to owners of the parent . . . . . . . . . . 5270 4359 4118 Return on average assets . . . . . . . . . . . . . . . . . . . . . . . 0.5% 0.4% 0.4% Return on average equity . . . . . . . . . . . . . . . . . . . . . . . 4.4% 3.7% 3.6% Loan to deposit ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 78.6% 80.6% 81.1% Common Equity Tier 1 capital ratio . . . . . . . . . . . . . . . 17.0% 15.8% 17.3% Total capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.6% 20.1% 22.0% Note: (1) Total loans and advances to customers and trade bills are gross and before impairment provision. ? 80 ?HONG KONG Home Mortgages As at 31 December 2021 2022 and 2023 home mortgages (including loans for the purchase of flats in the Home Ownership Scheme (“HOS”) Private Sector Participation Scheme (“PSPS”) and Tenants Purchase Scheme (“TPS”) and loans for the purchase of other residential properties) in Hong Kong represented one of the most significant segments of the Group’s total loans and advances to customers accounting for approximately HK$92869 million HK$93144 million and HK$97228 million respectively or approximately 16.9 per cent. 17.0 per cent. and 18.3 per cent. respectively of the Group’s total loans and advances to customers. As at 31 December 2021 2022 and 2023 loans for the purchase of flats in HOS PSPS and TPS accounted for approximately HK$1337 million HK$1200 million and HK$1081 million respectively or approximately 0.2 per cent. 0.2 per cent. and 0.2 per cent. respectively of the Group’s total loans and advances to customers.The majority of home mortgages are extended to buyers of housing units in Hong Kong who intend to occupy the premises which include advances guaranteed by the HKSARG under HOS and TPS to assist lower income families in purchasing homes. Other home mortgages are extended to individuals purchasing residential units for investment purposes and refinancing.All home mortgage advances are secured by a first legal charge on the property and in certain circumstances the Group may also require personal guarantee as additional security. The Group provides various mortgage plans including floating Prime-based rate and floating HIBOR-based rate mortgage plans which are repayable by instalments. For a discussion of the Group’s loan-to-valuelending limits applicable to home mortgage advances see “Selected Statistical and Other Information— Risk Management and Credit Policies”. For a discussion of the Group’s lending rates applicable tohome mortgage advances see “Selected Statistical and Other Information — Advance Portfolio —Advance Analysis”. The Group maintains close relationships with most property developers in Hong Kong which has enabled the Group to source a significant amount of home mortgage and commercial mortgage advance business.Trade Finance Trade finance comprises loans and services to companies to accommodate their working capital requirements through short-term advances trust receipts invoice financing loans export credit packing loans shipping guarantees issuance of all types of documentary credits and factoring facilities.The customers of the Group’s trade finance services range from small-to-medium-sized enterprises to multinational corporations. Trade finance advances are made on a secured basis by way of a mortgage of property or other collateral or on an unsecured basis. BEA intends to increase income contribution and market share from trade finance by providing the Group’s customers with more market-oriented products. For example in October 2018 BEA together with six other banks jointly launched a digital trade finance platform eTradeConnect being the first trade finance platform leveraging blockchain technology in Hong Kong.The trade finance sector in Hong Kong is well developed and consequently the Group is seeking to capitalise on its network in Chinese Mainland to market its trade finance services to the increasing number of cross-border customers.As at 31 December 2021 2022 and 2023 trade finance advances amounted to approximately HK$6088 million HK$5110 million and HK$5592 million respectively which accounted for approximately 1.1 per cent. 0.9 per cent. and 1.1 per cent. of the Group’s total loans and advances to customers respectively.? 81 ?Consumer Finance The Group offers unsecured and secured lending to individuals with the aim to fulfil their financial needs. To accommodate varying customer needs on repayment options and to align with the Group’s risk appetite the Group offers a series of lending programmes and a variety of products targeting different customer segments. These products bear features such as personalised interest rate determined based on an individual customer’s credit standing automatic restoration of credit limit after each repayment of a revolving loan as well as other special purposes packages. They are available for application by customers at BEA’s branches via phone or through BEA’s online and mobile platforms.As at 31 December 2021 2022 and 2023 total outstanding consumer advances in Hong Kong amounted to approximately HK$8400 million HK$7766 million and HK$7095 million respectively which accounted for approximately 1.5 per cent. 1.4 per cent. and 1.3 per cent. of the Group’s total loans and advances to customers respectively.Credit Cards The Group’s credit card business involves offering credit lines to individuals for mercantile purchases as well as convenience cash via loan on cards. The Group offers an array of card types for different customer segments including the unparalleled Centennial World Elite MasterCard for high net worth clientele prestigious World MasterCard Visa Signature and Unionpay Diamond Card for affluent customers BEA AIA Credit Card for AIA policyholders BEA Goal Card for young customers and Platinum and Titanium Cards for the general public.The Group has continuously focused on the key areas of overseas and Greater Bay Area dining shopping and entertainment rewards to attract new customers in its credit card business. High ticket size spending categories such as travel and online purchases are also key areas which the Group continues to invest in with the aim to solicit new customers.As at 31 December 2021 2022 and 2023 credit card advances in Hong Kong amounted to approximately HK$4306 million HK$4136 million and HK$4765 million respectively which accounted for approximately 0.8 per cent. 0.8 per cent. and 0.9 per cent. of the Group’s total loans and advances to customers respectively.Insurance BEA is an appointed insurance agent of AIA and offers a wide variety of life insurance and general insurance products. BEA’s bancassurance partnership with AIA has successfully leveraged the Group’s strengths in distribution and its sizeable customer base in Hong Kong generating opportunities for cross-selling to new and existing customers.MPF Services and Other Trustee Services In October 1999 Bank of East Asia (Trustees) Limited (“BEAT”) a wholly-owned subsidiary of BEA was granted the status of an approved trustee under the Mandatory Provident Fund Schemes Ordinance (Cap. 485) of Hong Kong (the “MPF Schemes Ordinance”). Through this subsidiary the Group offers a full-range of MPF services including trustee scheme administration investment management and custody services to employers employees and the self-employed persons. BEAT is one of two approved trustees under the MPF Schemes Ordinance licensed to offer both the Master Trust Schemes and the Industry Scheme in Hong Kong.? 82 ?In addition to MPF services BEAT also offers a complete range of trustee services to both individual and corporate clients. BEAT acts as executor and trustee of wills an administrator of estates attorney administrator for overseas estates having assets in Hong Kong and as escrow agent for commercial transactions. BEAT also acts as trustee for family or other trusts and settlement investment funds unit trusts charities public funds and capital market issues.Internet Banking Services BEA’s internet banking platform provides a comprehensive range of e-banking services such as balance enquiry e-statement & e-advice rate enquiry change of address funds transfer remittance electronic cheque placement and renewal of time deposit bill payment credit card transactions and redemption of bonus points for gifts an online application for mortgages services stock and gold trading foreign exchange margin and option margin trading unit trust subscription and redemption linked deposits electronic initial public offering and other investment products purchase of TravelSafe insurance and MPF account enquiry and deposit.Bilateral Advances and Syndicated Advances The Group’s corporate lending activities include financing general corporate funding requirements property development property investment and M&A activities as well as project financing. The majority of borrowers are medium to large-sized Hong Kong companies as well as state-owned and private enterprises in Chinese Mainland which use the funds to support general working capital and funding requirements in Hong Kong and Chinese Mainland.The Group acts as arranger or participating bank in the Hong Kong syndicated loan market. The majority of the Group’s syndicated advances are extended to Hong Kong and PRC companies engaging in property development and investment local conglomerates and large private or state-owned enterprises in Chinese Mainland. The Group also acts as co-arranger in club deal facilities.The majority of the project financing in which the Group participates is extended on a recourse basis and is secured by the underlying project. Typically the average maturity of BEA’s corporate advances is up to five years and that for construction loans is extended up to completion of the construction project. Loan-to-value ratios are determined on a case-by-case basis in compliance with the regulatory requirement. For project financing the advance is generally secured by the underlying property and charge over all receivables derived from the property projects. The Group has been targeting at medium-sized to large-sized borrowers to pursue better risk-justified return.As at 31 December 2021 2022 and 2023 total outstanding bilateral and syndicated advances in Hong Kong amounted to approximately HK$120991 million HK$116829 million and HK$106198 million respectively which accounted for approximately 22.0 per cent. 21.3 per cent. and 20.0 per cent. of the Group’s total loans and advances to customers respectively.Wealth Management BEA’s Wealth Management Division comprises the Private Banking Department Investment Products and Advisory Department Wealth Management Operation Department East Asia Securities and East Asia Futures. The Wealth Management Division provides comprehensive and holistic wealth management products and solutions to high net worth individuals. It is the powerhouse of BEA’s wealth investment product offerings which target at catering clients’ wealth management needs and assisting clients with wealth planning at different phases of their wealth cycle from asset creation and accumulation to wealth preservation and succession planning.? 83 ?Services and products offered by the Wealth Management Division include a broad range of Capital Markets Investment and Banking solutions and services ranging from traditional investment products in equities fixed income and mutual funds to more complex solutions in structured products alternative investments and premium financing. In addition the Wealth Management Division provides assistance to clients in respect of various immigration schemes of Hong Kong and other countries securities and futures trading asset custody trusts and general banking products such as mortgage credit card and foreign exchange.Established in 2005 BEA’s private banking service (“BEA Private Banking”) is a domestic private bank that helps to strengthen the Group’s profile and visibility among high net worth individuals in Chinese Mainland Hong Kong Macau and Taiwan by harnessing the Group’s extensive network in such areas. Striving to become a leading private bank BEA continues to expand its sales force and product suite to meet the demands of high net worth clients in Chinese Mainland. It is expected that contribution from clients in Chinese Mainland will continue to increase given the strong and leading position of the Group’s business and track record in Chinese Mainland. The Group will continue to explore new avenues to drive more businesses and provide value-added services to its clients.Established in 2009 the Investment Products and Advisory Department (“IPAD”) is a central investment provider of investment products advisory and execution services to BEA Private Banking BEA’s retail and wholesale banking and BEA (China). IPAD comprises product management teams covering securities foreign exchange managed products and structured products. Separate teams have also been established to offer house views on investments and manage end-to-end product onboarding processes.The mission of the Group’s wealth management business is to provide digitalised data-driven and quality investment products to serve the needs of BEA’s clients. To this end BEA has been endeavouring to broaden the range of products available to its clients through an open-architecture platform improve the delivery of its house views and investment ideas through an omni-channel and data-driven approach and enhance clients’ banking experience with digitalisation efforts.Stock Broking In addition to the range of traditional banking products and services offered by the Group to its customers the Group also provides equity and futures stock broking. Stock broking activities and dealings in Hang Seng Index futures options and other derivative products are conducted through BEA and its wholly-owned subsidiaries namely East Asia Securities and East Asia Futures Limited on an agency basis for the execution of customers’ orders.Debt Capital Market In October 2018 the Group commenced its fixed income capital market business that involves origination execution and distribution of offshore public and private bond transactions for mainly corporations in Chinese Mainland and Hong Kong.? 84 ?CHINESE MAINLAND As at 31 December 2023 BEA’s wholly-owned subsidiary BEA (China) headquartered in Shanghai operated 30 branches in Shanghai Beijing Tianjin Harbin Dalian Shenyang Qingdao Shijiazhuang Zhengzhou Urumqi Hangzhou Nanjing Suzhou Chengdu Chongqing Wuhan Hefei Xi’an Shenzhen Shenzhen Qianhai Guangzhou Zhuhai Xiamen Changsha Kunming Ningbo Jinan Fuzhou Nanning and Nanchang as well as 32 sub-branches covering 38 cities in the PRC. BEA (China) operates 20 outlets covering nine Chinese Mainland cities (including Dongguan Foshan Guangzhou Huizhou Jiangmen Shenzhen Zhaoqing Zhongshan and Zhuhai) in the Greater Bay Area.In order to expand its presence in the Chinese Mainland market the Group has been expanding the range of products and services it provides in Chinese Mainland and will seek to capitalise on the opportunities arising from the liberalisation of the banking sector and from the CEPA between Hong Kong and Chinese Mainland. BEA (China)’s strategy is to increase the growth of RMB deposits (especially low-cost deposits) in order to maintain stability in its source of funds and to minimise costs associated with interbank lending. However there are many factors affecting the growth of deposits such as economic and political conditions interest rate liberalisation the availability of alternative investment choices (including but not limited to securities issued by governmental or corporate entities unit trusts and mutual funds investment-linked assurance schemes and structured investment products) and retail customers’ changing perceptions towards savings.BEA (China) aims at optimising the allocation and utilisation of its resources to better develop its personal banking in areas with business potential by strategically repositioning some of the business outlets. Selected existing outlets provide both wholesale and personal banking services while the rest of the existing outlets and newly established outlets focus on wholesale banking services supported by basic personal banking services. BEA (China) has focused on growing its credit exposure to selected strategic sectors including technology-media-telecom medicine and health fast moving consumer goods as well as automobiles and parts. Moreover BEA believes that BEA (China) responded swiftly to new opportunities arising from green finance.As at 31 December 2021 2022 and 2023 BEA (China)’s RMB-denominated lending amounted to approximately HK$128959 million HK$124923 million and HK$118969 million respectively accounting for approximately 86.0 per cent. 84.8 per cent. and 84.0 per cent. of the total customer advances of BEA (China) respectively. Borrowers comprise companies registered to do business in Chinese Mainland and individual customers including local residents. BEA (China) expects to further expand its RMB-denominated lending business with a prudent approach and has more appetite for loan growth in selected industries stemming from emerging pillar industries such as green energy auto healthcare technology media and telecommunications.? 85 ?INTERNATIONAL MACAU AND TAIWAN The Group’s international operations were commenced to serve the banking needs of local communities and the outbound investment demand of the Group’s core customers from Chinese Mainland Hong Kong and other Asian countries or regions. Apart from Macau and Taiwan the Group seeks to establish a presence in cities with large concentrations of overseas Chinese. The following table sets forth BEA’s outlets outside Hong Kong as at 31 December 2023: Country and Region Location Year Opened Malaysia . . . . . . . . . . . Representative Office in Kuala Lumpur 1997 Singapore . . . . . . . . . . Branch in Singapore 1952 United States . . . . . . . . Branches in New York and Los Angeles 1984 and 1991 United Kingdom . . . . . Branches in London Birmingham and 1990 1997 and 2013 Manchester Taiwan China . . . . . . . Branch in Taipei 1997 Macau China . . . . . . . Branch in Macau 2001 GROUP STRUCTURE BEA is the holding company and the principal operating company of the Group. In addition BEA has a number of significant subsidiaries and associated companies through which the Group conducts various operations such as stock-broking asset management and certain fee-based activities.As at 31 December 2023 except for BEA (China) none of BEA’s subsidiaries accounted for more than 10 per cent. of the consolidated net profit and loss of the Group or had a book value in excess of 10 per cent. of the Group’s consolidated total assets.The following table sets forth certain particulars of subsidiaries which principally affected the results assets or liabilities of the Group as at 31 December 2023: Place of % held by Incorporation Issued and Name of company and operation paid-up capital The Issuer The Group Nature of business Ample Delight Limited Hong Kong HK$450000000 100% Investment holding Bank of East Asia (Trustees) Limited Hong Kong HK$150000000 100% Trustee service BEA Union Investment Management Hong Kong HK$374580000 51% Asset management Limited BEA Union Investment Management PRC U.S.$7000000 51% Asset management/ (Shenzhen) Limited(1) Investment management Central Town Limited Hong Kong HK$2 100% Property investment Century Able Limited Hong Kong HK$929752849 100% Investment holding Corona Light Limited British Virgin HK$929752849 100% Investment holding Islands Credit Gain Finance Company Limited Hong Kong HK$640000000 100% Money lenders Crystal Gleaming Limited British Virgin HK$929752849 100% Investment holding Islands Dragon Jade Holdings Company Limited Hong Kong HK$1127510000 100% Investment holding East Asia Digital Information Services PRC U.S.$3000000 100% Servicing (Guangdong) Limited(1) East Asia Holding Company Inc. United States U.S.$5 100% Investment holding East Asia Securities Company Limited Hong Kong HK$25000000 100% Securities broking East Asia Services (Holdings) Limited Hong Kong HK$10000 100% Holding company ? 86 ?Place of % held by Incorporation Issued and Name of company and operation paid-up capital The Issuer The Group Nature of business Skyray Holdings Limited British Virgin HK$450000000 100% Investment holding Islands Speedfull Limited British Virgin HK$450000000 100% Investment holding Islands The Bank of East Asia (China) Limited(1) PRC RMB14160000000 100% Banking and related financial services Note: (1) Represents a wholly foreign owned enterprise registered under the PRC law. ORGANISATION The Board of Directors of BEA is collectively responsible for the long-term success of the Group and assumes responsibility for its leadership within a framework of effective controls.Under the framework the Board of Directors has set up six Board Committees and eight Management Committees to assist it in carrying out its responsibilities. The Board Committees include Audit Committee Nomination Committee Remuneration Committee Risk Committee ESG Committee and Sealing Committee. The Management Committees include Executive Committee Investment Committee Crisis Management Committee Risk Management Committee Asset and Liability Management Committee Credit Committee Operational Risk Management Committee and ESG Steering Committee.The Audit Committee is responsible for reviewing corporate governance functions financial controls risk management and internal control systems annual report and accounts and half-year interim report. The Nomination Committee is responsible for recommending to the Board of Directors on relevant matters relating to appointment re-appointment removal and succession planning of Directors Chief Executive/Co-Chief Executives Deputy Chief Executives Group Chief Compliance Officer Group Chief Auditor Group Chief Financial Officer Group Chief Risk Officer and Division Heads; defining succession planning and diversity of the Board of Directors and performing evaluation of the Board of Directors’ performance and Directors’ contribution to the effectiveness of the Board of Directors. The Remuneration Committee is responsible for making recommendations to the Board of Directors regarding BEA’s remuneration policy and for the formulation and review of the remuneration packages of the Directors Executive Chairman Co-Chief Executives Deputy Chief Executives General Managers and Key Personnel of the Group. The Risk Committee is assisted by the Management Committees namely the Risk Management Committee Credit Committee Asset and Liability Management Committee and Operational Risk Management Committee to deal with daily management of risk-related issues; and by the Crisis Management Committee to deal with crisis management. The ESG Committee is responsible for overseeing the Group’s ESG performance. It is assisted by a Management Committee namely the ESG Steering Committee. The Sealing Committee is responsible for directing the usage and custody of BEA’s common seal.? 87 ?The Management Committees are established to deal with matters as sufficiently prescribed in respective terms of reference each of which has specific roles and responsibilities delegated by the Board of Directors or the Board Committees. The Executive Committee is responsible for assisting and supporting the Co-Chief Executives to manage the businesses and operations of the Group at a strategic level. The Risk Management Committee is responsible for assisting the Risk Committee in the daily management of issues related to all major risks faced by the Group including risk appetites risk profiles regulatory updates and compliance with major controls. The Credit Committee is responsible for dealing with all credit risk-related issues of the Group. The Operational Risk Management Committee is responsible for dealing with issues related to operational legal reputation compliance and technology risks of the Group. The Asset and Liability Management Committee is responsible for dealing with all issues related to market interest rate and liquidity risks of the Group.The Crisis Management Committee is responsible for dealing with the Group’s crisis scenarios (if any) which jeopardise or have the potential to jeopardise the Group in its reputation liquidity/financial position and business continuity. The Investment Committee is responsible for reviewing and formulating investment strategies as well as making investment decisions in respect of fixed income instruments equity and equity-related investments for BEA and The Bank of East Asia Limited Employees’ Provident Fund. The ESG Steering Committee is responsible for setting the direction for BEA’s ESG strategy and driving the ESG performance of the Group.BEA has 14 divisions each of which is responsible for a specific operational function. The divisions are Personal Banking Division Wholesale Banking Division Wealth Management Division Treasury Markets Division Chinese Mainland Division International Division Finance Division Operations Division Technology & Productivity Division People & Sustainability Division Risk Management Division Legal & Secretarial Division Compliance Division and Internal Audit Division. In addition one special functional unit namely Strategy & Transformation Office has been set up to drive the Group’s transformation projects.PROPERTIES As at 31 December 2023 BEA owned properties with aggregate floor areas of approximately 396900 square feet 461819 square feet and 54925 square feet on Hong Kong Island in Kowloon and in the New Territories respectively. Most of BEA’s properties are used as banking offices as branches or for storage and the remainder are leased to third parties. In addition as at 31 December 2023 BEA also leased properties with aggregate floor areas of approximately 43478 square feet 57956 square feet and 40859 square feet on Hong Kong Island in Kowloon and in the New Territories respectively.These leased properties are used as banking offices as branches or for storage. As at 31 December 2023 the fair value for BEA’s investment properties and bank premises amounted to approximately HK$5105 million and HK$17910 million respectively.INTELLECTUAL PROPERTY The Group relies on domain name registrations to establish and protect its internet domain names. The Group has registered a number of internet domain names. The Group has also registered a number of trade marks including but not limited to “The Bank of East Asia Limited cyber banking” with the HKSARG.INSURANCE The Group maintains insurance cover to mitigate its risk. Such insurance can broadly be categorised into property insurance to cover the loss of or damage to building structure and content and electronic equipment; public liability insurance to cover legal liability as a result of physical bodily injury and/or property damage caused to third parties; bankers’ blanket bonds insurance to cover the loss resulting from fraudulent acts by employees loss of money on premises and in transit and forgery of bank instruments; professional indemnity insurance to indemnify the Group for loss arising out of ? 88 ?claims for wrongful or negligent professional acts; and directors’ and officers’ liability insurance to cover the personal liability of BEA’s directors and officers against any claims resulting from any wrongful act. There is a centralised function within the Group that handles the validity and adequacy of core insurance policies.COMPETITION The banking industries in Hong Kong and Chinese Mainland are highly competitive. Please see “Investment Considerations — Considerations Relating to the Group — Competition” for further information.LITIGATION The Group is involved from time to time in legal proceedings arising in the ordinary course of itsoperations. See “Investment Considerations — Considerations Relating to the Group — LegalLitigation and Regulatory Proceedings”.Disputes with China Medical Technologies Inc (“China Medical Technologies”) In August 2018 and August 2020 China Medical Technologies (which has been liquidated and delisted in the United States) filed an action and a summons against BEA at the Court of First Instance of the High Court of Hong Kong respectively.China Medical Technologies’ claims arose from the payment of funds: (i) to the bank accounts of Supreme Well Investments Limited maintained with BEA (among others) between November 2006 and December 2009 purportedly for the acquisition of technology that allegedly did not exist or was purchased by China Medical Technologies at a gross overvalue; and (ii) to other accounts maintained with BEA between March 2007 and June 2011.China Medical Technologies alleged that payments of over U.S.$180 million were made from the accounts of Supreme Well Investments Limited and other related entities maintained with BEA to parties connected with and/or controlled by directors and/or executives of China Medical Technologies with the aim of misappropriating the funds for their personal benefit and in breach of trust and/or fiduciary duties.Please refer to BEA’s announcement on the HKSE entitled “Legal Proceedings” and dated 6 March 2017 for further information. Save as otherwise disclosed in this Offering Circular neither BEA nor any of its subsidiaries is involved in any litigation or arbitration proceedings relating to claims or amounts that are material in the context of the issue of the Notes or the Undated Capital Securities and BEA is not aware of any such litigation or arbitration proceedings pending or threatened against it or any of its subsidiaries.EMPLOYEES As at 31 December 2023 the Group had a total of 8140 employees as set forth in the following table: No. of employees Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4672 Chinese Mainland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2906 Macau and Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8140 ? 89 ?BEA’s management believes that BEA maintains a good relationship with its employees and has not experienced any material employment disputes. Other than certain local employees of BEA (China) and the Singapore Branch none of BEA’s employees are members of a trade union. BEA provides attractive remuneration and benefits packages to its employees including medical health care plans group life insurance various paid leave staff housing loan with preferential interest rate staff account with preferential deposit interest rate and retirement benefits under either the MPF Scheme or the MPF exempted ORSO Scheme. In addition BEA operates share option schemes under which options to purchase ordinary shares of BEA have been granted to members of senior management and executive directors. As at 31 December 2023 52350395 shares representing approximately 1.94 per cent. of BEA’s issued capital on a fully diluted basis were issuable upon the exercise of options (including vested and unvested options) granted under BEA’s staff share option schemes adopted in 2011 2016 and 2021. In addition to benefits packages BEA continues to provide career advancement opportunities and a healthy and positive working environment to its employees. BEA offers a wide range of training courses to support its employees’ ongoing professional development.PROTECTION OF DEPOSITORS BEA is a member of the Deposit Protection Scheme which was launched in September 2006.Accordingly all eligible depositors of BEA are automatically protected under the Deposit Protection Scheme. As part of its measures to maintain the liquidity of and confidence in the Hong Kong financial markets the HKSARG introduced in 2006 a Deposit Protection Scheme to provide a level of protection to depositors with deposits held with authorized institutions in Hong Kong. An enhanced Deposit Protection Scheme with an increased protection limit of HK$500000 and expanded coverage including deposits pledged as security for banking services came into effect on 1 January 2011. On 24 March 2016 the 2016 Amendment Ordinance came into effect. Among other things a gross payout approach is adopted for the determination of compensation under the Deposit Protection Scheme in case the scheme is triggered. Under this approach any compensation paid to depositors is determined on the basis of their aggregate protected deposits held with a failed bank (up to HK$500000 per depositor) without deducting the amount of liabilities owed by those depositors to the same bank. The gross payout approach enables the affected depositors to have faster access to their deposits.? 90 ?SELECTED STATISTICAL AND OTHER INFORMATION The selected statistical and other information set forth below is derived from and should be read in conjunction with the 2022 Financial Statements and the 2023 Financial Statements. Such information relates only to the Group and has except where otherwise indicated been compiled as at and for each of the years ended 31 December 2021 2022 and 2023 and should be read in conjunction with the information contained elsewhere in this Offering Circular including “Business of the Group”.Certain comparative figures for the year ended 31 December 2021 have been restated to conform to the presentation of the figures for the year ended 31 December 2022. Please refer to Note 23 to the 2022 Financial Statements for further information about the effect of the restatement. Certain comparative figures for the year ended 31 December 2022 have been restated to conform to the presentation of the figures for the year ended 31 December 2023. Please refer to Note 22 to the 2023 Financial Statements for further information about the effect of the restatement.ADVANCE PORTFOLIO Overview As at 31 December 2021 2022 and 2023 the Group’s total outstanding loans and advances to customers before impairment allowances were approximately HK$548808 million HK$549014 million and HK$532111 million respectively which represented approximately 60.5 per cent. 62.2 per cent. and 61.8 per cent. respectively of its total assets.The majority of the Group’s advances are in respect of loans for the purchase in Hong Kong of other residential properties and advances for property investment and development (excluding loans for the purchase of flats in HOS PSPS and TPS) which together as at 31 December 2021 2022 and 2023 represented approximately 32.1 per cent. 33.0 per cent. and 32.9 per cent. respectively of the Group’s total loans and advances to customers.Industry Sectors The following table sets forth a summary of the Group’s gross loans and advances to customers by industry sector as at the dates indicated: As at 31 December Percentage Percentage Percentage 2021 of total 2022 of total 2023 of total (in HK$ millions except percentages) Loan for use in Hong Kong Industrial commercial and financial - Property development . . . . . . 34103 6.2% 36872 6.7% 28590 5.4% - Property investment . . . . . . . 50280 9.2% 52366 9.5% 50155 9.4% - Financial concerns . . . . . . . . 15514 2.8% 14892 2.7% 14171 2.7% - Stockbrokers . . . . . . . . . . . 1957 0.4% 708 0.1% 1218 0.2% - Wholesale and retail trade . . . 7742 1.4% 6560 1.2% 5996 1.1% - Manufacturing . . . . . . . . . . 4810 0.9% 4485 0.8% 3219 0.6% - Transport and transport equipment . . . . . . . . . . . . 5531 1.0% 5495 1.0% 4106 0.8% - Recreational activities . . . . . . 304 0.1% 347 0.1% 108 0.0% - Information technology . . . . . 1268 0.2% 1438 0.3% 2093 0.4% - Others(1) . . . . . . . . . . . . . . 15365 2.8% 16262 3.0% 20868 3.9% - Sub-total . . . . . . . . . . . . . . 136874 24.9% 139425 25.4% 130524 24.5% ? 91 ?As at 31 December Percentage Percentage Percentage 2021 of total 2022 of total 2023 of total (in HK$ millions except percentages) Individuals - Loans for the purchase of flats in HOS PSPS and TPS . . . . 1337 0.2% 1200 0.2% 1081 0.2% - Loans for the purchase of other residential properties . . 91532 16.7% 91944 16.8% 96147 18.0% - Credit card advances. . . . . . . 4284 0.8% 4115 0.8% 4740 0.9% - Others(2) . . . . . . . . . . . . . 28182 5.1% 24367 4.4% 20555 3.9% - Sub-total . . . . . . . . . . . . . . 125335 22.8% 121626 22.2% 122523 23.0% Total loans for use in Hong Kong . 262209 47.8% 261051 47.6% 253047 47.5% Trade finance . . . . . . . . . . . . . . 6088 1.1% 5110 0.9% 5592 1.1% Loans for use outside Hong Kong(3) . . . . . . . . . . . . . . . . 280511 51.1% 282853 51.5% 273472 51.4% Total advances to customers . . . . 548808 100.0% 549014 100.0% 532111 100.0% Notes: (1) “Others” includes the industry sectors of civil engineering works electricity and gas hotels boarding houses and catering non-stockbroking companies and individuals for the purchase of shares professional and private individuals for other business purposes and all others not specified. (2) “Others” includes professional and private individuals for other private purposes. (3) Loans for use outside Hong Kong include the certain loans for use in Chinese Mainland and loans for use outside Hong Kong and Chinese Mainland.Geographical Concentration The following table sets forth a summary of the Group’s gross loans and advances to customers by geographical location(1) as at the dates indicated: As at 31 December Percentage Percentage Percentage 2021 of total 2022 of total 2023 of total (in HK$ millions except percentages) Hong Kong . . . . . . . . . . . . . . . 264285 48.1% 270332 49.2% 251929 47.3% Chinese Mainland . . . . . . . . . . . 202365 36.9% 183886 33.5% 174954 32.9% Other Asian Countries and Regions(2) . . . . . . . . . . . . . . 28036 5.1% 30227 5.5% 31279 5.9% Others(3) . . . . . . . . . . . . . . . . 54122 9.9% 64569 11.8% 73949 13.9% Total . . . . . . . . . . . . . . . . . . 548808 100.0% 549014 100.0% 532111 100.0% Notes: (1) The geographical analysis has been classified by the location of the counterparties after taking into account any transfer of risk. (2) This includes all Asian countries and regions other than Chinese Mainland. (3) This includes North America Western Europe and other countries. Customer Advance Concentration As at 31 December 2023 the Group’s aggregate exposure to its 20 largest borrowers (ranked by exposure including groups of individuals and companies) amounted to HK$115972 million in which the outstanding balance to these borrowers amounted to approximately HK$72203 million or approximately 13.6 per cent. of the Group’s gross advances with the largest representing approximately HK$9496 million or approximately 1.8 per cent. of the Group’s gross advances. As at 31 December 2022 the Group’s aggregate exposure to its 20 largest borrowers (ranked by exposure ? 92 ?including groups of individuals and companies) amounted to HK$125104 million in which the outstanding balance to these borrowers amounted to approximately HK$77541 million or approximately 14.1 per cent. of the Group’s gross advances with the largest representing approximately HK$7015 million or approximately 1.3 per cent. of the Group’s gross advances. As at 31 December 2021 the Group’s aggregate exposure to its 20 largest borrowers (ranked by exposure including groups of individuals and companies) amounted to HK$121121 million in which the outstanding balance to these borrowers amounted to approximately HK$86785 million or approximately 15.8 per cent. of the Group’s gross advances with the largest representing approximately HK$8814 million or approximately 1.6 per cent. of the Group’s gross advances.Advance Analysis The following table sets forth a summary of the Group’s gross advances by remaining maturity as at the dates indicated: As at 31 December Percentage Percentage Percentage 2021 of total 2022 of total 2023 of total (in HK$ millions except percentages) Repayable on demand(1) . . . . . . . 2527 0.5% 2800 0.5% 2496 0.5% 3 months or less . . . . . . . . . . . . 101460 18.5% 92953 16.9% 112644 21.1% 1 year or less but over 3 months . . 120407 21.9% 116705 21.3% 120033 22.6% 5 years or less but over 1 year . . . 199371 36.3% 204234 37.2% 170637 32.1% After 5 years . . . . . . . . . . . . . . 120621 22.0% 121873 22.2% 115198 21.6% Undated . . . . . . . . . . . . . . . . . 4422 0.8% 10449 1.9% 11103 2.1% Gross advances to customers . . . 548808 100.0% 549014 100.0% 532111 100.0% Note: (1) Includes overdrafts. As at 31 December 2021 2022 and 2023 approximately 78.1 per cent. 78.4 per cent. and 75.9 percent. of advances made by the Group were at floating rates of interest respectively. See “— Asset andLiability Management”. The current rate offered by the Group for home mortgage advances in Hong Kong generally ranges from 1.3 per cent. to 1.5 per cent. above the 1-month HIBOR. The interest rate for Hong Kong dollar consumer finance advances offered by the Group is typically calculated on the initial principal amounts of such advances and can be in the form of fixed rate or floating based on the Bank’s prime rate. Trade finance advances typically have a relatively short maturity. The interest rate for Hong Kong dollar trade finance advances made by the Group is typically a margin over the interbank offer rate or on prime rate basis. The interest rate for project finance lending and syndicated lending is typically a margin over HIBOR. As at 31 December 2021 2022 and 2023 approximately 51.8 per cent. 50.9 per cent. and 49.9 per cent. respectively of advances made by the Group were denominated in Hong Kong dollars approximately 15.8 per cent. 16.2 per cent. and 17.1 per cent.respectively were denominated in U.S. dollars and approximately 23.9 per cent. 23.2 per cent. and 23.2 per cent. respectively were denominated in RMB. Rates which are lower than the above rates may be offered by the Group under appropriate circumstances subject to internal approvals.An important component of the Group’s asset and liability policy is its management of interest rate risk which is the relationship between market interest rates and the Group’s interest rates on itsinterest rate sensitive assets and interest rate sensitive liabilities. See “— Asset and LiabilityManagement”.? 93 ?As at 31 December 2021 the amounts in Hong Kong dollars and percentages represented by fixed and floating-rate advances denominated in Hong Kong dollars and foreign currencies respectively were as follows: Advances outstanding as at 31 December 2021 Hong Kong dollar Foreign currency advances advances Total Percentage Percentage Percentage Amount of total Amount of total Amount of total (in HK$ millions except percentages) Fixed rate . . . . . . . . . . . . . . . . 43685 15.4% 76460 28.9% 120145 21.9% Floating rate . . . . . . . . . . . . . . 240487 84.6% 188176 71.1% 428663 78.1% Total . . . . . . . . . . . . . . . . . . . 284172 100.0% 264636 100.0% 548808 100.0% As at 31 December 2022 the amounts in Hong Kong dollars and percentages represented by fixed and floating-rate advances denominated in Hong Kong dollars and foreign currencies respectively were as follows: Advances outstanding as at 31 December 2022 Hong Kong dollar Foreign currency advances advances Total Percentage Percentage Percentage Amount of total Amount of total Amount of total (in HK$ millions except percentages) Fixed rate . . . . . . . . . . . . . . . . 41839 15.0% 76764 28.5% 118603 21.6% Floating rate . . . . . . . . . . . . . . 237450 85.0% 192962 71.5% 430412 78.4% Total . . . . . . . . . . . . . . . . . . . 279289 100.0% 269726 100.0% 549014 100.0% As at 31 December 2023 the amounts in Hong Kong dollars and percentages represented by fixed and floating-rate advances denominated in Hong Kong dollars and foreign currencies respectively were as follows: Advances outstanding as at 31 December 2023 Hong Kong dollar Foreign currency advances advances Total Percentage Percentage Percentage Amount of total Amount of total Amount of total (in HK$ millions except percentages) Fixed rate . . . . . . . . . . . . . . . . 37290 14.1% 91073 34.1% 128363 24.1% Floating rate . . . . . . . . . . . . . . 228041 85.9% 175707 65.9% 403748 75.9% Total . . . . . . . . . . . . . . . . . . . 265331 100.0% 266780 100.0% 532111 100.0% Derivatives such as interest rate swaps and interest rate futures are used by the Group to manage interest rate risk in the banking book exposure. The Group enters into hedging either against individual transactions or on portfolio basis. Hedge accounting treatment under HKFRS is actively applied to avoid fluctuation of profit and loss arising from mark-to-market of the hedging derivatives.As at 31 December 2021 2022 and 2023 approximately 56.1 per cent. 55.8 per cent. and 56.4 per cent. respectively of the Group’s total loans and advances to customers were covered by collateral.The extent of collateral coverage over the Group’s loans and advances to customers depends on the type of customers and the product offered. Types of collateral include residential properties (in the form of mortgages over property) other properties other registered securities over assets cash deposits standby letters of credit and guarantees. All forms of security taken as collateral against credit facilities are monitored by the respective departments which extended the advances. In general the collateral is periodically valued by an independent valuer to determine whether any additional collateral is required.? 94 ?RISK MANAGEMENT AND CREDIT POLICIES The Group’s lending policies have been formulated on the basis of its own experience the Banking Ordinance guidelines or policies issued by the Monetary Authority the Hong Kong Association of Banks and other statutory requirements (and in the case of overseas branches and subsidiaries the relevant local laws and regulations). BEA believes it has a history of and reputation for prudent lending practices. The majority of the Group’s lending is on a secured basis and the Group has established loan-to-value lending limits based on the appraised market value of the relevant collateral.Risk Management The Group has established an effective risk governance and management framework in line with the requirements set out by the Monetary Authority and other regulators. This framework is built around a structure that enables BEA’s Board of Directors and management to discharge their risk management-related responsibilities with appropriate delegation and checks and balances. These responsibilities include defining risk appetite in accordance with the Group’s business strategies and objectives formulating risk policies that govern the execution of those strategies and establishing procedures and limits for the approval control monitoring and remedy of risks.The Risk Committee stands at the highest level of the Group’s risk governance structure under the Board of Directors. The Risk Committee provides direct oversight over the formulation of the Group’s risk appetite and sets the levels of risk that the Group is willing to undertake with regard to its financial capacity strategic direction prevailing market conditions and regulatory requirements.The Risk Committee also ensures that the Group’s risk appetite is reflected in the policies and procedures that the senior management adopts to execute its business functions. Through the Group’s specialised management committees including the Crisis Management Committee Risk Management Committee Credit Committee Asset and Liability Management Committee and Operational Risk Management Committee and with overall coordination by the Risk Management Division the Risk Committee regularly reviews the Group’s risk management framework and ensures that all important risk-related tasks are performed according to established policies with appropriate resources.The Risk Management Division is headed by the Group Chief Risk Officer and General Manager who reports directly to the Co-Chief Executives and is responsible for overseeing the Group’s risk management issues which include but are not limited to the risk management infrastructure strategies appetites culture and resources. The Risk Management Division assesses regulatory requirements in particular the requirements under the Supervisory Policy Manuals issued by the Monetary Authority and is responsible for: (i) formulating risk management policies and guidelines and performing regular reviews in order to ensure that such policies and guidelines are kept up to date; (ii) monitoring risk exposure and compliance with the risk management framework using a risk-based approach that incorporates independent risk assessment independent review of regular reports independent review of new products/specific issues and coordination of risk-related projects; and (iii) reporting the monitoring results and significant risk related issues to the specialised risk management committees and/or the Risk Management Committee and/or the Risk Committee and/or the Board where appropriate at pre-determined schedule so as to assist them to discharge their duty of oversight over risk management activities. The scope of BEA’s risk management framework covers major types of risk including credit risk interest rate risk legal risk liquidity risk market risk compliance risk operational risk reputation risk strategic risk and technology risk.? 95 ?The Asset and Liability Management Committee (“ALCO”) sets the strategy and policy for managing interest rate risk and the means for ensuring that such strategy and policy are implemented. Interest rate risk is managed daily by the Treasury Markets Division while the Risk Management Division is responsible for monitoring interest rate related activities to ensure compliance with the related bank policies rules and regulations. The Internal Audit Division performs periodic review to make sure the interest rate risk management functions are effectively carried out.For the interest rate risk in the banking book gap analysis is carried out on the maturity and repricing characteristics of the Group’s both on- and off- balance sheet positions in the banking book. Repricing gap position controls and sensitivity limits from both earnings and economic value perspectives are set to control the Group’s interest rate risk exposure in the banking book. The ALCO monitors the results thereof and decides remedial action if required.In addition to the above the ALCO sets the strategy and policy for managing liquidity risk. Funding projection is regularly conducted and reviewed to ensure BEA can meet all cash flow obligations.The stock of HQLA is maintained and can be used to fund unexpected and material cash outflows in case needed. Liquidity ratios are closely monitored to ensure all liquidity regulatory requirements are being met.Credit Policies The Group’s primary credit approval body is the Credit Committee which comprises two Deputy Chief Executives Group Chief Risk Officer Head of Chinese Mainland Division and Co-Head of Credit Risk Management Department. The Credit Committee has overall responsibility for the Group’s credit policies and oversees the credit quality of the Group’s advance portfolio. BEA has also established an Approval Centre which comprises Co-Head of Credit Risk Management Department and other experienced senior managers of Risk Management Division acting as an independent unit to approve credit according to the delegated lending authority. Under the oversight of the Credit Committee Approval Centre and other officers of the Group are authorised to approve credit based on the size of the advance the collateral provided the credit standing of the applicant and other prescribed credit guidelines. The following table sets out the credit approval limits for various types of advances in Hong Kong: Hong Kong (in HK$ millions) Credit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Any amount Approval Centre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Up to 600 Other lending officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Up to 600 The Credit Risk Management Department under the Risk Management Division is responsible for reviewing credit applications for significant loan amounts. When a customer fills out an advance application or requests a credit line the branch or lending department account officer collects information through customer interviews documentation requests and feasibility studies as well as other sources. After a thorough evaluation the application is submitted to the appropriate person having sufficient lending authority for approval.The Group has adopted lending policies with loan-to-value limits which apply to advances secured by a legal charge over an asset or property. Loan-to-value ratios on owner-occupied residential mortgages in Hong Kong (excluding loans for the purchase of flats in HOS PSPS TPS and the Mortgage Insurance Programme) are limited to 50 per cent. (for property value at more than HK$30 million) 60 per cent. (for property value at more than HK$15 million and up to HK$30 million) or 70 per cent. ? 96 ?(for property value at HK$15 million or below). Loan-to-value ratios on non-owner occupied residential mortgages are limited to 50 per cent. while commercial or industrial mortgages are limited to 60 per cent. Underlying property values are based on the lower of the purchase price and the independently appraised value of the property.Besides the Group’s lending policies limit the maximum customer debt servicing ratio to 50 per cent.on base scenario while stress test on the borrower’s repayment ability by assuming a rise in interest rate of two per cent. is imposed for property mortgages.Meanwhile for property mortgages under the approach of assessment by net worth of the borrower (with the asset-to-total debt obligation ratio of the borrower of at least 100 per cent.) the loan-to-value ratio is limited to 50 per cent.Hong Kong has adopted the Basel II Accord capital adequacy standards from the beginning of 2007.In December 2007 BEA received the approval from the Monetary Authority to adopt the advanced approaches under the Basel II Accord namely the Foundation Internal Ratings-based (“IRB”) Approach for credit risk the Internal Models Approach for market risk and the Standardised Approach for operational risk. Since 31 December 2007 the Group has used the IRB Approach to determine its credit risk weighted assets for calculating CAR. The business benefits of adopting these advanced approaches are significant including enhanced risk management more efficient use of capital and higher transparency in the disclosure of risk-related information.In December 2010 the Basel Committee issued the final Basel III regulatory framework presenting the Committee’s reforms to strengthen capital and liquidity standards in order to promote a more resilient banking sector.In line with the international implementation timetable set by the Basel Committee the Basel III rules pertaining to capital standards have been enacted into local banking regulations and implemented in Hong Kong on 1 January 2013.ASSET QUALITY Overview The performance of the Hong Kong economy is heavily dependent on the property sector and as at 31 December 2021 2022 and 2023 loans for the purchase of other residential properties and advances for property investment and development (excluding loans for the purchase of flats in HOS PSPS and TPS) in Hong Kong together accounted for approximately 32.1 per cent. 33.0 per cent. and 32.9 per cent. respectively of the Group’s total loans and advances to customers. As a result the Group’s asset quality is vulnerable to deflation in property prices. The ability of borrowers including homeowners to make timely repayment of their advances may be adversely affected by rising interest rates or aslowdown in economic growth. See “Investment Considerations — Considerations Relating to theGroup — Hong Kong PRC and Global Economies” and “Investment Considerations —Considerations Relating to the Group — Interest Rate Risk”. As at 31 December 2021 2022 and 2023 home mortgage advances (including loans for the purchase of flats in HOS PSPS and TPS and loans for the purchase of other residential properties) in Hong Kong amounted to approximately HK$92869 million HK$93144 million and HK$97228 million respectively or approximately 16.9 per cent. 17.0 per cent. and 18.3 per cent. respectively of the Group’s total loans and advances to customers and was one of the most significant segments of the Group’s total loans and advances to customers.See “Investment Considerations — Considerations Relating to the Group — Concentration Risk —Exposure to the Property Market”.The Group is committed to expanding its business and operations in Chinese Mainland and remains susceptible to risks associated with lending in Chinese Mainland which could lead to an increase in the Group’s classified advances. As at 31 December 2021 2022 and 2023 the Group’s Chinese Mainland exposure was approximately 27.3 per cent. 26.8 per cent. and 26.6 per cent. respectively ? 97 ?of the Group’s total advances and its Chinese Mainland impaired advances accounted for approximately 1.5 per cent. 2.8 per cent. and 2.7 per cent. respectively of its total Chinese Mainlandexposure. See “Investment Considerations — Considerations Relating to the Group — Exposure to theChinese Mainland Market”.Advance Classification The Group classifies the advances into the following grading: * Grades 1 through 15 — pass; * Grades 16-17 — special mention; * Grade 18 — sub-standard; * Grade 19 — doubtful; and * Grade 20 — loss.In classifying the individual borrowers into one of the 20 gradings the Group considers relevant factors including: (i) estimation of probability of default from the internal rating systems comprising statistical measurement and expert judgment with consideration of quantitative and qualitative elements such as the borrower’s financial condition the management and operation of the borrower’s business market conditions affecting the borrower’s industry and demographic characteristics; and (ii) the payment history of the borrower.BEA believes that its advance classification policy is in compliance with the Banking Ordinance and the applicable guidelines of the Monetary Authority.Recognition of Impaired Loans The Group’s impaired loans are sub-divided into three categories: “sub-standard” (Grade 18) “doubtful” (Grade 19) and “loss” (Grade 20). When the repayment of an advance is uncertain (for example there is a past-due record of 90 days or more) the Group downgrades the advance to “sub-standard”. If full recovery of the advance is in doubt and the Group expects to sustain a loss of principal or interest the Group classifies the advance as doubtful. Loss advances are those which are considered non-collectible after exhausting all collection efforts such as the realisation of collateral and the institution of legal proceedings and the liquidator or official receiver has ascertained the relevant recovery ratio.Impairment of Loans and Receivables In accordance with HKFRS 9 stage 1 or stage 2 impairment assessment is applied to non-impaired credit exposures while stage 3 impairment assessment is applied to impaired credit exposures.Stage 1 financial assets comprised of all non-impaired financial assets which have not experienced a significant increase in credit risk (“SICR”) since initial recognition. The Group recognises 12-month expected credit losses (“ECL”) for stage 1 financial assets. In assessing whether credit risk has increased significantly the Group compares the default risk as at the reporting date with the default risk as at the date of its initial recognition.? 98 ?Stage 2 financial assets comprised of all non-impaired financial assets which have experienced a SICR or with more than 30 days past due. The Group recognises lifetime ECL for stage 2 financial assets.In subsequent reporting periods if the credit risk of the financial assets improves such that there is no longer a SICR since initial recognition the financial assets will be transferred back to stage 1 and the Group will recognise 12-month ECL.Stage 3 financial assets are those that the Group has classified as credit-impaired. The Group recognises lifetime ECL for all stage 3 financial assets. The Group classifies financial assets as impaired when one or more credit events which have a detrimental impact on the estimated future cash flows of the financial assets have occurred after initial recognition. Evidence includes indications that the borrower is experiencing significant financial difficulties or a default or delinquency (i.e.past-due record of 90 days or more) has occurred.The following table sets forth a summary of the Group’s reconciliations of the impairment allowance by class of financial instrument for the year ended 31 December 2021: For the year ended 31 December 2021(1) Lifetime ECL not Lifetime ECL 12-month ECL credit-impaired credit-impaired Total (in HK$ millions) Loans and advances to customers Balance at 1st January . . . . . . . . . . . . . . . 849 1041 3025 4915 Transfer to 12-month ECL . . . . . . . . . . . . 150 (150) — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . . (19) 24 (5) — Transfer to lifetime ECL credit-impaired . (10) (371) 381 — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . (4) 46 (74) (32) Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — (2397) (2397) Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . (296) (62) 2301 1943 Balance at 31st December . . . . . . . . . . . . 670 528 3231 4429 Of which: For advance to customers at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . 667 527 3177 4371 For related accrued interest receivable . . . 3 1 54 58 67052832314429 Debt investment securities Balance at 1st January . . . . . . . . . . . . . . . 273 — — 273 Transfer to 12-month ECL . . . . . . . . . . . . — — — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . . (6) 6 — — Transfer to lifetime ECL credit-impaired . — — — — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . (27) 26 — (1) Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — — — Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . 51 15 — 66 Transfer to assets held for sale . . . . . . . . (7) — — (7) Balance at 31 December . . . . . . . . . . . . . 284 47 — 331 ? 99 ?For the year ended 31 December 2021(1) Lifetime ECL not Lifetime ECL 12-month ECL credit-impaired credit-impaired Total (in HK$ millions) Of which: For debt investment securities at amortised cost. . . . . . . . . . . . . . . . . . 97 44 — 141 For related accrued interest receivable . . . 1 1 — 2 9845—143 For debt investment securities at FVOCI . 184 2 — 186 For related accrued interest receivable . . . 2 — — 2 1862—188 Others Balance at 1st January . . . . . . . . . . . . . . . 89 19 121 229 Transfer to 12-month ECL . . . . . . . . . . . . 2 (2) — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . . — — — — Transfer to lifetime ECL credit-impaired . — — — — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . (14) 1 (1) (14) Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — (124) (124) Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . 66 6 89 161 Balance at 31st December . . . . . . . . . . . . 143 24 85 252 Of which: For trade bills at FVOCI . . . . . . . . . . . 2 — — 2 For related accrued interest receivable . . . — — — — 2——2 For trade bills at amortised cost . . . . . . . — — — — For related accrued interest receivable . . . — — — — ———— For placements with banks and financial institutions . . . . . . . . . . . . . . . . . . . . . . 1 — — 1 For related accrued interest receivable . . . — — — — 1——1 For cash and balances with banks and financial institutions. . . . . . . . . . . . . . . 3 — — 3 For related accrued interest receivable . . . — — — — 3——3 For loan commitments and financial guarantee contracts. . . . . . . . . . . . . . . . 133 24 17 174 For account receivables and other accounts other than accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . 4 — 68 72 Note: (1) This information has been extracted from the 2022 Financial Statements. ? 100 ?The following table sets forth a summary of the Group’s reconciliations of the impairment allowance by class of financial instrument for the year ended 31 December 2022: For the year ended 31 December 2022(1) Lifetime ECL not Lifetime ECL 12-month ECL credit-impaired credit-impaired Total (in HK$ millions) Loans and advances to customers Balance at 1st January . . . . . . . . . . . . . . . 670 528 3231 4429 Transfer to 12-month ECL . . . . . . . . . . . . 155 (155) — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . . (27) 54 (27) — Transfer to lifetime ECL credit-impaired . (24) (141) 165 — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . 350 114 273 737 Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — (3095) (3095) Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . (35) 626 4094 4685 Balance at 31st December . . . . . . . . . . . . 1089 1026 4641 6756 Of which: For advance to customers at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . 1084 1018 4518 6620 For related accrued interest receivable . . . 5 8 123 136 1089102646416756 Debt investment securities Balance at 1st January . . . . . . . . . . . . . . . 284 47 — 331 Transfer to 12-month ECL . . . . . . . . . . . . — — — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . . (11) 11 — — Transfer to lifetime ECL credit-impaired . (5) (13) 18 — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . 25 21 — 46 Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — — — Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . (10) 75 230 295 Transfer to assets held for sale . . . . . . . . — — — — Balance at 31 December . . . . . . . . . . . . . 283 141 248 672 Of which: For debt investment securities at amortised cost. . . . . . . . . . . . . . . . . . 66 98 241 405 For related accrued interest receivable . . . 1 2 7 10 67100248415 For debt investment securities at FVOCI . 214 41 — 255 For related accrued interest receivable . . . 2 — — 2 21641—257 ? 101 ?For the year ended 31 December 2022(1) Lifetime ECL not Lifetime ECL 12-month ECL credit-impaired credit-impaired Total (in HK$ millions) Others Balance at 1st January . . . . . . . . . . . . . . . 143 24 85 252 Transfer to 12-month ECL . . . . . . . . . . . . 2 (2) — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . . — — — — Transfer to lifetime ECL credit-impaired . (1) (7) 8 — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . 11 (3) 68 76 Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — — — Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . (22) 11 77 66 Balance at 31st December . . . . . . . . . . . . 133 23 238 394 Of which: For trade bills at FVOCI . . . . . . . . . . . — — — — For related accrued interest receivable . . . — — — — ———— For trade bills at amortised cost . . . . . . . — — — — For related accrued interest receivable . . . — — — — ———— For placements with banks and financial institutions . . . . . . . . . . . . . . . . . . . . . . 1 — — 1 For related accrued interest receivable . . . — — — — 1——1 For cash and balances with banks and financial institutions. . . . . . . . . . . . . . . 2 — — 2 For related accrued interest receivable . . . — — — — 2——2 For loan commitments and financial guarantee contracts. . . . . . . . . . . . . . . . 121 23 174 318 For account receivables and other accounts other than accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . 9 — 64 73 Note: (1) This information has been extracted from the 2023 Financial Statements. ? 102 ?The following table sets forth a summary of the Group’s reconciliations of the impairment allowance by class of financial instrument for the year ended 31 December 2023: For the year ended 31 December 2023(1) Lifetime ECL not Lifetime ECL 12-month ECL credit-impaired credit-impaired Total (in HK$ millions) Loans and advances to customers Balance at 1st January . . . . . . . . . . . . . . . 1089 1026 4641 6756 Transfer to 12-month ECL . . . . . . . . . . . . 117 (117) — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . . (24) 24 — — Transfer to lifetime ECL credit-impaired . (37) (493) 530 — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . 106 232 344 682 Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — (6819) (6819) Changes in models . . . . . . . . . . . . . . . . . (175) (34) — (209) Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . (172) 60 5003 4891 Balance at 31st December . . . . . . . . . . . . 904 698 3699 5301 Of which: For advance to customers at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . 900 691 3536 5127 For related accrued interest receivable . . . 4 7 163 174 90469836995301 Debt investment securities Balance at 1st January . . . . . . . . . . . . . . . 283 141 248 672 Transfer to 12-month ECL . . . . . . . . . . . . 12 (12) — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . . (7) 7 — — Transfer to lifetime ECL credit-impaired . — (99) 99 — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . (16) (10) — (26) Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — — — Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . (154) (5) 395 236 Balance at 31 December . . . . . . . . . . . . . 118 22 742 882 Of which: For debt investment securities at amortised cost. . . . . . . . . . . . . . . . . . 19 8 645 672 For related accrued interest receivable . . . - — 45 45 198690717 For debt investment securities at FVOCI . 98 14 48 160 For related accrued interest receivable . . . 1 — 4 5 991452165 ? 103 ?For the year ended 31 December 2023(1) Lifetime ECL not Lifetime ECL 12-month ECL credit-impaired credit-impaired Total (in HK$ millions) Others Balance at 1st January . . . . . . . . . . . . . . . 133 23 238 394 Transfer to 12-month ECL . . . . . . . . . . . . 12 (12) — — Transfer to lifetime ECL not credit-impaired . . . . . . . . . . . . . . . . . . (1) 1 — — Transfer to lifetime ECL credit-impaired . — — — — New financial assets originated or purchased assets derecognised repayments and further lending . . . . . . (18) 2 (11) (27) Write-offs . . . . . . . . . . . . . . . . . . . . . . . . — — (2) (2) Net remeasurement of impairment allowances (including exchange adjustments) . . . . . . . . . . . . . . . . . . . . . (4) 8 122 126 Balance at 31st December . . . . . . . . . . . . 122 22 347 491 Of which: For trade bills at FVOCI . . . . . . . . . . . — — — — For related accrued interest receivable . . . - — — — -——— For trade bills at amortised cost . . . . . . . — — — — For related accrued interest receivable . . . — — — — -——— For placements with banks and financial institutions . . . . . . . . . . . . . . . . . . . . . . 2 — — 2 For related accrued interest receivable . . . - — — — 2——2 For cash and balances with banks and financial institutions. . . . . . . . . . . . . . . 1 — — 1 For related accrued interest receivable . . . - — — — 1——1 For loan commitments and financial guarantee contracts. . . . . . . . . . . . . . . . 112 22 281 415 For account receivables and other accounts other than accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . 7 — 66 73 Note: (1) This information has been extracted from the 2023 Financial Statements. ? 104 ?Top Ten Impaired Loans As at 31 December 2023 the Group’s ten largest impaired loans accounted for approximately 1.98 per cent. of its total advances and approximately 73.64 per cent. of its gross impaired loan portfolio. The majority of the borrowers of such ten largest impaired loans were engaged in property development business and accounted for approximately 74.2 per cent. of the aggregate exposure relating to such ten largest impaired loans as at 31 December 2023. As at 31 December 2023 the Group’s exposure under its ten largest impaired loans ranged from approximately HK$426 million to approximately HK$2200 million per impaired loan and amounted to approximately HK$10556 million in the aggregate. As at 31 December 2022 the Group’s exposure under its ten largest impaired loans ranged from approximately HK$266 million to approximately HK$3530 million per impaired loan and amounted to approximately HK$10284 million in the aggregate. As at 31 December 2021 the Group’s exposure under its ten largest impaired loans ranged from approximately HK$130 million to approximately HK$1040 million per impaired loan and amounted to approximately HK$4662 million in the aggregate.Impaired Loans That Have Been Restructured The Group’s classified advances/impaired loans are restructured on a case-by-case basis subject to the approval of the appropriate lending parties for both the restructured limits and recovery measures.BEA believes that the Group maintains a prudent reclassification policy. For example if payments under an advance are rescheduled that advance will not be reclassified and will remain under adverse classification (either as a “sub-standard” or “doubtful” advance) and may only be upgraded to a special mention advance if the revised payment terms are honoured for a period of six months in the case of monthly payments (including both interest and principal) and 12 months in the case of non-monthly payments.As at 31 December 2021 2022 and 2023 the Group’s impaired advances to customers including those that have been restructured through the rescheduling of principal repayments and deferral or waiver of interest were as follows: As at 31 December 202120222023 (in HK$ millions except percentages) Gross impaired advances to customers . . . . . . . . . . . . . . . . . 5977 13145 14334 Specific provisions/Individual impairment loss allowance . . 3177 4518 3536 Net impaired advances to customers . . . . . . . . . . . . . . . . . . 2800 8627 10798 Gross impaired advances to customers as a percentage of total advances to customers . . . . . . . . . . . . . . . . . . . . . . . 1.1% 2.4% 2.7% Net impaired advances to customers as a percentage of total advances to customers . . . . . . . . . . . . . . . . . . . . . . . 0.5% 1.6% 2.0% In addition there may be circumstances when a rescheduled loan is taken up by a new obligor. Under BEA’s credit policy if a rescheduled loan is taken up by a new obligor BEA may regard it as a new loan (i.e. no longer a rescheduled loan) provided that (a) it is restructured with the new obligor on commercial terms; (b) the agreed haircut if any has been fully written off upon completion of restructuring; and (c) it is a genuine restructuring and not merely a transfer of an overdue loan among the borrower’s group or related companies. Before entering into the restructuring BEA must be satisfied with the creditworthiness and repayment ability of the new obligor. For example the new obligor must have sufficient assets that can generate adequate funds to repay the outstanding debt.? 105 ?The Group’s measured-at-amortised-cost debt securities included listed and unlisted debt securities.As at 31 December 2021 2022 and 2023 the book value of these securities were approximately HK$16546 million HK$14462 million and HK$11190 million respectively which represented approximately 11.2 per cent. 9.8 per cent. and 6.7 per cent. of the Group’s total investments securities respectively. These debt securities included both Hong Kong dollar and U.S. dollar denominated bonds and notes. See “— Asset and Liability Management”.The following table sets forth a summary of the carrying values of the Group’s measured-at-amortised-cost debt securities categorised by the types of issuers as at the dates indicated: As at 31 December Percentage Percentage Percentage 2021 of total 2022 of total 2023 of total (in HK$ millions except percentages) Measured-at-amortised-cost securities issued by: Central governments and central banks . . . . . . . . . . . . . . . . . 3547 21.4% 3819 26.4% 3384 30.2% Public sector entities . . . . . . . . . — — — — — — Banks and other financial institutions. . . . . . . . . . . . . . 1763 10.7% 1073 7.4% 736 6.6% Corporate entities . . . . . . . . . . . 11236 67.9% 9377 64.9% 7070 63.2% Other entities . . . . . . . . . . . . . . — — 193 1.3% — — Total . . . . . . . . . . . . . . . . . . . 16546 100.0% 14462 100.0% 11190 100.0% ASSET AND LIABILITY MANAGEMENT The Group’s objective on asset and liability management is to maximise its net interest income and return on assets and equity while providing for liquidity and effective risk management.Recommendations to management on liquidity interest rate policy and other significant asset and liability management matters are made by ALCO which consists of Co-Chief Executives two Deputy Chief Executives Group Chief Risk Officer Group Chief Financial Officer and Head of Treasury Markets Division. A representative from Market & Liquidity Risk Management Department acts as the secretary of ALCO.One of the key components of the Group’s asset and liability management is the management of market risk interest rate risk and liquidity risk. The Group’s policies regarding the management of these risks are formulated and their implementations are coordinated by ALCO. ALCO meets on a bi-weekly basis to formulate the asset and liability strategies such as the deposit rates advance pricing strategies and hedging strategies. The Treasury Markets Division is responsible for the daily operating management of the discretionary portion of the Group’s assets and liabilities within the approved internal limits. The derivative transactions entered into by the Group are substantially in response to customer demands in addition to BEA book hedging and no significant proprietary trading positions are maintained by the Group.Interest rate risk primarily results from the timing differences in the repricing of interest rate sensitive assets liabilities and off balance sheet items in the banking book. In determining the level of interest rate risk assessments are made for the gap risk basis risk and option risk. The Group manages the interest rate risk in the banking book primarily by focusing on repricing mismatches. Gap analysis provides a static view of the maturity and repricing characteristics of the Group’s interest rate sensitive assets liabilities and off balance sheet positions. Repricing gap position limits are set to control the Group’s interest rate risk.? 106 ?Sensitivity analysis in relation to the impact of changes in interest rates on earnings and economic value is assessed regularly through a number of hypothetical interest rate shock scenarios prescribed by the Monetary Authority. Sensitivity limits are set to control the Group’s interest rate risk exposure under both earnings and economic value perspectives. The results are reported to ALCO on a regular basis.The following table sets forth the interest rate shock impact to the Group according to the Monetary Authority predefined scenarios as at 31 December 2023: Economic Net Interest Adverse impacts from the Monetary Authority interest rate shock scenarios Value of Equity Income (in HK$ millions) 1 Parallel up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704 — 2 Parallel down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1839 2674 3 Steepener. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 892 — 4 Flattener . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 — 5 Short rate up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 — 6 Short rate down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1565 — Liquidity pertains to the Group’s ability to meet obligations as they fall due. To manage liquidity risk the Group has established a liquidity risk management policy which is reviewed by ALCO and approved by BEA’s Board of Directors. The Group measures its liquidity through various risk metrics including but not limited to LCR NSFR loan-to-deposit ratio and the maturity mismatch ratio.The Group monitorsits liquidity position on a daily basis to ensure the Group’s funding needs can be met and the statutory ratios for monitoring and managing liquidity risk are complied with. The Group’s consolidated average LCR was approximately 201.5 per cent. for the fourth quarter of 2023 which is above the statutory minimum requirement of 100 per cent. As at 31 December 2023 the Group’s consolidated NSFR was approximately 125.5 per cent. which is above the statutory minimum requirement of 100 per cent.As at 31 December 2021 2022 and 2023 approximately 78.1 per cent. 78.4 per cent. and 75.9 per cent. of advances made by the Group were at floating rates of interest respectively. The Group’s interest-earning assets have floating interest rates fixed by reference to BEA’s best lending rate prime rate and interbank rates and the Group’s interest-bearing liabilities have floating interest rates by reference to interbank rates and savings deposit rates. ALCO continuously monitors the gap between HIBOR and the prime rate and consequently the impact on Group’s net interest income. If the Group’s net interest income declines due to the squeeze of the spread between BEA’s prime rate and HIBOR ALCO may recommend the adjustment of BEA’s prime rate charged on advances and/or the expansion of higher-yield lending business.? 107 ?The following table sets forth the Group’s average balances of interest-earning assets and interest-bearing liabilities interest and related average interest rates for the years ended 31 December 2021 2022 and 2023. Average balances of interest-earning assets and interest-bearing liabilities for the years ended 31 December 2021 2022 and 2023 are based on the arithmetic mean of the respective balances at the beginning and the end of such period.For the years ended 31 December 202120222023 Average Average Average Average Average Average balance Interest rate (%) balance Interest rate (%) balance Interest rate (%) (in HK$ millions except percentages) ASSETS Interest-earning assets Customers loans and credit Advances to customers . . 528294 544847 531199 Trade bills . . . . . . . . . 12442 4130 1098 Total . . . . . . . . . . . 540736 14594 2.7 548977 18739 3.4 532297 27474 5.2 Interbank placements and loans Balances with banks . . . 56511 52581 42544 Placements with and advances to banks . . . 64380 68936 58458 Total . . . . . . . . . . . 120891 638 0.5 121517 1540 1.3 101002 3347 3.3 Securities Treasury bills . . . . . . . 23925 24898 26635 Certificates of deposit . . 2416 1065 1156 Debt securities . . . . . . . 133731 124090 130723 Total . . . . . . . . . . . 160072 2460 1.5 150053 4224 2.8 158514 8503 5.4 Total interest-earning assets 821699 17692 2.2 820547 24503 3.0 791813 39324 5.0 Allowance for possible loan losses . . . . . . . . . . . . (4409) (4989) (6117) Non-interest earning assets . 79037 82035 81985 Total assets . . . . . . . . . . 896327 897593 867681 LIABILITIES Interest-bearing assets Deposits Deposits from customers . 596819 5439 0.9 635524 9271 1.5 626495 18902 3.0 Deposits and balances of banks . . . . . . . . . . . 34344 225 0.7 32367 531 1.6 26251 1156 4.4 Total . . . . . . . . . . . 631163 5664 0.9 667891 9802 1.5 652746 20058 3.1 Other liabilities Certificates of deposits . . 63848 48607 31115 Debt securities issued . . 5431 3766 1742 Loan capital . . . . . . . . 9745 10081 14955 Total . . . . . . . . . . . 79024 1174 1.5 62454 1457 2.3 47812 2455 5.1 Total interest-earning assets . . . . . . . . . . . . 710187 6838 1.0 730345 11259 1.5 700558 22513 3.2 Non interest-bearing liabilities . . . . . . . . . . 71181 57853 59239 Total liabilities . . . . . . . . 781368 788198 759797 NET INTEREST INCOME 108541324416811 NET INTEREST SPREAD. 1.2 1.5 1.8 Note: (1) Net interest spread is the difference between average interest yield on interest-earning assets and average funding cost on interest-bearing liabilities.? 108 ?INTERNAL AUDIT The Internal Audit Division is responsible for auditing the Group’s operations through evaluation of the appropriateness of the control design and the operating effectiveness of the risk management and internal control systems that safeguard the Group’s assets and ensure the reliability of financial information and the compliance with relevant regulatory and statutory requirements. The results of internal audit would be communicated to the senior management and internal audit recommendations are followed up for implementation. Internal audit report summarising results of the Group’s audit activities and key audit findings are presented to the Audit Committee on a quarterly basis.COMPLIANCE The Compliance Division was established to independently monitor and advise the Group’s management on the risk management of regulatory compliance issues concerning the Group’s business. It is responsible for establishing and reviewing compliance policies and guidelines and ensuring that they remain effective. It reviews new products and business proposals (in the capacity as a member of the Steering Group for New Product and Business Approval) conducts periodic review of the Group’s activities and advises the Group’s senior management in accordance with applicable laws rules and regulations. Another key function of the Compliance Division is to raise compliance awareness among staff members. Among others the Compliance Risk Management Policy has been issued to relevant staff members of the Group. Forming part of the Compliance Risk Management Policy the Group Policy on Anti-Money Laundering and Counter-Financing of Terrorism which adheres to those requirements stipulated in the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) of Hong Kong and the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Authorized Institutions) issued by the Monetary Authority is also available to staff members of the Group. In addition the Group’s internal controls are also reviewed by its internal auditors. Regular training sessions are conducted and newsletters are issued to update the Group’s staff members on any significant regulatory changes relevant to the Group’s operations.? 109 ?BOARD OF DIRECTORS AND SENIOR MANAGEMENT BOARD OF DIRECTORS BEA is managed by its Board of Directors which is responsible for the direction and management of BEA. The articles of association of BEA require that there must be not less than five Directors unless and until otherwise determined by an ordinary resolution of the shareholders of BEA. Directors are appointed at any time either at a general meeting of shareholders or by the Board of Directors.As at 29 February 2024 the Board of Directors of BEA comprised the following individuals: Name Age Title Dr. the Hon. Sir David LI Kwok-po . . . . . . . . . . . . . . . . . 84 Executive Chairman Professor Arthur LI Kwok-cheung . . . . . . . . . . . . . . . . . . 78 Non-executive Director (Deputy Chairman) Dr. Allan WONG Chi-yun . . . . . . . . . . . . . . . . . . . . . . . . . 73 Independent Non-executive Director (Deputy Chairman) Mr. Aubrey LI Kwok-sing . . . . . . . . . . . . . . . . . . . . . . . . . 74 Non-executive Director Mr. Winston LO Yau-lai . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Non-executive Director Mr. Stephen Charles LI Kwok-sze . . . . . . . . . . . . . . . . . . 64 Non-executive Director Mr. Adrian David LI Man-kiu . . . . . . . . . . . . . . . . . . . . . . 50 Co-Chief Executive Mr. Brian David LI Man-bun . . . . . . . . . . . . . . . . . . . . . . . 49 Co-Chief Executive Dr. Daryl NG Win-kong . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Non-executive Director Mr. Masayuki OKU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Non-executive Director Dr. the Hon. Rita FAN HSU Lai-tai . . . . . . . . . . . . . . . . . 78 Independent Non-executive Director Mr. Meocre LI Kwok-wing . . . . . . . . . . . . . . . . . . . . . . . . 68 Independent Non-executive Director Dr. the Hon. Henry TANG Ying-yen . . . . . . . . . . . . . . . . . 71 Independent Non-executive Director Dr. Delman LEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Independent Non-executive Director Mr. William Junior Guilherme DOO . . . . . . . . . . . . . . . . . 50 Independent Non-executive Director Dr. David MONG Tak-yeung . . . . . . . . . . . . . . . . . . . . . . 61 Independent Non-executive Director Dr. Francisco Javier SERRADO TREPAT . . . . . . . . . . . . . 65 Non-executive Director ? 110 ?Dr. the Hon. Sir David LI Kwok-po GBM GBS OBE JP MA Cantab. (Economics & Law) Hon.LLD (Cantab) Hon. DSc. (Imperial) Hon. LLD (Warwick) Hon. DBA (Edinburgh Napier) Hon.D.Hum.Litt. (Trinity USA) Hon. LLD (Hong Kong) Hon. DSocSc (Lingnan) Hon. DLitt (Macquarie) Hon. DSocSc (CUHK) FCA FCPA FCPA (Aust.) FCIB FHKIB FBCS CITP Officier de l’Ordre de la Couronne Grand Officer of the Order of the Star of Italian Solidarity The Order of the Rising Sun Gold Rays with Neck Ribbon Commandeur dans l’Ordre National de la Légion d’Honneur Executive Chairman and Member of the Nomination Committee Sir David aged 84 joined BEA in 1969. He was appointed a Director in 1977 Chief Executive in 1981 Deputy Chairman in 1995 and Chairman in 1997. On 1 July 2019 Sir David stepped down as Chief Executive and was re-designated as Executive Chairman of BEA. Sir David is also the Chairman of BEA (China) and The Bank of East Asia Charitable Foundation Limited.Sir David is an Independent Non-executive Director of The Hong Kong and China Gas Company Limited (listed in Hong Kong) The Hongkong and Shanghai Hotels Limited (listed in Hong Kong) San Miguel Brewery Hong Kong Limited (listed in Hong Kong) and Vitasoy International Holdings Limited (listed in Hong Kong). He was an Independent Non-executive Director of Guangdong Investment Limited (listed in Hong Kong).Sir David is a Member of the Council of the Treasury Markets Association. He is Founding Chairman of The Friends of Cambridge University in Hong Kong Limited Chairman of the Advisory Board of The Salvation Army Hong Kong and Macau Territory Chairman of the Executive Committee of St.James’ Settlement and a Fellow of the Hong Kong Academy of Finance. He was a Member of the Executive Council of HKSAR from 2005 to 2008 and the Legislative Council of Hong Kong from 1985 to 2012. Professor Arthur LI Kwok-cheung GBM GBS MA MD M.B.B.Chir (Cantab) DSc (Hon) DLitt (Hon) Hon DSc (Med) LLD (Hon) Hon Doc (Soka) Hon Doc (KNUA) FRCS (Eng & Edin) FRACS Hon FACS Hon FRCS (Glasg & I) Hon FRSM Hon FPCS Hon FCSHK Hon FRCP (Lond) JP Deputy Chairman Non-executive Director Member of the Nomination Committee and the Remuneration Committee Professor Li aged 78 was a Director of BEA (1995-2002) and was re-appointed a Director in 2008 and was appointed a Deputy Chairman in 2009.Professor Li is a Member of the Executive Council of HKSAR (he was/has been a Member from 2002 to June 2007 and from July 2012 to present). He also serves as a Member of the Committee for the Basic Law of the HKSAR under the Standing Committee of the National People’s Congress (the “NPC”). Professor Li was a Member of the National Committee of the Chinese People’s Political Consultative Conference (the “CPPCC”) (1998-2018).Professor Li is an Independent Non-executive Director of Shangri-La Asia Limited (listed in Hong Kong) and a Non-executive Director of Greater Bay Airlines Company Limited. He was an Independent Non-executive Director of Nature Home Holding Company Limited (listing in Hong Kong withdrawn on 19 October 2021).Professor Li was the Secretary for Education and Manpower of the HKSARG (2002-June 2007).Before these appointments he was the Vice Chancellor of the Chinese University of Hong Kong (1996-2002) and was the Chairman of Department of Surgery and the Dean of Faculty of Medicine of the Chinese University of Hong Kong. He was also the Chairman of the Council of the University of Hong Kong.Professor Li had held many important positions in various social service organisations medical associations and educational bodies including the Education Commission Committee on Science and Technology the Hospital Authority the Hong Kong Medical Council the University Grants Committee the College of Surgeons of Hong Kong and the United Christian Medical Services Board.? 111 ?He was a Member of the Board of Directors of the Hong Kong Science and Technology Parks Corporation and the Hong Kong Applied Science and Technology Research Institute and Vice President of the Association of University Presidents of China. He was a Hong Kong Affairs Adviser to China.Dr. Allan WONG Chi-yun GBS MBE BSc MSEE Hon. DTech JP Deputy Chairman Independent Non-executive Director Chairman of the Nomination Committee Member of the Audit Committee the Remuneration Committee and the Risk Committee Dr. Wong aged 73 was appointed a Director in 1995 and a Deputy Chairman in 2009. He is the Chairman and Group Chief Executive Officer of VTech Holdings Limited (listed in Hong Kong). Dr.Wong is an Independent Non-executive Director of China-Hongkong Photo Products Holdings Limited (listed in Hong Kong).Dr. Wong is a Member of the Chief Executive’s Council of Advisers of the HKSARG.Dr. Wong holds a Bachelor of Science degree in electrical engineering from the University of Hong Kong a Master of Science degree in electrical and computer engineering from the University of Wisconsin and an honorary degree of Doctor of Technology from the Hong Kong Polytechnic University.Mr. Aubrey LI Kwok-sing ScB MBA Non-executive Director and Member of the Risk Committee Mr. Li aged 74 was appointed a Director in 1995. He is Chairman of IAM Family Office Limited and Chairman of the Advisory Board of MCL Financial Group Limited both Hong Kong based investment firms. Mr. Li possesses extensive experience in the fields of investment banking merchant banking and capital markets. He is also an Independent Non-executive Director of Café de Coral Holdings Limited (listed in Hong Kong) Kowloon Development Co. Ltd (listed in Hong Kong) and Pokfulam Development Company Limited (listed in Hong Kong).Mr. Li has an ScB in Civil Engineering from Brown University and a Master of Business Administration from Columbia University.Mr. Winston LO Yau-lai SBS BSc MSc Non-executive Director Mr. Lo aged 82 was appointed a Director in 2000. He is the Executive Chairman of Vitasoy International Holdings Limited (listed in Hong Kong).Mr. Lo graduated from the University of Illinois with a Bachelor of Science degree in Food Science and gained his Master of Science degree in Food Science from Cornell University.Mr. Lo is the Chairman of Ping Ping Investment Company Ltd. He is an Honorary Court Member of the Hong Kong University of Science and Technology and a Life Member of Cornell University Council.Mr. Stephen Charles LI Kwok-sze BSc (Hons.) ACA Non-executive Director Mr. Li aged 64 was appointed a Director in 2006. He is a Member of the Institute of Chartered Accountants in England and Wales. Mr. Li holds a Bachelor of Science (Hons.) Degree in Mathematics from King’s College University of London U.K. He has extensive experience in investment banking having held senior capital markets positions with international investment banks in London and Hong Kong and board positions with international investment funds.? 112 ?Mr. Li is a member of the Executive Committee and the Honorary Treasurer of The Keswick Foundation.Mr. Adrian David LI Man-kiu BBS MA (Cantab) MBA LPC JP Co-Chief Executive and Member of the ESG Committee Mr. Li aged 50 was appointed an Executive Director in 2014. He first joined BEA in 2000 as General Manager & Head of Corporate Banking Division. He was appointed Deputy Chief Executive in April 2009 and Co-Chief Executive in July 2019 and is responsible for overall management and control of the Group with a particular focus on its Hong Kong business. He serves on the boards of several Group members as Chairman or Member.Mr. Li is an Independent Non-executive Director of two listed companies under the Sino Group (Sino Land Company Limited (listed in Hong Kong) and Tsim Sha Tsui Properties Limited (listed in Hong Kong)) and COSCO SHIPPING Ports Limited (listed in Hong Kong). He previously served as a Non-executive Director of The Berkeley Group Holdings plc (listed in London) and an Independent Non-executive Director of China State Construction International Holdings Limited (listed in Hong Kong).Mr. Li is a Member of the Shanghai Committee of the CPPCC and a Counsellor of the Hong Kong United Youth Association. He is Chairman of The Chinese Banks’ Association Deputy Chairman of The Hong Kong Institute of Bankers’ Executive Committee and Vice President of its Council and a Member of the MPF Industry Schemes Committee of the Mandatory Provident Fund Schemes Authority. He is a Vice Patron of The Community Chest of Hong Kong a Member of the Advisory Board of The Salvation Army Hong Kong and Macau Territory and a Trustee of The University of Hong Kong’s occupational retirement schemes. Furthermore he serves as a Member of the Election Committees responsible for electing the Chief Executive and Legislative Council Members of HKSAR as well as deputies of the HKSAR to the 14th NPC.Mr. Li holds a Master of Management Degree from Kellogg School of Management Northwestern University in the United States and a Master of Arts Degree and Bachelor of Arts Degree in Law from the University of Cambridge in Britain. He is a Member of The Law Society of England and Wales and The Law Society of Hong Kong. He is also a Member of the Hong Kong Academy of Finance and has been conferred as an Honorary Certified Banker by The Hong Kong Institute of Bankers. Mr. Li was awarded the Bronze Bauhinia Star by the HKSARG in 2022 in recognition of his contributions to the community.Mr. Brian David LI Man-bun BBS JP MA (Cantab) MBA FCA Co-Chief Executive and Member of the ESG Committee Mr. Li aged 49 was appointed an Executive Director in 2014. He first joined the Group in 2002. He was General Manager & Head of Wealth Management Division of BEA from July 2004 to March 2009.He was appointed Deputy Chief Executive in April 2009 and Co-Chief Executive in July 2019. He is responsible for the overall management and control of the Group with a particular focus on its Chinese Mainland and international businesses. He serves on the boards of several Group members as Chairman or as a Member.Mr. Li is an Independent Non-executive Director of Towngas Smart Energy Company Limited (listed in Hong Kong) China Overseas Land & Investment Limited (listed in Hong Kong) and Guangdong Investment Limited (listed in Hong Kong). He was an Independent Non-executive Director of Shenzhen Investment Holdings Bay Area Development Company Limited (listed in Hong Kong).Mr. Li holds a number of public and honorary positions including being a Member of the National Committee of the CPPCC and a Vice Chairman of its Committee on Social and Legal Affairs a Member of the Chief Executive’s Council of Advisers of the HKSARG a Director of the Financial Services Development Council a Member of the Process Review Panel for the SFC a Board Member ? 113 ?of Hong Kong-Shenzhen Innovation and Technology Park Limited a Member of the Disaster Relief Fund Advisory Committee and a Vice Chairman of the Asian Financial Cooperation Association. Mr.Li was awarded the Bronze Bauhinia Star by the HKSARG in 2023 in recognition of his contributions to the community.Mr. Li is a Fellow of the Hong Kong Institute of Certified Public Accountants and the Institute of Chartered Accountants in England and Wales. He is also a Member of the Hong Kong Academy of Finance an Honorary Certified Banker of The Hong Kong Institute of Bankers and a Full Member of the Treasury Markets Association. He holds an MBA degree from Stanford University as well as a BA degree from the University of Cambridge.Dr. Daryl NG Win-kong SBS BA MSc DHL Hon. DBA JP Non-executive Director and Member of the Risk Committee Dr. Ng aged 45 was appointed a Director in 2015. He is an Executive Director and Deputy Chairman of Sino Land Company Limited (listed in Hong Kong) Tsim Sha Tsui Properties Limited (listed in Hong Kong) and Sino Hotels (Holdings) Limited (listed in Hong Kong). He is also the Chairman Non-independent & Non-executive Director of Yeo Hiap Seng Limited (listed in Singapore).Dr. Ng holds a Bachelor of Arts Degree in Economics a Master Degree of Science in Real Estate Development from Columbia University in New York an Honorary Doctor of Humane Letters Degree from Savannah College of Art and Design and an Honorary Doctor of Business Administration honoris causa from Hong Kong Metropolitan University. He is also Honorary Fellow of The Hong Kong University of Science and Technology and Hong Kong Metropolitan University.Dr. Ng is a member of the Global Leadership Council of Columbia University in the City of New York a member of the 10th Sichuan Committee of the CPPCC a member of the Standing Committee of the 14th Beijing Municipal Committee of the CPPCC a member of the 10th and 11th Committees of the All-China Youth Federation and the Deputy Chairman of the Chongqing Youth Federation. He is the President of Hong Kong United Youth Association a Council Member of the Hong Kong Committee for UNICEF a Council Member of The Hong Kong Management Association a Governor of Our Hong Kong Foundation Limited a Council Member of Hong Kong Chronicles Institute Limited a Council Member of the Employers’ Federation of Hong Kong a Member of the Board of Hong Kong Science and Technology Parks Corporation the Chairman of Greater Bay Area Homeland Youth Community Foundation Limited a member of the Estate Agents Authority of the HKSARG a member of the Council for Carbon Neutrality and Sustainable Development of the HKSARG a member of the Culture Commission of the HKSARG a member of the Advisory Council on the Environment of the HKSARG a member of the Steering Committee of the Research Academic and Industry Sectors One-plus (RAISe+) Scheme of Innovation and Technology Commission of the HKSARG a member of the Council of the University of Hong Kong a Member of the Court of the Hong Kong University of Science and Technology a Member of the Board of Hong Kong Academy for Wealth Legacy of Financial Services Development Council a member of NUS Medicine International Council at the Yong Loo Lin School of Medicine of National University of Singapore a member of International Advisory Council of Singapore Management University a Member of the National Heritage Board Singapore a Special Advisor to UNESCO Asia-Pacific Awards for Cultural Heritage Conservation a Director of The Real Estate Developers Association of Hong Kong a Vice Patron of The Community Chest of Hong Kong and a Member of the Board of Hong Kong Palace Museum Limited.Mr. Masayuki OKU LL.B LL.M the Order of Industrial Service Merit Silver Tower Non-executive Director and Member of the Nomination Committee Mr. Oku aged 79 was appointed a Director in 2015. He is an Independent Non-executive Director of Rengo Co. Ltd. The Royal Hotel Limited and TV TOKYO Holdings Corporation all of which are companies listed in Japan. Mr. Oku is also the Honorary Advisor of Sumitomo Mitsui Financial Group Inc. (“SMFG”) (listed in Japan and USA). He was an Independent Non-executive Director of Chugai Pharmaceutical Co. Ltd. (listed in Japan).? 114 ?Mr. Oku began his career in 1968 at The Sumitomo Bank Limited. After engaging in the bank’s key acquisitions and investments in the 1980’s he was transferred to New York and appointed General Manager of Chicago Branch in 1991. He returned to Tokyo in 1992 assumed the position of General Manager of the Corporate Planning Department and was elected as a member of the Board of Directors of the bank in 1994. In 1999 Mr. Oku was appointed Secretary General of the Integration Strategy Committee of the bank leading its merger process with The Sakura Bank Limited which culminated in the formation of Sumitomo Mitsui Banking Corporation (“SMBC”) in 2001. In 2003 he became Deputy President of SMBC heading Corporate Banking and International Banking Units.In 2005 he was appointed President and CEO of SMBC and Chairman of the Board of SMFG the holding company of SMBC. During his tenure as President and CEO of SMBC he also served as Chairman of Japanese Bankers Association in 2007 and 2010. In April 2011 he resigned as President and CEO of SMBC to devote himself to his duties as Chairman of the Board of SMFG. Mr. Oku also served as Vice Chairman of Keidanren (Japan Business Federation) from 2011 to 2015. In April 2017 Mr. Oku stepped down as Chairman of the Board of SMFG and remained as a Director until 28 June 2017. Mr. Oku received his Bachelor of Law degree from Kyoto University in 1968 and his Master of Laws (LL.M) degree from Michigan Law School in 1975. He was awarded the Order of Industrial Service Merit Silver Tower by the Government of the Republic of Korea in 2009.Dr. the Hon. Rita FAN HSU Lai-tai GBM GBS DSocSc JP Independent Non-executive Director Chairman of the Remuneration Committee and Member of the Nomination Committee Dr. Fan aged 78 was appointed a Director in 2016. She is an Independent Non-executive Director of COSCO SHIPPING Ports Limited (listed in Hong Kong). She was an Independent Non-executive Director of China Overseas Land & Investment Limited (listed in Hong Kong).Dr. Fan is one of Hong Kong’s best-known public figures and has an outstanding track record of community service. Dr. Fan was appointed to the Legislative Council of Hong Kong from 1983 to 1992 and was a Member of the Executive Council of Hong Kong from 1989 to 1992. She became the President of the Provisional Legislative Council of HKSAR in 1997 and has since been re-elected as the President of the First Second and Third Legislative Council of HKSAR until 30 September 2008.Dr. Fan served as President of the legislature of HKSAR for 11 years.In the lead-up to Hong Kong’s reunification with China Dr. Fan played a valuable role as a Member of the Preliminary Working Committee for the Preparatory Committee for the HKSAR from 1993 to 1995 and of the Preparatory Committee for the HKSAR from 1995 to 1997. She was elected as a Hong Kong Deputy to the 9th 10th 11th and 12th sessions of the NPC during 1998 to 2018 and was concurrently a Member of the Standing Committee of the 11th and 12th sessions of the NPC from 2008 to 2018. Dr. Fan is a Non-official Member of the Candidate Eligibility Review Committee of the HKSAR. She is also serving as the Chairman of Board of Management of the Endeavour Education Centre Limited and the Endeavour Education Trust and a Member of Hong Kong Laureate Forum Council.After graduating from St. Stephen’s Girls’ College Dr. Fan studied at the University of Hong Kong and was awarded a Bachelor degree in Science and a Master degree in Social Science. She was awarded Honorary Doctorate degrees in Social Science by the University of Hong Kong the City University of Hong Kong the Hong Kong Polytechnic University and the Education University of Hong Kong; and an Honorary Doctorate in Law from the China University of Political Science and Law of the People’s Republic of China. Her record of public service was acknowledged by the HKSARG through the award of the Gold Bauhinia Star in 1998 and Hong Kong’s top award the Grand Bauhinia Medal in 2007.? 115 ?Mr. Meocre LI Kwok-wing BCom CPA Independent Non-executive Director Chairman of the Audit Committee and Member of the Risk Committee Mr. Li aged 68 was appointed a Director in 2016. He is the Chief Executive of Alpha Alliance Finance Holdings Limited.Mr. Li was the Managing Partner of Arthur Andersen one of the major international accounting firms taking charge of its Hong Kong and Chinese Mainland operations from September 1993 to February 1995. He was the Managing Director and Head of Corporate Finance of NatWest Securities Asia from March 1995 to March 1998. He was the Chief Executive of ICEA Finance Holdings Limited (from March 1998 to March 2002) an investment banking joint venture between The Industrial and Commercial Bank of China and BEA prior to the company’s becoming a wholly-owned subsidiary of BEA which was subsequently renamed as Tung Shing Holdings Company Limited and disposed to SinoPac Securities (Cayman) Holdings Limited on 6 April 2016. He was an Independent Non-executive Director of BEA (China) (from May 2016 to July 2022).Mr. Li received a Bachelor of Commerce degree with distinction from University of Alberta Canada.Upon graduation he was awarded the Financial Executives Institute Silver Medal for “HighestStanding in Finance”. He also earned a Postgraduate Management Diploma from the Harvard Business School and is a member of the Hong Kong Institute of Certified Public Accountants.Dr. the Hon. Henry TANG Ying-yen GBM GBS JP Independent Non-executive Director Chairman of the Risk Committee Member of the Audit Committee the Nomination Committee and the Remuneration Committee Dr. Tang aged 71 was appointed a Director in 2017. He was the Chief Secretary for Administration of the HKSARG from 2007 to 2011 and the Financial Secretary of the HKSARG from 2003 to 2007.He served as a member of the Executive Council of HKSAR from 1997 to 2011 and was a member of the Legislative Council of Hong Kong from 1991 to 1998.Dr. Tang is a Standing Committee Member of the CPPCC Chairman of the West Kowloon Cultural District Authority Board and the Chairman of Shanghai Tang Junyuan Education Foundation.Dr. Tang received a Bachelor of Arts degree from the University of Michigan. In 1993 Dr. Tang was named Global Leader for Tomorrow by the World Economic Forum. In 1989 he won the Young Industrialist of Hong Kong award.Dr. Tang is the Supervisor of BEA (China).Dr. Delman LEE BEng DPhil Independent Non-executive Director Chairman of the ESG Committee Member of the Audit Committee the Nomination Committee and the Risk Committee Dr. Lee aged 56 was appointed a Director in 2017. He is the Vice Chairman of TAL Apparel Limited.He is also a Non-executive Director of Tradelink Electronic Commerce Limited (listed in Hong Kong). He was a Non-executive Director of Dairy Farm International Holdings Limited (listed in London Bermuda and Singapore).Dr. Lee is a Council Member of The Hong Kong Management Association. Dr. Lee possesses extensive experience in information technology and management in global operations. He also has a strong background in research.Dr. Lee holds a doctorate from the University of Oxford and a Bachelor’s degree in Electrical and Electronic Engineering from the Imperial College London.? 116 ?Mr. William Junior Guilherme DOO BBS BA MA (Oxon) JP Independent Non-executive Director Member of the Audit Committee the Risk Committee and the ESG Committee Mr. Doo aged 50 was appointed a Director in 2019. He is the Chief Executive Officer and Director of Fungseng Prosperity Holdings Limited the Deputy Chief Executive Officer and Executive Director of FSE Holdings Limited an Executive Director of FSE Lifestyle Services Limited (listed in Hong Kong) and a Non-executive Director of NWS Holdings Limited (listed in Hong Kong).Mr. Doo is a solicitor admitted in Hong Kong and is a non-practising solicitor in England and Wales.He had legal practice experience in one of the largest global law firms specialising in finance and corporate transactions. He is a Member of the National Committee of the CPPCC. He serves in different committees of the HKSARG including a member of the Standing Committee on Young Offenders of Fight Crime Committee a member of the Correctional Services Department Complaints Appeal Board a member of the Election Committee and a member of the Corruption Prevention Advisory Committee of the Independent Commission Against Corruption.Mr. Doo graduated from University of Oxford with B.A. and M.A. degrees in Jurisprudence and he is elected as Foundation Fellow of Wadham College University of Oxford and a member of Chancellor’s Court of Benefactors University of Oxford. He was appointed as Justice of the Peace and was awarded the honour of Chevalier de I’Ordre National du Mérite by the President of the French Republic. Mr. Doo was awarded the Bronze Bauhinia Star by the HKSARG.Dr. David MONG Tak-yeung BScEE DSocSc DBA The Order of the Rising Sun Gold Rays with Neck Ribbon Independent Non-executive Director Member of the Nomination Committee the Remuneration Committee and the ESG Committee Dr. Mong aged 61 was appointed a Director in 2021. He is the Chairman and Chief Executive Officer of Shun Hing Group which has been the exclusive regional representative of a famous brand of home appliances Panasonic (formerly National) for many decades. He is the President of the Hong Kong & Kowloon Electrical Appliances Merchants Association Limited and the Chairman of Occupational Safety and Health Council.Dr. Mong obtained a Bachelor of Science in Electrical Engineering University of California Los Angeles and a Master of Business Administration Santa Clara University California. Dr. Mong was conferred Doctoral Degrees of Social Sciences honoris causa from the University of Hong Kong and Hong Kong Baptist University and Doctoral Degree of Business Administration honoris causa from Hong Kong Polytechnic University. Dr. Mong is an Honorary Fellow of the University of Hong Kong and the Chinese University of Hong Kong as well as a Fellow of The Hong Kong Management Association. He was awarded the Order of the Rising Sun Gold Rays with Neck Ribbon by the Government of Japan.Dr. Francisco Javier SERRADO TREPAT Non-executive Director and Member of the Nomination Committee Dr. Serrado aged 65 was appointed a Director in 2021. He is the Asia Regional Manager of Criteria Caixa S.A. Sociedad Unipersonal (“Criteria”). He possesses extensive knowledge and skills and has more than 35 years of experience in banking and finance-related industries including about 30 years of experience working in China. His major responsibilities include overseeing the operations (including establishment) of banking and finance entities of Criteria in China and other regions in Asia. Dr. Serrado was the Asia Regional Manager of CaixaBank S.A. (listed in Spain) since 2007 until February 2022.? 117 ?Among other academic and professional qualifications Dr. Serrado holds a PhD degree in Economics from Columbia University; a PhD in Economics from the University of Philippines Diliman; and an MBA degree from The London School of Economics and Political Science. He was awarded the Cross of the Order of Civil Merit (2020) at the behest of His Majesty King Felipe VI of Spain in recognition for his achievements in economic cooperation investment and trade between the People’s Republic of China and Spain.SENIOR MANAGEMENT Mr. Adrian David LI Man-kiu BBS MA (Cantab) MBA LPC JP Co-Chief Executive Biographical details are set out above under “Board of Directors”.Mr. Brian David LI Man-bun BBS JP MA (Cantab) MBA FCA Co-Chief Executive Biographical details are set out above under “Board of Directors”.Mr. Samson LI Kai-cheong FCCA CPA FCG HKFCG HKSI Deputy Chief Executive & Chief Investment Officer Mr. Li aged 63 joined BEA in 1987 as Chief Internal Auditor. He was promoted to Deputy Chief Executive & Chief Investment Officer in April 2009. Mr. Li is primarily responsible for BEA’s investment activities and treasury operations. He is also a Director of various members of the Group and a Member of various committees appointed by the Board.Mr. Li is a Fellow of The Hong Kong Chartered Governance Institute The Chartered Governance Institute and The Association of Chartered Certified Accountants. In addition he is an Associate of the Hong Kong Institute of Certified Public Accountants and a Member of the Hong Kong Securities and Investment Institute. Mr. Li received his Professional Diploma in Accountancy from The Hong Kong Polytechnic University.Mr. TONG Hon-shing BSc ACIB FCG HKFCG Fellow CB Deputy Chief Executive & Chief Operating Officer Mr. Tong aged 64 joined BEA in 1975. He was promoted to Assistant General Manager in 1995 and to General Manager in 2000. He was General Manager & Head of Personal Banking Division from 2001 to March 2009. He was further promoted to Deputy Chief Executive and Chief Operating Officer in April 2009. Mr. Tong is primarily responsible for operations technology compliance human resources and corporate communications of BEA. He is also a Director of various members of the Group and a Member of various committees appointed by the Board.Mr. Tong is a Fellow Certified Banker of The Hong Kong Institute of Bankers a Fellow of The Hong Kong Chartered Governance Institute and The Chartered Governance Institute as well as an Associate of The Chartered Institute of Bankers. He holds a BSc from the University of Manchester.? 118 ?TERMS AND CONDITIONS OF THE NOTES OTHER THAN THE UNDATED CAPITAL SECURITIES The following is the text of the terms and conditions that save for the paragraphs in italics and subject to completion and amendment and as supplemented or varied in accordance with the provisions of the applicable Pricing Supplement shall be applicable to the Notes in definitive form (if any) issued in exchange for the global note(s) (the “Global Note(s)”) or global certificate(s) (the “Global Certificate(s)”) representing each Series. Either: (i) the full text of these terms and conditions together with the relevant provisions of the applicable Pricing Supplement; or (ii) these terms and conditions as so completed amended supplemented or varied (and subject to simplification by the deletion of non-applicable provisions) shall be endorsed on such Bearer Notes or on the Certificates relating to such Registered Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the applicable Pricing Supplement or the Trust Deed as the case may be. Those definitions will be endorsed on the definitive Notes or Certificates as the case may be. References in these Conditions to “Notes” are to the Notes of one Series only not to all Notes that may be issued under the Programme.The Notes are constituted by an amended and restated Trust Deed dated 24 September 2021 (as may be amended or supplemented as at the date of issue of the Notes (the “Issue Date”) and as may be further amended restated novated or supplemented from time to time thereafter the “Trust Deed”) between The Bank of East Asia Limited (the “Issuer”) and DB Trustees (Hong Kong) Limited (the “Trustee” which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Noteholders (as defined below).These terms and conditions (the “Conditions”) include summaries of and are subject to the detailed provisions of the Trust Deed which includes the form of the Notes Certificates Receipts Coupons and Talons referred to below. An amended and restated Agency Agreement dated 24 September 2021 (as may be further amended restated novated or supplemented from time to time thereafter the “Agency Agreement”) has been entered into in relation to the Notes between the Issuer the Trustee Deutsche Bank AG Hong Kong Branch as initial issuing and paying agent Deutsche Bank AG Hong Kong Branch as CMU lodging and paying agent transfer agent and as registrar for Registered Notes to be held in the Central Moneymarkets Unit Service operated by the Hong Kong Monetary Authority (the “CMU”) Deutsche Bank AG Hong Kong Branch as registrar of each series of Notes to be held in the CMU (the “CMU Notes”) and Deutsche Bank Luxembourg S.A. as registrar of each series of Notes (other than CMU Notes) and the other agents named in it. The issuing and paying agent the CMU lodging and paying agent the other paying agents the registrars the transfer agent(s) and thecalculation agent(s) for the time being (if any) are referred to below respectively as the “Issuing andPaying Agent” the “CMU Lodging and Paying Agent” the “Paying Agents” (which expression shall include the Issuing and Paying Agent and the CMU Lodging and Paying Agent) the “Registrars” the “Transfer Agents” (which expression shall include the Registrars) and the “Calculation Agent(s)” (such Issuing and Paying Agent CMU Lodging and Paying Agent Paying Agents Registrars and Transfer Agents being together referred to as the “Agents”). For the purposes of these Conditions all references (other than in relation to the determination of interest and other amounts payable in respect of the Notes) to the Issuing and Paying Agent shall unless provided otherwise with respect to a Series of Notes to be held in the CMU be deemed to be a reference to the CMU Lodging and Paying Agent and all such references shall be construed accordingly.Copies of the Trust Deed and the Agency Agreement are available for inspection by any Noteholder at all reasonable times during usual business hours (being between 9:00 a.m. and 3:00 p.m.) on any weekday (Saturdays Sundays and public holidays excepted) at the principal office of the Trustee (presently at Level 52 International Commercial Centre 1 Austin Road West Kowloon Hong Kong) and at the specified offices of the Paying Agents following prior written request and proof of holding and identity satisfactory to the Trustee or as the case may be the relevant Paying Agent.? 119 ?The Noteholders the holders of the interest coupons (the “Coupons”) relating to interest-bearing Bearer Notes and where applicable in the case of such Bearer Notes talons for further Coupons (the “Talons”) (the “Couponholders”) and the holders of the receipts for the payment of instalments of principal (the “Receipts”) relating to Bearer Notes of which the principal is payable in instalments (the “Receiptholders”) are entitled to the benefit of are bound by and are deemed to have notice of these Conditions all the provisions of the Trust Deed and the applicable Pricing Supplement and are deemed to have notice of those provisions applicable to them of the Agency Agreement. The Pricing Supplement for the Notes of this Tranche is (or the relevant provisions thereof are) attached to or endorsed hereon. References to “applicable Pricing Supplement” are to the Pricing Supplement (or relevant provisions thereof) attached to or endorsed hereon.All capitalised terms that are not defined in these Conditions will have the meanings given to them in the applicable Pricing Supplement or the Trust Deed as the case may be.As used in these Conditions “Tranche” means Notes which are identical in all respects and “Series” means a series of Notes comprising one or more Tranches whether or not issued on the same date that (except in respect of the first payment of interest and their issue price) have identical terms on issue and are expressed to have the same series number. 1 Form Denomination and Title The Notes are issued in bearer form (“Bearer Notes”) or in registered form (“RegisteredNotes”) in each case as specified in the applicable Pricing Supplement (or the relevant provisions thereof) attached to or endorsed on this Note and in the case of definitive Notes serially numbered in the currency (the “Specified Currency”) and in the specified denomination(s) (the “Specified Denomination(s)”) shown hereon. The principal amount of a Non-Preferred Loss Absorbing Note or a Dated Subordinated Note is subject to adjustment following the occurrence of a Non-Viability Event (as defined in Condition 7(a)) in accordance with Condition 7(a) and references in these Conditions to the “principal amount” of a Non-Preferred Loss Absorbing Note or a Dated Subordinated Note shall mean the principal amount of such Non-Preferred Loss Absorbing Note or such Dated Subordinated Note as so adjusted.Dated Subordinated Notes (as defined in Condition 3(d)) will only be issued in registered certificated form; Dated Subordinated Notes shall not be issued in bearer form. References to “hereon” is to the applicable Pricing Supplement (or the relevant provisions thereof) attached to or endorsed on the Notes.All Registered Notes shall have the same Specified Denomination. Unless otherwise permitted by the then current laws and regulations Notes which have a maturity of less than one year and in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of Section 19 of the Financial Services and Markets Act 2000 will have a minimum denomination of ?100000 (or its equivalent in other currencies). Notwithstanding any other regulatory or listing requirements in respect of specified denominations the minimum Specified Denomination for any series or tranche of Non-Preferred Loss Absorbing Notes and of Dated Subordinated Notes shall be if denominated in: (i) Hong Kong dollars HKD2000000; (ii) United States dollars U.S.$250000; (iii) Euros €200000; or (iv) any other currency the equivalent in that currency to HKD2000000 with reference to the relevant exchange rate on the Issue Date.Each Note may be a Fixed Rate Note a Floating Rate Note a Zero Coupon Note an Index Linked Interest Note an Index Linked Redemption Note an Instalment Note a Senior (Preferred) Note a Dated Subordinated Note a Dual Currency Note or a Partly Paid Note a combination of any of the foregoing or any other kind of Note depending upon the interest basis and redemption basis shown hereon.? 120 ?Bearer Notes are serially numbered and are issued with Coupons (and where appropriate a Talon) attached save in the case of Zero Coupon Notes in which case references to interest (other than in relation to interest due after the Maturity Date) Coupons and Talons in these Conditions are not applicable. Any Bearer Note the principal amount of which is redeemable in instalments is issued with one or more Receipts attached.Registered Notes are represented by registered certificates (“Certificates”) and save as provided in Condition 2(c) each Certificate shall represent the entire holding of Registered Notes by the same holder.Title to the Bearer Notes and the Receipts Coupons and Talons shall pass by delivery. Title to the Registered Notes shall pass by registration in the register (the “Register”) that the Issuer shall procure to be kept by the Registrar in accordance with the provisions of the Agency Agreement. The Issuer may appoint a registrar (the “Alternative Registrar”) in accordance with the provisions of the Agency Agreement other than the Registrar in relation to any Series comprising Registered Notes. In these Conditions “Registrar” includes if applicable in relation to any Series comprising Registered Notes the Registrar or as the case may be the Alternative Registrar as specified hereon. Except as ordered by a court of competent jurisdiction or as required by law the holder (as defined below) of any Note Receipt Coupon or Talon shall be deemed to be and may be treated as its absolute owner for all purposes whether or not it is overdue and regardless of any notice of ownership trust or an interest in it any writing on it (or on the Certificate representing it) or its theft or loss (or that of the related Certificate) and no person shall be liable for so treating the Noteholder.The Conditions are modified by certain provisions contained in the Global Certificate.Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes are not issuable in bearer form.In these Conditions “Noteholder” means the bearer of any Bearer Note and the Receipts relating to it or the person in whose name a Registered Note is registered (as the case may be) “holder” (in relation to a Note Receipt Coupon or Talon) means the bearer of any Bearer Note Receipt Coupon or Talon or the person in whose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings given to them hereon the absence of any suchmeaning indicating that such term is not applicable to the Notes and the expression “Senior(Preferred) Noteholder” shall be construed accordingly in relation to Senior (Preferred) Notes the expression “Non-Preferred Loss Absorbing Noteholder” shall be construed accordingly inrelation to Non-Preferred Loss Absorbing Notes and the expression “Dated SubordinatedNoteholder” shall be construed accordingly in relation to Dated Subordinated Notes.References in the Conditions to Coupons Talons Couponholders Receipts and Receiptholders relate to Bearer Notes only. 2 No Exchange of Notes and Transfers of Registered Notes (a) No Exchange of Notes: Registered Notes may not be exchanged for Bearer Notes. Bearer Notes of one Specified Denomination may not be exchanged for Bearer Notes of another Specified Denomination. Bearer Notes may not be exchanged for Registered Notes.(b) Transfer of Registered Notes: Subject to Condition 2(f) and Condition 6 one or more Registered Notes may be transferred upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such Registered Notes to be transferred together with the form of transfer endorsed on such Certificate (or another form of transfer substantially in the same form and containing the same representations and certifications (if any) unless otherwise agreed by the Issuer) duly completed and executed and any other evidence as the Registrar or such Transfer Agent may reasonably require to ? 121 ?prove the title of the transferor and the authority of the individuals that have executed the form of transfer. In the case of a transfer of part only of a holding of Registered Notes represented by one Certificate a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor. All transfers of Notes and entries on the Register will be made subject to the detailed regulations concerning transfers of Notes scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Registrar and the Trustee or by the Registrar with the prior written approval of the Trustee. A copy of the current regulations will be made available by the Registrar to any Noteholder upon request.Transfers of interests in the Notes evidenced by the Global Certificate will be effected in accordance with the rules of the relevant clearing systems.Transfers of interests in any Dated Subordinated Notes that are the subject of a Non-Viability Event Notice issued in accordance with Condition 7 or notice of issue of a Resolution Notice shall not be permitted during any Suspension Period (as defined in Condition 2(f)).(c) Exercise of Options or Partial Redemption or Partial Write-off in Respect of Registered Notes: In the case of an exercise of an Issuer’s or Noteholders’ option in respect of or a partial redemption of or a partial Write-off of or cancellation modification conversion and/or change in form pursuant to a Resolution Notice (as defined in Condition 7(b)(iv)) of a holding of Registered Notes represented by a single Certificate a new Certificate shall be issued to the holder to reflect the exercise of such option or in respect of the balance of the holding not redeemed or Written-off in accordance with Condition 7 or subject to cancellation modification conversion and/or change in form pursuant to a Resolution Notice as the case may be. In the case of a partial exercise of an option resulting in Registered Notes of the same holding having different terms separate Certificates shall be issued in respect of those Notes of that holding that have the same terms. New Certificates shall only be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Registered Notes to a person who is already a holder of Registered Notes a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.(d) Delivery of New Certificates: Each new Certificate to be issued pursuant to Condition 2(b) or Condition 2(c) shall be available for delivery within three business days of receipt of the form of transfer or Exercise Notice (as defined in Condition 6(e)) and surrender of the Certificate for exchange except for any Write-off pursuant to Condition 7(a) in which case any new Certificate to be issued shall be available for delivery as soon as reasonably practicable. Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such form of transfer Exercise Notice or Certificate shall have been made or at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant form of transfer Exercise Notice or otherwise in writing be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified unless such holder requests otherwise and pays in advance to the relevant Transfer Agent or the Registrar the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 2(d) “business day” means a day other than a Saturday or Sunday on which banks are open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).? 122 ?(e) Transfers Free of Charge: Transfers of Notes and Certificates on registration transfer exercise of an option partial redemption or partial Write-off shall be effected without charge by or on behalf of the Issuer the Registrar or the Transfer Agents but upon payment by the relevant Noteholder of any tax or other governmental charges that may be imposed in relation to it (or the giving of such indemnity and/or security as the Registrar or the relevant Transfer Agent may require).(f) Closed Periods: No Noteholder may require the transfer of a Registered Note to be registered: (i) during the period of 15 days ending on (and including) the due date for redemption of or payment of any Instalment Amount in respect of that Note; (ii) after such Noteholder has exercised its put option to require the Issuer to redeem any such Note; (iii) during the period of 15 days ending on (and including) any date on which payment is due; or (iv) where the Registered Notes are also Dated Subordinated Notes during the period commencing on the date of a Non-Viability Event Notice (as defined in Condition 7(a) below) and ending on the effective date of the related Write-off.So long as any Notes are represented by a Global Certificate and such Global Certificate is held on behalf of Euroclear Bank SA/NV (“Euroclear”) or Clearstream Banking S.A.(“Clearstream Luxembourg”) or any other clearing system no holder may require the transfer of a Note to be registered during the period of five Clearing System Business Days (or such other period as the relevant clearing systems shall determine in accordance with their rules and procedures) commencing on the Clearing System Business Day immediately following the date on which the Non-Viability Event Notice (as defined in Condition 7(a) below) has been received by the relevant clearing systems (the “Suspension Period”).“Clearing System Business Day” means a weekday (Monday to Friday inclusive except 25 December and 1 January). 3 Status Subordination and Qualification of the Notes (a) Status of Senior (Preferred) Notes: The senior (preferred) notes (being those Notes that specify their status as “Senior (Preferred)” in the applicable Pricing Supplement (the “Senior (Preferred) Notes”)) and the Receipts and the Coupons relating to them constitute direct unconditional unsubordinated and (subject to Condition 4) unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves. The payment obligations of the Issuer under the Senior (Preferred) Notes and the Receipts and the Coupons relating to them shall save for such exceptions as may be provided by applicable legislation and subject to Condition 4 at all times rank at least equally with all other unsecured and unsubordinated indebtedness and monetary obligations of the Issuer present and future.(b) Status and Qualification of Non-Preferred Loss Absorbing Notes (i) Status: The non-preferred loss absorbing notes (being those Notes that specify their status as “Non-Preferred Loss Absorbing” in the applicable Pricing Supplement (the “Non-Preferred Loss Absorbing Notes”)) constitute direct and unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves.? 123 ?(ii) Qualification: The applicable Pricing Supplement for any Non-Preferred Loss Absorbing Notes shall specify if such Non-Preferred Loss Absorbing Notes are intended to qualify as a Loss Absorbing Instrument.(c) Ranking of Non-Preferred Loss Absorbing Notes: Subject to the insolvency laws of Hong Kong and other applicable laws in the event of a Winding-Up (as defined below) of the Issuer (other than pursuant to a Permitted Reorganisation (as defined below)) the rights of the Noteholders to payment of principal and interest on the Non-Preferred Loss Absorbing Notes and any other obligations in respect of the Non-Preferred Loss Absorbing Notes shall rank: (i) subsequent in right of payment to and of all claims of all unsubordinated creditors of the Issuer (including its depositors) only; (ii) pari passu in right of payment to and of all claims of the holders of Parity Obligations and as may be further specified in the applicable Pricing Supplement; and (iii) senior in right of payment to and of all claims of: (A) the holders of any subordinated instrument or other subordinated obligation issued or entered into by the Issuer (other than Parity Obligations); (B) the holders of any instrument or other obligation issued or entered into by the Issuer that qualifies as a Tier 2 Capital Instrument or that is specified in the applicable Pricing Supplement as being Dated Subordinated Notes or as ranking pari passu with the Dated Subordinated Notes and any instrument or other obligation issued entered into or guaranteed by the Issuer that ranks or is expressed to rank pari passu with the Dated Subordinated Notes by operation of law or contract; and (C) the holders of Junior Obligations and as may be further specified in the applicable Pricing Supplement in each case in the manner provided in the Trust Deed and to the extent that such Noteholders did not receive payment in full of principal of and interest on such Non-Preferred Loss Absorbing Notes such unpaid amounts shall remain payable in full; provided that payment of such unpaid amounts shall be subject to the provisions under this Condition 3 and Condition 11(b) and Clause 5 and Clause 7 of the Trust Deed.In the event of a Winding-Up that requires the Noteholders or the Trustee to provide evidence of their claim to principal or interest under the Non-Preferred Loss Absorbing Notes such claims of the Noteholders of such Non-Preferred Loss Absorbing Notes will only be satisfied after claims in respect of unsubordinated creditors of the Issuer (including its depositors) have been satisfied in whole.The subordination provisions set out in this Condition 3(c) are effective only upon the occurrence of any Winding-Up proceedings of the Issuer. In the event that a Non-Viability Event occurs the rights of holders of Non-Preferred Loss Absorbing Notes shall be subject to Condition 7. This may not result in the same outcome for the holders of Non-Preferred Loss Absorbing Notes as would otherwise occur under this Condition 3(c) upon the occurrence of any Winding-Up proceedings of the Issuer.(d) Status and Qualification of Dated Subordinated Notes: (i) Status: The dated subordinated notes (being those Notes that specify their status as “Dated Subordinated” in the applicable Pricing Supplement (the “DatedSubordinated Notes”)) constitute direct unsecured and subordinated obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves.? 124 ?(ii) Qualification: The applicable Pricing Supplement for any Dated Subordinated Notes shall specify if such Dated Subordinated Notes are intended to qualify as: (A) a Tier 2 Capital Instrument; and/or (B) a Loss Absorbing Instrument. (e) Subordination of Dated Subordinated Notes: Subject to the insolvency laws of Hong Kong and other applicable laws in the event of a Winding-Up (as defined below) of the Issuer (other than pursuant to a Permitted Reorganisation (as defined below)) the rights of the Noteholders to payment of principal and interest on the Dated Subordinated Notes and any other obligations in respect of the Dated Subordinated Notes shall rank: (i) subordinate and junior in right of payment to and of all claims of: (A) all unsubordinated creditors of the Issuer (including its depositors); and (B) the holders of Non-Preferred Loss Absorbing Instruments; (ii) pari passu in right of payment to and of all claims of the holders of Parity Obligations as may be further specified in the applicable Pricing Supplement; and (iii) senior in right of payment to and of all claims of: (A) the holders of other Subordinated Obligations (if any) and as may be further specified in the applicable Pricing Supplement; and (B) the holders of Junior Obligations and as may be further specified in the applicable Pricing Supplement in each case in the manner provided in the Trust Deed and to the extent that such Noteholders did not receive payment in full of principal of and interest on such Dated Subordinated Notes such unpaid amounts shall remain payable in full; provided that payment of such unpaid amounts shall be subject to the provisions under this Condition 3 and Condition 11(b) and Clause 5 and Clause 7 of the Trust Deed.In the event of a Winding-Up that requires the Noteholders or the Trustee to provide evidence of their claim to principal or interest under the Dated Subordinated Notes such claims of the Noteholders of such Dated Subordinated Notes will only be satisfied after all senior ranking obligations of the Issuer have been satisfied in whole.The subordination provisions set out in this Condition 3(e) are effective only upon the occurrence of any Winding-Up proceedings of the Issuer. In the event that a Non-Viability Event occurs the rights of holders of Dated Subordinated Notes shall be subject to Condition 7. This may not result in the same outcome for the holders of Dated Subordinated Notes as would otherwise occur under this Condition 3(e) upon the occurrence of any Winding-Up proceedings of the Issuer.(f) Set-off and Payment Void in respect of Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes: Subject to applicable law no holder of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes may exercise claim or plead any right of set-off counter-claim or retention in respect of any amount owed to it by the Issuer arising under or in connection with the Non-Preferred Loss Absorbing Notes or the Dated Subordinated ? 125 ?Notes and each holder of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes shall by virtue of being the holder of any Non-Preferred Loss Absorbing Note or Dated Subordinated Note be deemed to have waived all such rights of such set-off counterclaim or retention to the fullest extent permitted by law.In the event that any holder of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes nevertheless receives (whether by set-off or otherwise) directly in a Winding-Up Proceeding in respect of the Issuer any payment by or distribution of assets of the Issuer of any kind or character whether in cash property or securities in respect of any amount owing to it by the Issuer arising under or in connection with the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes other than in accordance with this Condition 3(f) such holder shall subject to applicable law immediately pay an amount equal to the amount of such payment or discharge to the liquidator for the time being in the Winding-Up of the Issuer for interest and each holder by virtue of becoming a holder of such Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes shall be deemed to have so agreed and undertaken with and to the Issuer and all depositors and other unsubordinated creditors of the Issuer for good consideration.(g) Definitions: In these Conditions: “Authorized Institution” has the meaning given to that term in the Banking Ordinance (Cap. 155) of Hong Kong; “Banking Capital Regulations” means the Banking (Capital) Rules (Cap. 155L) of Hong Kong or any other banking capital regulations as amended or superseded from time to time applicable to the regulatory capital of Authorized Institutions incorporated in Hong Kong or any supervisory guidelines issued or implemented by the Monetary Authority; “Group” means the Issuer and its subsidiaries; “Junior Obligation” means: (i) all classes of the Issuer’s share capital (including without limitation any ordinary shares and any preference shares of the Issuer); (ii) any Tier 1 Capital Instruments; (iii) in respect of the Non-Preferred Loss Absorbing Notes any instrument or other obligation issued entered into or guaranteed by the Issuer that ranks or is expressed to rank junior to the Non-Preferred Loss Absorbing Notes by operation of law or contract; (iv) in respect of the Dated Subordinated Notes any instrument or other obligation issued entered into or guaranteed by the Issuer that ranks or is expressed to rank junior to the Dated Subordinated Notes by operation of law or contract; and (v) any other instrument or obligation specified in the applicable Pricing Supplement; “Loss Absorbing Capacity Rules” means the Financial Institutions (Resolution) (Loss-absorbing Capacity Requirements — Banking Sector) Rules (Cap. 628B) of Hong Kong or any other loss-absorbing capacity regulations as amended or superseded from time to time applicable to the loss-absorbing capacity of Authorized Institutions incorporated in Hong Kong or any statutory guidelines issued or implemented by the Monetary Authority; ? 126 ?“Loss Absorbing Instruments” means any notes securities or other instruments issued entered into or guaranteed by the Issuer that constitute “LAC debt instruments” under the Loss Absorbing Capacity Rules; “Non-Preferred Loss Absorbing Instruments” means any Loss Absorbing Instrument that by operation of law or contract ranks or is expressed to rank senior to any: (i) Tier 2 Capital Instruments; and (ii) Tier 1 Capital Instruments; “Monetary Authority” means the Monetary Authority appointed under section 5A of the Exchange Fund Ordinance (Cap 66.) of Hong Kong or any successor thereto; “Parity Obligation” means: (i) in respect of Non-Preferred Loss Absorbing Notes any instrument or other obligation issued or entered into by the Issuer that is specified in the applicable Pricing Supplement as being Non-Preferred Loss Absorbing Notes or any other Non-Preferred Loss Absorbing Instruments issued entered into or guaranteed by the Issuer that ranks or is expressed to rank pari passu with the Non-Preferred Loss Absorbing Notes by operation of law or contract; (ii) in respect of Dated Subordinated Notes any instrument or other obligation issued or entered into by the Issuer that is specified in the applicable Pricing Supplement as ranking pari passu with the Dated Subordinated Notes and any instrument or other obligation issued entered into or guaranteed by the Issuer that ranks or is expressed to rank pari passu with the Dated Subordinated Notes by operation of law or contract; “Permitted Reorganisation” means a solvent reconstruction amalgamation reorganisation merger or consolidation whereby all or substantially all the business undertaking or assets of the Issuer are transferred to a successor entity which assumes all the obligations of the Issuer under the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes as the case may be; “Subordinated Obligations” means any subordinated instrument or other obligation issued entered into or guaranteed by the Issuer that is specified in the applicable Pricing Supplement as ranking junior to the Dated Subordinated Notes and any instrument or other obligation issued entered into or guaranteed by the Issuer that ranks or is expressed to rank junior to the Dated Subordinated Notes by operation of law or contract but senior to the holders of Junior Obligations; “Tier 1 Capital Instruments” means any instrument or other obligation issued or entered into by the Issuer that constitutes Tier 1 capital of the Issuer pursuant to the Banking Capital Regulations; “Tier 2 Capital Instruments” means any instrument or other obligation issued or entered into by the Issuer that constitutes Tier 2 capital of the Issuer pursuant to the Banking Capital Regulations; “Winding-Up” means with respect to the Issuer a final and effective order or resolution by a competent judicial authority in the place of incorporation of the Issuer for the bankruptcy winding-up liquidation administrative receivership or similar proceeding in respect of the Issuer; and ? 127 ?“Winding-Up Proceedings” means with respect to the Issuer proceedings for the bankruptcy liquidation winding-up administrative receivership or other similar proceeding of the Issuer. 4 Negative Pledge in respect of Senior (Preferred) Notes only So long as any Senior (Preferred) Note or Coupon (in respect thereof) remains outstanding (as defined in the Trust Deed) the Issuer will not and will ensure that none of its Subsidiaries will create or have outstanding any mortgage charge lien pledge or other security interest upon the whole or any part of its present or future undertaking assets or revenues (including any uncalled capital) to secure any Relevant Indebtedness or to secure any guarantee or indemnity in respect of any Relevant Indebtedness without at the same time or prior thereto according to the Senior (Preferred) Notes and the Coupons the same security as is created or subsisting to secure any such Relevant Indebtedness guarantee or indemnity or such other security as either: (a) the Trustee shall in its absolute discretion deem not materially less beneficial to the interest of the Noteholders; or (b) shall be approved by the Trustee or by an Extraordinary Resolution (as defined in the Trust Deed) of the holders of the Senior (Preferred) Notes.In this Condition 4: “Relevant Indebtedness” means any indebtedness which is in the form of or represented or evidenced by bonds notes debentures loan stock or other securities which for the time being are or are intended to be or capable of being quoted listed or dealt in or traded on any stock exchange or over-the-counter or other securities market; and “Subsidiary” means any entity whose financial statements at any time are required by law or in accordance with generally accepted accounting principles to be fully consolidated with those of the Issuer. 5 Interest and other Calculations The amount payable in respect of the aggregate principal amount of Notes represented by a Global Certificate or a Global Note (as the case may be) shall be made in accordance with the methods of calculation provided for in the Conditions and the applicable Pricing Supplement save that the calculation is made in respect of the total aggregate amount of the Notes represented by a Global Certificate or a Global Note (as the case may be) together with such other sums and additional amounts (if any) as may be payable under the Conditions.(a) Interest on Fixed Rate Notes: Each Fixed Rate Note bears interest on its outstanding principal amount from and including the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest such interest being payable in arrear on each Interest Payment Date. The amount of interest payable shall be determined in accordance with Condition 5(h).(b) Interest on Floating Rate Notes and Index Linked Interest Notes: (i) Interest Payment Dates: Each Floating Rate Note and Index Linked Interest Note bears interest on its outstanding principal amount from and including the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest such interest being payable in arrear on each Interest Payment Date.The amount of interest payable shall be determined by the Calculation Agent in accordance with Condition 5(h). Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Dates or if no Specified Interest Payment ? 128 ?Date(s) is/are shown hereon “Interest Payment Date” shall mean each date which falls the number of months or other period shown hereon as the Interest Period after the preceding Interest Payment Date or in the case of the first Interest Payment Date after the Interest Commencement Date.(ii) Business Day Convention: If any date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a Business Day then if the Business Day Convention specified is: (A) the Floating Rate Business Day Convention such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment; (B) the Following Business Day Convention such date shall be postponed to the next day that is a Business Day; (C) the Modified Following Business Day Convention such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month in which event such date shall be brought forward to the immediately preceding Business Day; or (D) the Preceding Business Day Convention such date shall be brought forward to the immediately preceding Business Day.(iii) Rate of Interest for Floating Rate Notes: The Rate of Interest in respect of Floating Rate Notes for each Interest Accrual Period shall be determined by the Calculation Agent in the manner specified hereon and the provisions below relating to either ISDA Determination or Screen Rate Determination shall apply depending upon which is specified hereon. (A) ISDA Determination for Floating Rate Notes Where ISDA Determination is specified hereon as the manner in which the Rate of Interest is to be determined the Rate of Interest for each Interest Accrual Period shall be determined by the Calculation Agent as a rate equal to the relevant ISDA Rate. For the purposes of this paragraph (A) “ISDA Rate” for an Interest Accrual Period means a rate equal to the Floating Rate that would be determined by the Calculation Agent under a Swap Transaction under the terms of an agreement incorporating the ISDA Definitions and under which: (x) the Floating Rate Option is as specified hereon; (y) the Designated Maturity is a period specified hereon; and (z) the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise specified hereon.For the purposes of this paragraph (A) “Floating Rate” “Calculation Agent” “Floating Rate Option” “Designated Maturity” “Reset Date” and “SwapTransaction” have the meanings given to those terms in the ISDA Definitions.? 129 ?(B) Screen Rate Determination for Floating Rate Notes (other than Floating Rate Notes which specify the Reference Rate as either SOFR Benchmark or SONIA Benchmark) (x) Where Screen Rate Determination is specified hereon as the manner in which the Rate of Interest is to be determined the Rate of Interest for each Interest Accrual Period will subject as provided below be either: (1) the offered quotation; or (2) the arithmetic mean of the offered quotations (expressed as a percentage rate per annum) for the Reference Rate which appears or appear as the case may be on the Relevant Screen Page as at either 11.00 a.m. (London time in the case of LIBOR or Brussels time in the case of EURIBOR or Hong Kong time in the case of HIBOR or Beijing time in the case of SHIBOR) or 11.15 a.m. (Hong Kong time in the case of CNH HIBOR) or if at around that time it is notified that the fixing will be published at 2.30 p.m. (Hong Kong time) then as of 2.30 p.m. (Hong Kong time in the case of CNH HIBOR) as the case may be on the Interest Determination Date in question as determined by the Calculation Agent. If five or more of such offered quotations are available on the Relevant Screen Page the highest (or if there is more than one such highest quotation one only of such quotations) and the lowest (or if there is more than one such lowest quotation one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean of such offered quotations.If the Reference Rate from time to time in respect of Floating Rate Notes is specified hereon as being other than LIBOR EURIBOR HIBOR CNH HIBOR or SHIBOR the Rate of Interest in respect of such Notes will be determined as provided hereon.(y) If the Relevant Screen Page is not available or if sub-paragraph (x)(1) above applies and no such offered quotation appears on the Relevant Screen Page or if sub-paragraph (x)(2) above applies and fewer than three such offered quotations appear on the Relevant Screen Page in each case as at the time specified above subject as provided below the Calculation Agent shall promptly notify the Issuer and the Issuer shall use all commercially reasonable endeavours to appoint an Independent Investment Bank and procure such Independent Investment Bank to request if the Reference Rate is LIBOR the principal London office of each of the Reference Banks or if the Reference Rate is EURIBOR the principal Euro-zone office of each of the Reference Banks or if the Reference Rate is HIBOR or CNH HIBOR the principal Hong Kong office of each of the Reference Banks or if the Reference Rate is SHIBOR the principal Beijing office of each of the Reference Banks to provide the Independent Investment Bank and the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate if the Reference Rate is LIBOR at approximately 11.00 a.m. (London time) or if the Reference Rate is EURIBOR at approximately 11.00 a.m. (Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m.(Hong Kong time) or if the Reference Rate is CNH HIBOR at approximately 11.15 a.m. (Hong Kong time) or if the Reference Rate is SHIBOR at approximately 11.30 a.m. (Beijing time) on the Interest Determination Date in question. If two or more of the Reference Banks ? 130 ?provide the Independent Investment Bank and the Calculation Agent with such offered quotations the Rate of Interest for such Interest Accrual Period shall be the arithmetic mean of such offered quotations as determined by the Calculation Agent.(z) If paragraph (y) above applies and the Calculation Agent has received offered quotations from fewer than two Reference Banks subject as provided below the Rate of Interest shall be the arithmetic mean of the rates per annum (expressed as a percentage) as communicated at the request of the Independent Investment Bank to the Independent Investment Bank and the Calculation Agent by the Reference Banks or any two or more of them at which such banks were offered if the Reference Rate is LIBOR at approximately 11.00 a.m. (London time) or if the Reference Rate is EURIBOR at approximately 11.00 a.m. (Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m. (Hong Kong time) or if the Reference Rate is CNH HIBOR at approximately 11.15 a.m.(Hong Kong time) or if the Reference Rate is SHIBOR at approximately 11.30 a.m. (Beijing time) on the relevant Interest Determination Date deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in if the Reference Rate is LIBOR the London interbank market or if the Reference Rate is EURIBOR the Euro-zone interbank market or if the Reference Rate is HIBOR or CNH HIBOR the Hong Kong interbank market or if the Reference Rate is SHIBOR the Beijing interbank market as the case may be or if fewer than two of the Reference Banks provide the Independent Investment Bank and the Calculation Agent with such offered rates the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate or the arithmetic mean of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate at which if the Reference Rate is LIBOR at approximately 11.00 a.m. (London time) or if the Reference Rate is EURIBOR at approximately 11.00 a.m. (Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m. (Hong Kong time) or if the Reference Rate is CNH HIBOR at approximately 11.15 a.m. (Hong Kong time) or if the Reference Rate is SHIBOR at approximately 11.30 a.m. (Beijing time) on the relevant Interest Determination Date any one or more banks (which bank or banks is or are in the opinion of the Independent Investment Bank suitable for such purpose) informs the Independent Investment Bank and the Calculation Agent it is quoting to leading banks in if the Reference Rate is LIBOR the London interbank market or if the Reference Rate is EURIBOR the Euro-zone interbank market or if the Reference Rate is HIBOR or CNH HIBOR the Hong Kong interbank market or if the Reference Rate is SHIBOR the Beijing interbank market as the case may be provided that if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 5(b)(iii)(B) the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting where a different Margin or Maximum Rate of Interest or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period the Margin or Maximum Rate of Interest or Minimum Rate of Interest relating to the relevant Interest Accrual Period in place of the Margin or Maximum Rate of Interest or Minimum Rate of Interest relating to that last preceding Interest Accrual Period).? 131 ?For the purposes of this Condition 5(b)(iii)(B) “Independent InvestmentBank” means an internationally recognised independent financial institution or an independent financial adviser with appropriate experience (which shall not be the Calculation Agent) selected and appointed by the Issuer (at the expense of the Issuer) for the purposes of this Condition 5(b)(iii)(B) and notified in writing by the Issuer to the Calculation Agent and the Trustee. (C) Screen Rate Determination for Floating Rate Notes where the Reference Rate is specified as being SOFR Benchmark Where Screen Rate Determination is specified hereon as the manner in which the Rate of Interest is to be determined where the Reference Rate is SOFR Benchmark the Rate of Interest for each Interest Accrual Period will subject as provided below be equal to the sum of the relevant SOFR Benchmark plus or minus (as specified in the relevant Pricing Supplement) the Margin (if any) all as determined by the Calculation Agent on the relevant Interest Determination Date.The “SOFR Benchmark” will be determined based on Simple SOFR Average Compounded SOFR Average or SOFR Index Average (as specified in the relevant Pricing Supplement) as follows (subject in each case to Condition 5(l)): (x) If Simple SOFR Average (“Simple SOFR Average”) is specified in the relevant Pricing Supplement as the manner in which the SOFR Benchmark will be determined the SOFR Benchmark for each Interest Accrual Period shall be the arithmetic mean of the SOFR reference rates for each day during such Interest Accrual Period as calculated by the Calculation Agent and where if applicable and as specified in the relevant Pricing Supplement the SOFR reference rate on the SOFR Rate Cut-Off Date shall be used for the days in the relevant Interest Accrual Period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the last day of that Interest Accrual Period.(y) If Compounded SOFR Average (“Compounded SOFR Average”) is specified in the relevant Pricing Supplement as the manner in which the SOFR Benchmark will be determined the SOFR Benchmark for each Interest Accrual Period shall be equal to the value of the SOFR reference rates for each day during the relevant Interest Accrual Period (where SOFR Observation Lag SOFR Payment Delay or SOFR Lockout is specified in the relevant Pricing Supplement to determine Compounded SOFR Average) or SOFR Observation Period (where SOFR Observation Shift is specified as applicable in the relevant Pricing Supplement to determine Compounded SOFR Average).Compounded SOFR Average shall be calculated by the Calculation Agent in accordance with one of the formulas referenced below depending upon which is specified in the relevant Pricing Supplement: (1) SOFR Observation Lag: (∏do SOFRi ?xUSBD x ni 360i=1 (1 + ) ? 1) x 360 d ? 132 ?with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFRi-xUSBD” for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period is equal to the SOFR reference rate for the U.S. Government Securities Business Day falling the number of Lookback Days prior to that U.S. Government Securities Business Day(i); “Lookback Days” means such number of U.S. Government Securities Business Days as specified in the relevant Pricing Supplement; “d” means the number of calendar days in the relevant Interest Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; “i” means a series of whole numbers ascending from one to do each representing the relevant U.S. Government Securities Business Day in chronological order from (and including) the first U.S. Government Securities Business Day in the relevant Interest Accrual Period (each a “U.S. Government Securities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day(i). (2) SOFR Observation Shift: (∏do SOFRi x nii=1 (1 + ) ? 1) 360x 360 d with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant SOFR Observation Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i); “SOFR Observation Period” means in respect of each Interest Accrual Period the period from (and including) the date falling the number of SOFR Observation Shift Days prior to the first day of the relevant Interest Accrual Period to (but excluding) the date falling the number of SOFR Observation Shift Days prior to the last day of such Interest Accrual Period; “SOFR Observation Shift Days” means the number of U.S.Government Securities Business Days as specified in the relevant Pricing Supplement; “d” means the number of calendar days in the relevant SOFR Observation Period; ? 133 ?“do” means the number of U.S. Government Securities Business Days in the relevant SOFR Observation Period; “i” means a series of whole numbers ascending from one to do each representing the relevant U.S. Government Securities Business Day in chronological order from (and including) the first U.S. Government Securities Business Day in the relevant SOFR Observation Period (each a “U.S. Government Securities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day(i). (3) SOFR Payment Delay: (∏do ( SOFRi x ni ) ) 360i=1 1 + ? 1 x 360 d with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i); “Interest Payment Date” shall be the date falling the number of Interest Payment Delay Days following each Interest Period Date; provided that the Interest Payment Date with respect to the final Interest Accrual Period will be the Maturity Date or the relevant date for redemption as applicable; “Interest Payment Delay Days” means the number of Business Days as specified in the relevant Pricing Supplement; “d” means the number of calendar days in the relevant Interest Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; “i” means a series of whole numbers ascending from one to do each representing the relevant U.S. Government Securities Business Day in chronological order from (and including) the first U.S. Government Securities Business Day in the relevant Interest Accrual Period (each a “U.S. Government Securities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day(i).For the purposes of calculating Compounded SOFR Average with respect to the final Interest Accrual Period where SOFR Payment Delay is specified in the relevant Pricing Supplement the SOFR ? 134 ?reference rate for each U.S. Government Securities Business Day in the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Maturity Date or the relevant date for redemption as applicable shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date. (4) SOFR Lockout: (∏do ( SOFRi x nii=1 1 + ) ? 1) 360x 360 d with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i) except that the SOFR for any U.S. Government Securities Business Day(i) in respect of the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the last day of such Interest Accrual Period shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date; “d” means the number of calendar days in the relevant Interest Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; “i” means a series of whole numbers ascending from one to do representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities BusinessDay in the relevant Interest Accrual Period (each a “U.S.Government Securities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day(i).The following defined terms shall have the meanings set out below for purpose of Conditions 5(b)(iii)(C)(x) and 5(b)(iii)(C)(y): “Bloomberg Screen SOFRRATE Page” means the Bloomberg screen designated “SOFRRATE” or any successor page or service; “Reuters Page USDSOFR=” means the Reuters page designated “USDSOFR=”or any successor page or service; “SOFR” means with respect to any U.S. Government Securities Business Day the reference rate determined by the Calculation Agent in accordance with the following provision: (i) the Secured Overnight Financing Rate published at the SOFR Determination Time as such reference rate is reported on the Bloomberg Screen SOFRRATE Page; the Secured Overnight ? 135 ?Financing Rate published at the SOFR Determination Time as such reference rate is reported on the Reuters Page USDSOFR=; or the Secured Overnight Financing Rate published at the SOFR Determination Time on the SOFR Administrator’s Website; (ii) if the reference rate specified in (i) above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have not occurred the SOFR reference rate shall be the reference rate published on the SOFR Administrator’s Website for the first preceding U.S. Government Securities Business Day for which SOFR was published on the SOFR Administrator’s Website; or (iii) if the reference rate specified in (i) above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have occurred the provisions set forth in Condition 5(l) shall apply; “SOFR Determination Time” means approximately 3:00 p.m. (New York City time) on the immediately following U.S. Government Securities Business Day; and “SOFR Rate Cut-Off Date” has the meaning given in the relevant Pricing Supplement.(z) If SOFR Index Average (“SOFR Index Average”) is specified as applicable in the relevant Pricing Supplement the SOFR Benchmark for each Interest Accrual Period shall be equal to the value of the SOFR reference rates for each day during the relevant Interest Accrual Period as calculated by the Calculation Agent as follows: ( SOFR IndexEnd ) ( 360? 1 x ) SOFR IndexStart dc with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFR Index” with respect to any U.S. Government Securities Business Day means the SOFR Index value as published on the SOFR Administrator’s Website at the SOFR Index Determination Time provided that if such SOFR Index value is not available and: (i) if a SOFR Benchmark Transition Event and its related SOFRBenchmark Replacement Date have not occurred the “SOFR IndexAverage” shall be calculated on any Interest Determination Date with respect to an Interest Accrual Period in accordance with the Compounded SOFR Average formula described above in Condition 5(b)(iii)(C)(y)(2) (SOFR Observation Shift); or (ii) if a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have occurred the provisions set forth in Condition 5(l) shall apply; ? 136 ?“SOFR IndexEnd” means the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified in the relevant Pricing Supplement prior to the last day of such Interest Accrual Period (or in the final Interest Accrual Period the Maturity Date); “SOFR IndexStart” means the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified in the relevant Pricing Supplement prior to the first day of the relevant Interest Accrual Period; “SOFR Index Determination Time” means in relation to any U.S.Government Securities Business Day approximately 3:00 p.m. (New York City time) on such U.S. Government Securities Business Day; and “dc” means the number of calendar days from (and including) the day in relation to which SOFR IndexStart is determined to (but excluding) the day in relation to which SOFR IndexEnd is determined (being the number of calendar days in the applicable reference period).The following defined terms shall have the meanings set out below for purpose of this Condition 5(b)(iii)(C): “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org or any successor source; “SOFR Benchmark Replacement Date” means the date of occurrence of a Benchmark Event with respect to the then-current SOFR Benchmark; “SOFR Benchmark Transition Event” means the occurrence of a Benchmark Event with respect to the then-current SOFR Benchmark; and “U.S. Government Securities Business Day” or “USBD” means any day except for a Saturday a Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities. (D) Screen Rate Determination for Floating Rate Notes which specify the Reference Rate as SONIA Benchmark (x) SONIA Compounded Index Rate Where (i) Screen Rate Determination is specified hereon as the manner in which the Rate of Interest is to be determined; (ii) the Reference Rate is specified hereon as being SONIA Benchmark; and (iii) SONIA Compounded Index Rate is specified hereon as the manner in which the Rate of Interest is to be determined the Rate of Interest for each Interest Period will subject to Condition 5(k) be the SONIA Compounded Index Rate as follows plus or minus (as indicated hereon) the Margin.For the purposes of this Condition 5(b)(iii)(D)(x): “SONIA Compounded Index Rate” means with respect to an Interest Period the rate of return of a daily compound interest investment during the Observation Period corresponding to such Interest Period (with the ? 137 ?daily Sterling overnight reference rate as reference rate for the calculation of interest) and will be calculated by the Calculation Agent on the Interest Determination Date as follows and the resulting percentage will be rounded if necessary to the fourth decimal place with 0.00005 being rounded upwards ( SONIA Compounded IndexEND ) ( 365? 1 x ) SONIA Compounded IndexSTART d provided however that and subject to Condition 5(k) if the SONIA Compounded Index Value is not available in relation to any Interest Period on the Relevant Screen Page for the determination of either or both of SONIA Compounded IndexSTART and SONIA Compounded IndexEND the Rate of Interest shall be calculated for such Interest Period on the basis of the SONIA Compounded Daily Reference Rate as set out in Condition 5(b)(iii)(D)(y) as if SONIA Compounded Daily Reference Rate withObservation Shift had been specified hereon and the “Relevant ScreenPage” shall be deemed to be the “Relevant Fallback Screen Page” as specified hereon where: “d” means the number of calendar days in the relevant Observation Period; “London Business Day” means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London; “Observation Period” means in respect of an Interest Period the period from (and including) the date falling “p” London Business Days prior to the first day of such Interest Period (and the first Observation Period shall begin on and include the date which is “p” London Business Days prior to the Issue Date) and ending on (but excluding) the date which is “p” London Business Days prior to the Interest Payment Date for such Interest Period (or the date falling “p” London Business Days prior to such earlier date if any on which the Notes become due and payable); “p” means for any Interest Period the whole number specified hereon (or if no such number is so specified five London Business Days) representing a number of London Business Days; “SONIA Compounded Index” means the index known as the SONIA Compounded Index administered by the Bank of England (or any successor administrator thereof); “SONIA Compounded IndexSTART” means in respect of an Interest Period the SONIA Compounded Index Value on the date falling “p” London Business Days prior to (i) the first day of such Interest Period or (ii) in the case of the first Interest Period the Issue Date; “SONIA Compounded IndexEND” means the SONIA Compounded Index Value on the date falling “p” London Business Days prior to (i) in respect of an Interest Period the Interest Payment Date for such Interest Period or (ii) if the Notes become due and payable prior to the end of an Interest Period the date on which the Notes become so due and payable; and ? 138 ?“SONIA Compounded Index Value” means in relation to any London Business Day the value of the SONIA Compounded Index as published by authorised distributors on the Relevant Screen Page on such London Business Day or if the value of the SONIA Compounded Index cannot be obtained from such authorised distributors as published on the Bank of England’s Website at www.bankofengland.co.uk/boeapps/database/ (or such other page or website as may replace such page for the purposes of publishing the SONIA Compounded Index) on such London Business Day.(y) SONIA Compounded Daily Reference Rate Where (i) Screen Rate Determination is specified hereon as the manner in which the Rate of Interest is to be determined (ii) the Reference Rate is specified hereon as being SONIA Benchmark; and (iii) SONIA Compounded Daily Reference Rate is specified hereon the Rate of Interest for each Interest Period will subject to Condition 5(k) be the SONIA Compounded Daily Reference Rate as follows plus or minus (as indicated hereon) the Margin “SONIA Compounded Daily Reference Rate” means in respect of an Interest Period the rate of return of a daily compound interest investment (with the daily Sterling overnight reference rate as reference rate for the calculation of interest) and will be calculated by the Calculation Agent on the Interest Determination Date as follows and the resulting percentage will be rounded if necessary to the fourth decimal place with 0.00005 being rounded upwards d [ o∏ ( SONIAi x ni 3651 + ) ? 1 x i=1 365 ] d Where: “London Business Day” “Observation Period” and “p” have the meanings set out under Condition 5(b)(iii)(D)(x); “d” is the number of calendar days in the relevant: (i) Observation Period where Observation Shift is specified hereon; or (ii) Interest Period where Lag is specified hereon; “do” is the number of London Business Days in the relevant: (i) Observation Period where Observation Shift is specified hereon; or (ii) Interest Period where Lag is specified hereon; “i” is a series of whole numbers from one to do each representing the relevant London Business Day in chronological order from and including the first London Business Day in the relevant: (i) Observation Period where Observation Shift is specified hereon; or (ii) Interest Period where Lag is specified hereon; ? 139 ?“ni” for any London Business Day “i” means the number of calendar days from and including such London Business Day “i” up to but excluding the following London Business Day; “SONIAi” means in relation to any London Business Day the SONIA reference rate in respect of: (i) that London Business Day “i” where Observation Shift is specified hereon; or (ii) the London Business Day (being a London Business Day falling in the relevant Observation Period) falling “p” London Business Days prior to the relevant London Business Day “i” where Lag is specified hereon; and the “SONIA reference rate” in respect of any London Business Day is a reference rate equal to the daily Sterling Overnight Index Average (“SONIA”) rate for such London Business Day as provided by the administrator of SONIA to authorised distributors and as then published on the Relevant Screen Page on the next following London Business Day or if the Relevant Screen Page is unavailable as published by authorised distributors on such London Business Day or if SONIA cannot be obtained from such authorised distributors as published on the Bank of England’s Website at www.bankofengland.co.uk/boeapps/database/ (or such other page or website as may replace such page for the purposes of publishing the SONIA reference rate).(z) Subject to Condition 5(k) where SONIA Benchmark is specified as the Reference Rate hereon and either (i) SONIA Compounded Daily Reference Rate is specified hereon or (ii) the SONIA Compounded Index Rate is specified hereon and Condition 5(b)(iii)(D)(y) applies if in respect of any London Business Day the SONIA reference rate is not available on the Relevant Screen Page or Relevant Fallback Screen Page as applicable (or as otherwise provided in the relevant definition thereof) such Reference Rate shall be: (1) the Bank of England’s Bank Rate (the “Bank Rate”) prevailing at close of business on the relevant London Business Day; plus (ii) the mean of the spread of the SONIA reference rate to the Bank Rate over the previous five days on which the SONIA reference rate has been published excluding the highest spread (or if there is more than one highest spread one only of those highest spreads) and lowest spread (or if there is more than one lowest spread one only of those lowest spreads) to the Bank Rate or (2) if such Bank Rate is not available the SONIA reference rate published on the Relevant Screen Page (or as otherwise provided in the relevant definition thereof) for the first preceding London Business Day on which the SONIA reference rate was published on the Relevant Screen Page (or as otherwise provided in the relevant definition thereof) and in each case SONIAi shall be interpreted accordingly.? 140 ?(aa) If the Rate of Interest cannot be determined in accordance with the foregoing provisions but without prejudice to Condition 5(k) the Rate of Interest shall be (i) that determined as at the last preceding Interest Determination Date (though substituting where a different Margin or Maximum Rate of Interest or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period the Margin or Maximum Rate of Interest or Minimum Rate of Interest relating to the relevant Interest Accrual Period in place of the Margin or Maximum Rate of Interest or Minimum Rate of Interest relating to that last preceding Interest Accrual Period) or (ii) if there is no such preceding Interest Determination Date the initial Rate of Interest which would have been applicable to such Series of Notes for the first Interest Accrual Period had the Notes been in issue for a period equal in duration to the scheduled first Interest Accrual Period but ending on (and excluding) the Interest Commencement Date (but applying the Margin and any Maximum Rate of Interest or Minimum Rate of Interest applicable to the first Interest Accrual Period).(bb) If the relevant Series of Notes become due and payable in accordance with Condition 11 the final Interest Determination Date shall notwithstanding any Interest Determination Date specified hereon be deemed to be the date on which such Notes became due and payable and the Rate of Interest on such Notes shall for so long as any such Note remains outstanding be that determined on such date.(iv) Rate of Interest for Index Linked Interest Notes: The Rate of Interest in respect of Index Linked Interest Notes for each Interest Accrual Period shall be determined by the Calculation Agent in the manner specified hereon and interest will accrue by reference to an Index or Formula as specified hereon.(c) Zero Coupon Notes: Where a Note the interest basis of which is specified to be Zero Coupon is repayable prior to the Maturity Date and is not paid when due the amount due and payable prior to the Maturity Date shall be the Early Redemption Amount of such Note.As from the Maturity Date the Rate of Interest for any overdue principal of such a Note shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as described in Condition 6(b)(i)(B)).(d) Dual Currency Notes: In the case of Dual Currency Notes if the rate or amount of interest falls to be determined by reference to a Rate of Exchange or a method of calculating Rate of Exchange the rate or amount of interest payable shall be determined by the Calculation Agent in the manner specified hereon.(e) Partly Paid Notes: In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes) interest will accrue as aforesaid on the paid-up principal amount of such Notes and otherwise as specified hereon.(f) Accrual of Interest: Interest shall cease to accrue on each Note on the due date for redemption unless upon due presentation payment is improperly withheld or refused in which event interest shall continue to accrue (both before and after judgment) at the Rate of Interest in the manner provided in this Condition 5 to the Relevant Date (as defined in Condition 9).? 141 ?(g) Margin Maximum/Minimum Rates of Interest Instalment Amounts and Redemption Amounts and Rounding: (i) If any Margin is specified hereon (either (x) generally or (y) in relation to one or more Interest Accrual Periods) an adjustment shall be made to all Rates of Interest in the case of (x) or the Rates of Interest for the specified Interest Accrual Periods in the case of (y) calculated in accordance with Condition 5(b) above by adding (if a positive number) or subtracting the absolute value (if a negative number) of such Margin subject always to the next paragraph.(ii) If any Maximum Rate of Interest or Minimum Rate of Interest Instalment Amount or Redemption Amount is specified hereon then any Rate of Interest Instalment Amount or Redemption Amount shall be subject to such maximum or minimum as the case may be.(iii) For the purposes of any calculations required pursuant to these Conditions (unless otherwise specified) (x) all percentages resulting from such calculations shall be rounded if necessary to the nearest fifth decimal place (with halves being rounded up) (y) all figures shall be rounded to seven significant figures (with halves being rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest unit of such currency (with halves being rounded up) save in the case of yen which shall be rounded down to the nearest yen. For these purposes “unit” means the lowest amount of such currency that is available as legal tender in the country(ies) of such currency.(h) Calculations: The amount of interest payable per calculation amount specified hereon (orif no such amount is so specified the Specified Denomination) (the “CalculationAmount”) in respect of any Note for any Interest Accrual Period shall be equal to the product of the Rate of Interest the Calculation Amount and the Day Count Fraction for such Interest Accrual Period unless an Interest Amount (or a formula for its calculation) is applicable to such Interest Accrual Period in which case the amount of interest payable per Calculation Amount in respect of such Note for such Interest Accrual Period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods the amount of interest payable per Calculation Amount in respect of such Interest Period shall be the sum of the Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect of any other period for which interest is required to be calculated the provisions above shall apply save that the Day Count Fraction shall be for the period for which interest is required to be calculated.(i) Determination and Publication of Rates of Interest Interest Amounts Final Redemption Amounts Early Redemption Amounts Optional Redemption Amounts and Instalment Amounts: The Calculation Agent shall as soon as practicable on each Interest Determination Date or such other time on such date as the Calculation Agent may be required to calculate any rate or amount or make any determination or calculation determine such rate and calculate the Interest Amounts for the relevant Interest Accrual Period calculate the Final Redemption Amount Early Redemption Amount Optional Redemption Amount or Instalment Amount make such determination or calculation as the case may be and cause the Rate of Interest and the Interest Amounts for each Interest Accrual Period and the relevant Interest Payment Date and if required to be calculated the Final Redemption Amount Early Redemption Amount Optional Redemption Amount or ? 142 ?any Instalment Amount to be notified to the Trustee the Issuer each of the Paying Agents the Noteholders and any other Calculation Agent appointed in respect of the Notes that is to make a further calculation upon receipt of such information as soon as possible after their determination but in no event later than: (i) the commencement of the relevant Interest Period if determined prior to such time in the case of notification to such exchange of a Rate of Interest and Interest Amount; or (ii) in all other cases the fourth Business Day after such determination.Where any Interest Payment Date or Interest Period End Date is subject to adjustment pursuant to Condition 5(b)(ii) the Interest Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made with the consent of the Trustee by way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If the Notes become due and payable under Condition 11 the accrued interest and the Rate of Interest payable in respect of the Notes shall subject in the case of each of the SONIA Compounded Index Rate and the SONIA Compounded Daily Reference Rate to Condition 5(b)(iii)(D)(y)(i) nevertheless continue to be calculated as previously in accordance with this Condition 5(i) but no publication of the Rate of Interest or the Interest Amount so calculated need be made unless the Trustee otherwise requires. The determination of any rate or amount the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties and the Noteholders.If the Notes are listed on a stock exchange and the rules of such exchange or other relevant authority so require such exchange or other relevant authority the Issuer shall notify such stock exchange or other relevant authority as soon as possible.(j) Determination or Calculation by an agent of the Issuer: If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Interest for an Interest Accrual Period or any Interest Amount Instalment Amount Final Redemption Amount Early Redemption Amount or Optional Redemption Amount the Trustee may appoint an agent on its behalf to do so and such determination or calculation shall be deemed to have been made by the Calculation Agent. In doing so such agent shall apply the foregoing provisions of this Condition 5(j) with any necessary consequential amendments to the extent that in its opinion it can do so and in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances. The determination of any rate or amount and the making of each determination or calculation by such agent pursuant to this Condition 5(j) shall (in the absence of manifest error) be final and binding upon all parties. (k) Benchmark Discontinuation (other than Floating Rate Notes which specify the Reference Rate as SOFR Benchmark): This Condition 5(k) shall apply to only those Notes for which this Condition 5(k) is specified as “Applicable” in the applicable Pricing Supplement.Notwithstanding any other provision of this Condition 5(k) no Successor Rate or Alternative Rate (as applicable) will be adopted and no other amendments to the terms of any Dated Subordinated Notes will be made pursuant to this Condition 5(k) if and to the extent that in the determination of the Issuer the same could reasonably be expected to prejudice the qualification of any of the Dated Subordinated Notes as Tier 2 capital and/or the Notes as eligible liabilities or loss absorbing capacity instruments for the purposes of the Banking Capital Regulations and/or any applicable Loss Absorbing Capacity Rules.? 143 ?(i) Independent Adviser: If a Benchmark Event occurs in relation to an Original Reference Rate when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate the Issuer shall use its reasonable endeavours to appoint an Independent Adviser as soon as reasonably practicable to determine a Successor Rate or failing which an Alternative Rate (in accordance with Condition 5(k)(ii)) and in either case an Adjustment Spread (if any in accordance with Condition 5(k)(iii)) and any Benchmark Amendments (in accordance with Condition 5(k)(iv)).In making such determination the Independent Adviser appointed pursuant to this Condition 5(k) shall act in good faith as an expert and in consultation with the Issuer.In the absence of bad faith or fraud the Independent Adviser shall have no liability whatsoever to the Issuer the Trustee the Paying Agents or the Noteholders for any determination made by it pursuant to this Condition 5(k).If (A) the Issuer is unable to appoint an Independent Adviser; or (B) the Independent Adviser fails to determine a Successor Rate or failing which an Alternative Rate in accordance with this Condition 5(k)(i) prior to the relevant Interest Determination Date the Rate of Interest applicable to the next succeeding Interest Accrual Period shall be equal to the Rate of Interest last determined in relation to the Notes in respect of the immediately preceding Interest Accrual Period. If there has not been a first Interest Payment Date the Rate of Interest shall be the initial Rate of Interest. Where a different Margin or Maximum Rate of Interest or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period the Margin or Maximum Rate of Interest or Minimum Rate of Interest relating to the relevant Interest Accrual Period shall be substituted in place of the Margin or Maximum Rate of Interest or Minimum Rate of Interest relating to that last preceding Interest Accrual Period. For the avoidance of doubt this paragraph shall apply to the relevant next succeeding Interest Accrual Period only and any subsequent Interest Accrual Periods are subject to the subsequent operation of and to adjustment as provided in the first paragraph of this Condition 5(k)(i). (ii) Successor Rate or Alternative Rate: If the Independent Adviser determines that: (A) there is a Successor Rate then such Successor Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the Rate of Interest (or the relevant component part thereof) for all future payments of interest on the Notes (subject to the operation of this Condition 5(k)); or (B) there is no Successor Rate but that there is an Alternative Rate then such Alternative Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the Rate of Interest (or the relevant component part thereof) for all future payments of interest on the Notes (subject to the operation of this Condition 5(k)).? 144 ?(iii) Adjustment Spread: If the Independent Advisor determines that: (A) an Adjustment Spread is required to be applied to the Successor Rate or the Alternative Rate (as the case may be); and (B) the quantum of or a formula or methodology for determining such Adjustment Spread then the Adjustment Spread (or the formula or methodology for determining the Adjustment Spread) shall be applied to the Successor Rate or the Alternative Rate (as the case may be).(iv) Benchmark Amendments: If any Successor Rate or Alternative Rate and in either case the applicable Adjustment Spread is determined in accordance with this Condition 5(k) and the Independent Adviser determines: (A) that amendments to these Conditions and/or the Trust Deed are necessary to ensure the proper operation of such Successor Rate or Alternative Rate and/or (in either case) the applicable Adjustment Spread (such amendments the “Benchmark Amendments”); and (B) the terms of the Benchmark Amendments then the Issuer shall subject to giving notice thereof in accordance with Condition 5(k)(v) without any requirement for the consent or approval of Noteholders the Trustee or the Agents vary these Conditions and/or the Trust Deed to give effect to such Benchmark Amendments with effect from the date specified in such notice.At the request of the Issuer but subject to receipt by the Trustee of a certificate signed by two Authorised Signatories of the Issuer pursuant to Condition 5(k)(v) the Trustee shall (at the expense of the Issuer) without any requirement for the consent or approval of the Noteholders be obliged to concur with the Issuer in effecting any Benchmark Amendments (including inter alia by the execution of a deed supplemental to or amending the Trust Deed) provided that the Trustee shall not be obliged so to concur if in the opinion of the Trustee doing so would impose more onerous obligations upon it or expose it to any additional duties responsibilities or liabilities or reduce or amend the protective provisions afforded to the Trustee in these Conditions or the Trust Deed (including for the avoidance of doubt any supplemental trust deed) in any way.For the avoidance of doubt the Trustee and the Issuing and Paying Agent shall at the direction and expense of the Issuer effect such consequential amendments to the Trust Deed the Agency Agreement and these Conditions as may be required in order to give effect to this Condition 5(k)(iv). Noteholders’ consent shall not be required in connection with effecting of the Successor Rate or the Alternative Rate (as applicable) any Adjustment Spread Benchmark Amendments or such other changes including the execution of any documents or any steps by the Trustee or the Issuing and Paying Agent (if required).In connection with any such variation in accordance with this Condition 5(k)(iv) the Issuer shall comply with the rules of any stock exchange on which the Notes are for the time being listed or admitted to trading.? 145 ?Notwithstanding any other provision of this Condition 5(k)(iv) no Successor Rate or Alternative Rate will be adopted nor will the applicable Adjustment Spread be applied nor will any Benchmark Amendments be made if and to the extent that in the determination of the Issuer the same could reasonably be expected to prejudice the qualification of the Dated Subordinated Notes as Tier 2 Capital Instruments and/or the Notes as eligible liabilities or loss absorbing capacity instruments for the purposes of the Banking Capital Regulations and/or any applicable Loss Absorbing Capacity Rules.(v) Notices: Any Successor Rate Alternative Rate Adjustment Spread and the specific terms of any Benchmark Amendments determined under this Condition 5(k) will be notified promptly by the Issuer to the Trustee the Calculation Agent the Paying Agents and in accordance with Condition 17 the Noteholders or the Couponholders.Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments if any.No later than notifying the Trustee of the same the Issuer shall deliver to the Trustee a certificate signed by two Authorised Signatories of the Issuer: (A) confirming (I) that a Benchmark Event has occurred (II) the Successor Rate or as the case may be the Alternative Rate (if applicable) (III) the applicable Adjustment Spread (if any) and (IV) the specific terms of the Benchmark Amendments (if any) in each case as determined in accordance with the provisions of this Condition 5(k); and (B) certifying that the Benchmark Amendments (if any) are necessary to ensure the proper operation of such Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread (if any).The Trustee shall be entitled to rely on such certificate (without liability to any person) as sufficient evidence thereof. The Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark Amendments (if any) specified in such certificate will (in the absence of manifest error or bad faith in the determination of the Successor Rate Alternative Rate the Adjustment Spread or the Benchmark Amendments (if any) and without prejudice to the Trustee’s ability to rely on such certificate as aforesaid) be binding on the Issuer the Trustee the Calculation Agent the Paying Agents the Noteholders and Couponholders.(vi) Survival of Original Reference Rate: Without prejudice to the obligations of the Issuer under Conditions 5(k)(i) 5(k)(ii) 5(k)(iii) and 5(k)(iv) the Original Reference Rate and the fallback provisions provided for in Condition 5(b)(iii)(B) as applicable will continue to apply unless and until a Benchmark Event has occurred.(vii) Definitions: As used in this Condition 5(k): “Adjustment Spread” means either (A) a spread (which may be positive negative or zero) or (B) a formula or methodology for calculating a spread in each case to be applied to the Successor Rate or the Alternative Rate (as the case may be) and is the spread formula or methodology which: (i) in the case of a Successor Rate is formally recommended in relation to the replacement of the Original Reference Rate with the Successor Rate by any Relevant Nominating Body; or ? 146 ?(ii) (if no such recommendation as referred to in (i) above of this definition has been made or in the case of an Alternative Rate) the Independent Adviser determines as being customarily applied to the relevant Successor Rate or the Alternative Rate (as the case may be) in international debt capital markets transactions to produce an industry-accepted replacement rate for the Original Reference Rate; or (iii) (if the Independent Adviser determines that no such spread as referred to in (ii) above of this definition is customarily applied) the Independent Adviser (in consultation with the Issuer) determines and which is recognised or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate where such rate has been replaced by the Successor Rate or the Alternative Rate (as the case may be); “Alternative Rate” means an alternative benchmark or screen rate which the Independent Adviser determines in accordance with Condition 5(k)(ii) as being customarily applied in market usage in the international debt capital markets transactions for the purposes of determining rates of interest (or the relevant component part thereof) in the same Specified Currency as the Notes; “Authorised Signatory” has the meaning given to it in the Trust Deed; “Benchmark Amendments” has the meaning given to it in Condition 5(k)(iv); “Benchmark Event” means: (i) the Original Reference Rate ceasing to be published for a period of at least five Business Days or ceasing to exist; or (ii) a public statement by the administrator of the Original Reference Rate that it has ceased or that it will cease publishing the Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of the Original Reference Rate) and such cessation is reasonably expected by the Issuer to occur prior to the Maturity Date; or (iii) a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate has been or will be permanently or indefinitely discontinued and such discontinuation is reasonably expected by the Issuer to occur prior to the Maturity Date; or (iv) a public statement by the supervisor of the administrator of the Original Reference Rate as a consequence of which the Original Reference Rate will be prohibited from being used either generally or in respect of the Notes and such prohibition is reasonably expected by the Issuer to occur prior to the Maturity Date; (v) a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate is or will be (or is or will be deemed by such supervisor to be) no longer representative of its relevant underlying market; or (vi) it has become unlawful for any Paying Agent the Calculation Agent the Issuer or other party to calculate any payments due to be made to any Noteholder or Couponholder using the Original Reference Rate ? 147 ?provided that the Benchmark Event shall be deemed to occur (a) in the case of subparagraphs (ii) and (iii) above on the date of the cessation of publication of the Original Reference Rate or the discontinuation of the Original Reference Rate as the case may be (b) in the case of sub-paragraph (iv) above on the date of the prohibition or restriction of use of the Original Reference Rate and (c) in the case of sub-paragraph (v) above on the date with effect from which the Original Reference Rate will no longer be (or will be deemed by the relevant supervisor to no longer be) representative of its relevant underlying market and which is specified in the relevant public statement and in each case not the date of the relevant public statement; “Independent Adviser” means an independent financial institution of international or national repute or an independent financial adviser with appropriate expertise appointed by the Issuer under Condition 5(k)(i); “Original Reference Rate” means the originally-specified benchmark or screen rate (as applicable) used to determine the Rate of Interest (or any component part thereof) on the Notes; “Relevant Nominating Body” means in respect of a benchmark or screen rate (as applicable): (i) the central bank for the currency to which the benchmark or screen rate (as applicable) relates or any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable); or (ii) any working group or committee sponsored by chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which the benchmark or screen rate (as applicable) relates (b) any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable) (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof; and “Successor Rate” means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body.(l) Benchmark Replacement (SOFR): The following provisions shall apply if Benchmark Event (SOFR) is specified as applicable in the relevant Pricing Supplement: (i) Benchmark Replacement If the Issuer or its designee determines on or prior to the relevant Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the-then current Benchmark the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Notes in respect of all determinations on such date and for all determinations on all subsequent dates. In connection with the implementation of a Benchmark Replacement the Issuer will have the right to make Benchmark Replacement Conforming Changes from time to time without any requirement for the consent or approval of the Noteholders.(ii) Benchmark Replacement Conforming Changes In connection with the implementation of a Benchmark Replacement the Issuer or its designee will have the right to make Benchmark Replacement Conforming Changes from time to time. For the avoidance of doubt the Trustee and any of the Agents shall ? 148 ?at the request and expense of the Issuer effect such consequential amendments to the Trust Deed the Agency Agreement and these Conditions as may be required to give effect to this Condition 5(l). Noteholders’ consent shall not be required in connection with effecting any such changes including the execution of any documents or any steps to be taken by the Trustee or any of the Agents (if required). Further none of the Trustee or the Agents shall be responsible or liable for any determinations decisions or elections made by the Issuer or its designee with respect to any Benchmark Replacement or any other changes and shall be entitled to accept and rely conclusively on any certifications provided to each of them in this regard.(iii) Decisions and Determinations Any determination decision or election that may be made by the Issuer or its designee pursuant to this Condition 5(l) including any determination with respect to a tenor rate or adjustment or of the occurrence or non-occurrence of an event circumstance or date and any decision to take or refrain from taking any action or any selection (i) will be conclusive and binding absent manifest error (ii) will be made in the sole discretion of the Issuer or its designee as applicable and (iii) notwithstanding anything to the contrary in the documentation relating to the Notes shall become effective without consent from the holders of the Notes or any other party.(iv) The following defined terms shall have the meanings set out below for purpose of Conditions 5(b)(iii)(C) and 5(l): “Benchmark” means initially the relevant SOFR Benchmark specified in the relevant Pricing Supplement; provided that if the Issuer or its designee determines on or prior to the Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the relevant SOFR Benchmark (including any daily published component used in the calculation thereof) or the then-current Benchmark then “Benchmark” means the applicable Benchmark Replacement; “Benchmark Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof): (1) a public statement or publication of information by or on behalf of the administrator of the Benchmark (or such component) announcing that such administrator has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely provided that at the time of such statement or publication there is no successor administrator that will continue to provide the Benchmark (or such component); or (2) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark (or such component) the central bank for the currency of the Benchmark (or such component) an insolvency official with jurisdiction over the administrator for the Benchmark (or such component) a resolution authority with jurisdiction over the administrator for the Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark which states that the administrator of the Benchmark (or such component) has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely provided that at the time of such statement or publication there is no successor administrator that will continue to provide the Benchmark (or such component); or ? 149 ?(3) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative; “Benchmark Replacement” means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date: (1) the sum of: (a) the alternate reference rate that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof); and (b) the Benchmark Replacement Adjustment; (2) the sum of: (a) the ISDA Fallback Rate; and (b) the Benchmark Replacement Adjustment; or (3) the sum of: (a) the alternate reference rate that has been selected by the Issuer or its designee as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) giving due consideration to any industry-accepted reference rate as a replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) for U.S. dollar-denominated Floating Rate Notes at such time; and (b) the Benchmark Replacement Adjustment; “Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date: (1) the spread adjustment or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement; (2) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate the ISDA Fallback Adjustment; or (3) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Issuer or its designee giving due consideration to any industry-accepted spread adjustment or method for calculating or determining such spread adjustment for the replacement of the then-current Benchmark (including any daily published component used in the calculation thereof) with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated Floating Rate Notes at such time; ? 150 ?“Benchmark Replacement Conforming Changes” means with respect to any Benchmark Replacement any technical administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of interest rounding of amounts or tenors and other administrative matters) that the Issuer or its designee decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or if the Issuer or its designee decides that adoption of any portion of such market practice is not administratively feasible or if the Issuer or its designee determines that no market practice for use of the Benchmark Replacement exists in such other manner as the Issuer or its designee determines is reasonably necessary); “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof): (1) in the case of sub-paragraph (1) or (2) of the definition of “Benchmark Event” the later of: (a) the date of the public statement or publication of information referenced therein; and (b) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark (or such component); or (2) in the case of sub-paragraph (3) of the definition of “Benchmark Event” the date of the public statement or publication of information referenced therein.For the avoidance of doubt if the event giving rise to the Benchmark Replacement Date occurs on the same day as but earlier than the Reference Time in respect of any determination the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination; “designee” means a designee as selected and separately appointed by the Issuer in writing; “ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association Inc. and as amended and updated or (if specified in applicable Pricing Supplement) the 2021 Definitions published by the International Swaps and Derivatives Association Inc. or any successor thereto as amended or supplemented from time to time or any successor definitional booklet for interest rate derivatives published from time to time as at the Issue Date of the first Tranche of the Notes unless otherwise specified hereon.“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark; “ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark (including any daily published component used in the calculation thereof) for the applicable tenor excluding the applicable ISDA Fallback Adjustment; ? 151 ?“Reference Time” with respect to any determination of the Benchmark means (1) if the Benchmark is the SOFR Benchmark the SOFR Determination Time (where Simple SOFR Average or Compounded SOFR Average is specified in the relevant Pricing Supplement) or SOFR Index Determination Time (where SOFR Index Average is specified in the relevant Pricing Supplement); or (2) if the Benchmark is not the SOFR Benchmark the time determined by the Issuer or its designee after giving effect to the Benchmark Replacement Conforming Changes; “Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto; and “Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.Notwithstanding any other provision of this Condition 5(l) no alternative reference rate will be adopted and no other amendments to the terms of any Subordinated Notes will be made pursuant to this Condition 5(l) if and to the extent that in the determination of the Issuer the same could reasonably be expected to prejudice the qualification of any of the Subordinated Notes under the Capital Regulations.(m) Definitions: In these Conditions unless the context otherwise requires the following defined terms shall have the meanings set out below: “Business Day” means: (i) in the case of Notes denominated in a currency other than Euro and Renminbi a day (other than a Saturday Sunday or public holiday) on which commercial banks and foreign exchange markets settle payments in the principal financial centre for such currency; (ii) in the case of Notes denominated in Euro a day on which the TARGET System is operating (a “TARGET Business Day”) and a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments of Euro in Luxembourg; (iii) in the case of Notes denominated in Renminbi a day (other than a Saturday Sunday or public holiday) on which commercial banks in Hong Kong are generally open for business and settlement of Renminbi payments in Hong Kong; and/or (iv) in the case of Notes denominated in a currency and/or one or more Financial Centres a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in such currency in the Financial Centre(s) or if no currency is indicated generally in each of the Financial Centres; “CNY” or “Renminbi” means the lawful currency of the PRC; “Day Count Fraction” means in respect of the calculation of an amount of interest on any Note for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting an Interest Period or an Interest Accrual Period the “Calculation Period”): (i) if “Actual/Actual” or “Actual/Actual - ISDA” is specified hereon the actual number of days in the Calculation Period divided by 365 (or if any portion of that Calculation ? 152 ?Period falls in a leap year the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365); (ii) if “Actual/365 (Fixed)” is specified hereon the actual number of days in the Calculation Period divided by 365; (iii) if “Actual/360” is specified hereon the actual number of days in the Calculation Period divided by 360; (iv) if “30/360” “360/360” or “Bond Basis” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 x (Y - Y )] + [30 x (M - M )] + (D - D ) Day Count Fraction = 2 1 2 1 2 1 360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; “M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless such number is 31 in which case D1 will be 30; and “D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless such number is 31 and D1 is greater than 29 in which case D2 will be 30; (v) if “30E/360” or “Eurobond Basis” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 x (Y - Y )] + [30 x (M - M )] + (D - D ) Day Count Fraction = 2 1 2 1 2 1 360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; ? 153 ?“M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless such number is 31 in which case D1 will be 30; and “D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless such number is 31 in which case D2 will be 30; (vi) if “30E/360 (ISDA)” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 x (Y - Y )] + [30 x (M - M Day Count Fraction = 2 1 2 1 )] + (D2 - D1) 360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; “M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless (i) that day is the last day of February or (ii) such number is 31 in which case D1 will be 30; and “D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless (i) that day is the last day of February but not the Maturity Date or (ii) such number is 31 in which case D2 will be 30; (vii) if “Actual/Actual-ICMA” is specified hereon: (a) if the Calculation Period is equal to or shorter than the Determination Period during which it falls the number of days in the Calculation Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Periods normally ending in any year; and (b) if the Calculation Period is longer than one Determination Period the sum of: (x) the number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year; and (y) the number of days in such Calculation Period falling in the next Determination Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year ? 154 ?where: “Determination Date” means the date(s) specified as such hereon or if none is so specified the Interest Payment Date(s); and “Determination Period” means the period from and including a Determination Date in any year to but excluding the next Determination Date; “Euro” means the currency of the member states of the European Union that adopt the single currency in accordance with the treaty establishing the European Community as amended from time to time; “Euro-zone” means the region comprised of member states of the European Union that adopt the single currency in accordance with the treaty establishing the European Community as amended; “HKD” or “Hong Kong dollars” means the lawful currency of Hong Kong; “Interest Accrual Period” means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Period End Date and each successive period beginning on (and including) an Interest Period End Date and ending on (but excluding) the next succeeding Interest Period End Date; “Interest Amount” means: (i) in respect of an Interest Accrual Period the amount of interest payable per Calculation Amount for that Interest Accrual Period and which in the case of Fixed Rate Notes and unless otherwise specified hereon shall mean the Fixed Coupon Amount or Broken Amount specified hereon as being payable on the Interest Payment Date ending the Interest Period of which such Interest Accrual Period forms part; and (ii) in respect of any other period the amount of interest payable per Calculation Amount for that period; “Interest Commencement Date” means the Issue Date or such other date as may be specified hereon; “Interest Determination Date” means with respect to a Rate of Interest and Interest Accrual Period the date specified as such hereon or if none is so specified: (i) the first day of such Interest Accrual Period if the Specified Currency is Sterling or Hong Kong dollars or Renminbi other than where the Specified Currency is Renminbi and the Reference Rate is CNH HIBOR; or (ii) the day falling two Business Days in London prior to the first day of such Interest Accrual Period if the Specified Currency is neither Sterling nor Hong Kong dollars nor Euro nor Renminbi; or (iii) the day falling two TARGET Business Days prior to the first day of such Interest Accrual Period if the Specified Currency is Euro; or (iv) the day falling two Business Days in Hong Kong prior to the first day of such Interest Accrual Period if the Specified Currency is Renminbi and the Reference Rate is CNH HIBOR; ? 155 ?“Interest Period” means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date; “Interest Period End Date” means each Interest Payment Date unless otherwise specified hereon; “ISDA Definitions” means the 2006 ISDA Definitions as published by the International Swaps and Derivatives Association Inc. (as may be updated amended or supplemented from time to time) unless otherwise specified hereon; “Rate of Interest” means the rate of interest payable from time to time in respect of this Note and that is either specified or calculated in accordance with the provisions hereon; “Reference Banks” means: (i) in the case of a determination of LIBOR the principal London office of four major banks in the London interbank market; (ii) in the case of a determination of EURIBOR the principal Euro-zone office of four major banks in the Euro-zone interbank market; (iii) in the case of a determination of HIBOR the principal Hong Kong office of four major banks in the Hong Kong interbank market; and (iv) in the case of a determination of CNH HIBOR the principal Hong Kong office of four major banks dealing in Chinese Yuan in the Hong Kong interbank market in each case selected by the Issuer or as specified hereon; “Reference Rate” means the rate specified as such hereon or such other page section caption column or other part as may replace it on that information service or such other information service in each case as may be nominated by the person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate; “Relevant Screen Page” means such page section caption column or other part of a particular information service as may be specified hereon; “Specified Currency” means the currency specified as such hereon or if none is specified the currency in which the Notes are denominated; “Sterling” means the lawful currency of the United Kingdom; and “TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express Transfer System which was launched on 19 November 2007 or any successor thereto.(n) Calculation Agent: The Issuer shall procure that there shall at all times be one or more Calculation Agents if provision is made for them hereon and for so long as any Note is outstanding (as defined in the Trust Deed). Where more than one Calculation Agent is appointed in respect of the Notes references in these Conditions to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under the ? 156 ?Conditions. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Rate of Interest for an Interest Accrual Period or to calculate any Interest Amount Instalment Amount Final Redemption Amount Early Redemption Amount or Optional Redemption Amount as the case may be or to comply with any other requirement the Issuer shall (with the prior approval of the Trustee) appoint a leading bank or financial institution engaged in the interbank market (or if appropriate money swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid. 6 Redemption Purchase and Options (a) Redemption by Instalments and Final Redemption: (i) Unless previously redeemed purchased and cancelled as provided in this Condition 6 each Note that provides for Instalment Dates and Instalment Amounts shall be partially redeemed on each Instalment Date at the related Instalment Amount specified hereon. The outstanding principal amount of each such Note shall be reduced by the Instalment Amount (or if such Instalment Amount is calculated by reference to a proportion of the principal amount of such Note such proportion) for all purposes with effect from the related Instalment Date unless payment of the Instalment Amount is improperly withheld or refused in which case such amount shall remain outstanding until the Relevant Date relating to such Instalment Amount.(ii) Unless otherwise provided hereon and unless previously redeemed purchased and cancelled as provided below each Note shall be finally redeemed on the Maturity Date specified hereon at its Final Redemption Amount (which unless otherwise provided hereon is its principal amount) or in the case of a Note falling within paragraph (i) above its final Instalment Amount.(iii) The specified Maturity Date in respect of each Series of Non-Preferred Loss Absorbing Notes must fall on a date that is at least 12 months following the relevant Issue Date.(iv) The specified Maturity Date in respect of each Series of Dated Subordinated Notes must fall on a date that is at least five years following the relevant Issue Date.Any redemption of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes by the Issuer prior to the Maturity Date is subject to the Issuer obtaining the prior written consent of the Monetary Authority to the extent such consent is required under the Banking Capital Regulations or Loss Absorbing Capacity Rules.(b) Early Redemption: (i) Zero Coupon Notes: (A) The Early Redemption Amount payable in respect of any Zero Coupon Note the Early Redemption Amount of which is not linked to an index and/or a formula upon redemption of such Note pursuant to Condition 6(c) or upon it becoming due and payable as provided in Condition 11 shall be the Amortised Face Amount (calculated as provided below) of such Note unless otherwise specified hereon.? 157 ?(B) Subject to the provisions of sub-paragraph (C) below of this Condition 6(b)(i) the Amortised Face Amount of any such Note shall be the scheduled Final Redemption Amount of such Note on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which if none is shown hereon shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Notes if they were discounted back to their issue price on the Issue Date) compounded annually. (C) If the Early Redemption Amount payable in respect of any such Note upon its redemption pursuant to Condition 6(c) or upon it becoming due and payable as provided in Condition 11 is not paid when due the Early Redemption Amount due and payable in respect of such Note shall be the Amortised Face Amount of such Note as defined in sub-paragraph (B) above of this Condition 6(b) except that such sub-paragraph shall have effect as though the date on which the Note becomes due and payable were the Relevant Date. The calculation of the Amortised Face Amount in accordance with this Condition 6(b)(i) shall continue to be made (both before and after judgment) until the Relevant Date unless the Relevant Date falls on or after the Maturity Date in which case the amount due and payable shall be the scheduled Final Redemption Amount of such Note on the Maturity Date together with any interest that may accrue in accordance with Condition 5(c).Where such calculation is to be made for a period of less than one year it shall be made on the basis of the Day Count Fraction shown hereon.(ii) Other Notes: The Early Redemption Amount payable in respect of any Note (other than Notes described in Condition 6(b)(i)) upon redemption of such Note pursuant to Condition 6(c) or upon it becoming due and payable as provided in Condition 11 shall be the Final Redemption Amount unless otherwise specified hereon.(c) Redemption for Taxation: (i) Withholding Tax in respect of any Notes: Subject to Condition 6(l) the Notes may be redeemed at the option of the Issuer in whole but not in part on any Interest Payment Date (if such Note is at the relevant time a Floating Rate Note or an Index Linked Note) or if so specified thereon at any time (if such Note is at the relevant time neither a Floating Rate Note nor an Index Linked Note) on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable) subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 at their Early Redemption Amount (as described in Condition 6(b)) together with interest accrued but unpaid (if any) to (but excluding) the date fixed for redemption and any Additional Amounts (as defined in Condition 9) then due or which will become due on or before the date fixed for redemption if: (A) the Issuer has or will become obliged to pay Additional Amounts as a result of any change in or amendment to the laws or regulations of a Relevant Taxing Jurisdiction (as defined in Condition 9) or in any such case any political subdivision or any authority thereof or therein having power to tax or any change in the official application or interpretation of such laws or regulations which change or amendment is announced and becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes; and (B) such obligation cannot be avoided by the Issuer taking reasonable measures available to it ? 158 ?provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such Additional Amounts or give effect to such treatment as the case may be were a payment in respect of the Notes then due and in the case of Non-Preferred Loss Absorbing Notes and of Dated Subordinated Notes no such notice of redemption shall be given prior to the compliance with the requirements in Condition 6(l).Prior to giving any notice of redemption pursuant to this Condition 6(c)(i) the Issuer shall deliver to the Trustee (I) a certificate signed by two Authorised Signatories of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the relevant conditions have been satisfied; and (II) an opinion of independent legal or tax advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such Additional Amounts as a result of such change or amendment and the Trustee shall be entitled without further enquiry to accept such certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set out in paragraphs (A) and (B) above of this Condition 6(c)(i) in which event the same shall be conclusive and binding on Noteholders and Couponholders.(ii) Tax Deductibility in respect of Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes: Subject to Condition 6(l) any Non-Preferred Loss Absorbing Note or Dated Subordinated Note may be redeemed at the option of the Issuer in whole but not in part on any Interest Payment Date (if such Non-Preferred Loss Absorbing Note or Dated Subordinated Note is at the relevant time a Floating Rate Note) or at any time (if such Non-Preferred Loss Absorbing Note or Dated Subordinated Note is at the relevant time not a Floating Rate Note) on giving not less than 30 but not more than 60 days’ notice to the Noteholders (which notice shall be irrevocable) at subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 their Early Redemption Amount (as described in Condition 6(b)) or if the Early Redemption Amount is not specified hereon at their principal amount in each case together with interest accrued but unpaid (if any) to (but excluding) the date fixed for redemption and any Additional Amounts then due or which will become due on or before the date fixed for redemption if in respect of payments of interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes the Issuer is no longer or will no longer be entitled to claim a deduction in respect of computing its taxation liabilities in Hong Kong or any political subdivision or any authority thereof or therein having power to tax: (I) as a result of any change in or amendment to the laws or regulations of the Relevant Taxing Jurisdiction or any political subdivision or any authority thereof or therein having power to tax (or any taxing authority of any taxing jurisdiction in which the Issuer is a tax resident) or any change in the official application or interpretation of such laws or regulations which change or amendment is announced and becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes; and (II) the foregoing cannot be avoided by the Issuer taking reasonable measures available to it provided that no such notice of redemption shall be given earlier than (a) if such Non-Preferred Loss Absorbing Note or Dated Subordinated Note is a Floating Rate Note 60 days or (b) if such Non-Preferred Loss Absorbing Note or Dated ? 159 ?Subordinated Note is not a Floating Rate Note 90 days in each case prior to the earliest date on which the Issuer would cease to be able to claim a tax deduction in respect of the interest payable on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes then due.Prior to giving any notice of redemption pursuant to this Condition 6(c)(ii) the Issuer shall deliver to the Trustee: (x) a certificate signed by two Authorised Signatories of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the relevant conditions have been satisfied and an opinion of independent legal or tax advisers of recognised standing to the effect that the Issuer has or will cease to be able to claim a tax deduction in respect of the interest payable on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes; and (y) a copy of the written consent of the Monetary Authority as referred to in Condition 6(l) and the Trustee shall be entitled without further enquiry and without liability to accept such certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set out above in this Condition 6(c)(ii) in which event the same shall be conclusive and binding on the Noteholders.Any redemption of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes by the Issuer pursuant to this Condition 6(c)(ii) is subject to the Issuer obtaining the prior written consent of the Monetary Authority to the extent such consent is required under the Banking Capital Regulations or Loss Absorbing Capacity Rules.(d) Redemption at the Option of the Issuer: Subject to Condition 6(l) if Call Option is specified hereon the Issuer may on giving not less than 15 nor more than 30 days’ irrevocable notice to the Noteholders (or such other notice period as may be specified hereon) redeem all or if so provided some of the Notes on the date(s) specified hereon (the “Optional Redemption Date”) provided that in the case of Dated Subordinated Notes no such notice of redemption shall be given prior to the compliance with Condition 6(l). Any such redemption of Notes shall be at subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 the Optional Redemption Amount specified hereon together with interest accrued but unpaid (if any) to (but excluding) the date fixed for redemption. Any such redemption or exercise must relate to Notes of a principal amount at least equal to the Minimum Redemption Amount to be redeemed specified hereon and no greater than the Maximum Redemption Amount to be redeemed specified hereon.All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Condition 6(d).In the case of a partial redemption of Notes the notice to Noteholders shall also contain the certificate numbers of the Bearer Notes or in the case of Registered Notes shall specify the principal amount of Registered Notes drawn and the holder(s) of such Registered Notes to be redeemed which shall have been drawn in such place and in such manner as may be fair and reasonable in the circumstances taking account of prevailing market practices subject to compliance with any applicable laws and stock exchange or other relevant authority requirements.? 160 ?Any redemption of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes by the Issuer pursuant to this Condition 6(d) is subject to the Issuer obtaining the prior written consent of the Monetary Authority to the extent such consent is required under the Banking Capital Regulations or Loss Absorbing Capacity Rules.For the avoidance of doubt the Issuer does not provide any undertaking that it will exercise its option to redeem any Notes pursuant to this Condition 6(d).(e) Redemption at the Option of the Noteholders other than holders of Dated Subordinated Notes: If Put Option is specified hereon the Issuer shall at the option of the holder of any such Senior (Preferred) Note upon the holder of such Senior (Preferred) Note giving not less than 15 nor more than 30 days’ notice to the Issuer (or such other notice period as may be specified hereon) redeem such Note on the Optional Redemption Date(s) at its Optional Redemption Amount together with interest accrued but unpaid (if any) to (but excluding) the date fixed for redemption provided that in the case of Non-Preferred Loss Absorbing Notes the earliest date on which such Note may be redeemed pursuant to this Condition 6(e) is 12 months after the relevant Issue Date.To exercise such option the holder must deposit (in the case of Bearer Notes) such Senior (Preferred) Note (together with all unmatured Receipts and Coupons and unexchanged Talons) with any Paying Agent or (in the case of Registered Notes) the Certificate representing such Senior (Preferred) Note(s) with the Registrar or any Transfer Agent at itsspecified office together with a duly completed option exercise notice (an “ExerciseNotice”) in the form obtainable from any Paying Agent the Registrar or any Transfer Agent (as applicable) within the notice period. No such Senior (Preferred) Note or Certificate so deposited and option exercised may be withdrawn (except as provided in the Agency Agreement) without the prior written consent of the Issuer.Unless otherwise provided in these Conditions or the applicable Pricing Supplement the Non-Preferred Loss Absorbing Notes and the Dated Subordinated Notes are not redeemable prior to the Maturity Date at the option of the Noteholders.(f) Redemption for Regulatory Reasons in respect of Dated Subordinated Notes: Subject to Condition 6(l) following the occurrence of a Capital Event the Issuer may having given not less than 30 but not more than 60 days’ prior written notice to the Noteholders in accordance with Condition 17 (which notice shall be irrevocable) redeem in accordance with these Conditions on any Interest Payment Date (if the relevant Dated Subordinated Note is at the relevant time a Floating Rate Note) or at any time (if the relevant Dated Subordinated Note is at the relevant time not a Floating Rate Note) all but not some only of the relevant Dated Subordinated Notes at subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 their Early Redemption Amount or if no Early Redemption Amount is specified hereon at their principal amount in each case together with interest accrued but unpaid (if any) to (but excluding) the date of redemption in accordance with these Conditions and provided that no such notice of redemption shall be given prior to the compliance with Condition 6(l).For the purposes of this Condition 6(f) a “Capital Event” occurs if immediately before the Issuer gives the notice of redemption referred in this Condition 6(f) the Dated Subordinated Notes after having qualified as such will no longer qualify (in whole but not in part) as Tier 2 capital (or equivalent) of the Issuer (other than non-qualification solely as a result of any discounting or amortisation requirements as to the eligibility of the Notes for such inclusion pursuant to the relevant legislation and supervisory guidance in force from time to time) as a result of a change or amendment in (or any change in the application or official interpretation of) the relevant provisions of the Banking Capital ? 161 ?Regulations or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto. No such notice of redemption shall be given earlier than 90 days prior to the earliest date on which it is determined that a Capital Event has occurred.Prior to the publication of any notice of redemption pursuant to this Condition 6(f) the Issuer shall deliver to the Trustee: (x) a certificate signed by two Authorised Signatories of the Issuer stating that a Capital Event has occurred; and (y) a copy of the written consent of the Monetary Authority and the Trustee shall accept such certificate without any further inquiry as conclusive evidence of the satisfaction of the conditions set out above without liability to any person in which event it shall be conclusive and binding on the Noteholders. Upon expiry of such notice the Issuer shall redeem the Dated Subordinated Notes in accordance with this Condition 6(f).Any redemption of Dated Subordinated Notes by the Issuer pursuant to this Condition 6(f) is subject to the Issuer obtaining the prior written consent of the Monetary Authority to the extent such consent is required under the Banking Capital Regulations or Loss Absorbing Capacity Rules.(g) Redemption due to Loss Absorption Disqualification Event: Subject to Condition 6(l) following the occurrence of a Loss Absorption Disqualification Event the Issuer may having given not less than 30 but not more than 60 days’ prior written notice to the Noteholders in accordance with Condition 17 (which notice shall be irrevocable) redeem in accordance with these Conditions on any Interest Payment Date (if the relevant Note is at the relevant time a Floating Rate Note) or at any time (if the relevant Note is at the relevant time not a Floating Rate Note) all but not some only of the relevant Notes at subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 their Early Redemption Amount or if no Early Redemption Amount is specified hereon at their principal amount together with interest accrued but unpaid (if any) to (but excluding) the date of redemption in accordance with these Conditions and provided that in the case of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes no such notice of redemption shall be given prior to the compliance with Condition 6(l). For the purposes of this Condition 6(g) a “Loss Absorption Disqualification Event” occurs if immediately before the Issuer gives the notice of redemption referred in this Condition 6(g) the Notes after having qualified as such will no longer qualify (in whole but not in part) as a Loss Absorbing Instrument (or equivalent) of the Issuer (other than non-qualification solely as a result of any discounting or amortisation requirements as to the eligibility of the Notes for such inclusion pursuant to the relevant legislation and supervisory guidance in force from time to time) pursuant to the Loss Absorbing Capacity Rules as a result of a change or amendment in (or any change in the application or official interpretation of) the relevant provisions of the Loss Absorbing Capacity Rules or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto. No such notice of redemption shall be given earlier than 90 days prior to the earliest date on which it is determined that a Loss Absorption Disqualification Event has occurred.? 162 ?Prior to the publication of any notice of redemption pursuant to this Condition 6(g) the Issuer shall deliver to the Trustee: (x) a certificate signed by two Authorised Signatories of the Issuer stating that a Loss Absorption Disqualification Event has occurred; and (y) a copy of the written consent of the Monetary Authority and the Trustee shall accept such certificate without any further inquiry as conclusive evidence of the satisfaction of the conditions set out above without liability to any person in which event it shall be conclusive and binding on the Noteholders. Upon expiry of such notice the Issuer shall redeem the Notes in accordance with this Condition 6(f).Any redemption of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes by the Issuer pursuant to Condition 6(g) is subject to the Issuer obtaining the prior written consent of the Monetary Authority to the extent such consent is required under the Banking Capital Regulations or Loss Absorbing Capacity Rules.(h) Partly Paid Notes: Partly Paid Notes will be redeemed whether at maturity early redemption or otherwise in accordance with the provisions of this Condition 6 and the provisions specified hereon.(i) Purchases: The Issuer and any of its Subsidiaries may at any time purchase Notes (provided that all unmatured Receipts and Coupons and unexchanged Talons relating thereto are attached thereto or surrendered therewith) in the open market or otherwise at any price in accordance with all relevant laws and regulations and for so long as the Notes are listed the requirements of the relevant stock exchange and provided that in the case of Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes no such purchase shall be made prior to the compliance with Condition 6(l). The Notes so purchased while held by or on behalf of the Issuer or any such Subsidiary shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for among other things the purposes of calculating the quorums at meetings of Noteholders or the purposes of Condition 12(a). The Issuer or any such Subsidiary may at its option retain such purchased Notes for its own account and/or resell or cancel or otherwise deal with them at its discretion.(j) Cancellation: All Notes purchased by or on behalf of the Issuer or any of its Subsidiaries may be surrendered for cancellation in the case of Bearer Notes by surrendering each such Note together with all unmatured Receipts and Coupons and all unexchanged Talons to the Issuing and Paying Agent and in the case of Registered Notes by surrendering the Certificate representing such Notes to the Registrar and in each case if so surrendered shall together with all Notes redeemed by the Issuer be cancelled forthwith (together with all unmatured Receipts and Coupons and unexchanged Talons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold and the obligations of the Issuer in respect of any such Notes shall be discharged.Any Non-Preferred Loss Absorbing Note or Dated Subordinated Note that is written-off in full in accordance with Condition 7 shall be automatically cancelled.(k) No Obligation to Monitor: The Trustee shall not be under any duty to monitor whether any event or circumstance has happened or exists within this Condition 6 or Condition 7 and will not be responsible or liable to the Noteholders the Receiptholders or the Couponholders or any other person for any loss arising from any failure by it to do so.Unless and until the Trustee has express notice in writing of the occurrence of any event or circumstance within this Condition 6 or Condition 7 it shall be entitled to assume that no such event or circumstance has happened or exists.? 163 ?(l) Conditions for Redemption or Purchase of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes: Notwithstanding any other provision in these Conditions the Issuer shall not redeem any of the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes (other than pursuant to Conditions 7(a) or 11) and neither the Issuer nor any of its Subsidiaries shall purchase any of the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes unless the prior written consent of the Monetary Authority thereto shall have been obtained to the extent such consent is required under the Banking Capital Regulations and/or the Loss Absorbing Capacity Rules or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto. This Condition 6(l) shall not apply to the Issuer or any of its Subsidiaries holding any Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes in a purely nominee custodian or trustee capacity. 7 Non-Viability Loss Absorption and Hong Kong Resolution Authority Power The ability to operationally effect any Write-off of any Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes or any cancellation modification conversion or change in form of Non-Preferred Loss Absorbing Notes or of Dated Subordinated Notes as a result of the exercise of the Hong Kong Resolution Authority Power under this Condition 7 with respect to the clearing and/or settlement of any Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes in or through the relevant clearing system(s) is subject to the availability of procedures to effect any such Write-off or such cancellation modification conversion or change in form in the relevant clearing system(s). However any Write-off of any Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes or the giving of effect of the Hong Kong Resolution Authority Power with respect to the Issuer under this Condition 7 will be effective upon the exercise of any Hong Kong Resolution Authority Power (or as may otherwise be notified in writing to Noteholders the Trustee and Agents by the Issuer) notwithstanding any inability to operationally effect any such Write-off or any cancellation modification conversion or change in form as a result of the exercise of the Hong Kong Resolution Authority Power under this Condition 7 in the relevant clearing system(s).The Trust Deed and the Agency Agreement may contain certain protections and disclaimers as applicable to the Trustee and Agents in relation to this Condition 7. Each Noteholder shall be deemed to have authorised directed and requested the Trustee the Registrar and the other Agents as the case may be to take any and all necessary action to give effect to any Write-off cancellation notification conversion or change in form following the occurrence of the Non-Viability Event and/or exercise of any Hong Kong Resolution Authority Power.(a) Non-Viability Loss Absorption upon a Non-Viability Event in respect of Dated Subordinated Notes: (i) If “Write-off” is specified as being applicable for the Loss Absorption option in the applicable Pricing Supplement for any Dated Subordinated Notes and a Non-Viability Event occurs and is continuing the Issuer shall on or prior to the provision of a Non-Viability Event Notice irrevocably (without the need for the consent of the Trustee or the holders of any Dated Subordinated Notes) reduce the then principal amount of and cancel any accrued but unpaid interest in respect of each Dated Subordinated Note (in each case in whole or in part) by an amount equal to the Non-Viability Event Write-off Amount per Dated Subordinated Note (such reduction and cancellation and the reduction and cancellation or conversion of any other Subordinated Capital Instruments so reduced and cancelled or converted upon the occurrence of a Non-Viability Event where applicable being referred to herein as the “Write-off” and “Written-off” shall be construed accordingly).? 164 ?(ii) Concurrently with the giving of a Non-Viability Event Notice the Issuer shall procure unless otherwise directed by the Monetary Authority that: (A) a similar notice be given in respect of other Parity Capital Instruments in accordance with their terms; and (B) concurrently and rateably with the Write-off of the Dated Subordinated Notes the aggregate principal amount of such other Parity Capital Instruments is subject to a Write-off on a pro rata basis with the Dated Subordinated Notes.(iii) Any Write-off pursuant to this provision will not constitute a Default under the Dated Subordinated Notes.(iv) Any Dated Subordinated Note may be subject to one or more Write-offs in part (as the case may be) except where such Dated Subordinated Note has been Written-off in its entirety.(v) Once the principal amount of and any accrued but unpaid interest under the Dated Subordinated Notes has been Written-off the relevant amount(s) Written-off will not be restored in any circumstances including where the relevant Non-Viability Event ceases to continue. No Noteholder may exercise claim or plead any right to any amount that has been Written-off and each Noteholder shall by virtue of its holding of any Dated Subordinated Notes be deemed to have waived all such rights to such amount that has been Written-off.(vi) Any reference in these Conditions to principal in respect of the Dated Subordinated Notes shall refer to the principal amount of the Dated Subordinated Note(s) reduced by any applicable Write-off(s).(vii) Definitions: In these Conditions: “Non-Viability Event” means the earlier of: (A) the Monetary Authority notifying the Issuer in writing that the Monetary Authority is of the opinion that a Write-off or conversion is necessary without which the Issuer would become non-viable; and (B) the Monetary Authority notifying the Issuer in writing that a decision has been made by the government body a government officer or other relevant regulatory body with the authority to make such a decision that a public-sector injection of capital or equivalent support is necessary without which the Issuer would become non-viable; “Non-Viability Event Notice” means the notice which shall be given by the Issuer not more than two Hong Kong Business Days after the occurrence of a Non-Viability Event to the Noteholders in accordance with Condition 17 and to the Trustee and the Paying Agents in writing and which shall state: (A) in reasonable detail the nature of the relevant Non-Viability Event; and (B) the Non-Viability Event Write-off Amount for: (x) each Dated Subordinated Note; and ? 165 ?(y) each other Subordinated Capital Instrument in accordance with its terms; “Non-Viability Event Write-off Amount” means the amount of interest and/or principal to be Written-off as the Monetary Authority may direct or in the absence of such a direction as the Issuer shall (in consultation with the Monetary Authority) determine to be necessary to satisfy the Monetary Authority that the Non-Viability Event will cease to continue. For the avoidance of doubt: (A) the full amount of the Dated Subordinated Notes will be Written-off in full in the event that the amount Written-off is not sufficient for the Non-Viability Event to cease to continue; and (B) in the case of an event falling within paragraph (B) of the definition of Non-Viability Event the Write-off will be effected in full before any public-sector injection of capital or equivalent support.Further the Non-Viability Event Write-off Amount in respect of each Dated Subordinated Note will be calculated based on a percentage of the principal amount of that Dated Subordinated Note; “Parity Capital Instrument” means any Parity Obligation which contains provisions relating to a write-down or conversion into ordinary shares in respect of its principal amount on the occurrence or as a result of a Non-Viability Event and in respect of which the conditions (if any) to the operation of such provisions are (or with the giving of any certificate or notice which is capable of being given by the Issuer would be) satisfied; and “Subordinated Capital Instrument” means any Junior Obligation or Parity Obligation which contains provisions relating to a write-down or conversion into ordinary shares in respect of its principal amount on the occurrence or as a result of a Non-Viability Event and in respect of which the conditions (if any) to the operation of such provisions are (or with the giving of any certificate or notice which is capable of being given by the Issuer would be) satisfied.(b) Hong Kong Resolution Authority Power in respect of Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes: The Financial Institutions (Resolution) Ordinance (Cap. 628) of Hong Kong as amended or superseded from time to time (the “Ordinance”) became effective on 7 July 2017 and all within scope financial institutions in Hong Kong are subject to the Ordinance.(i) Notwithstanding any other term of the Non-Preferred Loss Absorbing Notes the Dated Subordinated Notes (including without limitation Condition 7(a)) or any other agreement or arrangement each holder of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes and the Trustee shall be subject and shall be deemed to agree be bound by and acknowledge that they are each subject to having the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes (as the case may be) being written off cancelled converted or modified or to having the form of the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes (as the case may be) changed in the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority without prior notice and which may include (without limitation) and result in any of the following or some combination thereof: ? 166 ?(A) the reduction or cancellation of all or a part of the principal amount of or interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes; (B) the conversion of all or a part of the principal amount of or interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes into shares or other securities or other obligations of the Issuer or another person (and the issue to or conferral on the holder of such shares securities or obligations) including by means of an amendment modification or variation of the terms of the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes; and (C) the amendment or alteration of the maturity of the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes or amendment or alteration of the amount of interest payable on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes or the date on which the interest becomes payable including by suspending payment for a temporary period or any other amendment or alteration of these Conditions.(ii) With respect to (A) (B) and (C) above of Condition 7(b)(i) references to principal and interest shall include payments of principal and interest that have become due and payable (including principal that has become due and payable at the Maturity Date) but which have not been paid prior to the exercise of any Hong Kong Resolution Authority Power. The rights of the holders of Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes and the Trustee under the Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and these Conditions are subject to and will be amended and varied if necessary solely to give effect to the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority.(iii) No repayment of the principal amount of the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes or payment of interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes shall become due and payable or be paid after the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes unless at the time that such repayment or payment respectively is scheduled to become due such repayment or payment would be permitted to be made by the Issuer under the laws and regulations applicable to the Issuer and the Group.(iv) Upon the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes the Issuer shall provide a written notice (a “Resolution Notice”) not more than two Business Days after the occurrence of such exercise of the Hong Kong Resolution Authority Power to the Noteholders in accordance with Condition 17 and to the Trustee and the Principal Paying Agent in writing.(v) Neither the reduction or cancellation in part or in full of the principal amount of or interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes the conversion thereof into another security or obligation of the Issuer or another person or any other amendment or alteration of these Conditions or any other modification or change in form of the Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes as a result of the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Issuer nor the exercise of the Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Notes shall constitute a Default under Condition 11.? 167 ?(vi) Definitions: In this Condition 7(b): “Group” means the Issuer and its Subsidiaries.“Hong Kong Resolution Authority Power” means any power which may exist from time to time under the Ordinance relating to financial institutions including licensed banks deposit-taking companies restricted licence banks banking group companies insurance companies and/or investment firms incorporated in or authorised designated recognised or licensed to conduct regulated financial activities in Hong Kong in effect and applicable in Hong Kong to the Issuer or other members of the Group (including for the avoidance of doubt powers under Part 4 and Part 5 of the Ordinance) or any other laws regulations rules or requirements relating thereto as the same may be amended from time to time (whether pursuant to the Ordinance or otherwise) and pursuant to which obligations of a licensed bank deposit-taking company restricted licence bank banking group company insurance company or investment firm or any of its affiliates can be reduced cancelled transferred modified and/or converted into shares or other securities or obligations of the obligor or any other person; and “relevant Hong Kong Resolution Authority” means any authority with the ability to exercise a Hong Kong Resolution Authority Power in relation to the Issuer from time to time.Please see the investment consideration entitled “The operation of the resolution regime inHong Kong may override the contractual terms of the Notes and the Undated CapitalSecurities” in the section headed “Investment Considerations — Considerations Relatingto Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated CapitalSecurities” for further information. 8 Payments and Talons (a) Bearer Notes: Payments of principal and interest in respect of Bearer Notes shall subject as mentioned below be made against presentation and surrender of the relevant Receipts (in the case of payments of Instalment Amounts other than on the due date for redemption and provided that the Receipt is presented for payment together with its relevant Note) Notes (in the case of all other payments of principal and in the case of interest as specified in Condition 8(f)(iv)) or Coupons (in the case of interest save as specified in Condition 8(f)(ii)) as the case may be: (i) in the case of Notes denominated in a currency other than Renminbi at the specified office of any Paying Agent outside the United States by transfer to an account denominated in such currency with or at the option of the relevant Agent by a cheque payable in the relevant currency drawn on a Bank; and (ii) in the case of Notes denominated in Renminbi by transfer to a relevant account maintained by or on behalf of the Noteholder. If a holder does not maintain a relevant account in respect of a payment to be made under the Notes the Issuer reserves the right in its sole discretion and upon such terms as it may determine to make arrangements to pay such amount to that holder by another means provided that the Issuer shall not have any obligation to make any such arrangements.? 168 ?In this Condition 8(a): “Bank” means a bank in the principal financial centre for such currency or in the case of Euro in a city in which banks have access to the TARGET System; and “relevant account” means the Renminbi account maintained by or on behalf of the Noteholder with a bank in Hong Kong.Payments of principal and interest in respect of Bearer Notes held in the CMU will be made to the CMU for their distribution to the person(s) for whose account(s) interests in the relevant Bearer Note are credited as being held with the CMU in accordance with the CMU Rules (as defined in the Agency Agreement) at the relevant time and payment made in accordance thereof shall discharge the obligations of the Issuer in respect of that payment.Please see the section entitled “Clearance and Settlement”. Noteholders are required to ensure that they maintain an account or as the case may be a relevant account into which payments of principal and interest in respect of the Bearer Notes are able to be paid by the relevant Paying Agent.(b) Registered Notes: (i) Payments of principal (which for the purposes of this Condition 8(b) shall include final Instalment Amounts but not other Instalment Amounts) in respect of Registered Notes shall be made against presentation and surrender of the relevant Certificates at the specified office of any of the Transfer Agents or of the Registrar and in the manner provided in Condition 8(b)(ii) below.(ii) Interest (which for the purpose of this Condition 8(b) shall include all Instalment Amounts other than final Instalment Amounts) on Registered Notes shall be paid to the person shown on the Register at the close of business: (A) in the case of Notes denominated in a currency other than Renminbi on the 15th day before the due date for payment thereof; and (B) in the case of Notes denominated in Renminbi on the fifth day before the due date for payment. Payments of interest on each Registered Note shall be made: (x) in the case of a currency other than Renminbi in the relevant currency by transfer to an account in the relevant currency maintained by the payee with a Bank; and (y) in the case of Renminbi by transfer to the registered account of the Noteholder. If a holder does not maintain a registered account in respect of a payment to be made under the Notes the Issuer reserves the right in its sole discretion and upon such terms as it may determine to make arrangements to pay such amount to that holder by another means provided that the Issuer shall not have any obligation to make any such arrangements.In this Condition 8(b): “Bank” has the meaning given to it in Condition 8(a); and ? 169 ?“registered account” means the Renminbi account maintained by or on behalf of the Noteholder with a bank in Hong Kong details of which appear on the Register at the close of business on the fifth Business Day before the due date for payment.Payments of principal and interest in respect of Registered Notes held in the CMU will be made to the CMU for their distribution to the person(s) for whose account(s) interests in the relevant Registered Note are credited as being held with the CMU in accordance with the CMU Rules at the relevant time and payment made in accordance thereof shall discharge the obligations of the Issuer in respect of that payment.Please see the section entitled “Clearance and Settlement”. Noteholders are required to ensure that they maintain an account or as the case may be a registered account into which payments of principal and interest in respect of the Registered Notes are able to be paid by the relevant Paying Agent.(c) Payments in the United States: Notwithstanding the foregoing if any Bearer Notes are denominated in U.S. dollars payments in respect thereof may be made at the specified office of any Paying Agent in New York City in the same manner as aforesaid if: (i) the Issuer shall have appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment of the amounts on the Notes in the manner provided above when due; (ii) payment in full of such amounts at all such offices is illegal or effectively precluded by exchange controls or other similar restrictions on payment or receipt of such amounts; and (iii) such payment is then permitted by United States law without involving in the opinion of the Issuer any adverse tax consequence to the Issuer.(d) Payments subject to fiscal laws: Payments will be subject in all cases to: (i) any fiscal or other laws and regulations applicable thereto but without prejudice to the provisions of Condition 9 in the place of payment; and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 as amended (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code any regulations or agreements thereunder any official interpretations thereof or (without prejudice to the provisions of Condition 9) any law implementing an intergovernmental approach thereto.(e) Appointment of Agents: The Issuing and Paying Agent the CMU Lodging and Paying Agent the Paying Agents the Registrar the Transfer Agents and the Calculation Agent initially appointed by the Issuer and their respective specified offices are listed below. The Issuing and Paying Agent the CMU Lodging and Paying Agent the Paying Agents the Registrar the Transfer Agents and the Calculation Agent act solely as agents of the Issuer and do not assume any obligation or relationship of agency or trust for or with any Noteholder or Couponholder. The Issuer reserves the right at any time with the prior written approval of the Trustee to vary or terminate the appointment of the Issuing and Paying Agent the CMU Lodging and Paying Agent any other Paying Agent the Registrar any Transfer Agent or the Calculation Agent(s) and to appoint additional or other Paying Agents or Transfer Agents provided that the Issuer shall at all times maintain: (i) an Issuing and Paying Agent; ? 170 ?(ii) a Registrar in relation to Registered Notes; (iii) a Transfer Agent in relation to Registered Notes; (iv) a CMU Lodging and Paying Agent in relation to Notes accepted for clearance through the CMU; (v) one or more Calculation Agent(s) where the Conditions so require; and (vi) such other agents as may be required by any other stock exchange on which the Notes may be listed in each case as approved in writing by the Trustee.In addition the Issuer shall forthwith appoint a Paying Agent in New York City in respect of any Bearer Notes denominated in U.S. dollars in the circumstances described in Condition 8(c) above.Notice of any such change or any change of any specified office shall promptly be given by the Issuer to the Noteholders.(f) Unmatured Coupons and Receipts and unexchanged Talons: (i) Unless the Notes provide that the relevant Coupons are to become void upon the due date for redemption of those Notes Bearer Notes which comprise Fixed Rate Notes (other than Dual Currency Notes or Index linked Notes) the Notes should be surrendered for payment together with all unmatured Coupons (if any) relating thereto failing which an amount equal to the face value of each missing unmatured Coupon (or in the case of payment not being made in full that proportion of the amount of such missing unmatured Coupon that the sum of principal so paid bears to the total principal due) shall be deducted from the Final Redemption Amount Early Redemption Amount or Optional Redemption Amount as the case may be due for payment. Any amount so deducted shall be paid in the manner mentioned above against surrender of such missing Coupon within a period of 10 years from the Relevant Date for the payment of such principal (whether or not such Coupon has become void pursuant to Condition 10).(ii) Upon the due date for redemption of any Bearer Note comprising a Floating Rate Note Dual Currency Note or Index Linked Note unmatured Coupons relating to such Note (whether or not attached) shall become void and no payment shall be made in respect of them.(iii) Upon the due date for redemption of any Bearer Note any unexchanged Talon relating to such Note (whether or not attached) shall become void and no Coupon shall be delivered in respect of such Talon.(iv) Upon the due date for redemption of any Bearer Note that is redeemable in instalments all Receipts relating to such Note having an Instalment Date falling on or after such due date (whether or not attached) shall become void and no payment shall be made in respect of them.(v) Where any Bearer Note that provides that the relevant unmatured Coupons are to become void upon the due date for redemption of those Notes is presented for redemption without all unmatured Coupons and where any Bearer Note is presented for redemption without any unexchanged Talon relating to it redemption shall be made only against the provision of such indemnity as the Issuer may require.? 171 ?(vi) If the due date for redemption of any Note is not a due date for payment of interest interest accrued from the preceding due date for payment of interest or the Interest Commencement Date as the case may be shall only be payable against presentation (and surrender if appropriate) of the relevant Bearer Note or Certificate representing it as the case may be. Interest accrued on a Note that only bears interest after its Maturity Date shall be payable on redemption of such Note against presentation of the relevant Note or Certificate representing it as the case may be.(g) Talons: On or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet issued in respect of any Bearer Note the Talon forming part of such Coupon sheet may be surrendered at the specified office of the Issuing and Paying Agent in exchange for a further Coupon sheet (and if necessary another Talon for a further Coupon sheet) (but excluding any Coupons that may have become void pursuant to Condition 10).(h) Non-Business Days: If any date for payment in respect of any Note Receipt or Coupon is not a business day the holder shall not be entitled to payment until the next following business day nor to any interest or other sum in respect of such postponed payment. In this Condition 8(h) “business day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in the relevant place of presentation of the relevant Bearer Note Certificate Receipt or Coupon and in such other jurisdictions as shall be specified as “Financial Centres” hereon and: (i) (in the case of a payment in a currency other than Euro or Renminbi) where payment is to be made by transfer to an account maintained with a bank in the relevant currency on which foreign exchange transactions may be carried on in the relevant currency in the principal financial centre of the country of such currency; or (ii) (in the case of a payment in Euro) which is a TARGET Business Day; or (iii) (in the case of a payment in Renminbi) on which banks and foreign exchange markets are open for business and settlement of Renminbi payments in Hong Kong. 9 Taxation All payments of principal and interest by or on behalf of the Issuer in respect of the Notes the Receipts and the Coupons shall be made free and clear of and without withholding or deduction for any taxes duties assessments or governmental charges of whatever nature imposed levied collected withheld or assessed by or within Hong Kong (the “Relevant Taxing Jurisdiction”) or any authority therein or thereof having power to tax unless such withholding or deduction is required by law. If the Issuer is required to make a deduction or withholding by or within Hong Kong the Issuer shall pay such additional amounts (the “Additional Amounts”) as shall result in receipt by the Noteholders Receiptholders and Couponholders of such amounts as would have been received by them had no such withholding or deduction been required except that no such Additional Amounts shall be payable with respect to any Note Receipt or Coupon: (a) Other connection: to or to a third party on behalf of a holder who is liable to such taxes duties assessments or governmental charges in respect of such Note Receipt Talon or Coupon by reason of his having some connection with the Relevant Taxing Jurisdiction other than the holding or ownership of the Note Receipt Talon or Coupon or receiving income therefrom or the enforcement thereof; or (b) Presentation more than 30 days after the Relevant Date: where presentation is required or has occurred presented (or in respect of which the Certificate representing it is presented) for payment more than 30 days after the Relevant Date except to the extent that the holder of it would have been entitled to such Additional Amounts on presenting it for payment on or before the 30th such day.? 172 ?As used in these Conditions “Relevant Date” in respect of any Note Receipt Talon or Coupon means the date on which payment in respect of it first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date seven days after that on which notice is duly given to the Noteholders that upon further presentation of the Note (or relevant Certificate) Receipt Talon or Coupon being made in accordance with these Conditions such payment will be made provided that payment is in fact made upon such presentation.References in these Conditions to (i) “principal” shall be deemed to include any premium payable in respect of the Notes all Instalment Amounts Final Redemption Amounts Early Redemption Amounts Optional Redemption Amounts Amortised Face Amounts and all other amounts in the nature of principal payable pursuant to Condition 6 or any amendment or supplement to it (ii) “interest” shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 5 or any amendment or supplement to it and (iii) “principal” and/or “interest” shall be deemed to include any Additional Amounts that may be payable under this Condition 9 or any undertaking given in addition to or in substitution for it under the Trust Deed. 10 Prescription Claims against the Issuer for payment in respect of the Notes Receipts and Coupons (which for this purpose shall not include Talons) shall be prescribed and will become void unless made within 10 years (in the case of principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of them. 11 Events of Default and Default (a) Senior (Preferred) Notes: If any of the following events (“Events of Default”) occurs and is continuing in the case of Senior (Preferred) Notes the Trustee at its discretion may and if so requested in writing by holders of at least 25 per cent. in principal amount of the Senior (Preferred) Notes then outstanding or if so directed by an Extraordinary Resolution shall (but in respect of the events in Conditions 11(a)(ii) to 11(a)(vi) (inclusive) and Condition 11(a)(x) below only if the Trustee certifies that the occurrence of such event is materially prejudicial to the interests of the Noteholders of the relevant Series) (subject in each case to its being indemnified and/or secured and/or pre-funded to its satisfaction in its sole discretion) give notice to the Issuer that the Senior (Preferred) Notes are and they shall immediately become due and payable at their Early Redemption Amount together (if applicable) with accrued interest to the date of redemption: (i) Non-Payment: default is made for more than 14 days (in the case of interest) or five days (in the case of principal) in the payment on the due date of interest or principal in respect of any of the Senior (Preferred) Notes; or (ii) Breach of Other Obligations: the Issuer does not perform or comply with any one or more of its other obligations under the Senior (Preferred) Notes or the Trust Deed which default is incapable of remedy or if capable of remedy is not remedied within 21 days after notice of such default shall have been given to the Issuer by the Trustee; or (iii) Cross-Default: (A) any other present or future indebtedness for monies borrowed or raised by the Issuer or any of its Subsidiaries for or in respect of moneys borrowed or raised becomes (or becomes capable of being declared) due and payable prior to its stated maturity by reason of any actual or potential default event of default or the like (howsoever described); ? 173 ?(B) any such indebtedness is not paid when due or as the case may be within any originally applicable grace period; or (C) the Issuer or any of its Subsidiaries fails to pay when due any amount payable by it under any present or future guarantee for or indemnity in respect of any moneys borrowed or raised provided that the aggregate amount of the relevant indebtedness guarantees and indemnities in respect of which one or more of the events mentioned above in this paragraph (C) have occurred equals or exceeds U.S.$15000000 or its equivalent in any other currency; or (iv) Enforcement Proceedings: a distress attachment execution or other legal process is levied enforced or sued out on or against any part of the property assets or revenues of the Issuer or any of its Subsidiaries and is not discharged or stayed within 45 days; or (v) Security Enforced: any mortgage charge pledge lien or other encumbrance present or future created or assumed by the Issuer or any of its Subsidiaries becomes enforceable and any step is taken to enforce it (including the taking of possession or the appointment of a receiver administrative receiver administrator manager or other similar person); or (vi) Insolvency: the Issuer or any of its Subsidiaries is (or is or could be deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts stops suspends or threatens to stop or suspend payment of all or a material part of (or of a particular type of) its debts proposes or makes any agreement for the deferral rescheduling or other readjustment of all of (or all of a particular type of) its debts (or of any part which it will or might otherwise be unable to pay when due) proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any part of (or of a particular type of) the debts of the Issuer or any of its Subsidiaries; or (vii) Winding-up: an order is made or an effective resolution passed for the winding-up or dissolution of the Issuer or any of its Subsidiaries or the Issuer or any of its Subsidiaries shall apply or petition for a winding-up or administration order in respect of itself or ceases or threatens to cease to carry on all or substantially all of its business or operations in each case except for the purpose of and followed by a reconstruction amalgamation reorganisation merger or consolidation (i) on terms approved by the Trustee or by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders or (ii) in the case of a Subsidiary whereby the undertaking and assets of the Subsidiary are transferred to or otherwise vested in the Issuer or another of its Subsidiaries; or (viii) Authorisation and Consents: any action condition or thing (including the obtaining or effecting of any necessary consent approval authorisation exemption filing licence order recording or registration) at any time required to be taken fulfilled or done in order (I) to enable the Issuer lawfully to enter into exercise its rights and perform and comply with its obligations under the Senior (Preferred) Notes and the Trust Deed (II) to ensure that those obligations are legally binding and enforceable and (III) to make the Senior (Preferred) Notes and the Trust Deed admissible in evidence in the courts of England is not taken fulfilled or done; or (ix) Illegality: it is or will become unlawful for the Issuer to perform or comply with any one or more of its obligations under any of the Senior (Preferred) Notes or the Trust Deed; or ? 174 ?(x) Analogous Events: any event occurs that under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in any of Conditions 11(a)(i) to 11(a)(ix) (both inclusive) (b) Non-Preferred Loss Absorbing Notes and Dated Subordinated Notes: In the case of the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes: (i) If default is made in the payment of any amount of principal or interest due in respect of any of the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes and the default continues for a period of five business days in Hong Kong (in the case of principal) or 10 business days in Hong Kong (in the case of interest) (in relation to Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes each such event a “Default”) then the Trustee at its discretion may subject as provided in Condition 13 in order to enforce payment without further notice institute Winding-Up Proceedings in Hong Kong against the Issuer but may take no further action in respect of such default (but without prejudice to Condition 11(b)(iii) below); (ii) If a Write-off has occurred as described in Condition 7 or if there is a reduction or cancellation of the principal amount of or interest on the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes the conversion thereof into another security or obligation of the Issuer or another person or any other amendment or alteration of these Conditions or any other modification or change in form of the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes as a result of the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Issuer or the exercise of the Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority as described in Condition 7(b)(v) such event will not constitute a Default under these Conditions; and (iii) If an order is made or an effective resolution is passed for the Winding-Up of the Issuer in Hong Kong (except for the purposes of reconstruction amalgamation or reorganisation the terms of which have previously been approved by an Extraordinary Resolution of the Non-Preferred Loss Absorbing Noteholders or Dated Subordinated Noteholders) (in relation to Non-Preferred Loss Absorbing Notes or Dated Subordinated Notes such event also a “Default”) then the Trustee at its discretion may subject as provided in Condition 13(b) give written notice to the Issuer that the Non-Preferred Loss Absorbing Notes or the Dated Subordinated Notes are and they shall forthwith thereupon become immediately due and repayable at their principal amount together with accrued interest without further action or formality. 12 Meetings of Noteholders Modification Waiver and Substitution (a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings of Noteholders to consider any matter affecting their interests including the sanctioning by Extraordinary Resolution (as defined in the Trust Deed) of a modification of any of these Conditions or any provision of the Trust Deed. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by the Trustee if requested in writing by Noteholders holding not less than 10 per cent. in aggregate principal amount of the Notes for the time being outstanding and subject to the Trustee being indemnified and/or secured and/or pre-funded to its satisfaction against all costs and expenses. The quorum for any meeting convened to consider an Extraordinary Resolution shall be two or more persons holding or representing more than 50 per cent. in principal amount of the Notes for the time being outstanding or at any adjourned meeting two or more persons being or representing Noteholders whatever the principal amount of the Notes held or represented unless the business of such meeting includes consideration of proposals inter alia (i) to amend the dates of maturity or redemption of the Notes any Instalment Date or any date for payment ? 175 ?of interest or Interest Amounts on the Notes (ii) to reduce or cancel the principal amount of or any Instalment Amount of or any premium payable on redemption of the Notes (iii) to reduce the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates or amount of interest or the basis for calculating any Interest Amount in respect of the Notes (iv) if a Minimum Rate of Interest and/or a Maximum Rate of Interest Instalment Amount or Redemption Amount is shown hereon to reduce any such Minimum Rate of Interest and/or Maximum Rate of Interest (v) to vary any method of or basis for calculating the Final Redemption Amount the Early Redemption Amount or the Optional Redemption Amount including the method of calculating the Amortised Face Amount (vi) to vary the currency or currencies of payment or denomination of the Notes or (vii) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass an Extraordinary Resolution in which case the necessary quorum shall be two or more persons holding or representing not less than 75 per cent. or at any adjourned meeting not less than 25 per cent. in principal amount of the Notes for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on Noteholders (whether or not they were present at the meeting at which such resolution was passed) and on all Couponholders.The Trust Deed provides that a resolution in writing signed by or on behalf of the holders of not less than 90 per cent. in principal amount of the Notes for the time being outstanding shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Noteholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form each signed by or on behalf of one or more Noteholders.These Conditions may be amended modified or varied in relation to any Series of Notes by the terms of the applicable Pricing Supplement in relation to such Series.(b) Modification of the Trust Deed: The Trustee may agree without the consent of the Noteholders the Receiptholders or the Couponholders to (i) any modification of any of the provisions of the Trust Deed or these Conditions that is of a formal minor or technical nature or is made to correct a manifest error or to comply with any mandatory provision of law and (ii) any other modification (except as mentioned in the Trust Deed) and any waiver or authorisation of any breach or proposed breach of any of the provisions of the Trust Deed and/or these Conditions that is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. Any such modification authorisation or waiver shall be binding on the Noteholders and the Couponholders and unless the Trustee otherwise agrees such modification authorisation or waiver shall be notified by the Issuer to the Noteholders as soon as practicable.(c) Substitution: The Trust Deed contains provisions permitting the Trustee to agree subject to such amendment of the Trust Deed and such other conditions as the Trustee may require but without the consent of the Noteholders or the Couponholders to the substitution of the Issuer’s successor in business or any Subsidiary of the Issuer or its successor in business or any holding company of the Issuer or any other subsidiary of any such holding company or their respective successor in business in place of the Issuer or of any previous substituted company as principal debtor under the Trust Deed and the Notes. In the case of such a substitution the Trustee may agree without the consent of the Noteholders or the Couponholders to a change of the law governing the Notes the Receipts the Coupons the Talons and/or the Trust Deed provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Noteholders.? 176 ?(d) Entitlement of the Trustee: In connection with the exercise of its functions powers rights and discretions (including but not limited to those referred to in this Condition 12) the Trustee shall have regard to the interests of the Noteholders the Receiptholders or the Couponholders as a class and shall not have regard to the consequences of such exercise for individual Noteholders Receiptholders or Couponholders and the Trustee acting for and on behalf of Noteholders shall not be entitled to require nor shall any Noteholder Receiptholder or Couponholder be entitled to claim from the Issuer any indemnification or payment in each case in respect of any tax consequence of any such exercise upon individual Noteholders Receiptholders or Couponholders. 13 Enforcement (a) Without prejudice to Condition 11 the Trustee may subject as provided below in this Condition 13 at its discretion and without further notice take such steps and/or actions and/or institute such proceedings as it may think fit against the Issuer if the Issuer fails to perform observe or comply with any obligation condition or provision binding on the Issuer under the Notes the Receipts the Coupons or the Trust Deed (other than any obligation for the payment of any principal or interest in respect of Dated Subordinated Notes) provided that the Issuer shall not as consequence of such proceedings be obliged to pay any sum or sums representing or measured by reference to principal or interest in respect of the Notes sooner than the same would otherwise have been payable by it.(b) The Trustee shall not be bound to take action as referred to in these Conditions or any other action under the Trust Deed unless (i) it shall have been so requested in writing by Noteholders holding at least 25 per cent. of the principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders and (ii) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction.(c) No Noteholder Receiptholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee having become bound so to proceed fails to do so within reasonable period and such failure is continuing. In respect of Dated Subordinated Notes only subject to applicable laws no remedy (including the exercise of any right of set-off or analogous event) other than those provided for in Condition 11 and Conditions 13(a) and 13(b) or submitting claims in the Winding-Up of the Issuer will be available to the Trustee or the Dated Subordinated Noteholders. No Dated Subordinated Noteholder shall be entitled to institute Winding-Up Proceedings in Hong Kong (or elsewhere) against the Issuer or to submit claim in such Winding-Up except that if the Trustee having become bound to institute such proceedings as aforesaid fails to do so or being able and bound to submit a claim in such Winding-Up fails to do so in each case within a reasonable period and such failure is continuing then any such holder may himself institute Winding-Up Proceedings against the Issuer in Hong Kong (but not elsewhere) and/or submit a claim in such Winding-Up to the same extent (but not further or otherwise) that the Trustee would have been entitled to do. 14 Indemnification of the Trustee The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility. The Trustee is entitled to enter into business transactions with the Issuer and any entity related to the Issuer without accounting for any profit.The Trustee may rely without liability to Noteholders Receiptholders or Couponholders on any report confirmation or certificate or any advice or opinion of any legal counsel accountants financial advisers financial institution or any other expert whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or any other person or in any other manner) by ? 177 ?reference to a monetary cap methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such report confirmation certificate advice or opinion and in such event such report confirmation certificate advice or opinion shall be binding on the Issuer the Trustee the Noteholders the Receiptholders and the Couponholders. 15 Replacement of Notes Certificates Receipts Coupons and Talons If a Note Certificate Receipt Coupon or Talon is lost stolen mutilated defaced or destroyed it may be replaced subject to applicable laws regulations and stock exchange or other relevant authority regulations at the specified office of the Issuing and Paying Agent (in the case of Bearer Notes Receipts Coupons or Talons) and of the Registrar (in the case of Certificates) or such other Paying Agent or Transfer Agent as the case may be as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to Noteholders in each case on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence security and indemnity (which may provide inter alia that if the allegedly lost stolen or destroyed Note Certificate Receipt Coupon or Talon is subsequently presented for payment or as the case may be for exchange for further Coupons there shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such Notes Certificates Receipts Coupons or further Coupons) or talons and otherwise as the Issuer may require. Mutilated or defaced Notes Certificates Receipts Coupons or Talons must be surrendered before replacements will be issued. 16 Further Issues The Issuer may from time to time without the consent of the Noteholders the Couponholders or the Receiptholders create and issue further securities either having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest on them) and so that such further issue shall be consolidated and form a single series with the outstanding securities of any series (including the Notes) or upon such terms as the Issuer may determine at the time of their issue. References in these Conditions to the Notes include (unless the context requires otherwise) any other securities issued pursuant to this Condition 16 and consolidated and forming a single series with the Notes. Any further securities consolidated and forming a single series with the outstanding securities of any series (including the Notes) constituted by the Trust Deed or any deed supplemental to it shall and any other securities may (with the consent of the Trustee) be constituted by the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of securities of other series where the Trustee so decides. 17 Notices Notices to the holders of Registered Notes shall be mailed to them at their respective addresses in the Register and deemed to have been given on the fourth weekday (being a day other than a Saturday or a Sunday) after the date of mailing and so long as the Registered Notes are listed on a stock exchange or admitted to trading by another relevant authority and the rules of that exchange or a relevant authority so require published in a daily newspaper having general circulation in the place or places required by those rules. Notices to the holders of Bearer Notes shall be valid if published in a daily newspaper of general circulation in Hong Kong (which is expected to be the South China Morning Post in Hong Kong). If any such publication is not practicable notice shall be validly given if published in another leading daily English language newspaper with general circulation in Asia. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange or any other relevant authority on which the Bearer Notes are for the time being listed. Any such notice shall be deemed to have been given on the date of such publication or if published more than once or on different dates on the first date on which publication is made as provided above.? 178 ?Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Bearer Notes in accordance with this Condition 17.So long as the Notes are represented by a Global Note or a Global Certificate and such Global Note or Global Certificate is held on behalf of: (i) Euroclear or Clearstream Luxembourg or the Alternative Clearing System (as defined in the form of the Global Certificate) notices to Noteholders shall be given by delivery of the relevant notice to Euroclear or Clearstream Luxembourg or the Alternative Clearing System for communication by it to entitled accountholders in substitution for notification as required by the Conditions; or (ii) the CMU notices to the holders of Notes of that Series may be given by delivery of the relevant notice to the persons shown in the relevant CMU Issue Position Report issued by the Monetary Authority on the business day preceding the date of despatch of such notice.A Non-Viability Event Notice or Resolution Notice to the holders of the relevant Dated Subordinated Notes shall be deemed to have been validly given on the date on which such notice is published in a daily newspaper of general circulation in Asia (which is expected to be Asian Wall Street Journal) or so long as Notes are listed on The Stock Exchange of Hong Kong Limited (the “HKSE”) published on the website of the HKSE. If any such publication is not practicable notice shall be validly given if published in another leading daily English language newspaper with general circulation in Hong Kong. Any such notice shall be deemed to have been given on the date of such publication or if published more than once or on different dates on the first date on which publication is made as provided above. 18 Contracts (Rights of Third Parties) Act No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999 except and to the extent (if any) that the Notes expressly provide for such Act to apply to any of their terms but this shall not affect any right or remedy that exists or is available apart from such Act and is without prejudice to the rights of the Noteholders as set out in Condition 13. 19 Governing Law and Jurisdiction (a) Governing Law: The Trust Deed the Notes the Receipts the Coupons and the Talons and any non-contractual obligations arising out of or in connection with them are governed by and shall be construed in accordance with English law save that Conditions 3(c) 3(e) 3(f) and 7 are governed by and shall be construed in accordance with Hong Kong law.(b) Jurisdiction: The Courts of England are to have jurisdiction to settle any disputes that may arise out of or in connection with any Notes Receipts Coupons or Talons save that the courts of Hong Kong shall have exclusive jurisdiction to settle any disputes that arise out of or are in connection with Conditions 3(c) 3(e) 3(f) and 7 and accordingly any legal action or proceedings arising out of or in connection with any Notes Receipts Coupons or Talons (“Proceedings”) may be brought in such courts. The Issuer irrevocably submits to the jurisdiction of the courts of England and waives any objection to Proceedings in such courts on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. This submission is made for the benefit of the Trustee and each of the holders of the Notes Receipts Coupons and Talons and shall not affect the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not).? 179 ?(c) Service of Process: The Issuer has in the Trust Deed irrevocably appointed an agent in England to receive for it and on its behalf service of process in any Proceedings in England. If for any reason such process agent ceases to be able to accept service of process in England the Issuer shall appoint a new agent to accept such service of process in England as soon as practicable. 20 Headings Headings are for convenience only and do not affect the interpretation of these Conditions.? 180 ?TERMS AND CONDITIONS OF THE UNDATED CAPITAL SECURITIES The following is the text of the terms and conditions that save for the paragraphs in italics and subject to completion and amendment and as supplemented or varied in accordance with the provisions of the applicable Pricing Supplement shall be applicable to the Undated Capital Securities in definitive form (if any) issued in exchange for the global certificate(s) (the “Global Certificate(s)”) representing each Series. Either: (i) the full text of these terms and conditions together with the relevant provisions of the applicable Pricing Supplement; or (ii) these terms and conditions as so completed amended supplemented or varied (and subject to simplification by the deletion of non-applicable provisions) shall be endorsed on the Certificates relating to such Undated Capital Securities. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the applicable Pricing Supplement or the Trust Deed as the case may be. Those definitions will be endorsed on the definitive Undated Capital Securities or Certificates as the case may be.References in these Conditions to “Undated Capital Securities” are to the Undated Capital Securities of one Series only not to all Undated Capital Securities that may be issued under the Programme.The Undated Capital Securities are constituted by an amended and restated Trust Deed dated 24 September 2021 (as may be amended or supplemented as at the date of issue of the Undated Capital Securities (the “Issue Date”) and as may be further amended restated novated or supplemented from time to time thereafter the “Trust Deed”) between The Bank of East Asia Limited (the “Issuer”) and DB Trustees (Hong Kong) Limited (the “Trustee” which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Securityholders (as defined below).These terms and conditions (the “Conditions”) include summaries of and are subject to the detailed provisions of the Trust Deed. An amended and restated Agency Agreement dated 24 September 2021 (as may be further amended restated novated or supplemented from time to time thereafter the “Agency Agreement”) has been entered into in relation to the Undated Capital Securities between the Issuer the Trustee Deutsche Bank AG Hong Kong Branch as initial issuing and paying agent Deutsche Bank AG Hong Kong Branch as CMU lodging and paying agent transfer agent and as registrar for Undated Capital Securities to be held in the Central Moneymarkets Unit Service operated by the Hong Kong Monetary Authority (the “CMU”) Deutsche Bank AG Hong Kong Branch as registrar of each series of Undated Capital Securities to be held in the CMU and Deutsche Bank Luxembourg S.A. as registrar of each series of Undated Capital Securities (other than Undated Capital Securities to be held in the CMU) and the other agents named in it. The issuing and paying agent the CMU lodging and paying agent the other paying agents the registrars the transfer agent(s) and thecalculation agent(s) for the time being (if any) are referred to below respectively as the “Issuing andPaying Agent” the “CMU Lodging and Paying Agent” the “Paying Agents” (which expression shall include the Issuing and Paying Agent and the CMU Lodging and Paying Agent) the “Registrars” the “Transfer Agents” (which expression shall include the Registrars) and the “Calculation Agent(s)” (such Issuing and Paying Agent CMU Lodging and Paying Agent Paying Agents Registrars and Transfer Agents being together referred to as the “Agents”). For the purposes of these Conditions all references (other than in relation to the determination of Distribution and other amounts payable in respect of the Undated Capital Securities) to the Issuing and Paying Agent shall unless provided otherwise with respect to a Series of Undated Capital Securities to be held in the CMU be deemed to be a reference to the CMU Lodging and Paying Agent and all such references shall be construed accordingly.Copies of the Trust Deed and the Agency Agreement are available for inspection by any Securityholder at all reasonable times during usual business hours (being between 9:00 a.m. and 3:00 p.m.) on any weekday (Saturdays Sundays and public holidays excepted) at the principal office of the Trustee (presently at Level 52 International Commercial Centre 1 Austin Road West Kowloon Hong Kong) and at the specified offices of the Paying Agents following prior written request and proof of holding and identity satisfactory to the Trustee or as the case may be the relevant Paying Agent.? 181 ?The Securityholders are entitled to the benefit of are bound by and are deemed to have notice of these Conditions all the provisions of the Trust Deed and the applicable Pricing Supplement and are deemed to have notice of those provisions applicable to them of the Agency Agreement. The Pricing Supplement for the Undated Capital Securities of this Tranche is (or the relevant provisions thereof are) attached to or endorsed hereon. References to “applicable Pricing Supplement” are to the Pricing Supplement (or relevant provisions thereof) attached to or endorsed hereon.All capitalised terms that are not defined in these Conditions will have the meanings given to them in the applicable Pricing Supplement or the Trust Deed as the case may be.As used in these Conditions “Tranche” means Undated Capital Securities which are identical in all respects and “Series” means a series of Undated Capital Securities comprising one or more Tranches whether or not issued on the same date that (except in respect of the first payment of Distribution and their issue price) have identical terms on issue and are expressed to have the same series number. 1 Form Denomination and Title The Undated Capital Securities are issued in registered form in the Specified Denomination(s) shown hereon. References to “hereon” are to the applicable Pricing Supplement (or the relevant provisions thereof) attached to or endorsed on this Undated Capital Security and in the case ofdefinitive Undated Capital Securities serially numbered in the currency (the “SpecifiedCurrency”) and in the specified denomination(s) (the “Specified Denomination(s)”) shown hereon. The principal amount of an Undated Capital Security is subject to adjustment following the occurrence of a Non-Viability Event (as defined in Condition 7(a)) in accordance with Condition 7(a) and references in these Conditions to the “principal amount” of an Undated Capital Security shall mean the principal amount of such Undated Capital Security as so adjusted.All Undated Capital Securities shall have the same Specified Denomination. Notwithstanding any other regulatory or listing requirements in respect of specified denominations the minimum Specified Denomination for any series or tranche of Undated Capital Securities shall be if denominated in: (i) Hong Kong dollars HKD2000000; (ii) United States dollars U.S.$250000; (iii) Euros €200000; or (iv) any other currency the equivalent in that currency to HKD2000000 with reference to the relevant exchange rate on the Issue Date.Each Undated Capital Security is a Fixed Rate Undated Capital Security a Floating Rate Undated Capital Security or any other kind of Undated Capital Security depending on the Distribution and redemption/payment basis shown hereon.Undated Capital Securities are represented by registered certificates (“Certificates”) and save as provided in Condition 2(b) each Certificate shall represent the entire holding of Undated Capital Securities by the same holder.Title to the Undated Capital Securities shall pass only by registration in the register (the “Register”) that the Issuer shall procure to be kept by the Registrar in accordance with theprovisions of the Agency Agreement. The Issuer may appoint a registrar (the “AlternativeRegistrar”) in accordance with the provisions of the Agency Agreement other than the Registrar in relation to any Series. In these Conditions “Registrar” includes if applicable in relation to any Series the Registrar or as the case may be the Alternative Registrar as specified hereon.Except as ordered by a court of competent jurisdiction or as required by law the holder (as defined below) of any Undated Capital Security shall be deemed to be and may be treated as its absolute owner for all purposes whether or not it is overdue and regardless of any notice of ownership trust or an interest in it any writing on it (or on the Certificate representing it) or its theft or loss (or that of the related Certificate) and no person shall be liable for so treating the Securityholder.? 182 ?The Conditions are modified by certain provisions contained in the Global Certificate.The Undated Capital Securities are not issuable in bearer form.In these Conditions “Securityholder” or “holder” in relation to any Undated Capital Securities means the person in whose name an Undated Capital Security is registered. 2 Transfers of Undated Capital Securities (a) Transfers of Interests in Undated Capital Securities: Subject to Condition 2(e) and Condition 6 one or more Undated Capital Securities may be transferred upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such Undated Capital Securities to be transferred together with the form of transfer endorsed on such Certificate (or another form of transfer substantially in the same form and containing the same representations and certifications (if any) unless otherwise agreed by the Issuer) duly completed and executed and any other evidence as the Registrar or such Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals that have executed the form of transfer. In the case of a transfer of part only of a holding of Undated Capital Securities represented by one Certificate a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor. All transfers of Undated Capital Securities and entries on the Register will be made subject to the detailed regulations concerning transfers of Undated Capital Securities scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Registrar and the Trustee or by the Registrar with the prior written approval of the Trustee. A copy of the current regulations will be made available by the Registrar to any Securityholder upon request.Transfers of interests in the Undated Capital Securities evidenced by the Global Certificate will be effected in accordance with the rules of the relevant clearing systems.Transfers of interests in any Undated Capital Securities that are the subject of a Non-Viability Event Notice issued in accordance with Condition 7 or notice of issue of a Resolution Notice shall not be permitted during any Suspension Period (as defined in Condition 2(f)).(b) Exercise of Options or Partial Redemption or Partial Write-off in Respect of Undated Capital Securities: In the case of an exercise of an Issuer’s option in respect of or a partial redemption of or a partial Write-off of or cancellation modification conversion and/or change in form pursuant to a Resolution Notice (as defined in Condition 7(b)(iv)) of a holding of Undated Capital Securities represented by a single Certificate a new Certificate shall be issued to the holder to reflect the exercise of such option or in respect of the balance of the holding not redeemed or Written-off in accordance with Condition 7 or subject to cancellation modification conversion and/or change in form pursuant to a Resolution Notice as the case may be. In the case of a partial exercise of an option resulting in Undated Capital Securities of the same holding having different terms separate Certificates shall be issued in respect of those Undated Capital Securities of that holding that have the same terms. New Certificates shall only be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Undated Capital Securities to a person who is already a holder of Undated Capital Securities a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.? 183 ?(c) Delivery of New Certificates: Each new Certificate to be issued pursuant to Conditions 2(a) or 2(b) shall be available for delivery within three business days of receipt of the form of transfer and surrender of the Certificate for exchange except for any Write-off pursuant to Condition 7(a) in which case any new Certificate to be issued shall be available for delivery as soon as reasonably practicable. Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such form of transfer or Certificate shall have been made or at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant form of transfer or otherwise in writing be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified unless such holder requests otherwise and pays in advance to the relevant Transfer Agent or the Registrar the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 2(c) “business day” means a day other than a Saturday or Sunday on which banks are open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).(d) Transfers Free of Charge: Transfers of Undated Capital Securities and Certificates on registration transfer exercise of an option partial redemption or partial Write-off shall be effected without charge by or on behalf of the Issuer the Registrar or the Transfer Agents but upon payment by the relevant Securityholder of any tax or other governmental charges that may be imposed in relation to it (or the giving of such indemnity and/or security as the Registrar or the relevant Transfer Agent may require).(e) Closed Periods: No Securityholder may require the transfer of an Undated Capital Security to be registered: (i) during the period of 15 days ending on (and including) the due date for redemption of or payment of principal or Distributions in respect of that Undated Capital Security; (ii) during the period of 15 days prior to any date on which Undated Capital Securities may be called for redemption by the Issuer at its option pursuant to Condition 6(d); (iii) after any such Undated Capital Security has been called for redemption; (iv) during the period of seven days ending on (and including) any Record Date; or (v) during a Suspension Period.In this Condition 2(e): “Business Day” has the meaning given to such term in Condition 4(i) and shall be deemed to include a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets are open for business in Hong Kong; and “Suspension Period” means the period commencing on the date of a Non-Viability Event Notice (as defined in Condition 7(a) below) and ending on (and including) the close of business in Hong Kong on the effective date of the related Write-off.So long as any Undated Capital Securities are represented by a Global Certificate and such Global Certificate is held on behalf of Euroclear Bank SA/NV (“Euroclear”) or Clearstream Banking S.A. (“Clearstream Luxembourg”) or any other clearing system no holder may require the transfer of an Undated Capital Security to be registered during the period of five Clearing System Business Days (or such other period as the relevant clearing systems shall determine in accordance with their rules and procedures) commencing on the ? 184 ?Clearing System Business Day immediately following the date on which the Non-Viability Event Notice (as defined in Condition 7(a) below) has been received by the relevant clearing systems (the “Suspension Period”). “Clearing System Business Day” means a weekday (Monday to Friday inclusive except 25 December and 1 January). 3 Status Qualification Subordination and Set-off (a) Status and Qualification of the Undated Capital Securities: (i) Status: The Undated Capital Securities (being those securities that specify their status as “Undated Capital Securities” in the applicable Pricing Supplement) constitute direct unsecured and subordinated obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves.(ii) Qualification: The Undated Capital Securities are intended to qualify as: (A) Additional Tier 1 capital under the Banking Capital Regulations; and (B) a Loss Absorbing Instrument. (b) Subordination of Undated Capital Securities: Subject to the insolvency laws of Hong Kong and other applicable laws in the event of a Winding-Up (as defined below) of the Issuer (other than pursuant to a Permitted Reorganisation (as defined below)) the rights of the Securityholders to payment of principal and Distributions on the Undated Capital Securities and any other obligations in respect of the Undated Capital Securities shall rank: (i) subordinate and junior in right of payment to and of all claims of: (A) all unsubordinated creditors of the Issuer (including its depositors); (B) the holders of Non-Preferred Loss Absorbing Instruments of the Issuer and/or Tier 2 Capital Instruments of the Issuer; and (C) all other Subordinated Creditors of the Issuer (other than holders of Non-Preferred Loss Absorbing Instruments of the Issuer and/or Tier 2 Capital Instruments of the Issuer); (ii) pari passu in right of payment to and of all claims of the holders of Parity Obligations and as may be further specified in the applicable Pricing Supplement; and (iii) senior in right of payment to and of all claims of the holders of Junior Obligations and as may be further specified in the applicable Pricing Supplement in each case in the manner provided in the Trust Deed.In the event of a Winding-Up that requires the Securityholders or the Trustee to provide evidence of their claim to principal or Distribution under the Undated Capital Securities such claims of the Securityholders of such Undated Capital Securities will only be satisfied after all senior ranking obligations of the Issuer have been satisfied in whole.No amount may be claimed in respect of any Distribution that has been cancelled pursuant to a Mandatory Distribution Cancellation Event (as defined in Condition 5(b)) or an Optional Distribution Cancellation Event (as defined in Condition 5(a)).? 185 ?In the event that (A) the Securityholders do not receive payment in full of principal due and payable in respect of the Undated Capital Securities plus Distribution thereon accrued to the date of repayment in any Winding-Up and (B) the winding-up order or resolution passed for the Winding-Up of the Issuer or the dissolution of the Issuer is subsequently stayed discharged rescinded avoided annulled or otherwise rendered inoperative then to the extent that such Securityholders did not receive payment in full of such principal of and Distribution on such Undated Capital Securities such unpaid amounts shall remain payable in full; provided that payment of such unpaid amounts shall be subject to the provisions under this Condition 3 and Condition 11 and Clause 5 and Clause 7 of the Trust Deed. No amount may be claimed in respect of any Distribution that has been cancelled pursuant to a Mandatory Distribution Cancellation Event or an Optional Distribution Cancellation Event.The subordination provisions set out in this Condition 3(b) are effective only upon the occurrence of any Winding-Up proceedings of the Issuer. In the event that a Non-Viability Event occurs the rights of holders of Undated Capital Securities shall be subject to Condition 7. This may not result in the same outcome for the holders of Undated Capital Securities as would otherwise occur under this Condition 3(b) upon the occurrence of any Winding-Up proceedings of the Issuer.On a Winding-Up of the Issuer there may be no surplus assets available to meet the claims of the Securityholders after the claims of the parties ranking senior to the Securityholders (as provided in this Condition 3 and Clause 5 of the Trust Deed) have been satisfied.In these Conditions: “Additional Tier 1 Capital Instruments” means any instrument or other obligation issued or entered into by the Issuer that constitutes Additional Tier 1 capital of the Issuer pursuant to the Banking Capital Regulations; “Authorized Institution” has the meaning given to that term in the Banking Ordinance (Cap. 155) of Hong Kong; “Banking Capital Regulations” means the Banking (Capital) Rules (Cap. 155L) of Hong Kong or any other banking capital regulations as amended or superseded from time to time applicable to the regulatory capital of Authorized Institutions incorporated in Hong Kong or any supervisory guidelines issued or implemented by the Monetary Authority; “Junior Obligation” means all classes of the Issuer’s ordinary share capital any Tier 1 Capital Instruments which are not Additional Tier 1 Capital Instruments and any instrument or other obligation issued entered into or guaranteed by the Issuer that ranks or is expressed to rank junior to the Undated Capital Securities by operation of law or contract; “Loss Absorbing Capacity Rules” means the Financial Institutions (Resolution) (Loss-absorbing Capacity Requirements — Banking Sector) Rules (Cap. 628B) of Hong Kong or any other loss-absorbing capacity regulations as amended or superseded from time to time applicable to the loss-absorbing capacity of Authorized Institutions incorporated in Hong Kong or any statutory guidelines issued or implemented by the Monetary Authority; “Loss Absorbing Instruments” means any notes securities or other instruments issued entered into or guaranteed by the Issuer that constitute “LAC debt instruments” under the Loss Absorbing Capacity Rules; ? 186 ?“Non-Preferred Loss Absorbing Instruments” means any Loss Absorbing Instrument that by operation of law or contract ranks or is expressed to rank senior to any: (i) Tier 2 Capital Instruments; and (ii) Tier 1 Capital Instruments; “Monetary Authority” means the Monetary Authority appointed under section 5A of the Exchange Fund Ordinance (Cap 66.) of Hong Kong or any successor thereto; “Parity Obligation” means any Additional Tier 1 Capital Instrument and any other instrument or other obligation issued entered into or guaranteed by the Issuer that ranks or is expressed to rank pari passu with the Undated Capital Securities by operation of law or contract; “Permitted Reorganisation” means a solvent reconstruction amalgamation reorganisation merger or consolidation whereby all or substantially all the business undertaking or assets of the Issuer are transferred to a successor entity which assumes all the obligations of the Issuer under the Undated Capital Securities; “Shares” means the ordinary share capital of the Issuer; “Subordinated Creditors” means all creditors the indebtedness of which is subordinated in the event of the Winding-Up of the Issuer in right of payment to the claims of depositors and other unsubordinated creditors of the Issuer other than those whose claims rank or is expressed to rank by operation of law or contract pari passu with or junior to the claims of the Securityholders of the Undated Capital Securities. For this purpose indebtedness shall include all liabilities whether actual or contingent; “Tier 1 Capital Instruments” means any instrument or other obligation issued or entered into by the Issuer that constitutes Tier 1 capital of the Issuer pursuant to the Banking Capital Regulations; “Tier 2 Capital Instruments” means any instrument or other obligation issued or entered into by the Issuer that constitutes Tier 2 capital of the Issuer pursuant to the Banking Capital Regulations; “Winding-Up” means with respect to the Issuer a final and effective order or resolution by a competent judicial authority in the place of incorporation of the Issuer for the bankruptcy winding-up liquidation administrative receivership or similar proceeding in respect of the Issuer; and “Winding-Up Proceedings” means with respect to the Issuer proceedings for the bankruptcy liquidation winding-up administrative receivership or other similar proceeding of the Issuer.(c) Set-off: Subject to applicable law no Securityholder may exercise claim or plead any right of set-off counter-claim or retention in respect of any amount owed to it by the Issuer arising under or in connection with the Undated Capital Securities and each Securityholder shall by virtue of being the holder of any Undated Capital Security be deemed to have waived all such rights of such set-off counter-claim or retention to the fullest extent permitted by law.In the event that any Securityholder nevertheless receives (whether by set-off or otherwise) directly in any Winding-Up Proceedings in respect of the Issuer any payment by or distribution of assets of the Issuer of any kind or character whether in cash property or ? 187 ?securities in respect of any amount owing to it by the Issuer arising under or in connection with the Undated Capital Securities other than in accordance with this Condition 3(c) such Securityholder shall subject to applicable law immediately pay an amount equal to the amount of such payment or discharge to the liquidator for the time being in the Winding-Up of the Issuer for distribution and each Securityholder by virtue of becoming a holder or any Undated Capital Security shall be deemed to have so agreed and undertaken with and to the Issuer and all depositors and other unsubordinated creditors of the Issuer for good consideration. 4 Distribution and other Calculations The amount payable in respect of the aggregate principal amount of Undated Capital Securities represented by a Global Certificate in accordance with the methods of calculation provided for in the Conditions and the applicable Pricing Supplement save that the calculation is made in respect of the total aggregate amount of the Undated Capital Securities represented by a Global Certificate together with such other sums and additional amounts (if any) as may be payable under the Conditions.(a) Distribution on Fixed Rate Undated Capital Securities: Subject to Condition 5 each Fixed Rate Undated Capital Security confers a right to receive distribution (each a “Distribution”) on its outstanding principal amount (subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7) from and including the Distribution Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Distribution such Distribution being payable in arrear on each Distribution Payment Date.The Rate of Distribution in respect of a Fixed Rate Undated Capital Security shall be: (i) if no Reset Date is specified in the applicable Pricing Supplement the Initial Distribution Rate; or (ii) if a Reset Date is specified in the applicable Pricing Supplement: (A) for the period from and including the Distribution Commencement Date to but excluding the First Reset Date specified in the applicable Pricing Supplement the Initial Distribution Rate; and (B) for the period from and including the First Reset Date and each Reset Date (as specified in the applicable Pricing Supplement) falling thereafter to but excluding the immediately following Reset Date the Reset Distribution Rate.The amount of Distribution payable shall be determined in accordance with Condition 4(e).For the purposes of this Condition 4(a) “Reset Distribution Rate” means the Relevant Rate with respect to the relevant Reset Date plus the Spread.Distributions will not be cumulative and Distributions which are not paid in accordance with these Conditions will not accumulate or compound and Securityholders will have no right to receive such Distributions at any time even if subsequent Distributions are paid in the future or be entitled to any claim in respect thereof against the Issuer. Unless otherwise provided in these Conditions each Undated Capital Security will cease to confer the right to receive any Distribution from the due date for redemption unless upon surrender of the Certificate representing such Undated Capital Security payment of principal is improperly withheld or refused. In such event Distribution shall continue to accrue at such rate (both before and after judgment) until whichever is the earlier of (x) the date on which all amounts due in respect of such Undated Capital Security have been paid; ? 188 ?and (y) five days after the date on which the full amount of moneys payable in respect of such Undated Capital Security has been received by the Issuing and Paying Agent and notice to that effect has been given to the Securityholders in accordance with Condition 15.No Securityholder shall have any claim in respect of any Distribution or part thereof cancelled and/or not due or payable pursuant to these Conditions. Accordingly such Distribution shall not accumulate for the benefit of the Securityholders or entitle the Securityholders to any claim in respect thereof against the Issuer.(b) Distribution on Floating Rate Undated Capital Securities: (i) Distribution Payment Dates: Subject to Condition 5 each Floating Rate Undated Capital Security confers a right to receive distribution (each a “Distribution”) on its outstanding principal amount from and including the Distribution Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Distribution such Distribution being payable in arrear on each Distribution Payment Date. The amount of Distribution payable shall be determined by the Calculation Agent in accordance with Condition 4(e). Such Distribution Payment Date(s) is/are either shown hereon as Specified Distribution Payment Dates or if no Specified Distribution Payment Date(s) is/are shown hereon “Distribution Payment Date” shall mean each date which falls the number of months or other period shown hereon as the Distribution Period after the preceding Distribution Payment Date or in the case of the first Distribution Payment Date after the Distribution Commencement Date.(ii) Business Day Convention: If any date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a Business Day then if the Business Day Convention specified is: (A) the Floating Rate Business Day Convention such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment; (B) the Following Business Day Convention such date shall be postponed to the next day that is a Business Day; (C) the Modified Following Business Day Convention such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month in which event such date shall be brought forward to the immediately preceding Business Day; or (D) the Preceding Business Day Convention such date shall be brought forward to the immediately preceding Business Day.(iii) Rate of Distribution for Floating Rate Undated Capital Securities: The Rate of Distribution in respect of Floating Rate Undated Capital Securities for each Distribution Accrual Period shall be determined by the Calculation Agent in the manner specified hereon and the provisions below relating to either ISDA Determination or Screen Rate Determination shall apply depending upon which is specified hereon.? 189 ?(A) ISDA Determination for Floating Rate Undated Capital Securities Where ISDA Determination is specified hereon as the manner in which the Rate of Distribution is to be determined the Rate of Distribution for each Distribution Accrual Period shall be determined by the Calculation Agent as a rate equal to the relevant ISDA Rate. For the purposes of this paragraph (A) “ISDA Rate” for a Distribution Accrual Period means a rate equal to the Floating Rate that would be determined by the Calculation Agent under a Swap Transaction under the terms of an agreement incorporating the ISDA Definitions and under which: (x) the Floating Rate Option is as specified hereon; (y) the Designated Maturity is a period specified hereon; and (z) the relevant Reset Date is the first day of that Distribution Accrual Period unless otherwise specified hereon.For the purposes of this paragraph (A) “Floating Rate” “Calculation Agent” “Floating Rate Option” “Designated Maturity” “Reset Date” and “SwapTransaction” have the meanings given to those terms in the ISDA Definitions. (B) Screen Rate Determination for Floating Rate Undated Capital Securities (other than Floating Rate Undated Capital Securities which specify the Reference Rate as either SOFR Benchmark or SONIA Benchmark) (x) Where Screen Rate Determination is specified hereon as the manner in which the Rate of Distribution is to be determined the Rate of Distribution for each Distribution Accrual Period will subject as provided below be either: (1) the offered quotation; or (2) the arithmetic mean of the offered quotations (expressed as a percentage rate per annum) for the Reference Rate which appears or appear as the case may be on the Relevant Screen Page as at either 11.00 a.m. (London time in the case of LIBOR or Brussels time in the case of EURIBOR or Hong Kong time in the case of HIBOR or Beijing time in the case of SHIBOR) or 11.15 a.m. (Hong Kong time in the case of CNH HIBOR) or if at around that time it is notified that the fixing will be published at 2.30 p.m. (Hong Kong time) then as of 2.30 p.m. (Hong Kong time in the case of CNH HIBOR) as the case may be on the Distribution Determination Date in question as determined by the Calculation Agent. If five or more of such offered quotations are available on the Relevant Screen Page the highest (or if there is more than one such highest quotation one only of such quotations) and the lowest (or if there is more than one such lowest quotation one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean of such offered quotations.If the Reference Rate from time to time in respect of Floating Rate Undated Capital Securities is specified hereon as being other than LIBOR EURIBOR HIBOR CNH HIBOR or SHIBOR the Rate of Distribution in respect of such Undated Capital Securities will be determined as provided hereon.? 190 ?(y) If the Relevant Screen Page is not available or if sub-paragraph (x)(1) above applies and no such offered quotation appears on the Relevant Screen Page or if sub-paragraph (x)(2) above applies and fewer than three such offered quotations appear on the Relevant Screen Page in each case as at the time specified above subject as provided below the Calculation Agent shall promptly notify the Issuer and the Issuer shall use all commercially reasonable endeavours to appoint an Independent Investment Bank and procure such Independent Investment Bank to request if the Reference Rate is LIBOR the principal London office of each of the Reference Banks or if the Reference Rate is EURIBOR the principal Euro-zone office of each of the Reference Banks or if the Reference Rate is HIBOR or CNH HIBOR the principal Hong Kong office of each of the Reference Banks or if the Reference Rate is SHIBOR the principal Beijing office of each of the Reference Banks to provide the Independent Investment Bank and the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate if the Reference Rate is LIBOR at approximately 11.00 a.m. (London time) or if the Reference Rate is EURIBOR at approximately 11.00 a.m. (Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m.(Hong Kong time) or if the Reference Rate is CNH HIBOR at approximately 11.15 a.m. (Hong Kong time) or if the Reference Rate is SHIBOR at approximately 11.30 a.m. (Beijing time) on the Distribution Determination Date in question. If two or more of the Reference Banks provide the Independent Investment Bank and the Calculation Agent with such offered quotations the Rate of Distribution for such Distribution Accrual Period shall be the arithmetic mean of such offered quotations as determined by the Calculation Agent.(z) If paragraph (y) above applies and the Calculation Agent has received offered quotations from fewer than two Reference Banks subject as provided below the Rate of Distribution shall be the arithmetic mean of the rates per annum (expressed as a percentage) as communicated at the request of the Independent Investment Bank to the Independent Investment Bank and the Calculation Agent by the Reference Banks or any two or more of them at which such banks were offered if the Reference Rate is LIBOR at approximately 11.00 a.m. (London time) or if the Reference Rate is EURIBOR at approximately 11.00 a.m. (Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m. (Hong Kong time) or if the Reference Rate is CNH HIBOR at approximately 11.15 a.m.(Hong Kong time) or if the Reference Rate is SHIBOR at approximately 11.30 a.m. (Beijing time) on the relevant Distribution Determination Date deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in if the Reference Rate is LIBOR the London interbank market or if the Reference Rate is EURIBOR the Euro-zone interbank market or if the Reference Rate is HIBOR or CNH HIBOR the Hong Kong interbank market or if the Reference Rate is SHIBOR the Beijing interbank market as the case may be or if fewer than two of the Reference Banks provide the Independent Investment Bank and the Calculation Agent with such offered rates the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate or the arithmetic mean of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate at which if the Reference Rate is LIBOR at approximately 11.00 a.m. (London time) or if the Reference Rate is EURIBOR at approximately 11.00 a.m.? 191 ?(Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m. (Hong Kong time) or if the Reference Rate is CNH HIBOR at approximately 11.15 a.m. (Hong Kong time) or if the Reference Rate is SHIBOR at approximately 11.30 a.m. (Beijing time) on the relevant Distribution Determination Date any one or more banks (which bank or banks is or are in the opinion of the Independent Investment Bank suitable for such purpose) informs the Independent Investment Bank and the Calculation Agent it is quoting to leading banks in if the Reference Rate is LIBOR the London interbank market or if the Reference Rate is EURIBOR the Euro-zone interbank market or if the Reference Rate is HIBOR or CNH HIBOR the Hong Kong interbank market or if the Reference Rate is SHIBOR the Beijing interbank market as the case may be provided that if the Rate of Distribution cannot be determined in accordance with the foregoing provisions of this Condition 4(b)(iii)(B) the Rate of Distribution shall be determined as at the last preceding Distribution Determination Date (though substituting where a different Maximum Rate of Distribution or Minimum Rate of Distribution is to be applied to the relevant Distribution Accrual Period from that which applied to the last preceding Distribution Accrual Period the Maximum Rate of Distribution or Minimum Rate of Distribution relating to the relevant Distribution Accrual Period in place of the Maximum Rate of Distribution or Minimum Rate of Distribution relating to that last preceding Distribution Accrual Period).For the purposes of this Condition 4(b)(iii)(B) “Independent InvestmentBank” means an internationally recognised independent financial institution or an independent financial adviser with appropriate experience (which shall not be the Calculation Agent) selected and appointed by the Issuer (at the expense of the Issuer) for the purposes of this Condition 4(b)(iii)(B) and notified in writing by the Issuer to the Calculation Agent and the Trustee. (C) Screen Rate Determination for Floating Rate Undated Capital Securities where the Reference Rate is specified as being SOFR Benchmark Where Screen Rate Determination is specified hereon as the manner in which the Rate of Distribution is to be determined where the Reference Rate is SOFR Benchmark the Rate of Distribution for each Distribution Accrual Period will subject as provided below be equal to the sum of the relevant SOFR Benchmark plus or minus (as specified in the relevant Pricing Supplement) the Margin (if any) all as determined by the Calculation Agent on the relevant Distribution Determination Date.The “SOFR Benchmark” will be determined based on Simple SOFR Average Compounded SOFR Average or SOFR Index Average (as specified in the relevant Pricing Supplement) as follows (subject in each case to Condition 4(i)): (x) If Simple SOFR Average (“Simple SOFR Average”) is specified in the relevant Pricing Supplement as the manner in which the SOFR Benchmark will be determined the SOFR Benchmark for each Distribution Accrual Period shall be the arithmetic mean of the SOFR reference rates for each day during such Distribution Accrual Period as calculated by the Calculation Agent and where if applicable and as specified in the relevant ? 192 ?Pricing Supplement the SOFR reference rate on the SOFR Rate Cut-Off Date shall be used for the days in the relevant Distribution Accrual Period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the last day of that Distribution Accrual Period.(y) If Compounded SOFR Average (“Compounded SOFR Average”) is specified in the relevant Pricing Supplement as the manner in which the SOFR Benchmark will be determined the SOFR Benchmark for each Distribution Accrual Period shall be equal to the value of the SOFR reference rates for each day during the relevant Distribution Accrual Period (where SOFR Observation Lag SOFR Payment Delay or SOFR Lockout is specified in the relevant Pricing Supplement to determine Compounded SOFR Average) or SOFR Observation Period (where SOFR Observation Shift is specified as applicable in the relevant Pricing Supplement to determine Compounded SOFR Average).Compounded SOFR Average shall be calculated by the Calculation Agent in accordance with one of the formulas referenced below depending upon which is specified in the relevant Pricing Supplement: (1) SOFR Observation Lag: (∏do ( SOFRi ?xUSBD x ni ) ) 360i=1 1 + ? 1 x 360 d with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFRi-xUSBD” for any U.S. Government Securities Business Day(i) in the relevant Distribution Accrual Period is equal to the SOFR reference rate for the U.S. Government Securities Business Day falling the number of Lookback Days prior to that U.S. Government Securities Business Day(i); “Lookback Days” means such number of U.S. Government Securities Business Days as specified in the relevant Pricing Supplement; “d” means the number of calendar days in the relevant Distribution Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Distribution Accrual Period; “i” means a series of whole numbers ascending from one to do each representing the relevant U.S. Government Securities Business Day in chronological order from (and including) the first U.S. Government Securities Business Day in the relevant Distribution Accrual Period (each a “U.S. Government Securities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day(i).? 193 ?(2) SOFR Observation Shift: (∏doi=1 ( SOFRi x ni ) ) 3601 + ? 1 x 360 d with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant SOFR Observation Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i); “SOFR Observation Period” means in respect of each Distribution Accrual Period the period from (and including) the date falling the number of SOFR Observation Shift Days prior to the first day of the relevant Distribution Accrual Period to (but excluding) the date falling the number of SOFR Observation Shift Days prior to the last day of such Distribution Accrual Period; “SOFR Observation Shift Days” means the number of U.S.Government Securities Business Days as specified in the relevant Pricing Supplement; “d” means the number of calendar days in the relevant SOFR Observation Period; “do” means the number of U.S. Government Securities Business Days in the relevant SOFR Observation Period; “i” means a series of whole numbers ascending from one to do each representing the relevant U.S. Government Securities Business Day in chronological order from (and including) the first U.S. Government Securities Business Day in the relevant SOFR Observation Period (each a “U.S. Government Securities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day(i). (3) SOFR Payment Delay: (∏do ( SOFRi x ni ) ) 360i=1 1 + ? 1 x 360 d with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant Distribution Accrual Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i); “Distribution Payment Date” shall be the date falling the number of Distribution Payment Delay Days following each Distribution Period Date; provided that the Distribution Payment Date with respect to the final Distribution Accrual Period will be the relevant date for redemption; ? 194 ?“Distribution Payment Delay Days” means the number of Business Days as specified in the relevant Pricing Supplement; “d” means the number of calendar days in the relevant Distribution Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Distribution Accrual Period; “i” means a series of whole numbers ascending from one to do each representing the relevant U.S. Government Securities Business Day in chronological order from (and including) the first U.S. Government Securities Business Day in the relevant Distribution Accrual Period (each a “U.S. Government Securities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day(i).For the purposes of calculating Compounded SOFR Average with respect to the final Distribution Accrual Period where SOFR Payment Delay is specified in the relevant Pricing Supplement the SOFR reference rate for each U.S. Government Securities Business Day in the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the relevant date for redemption shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date. (4) SOFR Lockout: (∏do ( SOFRi x nii=1 1 + ) ) 360? 1 x 360 d with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant Distribution Accrual Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i) except that the SOFR for any U.S. Government Securities Business Day(i) in respect of the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the last day of such Distribution Accrual Period shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date; “d” means the number of calendar days in the relevant Distribution Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Distribution Accrual Period; “i” means a series of whole numbers ascending from one to do representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities BusinessDay in the relevant Distribution Accrual Period (each a “U.S.Government Securities Business Day(i)”); and ? 195 ?“ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day(i).The following defined terms shall have the meanings set out below for purpose of Conditions 4(b)(iii)(C)(x) and 4(b)(iii)(C)(y): “Bloomberg Screen SOFRRATE Page” means the Bloomberg screen designated “SOFRRATE” or any successor page or service; “Reuters Page USDSOFR=” means the Reuters page designated “USDSOFR=”or any successor page or service; “SOFR” means with respect to any U.S. Government Securities Business Day the reference rate determined by the Calculation Agent in accordance with the following provision: (i) the Secured Overnight Financing Rate published at the SOFR Determination Time as such reference rate is reported on the Bloomberg Screen SOFRRATE Page; the Secured Overnight Financing Rate published at the SOFR Determination Time as such reference rate is reported on the Reuters Page USDSOFR=; or the Secured Overnight Financing Rate published at the SOFR Determination Time on the SOFR Administrator’s Website; (ii) if the reference rate specified in (i) above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have not occurred the SOFR reference rate shall be the reference rate published on the SOFR Administrator’s Website for the first preceding U.S. Government Securities Business Day for which SOFR was published on the SOFR Administrator’s Website; or (iii) if the reference rate specified in (i) above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have occurred the provisions set forth in Condition 4(i) shall apply; “SOFR Determination Time” means approximately 3:00 p.m. (New York City time) on the immediately following U.S. Government Securities Business Day; and “SOFR Rate Cut-Off Date” has the meaning given in the relevant Pricing Supplement.(z) If SOFR Index Average (“SOFR Index Average”) is specified as applicable in the relevant Pricing Supplement the SOFR Benchmark for each Distribution Accrual Period shall be equal to the value of the SOFR reference rates for each day during the relevant Distribution Accrual Period as calculated by the Calculation Agent as follows: ( SOFR IndexEnd ) ( 360? 1 x ) SOFR IndexStart dc ? 196 ?with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 being rounded upwards) and where: “SOFR Index” with respect to any U.S. Government Securities Business Day means the SOFR Index value as published on the SOFR Administrator’s Website at the SOFR Index Determination Time provided that if such SOFR Index value is not available and: (i) if a SOFR Benchmark Transition Event and its related SOFRBenchmark Replacement Date have not occurred the “SOFR IndexAverage” shall be calculated on any Distribution Determination Date with respect to a Distribution Accrual Period in accordance with the Compounded SOFR Average formula described above in Condition 4(b)(iii)(C)(y)(2) (SOFR Observation Shift); or (ii) if a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have occurred the provisions set forth in Condition 4(i) shall apply; “SOFR IndexEnd” means the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified in the relevant Pricing Supplement prior to the last day of such Distribution Accrual Period; “SOFR IndexStart” means the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified in the relevant Pricing Supplement prior to the first day of the relevant Distribution Accrual Period; “SOFR Index Determination Time” means in relation to any U.S.Government Securities Business Day approximately 3:00 p.m. (New York City time) on such U.S. Government Securities Business Day; and “dc” means the number of calendar days from (and including) the day in relation to which SOFR IndexStart is determined to (but excluding) the day in relation to which SOFR IndexEnd is determined (being the number of calendar days in the applicable reference period).The following defined terms shall have the meanings set out below for purpose of this Condition 4(b)(iii)(C): “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org or any successor source; “SOFR Benchmark Replacement Date” means the date of occurrence of a Benchmark Event with respect to the then-current SOFR Benchmark; “SOFR Benchmark Transition Event” means the occurrence of a Benchmark Event with respect to the then-current SOFR Benchmark; and “U.S. Government Securities Business Day” or “USBD” means any day except for a Saturday a Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.? 197 ?(D) Screen Rate Determination for Floating Rate Undated Capital Securities which specify the Reference Rate as SONIA Benchmark (x) SONIA Compounded Index Rate Where (i) Screen Rate Determination is specified hereon as the manner in which the Rate of Distribution is to be determined; (ii) the Reference Rate is specified hereon as being SONIA Benchmark; and (iii) SONIA Compounded Index Rate is specified hereon as the manner in which the Rate of Distribution is to be determined the Rate of Distribution for each Distribution Period will subject to Condition 4(h) be the SONIA Compounded Index Rate as follows plus or minus (as indicated hereon) the Margin.For the purposes of this Condition 4(b)(iii)(D)(x): “SONIA Compounded Index Rate” means with respect to a Distribution Period the rate of return of a daily compound distribution investment during the Observation Period corresponding to such Distribution Period (with the daily Sterling overnight reference rate as reference rate for the calculation of distribution) and will be calculated by the Calculation Agent on the Distribution Determination Date as follows and the resulting percentage will be rounded if necessary to the fourth decimal place with 0.00005 being rounded upwards ( SONIA Compounded IndexEND 365? 1 ) x ( ) SONIA Compounded IndexSTART d provided however that and subject to Condition 4(h) if the SONIA Compounded Index Value is not available in relation to any Distribution Period on the Relevant Screen Page for the determination of either or both of SONIA Compounded IndexSTART and SONIA Compounded IndexEND the Rate of Distribution shall be calculated for such Distribution Period on the basis of the SONIA Compounded Daily Reference Rate as set out in Condition 4(b)(iii)(D)(y) as if SONIA Compounded Daily Reference Ratewith Observation Shift had been specified hereon and the “Relevant ScreenPage” shall be deemed to be the “Relevant Fallback Screen Page” as specified hereon where: “d” means the number of calendar days in the relevant Observation Period; “London Business Day” means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London; “Observation Period” means in respect of a Distribution Period the period from (and including) the date falling “p” London Business Days prior to the first day of such Distribution Period (and the first Observation Period shall begin on and include the date which is “p” London Business Days prior to the Issue Date) and ending on (but excluding) the date which is “p” London Business Days prior to the Distribution Payment Date for such Distribution Period (or the date falling “p” London Business Days prior to such earlier date if any on which the Undated Capital Securities become due and payable); ? 198 ?“p” means for any Distribution Period the whole number specified hereon (or if no such number is so specified five London Business Days) representing a number of London Business Days; “SONIA Compounded Index” means the index known as the SONIA Compounded Index administered by the Bank of England (or any successor administrator thereof); “SONIA Compounded IndexSTART” means in respect of a Distribution Period the SONIA Compounded Index Value on the date falling “p” London Business Days prior to (i) the first day of such Distribution Period or (ii) in the case of the first Distribution Period the Issue Date; “SONIA Compounded IndexEND” means the SONIA Compounded Index Value on the date falling “p” London Business Days prior to (i) in respect of a Distribution Period the Distribution Payment Date for such Distribution Period or (ii) if the Undated Capital Securities become due and payable prior to the end of a Distribution Period the date on which the Undated Capital Securities become so due and payable; and “SONIA Compounded Index Value” means in relation to any London Business Day the value of the SONIA Compounded Index as published by authorised distributors on the Relevant Screen Page on such London Business Day or if the value of the SONIA Compounded Index cannot be obtained from such authorised distributors as published on the Bank of England’s Website at www.bankofengland.co.uk/boeapps/database/ (or such other page or website as may replace such page for the purposes of publishing the SONIA Compounded Index) on such London Business Day.(y) SONIA Compounded Daily Reference Rate Where (i) Screen Rate Determination is specified hereon as the manner in which the Rate of Distribution is to be determined (ii) the Reference Rate is specified hereon as being SONIA Benchmark; and (iii) SONIA Compounded Daily Reference Rate is specified hereon the Rate of Distribution for each Distribution Period will subject to Condition 4(h) be the SONIA Compounded Daily Reference Rate as follows plus or minus (as indicated hereon) the Margin “SONIA Compounded Daily Reference Rate” means in respect of a Distribution Period the rate of return of a daily compound distribution investment (with the daily Sterling overnight reference rate as reference rate for the calculation of distribution) and will be calculated by the Calculation Agent on the Distribution Determination Date as follows and the resulting percentage will be rounded if necessary to the fourth decimal place with 0.00005 being rounded upwards d [ o∏ ( SONIAi x ni 3651 + ) ? 1] x i=1 365 d Where: “London Business Day” “Observation Period” and “p” have the meanings set out under Condition 4(b)(iii)(D)(x); ? 199 ?“d” is the number of calendar days in the relevant: (i) Observation Period where Observation Shift is specified hereon; or (ii) Distribution Period where Lag is specified hereon; “do” is the number of London Business Days in the relevant: (i) Observation Period where Observation Shift is specified hereon; or (ii) Distribution Period where Lag is specified hereon; “i” is a series of whole numbers from one to do each representing the relevant London Business Day in chronological order from and including the first London Business Day in the relevant: (i) Observation Period where Observation Shift is specified hereon; or (ii) Distribution Period where Lag is specified hereon; “ni” for any London Business Day “i” means the number of calendar days from and including such London Business Day “i” up to but excluding the following London Business Day; “SONIAi” means in relation to any London Business Day the SONIA reference rate in respect of: (i) that London Business Day “i” where Observation Shift is specified hereon; or (ii) the London Business Day (being a London Business Day falling in the relevant Observation Period) falling “p” London Business Days prior to the relevant London Business Day “i” where Lag is specified hereon; and the “SONIA reference rate” in respect of any London Business Day is a reference rate equal to the daily Sterling Overnight Index Average (“SONIA”) rate for such London Business Day as provided by the administrator of SONIA to authorised distributors and as then published on the Relevant Screen Page on the next following London Business Day or if the Relevant Screen Page is unavailable as published by authorised distributors on such London Business Day or if SONIA cannot be obtained from such authorised distributors as published on the Bank of England’s Website at www.bankofengland.co.uk/boeapps/database/ (or such other page or website as may replace such page for the purposes of publishing the SONIA reference rate).? 200 ?(z) Subject to Condition 4(h) where SONIA Benchmark is specified as the Reference Rate hereon and either (i) SONIA Compounded Daily Reference Rate is specified hereon or (ii) the SONIA Compounded Index Rate is specified hereon and Condition 4(b)(iii)(D)(y) applies if in respect of any London Business Day the SONIA reference rate is not available on the Relevant Screen Page or Relevant Fallback Screen Page as applicable (or as otherwise provided in the relevant definition thereof) such Reference Rate shall be: (1) the Bank of England’s Bank Rate (the “Bank Rate”) prevailing at close of business on the relevant London Business Day; plus (ii) the mean of the spread of the SONIA reference rate to the Bank Rate over the previous five days on which the SONIA reference rate has been published excluding the highest spread (or if there is more than one highest spread one only of those highest spreads) and lowest spread (or if there is more than one lowest spread one only of those lowest spreads) to the Bank Rate or (2) if such Bank Rate is not available the SONIA reference rate published on the Relevant Screen Page (or as otherwise provided in the relevant definition thereof) for the first preceding London Business Day on which the SONIA reference rate was published on the Relevant Screen Page (or as otherwise provided in the relevant definition thereof) and in each case SONIAi shall be interpreted accordingly.(aa) If the Rate of Distribution cannot be determined in accordance with the foregoing provisions but without prejudice to Condition 4(h) the Rate of Distribution shall be (i) that determined as at the last preceding Distribution Determination Date (though substituting where a different Margin or Maximum Rate of Distribution or Minimum Rate of Distribution is to be applied to the relevant Distribution Accrual Period from that which applied to the last preceding Distribution Accrual Period the Margin or Maximum Rate of Distribution or Minimum Rate of Distribution relating to the relevant Distribution Accrual Period in place of the Margin or Maximum Rate of Distribution or Minimum Rate of Distribution relating to that last preceding Distribution Accrual Period) or (ii) if there is no such preceding Distribution Determination Date the initial Rate of Distribution which would have been applicable to such Series of Undated Capital Securities for the first Distribution Accrual Period had the Undated Capital Securities been in issue for a period equal in duration to the scheduled first Distribution Accrual Period but ending on (and excluding) the Distribution Commencement Date (but applying the Margin and any Maximum Rate of Distribution or Minimum Rate of Distribution applicable to the first Distribution Accrual Period).(bb) If the relevant Series of Undated Capital Securities become due and payable in accordance with Condition 11 the final Distribution Determination Date shall notwithstanding any Distribution Determination Date specified hereon be deemed to be the date on which such Undated Capital Securities became due and payable and the Rate of Distribution on such Undated Capital Securities shall for so long as any such Undated Capital Securities remains outstanding be that determined on such date.? 201 ?(c) Determination and Publication of Reset Distribution Rate: The Calculation Agent shall on the second Business Day prior to each Reset Date calculate the applicable Reset Distribution Rate and cause the Reset Distribution Rate to be notified to the Trustee the Issuer each of the Paying Agents the Securityholders and any other Calculation Agent appointed in respect of the Undated Capital Securities that is to make a further calculation upon receipt of such information as soon as possible after their determination but in no event later than: (i) the commencement of the relevant Distribution Period if determined prior to such time in the case of notification to such exchange of a Rate of Distribution and Distribution Amount; or (ii) in all other cases the fourth Business Day after such determination.The determination of any rate the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties and the Securityholders.If the Undated Capital Securities are listed on a stock exchange and the rules of such exchange or other relevant authority so require such exchange or other relevant authority the Issuer shall notify such stock exchange or other relevant authority as soon as possible.(d) Margin Maximum/Minimum Rates of Distribution and Redemption Amounts and Rounding: (i) If any Margin is specified hereon (either (x) generally or (y) in relation to one or more Distribution Accrual Periods) an adjustment shall be made to all Rates of Distribution in the case of (x) or the Rates of Distribution for the specified Distribution Accrual Periods in the case of (y) calculated in accordance with Condition 4(b) above by adding (if a positive number) or subtracting the absolute value (if a negative number) of such Margin subject always to the next paragraph.(ii) If any Maximum Rate of Distribution or Minimum Rate of Distribution or Redemption Amount is specified hereon then any Rate of Distribution or Redemption Amount shall be subject to such maximum or minimum as the case may be.(iii) For the purposes of any calculations required pursuant to these Conditions (unless otherwise specified) (x) all percentages resulting from such calculations shall be rounded if necessary to the nearest fifth decimal place (with halves being rounded up) (y) all figures shall be rounded to seven significant figures (with halves being rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest unit of such currency (with halves being rounded up) save in the case of yen which shall be rounded down to the nearest yen. For these purposes “unit” means the lowest amount of such currency that is available as legal tender in the country(ies) of such currency.(e) Calculations: The amount of Distribution payable per calculation amount specified hereon(or if no such amount is so specified the Specified Denomination) (the “CalculationAmount”) in respect of any Undated Capital Security for any Distribution Accrual Period shall be equal to the product of the Rate of Distribution the Calculation Amount and the Day Count Fraction for such Distribution Accrual Period unless a Distribution Amount (or a formula for its calculation) is applicable to such Distribution Accrual Period in which case the amount of Distribution payable per Calculation Amount in respect of such Undated Capital Security for such Distribution Accrual Period shall equal such Distribution Amount (or be calculated in accordance with such formula). Where any Distribution Period comprises two or more Distribution Accrual Periods the amount of Distribution payable ? 202 ?per Calculation Amount in respect of such Distribution Period shall be the sum of the Distribution Amounts payable in respect of each of those Distribution Accrual Periods. In respect of any other period for which Distributions are required to be calculated the provisions above shall apply save that the Day Count Fraction shall be for the period for which Distributions are required to be calculated.(f) Determination and Publication of Rates of Distribution Distribution Amounts Final Redemption Amounts Early Redemption Amounts and Optional Redemption Amounts: The Calculation Agent shall as soon as practicable on each Distribution Determination Date or such other time on such date as the Calculation Agent may be required to calculate any rate or amount or make any determination or calculation determine such rate and calculate the Distribution Amounts for the relevant Distribution Accrual Period calculate the Final Redemption Amount Early Redemption Amount or Optional Redemption Amount or make such determination or calculation as the case may be and cause the Rate of Distribution and the Distribution Amounts for each Distribution Accrual Period and the relevant Distribution Payment Date and if required to be calculated the Final Redemption Amount Early Redemption Amount or Optional Redemption Amount to be notified to the Trustee the Issuer each of the Paying Agents the Securityholders and any other Calculation Agent appointed in respect of the Undated Capital Securities that is to make a further calculation upon receipt of such information as soon as possible after their determination but in no event later than: (i) the commencement of the relevant Distribution Period if determined prior to such time in the case of notification to such exchange of a Rate of Distribution and Distribution Amount; or (ii) in all other cases the fourth Business Day after such determination.Where any Distribution Payment Date or Distribution Period End Date is subject to adjustment pursuant to Condition 4(b)(ii) the Distribution Amounts and the Distribution Payment Date so published may subsequently be amended (or appropriate alternative arrangements made with the consent of the Trustee by way of adjustment) without notice in the event of an extension or shortening of the Distribution Period. If the Undated Capital Securities become due and payable under Condition 11 the accrued Distribution and the Rate of Distribution payable in respect of the Undated Capital Securities shall subject in the case of each of the SONIA Compounded Index Rate and the SONIA Compounded Daily Reference Rate to Condition 4(b)(iii)(D)(y)(i) nevertheless continue to be calculated as previously in accordance with this Condition 4(f) but no publication of the Rate of Distribution or the Distribution Amount so calculated need be made unless the Trustee otherwise requires. The determination of any rate or amount the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties and the Securityholders.If the Undated Capital Securities are listed on a stock exchange and the rules of such exchange or other relevant authority so require such exchange or other relevant authority the Issuer shall notify such stock exchange or other relevant authority as soon as possible.(g) Determination or Calculation by an agent of the Issuer: If the Calculation Agent does not at any time for any reason determine or calculate the Rate of Distribution for an Distribution Accrual Period or any Distribution Amount Final Redemption Amount Early Redemption Amount or Optional Redemption Amount the Trustee may appoint an agent on its behalf to do so and such determination or calculation shall be deemed to have been made by the Calculation Agent. In doing so such agent shall apply the foregoing provisions of this Condition 4 with any necessary consequential amendments to the extent that in its ? 203 ?opinion it can do so and in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances. The determination of any rate or amount and the making of each determination or calculation by such agent pursuant to this Condition 4(g) shall (in the absence of manifest error) be final and binding upon all parties. (h) Benchmark Discontinuation (other than Floating Rate Undated Capital Securities which specify the Reference Rate as SOFR Benchmark): This Condition 4(h) shall apply to only those Undated Capital Securities for which this Condition 4(h) is specified as “Applicable” in the applicable Pricing Supplement.Notwithstanding any other provision of this Condition 4(h) no Successor Rate or Alternative Rate (as applicable) will be adopted nor will other amendments to the terms of any Undated Capital Securities be made pursuant to this Condition 4(h) if and to the extent that in the determination of the Issuer the same could reasonably be expected to prejudice the qualification of the Undated Capital Securities as Additional Tier 1 capital of the Issuer and/or the Group and/or as eligible liabilities or loss absorbing capacity instruments for the purposes of the Banking Capital Regulations and/or any applicable Loss Absorbing Capacity Rules.(i) Independent Adviser: If a Benchmark Event occurs in relation to an Original Reference Rate when any Rate of Distribution (or any component part thereof) remains to be determined by reference to such Original Reference Rate the Issuer shall use its reasonable endeavours to appoint an Independent Adviser as soon as reasonably practicable to determine a Successor Rate or failing which an Alternative Rate (in accordance with Condition 4(h)(ii)) and in either case an Adjustment Spread (if any in accordance with Condition 4(h)(iii)) and any Benchmark Amendments (in accordance with Condition 4(h)(iv)).In making such determination the Independent Adviser appointed pursuant to this Condition 4(h) shall act in good faith as an expert and in consultation with the Issuer.In the absence of bad faith or fraud the Independent Adviser shall have no liability whatsoever to the Issuer the Trustee the Paying Agents or the Securityholders for any determination made by it pursuant to this Condition 4(h).If (A) the Issuer is unable to appoint an Independent Adviser; or (B) the Independent Adviser fails to determine a Successor Rate or failing which an Alternative Rate in accordance with this Condition 4(h)(i) prior to the relevant Distribution Determination Date the Rate of Distribution applicable to the next succeeding Distribution Accrual Period shall be equal to the Rate of Distribution last determined in relation to the Undated Capital Securities in respect of the immediately preceding Distribution Accrual Period. If there has not been a first Distribution Payment Date the Rate of Distribution shall be the initial Rate of Distribution. Where a different Margin or Maximum Rate of Distribution or Minimum Rate of Distribution is to be applied to the relevant Distribution Accrual Period from that which applied to the last preceding Distribution Accrual Period the Margin or Maximum Rate of Distribution or Minimum Rate of Distribution relating to the relevant Distribution Accrual Period shall be substituted in place of the Margin or Maximum Rate of Distribution or Minimum Rate of Distribution relating to that last preceding Distribution Accrual Period. For the avoidance of doubt this paragraph shall apply to the relevant next succeeding Distribution Accrual Period only and any subsequent Distribution Accrual Periods are subject to the subsequent operation of and to adjustment as provided in the first paragraph of this Condition 4(h)(i).? 204 ?(ii) Successor Rate or Alternative Rate: If the Independent Adviser determines that: (A) there is a Successor Rate then such Successor Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the Rate of Distribution (or the relevant component part thereof) for all future payments of distribution on the Undated Capital Securities (subject to the operation of this Condition 4(h)); or (B) there is no Successor Rate but that there is an Alternative Rate then such Alternative Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the Rate of Distribution (or the relevant component part thereof) for all future payments of distribution on the Undated Capital Securities (subject to the operation of this Condition 4(h)).(iii) Adjustment Spread: If the Independent Advisor determines that: (A) an Adjustment Spread is required to be applied to the Successor Rate or the Alternative Rate (as the case may be); and (B) the quantum of or a formula or methodology for determining such Adjustment Spread then the Adjustment Spread (or the formula or methodology for determining the Adjustment Spread) shall be applied to the Successor Rate or the Alternative Rate (as the case may be).(iv) Benchmark Amendments: If any Successor Rate or Alternative Rate and in either case the applicable Adjustment Spread is determined in accordance with this Condition 4(h) and the Independent Adviser determines: (A) that amendments to these Conditions and/or the Trust Deed are necessary to ensure the proper operation of such Successor Rate or Alternative Rate and/or (in either case) the applicable Adjustment Spread (such amendments the “Benchmark Amendments”); and (B) the terms of the Benchmark Amendments then the Issuer shall subject to giving notice thereof in accordance with Condition 4(h)(v) without any requirement for the consent or approval of Securityholders the Trustee or the Agents vary these Conditions and/or the Trust Deed to give effect to such Benchmark Amendments with effect from the date specified in such notice.At the request of the Issuer but subject to receipt by the Trustee of a certificate signed by two Authorised Signatories of the Issuer pursuant to Condition 4(h)(v) the Trustee shall (at the expense of the Issuer) without any requirement for the consent or approval of the Securityholders be obliged to concur with the Issuer in effecting any Benchmark Amendments (including inter alia by the execution of a deed supplemental to or amending the Trust Deed) provided that the Trustee shall not be obliged so to concur if in the opinion of the Trustee doing so would impose more onerous obligations upon it or expose it to any additional duties responsibilities or liabilities or reduce or amend the protective provisions afforded to the Trustee in these Conditions or the Trust Deed (including for the avoidance of doubt any supplemental trust deed) in any way.? 205 ?For the avoidance of doubt the Trustee and the Issuing and Paying Agent shall at the direction and expense of the Issuer effect such consequential amendments to the Trust Deed the Agency Agreement and these Conditions as may be required in order to give effect to this Condition 4(h)(iv). Securityholders’ consent shall not be required in connection with effecting of the Successor Rate or the Alternative Rate (as applicable) any Adjustment Spread Benchmark Amendments or such other changes including the execution of any documents or any steps by the Trustee or the Issuing and Paying Agent (if required).In connection with any such variation in accordance with this Condition 4(h)(iv) the Issuer shall comply with the rules of any stock exchange on which the Undated Capital Securities are for the time being listed or admitted to trading.Notwithstanding any other provision of this Condition 4(h)(iv) no Successor Rate or Alternative Rate (as applicable) will be adopted nor will the applicable Adjustment Spread be applied nor will any Benchmark Amendments be made if and to the extent that in the determination of the Issuer the same could reasonably be expected to prejudice the qualification of the Undated Capital Securities as Additional Tier 1 capital of the Issuer and/or the Group and/or as eligible liabilities or loss absorbing capacity instruments for the purposes of the Banking Capital Regulations and/or any applicable Loss Absorbing Capacity Rules.(v) Notices: Any Successor Rate Alternative Rate Adjustment Spread and the specific terms of any Benchmark Amendments determined under this Condition 4(h) will be notified promptly by the Issuer to the Trustee the Calculation Agent the Paying Agents and in accordance with Condition 15 the Securityholders. Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments if any.No later than notifying the Trustee of the same the Issuer shall deliver to the Trustee a certificate signed by two Authorised Signatories of the Issuer: (A) confirming (I) that a Benchmark Event has occurred (II) the Successor Rate or as the case may be the Alternative Rate (if applicable) (III) the applicable Adjustment Spread (if any) and (IV) the specific terms of the Benchmark Amendments (if any) in each case as determined in accordance with the provisions of this Condition 4(h); and (B) certifying that the Benchmark Amendments (if any) are necessary to ensure the proper operation of such Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread (if any).The Trustee shall be entitled to rely on such certificate (without liability to any person) as sufficient evidence thereof. The Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark Amendments (if any) specified in such certificate will (in the absence of manifest error or bad faith in the determination of the Successor Rate Alternative Rate the Adjustment Spread or the Benchmark Amendments (if any) and without prejudice to the Trustee’s ability to rely on such certificate as aforesaid) be binding on the Issuer the Trustee the Calculation Agent the Paying Agents the Securityholders.(vi) Survival of Original Reference Rate: Without prejudice to the obligations of the Issuer under Conditions 4(h)(i) 4(h)(ii) 4(h)(iii) and 4(h)(iv) the Original Reference Rate and the fallback provisions provided for in Condition 4(b)(iii)(B) as applicable will continue to apply unless and until a Benchmark Event has occurred.? 206 ?(vii) Definitions: As used in this Condition 4(h): “Adjustment Spread” means either (A) a spread (which may be positive negative or zero) or (B) a formula or methodology for calculating a spread in each case to be applied to the Successor Rate or the Alternative Rate (as the case may be) and is the spread formula or methodology which: (i) in the case of a Successor Rate is formally recommended in relation to the replacement of the Original Reference Rate with the Successor Rate by any Relevant Nominating Body; or (ii) (if no such recommendation as referred to in (i) above of this definition has been made or in the case of an Alternative Rate) the Independent Adviser determines as being customarily applied to the relevant Successor Rate or the Alternative Rate (as the case may be) in international debt capital markets transactions to produce an industry-accepted replacement rate for the Original Reference Rate; or (iii) (if the Independent Adviser determines that no such spread as referred to in (ii) above of this definition is customarily applied) the Independent Adviser (in consultation with the Issuer) determines and which is recognised or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate where such rate has been replaced by the Successor Rate or the Alternative Rate (as the case may be); “Alternative Rate” means an alternative benchmark or screen rate which the Independent Adviser determines in accordance with Condition 4(h)(ii) as being customarily applied in market usage in the international debt capital markets transactions for the purposes of determining rates of distribution (or the relevant component part thereof) in the same Specified Currency as the Undated Capital Securities; “Authorised Signatory” has the meaning given to it in the Trust Deed; “Benchmark Amendments” has the meaning given to it in Condition 4(h)(iv); “Benchmark Event” means: (i) the Original Reference Rate ceasing to be published for a period of at least five Business Days or ceasing to exist; or (ii) a public statement by the administrator of the Original Reference Rate that it has ceased or that it will cease publishing the Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of the Original Reference Rate) and such cessation is reasonably expected by the Issuer to occur during the term of the Undated Capital Securities; or (iii) a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate has been or will be permanently or indefinitely discontinued and such discontinuation is reasonably expected by the Issuer to occur during the term of the Undated Capital Securities; or ? 207 ?(iv) a public statement by the supervisor of the administrator of the Original Reference Rate as a consequence of which the Original Reference Rate will be prohibited from being used either generally or in respect of the Undated Capital Securities and such prohibition is reasonably expected by the Issuer to occur during the term of the Undated Capital Securities; or (v) a public statement by the supervisor of the administrator of the Original Reference Rate that the Original Reference Rate is or will be (or is or will be deemed by such supervisor to be) no longer representative of its relevant underlying market; or (vi) it has become unlawful for any Paying Agent the Calculation Agent the Issuer or other party to calculate any payments due to be made to any Securityholder using the Original Reference Rate provided that the Benchmark Event shall be deemed to occur (a) in the case of subparagraphs (ii) and (iii) above on the date of the cessation of publication of the Original Reference Rate or the discontinuation of the Original Reference Rate as the case may be (b) in the case of sub-paragraph (iv) above on the date of the prohibition or restriction of use of the Original Reference Rate and (c) in the case of sub-paragraph (v) above on the date with effect from which the Original Reference Rate will no longer be (or will be deemed by the relevant supervisor to no longer be) representative of its relevant underlying market and which is specified in the relevant public statement and in each case not the date of the relevant public statement; “Independent Adviser” means an independent financial institution of international or national repute or an independent financial adviser with appropriate expertise appointed by the Issuer under Condition 4(h)(i); “Original Reference Rate” means the originally-specified benchmark or screen rate (as applicable) used to determine the Rate of Distribution (or any component part thereof) on the Undated Capital Securities; “Relevant Nominating Body” means in respect of a benchmark or screen rate (as applicable): (i) the central bank for the currency to which the benchmark or screen rate (as applicable) relates or any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable); or (ii) any working group or committee sponsored by chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which the benchmark or screen rate (as applicable) relates (b) any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable) (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof; and “Successor Rate” means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body.? 208 ?(i) Benchmark Replacement (SOFR): The following provisions shall apply if Benchmark Event (SOFR) is specified as applicable in the relevant Pricing Supplement: (i) Benchmark Replacement If the Issuer or its designee determines on or prior to the relevant Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the-then current Benchmark the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Undated Capital Securities in respect of all determinations on such date and for all determinations on all subsequent dates. In connection with the implementation of a Benchmark Replacement the Issuer will have the right to make Benchmark Replacement Conforming Changes from time to time without any requirement for the consent or approval of the Securityholders.(ii) Benchmark Replacement Conforming Changes In connection with the implementation of a Benchmark Replacement the Issuer or its designee will have the right to make Benchmark Replacement Conforming Changes from time to time. For the avoidance of doubt the Trustee and any of the Agents shall at the request and expense of the Issuer effect such consequential amendments to the Trust Deed the Agency Agreement and these Conditions as may be required to give effect to this Condition 4(i). Securityholders’ consent shall not be required in connection with effecting any such changes including the execution of any documents or any steps to be taken by the Trustee or any of the Agents (if required).Further none of the Trustee or the Agents shall be responsible or liable for any determinations decisions or elections made by the Issuer or its designee with respect to any Benchmark Replacement or any other changes and shall be entitled to accept and rely conclusively on any certifications provided to each of them in this regard.(iii) Decisions and Determinations Any determination decision or election that may be made by the Issuer or its designee pursuant to this Condition 4(i) including any determination with respect to a tenor rate or adjustment or of the occurrence or non-occurrence of an event circumstance or date and any decision to take or refrain from taking any action or any selection (i) will be conclusive and binding absent manifest error (ii) will be made in the sole discretion of the Issuer or its designee as applicable and (iii) notwithstanding anything to the contrary in the documentation relating to the Undated Capital Securities shall become effective without consent from the holders of the Undated Capital Securities or any other party.(iv) The following defined terms shall have the meanings set out below for purpose of Conditions 4(b)(iii)(C) and 4(i): “Benchmark” means initially the relevant SOFR Benchmark specified in the relevant Pricing Supplement; provided that if the Issuer or its designee determines on or prior to the Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the relevant SOFR Benchmark (including any daily published component used in the calculation thereof) or the then-current Benchmark then “Benchmark” means the applicable Benchmark Replacement; ? 209 ?“Benchmark Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof): (1) a public statement or publication of information by or on behalf of the administrator of the Benchmark (or such component) announcing that such administrator has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely provided that at the time of such statement or publication there is no successor administrator that will continue to provide the Benchmark (or such component); or (2) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark (or such component) the central bank for the currency of the Benchmark (or such component) an insolvency official with jurisdiction over the administrator for the Benchmark (or such component) a resolution authority with jurisdiction over the administrator for the Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark which states that the administrator of the Benchmark (or such component) has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely provided that at the time of such statement or publication there is no successor administrator that will continue to provide the Benchmark (or such component); or (3) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative; “Benchmark Replacement” means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date: (1) the sum of: (a) the alternate reference rate that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof); and (b) the Benchmark Replacement Adjustment; (2) the sum of: (a) the ISDA Fallback Rate; and (b) the Benchmark Replacement Adjustment; or (3) the sum of: (a) the alternate reference rate that has been selected by the Issuer or its designee as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) giving due consideration to any industry-accepted reference rate as a replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) for U.S. dollar-denominated Floating Rate Undated Capital Securities at such time; and ? 210 ?(b) the Benchmark Replacement Adjustment; “Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date: (1) the spread adjustment or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement; (2) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate the ISDA Fallback Adjustment; or (3) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Issuer or its designee giving due consideration to any industry-accepted spread adjustment or method for calculating or determining such spread adjustment for the replacement of the then-current Benchmark (including any daily published component used in the calculation thereof) with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated Floating Rate Undated Capital Securities at such time; “Benchmark Replacement Conforming Changes” means with respect to any Benchmark Replacement any technical administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of distribution rounding of amounts or tenors and other administrative matters) that the Issuer or its designee decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or if the Issuer or its designee decides that adoption of any portion of such market practice is not administratively feasible or if the Issuer or its designee determines that no market practice for use of the Benchmark Replacement exists in such other manner as the Issuer or its designee determines is reasonably necessary); “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof): (1) in the case of sub-paragraph (1) or (2) of the definition of “Benchmark Event” the later of: (a) the date of the public statement or publication of information referenced therein; and (b) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark (or such component); or (2) in the case of sub-paragraph (3) of the definition of “Benchmark Event” the date of the public statement or publication of information referenced therein.For the avoidance of doubt if the event giving rise to the Benchmark Replacement Date occurs on the same day as but earlier than the Reference Time in respect of any determination the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination; “designee” means a designee as selected and separately appointed by the Issuer in writing; ? 211 ?“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association Inc. and as amended and updated or (if specified in applicable Pricing Supplement) the 2021 Definitions published by the International Swaps and Derivatives Association Inc. or any successor thereto as amended or supplemented from time to time or any successor definitional booklet for interest rate derivatives published from time to time as at the Issue Date of the first Tranche of the Undated Capital Securities unless otherwise specified hereon.“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark; “ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark (including any daily published component used in the calculation thereof) for the applicable tenor excluding the applicable ISDA Fallback Adjustment; “Reference Time” with respect to any determination of the Benchmark means (1) if the Benchmark is the SOFR Benchmark the SOFR Determination Time (where Simple SOFR Average or Compounded SOFR Average is specified in the relevant Pricing Supplement) or SOFR Index Determination Time (where SOFR Index Average is specified in the relevant Pricing Supplement); or (2) if the Benchmark is not the SOFR Benchmark the time determined by the Issuer or its designee after giving effect to the Benchmark Replacement Conforming Changes; “Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto; and “Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.Notwithstanding any other provision of this Condition 4(i) no alternative reference rate will be adopted and no other amendments to the terms of any Undated Capital Securities will be made pursuant to this Condition 4(i) if and to the extent that in the determination of the Issuer the same could reasonably be expected to prejudice the qualification of any of the Undated Capital Securities under the Capital Regulations.(j) Definitions: In these Conditions unless the context otherwise requires the following defined terms shall have the meanings set out below: “Business Day” means: (i) in the case of Undated Capital Securities denominated in a currency other than Euro or Renminbi a day (other than a Saturday Sunday or public holiday) on which commercial banks and foreign exchange markets settle payments in the principal financial centre for such currency; (ii) in the case of Undated Capital Securities denominated in Euro a day on which the TARGET System is operating (a “TARGET Business Day”) and a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments of Euro in Luxembourg; ? 212 ?(iii) in the case of Undated Capital Securities denominated in Renminbi a day (other than a Saturday Sunday or public holiday) on which commercial banks in Hong Kong are generally open for business and settlement of Renminbi payments in Hong Kong; and/or (iv) in the case of Undated Capital Securities denominated in a currency and/or one or more Financial Centres a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in such currency in the Financial Centre(s) or if no currency is indicated generally in each of the Financial Centres; “CNY” or “Renminbi” means the lawful currency of the PRC; “Day Count Fraction” means in respect of the calculation of an amount of Distribution on any Undated Capital Security for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting a Distribution Period or a Distribution Accrual Period the “Calculation Period”): (i) if “Actual/Actual” or “Actual/Actual — ISDA” is specified hereon the actual number of days in the Calculation Period divided by 365 (or if any portion of that Calculation Period falls in a leap year the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365); (ii) if “Actual/365 (Fixed)” is specified hereon the actual number of days in the Calculation Period divided by 365; (iii) if “Actual/360” is specified hereon the actual number of days in the Calculation Period divided by 360; (iv) if “30/360” “360/360” or “Bond Basis” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 x (Y2 - Y1)] + [30 x (M - M )] + (D - D )Day Count Fraction = 2 1 2 1 360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; “M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless such number is 31 in which case D1 will be 30; and ? 213 ?“D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless such number is 31 and D1 is greater than 29 in which case D2 will be 30; (v) if “30E/360” or “Eurobond Basis” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 x (Y2 - Y1)] + [30 x (M - M )] + (DDay Count Fraction = 2 1 2 - D1) 360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; “M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless such number is 31 in which case D1 will be 30; and “D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless such number is 31 in which case D2 will be 30; (vi) if “30E/360 (ISDA)” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 x (Y - Y )] + [30 x (M - M )] + (D - D ) Day Count Fraction = 2 1 2 1 2 1 360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; “M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless (i) that day is the last day of February or (ii) such number is 31 in which case D1 will be 30; and ? 214 ?“D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless (i) that day is the last day of February but not the Maturity Date or (ii) such number is 31 in which case D2 will be 30; (vii) if “Actual/Actual-ICMA” is specified hereon: (a) if the Calculation Period is equal to or shorter than the Determination Period during which it falls the number of days in the Calculation Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Periods normally ending in any year; and (b) if the Calculation Period is longer than one Determination Period the sum of: (x) the number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year; and (y) the number of days in such Calculation Period falling in the next Determination Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year where: “Determination Date” means the date(s) specified as such hereon or if none is so specified the Distribution Payment Date(s); and “Determination Period” means the period from and including a Determination Date in any year to but excluding the next Determination Date; “Distribution Accrual Period” means the period beginning on (and including) the Distribution Commencement Date and ending on (but excluding) the first Distribution Period End Date and each successive period beginning on (and including) a Distribution Period End Date and ending on (but excluding) the next succeeding Distribution Period End Date; “Distribution Amount” means: (i) in respect of a Distribution Accrual Period the amount of Distribution payable per Calculation Amount for that Distribution Accrual Period and which in the case of Fixed Rate Undated Capital Securities and unless otherwise specified hereon shall mean the Fixed Distribution Amount or Broken Amount specified hereon as being payable on the Distribution Payment Date ending the Distribution Period of which such Distribution Accrual Period forms part; and (ii) in respect of any other period the amount of Distribution payable per Calculation Amount for that period; “Distribution Commencement Date” means the Issue Date or such other date as may be specified hereon; “Distribution Determination Date” means with respect to a Rate of Distribution and Distribution Accrual Period the date specified as such hereon or if none is so specified: ? 215 ?(i) the first day of such Distribution Accrual Period if the Specified Currency is Sterling or Hong Kong dollars or Renminbi other than where the Specified Currency is Renminbi and the Reference Rate is CNH HIBOR; or (ii) the day falling two Business Days in London prior to the first day of such Distribution Accrual Period if the Specified Currency is neither Sterling nor Hong Kong dollars nor Euro nor Renminbi or (iii) the day falling two TARGET Business Days prior to the first day of such Distribution Accrual Period if the Specified Currency is Euro; or (iv) the day falling two Business Days in Hong Kong prior to the first day of such Distribution Accrual Period if the Specified Currency is Renminbi and the Reference Rate is CNH HIBOR; “Distribution Period” means the period beginning on (and including) the Distribution Commencement Date and ending on (but excluding) the first Distribution Payment Date and each successive period beginning on (and including) a Distribution Payment Date and ending on (but excluding) the next succeeding Distribution Payment Date; “Distribution Period End Date” means each Distribution Payment Date unless otherwise specified hereon; “Euro” means the currency of the member states of the European Union that adopt the single currency in accordance with the treaty establishing the European Community as amended from time to time; “Euro-zone” means the region comprised of member states of the European Union that adopt the single currency in accordance with the treaty establishing the European Community as amended; “HKD” or “Hong Kong dollars” means the lawful currency of Hong Kong; “ISDA Definitions” means the 2006 ISDA Definitions as published by the International Swaps and Derivatives Association Inc. (as may be updated amended or supplemented from time to time) unless otherwise specified hereon; “Rate of Distribution” means the rate of Distribution payable from time to time in respect of this Undated Capital Security and that is either specified or calculated in accordance with the provisions hereon; “Reference Banks” means: (i) in the case of a determination of LIBOR the principal London office of four major banks in the London interbank market; (ii) in the case of a determination of EURIBOR the principal Euro-zone office of four major banks in the Euro-zone interbank market; (iii) in the case of a determination of HIBOR the principal Hong Kong office of four major banks in the Hong Kong interbank market; and (iv) in the case of a determination of CNH HIBOR the principal Hong Kong office of four major banks dealing in Chinese Yuan in the Hong Kong interbank market in each case selected by the Issuer or as specified hereon; ? 216 ?“Reference Rate” means the rate specified as such hereon or such other page section caption column or other part as may replace it on that information service or such other information service in each case as may be nominated by the person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate; “Relevant Rate” means a fixed rate per annum (expressed as a percentage) of the then prevailing U.S. Treasury Rate (as defined in the applicable Pricing Supplement) payable semi-annually in arrear; “Relevant Screen Page” means such page section caption column or other part of a particular information service as may be specified hereon; “Specified Currency” means the currency specified as such hereon or if none is specified the currency in which the Undated Capital Securities are denominated; “Spread” means the relevant spread as defined in the applicable Pricing Supplement; “Sterling” means the lawful currency of the United Kingdom; and “TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express Transfer System which was launched on 19 November 2007 or any successor thereto.(k) Calculation Agent: The Issuer shall procure that there shall at all times be one or more Calculation Agents if provision is made for them hereon and for so long as any Undated Capital Security is outstanding (as defined in the Trust Deed). Where more than one Calculation Agent is appointed in respect of the Undated Capital Securities references in these Conditions to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under the Conditions. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Rate of Distribution for a Distribution Accrual Period or to calculate any Distribution Amount Final Redemption Amount Early Redemption Amount or Optional Redemption Amount as the case may be or to comply with any other requirement the Issuer shall (with the prior approval of the Trustee) appoint a leading bank or financial institution engaged in the interbank market (or if appropriate money swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid. 5 Distribution Restrictions (a) Optional Distribution Cancellation Event: Unless a Distribution has already been cancelled in full pursuant to a Mandatory Distribution Cancellation Event prior to any Distribution Payment Date the Issuer may at its sole discretion elect to cancel any payment of Distribution (each an “Optional Distribution Cancellation Event”) in whole or in part by giving a notice to the Trustee signed by two Authorised Signatories of the Issuer which shall be conclusive and binding on the Securityholders (such notice a “Distribution Cancellation Notice”) of such election to the Securityholders in accordance with Condition 15 and to the Trustee and the Agents at least 10 Business Days prior to the relevant Distribution Payment Date. The Issuer shall have no obligation to pay any Distribution on any Distribution Payment Date if it validly elects not to do so in accordance with this Condition 5(a) and any failure to pay such Distribution shall not constitute a Default. Distributions are non-cumulative and any Distribution that is cancelled shall therefore not be payable at any time thereafter whether in a Winding-Up or otherwise.? 217 ?In this Condition 5 “Business Day” means a day (other than a Saturday Sunday or public holiday) on which commercial banks and foreign exchange markets are open for general business in Hong Kong.(b) Mandatory Distribution Cancellation Event: Notwithstanding that a Distribution Cancellation Notice may not have been given the Issuer shall not be obliged to pay and shall not pay any Distribution on the applicable Distribution Payment Date in whole or in part as applicable if and to the extent that: (i) the Distribution scheduled to be paid together with any dividends distributions or other payments scheduled to be paid or made during the Issuer’s then current fiscal year on any Parity Obligations or any instruments which effectively rank pari passu with any Parity Obligations shall exceed Distributable Reserves as at such Distribution Determination Date; or (ii) the Monetary Authority directs the Issuer to cancel such Distribution (in whole or in part) or applicable Hong Kong banking regulations or other requirements of the Monetary Authority prevent the payment in full of dividends or other distributions when due on Parity Obligations (each a “Mandatory Distribution Cancellation Event”).The Issuer shall have no obligation to pay a Distribution on any Distribution Payment Date if such non-payment is in accordance with this Condition 5(b) and any failure to pay such Distribution shall not constitute a Default. Distributions are non-cumulative and any Distribution which is cancelled in accordance with these Conditions shall not be payable at any time thereafter whether in a Winding-Up or otherwise.(c) Distributable Reserves: Any Distribution may only be paid out of Distributable Reserves.(d) Dividend Stopper: If on any Distribution Payment Date payment of Distribution scheduled to be paid is not made in full by reason of this Condition 5 the Issuer shall not: (i) declare or pay in cash any distribution or dividend or make any other payment in cash on and will procure that no distribution or dividend in cash or other payment in cash is made on any Shares; or (ii) purchase cancel or otherwise acquire any Shares or permit any of its Subsidiaries to do so in each case unless or until the earlier of: (x) the Distribution scheduled to be paid on any subsequent Distribution Payment Date (which for the avoidance of doubt shall exclude any Distribution that has been cancelled in accordance with these Conditions prior to such subsequent Distribution Payment Date) has been paid in full (1) to Securityholders or (2) irrevocably to a designated third party trust account for the benefit of the Securityholders pending payment by the trustee thereof to the Securityholders on such subsequent Distribution Payment Date or (y) the redemption or purchase and cancellation of the Undated Capital Securities in full or reduction of the principal amount of the Undated Capital Securities to zero in accordance with these Conditions or (z) the Issuer is permitted to do so by an Extraordinary Resolution (as defined in the Trust Deed) of the Securityholders.(e) No Default: Notwithstanding any other provision in these Conditions the cancellation or non-payment of any Distribution in accordance with this Condition 5 shall not constitute a default for any purpose (including without limitation pursuant to Condition 11 on the part of the Issuer.? 218 ?(f) Definitions: In these Conditions: “Auditors” means the independent certified public accountants for the time being of the Issuer.“Distributable Reserves” means the amounts for the time being available to the Issuer for distribution as a distribution in compliance with section 297 of the Companies Ordinance (Cap. 622) of Hong Kong as amended or modified from time to time as at the date of the Issuer’s audited balance sheet last preceding the relevant Distribution Payment Date and subject to the Monetary Authority’s then current capital conservation requirements asapplicable to the Issuer on the relevant Distribution Payment Date (the “AvailableAmount”); provided that if the Issuer reasonably determines that the Available Amount as at any Distribution Determination Date is lower than the Available Amount as at the date of the Issuer’s audited balance sheet last preceding the relevant Distribution Payment Date and is insufficient to pay the Distributions and any payments due on Parity Obligations on the relevant Distribution Payment Date then on certification by two Authorised Signatories and the Auditors of such revised amount the Distributable Reserves shall for the purposes of Distributions mean the Available Amount as set forth in such certificate.As at the date hereof pursuant to section 297(1) of the Companies Ordinance (Cap. 622) of Hong Kong the Issuer may only make a distribution out of profits available for distribution. For the purposes of section 297 of the Companies Ordinance (Cap. 622) of Hong Kong the Issuer’s profits available for distribution are its accumulated realised profits so far as not previously utilised by distribution or capitalisation less its accumulated realised losses so far as not previously written off in a reduction or reorganisation of capital.“Subsidiary” means any entity whose financial statements at any time are required by law or in accordance with generally accepted accounting principles to be fully consolidated with those of the Issuer. 6 Redemption and Purchase (a) No Fixed Redemption Date: The Undated Capital Securities are perpetual securities in respect of which there is no fixed redemption date. The Undated Capital Securities may not be redeemed at the option of the Issuer other than in accordance with this Condition 6.(b) Early Redemption: The Early Redemption Amount or Optional Redemption Amount payable in respect of any Undated Capital Security upon redemption of such Undated Capital Security pursuant to Condition 6(c) or upon it becoming due and payable as provided in Condition 11 shall be the Final Redemption Amount unless otherwise specified hereon.(c) Redemption for Taxation: (i) Withholding Tax in respect of the Undated Capital Securities: Subject to Condition 6(j) the Undated Capital Securities may be redeemed at the option of the Issuer in whole but not in part on any Distribution Payment Date (if such Undated Capital Security is at the relevant time a Floating Rate Undated Capital Security) or at any time (if such Undated Capital Security is at the relevant time not a Floating Rate Undated Capital Security) on giving not less than 30 nor more than 60 days’ notice to the Securityholders (which notice shall be irrevocable) subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 at their Early Redemption Amount (as described in Condition 6(b)) together with Distribution accrued but unpaid (if any) to (but excluding) the date fixed for redemption and any Additional Amounts (as defined in Condition 9) then due or which will become due on or before the date fixed for redemption if: ? 219 ?(A) the Issuer has or will become obliged to pay Additional Amounts as a result of any change in or amendment to the laws or regulations of a Relevant Taxing Jurisdiction (as defined in Condition 9) or in any such case any political subdivision or any authority thereof or therein having power to tax or any change in the official application or interpretation of such laws or regulations which change or amendment is announced and becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Undated Capital Securities; and (B) such obligation cannot be avoided by the Issuer taking reasonable measures available to it provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such Additional Amounts or give effect to such treatment as the case may be were a payment in respect of the Undated Capital Securities then due and no such notice of redemption shall be given prior to the compliance with the requirements in Condition 6(j).Prior to giving any notice of redemption pursuant to this Condition 6(c)(i) the Issuer shall deliver to the Trustee (I) a certificate signed by two Authorised Signatories of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the relevant conditions have been satisfied; and (II) an opinion of independent legal or tax advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such Additional Amounts as a result of such change or amendment and the Trustee shall be entitled without further enquiry to accept such certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set out in paragraphs (A) and (B) above of this Condition 6(c) in which event the same shall be conclusive and binding on the Securityholders.(ii) Tax Deductibility in respect of the Undated Capital Securities: Subject to Condition 6(j) the Undated Capital Securities may be redeemed at the option of the Issuer in whole but not in part on any Distribution Payment Date (if such Undated Capital Security is at the relevant time a Floating Rate Undated Capital Security) or at any time (if such Undated Capital Security is at the relevant time not a Floating Rate Undated Capital Security) on giving not less than 30 but not more than 60 days’ notice to the Securityholders (which notice shall be irrevocable) at subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 their Early Redemption Amount (as described in Condition 6(b)) or if the Early Redemption Amount is not specified hereon at their principal amount in each case together with Distribution accrued but unpaid (if any) to (but excluding) the date fixed for redemption and any Additional Amounts then due or which will become due on or before the date fixed for redemption if in respect of payments of Distribution on the Undated Capital Securities the Issuer is no longer or will no longer be entitled to claim a deduction in respect of computing its taxation liabilities in Hong Kong or any political subdivision or any authority thereof or therein having power to tax: (I) as a result of any change in or amendment to the laws or regulations of the Relevant Taxing Jurisdiction or any political subdivision or any authority thereof or therein having power to tax (or any taxing authority of any taxing jurisdiction in which the Issuer is a tax resident) or any change in the official application or interpretation of such laws or regulations which change or amendment is announced and becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Undated Capital Securities; and ? 220 ?(II) the foregoing cannot be avoided by the Issuer taking reasonable measures available to it provided that no such notice of redemption shall be given earlier than (aa) if such Undated Capital Security is a Floating Rate Undated Capital Security 60 days or (bb) if such Undated Capital Security is not a Floating Rate Undated Capital Security 90 days in each case prior to the earliest date on which the Issuer would cease to be able to claim a tax deduction in respect of the Distribution payable on the Undated Capital Securities.Prior to giving any notice of redemption pursuant to this Condition 6(c)(ii) the Issuer shall deliver to the Trustee: (x) a certificate signed by two Authorised Signatories of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the relevant conditions have been satisfied and an opinion of independent legal or tax advisers of recognised standing to the effect that the Issuer has or will cease to be able to claim a tax deduction in respect of the Distribution payable on the Undated Capital Securities; and (y) a copy of the written consent of the Monetary Authority as referred to in Condition 6(j) and the Trustee shall be entitled without further enquiry and without liability to accept such certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set out above in this Condition 6(c)(ii) in which event the same shall be conclusive and binding on the Securityholders.Any redemption of Undated Capital Securities by the Issuer pursuant to this Condition 6(c)(ii) is subject to the Issuer obtaining the prior written consent of the Monetary Authority.(d) Redemption at the Option of the Issuer: Subject to Condition 6(j) if Call Option is specified hereon the Issuer may on giving not less than 15 nor more than 30 days’ irrevocable notice to the Securityholders (or such other notice period as may be specified hereon) redeem in whole but not in part the Undated Capital Securities on the date(s) specified hereon (each an “Optional Redemption Date”) (the earliest of which shall not be less than five years from the Issue Date) provided that no such notice of redemption shall be given prior to the compliance with Condition 6(j). Any such redemption of Undated Capital Securities shall be at subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 their Optional Redemption Amount specified hereon together with Distribution accrued but unpaid (if any) to (but excluding) the date fixed for redemption.All Undated Capital Securities in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Condition 6(d).Any redemption of the Undated Capital Securities by the Issuer pursuant to this Condition 6(d) is subject to the Issuer obtaining the prior written consent of the Monetary Authority. For the avoidance of doubt the Issuer does not provide any undertaking that it will redeem the Undated Capital Securities at any time.(e) Redemption for Regulatory Reasons: Subject to Condition 6(j) following the occurrence of a Capital Event the Issuer may having given not less than 30 but not more than 60 days’ prior written notice to the Securityholders in accordance with Condition 15 (which notice ? 221 ?shall be irrevocable) redeem in accordance with these Conditions on any Distribution Payment Date (if such Undated Capital Security is at the relevant time a Floating Rate Undated Capital Security) or at any time (if such Undated Capital Security is at the relevant time not a Floating Rate Undated Capital Security) all but not some only of the relevant Undated Capital Securities at subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 their Early Redemption Amount or if no Early Redemption Amount is specified hereon at their principal amount in each case together with Distribution accrued but unpaid (if any) to (but excluding) the date of redemption in accordance with these Conditions and provided that no such notice of redemption shall be given prior to the compliance with Condition 6(j).For the purposes of this Condition 6(e) a “Capital Event” occurs if immediately before the Issuer gives the notice of redemption referred in this Condition 6(e) (i) the Undated Capital Securities after having qualified as such will no longer qualify (in whole but not in part) as Additional Tier 1 capital (or equivalent) of the Issuer (other than non-qualification solely as a result of any discounting or amortisation requirements as to the eligibility of the Undated Capital Securities for such inclusion pursuant to the relevant legislation and supervisory guidance in force from time to time) and/or (ii) the Undated Capital Securities cease to be included in the calculation of the Issuer’s capital adequacy ratio as a result of a change or amendment in (or any change in the application or official interpretation of) the relevant provisions of the Banking Capital Regulations or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto. No such notice of redemption shall be given earlier than 90 days prior to the earliest date on which it is determined that a Capital Event has occurred.Prior to the publication of any notice of redemption pursuant to this Condition 6(e) the Issuer shall deliver to the Trustee: (x) a certificate signed by two Authorised Signatories of the Issuer stating that a Capital Event has occurred; and (y) a copy of the written consent of the Monetary Authority and the Trustee shall accept such certificate without any further inquiry as conclusive evidence of the satisfaction of the conditions set out above without liability to any person in which event it shall be conclusive and binding on the Securityholders. Upon expiry of such notice the Issuer shall redeem the Undated Capital Securities in accordance with this Condition 6(e).Any redemption of the Undated Capital Securities by the Issuer pursuant to this Condition 6(e)is subject to the Issuer obtaining the prior written consent of the Monetary Authority. (f) Redemption due to Loss Absorption Disqualification Event: Subject to Condition 6(j) following the occurrence of a Loss Absorption Disqualification Event the Issuer may having given not less than 30 but not more than 60 days’ prior written notice to the Securityholders in accordance with Condition 15 (which notice shall be irrevocable) redeem in accordance with these Conditions on any Distribution Payment Date (if such Undated Capital Security is at the relevant time a Floating Rate Undated Capital Security) or at any time (if such Undated Capital Security is at the relevant time not a Floating Rate Undated Capital Security) all but not some only of the relevant Undated Capital Securities at subject to adjustment following the occurrence of a Non-Viability Event in accordance with Condition 7 their Early Redemption Amount or if no Early Redemption Amount is ? 222 ?specified hereon at their principal amount together with Distribution accrued but unpaid (if any) to (but excluding) the date of redemption in accordance with these Conditions and provided that no such notice of redemption shall be given prior to the compliance with Condition 6(j).For the purposes of this Condition 6(f) a “Loss Absorption Disqualification Event” occurs if immediately before the Issuer gives the notice of redemption referred in this Condition 6(f) the Undated Capital Securities after having qualified as such will no longer qualify (in whole but not in part) as a Loss Absorbing Instrument (or equivalent) of the Issuer (other than non-qualification solely as a result of any discounting or amortisation requirements as to the eligibility of the Undated Capital Securities for such inclusion pursuant to the relevant legislation and supervisory guidance in force from time to time) pursuant to the Loss Absorbing Capacity Rules as a result of a change or amendment in (or any change in the application or official interpretation of) the relevant provisions of the Loss Absorbing Capacity Rules or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto. No such notice of redemption shall be given earlier than 90 days prior to the earliest date on which it is determined that a Loss Absorption Disqualification Event has occurred.Prior to the publication of any notice of redemption pursuant to this Condition 6(f) the Issuer shall deliver to the Trustee: (x) a certificate signed by two Authorised Signatories of the Issuer stating that a Loss Absorption Disqualification Event has occurred; and (y) a copy of the written consent of the Monetary Authority and the Trustee shall accept such certificate without any further inquiry as conclusive evidence of the satisfaction of the conditions set out above without liability to any person in which event it shall be conclusive and binding on the Securityholders. Upon expiry of such notice the Issuer shall redeem the Undated Capital Securities in accordance with this Condition 6(f).Any redemption of Undated Capital Securities by the Issuer pursuant to this Condition 6(f) is subject to the Issuer obtaining the prior written consent of the Monetary Authority.(g) Purchases: The Issuer and any of its Subsidiaries may at any time purchase Undated Capital Securities in the open market or otherwise at any price in accordance with all relevant laws and regulations and for so long as the Undated Capital Securities are listed the requirements of the relevant stock exchange and provided that no such purchase shall be made prior to the compliance with Condition 6(j). The Undated Capital Securities so purchased while held by or on behalf of the Issuer or any such Subsidiary shall not entitle the holder to vote at any meetings of the Securityholders and shall not be deemed to be outstanding for among other things the purposes of calculating the quorums at meetings of Securityholders or the purposes of Condition 12(a). The Issuer or any such Subsidiary may at its option retain such purchased Undated Capital Securities for its own account and/or resell or cancel or otherwise deal with them at its discretion.(h) Cancellation: All Undated Capital Securities purchased by or on behalf of the Issuer or any of its Subsidiaries may be surrendered for cancellation by surrendering the Certificate representing such Undated Capital Securities to the Registrar and if so surrendered shall together with all Undated Capital Securities redeemed by the Issuer be cancelled forthwith.? 223 ?Any Undated Capital Securities so surrendered for cancellation may not be reissued or resold and the obligations of the Issuer in respect of any such Undated Capital Securities shall be discharged. Any Undated Capital Security that is written-off in full in accordance with Condition 7 shall be automatically cancelled.(i) No Obligation to Monitor: The Trustee shall not be under any duty to monitor whether any event or circumstance has happened or exists within this Condition 6 or Condition 7 and will not be responsible or liable to the Securityholders or any other person for any loss arising from any failure by it to do so. Unless and until the Trustee has express notice in writing of the occurrence of any event or circumstance within this Condition 6 or Condition 7 it shall be entitled to assume that no such event or circumstance has happened or exists. (j) Conditions for Redemption or Purchase of the Undated Capital Securities: Notwithstanding any other provision in these Conditions the Issuer shall not redeem any of the Undated Capital Securities (other than pursuant to Condition 7 or Condition 11) and neither the Issuer nor any of its Subsidiaries shall purchase any of the Undated Capital Securities unless the prior written consent of the Monetary Authority thereto shall have been obtained to the extent such consent is required under the Banking Capital Regulations and/or the Loss Absorbing Capacity Rules or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto. This Condition 6(j) shall not apply to the Issuer or any of its Subsidiaries holding the Undated Capital Securities in a purely nominee custodian or trustee capacity. 7 Non-Viability Loss Absorption and Hong Kong Resolution Authority Power The ability to operationally effect any Write-off of any Undated Capital Securities or any cancellation modification conversion or change in form of Undated Capital Securities as a result of the exercise of the Hong Kong Resolution Authority Power under this Condition 7 with respect to the clearing and/or settlement of any Undated Capital Securities in or through the relevant clearing system(s) is subject to the availability of procedures to effect any such Write-off or such cancellation modification conversion or change in form in the relevant clearing system(s). However any Write-off of any Undated Capital Securities or the giving of effect of the Hong Kong Resolution Authority Power with respect to the Issuer under this Condition 7 will be effective upon the exercise of any Hong Kong Resolution Authority Power (or as may otherwise be notified in writing to Securityholders the Trustee and Agents by the Issuer) notwithstanding any inability to operationally effect any such Write-off or any cancellation modification conversion or change in form as a result of the exercise of the Hong Kong Resolution Authority Power under this Condition 7 in the relevant clearing system(s).The Trust Deed and the Agency Agreement may contain certain protections and disclaimers as applicable to the Trustee and Agents in relation to this Condition 7. Each Securityholder shall be deemed to have authorised directed and requested the Trustee the Registrar and the other Agents as the case may be to take any and all necessary action to give effect to any Write-off cancellation notification conversion or change in form following the occurrence of the Non-Viability Event and/or exercise of any Hong Kong Resolution Authority Power.(a) Non-Viability Loss Absorption upon a Non-Viability Event: (i) If a Non-Viability Event occurs and is continuing the Issuer shall on or prior to the provision of a Non-Viability Event Notice irrevocably (without the need for the consent of the Trustee or the holders of any Undated Capital Securities) reduce the then principal amount of and cancel any accrued but unpaid Distribution in respect of each Undated Capital Security (in each case in whole or in part) by an amount equal to the Non-Viability Event Write-off Amount per Undated Capital Security ? 224 ?(such reduction and cancellation and the reduction and cancellation or conversion of any other Subordinated Capital Instruments so reduced and cancelled or converted upon the occurrence of a Non-Viability Event where applicable being referred to herein as the “Write-off” and “Written-off” shall be construed accordingly).(ii) Concurrently with the giving of a Non-Viability Event Notice the Issuer shall procure unless otherwise directed by the Monetary Authority that: (A) a similar notice be given in respect of other Parity Capital Instruments in accordance with their terms; and (B) concurrently and rateably with the Write-off of the Undated Capital Securities the aggregate principal amount of such other Parity Capital Instruments is subject to a Write-off on a pro rata basis with the Undated Capital Securities.(iii) Any Write-off pursuant to this provision will not constitute a Default under the Undated Capital Securities.(iv) Any Undated Capital Security may be subject to one or more Write-offs in part (as the case may be) except where such Undated Capital Security has been Written-off in its entirety.(v) Once the principal amount of and any accrued but unpaid Distribution under the Undated Capital Securities has been Written-off the relevant amount(s) Written-off will not be restored in any circumstances including where the relevant Non-Viability Event ceases to continue. No Securityholder may exercise claim or plead any right to any amount that has been Written-off and each Securityholder shall by virtue of its holding of any Undated Capital Securities be deemed to have waived all such rights to such amount that has been Written-off.(vi) Any reference in these Conditions to principal in respect of the Undated Capital Securities shall refer to the principal amount of the Undated Capital Securities reduced by any applicable Write-off(s).(vii) Definitions: In these Conditions: “Non-Viability Event” means the earlier of: (A) the Monetary Authority notifying the Issuer in writing that the Monetary Authority is of the opinion that a Write-off or conversion is necessary without which the Issuer would become non-viable; and (B) the Monetary Authority notifying the Issuer in writing that a decision has been made by the government body a government officer or other relevant regulatory body with the authority to make such a decision that a public-sector injection of capital or equivalent support is necessary without which the Issuer would become non-viable; “Non-Viability Event Notice” means the notice which shall be given by the Issuer not more than two Hong Kong Business Days after the occurrence of a Non-Viability Event to the Securityholders in accordance with Condition 15 and to the Trustee and the Paying Agents in writing and which shall state: (A) in reasonable detail the nature of the relevant Non-Viability Event; and ? 225 ?(B) the Non-Viability Event Write-off Amount for: (x) each Undated Capital Security; and (y) each other Subordinated Capital Instrument in accordance with its terms; “Non-Viability Event Write-off Amount” means the amount of distributions and/or principal to be Written-off as the Monetary Authority may direct or in the absence of such a direction as the Issuer shall (in consultation with the Monetary Authority) determine to be necessary to satisfy the Monetary Authority that the Non-Viability Event will cease to continue. For the avoidance of doubt: (A) the full amount of the Undated Capital Securities will be Written-off in full in the event that the amount Written-off is not sufficient for the Non-Viability Event to cease to continue; and (B) in the case of an event falling within paragraph (B) of the definition of Non-Viability Event the Write-off will be effected in full before any public sector injection of capital or equivalent support.Further the Non-Viability Event Write-off Amount in respect of each Undated Capital Security will be calculated based on a percentage of the principal amount of that Undated Capital Security; “Parity Capital Instrument” means any Parity Obligation which contains provisions relating to a write-down or conversion into ordinary shares in respect of its principal amount on the occurrence or as a result of a Non-Viability Event and in respect of which the conditions (if any) to the operation of such provisions are (or with the giving of any certificate or notice which is capable of being given by the Issuer would be) satisfied; and “Subordinated Capital Instrument” means any Junior Obligation Parity Obligation or Tier 2 Capital Instruments which contains provisions relating to a write-down or conversion into ordinary shares in respect of its principal amount on the occurrence or as a result of a Non-Viability Event and in respect of which the conditions (if any) to the operation of such provisions are (or with the giving of any certificate or notice which is capable of being given by the Issuer would be) satisfied.(b) Hong Kong Resolution Authority Power: The Financial Institutions (Resolution) Ordinance (Cap. 628) of Hong Kong as amended or superseded from time to time (the “Ordinance”) became effective on 7 July 2017 and all within scope financial institutions in Hong Kong are subject to the Ordinance.(i) Notwithstanding any other term of the Undated Capital Securities including without limitation Condition 7(a) or any other agreement or arrangement each Securityholder and the Trustee shall be subject and shall be deemed to agree be bound by and acknowledge that they are each subject to having the Undated Capital Securities being written off cancelled converted or modified or to having the form of the Undated Capital Securities changed in the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority without prior notice and which may include (without limitation) and result in any of the following or some combination thereof: (A) the reduction or cancellation of all or a part of the principal amount of or Distributions on the Undated Capital Securities; ? 226 ?(B) the conversion of all or a part of the principal amount of or Distributions on the Undated Capital Securities into shares or other securities or other obligations of the Issuer or another person (and the issue to or conferral on the holder of such shares securities or obligations) including by means of an amendment modification or variation of the terms of the Undated Capital Securities; and (C) the amendment or alteration of the maturity of the Undated Capital Securities or amendment or alteration of the amount of Distributions payable on the Undated Capital Securities or the date on which the Distributions become payable including by suspending payment for a temporary period or any other amendment or alteration of these Conditions.(ii) With respect to (A) (B) and (C) above of Condition 7(b)(i) references to principal and Distributions shall include payments of principal and Distributions that have become due and payable but which have not been paid prior to the exercise of any Hong Kong Resolution Authority Power. The rights of the Securityholders and the Trustee under the Undated Capital Securities and these Conditions are subject to and will be amended and varied if necessary solely to give effect to the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority.(iii) No repayment of the principal amount of the Undated Capital Securities or payment of Distributions on the Undated Capital Securities shall become due and payable or be paid after the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Undated Capital Securities unless at the time that such repayment or payment respectively is scheduled to become due such repayment or payment would be permitted to be made by the Issuer under the laws and regulations applicable to the Issuer and the Group.(iv) Upon the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Undated Capital Securities the Issuer shall provide a written notice (a “Resolution Notice”) not more than two Business Days after the occurrence of such exercise of the Hong Kong Resolution Authority Power to the Securityholders in accordance with Condition 15 and to the Trustee and the Principal Paying Agent in writing.(v) Neither the reduction or cancellation in part or in full of the principal amount of or Distributions on the Undated Capital Securities the conversion thereof into another security or obligation of the Issuer or another person or any other amendment or alteration of these Conditions or any other modification or change in form of the Undated Capital Securities as a result of the exercise of any Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Issuer nor the exercise of the Hong Kong Resolution Authority Power by the relevant Hong Kong Resolution Authority with respect to the Undated Capital Securities shall constitute a Default under Condition 11.(vi) Definitions: In this Condition 7(b): “Group” means the Issuer and its Subsidiaries.“Hong Kong Resolution Authority Power” means any power which may exist from time to time under the Ordinance relating to financial institutions including licensed banks deposit-taking companies restricted licence banks banking group companies insurance companies and/or investment firms incorporated in or authorised ? 227 ?designated recognised or licensed to conduct regulated financial activities in Hong Kong in effect and applicable in Hong Kong to the Issuer or other members of the Group (including for the avoidance of doubt powers under Part 4 and Part 5 of the Ordinance) or any other laws regulations rules or requirements relating thereto as the same may be amended from time to time (whether pursuant to the Ordinance or otherwise) and pursuant to which obligations of a licensed bank deposit-taking company restricted licence bank banking group company insurance company or investment firm or any of its affiliates can be reduced cancelled transferred modified and/or converted into shares or other securities or obligations of the obligor or any other person; and “relevant Hong Kong Resolution Authority” means any authority with the ability to exercise a Hong Kong Resolution Authority Power in relation to the Issuer from time to time.Please see the investment consideration entitled “The operation of the resolution regime inHong Kong may override the contractual terms of the Notes and the Undated CapitalSecurities” in the section headed “Investment Considerations — Considerations Relatingto Non-Preferred Loss Absorbing Notes Dated Subordinated Notes and Undated CapitalSecurities” for further information. 8 Payments (a) Payments in Respect of the Undated Capital Securities: (i) Payments of principal in respect of Undated Capital Securities shall be made against presentation and surrender of the relevant Certificates at the specified office of any of the Transfer Agents or of the Registrar and in the manner provided in Condition 7(a)(ii) below. (ii) Distributions shall be paid to the person shown on the Register at the close of business: (A) in the case of Undated Capital Securities denominated in a currency other than Renminbi on the 15th day before the due date for payment thereof; and (B) in the case of Undated Capital Securities denominated in Renminbi on the fifth day before the due date for payment (the “Record Date”).Payments of Distributions in respect of each Undated Capital Security shall be made: (x) in the case of Undated Capital Securities denominated in a currency other than Renminbi in the relevant currency by transfer to an account in the relevant currency maintained by the payee with or at the option of the relevant Agent by a cheque payable in the relevant currency drawn on a Bank; and (y) in the case of Undated Capital Securities denominated in Renminbi by transfer to the registered account of the Securityholder. If a holder does not maintain a registered account in respect of a payment to be made under the Undated Capital Securities the Issuer reserves the right in its sole discretion and upon such terms as it may determine to make arrangements to pay such amount to that holder by another means provided that the Issuer shall not have any obligation to make any such arrangements.? 228 ?In this Condition 8(a): “Bank” means a bank in the principal financial centre for such currency or in the case of Euro in a city in which banks have access to the TARGET System; and “registered account” means the Renminbi account maintained by or on behalf of the Securityholder with a bank in Hong Kong details of which appear on the Register at the close of business on the fifth Business Day before the due date for payment.Please see the section entitled “Clearance and Settlement”. Securityholders are required to ensure that they maintain an account or as the case may be a registered account into which payments of principal and Distributions in respect of the Undated Capital Securities are able to be paid by the relevant Paying Agent.Payments of principal and distribution in respect of Undated Capital Securities held in the CMU will be made to the CMU for their distribution to the person(s) for whose account(s) interests in the relevant Undated Capital Security are credited as being held with the CMU in accordance with the CMU Rules at the relevant time and payment made in accordance thereof shall discharge the obligations of the Issuer in respect of that payment.(b) Payments subject to fiscal laws: Payments will be subject in all cases to: (i) any fiscal or other laws and regulations applicable thereto but without prejudice to the provisions of Condition 9 in the place of payment; and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 as amended (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code any regulations or agreements thereunder any official interpretations thereof or (without prejudice to the provisions of Condition 9) any law implementing an intergovernmental approach thereto.(c) Appointment of Agents: The Issuing and Paying Agent the CMU Lodging and Paying Agent the Paying Agents the Registrar the Transfer Agents and the Calculation Agent initially appointed by the Issuer and their respective specified offices are listed below. The Issuing and Paying Agent the CMU Lodging and Paying Agent the Paying Agents the Registrar the Transfer Agents and the Calculation Agent act solely as agents of the Issuer and do not assume any obligation or relationship of agency or trust for or with any Securityholder. The Issuer reserves the right at any time with the prior written approval of the Trustee to vary or terminate the appointment of the Issuing and Paying Agent the CMU Lodging and Paying Agent any other Paying Agent the Registrar any Transfer Agent or the Calculation Agent(s) and to appoint additional or other Paying Agents or Transfer Agents provided that the Issuer shall at all times maintain: (i) an Issuing and Paying Agent; (ii) a Registrar; (iii) a Transfer Agent; (iv) a CMU Lodging and Paying Agent in relation to Undated Capital Securities accepted for clearance through the CMU; (v) one or more Calculation Agent(s) where the Conditions so require; and ? 229 ?(vi) such other agents as may be required by any other stock exchange on which the Undated Capital Securities may be listed in each case as approved in writing by the Trustee.Notice of any such change or any change of any specified office shall promptly be given by the Issuer to the Securityholders.(d) Non-Business Days: If any date for payment in respect of any Undated Capital Security is not a business day the holder shall not be entitled to payment until the next following business day nor to any distribution or other sum in respect of such postponed payment. In this Condition 8(d) “business day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in the relevant place of presentation of the relevant Certificate and in such other jurisdictions as shall be specified as “Financial Centres” hereon and: (i) (in the case of a payment in a currency other than Euro or Renminbi) where payment is to be made by transfer to an account maintained with a bank in the relevant currency on which foreign exchange transactions may be carried on in the relevant currency in the principal financial centre of the country of such currency; or (ii) (in the case of a payment in Euro) which is a TARGET Business Day; or (iii) (in the case of a payment in Renminbi) on which banks and foreign exchange markets are open for business and settlement of Renminbi payments in Hong Kong. 9 Taxation All payments of principal and distributions by or on behalf of the Issuer in respect of the Undated Capital Securities shall be made free and clear of and without withholding or deduction for any taxes duties assessments or governmental charges of whatever nature imposed levied collected withheld or assessed by or within Hong Kong (the “Relevant Taxing Jurisdiction”) or any authority therein or thereof having power to tax unless such withholding or deduction is required by law. If the Issuer is required to make a deduction or withholding by or within Hong Kong the Issuer shall pay such additional amounts (the “Additional Amounts”) as shall result in receipt by the Securityholders of such amounts as would have been received by them had no such withholding or deduction been required except that no such Additional Amounts shall be payable with respect to any Undated Capital Security: (a) Other connection: to or to a third party on behalf of a holder who is liable to such taxes duties assessments or governmental charges in respect of such Undated Capital Securities by reason of his having some connection with the Relevant Taxing Jurisdiction other than the holding or ownership of the Undated Capital Securities or receiving income therefrom or the enforcement thereof; or (b) Presentation more than 30 days after the Relevant Date: where presentation is required or has occurred presented (or in respect of which the Certificate representing it is presented) for payment more than 30 days after the Relevant Date except to the extent that the holder of it would have been entitled to such Additional Amounts on presenting it for payment on or before the 30th such day.? 230 ?As used in these Conditions “Relevant Date” in respect of any Undated Capital Security means the date on which payment in respect of it first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date seven days after that on which notice is duly given to the Securityholders that upon further presentation of the Undated Capital Security (or relevant Certificate) being made in accordance with these Conditions such payment will be made provided that payment is in fact made upon such presentation.References in these Conditions to (i) “principal” shall be deemed to include any premium payable in respect of the Undated Capital Securities and all amounts in the nature of principal payable pursuant to Condition 6 or any amendment or supplement to it (ii) “Distributions” shall be deemed to include all Distributions and all other amounts payable pursuant to Condition 4 or any amendment or supplement to it and (iii) “principal” and/or “Distributions” shall be deemed to include any Additional Amounts that may be payable under this Condition 9 or any undertaking given in addition to or in substitution for it under the Trust Deed. 10 Prescription Claims against the Issuer for payment in respect of the Undated Capital Securities shall be prescribed and will become void unless made within 10 years (in the case of principal) or five years (in the case of Distribution) from the appropriate Relevant Date in respect of them. 11 Default and Enforcement (a) Default and Winding-up Proceedings: (i) If default is made in the payment of any amount of principal or Distributions in respect of the Undated Capital Securities on the due date for payment thereof and such failure continues for a period of five business days in Hong Kong (in the case of principal) or 10 business days in Hong Kong (in the case of Distribution) (each such event a “Default”) then the Trustee at its discretion may subject as provided in Condition 11(b) in order to enforce payment without further notice institute Winding-Up Proceedings in Hong Kong against the Issuer but may take no further action in respect of such default (but without prejudice to Condition 11(a)(ii) below).For the avoidance of doubt no Distribution will be due and payable if such Distribution has been cancelled or is deemed cancelled (in each case in whole or in part) in accordance with these Conditions. Accordingly no default in payment under the Undated Capital Securities will have occurred or be deemed to have occurred for the non-payment of any Distribution that has been so cancelled or deemed cancelled.(ii) If a Write-off has occurred pursuant to or otherwise in accordance with Condition 7 such event will not constitute a Default under these Conditions.(iii) If an order is made or an effective resolution is passed for the Winding-Up of the Issuer in Hong Kong (except for the purposes of reconstruction amalgamation or reorganisation the terms of which have previously been approved by an Extraordinary Resolution of the holders of the Undated Capital Securities) (such event also a “Default”) then the Trustee at its discretion may subject as provided in Condition 11(b) give written notice to the Issuer that the Undated Capital Securities are and they shall forthwith thereupon become immediately due and repayable at their principal amount together with accrued Distribution without further action or formality.? 231 ?In addition nothing in this Condition 11 including without limitation any restriction on taking action and/or commencing proceedings shall in any way restrict or limit the rights of the Trustee or any of its directors officers employees or Appointees to claim from or to otherwise take any action against the Issuer in respect of any costs charges fees or expenses properly incurred or liabilities incurred by such party pursuant to or in connection with these Conditions or the Trust Deed.(b) Enforcement: (i) Without prejudice to Condition 11(a) the Trustee may subject as provided below at its discretion and without further notice institute such proceedings against the Issuer if the Issuer fails to perform observe or comply with any obligation condition or provision relating to the Undated Capital Securities binding on it under these Conditions or the Trust Deed (other than any obligation of the Issuer for the payment of any principal or Distributions in respect of the Undated Capital Securities) provided that the Issuer shall not as a consequence of such proceedings be obliged to pay any sum or sums representing or measured by reference to principal or Distributions in respect of the Undated Capital Securities sooner than the same would otherwise have been payable by it.(ii) The Trustee shall not be bound to take action as referred to in Conditions 11(a) and 11(b)(i) or any other action under these Conditions or the Trust Deed unless (a) it shall have been so requested in writing by Securityholders holding at least 25 per cent. in principal amount of the Undated Capital Securities then outstanding or if so directed by an Extraordinary Resolution of the Securityholders and (b) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction.(iii) No Securityholder shall be entitled to proceed directly against the Issuer unless the Trustee having become bound so to proceed fails to do so within a reasonable period and such failure is continuing.(iv) Subject to applicable laws no remedy (including the exercise of any right of set-off or analogous event) other than those provided for in Condition 11(a) and Conditions 11(b)(i) and 11(b)(ii) above or submitting a claim in the Winding-Up of the Issuer will be available to the Trustee or the Securityholders.(v) No Securityholder shall be entitled either to institute proceedings for the Winding-Up of the Issuer or to submit a claim in such Winding-Up except that if the Trustee having become bound to institute such proceedings as aforesaid fails to do so or being able and bound to submit a claim in such Winding-Up fails to do so in each case within a reasonable period and such failure is continuing then any such Securityholder may on giving an indemnity and/or security and/or pre-funding satisfactory to the Trustee in the name of the Trustee (but not otherwise) himself institute Winding-Up Proceedings and/or submit a claim in the Winding-Up of the Issuer to the same extent (but not further or otherwise) that the Trustee would have been entitled to do. 12 Meetings of Securityholders Modifications and Consolidations (a) Meetings of Securityholders: The Trust Deed contains provisions for convening meetings of Securityholders to consider any matter affecting their interests including the sanctioning by Extraordinary Resolution (as defined in the Trust Deed) of a modification of any of these Conditions or any provision of the Trust Deed. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by the Trustee if requested in writing by Securityholders holding not less than 10 per cent. in aggregate principal amount of the Undated Capital Securities for the time being outstanding and subject to the Trustee ? 232 ?being indemnified and/or secured and/or pre-funded to its satisfaction against all costs and expenses. The quorum for any meeting convened to consider an Extraordinary Resolution shall be two or more persons holding or representing more than 50 per cent. in principal amount of the Undated Capital Securities for the time being outstanding or at any adjourned meeting two or more persons being or representing Securityholders whatever the principal amount of the Undated Capital Securities held or represented unless the business of such meeting includes consideration of proposals inter alia (i) to amend the dates of redemption of the Undated Capital Securities or any date for payment of distribution or Distributions on the Undated Capital Securities (ii) to reduce or cancel the principal amount of or any premium payable on redemption of the Undated Capital Securities (iii) to reduce the rate or rates of distributions in respect of the Undated Capital Securities or to vary the method or basis of calculating the rate or rates or amount of distributions or the basis for calculating any distribution in respect of the Undated Capital Securities (iv) to vary any method of or basis for calculating the relevant redemption amount (v) to vary the currency or currencies of payment or denomination of the Undated Capital Securities or (vi) to modify the provisions concerning the quorum required at any meeting of Securityholders or the majority required to pass an Extraordinary Resolution in which case the necessary quorum shall be two or more persons holding or representing not less than 75 per cent. or at any adjourned meeting not less than 25 per cent. in principal amount of the Undated Capital Securities for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on the Securityholders (whether or not they were present at the meeting at which such resolution was passed).The Trust Deed provides that a resolution in writing signed by or on behalf of the Securityholders of not less than 90 per cent. in principal amount of the Undated Capital Securities for the time being outstanding shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Securityholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form each signed by or on behalf of one or more Securityholders.These Conditions may be amended modified or varied in relation to any Series of Undated Capital Securities by the terms of the applicable Pricing Supplement in relation to such Undated Capital Securities.(b) Modification of the Trust Deed: The Trustee may agree without the consent of the Securityholders to (i) any modification of any of the provisions of the Trust Deed or these Conditions that is of a formal minor or technical nature or is made to correct a manifest error or to comply with any mandatory provision of law and (ii) any other modification (except as mentioned in the Trust Deed) and any waiver or authorisation of any breach or proposed breach of any of the provisions of the Trust Deed and/or these Conditions that is in the opinion of the Trustee not materially prejudicial to the interests of the Securityholders. Any such modification authorisation or waiver shall be binding on the Securityholders and unless the Trustee otherwise agrees such modification authorisation or waiver shall be notified by the Issuer to the Securityholders as soon as practicable.(c) Substitution: The Trust Deed contains provisions permitting the Trustee to agree subject to such amendment of the Trust Deed and such other conditions as the Trustee may require but without the consent of the Securityholders to the substitution of the Issuer’s successor in business or any Subsidiary of the Issuer or its successor in business or any holding company of the Issuer or any other subsidiary of any such holding company or their respective successor in business in place of the Issuer or of any previous substituted company as principal debtor under the Trust Deed and the Undated Capital Securities. In ? 233 ?the case of such a substitution the Trustee may agree without the consent of the Securityholders to a change of the law governing the Undated Capital Securities and/or the Trust Deed provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Securityholders.(d) Entitlement of the Trustee: In connection with the exercise of its functions powers rights and discretions (including but not limited to those referred to in this Condition 12) the Trustee shall have regard to the interests of the Securityholders as a class and shall not have regard to the consequences of such exercise for individual Securityholders and the Trustee acting for and on behalf of Securityholders shall not be entitled to require nor shall any Securityholder be entitled to claim from the Issuer any indemnification or payment in each case in respect of any tax consequence of any such exercise upon individual Securityholders. 13 Indemnification of the Trustee The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility. The Trustee is entitled to enter into business transactions with the Issuer and any entity related to the Issuer without accounting for any profit.The Trustee may rely without liability to Securityholders on any report confirmation or certificate or any advice or opinion of any legal counsel accountants financial advisers financial institution or any other expert whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or any other person or in any other manner) by reference to a monetary cap methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such report confirmation certificate advice or opinion and in such event such report confirmation certificate advice or opinion shall be binding on the Issuer and the Securityholders. 14 Replacement of Certificates If a Certificate is lost stolen mutilated defaced or destroyed it may be replaced subject to applicable laws regulations and stock exchange or other relevant authority regulations at the specified office of the Issuing and Paying Agent and of the Registrar or such other Paying Agent or Transfer Agent as the case may be in each case on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence security and indemnity (which may provide inter alia that if the allegedly lost stolen or destroyed Certificate is subsequently presented for payment there shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such Certificates) and otherwise as the Issuer may require.Mutilated or defaced Certificates must be surrendered before replacements will be issued. 15 Notices Notices to the holders of the Undated Capital Securities shall be mailed to them at their respective addresses in the Register and deemed to have been given on the fourth weekday (being a day other than a Saturday or a Sunday) after the date of mailing and so long as the Undated Capital Securities are listed on a stock exchange or admitted to trading by another relevant authority and the rules of that exchange or a relevant authority so require published in a daily newspaper having general circulation in the place or places required by those rules. If any such publication is not practicable notice shall be validly given if published in another leading daily English language newspaper with general circulation in Asia. Any such notice shall be deemed to have been given on the date of such publication or if published more than once or on different dates on the first date on which publication is made as provided above.? 234 ?So long as the Undated Capital Securities are represented by a Global Certificate and such Global Certificate is held on behalf of: (i) Euroclear or Clearstream Luxembourg or the Alternative Clearing System (as defined in the form of the Global Certificate) notices to Securityholders shall be given by delivery of the relevant notice to Euroclear or Clearstream Luxembourg or the Alternative Clearing System for communication by it to entitled accountholders in substitution for notification as required by the Conditions; or (ii) the CMU notices to the holders of Undated Capital Securities of that Series may be given by delivery of the relevant notice to the persons shown in the relevant CMU Issue Position Report issued by the Monetary Authority on the business day preceding the date of despatch of such notice.A Non-Viability Event Notice or notice of the issue of a Resolution Notice to the holders of the relevant Undated Capital Securities shall be deemed to have been validly given on the date on which such notice is published in a daily newspaper of general circulation in Asia (which is expected to be Asian Wall Street Journal) or so long as Undated Capital Securities are listed on The Stock Exchange of Hong Kong Limited (the “HKSE”) published on the website of the HKSE. If any such publication is not practicable notice shall be validly given if published in another leading daily English language newspaper with general circulation in Hong Kong. Any such notice shall be deemed to have been given on the date of such publication or if published more than once or on different dates on the first date on which publication is made as provided above. 16 Contracts (Rights of Third Parties) Act No person shall have any right to enforce any term or condition of the Undated Capital Securities under the Contracts (Rights of Third Parties) Act 1999 except and to the extent (if any) that the Undated Capital Securities expressly provide for such Act to apply to any of their terms but this shall not affect any right or remedy that exists or is available apart from such Act and is without prejudice to the rights of the Securityholders as set out in Condition 11. 17 Governing Law and Jurisdiction (a) Governing Law: The Trust Deed the Undated Capital Securities and any non-contractual obligations arising out of or in connection with them are governed by and shall be construed in accordance with English law save that Conditions 3(b) 3(c) and 7 are governed by and shall be construed in accordance with Hong Kong law.(b) Jurisdiction: The Courts of England are to have jurisdiction to settle any disputes that may arise out of or in connection with any Undated Capital Securities save that the courts of Hong Kong shall have exclusive jurisdiction to settle any disputes that arise out of or are in connection with Conditions 3(b) 3(c) and 7 and accordingly any legal action or proceedings arising out of or in connection with any Undated Capital Securities (“Proceedings”) may be brought in such courts. The Issuer irrevocably submits to the jurisdiction of the courts of England and waives any objection to Proceedings in such courts on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. This submission is made for the benefit of the Trustee and each of the holders of the Undated Capital Securities and shall not affect the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not).? 235 ?(c) Service of Process: The Issuer has in the Trust Deed irrevocably appointed an agent in England to receive for it and on its behalf service of process in any Proceedings in England. If for any reason such process agent ceases to be able to accept service of process in England the Issuer shall appoint a new agent to accept such service of process in England as soon as practicable. 18 Headings Headings are for convenience only and do not affect the interpretation of these Conditions.? 236 ?SUMMARY OF PROVISIONS RELATING TO THE NOTES AND THE UNDATED CAPITAL SECURITIES WHILE IN GLOBAL FORM 1 INITIAL ISSUE OF NOTES OR UNDATED CAPITAL SECURITIES Global Notes and Global Certificates may be delivered on or prior to the original issue date of the Tranche to a common depositary for Euroclear and Clearstream (the “Common Depositary”) or a sub-custodian for the Monetary Authority as operator of the CMU.Upon the initial deposit of a Global Note or Global Certificate with the Common Depositary or with a sub-custodian for the Monetary Authority as operator of the CMU or registration of Registered Notes or Registered Certificates in the name of (i) any nominee for Euroclear and Clearstream or (ii) the Monetary Authority and delivery of the relative Global Certificate to the Common Depositary or the sub-custodian for the Monetary Authority as operator of the CMU (as the case may be) Euroclear or Clearstream or the CMU (as the case may be) will credit each subscriber with a nominal amount of Notes or Undated Capital Securities equal to the nominal amount thereof for which it has subscribed and paid.Notes or Undated Capital Securities that are initially deposited with the Common Depositary may also be credited to the accounts of subscribers with (if indicated in the relevant Pricing Supplement) other clearing systems through direct or indirect accounts with Euroclear and Clearstream held by such other clearing systems. Conversely Notes or Undated Capital Securities that are initially deposited with any other clearing system may similarly be credited to the accounts of subscribers with Euroclear Clearstream or other clearing systems. 2 RELATIONSHIP OF ACCOUNTHOLDERS WITH CLEARING SYSTEMS Save as provided in the following paragraph each of the persons shown in the records of Euroclear Clearstream or any other clearing system (an “Alternative Clearing System”) as the holder of a Note represented by a Global Note or a Global Certificate must look solely to Euroclear Clearstream or any such Alternative Clearing System (as the case may be) for his share of each payment made by the Issuer to the bearer of such Global Note or the holder of the underlying Registered Notes as the case may be and in relation to all other rights arising under the Global Notes or Global Certificates subject to and in accordance with the respective rules and procedures of Euroclear Clearstream or such Alternative Clearing System (as the case may be). Such persons shall have no claim directly against the Issuer in respect of payments due on the Notes or the Undated Capital Securities for so long as the Notes or the Undated Capital Securities are represented by such Global Note or Global Certificate and such obligations of the Issuer will be discharged by payment to the bearer of such Global Note or the holder of the underlying Registered Notes as the case may be in respect of each amount so paid.If a Global Note or a Global Certificate is lodged with a sub-custodian for or registered with the CMU the person(s) for whose account(s) interests in such Global Note or Global Certificate are credited as being held in the CMU in accordance with the CMU Rules shall be the only person(s) entitled (or in the case of Registered Notes directed or deemed by the CMU as entitled) to receive payments in respect of Notes or Undated Capital Securities represented by such Global Note or Global Certificate and the Issuer will be discharged by payment to or to the order of such person(s) for whose account(s) interests in such Global Note or Global Certificate are credited as being held in the CMU in respect of each amount so paid. Each of the persons shown in the records of the CMU as the beneficial holder of a particular nominal amount of Notes or Undated Capital Securities represented by such Global Note or Global Certificate must look solely to the CMU for his share of each payment so made by the Issuer in respect of such Global Note or Global Certificate.? 237 ?3 EXCHANGE 3.1 Temporary Global Notes Each temporary Global Note will be exchangeable free of charge to the holder on or after its Exchange Date: (i) if the relevant Pricing Supplement indicates that such Global Note is issued in compliance with the C Rules or in a transaction to which TEFRA is not applicable (as to which see “Summary of the Programme — Selling Restrictions”) in whole but not in part for the Definitive Notes defined and described below; and (ii) otherwise in whole or in part upon certification as to non-U.S. beneficial ownership in the form set out in the Agency Agreement for interests in a permanent Global Note or if so provided in the relevant Pricing Supplement for Definitive Notes.The CMU may require that any such exchange for a permanent Global Note is made in whole and not in part and in such event no such exchange will be effected until all relevant account holders (as set out in a CMU Issue Position Report (as defined in the rules of the CMU) or any other relevant notification supplied to the CMU Lodging and Paying Agent by the CMU) have so certified. 3.2 Permanent Global Notes Each permanent Global Note will be exchangeable free of charge to the holder on or after itsExchange Date in whole but not except as provided under “Partial Exchange of PermanentGlobal Notes” below in part for Definitive Notes or in the case of (i) below Registered Notes: (i) if the permanent Global Note is held on behalf of Euroclear Clearstream the CMU or an Alternative Clearing System and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays statutory or otherwise) or announces an intention permanently to cease business or in fact does so; or (ii) if principal in respect of any Notes is not paid when due by the holder giving notice to the Issuing and Paying Agent (or in the case of Notes lodged with the CMU the CMU Lodging and Paying Agent) of its election for such exchange.In the event that a Global Note is exchanged for Definitive Notes such Definitive Notes shall be issued in Specified Denomination(s) only. A Noteholder who holds a principal amount of less than the minimum Specified Denomination will not receive a Definitive Note in respect of such holding and would need to purchase a principal amount of Notes or Undated Capital Securities such that it holds an amount equal to one or more Specified Denominations. 3.3 Global Certificates If the relevant Pricing Supplement states that the Notes or the Undated Capital Securities are to be represented by a Global Certificate on issue the following will apply in respect of transfers of Notes or Undated Capital Securities held in Euroclear or Clearstream or the CMU or an Alternative Clearing System. These provisions will not prevent the trading of interests in the Notes or the Undated Capital Securities within a clearing system whilst they are held on behalf of such clearing system but will limit the circumstances in which the Notes or the Undated Capital Securities may be withdrawn from the relevant clearing system.? 238 ?Transfers of the holding of Notes or Undated Capital Securities represented by any Global Certificate pursuant to Note Condition 2 and Undated Capital Securities Condition 2 may only be made in part: (i) if the relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays statutory or otherwise) or announces an intention permanently to cease business or does in fact do so; (ii) if principal in respect of any Notes or Undated Capital Securities is not paid when due; or (iii) with the prior consent of the Issuer provided that in the case of the first transfer of part of a holding pursuant to (i) or (ii) above the Registered Holder has given the Registrar not less than 30 days’ notice at its specified office of the Registered Holder’s intention to effect such transfer. 3.4 Partial Exchange of Permanent Global Notes For so long as a permanent Global Note is held on behalf of a clearing system and the rules of that clearing system permit such permanent Global Note will be exchangeable in part on one or more occasions for Definitive Notes (i) if principal in respect of any Notes is not paid when due or (ii) if so provided in and in accordance with the Note Conditions (which will be set out in the relevant Pricing Supplement) relating to Partly Paid Notes. 3.5 Delivery of Notes On or after any due date for exchange the holder of a Global Note may surrender such Global Note or in the case of a partial exchange present it for endorsement to or to the order of the Issuing and Paying Agent (or in the case of Notes or Undated Capital Securities lodged with the CMU the CMU Lodging and Paying Agent). In exchange for any Global Note or the part thereof to be exchanged the Issuer will (i) in the case of a temporary Global Note exchangeable for a permanent Global Note deliver or procure the delivery of a permanent Global Note in an aggregate nominal amount equal to that of the whole or that part of a temporary Global Note that is being exchanged or in the case of a subsequent exchange endorse or procure the endorsement of a permanent Global Note to reflect such exchange or (ii) in the case of a Global Note exchangeable for Definitive Notes or Registered Notes deliver or procure the delivery of an equal aggregate nominal amount of duly executed and authenticated Definitive Notes and/or Certificates as the case may be. Global Notes and Definitive Notes will be delivered outside the United States and its possessions. In this Offering Circular “Definitive Notes” means in relation to any Global Note the definitive Bearer Notes for which such Global Note may be exchanged (if appropriate having attached to them all Coupons and Receipts in respect of interest or Installment Amounts that have not already been paid on the Global Note and a Talon).Definitive Notes will be security printed and Certificates will be printed in accordance with any applicable legal and stock exchange requirements in or substantially in the form set out in the Schedules to the Trust Deed. On exchange in full of each permanent Global Note the Issuer will if the holder so requests procure that it is cancelled and returned to the holder together with the relevant Definitive Notes. 3.6 Exchange Date “Exchange Date” means (i) in relation to an exchange of a temporary Global Note to a permanent Global Note the day falling after the expiry of 40 days after its issue date; (ii) in relation to an exchange of a permanent Global Note to a Definitive Note a day falling not more than 45 days after the date of receipt of the first relevant notice by the Issuing and Paying Agent; (iii) in relation to an exchange of a permanent Global Note to a Registered Note a day falling not more than five days after the date of receipt of the first relevant notice by the Issuing and ? 239 ?Paying Agent; or (iv) in the case of failure to pay principal in respect of any Notes when due or an Event of Default has occurred and is continuing a day falling 30 days after the date of receipt of the first relevant notice by the Issuing and Paying Agent provided if such date is not a day on which banks are open for business in the city in which the specified office of the Issuing and Paying Agent is located and in the city in which the relevant clearing system is located the immediately following day. 4 AMENDMENT TO CONDITIONS The temporary Global Notes permanent Global Notes and Global Notes contain provisions that apply to the Notes or the Undated Capital Securities that they represent some of which modify the effect of the Note Conditions or the Undated Capital Securities Conditions as applicable set out in this Offering Circular. The following is a summary of certain of those provisions: 4.1 Payments No payment falling due after the Exchange Date will be made on any Global Note unless exchange for an interest in a permanent Global Note or for Definitive Notes or Registered Notes is improperly withheld or refused. Payments on any temporary Global Note issued in compliance with the D Rules before the Exchange Date will only be made against presentation of certification as to non-U.S. beneficial ownership in the form set out in the Agency Agreement.All payments in respect of Notes represented by a Global Note (except with respect to Global Note held through the CMU) will be made against presentation for endorsement and if no further payment falls to be made in respect of the Notes surrender of that Global Note to or to the order of the Issuing and Paying Agent as shall have been notified to the Noteholders for such purpose.A record of each payment so made will be endorsed on each Global Note which endorsement will be prima facie evidence that such payment has been made in respect of the Notes.All payments in respect of Notes or Undated Capital Securities represented by a Global Certificate will be made to or to the order of the person whose name is entered on the Register at the close of business on the record date which shall be on the Clearing System Business Day immediately prior to the date for payment where “Clearing System Business Day” means Monday to Friday inclusive except 25 December and 1 January.In respect of a Global Note or Global Certificate representing Notes or Undated Capital Securities held through the CMU any payments of principal interest (if any) or any other amounts shall be made to the person(s) for whose account(s) interests in the relevant Global Note or Global Certificate are credited (as set out in the records of the CMU) at the close of business on the Clearing System Business Day immediately prior to the date for payment and save in the case of final payment no presentation of the relevant bearer Global Note or Global Certificateshall be required for such purpose. For the purposes of this paragraph “Clearing SystemBusiness Day” means a day on which the CMU is operating and open for business.So long as the Notes or the Undated Capital Securities are represented by a Global Note or Global Certificate and the Global Note or Global Certificate is held on behalf of the Clearing Systems the Issuer has promised inter alia to pay interest in respect of such Notes or Undated Capital Securities from the Interest Commencement Date or the Distribution Commencement Date in arrear at the rates on the dates for payment and in accordance with the method of calculation provided for in the Note Conditions or the Undated Capital Securities Conditions as applicable save that the calculation is made in respect of the total aggregate amount of the Notes or the Undated Capital Securities represented by the Global Note or Global Certificate.? 240 ?4.2 Prescription Claims against the Issuer in respect of Notes or Undated Capital Securities that are represented by a permanent Global Note will become void unless it is presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) from the appropriate Relevant Date (as defined in Note Condition 9 and Undated Capital Securities Condition 9). 4.3 Meetings The holder of a permanent Global Note or of the Notes or the Undated Capital Securities represented by a Global Certificate shall (unless such permanent Global Note or Global Certificate represents only one Note) be treated as being two persons for the purposes of any quorum requirements of a meeting of Noteholders and at any such meeting the holder of a permanent Global Note or a Global Certificate shall be treated as having one vote in respect of each integral currency unit of the Specified Currency of the Notes or the Undated Capital Securities. (All holders of Registered Notes are entitled to one vote in respect of each integral currency unit of the Specified Currency of the Notes or the Undated Capital Securities comprising such Noteholder’s holding whether or not represented by a Global Certificate.) 4.4 Cancellation Cancellation of any Note represented by a permanent Global Note or Global Certificate that is required by the Note Conditions or the Undated Capital Securities Conditions as applicable to be cancelled (other than upon its redemption) will be effected by reduction in the nominal amount of the relevant permanent Global Note or Global Certificate. 4.5 Purchase Notes or Undated Capital Securities represented by a permanent Global Note may only be purchased by the Issuer or any of its respective subsidiaries if they are purchased together with the rights to receive all future payments of interest and Installment Amounts (if any) thereon. 4.6 The Option of the Issuer Any option of the Issuer provided for in the Conditions of any Notes or Undated Capital Securities while such Notes or Undated Capital Securities are represented by a permanent Global Note shall be exercised by the Issuer giving notice to the Noteholders within the time limits set out in and containing the information required by the Note Conditions or the Undated Capital Securities Conditions as applicable except that the notice shall not be required to contain in the case of Bearer Notes the certificate numbers of Notes or Undated Capital Securities drawn or in the case of Registered Notes the holder of the Notes in respect of a partial exercise of an option and accordingly no drawing of Notes or Undated Capital Securities shall be required. In the event that any option of the Issuer is exercised in respect of some but not all of the Notes or the Undated Capital Securities of any Series the rights of accountholders with a clearing system in respect of the Notes or the Undated Capital Securities will be governed by the standard procedures of Euroclear Clearstream the CMU or an Alternative Clearing System (as the case may be).? 241 ?4.7 Noteholders’ Options Any option of the Noteholders provided for in the Conditions of any Notes or Undated Capital Securities while such Notes or Undated Capital Securities are represented by a permanent Global Note may be exercised by the holder of the permanent Global Note (in accordance with the standard procedures of the relevant clearing system) giving notice to the Issuing and Paying Agent or (in respect of Notes or Undated Capital Securities represented by a Global Certificate) the Registrar or Transfer Agent or (in respect of Notes or Undated Capital Securities lodged with the CMU) the CMU Lodging and Paying Agent within the time limits relating to the deposit of Notes or Undated Capital Securities with a Paying Agent set out in the Note Conditions or the Undated Capital Securities Conditions as applicable substantially in the form of the notice available from any Paying Agent except that the notice shall not be required to contain the serial numbers of the Notes or the Undated Capital Securities in respect of which the option has been exercised and stating the nominal amount of Notes or Undated Capital Securities in respect of which the option is exercised and at the same time presenting the permanent Global Note or Global Certificate to the Issuing and Paying Agent the relevant Registrar a Transfer Agent or the CMU Lodging and Paying Agent (or in each case to a Paying Agent acting on their behalf) as the case may be for notation. 4.8 Trustee’s Powers In considering the interests of Noteholders while any Global Note is held by or on behalf of or Registered Notes are registered in the name of or in the name of any nominee for a clearing system the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to such Global Note or Registered Notes and may consider such interests as if such accountholders were the holders of the Notes or the Undated Capital Securities represented by such Global Note or Global Certificate. 4.9 Notices So long as any Notes or Undated Capital Securities are represented by a Global Note or Global Certificate and such Global Note or Global Certificate is held on behalf of (i) Euroclear and/or Clearstream or any other clearing system (except as provided in (ii) below) notices to the holders of Notes or Undated Capital Securities of that Series may be given by delivery of the relevant notice to that clearing system for communication by it to entitled accountholders in substitution for publication as required by the Note Conditions or the Undated Capital Securities Conditions as applicable or by delivery of the relevant notice to the holder of the Global Note or Global Certificate or (ii) the CMU notices to the holders of Notes or Undated Capital Securities of that Series may be given by delivery of the relevant notice to the CMU in substitution for publication as required by the Conditions or by delivery of the relevant notice to the holder of the Global Note or Global Certificate and any such notice shall be deemed to have been given to the Noteholders on the day on which such notice is delivered to the CMU. 5 PARTLY PAID NOTES The provisions relating to Partly Paid Notes are not set out in this Offering Circular but will be contained in the relevant Pricing Supplement and thereby in the Global Notes or Global Certificates. While any installments of the subscription moneys due from the holder of Partly Paid Notes are overdue no interest in a Global Note representing such Notes may be exchanged for an interest in a permanent Global Note or for Definitive Notes (as the case may be). If any Noteholder fails to pay any installment due on any Partly Paid Notes within the time specified the Issuer may forfeit such Notes and shall have no further obligation to their holder in respect of them.? 242 ?FORM OF PRICING SUPPLEMENT RELATING TO NOTES OTHER THAN THE UNDATED CAPITAL SECURITIES [MiFID II PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPs ONLY TARGET MARKET — Solely for the purposes of [the/each] manufacturer’s product approval process the target market assessment in respect of the Notes (as defined below) has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients only each as defined in [Directive 2014/65/EU (as amended “MiFID II”)][MiFID II]; and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. [Consider any negative target market.] Any person subsequently offering selling or recommending the Notes (a “distributor”) should take into consideration the manufacturer[’s/s’] target market assessment; however a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer[’s/s’] target market assessment) and determining appropriate distribution channels.] [UK MiFIR PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPs ONLY TARGET MARKET — Solely for the purposes of [the/each] manufacturer’s product approval process the target market assessment in respect of the Notes [(as defined below)] has led to the conclusion that: (i) the target market for the Notes is only eligible counterparties as defined in the FCA Handbook Conduct of Business Sourcebook (“COBS”) and professional clients as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”) (“UK MiFIR”); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. [Consider any negative target market.] Any person subsequently offering selling or recommending the Notes (a “distributor”) should take into consideration the manufacturer[’s/s’] target market assessment; however a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR Product Governance Rules”) is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer[’s/s’] target market assessment) and determining appropriate distribution channels.] [PRIIPs REGULATION - PROHIBITION OF SALES TO EEA RETAIL INVESTORS — The Notes are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended the “Insurance Distribution Directive”) where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II[.]/[; or] [(iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended the “Prospectus Regulation”)].1 Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.] [UK PRIIPs REGULATION — PROHIBITION OF SALES TO UK RETAIL INVESTORS — The Notes are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the United Kingdom. For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the [European Union (Withdrawal) Act 2018 (“EUWA”)/EUWA]; (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (“FSMA”) and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 1 Paragraph (iii) is not required where the Notes have a denomination of at least €100000 or equivalent. ? 243 ?600/2014 as it forms part of domestic law by virtue of the EUWA[.]/[; or] [(iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA (the “UK Prospectus Regulation”)].2 Consequently no key information document required bythe PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPsRegulation”) for offering or selling the Notes or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.] [In connection with Section 309B of the Securities and Futures Act 2001 of Singapore (the “SFA”)and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMPRegulations 2018”) the Issuer has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA) that the Notes are [prescribed capital markets products] / [capital markets products other than prescribed capital markets products] (as defined in the CMP Regulations 2018) and [are] [Excluded] / [Specified] Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendation on Investment Products).]3 WARNING The contents of this Pricing Supplement have not been reviewed by any regulatory authority of any jurisdiction. You are advised to exercise caution in relation to the offering of the Notes. If you are in any doubt about any of the contents of this Pricing Supplement you should obtain independent professional advice.[This document is for distribution to Professional Investors (as defined in Chapter 37 of the RulesGoverning the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong KongStock Exchange”)) (“Professional Investors”) only.Notice to Hong Kong investors: The Issuer confirms that the Notes are intended for purchase by Professional Investors only and will be listed on the Hong Kong Stock Exchange on that basis.Accordingly the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.The Hong Kong Stock Exchange has not reviewed the contents of this document other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Programme or the Notes on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Programme the Notes the Issuer the Group or the quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.This document together with the Offering Circular (as defined below) includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer and the Group. The Issuer accepts full responsibility for the accuracy of the information contained in this document and confirms having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.]4 2 Paragraph (iii) is not required where the Notes have a denomination of at least €100000 or equivalent. 3 For any Notes to be offered to Singapore investors the Issuer to consider whether it needs to re-classify the Notes pursuant to Section 309B of the SFA prior to the launch of the offer. 4 Applicable for Notes to be listed on the Hong Kong Stock Exchange only. ? 244 ?It is intended that the Notes will constitute “loan capital” and/or a “regulatory capital security” for the purposes of the Stamp Duty Ordinance (Cap. 117) of the Laws of Hong Kong. To the extent there are any concerns specific Hong Kong tax advice should be sought.Pricing Supplement dated [●] The Bank of East Asia Limited 东亚银行有限公司 Issue of [Aggregate Principal Amount of Tranche] [Title of Notes] (the “Notes”) under the U.S.$6000000000 Medium Term Note Programme This document constitutes the Pricing Supplement relating to the issue of the Notes described herein.Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (as defined below) set forth in the Offering Circular dated [●] (the “Offering Circular”) [and the supplementary Offering Circular dated [●]]. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular [as so supplemented]. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of the Offering Circular[ the supplementary Offering Circular dated [●]] and this Pricing Supplement.[The following alternative language applies if the first tranche of an issue which is being increased was issued under an Offering Circular with an earlier date.Terms used herein shall be deemed to be defined as such for the purposes of the Note Conditions (the “Conditions”) set forth in the Offering Circular dated [●]. This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with the Offering Circular dated [●] [and the supplementary Offering Circular dated [●]] save in respect of the Conditions which are extracted from the Offering Circular dated [●] and are attached hereto. Principal and/or interest of the Notes may be written off upon the occurrence and continuance of a Non-Viability Event in accordance with the terms set out in Condition 7 and paragraph 25 below. In particular investors in the Notes should read the section titled “Investment Considerations” contained therein including but not limited to therisk factor titled “The terms of Dated Subordinated Notes and Non-Preferred Loss Absorbing Notesmay contain non-viability loss absorption provisions” which apply to the issue of Notes described herein. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of the Offering Circular[ the supplementary Offering Circular dated [●]] and this Pricing Supplement.] [Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should remain as set out below even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Pricing Supplement.] 1 Issuer The Bank of East Asia Limited 东亚银行有限公司 2 (i) [Series Number:] [●] (ii) [Tranche Number: [●] (If fungible with an existing Series details of that Series including the date on which the Notes became fungible)] 3 Specified Currency or Currencies: [●] 4 Aggregate Principal Amount: [●] (i) [Series:] [●] (ii) [Tranche:] [●] ? 245 ?(iii) [Date on which the Notes [Not applicable/The Notes shall be consolidated become fungible] form a single series and be interchangeable for trading purposes with the [insert description of series] on [insert date/the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note as referred to in paragraph [26] below [which is expected to occur on or about [insert date]]]] 5 (i) Issue Price: [●] per cent. of the Aggregate Principal Amount [plus accrued interest from [insert date] (in the case of fungible issues only if applicable)] (ii) Net Proceeds: [●] 6 (i) Specified Denominations5 6 7: [●] (notwithstanding any other regulatory or listing requirements in respect of specified denominations the minimum specified denomination for any series or tranche of Non-Preferred Loss Absorbing Notes and of Dated Subordinated Notes shall be if denominated in: (i) Hong Kong dollars HKD2000000; (ii) United States dollars U.S.$250000; (iii) Euros €200000; or (iv) any other currency the equivalent in that currency to HKD2000000 with reference to the relevant exchange rate on the date of issue.) (ii) Calculation Amount: [●] [ subject to adjustment following the occurrence of a Non-Viability Event or the issue of a Resolution Notice]8 (the applicable Calculation Amount will be: (i) if there is only one Specified Denomination the Specified Denomination of the relevant Notes; or (ii) if there are several Specified Denominations or the circumstances referred to in Footnote [3] apply the highest common factor of those Specified Denominations (note: there must be a common factor in the case of two or more Specified Denominations) 7 (i) Issue Date: [●] (ii) Interest Commencement [Specify/Issue date/Not Applicable] Date: 5 If the Specified Denomination is expressed to be EUR 100000 or its equivalent and multiples of a lower principalamount (for example EUR 1000) insert the following: “EUR 100000 and integral multiples of [EUR 1000] in excessthereof up to and including [EUR 199000]. No Notes in definitive form will be issued with a denomination above [EUR 199000]”. 6 Notes (including Notes denominated in pounds sterling) in respect of which the issue proceeds are to be accepted by the issuer in the United Kingdom or whose issue otherwise constitutes a contravention of Section 19 of the FSMA and which have a maturity of less than one year must have a minimum redemption value of GBP 100000 (or its equivalent in other currencies). 7 Notes to be listed on the Hong Kong Stock Exchange are required to be traded in a board lot size of at least HK$500000 (or its equivalent in other currencies). 8 Only relevant for Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes. ? 246 ?8 Maturity Date: [specify date or (for Floating Rate Notes) Interest Payment Date falling in or nearest to the relevant month and year]9 9 Interest Basis: [[●] per cent. Fixed Rate] [[LIBOR/EURIBOR/HIBOR/CNH HIBOR/SHIBOR/ SOFR Benchmark/SONIA Benchmark] +/- [●] per cent. Floating Rate] [Zero Coupon] [Index Linked Interest] [Other (specify)] (further particulars specified below) 10 Redemption/Payment Basis: [Redemption at par] [Index Linked Redemption] [Dual Currency] [Partly Paid] [Instalment] [Other (specify)] 11 Change of Interest or Redemption/ [Specify details of any provision for convertibility Payment Basis: of Notes into another interest or redemption/ payment basis/ Not Applicable] 12 Put/Call Options: [Investor Put] [Issuer Call] [(further particulars specified below)] [The Issuer shall not redeem any of the Dated Subordinated Notes or Non-Preferred Loss Absorbing Notes unless the prior written consent of the Monetary Authority thereto shall have been obtained to the extent such consent is required under the Banking Ordinance (Cap. 155) of Hong Kong or the Banking (Capital) Rules (Cap. 155L) of Hong Kong or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto]10] 9 Note that Renminbi or HK dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject to modification it will be necessary to use the second option here. 10 Only relevant for Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes. ? 247 ?13 (i) Status of the Notes: [Senior (Preferred)/Dated Subordinated/Non-Preferred Loss Absorbing] (ii) [Qualification of the Notes:] [Not Applicable/The Notes are intended to qualify as Tier 2 capital of the Issuer/The Notes are intended to qualify as a Loss Absorbing Instrument] (iii) [Date of [Board approval for [Not Applicable/specify details where Board (or issuance of Notes obtained:] similar) authorisation is required for the particular tranche of Notes] (iv) [Date of regulatory approval [Monetary Authority Approval dated [●]/None for issuance of Notes required] obtained:] 14 Listing and admission to trading: [Hong Kong/specify other/Not listed] (for Notes to be listed on the [Hong Kong Stock Exchange] insert the expected effective listing date of the Notes) 15 Method of distribution: [Syndicated/Non-syndicated] PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16 Fixed Rate Note Provisions: [Applicable/Not Applicable/Applicable from and including the [Issue Date/Interest Payment Date falling on [●]] to but excluding the [Interest Payment Date falling on [●]/Maturity Date]] (If not applicable delete the remaining sub — paragraphs of this paragraph) (i) Rate[(s)] of Interest: [●] per cent. per annum [payable [annually/semi-annually/quarterly/monthly] in arrear] (ii) Interest Payment Date(s): [●] in each [month]/[year]11 [commencing on the [Issue Date/Interest Payment Date falling on [●]] and ending on the [Interest Payment Date falling on [●]/Maturity Date]] [adjusted in accordance with [specify Business Day Convention and any applicable Financial Centre(s) for the definition of “Business Day”]/[not adjusted] (iii) Business Day Convention: [Following Business Day Convention / Modified Following Business Day Convention / Preceding Business Day Convention / other (give details) / not adjusted] 11 Note that for certain Renminbi and HK dollar denominated Fixed Rate Notes the Interest Payment Dates are subject tomodification and the following words should be added: “provided that if any Interest Payment Date falls on a day whichis not a Business Day the Interest Payment Date will be the next succeeding Business Day unless it would thereby fall in the next calendar month in which event the Interest Payment Date shall be brought forward to the immediatelypreceding Business Day”.? 248 ?(iv) Fixed Coupon Amount[(s)]: [●] per Calculation Amount12 [ subject to adjustment following the occurrence of a Non-Viability Event or the issue of a Resolution Notice] (v) Broken Amount(s): [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph.) [[●] per Calculation Amount subject to adjustment following the occurrence of a Non-Viability Event or the issue of a Resolution Notice payable on the Interest Payment Date falling [in/on] [●]] (vi) Day Count Fraction: [30/360 or Actual/Actual (ICMA/ISDA) or Actual/365 or Actual/360 or other] (vii) Determination Dates: [Applicable/Not Applicable] (if not applicable delete the remaining sub-paragraphs of this paragraph.) [●] in each year [(insert regular interest payment dates ignoring issue date or maturity date in the case of a long or short first or last coupon. N.B.only relevant where Day Count Fraction is Actual/Actual (ICMA))] (viii) Other terms relating to the [Not Applicable/give details] method of calculating interest for Fixed Rate Notes: 17 Floating Rate Note Provisions: [Applicable/Not Applicable/Applicable from and including the [Issue Date/Interest Payment Date falling on [●]] to but excluding the [Interest Payment Date falling on [●]/Maturity Date]] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Interest Period(s): [Each period from and including the [Issue Date]/[Interest Payment Date falling on [●]] to (but excluding) the [subsequent Interest Payment Date falling on [●]/[Maturity Date]] except that the first Interest Period will commence on (and include) the [Issue Date]/[the Interest Payment Date falling on [●]] and the final Interest Period shall end (but exclude) the [Interest Payment Date falling on [●]] /[Maturity Date].] 12 For Renminbi or HK dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject to modificationthe following alternative wording is appropriate: “Each Fixed Coupon Amount shall be calculated by multiplying theproduct of the Rate of Interest and the Calculation Amount by the Day Count Fraction and rounding the resultant figure to the nearest CNY0.01 CNY0.005 for the case of Renminbi denominated Fixed Rate Notes to the nearest HK$0.01HK$0.005 for the case of HK dollar denominated Fixed Rate Notes being rounded upwards”.? 249 ?(ii) Specified Interest Payment [●] in each [month]/[year] [commencing on the Date(s): [Issue Date/Interest Payment Date falling on [●]] and ending on the [Interest Payment Date falling on [●]/Maturity Date]] [adjusted in accordance with [specify Business Day Convention and any applicable Financial Centre(s) for the definition of “Business Day”]/not adjusted] (iii) Interest Period End Date: [●] (Not applicable unless different from Interest Payment Date) (iv) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)] (v) Manner in which the Rate(s) [Screen Rate Determination/ISDA of Interest is/are to be Determination/other (give details)] determined: (vi) Party responsible for [●] calculating the Rate(s) of Interest and Interest Amount(s) (if not the Calculation Agent): (vii) Screen Rate Determination: — Reference Bank: [●] — Reference Rate: [LIBOR/EURIBOR/HIBOR/CNH HIBOR/ SHIBOR/SOFR Benchmark/SONIA Benchmark/other (give details)] — Interest Determination [●] Date(s): — Relevant Screen Page: [●] — SOFR: [Applicable/Not Applicable] o SOFR Benchmark: [Simple SOFR Average/Compounded SOFR Average/SOFR Index Average] o Compounded [Not Applicable/SOFR Observation Lag/SOFR SOFR Average Observation Shift/SOFR Payment Delay/SOFR Lockout] o Lookback Days: [[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Observation Lag) o SOFR Observation [[●] U.S. Government Securities Business Day(s)] Shift Days: (Only applicable in the case of SOFR Observation Shift or SOFR Index Average) ? 250 ?o Interest Payment [[●] U.S. Government Securities Business Day(s)] Delay Days: (Only applicable in the case of SOFR Payment Delay) o SOFR Rate [Not Applicable/the day that is the [●] U.S.Cut-Off Date: Government Securities Business Day(s) prior to the end of each Interest Period the Maturity Date or the relevant date for redemption (as the case may be)] (Only applicable in the case of Simple SOFR Average SOFR Payment Delay or SOFT Lockout) o SOFR IndexStart: [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Index Average) o SOFR IndexEnd: [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Index Average) — SONIA: [Applicable/Not Applicable] o Reference Rate: [SONIA Compounded Index Rate/SONIA Compounded Daily Reference Rate [with Observation Shift]/[with Lag] where “p” is: [●] London Business Days [being no less than [5] London Business Days]]/[insert other applicable reference rates included in terms and conditions] o Interest [The date which is [“p”] London Business Days Determination prior to each Interest Payment Date/[2 London Date(s): Business Days] prior to the first day in each Interest Period] o Relevant Screen [[Bloomberg Screen Page : SONCINDX]/see pages Page: of authorised distributors for SONIA Compounded Index Rate]/[[Bloomberg Screen Page : SONIO/N Index]/SONIA Compounded Daily Reference Rate as applicable]/[●] o Relevant Fallback [[Bloomberg Screen Page : SONIO/N Index]/see Screen Page: pages of authorised distributors for SONIA Compounded Daily Reference Rate as applicable]/ [●] (Only applicable in the case of SONIA Compounded Index Rate) ? 251 ?(viii) ISDA Determination: — Floating Rate Option: [●] — Designated Maturity: [●] — Reset Date: [●] (ix) Margin(s): [+/?] [●] per cent. per annum (x) Minimum Rate of Interest: [●] per cent. per annum (xi) Maximum Rate of Interest: [●] per cent. per annum (xii) Day Count Fraction: [●] (xiii) Benchmark discontinuation and fall back provisions: — Benchmark [Applicable/Not Applicable] Discontinuation (other than Floating Rate Notes which specify the Reference Rate as SOFR Benchmark) (Condition 5(k)): — Fall back provisions [Benchmark Replacement (SOFR) (Condition rounding provisions 5(l))/specify other if different from those set out in denominator and any the Conditions] other terms relating to the method of calculating Distribution on Floating Rate Undated Capital Securities if different from those set out in the Conditions: 18 Zero Coupon Note Provisions: [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Amortisation Yield: [●] per cent. per annum (ii) Day Count Fraction: [●] (iii) Any other formula/basis of [●] determining amount payable: ? 252 ?19 Index Linked Interest Note [Applicable/Not Applicable] Provisions: (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Index/Formula: [give or annex details] (ii) Party responsible for [●] calculating the Rate(s) of Interest and/or Interest Amount(s) (if not the Calculation Agent): (iii) Provisions for determining [●] Coupon where calculation by reference to Index and/or Formula is impossible or impracticable or otherwise disrupted: (iv) Interest Period(s): [●] (v) Specified Interest Payment [●] Dates: (vi) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)] (vii) Minimum Rate of Interest: [●] per cent. per annum (viii) Maximum Rate of Interest: [●] per cent. per annum (ix) Day Count Fraction: [●] 20 Dual Currency Note Provisions: [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Rate of Exchange/method of [give details] calculating Rate of Exchange: (ii) Party if any responsible for [●] calculating the Rate(s) of Interest and Interest Amount(s) (if not the Calculation Agent): (iii) Provisions applicable where [●] calculation by reference to Rate of Exchange impossible or impracticable: (iv) Person at whose option [●] Specified Currency(ies) is/are payable: ? 253 ?PROVISIONS RELATING TO REDEMPTION 21 Call Option: [Applicable/Not Applicable] (If applicable specify/include details. If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Optional Redemption Date(s): [●][ subject to the prior written consent of the Monetary Authority]13 (ii) Optional Redemption [●] per Calculation Amount [ subject to adjustment Amount(s) of each Note and following the occurrence of a Non-Viability Event specified denomination or the issue of a Resolution Notice]14 method if any of calculation of such amount(s): (iii) If redeemable in part: (a) Minimum Redemption [●] per Calculation Amount Amount: (b) Maximum Redemption [●] per Calculation Amount Amount: (iv) Notice period: [●] 22 Put Option: [Applicable/Not Applicable][ subject to the prior written consent of the Monetary Authority]15 (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Optional Redemption Date(s): [●] (ii) Optional Redemption [●] per Calculation Amount[ subject to adjustment Amount(s) of each Note and following the occurrence of a Non-Viability Event method if any of calculation or the exercise of Hong Kong Resolution Authority of such amount(s): Power]16 (iii) Notice period: [●] 23 Final Redemption Amount of each [●] per Calculation Amount[ subject to adjustment Note: following the occurrence of a Non-Viability Event or the exercise of Hong Kong Resolution Authority Power] 13 Only relevant for Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes. 14 Only relevant for Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes. 15 Only relevant for Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes. 16 Only relevant for Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes. ? 254 ?24 Early Redemption Amount: Early Redemption Amount(s) per [●][ subject to adjustment following the Calculation Amount payable on occurrence of a Non-Viability Event or the issue of redemption for taxation reasons or a Resolution Notice]17 on event of default and/or the method of calculating the same (if required or if different from that set out in the Note Conditions): PROVISIONS RELATING TO NON-VIABILITY AND LOSS ABSORPTION OF DATED SUBORDINATED NOTES AND NON-PREFERRED LOSS ABSORBING NOTES 25 Loss Absorption: [Applicable/Not Applicable] (if not applicable delete the remaining sub-paragraphs of this paragraph) (a) Suspension Period: [Not Applicable/give details] (b) Non-Viability Event: [Not Applicable/give details] (c) Non-Viability Event Notice: [Not Applicable/give details] (d) Write-off: [Not Applicable/give details] (e) Loss-absorbing capacity: [Not Applicable/give details] (f) Others: [Not Applicable/give details e.g. Parity Obligations Junior Obligations] GENERAL PROVISIONS APPLICABLE TO THE NOTES 26 Form of Notes: Bearer Notes [Temporary Global Note exchangeable for a permanent Global Note which is exchangeable for Definitive Notes in the limited circumstances specified in the permanent Global Note] [Temporary Global Note exchangeable for Definitive Notes on [●] days’ notice] [Permanent Global Note exchangeable for Definitive Notes in the limited circumstances specified in the permanent Global Note] 17 Only relevant for Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes. ? 255 ?(N.B. The exchange upon notice/at any time options should not be expressed to be applicable if the Specified Denomination of the Notes in paragraph 6 includes language substantially to the followingeffect: “EUR 100000 plus integral multiples ofEUR 1000 in excess thereof up to and includingEUR 199000”. Furthermore such Specified Denomination construction is not permitted in relation to any issue of Notes which is to be represented on issue by a Temporary Global Note exchangeable for Definitive Notes.) Registered Notes: [Regulation S Global Note (U.S.$/EUR [●] principal amount) registered in the name of a nominee for [a common depositary for Euroclear and Clearstream]] 27 Financial Centre(s) or other [Not Applicable/give details. Note that this special provisions relating to paragraph relates to the date and place of Payment Dates: payment] 28 Talons for future Coupons or [Applicable/Not Applicable (if Applicable give Receipts to be attached to details)] Definitive Notes (and dates on which such Talons mature): 29 Details relating to Partly Paid [Applicable/Not Applicable (if Applicable give Notes: amount of each payment details)] comprising the Issue Price and date on which each payment is to be made and consequences (if any) of failure to pay including any right of the Issuer to forfeit the Notes and interest due on late payment: 30 Details relating to Instalment [Applicable/Not Applicable (if Applicable give Notes: amount of each instalment details)] (Instalment Amount) date on which each payment is to be made (Instalment Date): 31 Other terms or special conditions: [Applicable/Not Applicable (give details e.g. if any additional loss absorption details to be set out in schedule to the Pricing Supplement)] ? 256 ?DISTRIBUTION 32 (i) If syndicated names of [Not Applicable/give names] Managers: [The Issuer or any of its broker-dealers or other affiliates may engage in market-making transactions involving the Notes after their initial sale as permitted by applicable law but none of the Issuer any of its broker-dealer or its affiliates is obligated to do so or to make a market for the Notes] (ii) Stabilisation Manager (if [Not Applicable/give name] any): 33 If non-syndicated name of Dealer: [Not Applicable/give name] [The Issuer or any of its broker-dealers or other affiliates may engage in market-making transactions involving the Notes after their initial sale as permitted by applicable law but none of the Issuer any of its broker-dealer or its affiliates is obligated to do so or to make a market for the Notes] 34 U.S. selling restrictions: [TEFRA D/TEFRA C/TEFRA not applicable] Regulation S (Category [1/2]) (TEFRA not applicable for Bearer Notes with a maturity of one year or less or Registered Notes) (Where TEFRA D is applicable a Bearer Note must be issued in the form of a Temporary Note exchangeable upon a U.S. tax certification for a Permanent Global Note or a Definitive Note) 35 Prohibition of Sales to EEA Retail [Applicable/Not Applicable] Investors: (If the Notes clearly do not constitute ‘‘packaged’’ products ‘‘Not Applicable’’ should be specified. If the Notes may constitute ‘‘packaged’’ products and no Key Information Document (as provided for under the PRIIPs Regulation) will be prepared ‘‘Applicable’’ should be specified.) 36 Prohibition of Sales to UK Retail [Applicable/Not Applicable] Investors: (If the Notes clearly do not constitute “packaged” products “Not Applicable” should be specified. If the Notes may constitute “packaged” products and no Key Information Document (as provided for under the UK PRIIPs Regulation) will be prepared “Applicable” should be specified.) 37 Additional selling restrictions: [Not Applicable/give details] 38 Private bank rebate/commission: [Not Applicable/give details] ? 257 ?OPERATIONAL INFORMATION 39 ISIN Code: [●] 40 Common Code: [●] 41 CMU Instrument Number: [●] 42 Legal Entity Identifier (LEI): CO6GC26LCGGRTUESIP55 43 Any clearing system(s) other than [Not Applicable/give name(s) and number(s)] Euroclear and Clearstream and the CMU and the relevant identification number(s): 44 Delivery: Delivery [against/free of] payment 45 Names and addresses of additional [●] Paying Agent(s) (if any): GENERAL 46 The aggregate principal amount of [Not applicable/U.S.$][●] Notes issued has been translated into U.S. dollars at the rate of [●] producing a sum of (for Notes not denominated in U.S.dollars): 47 In the case of Registered Notes [●] specify the location of the office of the Registrar if other than Luxembourg: 48 In the case of Bearer Notes [●] specify the location of the office of the Issuing and Paying Agent if other than Dublin Ireland: 49 Governing Law: English law [save that the provisions relating to Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes in relation to subordination set-off and payment void and default and enforcement shall be governed by and construed in accordance with the laws of Hong Kong]18 50 Ratings: [The Notes to be issued have not been rated /The Notes to be issued have been rated: [Moody’s Investors Service Inc.: [●]] [S&P Global Ratings: [●]] [Fitch: [●]] [Other: [●]] 18 Only relevant for Dated Subordinated Notes and Non-Preferred Loss Absorbing Notes. ? 258 ?(The above disclosure should reflect the rating allocated to Notes of the type being issued under the Programme generally or where the issue has been specifically rated that rating.)] HONG KONG SFC CODE OF CONDUCT 51 Rebates: [A rebate of [●] bps is being offered by the Issuer to all private banks for orders they place (other than in relation to Notes subscribed by such private banks as principal whereby it is deploying its own balance sheet for onward selling to investors) payable upon closing of this offering based on the principal amount of the Notes distributed by such private banks to investors. Private banks are deemed to be placing an order on a principal basis unless they inform the CMIs otherwise. As a result private banks placing an order on a principal basis (including those deemed as placing an order as principal) will not be entitled to and will not be paid the rebate.] / [Not Applicable] 52 Contact email addresses of the [Include relevant contact email addresses of the Overall Coordinators where Overall Coordinators where the underlying investor underlying investor information in information should be sent — Overall Coordinators relation to omnibus orders should to provide] / [Not Applicable] be sent: 53 [Marketing and Investor Targeting [Provide details if different from the programme Strategy: Offering Circular]] PURPOSE OF PRICING SUPPLEMENT This Pricing Supplement comprises the final terms required for issue and admission to trading on the [specify relevant stock exchange/market] of the Notes described herein pursuant to the U.S.$6000000000 Medium Term Note Programme.[USE OF PROCEEDS Give details if different from the “Use of Proceeds” section in the Offering Circular.] [STABILISATION In connection with this issue [●] (the “Stabilisation Manager”) (or persons acting on behalf of any Stabilisation Manager) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail for a limited period after the closing date of the relevant Tranche of Notes. However there is no obligation on such the Stabilisation Manager to do this. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of relevant Tranche of the Notes is made and if begun may cease at any time but must end no later than the earlier of 30 days after the issue date ? 259 ?of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the Stabilisation Manager (or persons acting on behalf of any Stabilisation Manager) in accordance with all applicable laws and rules.] INVESTMENT CONSIDERATIONS There are significant risks associated with the Notes including but not limited to counterparty risk country risk price risk and liquidity risk. Investors should contact their own financial legal accounting and tax advisers about the risks associated with an investment in these Notes the appropriate tools to analyse that investment and the suitability of the investment in each investor’s particular circumstances. No investor should purchase the Notes unless that investor understands and has sufficient financial resources to bear the price market liquidity structure and other risks associated with an investment in these Notes.Before entering into any transaction investors should ensure that they fully understand the potential risks and rewards of that transaction and independently determine that the transaction is appropriate given their objectives experience financial and operational resources and other relevant circumstances. Investors should consider consulting with such advisers as they deem necessary to assist them in making these determinations.[MATERIAL ADVERSE CHANGE STATEMENT There has been no significant change in the financial or trading position of the Issuer or the Group since [insert date of last audited full year or interim financial statements] and no material adverse change in the financial position or prospects of the Issuer or the Group since [insert date of last published audited annual financial statements].] RESPONSIBILITY The Issuer accepts responsibility for the information contained in this Pricing Supplement.Signed on behalf of The Bank of East Asia Limited 东亚银行有限公司: By: Duly authorised ? 260 ?FORM OF PRICING SUPPLEMENT RELATING TO UNDATED CAPITAL SECURITIES ONLY [MiFID II PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPs ONLY TARGET MARKET — Solely for the purposes of [the/each] manufacturer’s product approval process the target market assessment in respect of the Undated Capital Securities (as defined below) has led to the conclusion that: (i) the target market for the Undated Capital Securities is eligible counterparties and professional clients only each as defined in [Directive 2014/65/EU (as amended “MiFID II”)][MiFID II]; and (ii) all channels for distribution of the Undated Capital Securities to eligible counterparties and professional clients are appropriate. [Consider any negative target market.] Any person subsequently offering selling or recommending the Undated Capital Securities (a “distributor”) should take into consideration the manufacturer[’s/s’] target market assessment; however a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Undated Capital Securities (by either adopting or refining the manufacturer[’s/s’] target market assessment) and determining appropriate distribution channels.] [UK MiFIR PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPs ONLY TARGET MARKET — Solely for the purposes of [the/each] manufacturer’s product approval process the target market assessment in respect of the Undated Capital Securities [(as defined below)] has led to the conclusion that: (i) the target market for the Undated Capital Securities is only eligible counterparties as defined in the FCA Handbook Conduct of Business Sourcebook (“COBS”) and professional clients as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”) (“UK MiFIR”); and (ii) all channels for distribution of the Undated Capital Securities to eligible counterparties and professional clients are appropriate. [Consider any negative target market.] Any person subsequently offering selling or recommending the Undated Capital Securities (a “distributor”) should take into consideration the manufacturer[’s/s’] target market assessment; however a distributor subject to the FCA HandbookProduct Intervention and Product Governance Sourcebook (the “UK MiFIR Product GovernanceRules”) is responsible for undertaking its own target market assessment in respect of the Undated Capital Securities (by either adopting or refining the manufacturer[’s/s’] target market assessment) and determining appropriate distribution channels.] [PRIIPs REGULATION — PROHIBITION OF SALES TO EEA RETAIL INVESTORS — The Undated Capital Securities are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended the “Insurance Distribution Directive”) where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II[.]/[; or] [(iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended the “Prospectus Regulation”)].1 Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended the “PRIIPs Regulation”) for offering or selling the Undated Capital Securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Undated Capital Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.] [UK PRIIPs REGULATION — PROHIBITION OF SALES TO UK RETAIL INVESTORS — The Undated Capital Securities are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the United Kingdom.For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the [European Union (Withdrawal) Act 2018 (“EUWA”)/EUWA]; (ii) a customer within the 1 Paragraph (iii) is not required where the Notes have a denomination of at least €100000 or equivalent. ? 261 ?meaning of the provisions of the Financial Services and Markets Act 2000 (“FSMA”) and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA[.]/[; or] [(iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA (the “UK Prospectus Regulation”)].2 Consequently no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Undated Capital Securities or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling the Undated Capital Securities or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.] [In connection with Section 309B of the Securities and Futures Act 2001 of Singapore (the “SFA”)and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMPRegulations 2018”) the Issuer has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA) that the Undated Capital Securities are [prescribed capital markets products] / [capital markets products other than prescribed capital markets products] (as defined in the CMP Regulations 2018) and [are] [Excluded] / [Specified] Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).]3 WARNING The contents of this Pricing Supplement have not been reviewed by any regulatory authority of any jurisdiction. You are advised to exercise caution in relation to the offering of the Undated Capital Securities. If you are in any doubt about any of the contents of this Pricing Supplement you should obtain independent professional advice.[This document is for distribution to Professional Investors (as defined in Chapter 37 of the RulesGoverning the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong KongStock Exchange”)) (“Professional Investors”) only.Notice to Hong Kong investors: The Issuer confirms that the Undated Capital Securities are intended for purchase by Professional Investors only and will be listed on the Hong Kong Stock Exchange on that basis. Accordingly the Issuer confirms that the Undated Capital Securities are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.The Hong Kong Stock Exchange has not reviewed the contents of this document other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Programme or the Undated Capital Securities on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Programme the Undated Capital Securities the Issuer the Group or the quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. 2 Paragraph (iii) is not required where the Notes have a denomination of at least €100000 or equivalent. 3 For any Undated Capital Securities to be offered to Singapore investors the Issuer to consider whether it needs to re-classify the Undated Capital Securities pursuant to Section 309B of the SFA prior to the launch of the offer.? 262 ?This document together with the Offering Circular (as defined below) includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer and the Group. The Issuer accepts full responsibility for the accuracy of the information contained in this document and confirms having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.]4 It is intended that the Undated Capital Securities will constitute “loan capital” and/or a “regulatorycapital security” for the purposes of the Stamp Duty Ordinance (Cap 117) of the Laws of Hong Kong.To the extent there are any concerns specific Hong Kong tax advice should be sought.Pricing Supplement dated [●] The Bank of East Asia Limited 东亚银行有限公司 Issue of [Aggregate Principal Amount of Tranche] [Title of Undated Capital Securities] (the “Undated Capital Securities”) under the U.S.$6000000000 Medium Term Note Programme This document constitutes the Pricing Supplement relating to the issue of the Undated Capital Securities described herein.Terms used herein shall be deemed to be defined as such for the purposes of the Undated Capital Securities Conditions (the “Conditions”) set forth in the Offering Circular dated [●] (the “OfferingCircular”) [and the supplementary Offering Circular dated [●]]. This Pricing Supplement contains the final terms of the Undated Capital Securities and must be read in conjunction with such Offering Circular [as so supplemented]. Full information on the Issuer and the offer of the Undated Capital Securities is only available on the basis of the combination of the Offering Circular[ the supplementary Offering Circular dated [●]] and this Pricing Supplement.[The following alternative language applies if the first tranche of an issue which is being increased was issued under an Offering Circular with an earlier date.Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions of the Undated Capital Securities (the “Conditions”) set forth in the Offering Circular dated [●]. This Pricing Supplement contains the final terms of the Undated Capital Securities and must be read in conjunction with the Offering Circular dated [●] [and the supplementary Offering Circular dated [●]] save in respect of the Conditions which are extracted from the Offering Circular dated [●] and are attached hereto. Principal and/or distribution of the Undated Capital Securities may be written-off upon the occurrence and continuance of a Non-Viability Event in accordance with the terms set out in Condition 7 and paragraph 20 below. In particular investors in the Undated Capital Securities should read the section titled “Investment Considerations” contained therein including but not limitedto the risk factor titled “[The terms of Undated Capital Securities may contain non-viability lossabsorption provisions]” which apply to the issue of Undated Capital Securities described herein. Full information on the Issuer and the offer of the Undated Capital Securities is only available on the basis of the combination of the Offering Circular[ the supplementary Offering Circular dated [●]] and this Pricing Supplement.] [Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should remain as set out below even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Pricing Supplement.] 1 Issuer The Bank of East Asia Limited 东亚银行有限公司 2 (i) [Series Number:] [●] 4 Applicable for Notes to be listed on the Hong Kong Stock Exchange only. ? 263 ?(ii) [Tranche Number: [●] (If fungible with an existing Series details of that Series including the date on which the Undated Capital Securities became fungible)] 3 Specified Currency or Currencies: [●] 4 Aggregate Principal Amount: [●] (i) [Series:] [●] (ii) [Tranche:] [●] (iii) [Date on which the Undated [The Undated Capital Securities will be Capital Securities become consolidated and form a single Series with [identify fungible:] earlier Tranches] on [the Issue Date/the date that is 40 days after the Issuer Date/Not Applicable] (if fungible with an existing Series details of that Series including the date on which the Undated Capital Securities become fungible) 5 (i) Issue Price: [●] per cent. of the Aggregate Principal Amount [plus accrued Distributions from [insert date] (in the case of fungible issues only if applicable)] (ii) Net Proceeds: [●] 6 (i) Specified Denomination5 6: [●] (notwithstanding any other regulatory or listing requirements in respect of specified denomination the minimum specified denomination for any series or tranche of Undated Capital Securities intending to qualify as Additional Tier 1 capital under the Banking Capital Regulations and/or a LAC debt instrument under the Loss Absorbing Capacity Rules shall be if denominated in: (i) Hong Kong dollars HKD2000000; (ii) United States dollars U.S.$250000; (iii) Euros €200000; or (iv) any other currency the equivalent in that currency to HKD2000000 with reference to the relevant exchange rate on the date of issue) (ii) Calculation Amount: [●] subject to adjustment following the occurrence of a Non-Viability Event or the issue of a Resolution Notice 7 (i) Issue Date: [●] (ii) Distribution Commencement [Specify/Issue date/Not Applicable] Date: 5 Undated Capital Securities (including Undated Capital Securities denominated in sterling) in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of Section 19 FSMA and which have a maturity of less than one year must have a minimum redemption value of ?100000 (or its equivalent in other currencies). Add appropriate provisions to terms and conditions if included. 6 Undated Capital Securities to be listed on the Hong Kong Stock Exchange are required to be traded in a board lot size of at least HK$500000 (or its equivalent in other currencies).? 264 ?8 Distribution (i) Distribution Basis: [[●] per cent. Fixed Rate from [●] to [●]] [[LIBOR/EURIBOR/HIBOR/CNH HIBOR/SHIBOR/ SOFR Benchmark/SONIA Benchmark] +/- [●] per cent. Floating Rate][from [●] to [●]] [Other (specify)] (further particulars specified below) Payment of any Distribution is subject to the terms and conditions specified in Condition 5 (ii) Distribution Stopper [Applicable/Not Applicable] (Condition 5(d)): 9 Redemption/Payment Basis: [Redemption at par] [Other (specify)] 10 Change of Distribution or [Specify details of any Payment Basis: provision for Redemption Payment Basis: convertibility of Undated Capital Securities into another Distribution or redemption/payment basis/ Not Applicable] 11 Call Options: [Issuer Call (further particulars specified below) The Issuer shall not redeem any of the Undated Capital Securities unless the prior written consent of the Monetary Authority thereto shall have been obtained to the extent such consent is required under the Banking Ordinance (Cap. 155) of Hong Kong or the Banking (Capital) Rules (Cap. 155L) of Hong Kong or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto] 12 (i) Qualification of the Undated [The Undated Capital Securities are intended to Capital Securities: qualify as Additional Tier 1 capital of the Issuer/The Undated Capital Securities are intended to qualify as a Loss Absorbing Instrument] (ii) [Date of [Board] approval for [Not Applicable/specify details where Board (or issuance of Undated Capital similar) authorisation is required for the particular Securities obtained:] tranche of Undated Capital Securities] (iii) [Date of regulatory approval [Monetary Authority Approval dated [●]/None for issuance of Undated required] Capital Securities obtained:] 13 Listing and admission to trading: [Hong Kong/specify other/Not listed] (for Undated Capital Securities to be listed on the [Hong Kong Stock Exchange] insert the expected effective listing date of the Undated Capital Securities) 14 Method of distribution: [Syndicated/Non-syndicated] ? 265 ?PROVISIONS RELATING TO DISTRIBUTION (IF ANY) PAYABLE 15 Fixed Rate Undated Capital [Applicable/Not Applicable/Applicable from and Securities Provisions: including the [Issue Date/Distribution Payment Date falling on [●]] to but excluding the [Distribution Payment Date falling on [●]] (If not applicable delete the remaining sub — paragraphs of this paragraph) (i) Rate[(s)] of Distribution: (a) Initial Distribution Rate: [●] per cent. per annum [payable [annually/semi-annually/quarterly/monthly] in arrear] (b) Reset: [Applicable/Not Applicable] (A) First Reset Date: [●] (B) Reset Date[s]: The First Reset Date and each date falling every [●] after the First Reset Date (C) Relevant Rate: [●] (D) Initial Spread: [●] (ii) Distribution Period: [Each period from and including the [Issue Date]/[Distribution Payment Date falling on [●]] to (but excluding) the [subsequent Distribution Payment Date falling on [●]] except that the first Distribution Period will commence on (and include) the [Issue Date]/ [Distribution Payment Date falling on [●]] and the final Distribution Period shall end (but exclude) the [Distribution Payment Date falling on [●]]] (iii) Distribution Payment Date(s): [●] in each year7 commencing on the [Issue Date/Distribution Payment Date falling on [●]] and ending on the [Distribution Payment Date falling on [●]]] [adjusted in accordance with [specify Business Day Convention and any applicableFinancial Centre(s) for the definition of “BusinessDay”]/not adjusted] (iv) Business Day Convention: [Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)] 7 Note that for certain Renminbi and HK dollar denominated Fixed Rate Undated Capital Securities the Interest PaymentDates are subject to modification and the following words should be added: “provided that if any Interest Payment Datefalls on a day which is not a Business Day the Interest Payment Date will be the next succeeding Business Day unless it would thereby fall in the next calendar month in which event the Interest Payment Date shall be brought forward tothe immediately preceding Business Day”.? 266 ?(v) Fixed Distribution [From (and including) the Distribution Amount[(s)]: Commencement Date to (but excluding) the First Reset Date [●] per Calculation Amount8 subject to adjustment following the occurrence of a Non-Viability Event or the issue of a Resolution Notice From (and including) the First Reset Date the respective amounts to be determined pursuant to Item 15(i)(b) above subject to adjustment following the occurrence of a Non-Viability Event] or the issue of a Resolution Notice (vi) Broken Amount(s): [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph.) [[●] per Calculation Amount subject to adjustment following the occurrence of a Non-Viability Event or the issue of a Resolution Notice payable on the Distribution Payment Date falling [in/on] [●]] (vii) Day Count Fraction: [30/360/Actual/Actual (ICMA/ISDA)/other] (viii) Determination Dates: [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph.) [[●] in each year (insert regular Distribution payment dates ignoring issue date or redemption date in the case of a long or short first or last coupon. N.B. only relevant where Day Count Fraction is Actual/Actual (ICMA))] (ix) Other terms relating to the [Not Applicable/give details] method of calculating Distribution for Fixed Rate Undated Capital Securities: 8 For Renminbi or HK dollar denominated Fixed Rate Undated Capital Securities where the Interest Payment Dates aresubject to modification the following alternative wording is appropriate: “Each Fixed Coupon Amount shall becalculated by multiplying the product of the Rate of Interest and the Calculation Amount by the Day Count Fraction and rounding the resultant figure to the nearest CNY0.01 CNY0.005 for the case of Renminbi denominated Fixed Rate Undated Capital Securities to the nearest HK$0.01 HK$0.005 for the case of HK dollar denominated Fixed Rate UndatedCapital Securities being rounded upwards”.? 267 ?16 Floating Rate Undated Capital [Applicable/Not Applicable/Applicable from and Securities Provisions: including the [Issue Date/Distribution Payment Date falling on [●]] to but excluding the [Distribution Payment Date falling on [●]]] (if not applicable delete the remaining sub-paragraphs of this paragraph) (i) Distribution Period(s): [Each period from and including the [Issue Date]/[Distribution Payment Date falling on [●]] to (but excluding) the [subsequent Distribution Payment Date falling on [●]] except that the first Distribution Period will commence on (and include) the [Issue Date]/[the Distribution Payment Date falling on [●] and the final Distribution Period shall end (but exclude) the [Distribution Payment Date falling on [●]]] (ii) Specified Distribution [●] in each year [commencing on the [Issue Payment Date(s): Date/Distribution Payment Date falling on [●]] and ending on the [Distribution Payment Date falling on [●]] [adjusted in accordance with [specify Business Day Convention and any applicable Financial Centre(s) for the definition of “Business Day”]/not adjusted] (iii) Distribution Period Date: [●] (Not applicable unless different from Distribution Payment Date) (iv) Business Day Convention: [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)] (v) Manner in which the Rate(s) [Screen Rate Determination/ISDA of Distribution is/are to be Determination/other (give details)] determined: (vi) Party responsible for [●] calculating the Rate(s) of Distribution and Distribution Amount(s) (if not the Calculation Agent): (vii) Screen Rate Determination: — Reference Banks: [●] — Reference Rate: [LIBOR/EURIBOR/HIBOR/CNH HIBOR/ SHIBOR/SOFR Benchmark/SONIA Benchmark/other (give details)] — Distribution [●] Determination Date(s): ? 268 ?— Relevant Screen Page: [●] — SOFR: [Applicable/Not Applicable] o SOFR Benchmark: [Simple SOFR Average/Compounded SOFR Average/SOFR Index Average] o Compounded [Not Applicable/SOFR Observation Lag/SOFR SOFR Average: Observation Shift/SOFR Payment Delay/SOFR Lockout] o Lookback Days: [[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Observation Lag) o SOFR Observation [[●] U.S. Government Securities Business Day(s)] Shift Days: (Only applicable in the case of SOFR Observation Shift or SOFR Index Average) o Distribution [[●] U.S. Government Securities Business Day(s)] Payment Delay (Only applicable in the case of SOFR Payment Days: Delay) o SOFR Rate [Not Applicable/the day that is the [●] U.S.Cut-Off Date: Government Securities Business Day(s) prior to the end of each Distribution Period or the relevant date for redemption (as the case may be)] (Only applicable in the case of Simple SOFR Average SOFR Payment Delay or SOFR Lockout) o SOFR IndexStart: [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Index Average) o SOFR IndexEnd: [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Index Average) — SONIA: [Applicable/Not Applicable] o Reference Rate: [SONIA Compounded Index Rate/SONIA Compounded Daily Reference Rate [with Observation Shift]/[with Lag] where “p” is: [●] London Business Days [being no less than [5] London Business Days]]/[insert other applicable reference rates included in terms and conditions] o Distribution [The date which is [“p”] London Business Days Determination prior to each Distribution Payment Date/[2 London Date(s): Business Days] prior to the first day in each Distribution Period] ? 269 ?o Relevant Screen [[Bloomberg Screen Page : SONCINDX]/see pages Page: of authorised distributors for SONIA Compounded Index Rate]/[Bloomberg Screen Page : SONIO/N Index]/SONIA Compounded Daily Reference Rate as applicable]/[●] o Relevant Fallback [[Bloomberg Screen Page : SONIO/N Index]/see Screen Page: pages of authorised distributors for SONIA Compounded Daily Reference Rate as applicable]/ [●] (Only applicable in the case of SONIA Compounded Index Rate) (viii) ISDA Determination: — Floating Rate Option: [●] — Designated Maturity: [●] — Reset Date: [●] (ix) Margin(s): [+/?] [●] per cent. per annum (x) Minimum Rate of [●] per cent. per annum Distribution: (xi) Maximum Rate of [●] per cent. per annum Distribution: (xii) Day Count Fraction: [30/360 or Actual/Actual (ICMA/ISDA) or Actual/360 or Actual/ 365 (Fixed) or [specify other]] (xiii) Benchmark discontinuation and fall back provisions: — Benchmark [Applicable/Not Applicable] Discontinuation (other than Floating Rate Undated Capital Securities which specify the Reference Rate as SOFR Benchmark) (Condition 4(h)): — Fall back provisions [Benchmark Replacement (SOFR) (Condition rounding provisions 4(i))/specify other if different from those set out in denominator and any the Conditions] other terms relating to the method of calculating Distribution on Floating Rate Undated Capital Securities if different from those set out in the Conditions: ? 270 ?PROVISIONS RELATING TO REDEMPTION 17 Call Option: [Applicable/Not Applicable] (if applicable specify/include details. If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Optional Redemption Date(s): [●] subject to the prior written consent of the Monetary Authority (ii) Optional Redemption [●] per Calculation Amount subject to adjustment Amount(s) of each Undated following the occurrence of a Non-Viability Event Capital Security and or the exercise of Hong Kong Resolution Authority specified denomination Power method if any of calculation of such amount(s): 18 Final Redemption Amount of each [●] per Calculation Amount subject to adjustment Undated Capital Security: following the occurrence of a Non-Viability Event or the exercise of Hong Kong Resolution Authority Power 19 Early Redemption Amount: [●]/ [Not Applicable] Early Redemption Amount(s) per [●] subject to adjustment following the occurrence Calculation Amount payable on of a Non-Viability Event or the issue of a redemption for taxation reasons or Resolution Notice on event of default and/or the method of calculating the same (if required or if different from that set out in the Conditions): PROVISIONS RELATING TO NON-VIABILITY AND LOSS ABSORPTION OF THE UNDATED CAPITAL SECURITIES 20 Loss Absorption: (i) Suspension Period: [per Condition [2(e)]/give details] (ii) Non-Viability Event: [per Condition [7]/give details] (iii) Non-Viability Event Notice: [per Condition [7]/give details] (iv) Write-off: [per Condition [7]/give details] (v) Loss-absorbing capacity: [per Condition [7]/give details] (vi) Others: [Not Applicable/give details e.g. Parity Obligations Junior Obligations] GENERAL PROVISIONS APPLICABLE TO THE UNDATED CAPITAL SECURITIES 21 Form of Undated Capital Registered Undated Capital Securities: Securities: Global Certificate exchangeable for Individual Security Certificates in the limited circumstances described in the Global Certificate ? 271 ?22 Financial Centre(s) or other [Not Applicable/give details (note that this special provisions relating to paragraph relates to the date and place of Payment Dates: payment)] 23 Other terms or special conditions: [Not Applicable/give details e.g. if any additional loss absorption details to be set out in schedule to the Pricing Supplement] DISTRIBUTION 24 (i) If syndicated names of [Not Applicable/give names] Managers: [The Issuer or any of its broker-dealers or other affiliates may engage in market-making transactions involving the Undated Capital Securities after their initial sale as permitted by applicable law but none of the Issuer any of its broker-dealer or its affiliates is obligated to do so or to make a market for the Undated Capital Securities] (ii) Stabilisation Manager (if [Not Applicable/give name] any): 25 If non-syndicated name of Dealer: [Not Applicable/give name] [The Issuer or any of its broker-dealers or other affiliates may engage in market-making transactions involving the Undated Capital Securities after their initial sale as permitted by applicable law but none of the Issuer any of its broker-dealer or its affiliates is obligated to do so or to make a market for the Undated Capital Securities] 26 U.S. selling restrictions: [Reg. S Category [1] / [2]; TEFRA/Not Applicable] 27 Prohibition of Sales to EEA Retail [Applicable/Not Applicable] Investors: (If the Undated Capital Securities clearly do not constitute ‘‘packaged’’ products ‘‘Not Applicable’’ should be specified. If the Undated Capital Securities may constitute ‘‘packaged’’ products and no Key Information Document (as provided for under the PRIIPs Regulation) will be prepared ‘‘Applicable’’ should be specified.) 28 Prohibition of Sales to UK Retail [Applicable/Not Applicable] Investors: (If the Undated Capital Securities clearly do not constitute “packaged” products “Not Applicable” should be specified. If the Undated Capital Securities may constitute “packaged” products and no Key Information Document (as provided for under the UK PRIIPs Regulation) will be prepared “Applicable” should be specified.) 29 Additional selling restrictions: [Not Applicable/give details] ? 272 ?30 Private bank rebate/commission: [Not Applicable/give details] OPERATIONAL INFORMATION 31 ISIN Code: [●] 32 Common Code: [●] 33 CMU Instrument Number: [●]/[Not Applicable] 34 Legal Entity Identifier (LEI): CO6GC26LCGGRTUESIP55 35 Any clearing system(s) other than [Not Applicable/give name(s) and number(s)] the CMU and/or Euroclear and Clearstream and the relevant identification number(s): 36 Delivery: Delivery [against/free of] payment 37 Names and addresses of additional [●] Paying Agent(s) (if any): GENERAL 38 Governing Law: English law save that the provisions in relation to subordination set-off and payment void and default and enforcement shall be governed by and construed in accordance with the laws of Hong Kong 39 Ratings: [The Undated Capital Securities to be issued have not been rated/The Undated Capital Securities to be issued have been rated: [Moody’s Investors Service Inc.: [●]] [S&P Global Ratings: [●]] [Fitch: [●]] [Other: [●]] (The above disclosure should reflect the rating allocated to Undated Capital Securities of the type being issued under the Programme generally or where the issue has been specifically rated that rating.)] ? 273 ?HONG KONG SFC CODE OF CONDUCT 40 Rebates: [A rebate of [●] bps is being offered by the Issuer to all private banks for orders they place (other than in relation to Undated Capital Securities subscribed by such private banks as principal whereby it is deploying its own balance sheet for onward selling to investors) payable upon closing of this offering based on the principal amount of the Undated Capital Securities distributed by such private banks to investors. Private banks are deemed to be placing an order on a principal basis unless they inform the CMIs otherwise. As a result private banks placing an order on a principal basis (including those deemed as placing an order as principal) will not be entitled to and will not be paid the rebate.] / [Not Applicable] 41 Contact email addresses of the [Include relevant contact email addresses of the Overall Coordinators where Overall Coordinators where the underlying investor underlying investor information in information should be sent — Overall Coordinators relation to omnibus orders should to provide] / [Not Applicable] be sent: 42 [Marketing and Investor Targeting [Provide details if different from the programme Strategy: Offering Circular]] PURPOSE OF PRICING SUPPLEMENT This Pricing Supplement comprises the final terms required for issue and admission to trading on the [specify relevant stock exchange/market] of the Undated Capital Securities described herein pursuant to the U.S.$6000000000 Medium Term Note Programme.[USE OF PROCEEDS Give details if different from the “Use of Proceeds” section in the Offering Circular.] [STABILISATION In connection with this issue [●] (the “Stabilisation Manager”) (or persons acting on behalf of any Stabilisation Manager) may over-allot Undated Capital Securities or effect transactions with a view to supporting the market price of the Undated Capital Securities at a level higher than that which might otherwise prevail for a limited period after the closing date of the relevant Tranche of Undated Capital Securities. However there is no obligation on such Stabilisation Manager to do this. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Undated Capital Securities is made and if begun may cease at any time but must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Undated Capital Securities and 60 days after the date of the allotment of the relevant Tranche of Undated Capital Securities. Any stabilisation action or over-allotment must be conducted by the Stabilisation Manager (or persons acting on behalf of any Stabilisation Manager) in accordance with all applicable laws and rules.] ? 274 ?INVESTMENT CONSIDERATIONS There are significant risks associated with the Undated Capital Securities including but not limited to counterparty risk country risk price risk and liquidity risk. Investors should contact their own financial legal accounting and tax advisers about the risks associated with an investment in these Undated Capital Securities the appropriate tools to analyse that investment and the suitability of the investment in each investor’s particular circumstances. No investor should purchase the Undated Capital Securities unless that investor understands and has sufficient financial resources to bear the price market liquidity structure and other risks associated with an investment in these Undated Capital Securities.Before entering into any transaction investors should ensure that they fully understand the potential risks and rewards of that transaction and independently determine that the transaction is appropriate given their objectives experience financial and operational resources and other relevant circumstances. Investors should consider consulting with such advisers as they deem necessary to assist them in making these determinations.RESPONSIBILITY The Issuer accepts responsibility for the information contained in this Pricing Supplement.Signed on behalf of The Bank of East Asia Limited 东亚银行有限公司: By: Duly authorised ? 275 ?TAXATION The statements herein regarding taxation are based on the laws and practice in force as at the date of this Offering Circular and are subject to any changes in law or practice occurring after such date which changes could be made on a retroactive basis and do not constitute legal or taxation advice.The following summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase own or dispose of the Notes or the Undated Capital Securities and does not purport to deal with the tax consequences applicable to all categories of investors some of which (such as dealers in securities or commodities) may be subject to special rules. Investors should consult their own tax advisers regarding the tax consequences of an investment in the Notes or the Undated Capital Securities.HONG KONG Withholding Tax No withholding tax is payable in Hong Kong in respect of payments of principal or interest on the Notes or the Undated Capital Securities or in respect of any capital gains arising from the sale of the Notes or the Undated Capital Securities.Profits Tax Hong Kong profits tax is chargeable on every person carrying on a trade profession or business in Hong Kong in respect of profits arising in or derived from Hong Kong from such trade profession or business (excluding profits arising from the sale of capital assets).Interest on the Notes or the Undated Capital Securities may be deemed to be profits arising in or derived from Hong Kong from a trade profession or business carried on in Hong Kong in the following circumstances: (i) interest on the Notes or the Undated Capital Securities is derived from Hong Kong and is received by or accrues to a corporation carrying on a trade profession or business in Hong Kong; (ii) interest on the Notes or the Undated Capital Securities is derived from Hong Kong and is received by or accrues to a person other than a corporation carrying on a trade profession or business in Hong Kong and is in respect of the funds of that trade profession or business; (iii) interest on the Notes or the Undated Capital Securities is received by or accrues to a financial institution (as defined in the Inland Revenue Ordinance (Cap.112) of Hong Kong (the “IRO”)) and arises through or from the carrying on by the financial institution of its business in Hong Kong; or (iv) interest on the Notes or the Undated Capital Securities is received by or accrues to a corporation other than a financial institution and arises through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO).Pursuant to the Exemption from Profits Tax (Interest Income) Order interest income accruing to a person other than a financial institution on deposits (denominated in any currency and whether or not the deposit is evidenced by a certificate of deposit) placed with inter alia an authorized institution in Hong Kong (within the meaning of section 2 of the Banking Ordinance (Cap. 155) of Hong Kong) is exempt from the payment of Hong Kong profits tax. This exemption does not apply however to deposits that are used to secure or guarantee money borrowed in certain circumstances. Provided no ? 276 ?prospectus involving the issue of the Notes or the Undated Capital Securities is registered under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong the issue of the Notes or the Undated Capital Securities by the Issuer is expected to constitute a deposit to which the above exemption from payment will apply.Sums received by or accrued to a financial institution by way of gains or profits arising through or from the carrying on by the financial institution of its business in Hong Kong from the sale disposal and redemption of Notes or Undated Capital Securities will be subject to Hong Kong profits tax. Sums received by or accrued to a corporation other than a financial institution by way of gains or profits arising through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO) from the sale disposal or other redemption of Notes or Undated Capital Securities will be subject to Hong Kong profits tax.Sums derived from the sale disposal or redemption of Notes or Undated Capital Securities will be subject to Hong Kong profits tax where received by or accrued to a person other than a financial institution who carries on a trade profession or business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted. The source of such sums will generally be determined by having regard to the manner in which the Notes or the Undated Capital Securities are acquired and disposed of.In addition the Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Ordinance 2022 of Hong Kong (the “Amendment Ordinance”) came into effect on 1 January 2023.Under the Amendment Ordinance certain foreign-sourced interest on the Notes or the Undated Capital Securities accrued to an MNE entity (as defined in the Amendment Ordinance) carrying on a trade profession or business in Hong Kong is regarded as arising in or derived from Hong Kong and subject to Hong Kong profits tax when it is received in Hong Kong. The Amendment Ordinance also provides for relief against double taxation in respect of certain foreign-sourced income and transitional matters.In certain circumstances Hong Kong profits tax exemptions (such as concessionary tax rates) may be available. Investors are advised to consult their own tax advisers to ascertain the applicability of any exemptions to their individual position.Stamp Duty Stamp duty will not be payable on the issue of Bearer Notes provided that either: (i) such Bearer Notes are denominated in a currency other than the currency of Hong Kong and are not repayable in any circumstances in the currency of Hong Kong; or (ii) such Bearer Notes constitute loan capital (as defined in the Stamp Duty Ordinance (Cap.117) of Hong Kong (the “SDO”).If stamp duty is payable it is payable by the Issuer on the issue of Bearer Notes at a rate of 3 per cent.of the market value of the Bearer Notes at the time of issue. No stamp duty will be payable on any subsequent transfer of Bearer Notes.No stamp duty is payable on the issue of Registered Notes. Stamp duty may be payable on any transfer of Registered Notes if the relevant transfer is required to be registered in Hong Kong. Stamp duty will however not be payable on any transfer of Registered Notes provided that either: (i) such Registered Notes are denominated in a currency other than the currency of Hong Kong and are not repayable in any circumstances in the currency of Hong Kong; or (ii) such Registered Notes constitute loan capital (as defined in the SDO).? 277 ?Notwithstanding the above no stamp duty is payable on the transfer of a regulatory capital security (as defined in Section 17A of the IRO).With effect from 17 November 2023 if stamp duty applies to the transfer of Registered Notes required to be registered in Hong Kong and which are not otherwise exempt it will be payable at the rate of 0.2 per cent. (of which 0.1 per cent. is payable by the seller and 0.1 per cent. is payable by the purchaser) normally by reference to the consideration or its value whichever is higher. In addition stamp duty is payable at the fixed rate of HK$5 on each instrument of transfer executed in relation to any transfer of the Registered Notes if the relevant transfer is required to be registered in Hong Kong.EUROPEAN UNION EU Savings Directive The Savings Directive requires EU Member States to provide to the tax authorities of other EU Member States details of payments of interest and other similar income paid by a person established within its jurisdiction to (or for the benefit of) an individual resident or certain other types of entity established in that other EU Member State except that Austria and Luxembourg will instead impose a withholding system for a transitional period (subject to a procedure whereby on meeting certain conditions the beneficial owner of the interest or other income may request that no tax be withheld) unless during such period they elect otherwise. The Luxembourg government has announced its intention to elect out of the withholding system in favour of an automatic exchange of information with effect from 1 January 2015.The Council of the European Union has adopted the Amending Directive which will when implemented amend and broaden the scope of the requirements described above. The Amending Directive will expand the range of payments covered by the Savings Directive in particular to include additional types of income payable on securities and the circumstances in which payments must be reported or paid subject to withholding. For example payments made to (or for the benefit of) (i) an entity or legal arrangement effectively managed in an EU Member State that is not subject to effective taxation or (ii) a person entity or legal arrangement established or effectively managed outside of the EU (and outside any third country or territory that has adopted similar measures to the Savings Directive) which indirectly benefit an individual resident in an EU Member State may fall within the scope of the Savings Directive as amended. The Amending Directive requires EU Member States to adopt national legislation necessary to comply with it by 1 January 2016 which legislation must apply from 1 January 2017.The Proposed Financial Transactions Tax (“FTT”)On 14 February 2013 the European Commission published a proposal (the “Commission’sProposal”) for a Directive for a common FTT in Belgium Germany Estonia Greece Spain France Italy Austria Portugal Slovenia and Slovakia (the “Participating Member States”).The Commission’s Proposal has very broad scope and could if introduced apply to certain dealings in Notes or Undated Capital Securities (including secondary market transactions) in certain circumstances.Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within and outside of the Participating Member States. Generally it would apply to certain dealings in Notes or Undated Capital Securities where at least one party is a financial institution and at least one party is established in a Participating Member State. A financial institution may be or be deemed to be “established” in a Participating Member State in a broad range of circumstances including (a) by transacting with a person established in a Participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a Participating Member State.? 278 ?A joint statement issued in May 2014 by ten of the eleven participating Member States indicated an intention to implement the FTT progressively such that it would initially apply to shares and certain derivatives with this initial implementation occurring by 1 January 2016. The FTT as initially implemented on this basis may not apply to dealings in the Notes or the Undated Capital Securities.The FTT proposal remains subject to negotiation between the Participating Member States. It may therefore be altered prior to any implementation. Additional EU Member States may decide to participate. Prospective holders of Notes or Undated Capital Securities are advised to seek their own professional advice in relation to the FTT.? 279 ?FATCA WITHHOLDING TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230 PROSPECTIVE PURCHASERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS OFFERING CIRCULAR IS NOT INTENDED OR WRITTEN TO BE RELIED UPON AND CANNOT BE RELIED UPON BY ANY PERSON FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON SUCH PERSON UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS INCLUDED HEREIN BY THE ISSUER IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE ISSUER OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) PROSPECTIVE PURCHASERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER.Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986 commonly known as FATCA a “foreign financial institution” may be required to withhold on certain payments it makes (“foreign passthru payments”) to persons that fail to meet certain certification reporting or related requirements. The issuer may be a foreign financial institution for these purposes. A number of jurisdictions (including Hong Kong) have entered into or have agreed in substance to intergovernmental agreements with the United States to implement FATCA (“IGAs”) which modify the way in which FATCA applies in their jurisdictions. Under the provisions of IGAs as currently in effect a foreign financial institution in an IGA jurisdiction would generally not be required to withhold under FATCA or an IGA from payments that it makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as the Notes and the Undated Capital Securities including whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes and the Undated Capital Securities are uncertain and may be subject to change. Even if withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments such as the Notes and the Undated Capital Securities such withholding would not apply prior to the date that is two years after the date on which final regulations defining foreign passthru payments are published in the U.S. Federal Register and Notes or Undated Capital Securities characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued on or prior to the date that is six months after the date on which final regulations defining “foreign passthru payments” are filed with the U.S. Federal Register generally would be “grandfathered” for purposes of FATCA withholding unless materially modified after such date (including by reason of a substitution of the issuer).However if additional Notes or Undated Capital Securities that are not distinguishable from previously issued Notes or Undated Capital Securities are issued after the expiration of the grandfathering period and are subject to withholding under FATCA then withholding agents may treat all Notes including the Notes or Undated Capital Securities offered prior to the expiration of the grandfathering period as subject to withholding under FATCA. Holders should consult their own tax advisors regarding how these rules may apply to their investment in the Notes and the Undated Capital Securities. In the event any withholding would be required pursuant to FATCA or an IGA with respect to payments on the Notes or the Undated Capital Securities no person will be required to pay additional amounts as a result of the withholding.? 280 ?CLEARANCE AND SETTLEMENT The information set out below is subject to any change in or reinterpretation of the rules regulations and procedures of Euroclear Clearstream or the CMU (together the “Clearing Systems”) currently in effect. The information in this section concerning the Clearing Systems has been obtained from sources that the Issuer believes to be reliable but neither the Issuer nor any Dealer or the Arranger takes any responsibility for the accuracy thereof. Investors wishing to use the facilities of any of the Clearing Systems are advised to confirm the continued applicability of the rules regulations and procedures of the relevant Clearing System. Neither the Issuer nor any other party to the Agency Agreement will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Notes or the Undated Capital Securities held through the facilities of any Clearing System or for maintaining supervising or reviewing any records relating to or payments made on account of such beneficial ownership interests.The relevant Pricing Supplement will specify the Clearing System(s) applicable for each Series.THE CLEARING SYSTEMS Euroclear and Clearstream Euroclear and Clearstream each holds securities for participating organisations and facilitates the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in accounts of such participants. Euroclear and Clearstream provide to their respective participants among other things services for safekeeping administration clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream participants are financial institutions throughout the world including underwriters securities brokers and dealers banks trust companies clearing corporations and certain other organisations. Indirect access to Euroclear or Clearstream is also available to others such as banks brokers dealers and trust companies which clear through or maintain a custodial relationship with a Euroclear or Clearstream participant either directly or indirectly.Distributions of principal with respect to book-entry interests in the Notes or the Undated Capital Securities held through Euroclear or Clearstream will be credited to the extent received by the Paying Agent to the cash accounts of Euroclear or Clearstream participants in accordance with the relevant system’s rules and procedures.CMU The CMU is a central depositary service provided by the Central Moneymarkets Unit of the MonetaryAuthority for the safe custody and electronic trading between the members of this service (“CMUMembers”) of Exchange Fund Bills and Notes Clearing and Settlement Service securities and capital markets instruments (together “CMU Instruments”) which are specified in the CMU Reference Manual as capable of being held within the CMU.The CMU is only available to CMU Instruments issued by a CMU Member or by a person for whom a CMU Member acts as agent for the purposes of lodging instruments issued by such persons.Membership of the CMU is open to all financial institutions regulated by the Monetary Authority SFC Insurance Authority or Mandatory Provident Fund Schemes Authority. For further details on the full range of the CMU’s custodial services please refer to the CMU Reference Manual.? 281 ?The CMU has an income distribution service which is a service offered by the CMU to facilitate the distribution of interest coupon or redemption proceeds (collectively the “income proceeds”) by CMU Members who are paying agents to the legal title holders of CMU Instruments via the CMU system. Furthermore the CMU has a corporate action platform which allows an issuer (or its agent) to make an announcement/notification of a corporate action and noteholders to submit the relevant certification. For further details please refer to the CMU Reference Manual. An investor holding an interest through an account with either Euroclear or Clearstream in any Notes or Undated Capital Securities held in the CMU will hold that interest through the respective accounts which Euroclear and Clearstream each have with the CMU.BOOK-ENTRY OWNERSHIP Bearer Notes The Issuer has made applications to Euroclear and Clearstream for acceptance in their respective book-entry systems in respect of any Series of Bearer Notes. The Issuer may also apply to have Bearer Notes accepted for clearance through the CMU. In respect of Bearer Notes a temporary Global Note and/or a permanent Global Note will be deposited with a common depositary for Euroclear and Clearstream or a sub-custodian for the CMU. Transfers of interests in a temporary Global Note or a permanent Global Note will be made in accordance with the normal market debt securities operating procedures of the CMU Euroclear and Clearstream.Registered Notes The Issuer has made applications to Euroclear and Clearstream for acceptance in their respective book-entry systems in respect of the Notes or the Undated Capital Securities to be represented by a Global Certificate. The Issuer may also apply to have Registered Notes or Undated Capital Securities to be represented by a Global Certificate accepted for clearance through the CMU. Each Global Certificate will have an International Securities Identification Number (“ISIN”) and a Common Code.Investors in Notes or Undated Capital Securities of such Series may hold their interests in a Global Certificate through Euroclear Clearstream or the CMU (if applicable).Each Global Certificate will be subject to restrictions on transfer contained in a legend appearing on the front of such Global Certificate as set out under “Subscription and Sale”.All Registered Notes will initially be in the form of a Global Certificate. Individual Certificates will be available in the case of Notes or Undated Capital Securities initially represented by a Global Certificate in amounts specified in the applicable Pricing Supplement.? 282 ?SUBSCRIPTION AND SALE AMENDED AND RESTATED DEALER AGREEMENT Subject to the terms and on the conditions contained in an Amended and Restated Dealer Agreement dated 5 March 2024 (the “Dealer Agreement”) between the Issuer the Permanent Dealers and the Arranger the Notes or the Undated Capital Securities will be offered on a continuous basis by the Issuer to the Permanent Dealers. However the Issuer has reserved the right to sell the Notes or the Undated Capital Securities directly on its own behalf to institutions that are not Dealers. The Notes or the Undated Capital Securities may be resold at prevailing market prices or at prices related thereto at the time of such resale as determined by the relevant Dealer. The Notes or the Undated Capital Securities may also be sold by the Issuer through the Dealers acting as agents of the Issuer.The Dealer Agreement also provides for the Notes or the Undated Capital Securities to be issued in syndicated Tranches that are severally underwritten by two or more Dealers.The Issuer will pay each relevant Dealer a commission as agreed between them in respect of the Notes or the Undated Capital Securities subscribed by it. The commissions in respect of an issue of Notes or the Undated Capital Securities on a syndicated basis will be stated in the relevant Pricing Supplement.The Issuer has agreed to indemnify the Arranger and the Dealers against certain liabilities in connection with the offer and sale of the Notes or the Undated Capital Securities. The Dealer Agreement entitles the Dealers to terminate any agreement that they make to subscribe Notes or Undated Capital Securities in certain circumstances prior to payment for such Notes or Undated Capital Securities being made to the Issuer.The Arranger the Dealers or any of their respective affiliates may have performed certain banking and advisory services for the Issuer and/or its affiliates from time to time for which they have received customary fees and expenses and may from time to time engage in transactions with and perform services for the Issuer and/or its affiliates in the ordinary course of the Issuer’s or their business. The Dealers or certain of their respective affiliates may purchase the Notes or the Undated Capital Securities and be allocated the Notes or the Undated Capital Securities for asset management and/or proprietary purposes but not with a view to distribution.The Arranger the Dealers or any of their respective affiliates may purchase the Notes or the Undated Capital Securities for its or their own account and enter into transactions including credit derivatives such as asset swaps repackaging and credit default swaps relating to the Notes or the Undated Capital Securities and/or other securities of the Issuer or its associates at the same time as the offer and sale of the Notes or the Undated Capital Securities or in secondary market transactions. Such transactions would be carried out as bilateral trades with selected counterparties and separately from any existing sale or resale of the Notes or the Undated Capital Securities to which this Offering Circular relates (notwithstanding that such selected counterparties may also be purchasers of the Notes or the Undated Capital Securities).Application has been made to the HKSE for the listing of the Programme under which Notes or Undated Capital Securities may be issued by way of debt issues to Professional Investor only during the 12-month period after the date of this Offering Circular on the HKSE. In connection with the offer and sale of each Series of Notes or Undated Capital Securities the relevant Pricing Supplement will indicate whether or not and if so on which stock exchange(s) the Notes or the Undated Capital Securities will be listed. No assurances can be given that the Programme will qualify for listing on a stock exchange. In addition no assurances can be given that if the Programme qualifies for listing on a stock exchange and the relevant Pricing Supplement indicates that such Series of Notes or Undated Capital Securities will be listed on a stock exchange that such Notes or Undated Capital Securities will trade from their date of issuance until maturity (or early redemption) and that such listing will be maintained.? 283 ?Notice to Capital Market Intermediaries and Prospective Investors Pursuant to Paragraph 21 of the Hong Kong SFC Code of Conduct — Important Notice to CMIs (including private banks) — This notice to CMIs (including private banks) is a summary of certain obligations the SFC Code imposes on CMIs which require the attention and cooperation of other CMIs (including private banks). Certain CMIs may also be acting as OCs for the relevant CMI Offering and are subject to additional requirements under the SFC Code. The application of these obligations will depend on the role(s) undertaken by the relevant Dealer(s) in respect of each CMI Offering.Prospective investors who are the directors employees or major shareholders of the Issuer a CMI or its group companies would be considered under the SFC Code as having an Association with the Issuer the CMI or the relevant group company. CMIs should specifically disclose whether their investor clients have any Association when submitting orders for the relevant Notes or Undated Capital Securities. In addition private banks should take all reasonable steps to identify whether their investor clients may have any Associations with the Issuer or any CMI (including its group companies) and inform the relevant Dealers accordingly.CMIs are informed that unless otherwise notified the marketing and investor targeting strategy for the relevant CMI Offering includes institutional investors sovereign wealth funds pension funds hedge funds family offices and high net worth individuals in each case subject to the selling restrictions and any MiFID II product governance language or any UK MiFIR product governance language set out elsewhere in this Offering Circular and/or the applicable Pricing Supplement.CMIs should ensure that orders placed are bona fide are not inflated and do not constitute duplicated orders (i.e. two or more corresponding or identical orders placed via two or more CMIs). CMIs should enquire with their investor clients regarding any orders which appear unusual or irregular. CMIs should disclose the identities of all investors when submitting orders for the relevant Notes or Undated Capital Securities (except for omnibus orders where underlying investor information may need to be provided to any OCs when submitting orders). Failure to provide underlying investor information for omnibus orders where required to do so may result in that order being rejected. CMIs should not place “X-orders” into the order book.CMIs should segregate and clearly identify their own proprietary orders (and those of their group companies including private banks as the case may be) in the order book and book messages.CMIs (including private banks) should not offer any rebates to prospective investors or pass on any rebates provided by the Issuer. In addition CMIs (including private banks) should not enter into arrangements which may result in prospective investors paying different prices for the relevant Notes or Undated Capital Securities. CMIs are informed that a private bank rebate may be payable as stated above and in the applicable Pricing Supplement or otherwise notified to prospective investors.The SFC Code requires that a CMI disclose complete and accurate information in a timely manner on the status of the order book and other relevant information it receives to targeted investors for them to make an informed decision. In order to do this those relevant Dealers in control of the order book should consider disclosing order book updates to all CMIs.When placing an order for the relevant Notes or Undated Capital Securities private banks should disclose at the same time if such order is placed other than on a “principal” basis (whereby it is deploying its own balance sheet for onward selling to investors). Private banks who do not provide such disclosure are hereby deemed to be placing their order on such a “principal” basis. Otherwise such order may be considered to be an omnibus order pursuant to the SFC Code. Private banks should be aware that placing an order on a “principal” basis may require the relevant affiliated Dealer(s) (if any) to categorise it as a proprietary order and apply the “proprietary orders” requirements of the SFC Code to such order and will result in that private bank not being entitled to and not being paid any rebate.? 284 ?In relation to omnibus orders when submitting such orders CMIs (including private banks) that are subject to the SFC Code should disclose underlying investor information in respect of each order constituting the relevant omnibus order (failure to provide such information may result in that order being rejected). Underlying investor information in relation to omnibus orders should consist of: * The name of each underlying investor; * A unique identification number for each investor; * Whether an underlying investor has any “Associations” (as used in the SFC Code); * Whether any underlying investor order is a “Proprietary Order” (as used in the SFC Code); * Whether any underlying investor order is a duplicate order.Underlying investor information in relation to omnibus order should be sent to the Managers named in the relevant Pricing Supplement.To the extent information being disclosed by CMIs and investors is personal and/or confidential in nature CMIs (including private banks) agree and warrant: (A) to take appropriate steps to safeguard the transmission of such information to any OCs; and (B) that they have obtained the necessary consents from the underlying investors to disclose such information to any OCs. By submitting an order and providing such information to any OCs each CMI (including private banks) further warrants that they and the underlying investors have understood and consented to the collection disclosure use and transfer of such information by any OCs and/or any other third parties as may be required by the SFC Code including to the Issuer relevant regulators and/or any other third parties as may be required by the SFC Code for the purpose of complying with the SFC Code during the bookbuilding process for the relevant CMI Offering. CMIs that receive such underlying investor information are reminded that such information should be used only for submitting orders in the relevant CMI Offering. The relevant Dealers may be asked to demonstrate compliance with their obligations under the SFC Code and may request other CMIs (including private banks) to provide evidence showing compliance with the obligations above (in particular that the necessary consents have been obtained). In such event other CMIs (including private banks) are required to provide the relevant Dealer with such evidence within the timeline requested.SELLING RESTRICTIONS General The distribution of this Offering Circular or any offering material and the offering sale or delivery of the Notes or the Undated Capital Securities is restricted by law in certain jurisdictions. Therefore persons who may come into possession of this Offering Circular or any offering material are advised to consult with their own legal advisers as to what restrictions may be applicable to them and to observe such restrictions. This Offering Circular may not be used for the purpose of an offer or invitation in any circumstances in which such offer or invitation is not authorised.If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Dealers or any affiliate of the Dealers are a licensed broker or dealer in that jurisdiction the offering shall be deemed to be made by the Dealers or such affiliate on behalf of The Bank of East Asia Limited 东亚银行有限公司 in such jurisdiction.? 285 ?United States The following sub-paragraphs shall apply in respect of any Notes or Undated Capital Securities the Pricing Supplement for which specifies that “Regulation S Category 1” applies.The Notes or the Undated Capital Securities have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold within the United States or (in respect of any Notes or Undated Capital Securities in respect of which the Pricing Supplement or the Subscription Agreement specifies that the “Regulation S Category 2” applies) to or for the benefit of U.S. persons except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act.The following sub-paragraphs shall apply in respect of any Notes or Undated Capital Securities the Pricing Supplement for which specifies that “Regulation S Category 1” applies. Each Dealer has represented that: (a) Offers/sales only in accordance with Regulation S: it has not offered or sold and will not offer or sell any Notes or Undated Capital Securities constituting part of its allotment in the United States except in accordance with Rule 903 of Regulation S; (b) No directed selling efforts: neither it nor any of its affiliates (nor any persons acting on behalf of such Dealer or any of its affiliates) has engaged or will engage in any directed selling efforts (as defined in Regulation S) with respect to the Notes or the Undated Capital Securities; and (c) No contractual arrangements without consent: it has not entered and will not enter into any contractual arrangement with respect to the distribution or delivery of the Notes or the Undated Capital Securities except with its affiliates or with the prior written consent of the Issuer.The following sub-paragraphs shall apply in respect of any Notes or Undated Capital Securities the Pricing Supplement for which specifies that “Regulation S Category 2” applies.Each Dealer has represented and agreed that: (a) Offers/sales only in accordance with Regulation S: it has offered and sold the Notes or the Undated Capital Securities and will offer and sell the Notes or the Undated Capital Securities: (i) Original distribution: as part of their distribution at any time; and (ii) Outside original distribution: otherwise until 40 days after the completion of the distribution of an identifiable tranche of which such Notes or Undated Capital Securities are a part as determined and certified to the Issuer and each relevant Dealer by the Issuing and Paying Agent or the relevant Lead Manager (the “Lead Manager”) only in accordance with Rule 903 of Regulation S; (b) No directed selling efforts: neither it its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts (as defined in Regulation S) with respect to the Notes or the Undated Capital Securities; (c) Offering restrictions: it and its affiliates have complied and will comply with the offering restrictions requirement of Regulation S; ? 286 ?(d) No contractual arrangements without consent: neither it nor any of its Affiliates (nor any person acting on behalf of such Dealer or any of its Affiliates) has entered and will not enter into any contractual arrangement with respect to the distribution or delivery of the Notes or the Undated Capital Securities except with its Affiliates or with the prior written consent of the Issuer; and (e) Prescribed form of confirmation: at or prior to confirmation of sale of Notes or Undated Capital Securities it will have sent to each distributor dealer or person receiving a selling concession fee or other remuneration that purchases Notes or Undated Capital Securities from it during the distribution compliance period a confirmation or notice in substantially the following form:“The securities covered hereby have not been registered under the Securities Act or with anysecurities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons (a) as part of their distribution at any time or (b) otherwise until 40 days after the completion of the distribution of the Notes or the Undated Capital Securities as determined and certified by the Issuing and Paying Agent or the Lead Manager except in either case in accordance with Regulation S under the Securities Act. Terms used above have the meanings given to them byRegulation S.” Completion of distribution: Each Dealer has agreed to notify the Issuing and Paying Agent or in the case of a Syndicated Issue the Lead Manager when it has completed the distribution of its portion of the Notes or the Undated Capital Securities of any identifiable tranche so that the Issuing and Paying Agent or in the case of a Syndicated Issue the Lead Manager may determine the completion of the distribution of all Notes or Undated Capital Securities of that tranche and notify the other relevant Dealers of the end of the distribution compliance period.The Notes or the Undated Capital Securities in bearer form are subject to U.S. tax law requirements and may not be offered sold or delivered within the United States or its possessions or to a United States person except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 and regulations thereunder.Each issuance of index- commodity-or currency-linked Notes or Undated Capital Securities shall be subject to such additional U.S. selling restrictions as the Relevant Dealer(s) shall agree with the Issuer as a term of the issuance and purchase or as the case may be subscription of such Notes or Undated Capital Securities. Each Relevant Dealer agrees that it shall offer sell and deliver such Notes or Undated Capital Securities only in compliance with such additional U.S. selling restrictions.European Economic Area Prohibition of Sales to EEA Retail Investors Unless the Pricing Supplement in respect of any Notes or Undated Capital Securities specifies the “Prohibition of Sales to EEA Retail Investors” as “Not Applicable” each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not offered sold or otherwise made available and will not offer sell or otherwise make available any Notes or Undated Capital Securities which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to any retail investor in the EEA. For the purposes of this provision: a) the expression “retail investor” means a person who is one (or more) of the following: i. a retail client as defined in point (11) of Article 4(1) of MiFID II; or ? 287 ?ii. a customer within the meaning of the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or iii. not a qualified investor as defined in the Prospectus Regulation; and b) the expression “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes or the Undated Capital Securities to be offered so as to enable an investor to decide to purchase or subscribe for the Notes or Undated Capital Securities.Public Offer Selling Restriction under the Prospectus Regulation If the Pricing Supplement in respect of any Notes or Undated Capital Securities specifies the “Prohibition of Sales to EEA Retail Investors” as “Not Applicable” in relation to each Member State of the EEA (each a “Relevant State”) each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not made and will not make an offer of Notes or Undated Capital Securities which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to the public in that Relevant State except that it may make an offer of such Notes or Undated Capital Securities to the public in that Relevant State: (a) if the Pricing Supplement in relation to the Notes or the Undated Capital Securities specifies that an offer of those Notes or Undated Capital Securities may be made other than pursuant to Article 1(4) of the Prospectus Regulation in that Relevant State (a “Non-exempt Offer”) following the date of publication of a prospectus in relation to such Notes or Undated Capital Securities which has been approved by the competent authority in that Relevant State or where appropriate approved in another Relevant State and notified to the competent authority in that Relevant State provided that any such prospectus has subsequently been completed by the Pricing Supplement contemplating such Non-exempt Offer in accordance with the Prospectus Regulation in the period beginning and ending on the dates specified in such prospectus or Pricing Supplement as applicable and the Issuer has consented in writing to its use for the purpose of that Non-exempt Offer; (b) at any time to any legal entity which is a qualified investor as defined in the Prospectus Regulation; (c) at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or (d) at any time in any other circumstances falling within Article 1(4) of the Prospectus Regulation provided that no such offer of Notes or Undated Capital Securities referred to in (b) to (d) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.For the purposes of this provision the expression an “offer of Notes or Undated Capital Securitiesto the public” in relation to any Notes or Undated Capital Securities in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes or the Undated Capital Securities to be offered so as to enable an investor to decide topurchase or subscribe for the Notes or the Undated Capital Securities and the expression “ProspectusRegulation” means Regulation (EU) 2017/1129 as amended.? 288 ?United Kingdom Prohibition of Sales to UK Retail Investors Unless the Pricing Supplement in respect of any Notes or Undated Capital Securities specifies the “Prohibition of Sales to UK Retail Investors” as “Not Applicable” each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not offered sold or otherwise made available and will not offer sell or otherwise make available any Notes or Undated Capital Securities which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to any retail investor in the United Kingdom. For the purposes of this provision: (a) the expression “retail investor” means a person who is one (or more) of the following: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the EUWA; or (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of UK MiFIR; or (iii) not a qualified investor as defined in Article 2 of the UK Prospectus Regulation and (b) the expression an “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes or the Undated Capital Securities to be offered so as to enable an investor to decide to purchase or subscribe for the Notes or the Undated Capital Securities.Public Offer Selling Restriction under the UK Prospectus Regulation If the Pricing Supplement in respect of any Notes or Undated Capital Securities specifies the “Prohibition of Sales to UK Retail Investors” as “Not Applicable” each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not made and will not make an offer of Notes or Undated Capital Securities which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to the public in the United Kingdom except that it may make an offer of such Notes or Undated Capital Securities to the public in the United Kingdom: (a) if the Pricing Supplement in relation to the Notes or the Undated Capital Securities specifies that an offer of those Notes or Undated Capital Securities may be made other than pursuant to Section 86 of the FSMA (a “Public Offer”) following the date of publication of a prospectus in relation to such Notes or Undated Capital Securities which has been approved by the Financial Conduct Authority provided that any such prospectus has subsequently been completed by the Pricing Supplement contemplating such Public Offer in the period beginning and ending on the dates specified in such prospectus or Pricing Supplement as applicable and the Issuer has consented in writing to its use for the purpose of that Public Offer; (b) at any time to any legal entity which is a qualified investor as defined in Article 2 of the UK Prospectus Regulation; (c) at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in Article 2 of the UK Prospectus Regulation) in the United Kingdom subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or (d) at any time in any other circumstances falling within Section 86 of the FSMA ? 289 ?provided that no such offer of Notes or Undated Capital Securities referred to in (b) to (d) shall require the Issuer or any Dealer to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.For the purposes of this provision the expression an “offer of Notes or Undated Capital Securitiesto the public” in relation to any Notes or Undated Capital Securities means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes or the Undated Capital Securities to be offered so as to enable an investor to decide to purchase or subscribe for the Notes or the Undated Capital Securities and the expression “UK Prospectus Regulation” means the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA.Other regulatory restrictions in the United Kingdom Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that: (1) in relation to any Notes or Undated Capital Securities which have a maturity of less than one year (a) it is a person whose ordinary activities involve it in acquiring holding managing or disposing of investments (as principal or as agent) for the purposes of its business and (b) it has not offered or sold and will not offer or sell any Notes or Undated Capital Securities other than to persons whose ordinary activities involve them in acquiring holding managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire hold manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes or the Undated Capital Securities would otherwise constitute a contravention of section 19 of the FSMA by the Issuer; (2) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes or Undated Capital Securities in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and (3) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes or the Undated Capital Securities in from or otherwise involving the United Kingdom.Hong Kong Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent warrant and agree that: (1) it has not offered or sold and will not offer or sell in Hong Kong by means of any document any Notes or Undated Capital Securities except for Notes or Undated Capital Securities which are a “structured product” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”) other than (a) to “professional investors” as defined in the SFO and any rules made under the SFO; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong (the “C(WUMP)O”) or which do not constitute an offer to the public within the meaning of the C(WUMP)O; and ? 290 ?(2) it has not issued or had in its possession for the purposes of issue and will not issue or have in its possession for the purposes of issue whether in Hong Kong or elsewhere any advertisement invitation or document relating to the Notes or the Undated Capital Securities which is directed at or the contents of which are likely to be accessed or read by the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes or Undated Capital Securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under the SFO.Singapore Each Dealer has acknowledged and each further Dealer appointed under the Programme will be required to acknowledge that this Offering Circular has not been and will not be registered as a prospectus with the Monetary Authority of Singapore (the “MAS”). Accordingly each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not offered or sold any Notes or Undated Capital Securities or caused such Notes or Undated Capital Securities to be made the subject of an invitation for subscription or purchase and will not offer or sell such Notes or Undated Capital Securities or cause such Notes or Undated Capital Securities to be made the subject of an invitation for subscription or purchase and has not circulated or distributed nor will it circulate or distribute this Offering Circular or any other document or material in connection with the offer or sale or invitation for subscription or purchase of the Notes or the Undated Capital Securities whether directly or indirectly to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the SFA) pursuant to Section 274 of the SFA or (ii) to an accredited investor (as defined in section 4A of the SFA) pursuant to and in accordance with the conditions specified in Section 275 of the SFA.Singapore SFA Product Classification: In connection with Section 309B of the SFA and the CMP Regulations 2018 unless otherwise specified before an offer of Notes or Undated Capital Securities the Issuer has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA) that the Notes or the Undated Capital Securities are “prescribed capital markets products” (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).Japan The Notes or the Undated Capital Securities have not been and will not be registered under theFinancial Instruments and Exchange Act of Japan (Act No. 25 of 1948 as amended the “FinancialInstruments and Exchange Act”). Accordingly each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not directly or indirectly offered or sold and will not directly or indirectly offer or sell any Notes or Undated Capital Securities in Japan or to or for the benefit of any resident of Japan (which term as used herein means any person resident in Japan including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale directly or indirectly in Japan or to or for the benefit of any resident of Japan except pursuant to an exemption from the registration requirements of and otherwise in compliance with the Financial Instruments and Exchange Act and other relevant laws and regulations of Japan.? 291 ?PRC Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that the Notes or the Undated Capital Securities are not being offered or sold and may not be offered or sold directly or indirectly in the PRC (for such purposes not including the Hong Kong and Macau Special Administrative Regions or Taiwan) except as permitted by the securities laws of the PRC.Taiwan The Notes or the Undated Capital Securities have not been and will not be registered or filed with or approved by the Financial Supervisory Commission of Taiwan and/or other regulatory authority pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or relevant laws and regulations that requires a registration filing or approval of the Financial Supervisory Commission and/or other regulatory authority of Taiwan.? 292 ?GENERAL INFORMATION 1. Clearing Systems: The Legal Entity Identifier Code of the Issuer is CO6GC26LCGGRTUESIP55. The Notes or the Undated Capital Securities may be accepted for clearance through the Euroclear and Clearstream systems (which are the entities in charge of keeping the records). The Issuer may also apply to have Notes or Undated Capital Securities accepted for clearance through the CMU. The relevant CMU instrument number will be set out in the relevant Pricing Supplement. The relevant ISIN the Common Code and (where applicable) the identification number for any other relevant clearing system for each series of Notes or Undated Capital Securities will be specified in the applicable Pricing Supplement. If the Notes or the Undated Capital Securities are to clear through an additional or alternative clearing system the appropriate information will be set out in the relevant Pricing Supplement.The address of Euroclear is 1 Boulevard du Roi Albert II B-1210 Brussels Belgium and the address of Clearstream is 42 Avenue JF Kennedy L-1855 Luxembourg. The address of any alternative clearing system will be specified in the relevant Pricing Supplement. 2. Listing: Application has been made to the HKSE for the listing of the Programme under which Notes or Undated Capital Securities may be issued by way of debt issues to Professional Investors only during the 12-month period after the date of this Offering Circular on the HKSE.Application will be made to the HKSE for the listing of and permission to deal in the Notes or the Undated Capital Securities which are agreed at the time of issue to be so listed on the HKSE. There can be no assurance that the application will be approved. 3. Litigation: Save as otherwise disclosed in this Offering Circular neither BEA nor any of its subsidiaries is involved in any litigation or arbitration proceedings relating to claims or amounts that are material in the context of the issue of the Notes or the Undated Capital Securities and BEA is not aware of any such litigation or arbitration proceedings pending or threatened against it or any of its subsidiaries. 4. Authorisations: The Issuer has obtained all necessary consents approvals and authorisations as may be required in connection with the establishment of the Programme including but not limited to approval by the Monetary Authority. The establishment of the Programme and the issue of Notes thereunder have been duly authorised by resolutions of the Board of Directors of the Issuer dated 23 February 2024. The Issuer has obtained and has agreed to obtain from time to time all necessary consents approvals and authorisations for the issue of Notes or Undated Capital Securities under the Programme. 5. No Material Adverse Change: Except as disclosed in this Offering Circular there has been no material adverse change in the financial or trading position or the prospects of the Issuer or of the Group since 31 December 2023. 6. Available Documents: For so long as Notes or Undated Capital Securities may be issued pursuant to this Offering Circular copies of the following documents will be available (upon written request and satisfactory proof of holding and identity) by any Noteholder at all reasonable times during usual business hours on any weekday (Saturdays Sundays and public holidays excepted) for inspection at (i) the office of the Trustee (in the case of the documents referred to in sub-paragraph (d) below; or (ii) the office of the Issuer or the specified office of any Paying Agent (in the case of the documents referred to in all the sub-paragraphs below in the case of any inspection at the specified office of any Paying Agent subject in the case of the documents referred to each sub-paragraph below other than sub-paragraph (d) below to the Issuer first having provided the Paying Agents with the same): (a) the Articles of Association of the Issuer; ? 293 ?(b) the audited consolidated financial statements of the Issuer as at and for the years ended 31 December 2022 and 2023 and a copy of the auditors’ reports of KPMG the Issuer’s external auditors; (c) the most recent annual and interim reports (including the financial statements) published by the Issuer; (d) the Trust Deed (which includes the form of the Global Notes the definitive Bearer Notes the Certificates the Coupons the Receipts and the Talons) and the Agency Agreement each dated 24 September 2021; (e) the Dealer Agreement; (f) this Offering Circular together with any Supplement to this Offering Circular or further Offering Circular; (g) the subscription agreement for Notes or Undated Capital Securities issued on a syndicated basis that are listed on any stock exchange where the rules of such stock exchange so require; and (h) each Pricing Supplement (save that a Pricing Supplement related to an unlisted Series of Notes or Undated Capital Securities will only be available for inspection by a holder of any such Notes or Undated Capital Securities and such holder must produce evidence satisfactory to the Issuer the Trustee or the relevant Paying Agents as to its holding of Notes or Undated Capital Securities and identity). 7. Auditors: The consolidated financial statements of the Issuer as at and for the years ended 31 December 2022 and 2023 included in this Offering Circular have been audited by KPMG Certified Public Accountants as stated in the auditors’ reports appearing in this Offering Circular in relation to such consolidated financial statements. 8. Each Bearer Note having a maturity of more than one year Receipt Coupon and Talon will bearthe following legend: “Any United States person who holds this obligation will be subject tolimitations under the United States income tax laws including the limitations provided inSections 165(j) and 1287(a) of the Internal Revenue Code”. 9. The issue price and the amount of the relevant Notes or Undated Capital Securities will be determined before filing of the relevant Pricing Supplement of each Tranche based on the prevailing market conditions. The Issuer does not intend to provide any post-issuance information in relation to any issues of Notes or Undated Capital Securities.? 294 ?INDEX TO FINANCIAL STATEMENTS Independent auditor’s report and audited consolidated financial statements of Page the Issuer as at and for the year ended 31 December 2022 Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2 Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18 Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . F-20 Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-21 Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-22 Consolidated Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-24 Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-27 The independent auditor’s report and audited consolidated financial statements of the Issuer as at and for the year ended 31 December 2022 included in this Offering Circular are reproduced from the 2022 annual report of the Issuer. Page references referred to in the independent auditor’s report and audited consolidated financial statements refer to pages set out in such annual report.Independent auditor’s report and audited consolidated financial statements of Page the Issuer as at and for the year ended 31 December 2023 Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-208 Consolidated Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-224 Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . F-225 Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-226 Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-227 Consolidated Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-229 Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-231 The independent auditor’s report and audited consolidated financial statements of the Issuer as at and for the year ended 31 December 2023 included in this Offering Circular are reproduced from theIssuer’s announcement on the HKSE entitled “Independent Auditor’s Report and ConsolidatedFinancial Statements as at and for the year ended 31st December 2023” and dated 5 March 2024. Page references referred to in the independent auditor’s report and audited consolidated financial statements refer to pages set out in such announcement.? F-1 ?164 The Bank of East Asia Limited l Annual Report 2022 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE BANK OF EAST ASIA LIMITED (Incorporated in Hong Kong with limited liability) OPINION We have audited the consolidated financial statements of The Bank of East Asia Limited (“the Bank”) and its subsidiaries (together “theGroup”) set out on pages 180 to 369 which comprise the consolidated statement of financial position as at 31 December 2022 the consolidated income statement the consolidated statement of comprehensive income the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended and notes to the consolidated financial statements including a summary of significant accounting policies.In our opinion the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2022 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.BASIS FOR OPINION We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.KEY AUDIT MATTERS Key audit matters are those matters that in our professional judgement were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.Impairment allowances of loans and advances to customers Refer to notes 2(h)(vii) 28(a) 43(a)(ix) to the consolidated financial statements Key audit matter How the matter was addressed in our audit The Group’s advances to customers as at 31 December 2022 amounted Our audit procedures to assess the Group’s impairment allowances to HK$549014 million with total expected credit losses (“ECL”) on loans and advances to customers measured at amortised cost with amounting to HK$6620 million as at 31 December 2022. Hong Kong regards to the methodology data and assumptions used in the estimate and Mainland China Operations contributed to 54.4% and 26.8% of the included the following: Group’s advances to customers and 49.1% and 40.4% of the Group’s total ECL respectively. Methodology * understanding and assessing the design implementation and Impairment allowances of loans and advances to customers across operating effectiveness of key internal controls on the ECL model the banking industry continues to be an area of elevated focus due monitoring and governance process and on the controls around to ongoing challenges in the China real estate sector and tightening the final review and determination of impairment allowances by monetary policy by many central banks to combat inflation. This has led management; to a more difficult environment for borrowers and leads to challenges in assessing impairment provisions. * involving credit risk specialists in assessing the appropriateness of the methodology and reliability of the ECL models used by management in determining impairment allowances; and ? F-2 ?东亚银行有限公司 l 2022年报 165独立核数师报告致东亚银行有限公司成员(于香港注册成立的有限公司)意见 本核数师(以下简称「我们」)已审计列载于第180至第369页的东亚银行有限公司(以下简称「贵银行」)及其附属公司(以下统称「贵集团」)的综合 财务报表,此综合财务报表包括于二零二二年十二月三十一日的综合财务状况表和截至该日止年度的综合收益表、综合全面收益表、综合权益变动表和综合现金流量表,以及综合财务报表附注,包括主要会计政策概要。 我们认为,该等综合财务报表已根据香港会计师公会颁布的《香港财务报告准则》真实而中肯地反映了贵集团于二零二二年十二月三十一日的综合财务状况及截至该日止年度的综合财务表现及综合现金流量,并已遵照香港《公司条例》妥为拟备。 意见的基础 我们已根据香港会计师公会颁布的《香港审计准则》进行审计。我们在该等准则下承担的责任已在本报告「核数师就审计综合财务报表承担的责任」部分中作进一步阐述。根据香港会计师公会颁布的《专业会计师道德守则》(以下简称「守则」),我们独立于贵集团,并已履行守则中的其他专业道德责任。我们相信,我们所获得的审计凭证能充足及适当地为我们的审计意见提供基础。 关键审计事项 关键审计事项是根据我们的专业判断,认为对本期综合财务报表的审计最为重要的事项。这些事项是在我们审计整体综合财务报表及出具意见时进行处理的。我们不会对这些事项提供单独的意见。 客户贷款及垫款的减值准备 请参阅综合财务报表附注2(h)(vii)、28(a)和43(a)(ix)关键审计事项审计对策 于二零二二年十二月三十一日,贵集团的客户垫款达到港币5490.14因应估计中使用的方法、数据和假设,我们就评估贵集团以摊销成亿元,预期信贷损失于二零二二年十二月三十一日总额为港币66.20本计量的客户贷款及垫款的减值准备相关的审计程序包括以下各项: 亿元。香港与中国内地的业务分别占贵集团客户垫款的54.4%和 26.8%,以及占贵集团预期信贷损失总额的49.1%和40.4%。方法 *了解并评估与以下项目有关的关键内部控制的设计、实施及操作 由于中国房地产行业的持续挑战以及许多央行为应对通胀而收紧货币成效:预期信贷损失模型监管和管治流程,以及管理层在最终审政策,银行业客户贷款和垫款的减值准备继续成为关注的焦点。这导阅及厘定减值准备的内部控制; 致评估减值准备更加困难。 *使用信贷风险专家评估管理层在厘定减值准备时所用的预期信贷损失模型的可靠性;及 ? F-3 ?166 The Bank of East Asia Limited l Annual Report 2022 INDEPENDENT AUDITOR’S REPORT (CONTINUED) Impairment allowances of loans and advances to customers Refer to notes 2(h)(vii) 28(a) 43(a)(ix) to the consolidated financial statements Key audit matter How the matter was addressed in our audit The Group applies its ECL models to assess impairment allowances * in respect of assessing the accuracy of ECL calculation calculating of loans and advances to customers measured at amortised the amount of credit loss allowance for 12-month and life-time cost. Loan exposures that are not already credit-impaired are credit losses using the ECL models based on the above parameters classified as stage 1 on origination and a 12-month ECL provision and assumptions for a sample of loans and advances to customers is recognised. Loan exposures will remain in stage 1 until they where the credit risk of the loan has not or has increased are repaid experience a significant increase in credit risk (stage significantly since initial recognition respectively and comparing to 2) or become credit-impaired (stage 3) for which a lifetime ECL the results from the Group; provision is recognised.Data The difficulty in identifying those loans which may have significant * understanding and assessing the design implementation and increase in credit risk or impaired has remained high. Past operating effectiveness of key internal controls on financial reporting historical experience on repayment may be less representative over approval recording and monitoring of loans measured at of the borrowers’ financial conditions and therefore more amortised cost including the recording of key data elements used in judgement is required. the ECL model; Impairment allowances may be materially misstated if the * assessing the completeness and accuracy of data used for the exposures with a significant increase in credit risk are not properly key parameters in the ECL models by comparing individual loan identified and classified in the appropriate stages. information on a sample basis with the underlying agreements and other related documentation to assess the accuracy of the loan The determination of impairment allowances using the information in the ECL models. For key parameters derived from ECL models is subject to a number of key parameters and external data we selected samples to inspect the accuracy of such assumptions including the identification of loss stages estimates data by comparing them with publicly available sources; and of probability of default loss given default exposures at default and discount rate adjustments for forward-looking information * for key parameters used in the ECL models which were derived and other adjustment factors. Management judgment is involved from system-generated internal data assessing the accuracy of in the selection of those parameters and the application of the input data by comparing the input data with original documents assumptions. on a sample basis. We involved our information technology specialists in assessing the information systems controls critical In particular the determination of the impairment allowances to the financial reporting process such as the compilation of the is heavily dependent on the external macro environment. The overdue reports for advances to customers. We also assessed the expected credit losses are derived from estimates including the design implementation and operating effectiveness of relevant historical losses internal and external credit grading and other automated application controls within these systems as well as key adjustment factors. The expected credit losses for personal internal controls over these underlying systems including controls loans are derived from estimates whereby management takes over access to these systems and controls over data and change into consideration historical overdue data the historical loss management; experience for personal loans and other adjustment factors.? F-4 ?东亚银行有限公司 l 2022年报 167 独立核数师报告(续)客户贷款及垫款的减值准备 请参阅综合财务报表附注2(h)(vii)、28(a)和43(a)(ix)关键审计事项审计对策 贵集团使用其预期信贷损失模型来评估以摊销成本计量的客户贷款及*在评估预期信贷损失计算的准确性方面,抽选信贷风险自初始确垫款的减值准备。尚未成为不良信贷的贷款于发放时被划归为第一阶认以来尚未显着增加或已显着增加的客户贷款及垫款样本,同时段,并按照相当于12个月的预期信贷损失的金额确认拨备。贷款会根据上述参数及假设并使用预期信贷损失模型,分别计算该等样保留于第一阶段直至其被偿还,信贷风险有显着增加(第二阶段)或已本按照12个月内的信贷损失和合约期内的信贷损失计量的信贷成为不良信贷(第三阶段),相应拨备会按照相当于合约期内之预期损失准备金额,并将该计算结果与贵集团的结果进行比较; 信贷损失的金额确认。 数据 识别信贷风险可能显着增加的贷款及不良信贷的难度仍高。当中需要*了解并评估与以下项目有关的关键财务报告内部控制的设计、实更多的判断,因为过去的历史偿还经验可能较难代表客户的财务状施及操作成效:以摊销成本计量的贷款的审批、记录和监管,包况。括记录预期信贷损失模型中使用的关键数据; 倘贷款的信贷风险显着增加未被恰当地识别及分类,可能导致预期信*通过在抽样基础上对比个别贷款资讯与相关协议及其他相关文贷损失存在重大错误陈述。档,评估预期信贷损失模型中的贷款资讯是否准确,以此评估预期信贷损失模型中的关键参数所用的数据是否完整及准确。对于采用预期信贷损失模型厘定减值准备时须考虑若干关键参数及假设,源自外部数据的关键参数,我们采用抽样方式将该等数据与公开包括所识别的损失阶段,所估计的违约概率、违约损失率、违约风险可获取的数据进行比较,以检查该等数据的准确性;及承担和贴现率,就前瞻性资讯所作的调整以及其他调整因素。在选取该等参数及应用上述假设时亦须管理层作出判断。*对于预期信贷损失模型中所用的、源自系统生成的内部数据的关键参数,在抽样基础上将输入数据与原始文档进行对比以评估输当中,减值准备的厘定在很大程度上取决于外部宏观环境及贵集团入参数的准确性。我们使用我们的资讯技术专家来评估对财务报的内部信贷风险管理策略。预期信贷损失乃源自于对历史损失、内部告流程有重要影响的资讯系统控制,包括客户垫款逾期报告的编及外部信贷评级及其他调整因素的估计。个人贷款的预期信贷损失乃制。我们还评估这些系统内的相关自动化应用程式控制,以及对源自于管理层考虑了历史逾期数据、个人贷款的以往损失经验以及其这些相关系统的主要内部控制(包括对系统登入的控制以及对数他调整因素而作出的估计。据和变更管理的控制)在设计、实施和操作上的成效; ? F-5 ?168 The Bank of East Asia Limited l Annual Report 2022 INDEPENDENT AUDITOR’S REPORT (CONTINUED) Impairment allowances of loans and advances to customers Refer to notes 2(h)(vii) 28(a) 43(a)(ix) to the consolidated financial statements Key audit matter How the matter was addressed in our audit Management also exercises judgement in determining the quantum of Assumptions loss given default based on a range of factors. These include available * understanding and assessing the design implementation and remedies for recovery the financial situation of the borrower the operating effectiveness of key internal controls on financial reporting recoverable amount of collateral macroeconomic factors the seniority over the credit grading process; of the claim and the existence and cooperativeness of other creditors.Management refers to valuation reports issued by qualified third party * understanding and assessing the design implementation and valuers and considers the influence of various factors including the operating effectiveness of key internal controls on the monitoring market price location and use when assessing the value of property and governance process for the assumptions used in the ECL models held as collateral. The enforceability timing and means of realisation including the assessment of the internal credit grading applied to of collateral can also have an impact on the recoverable amount from exposures; collateral and therefore the amount of impairment allowances as at the end of the reporting period. The assessment of the recoverable amount * evaluating the validity of management’s assessment on whether of collateral is particularly challenging in Mainland China as the extent of the credit risk of the loan has or has not increased significantly judgement exercised by management in the process of determining the since initial recognition and whether the loan is credit-impaired by strategy of recovery and assessing the collateral value of these exposures selecting samples for which we checked loan overdue information is high. As a result the impairment allowances of loans and advances to made enquiries of the credit managers about the borrowers’ customers in this particular part of business is subject to a higher inherent business operations checked borrowers’ financial information risk of material misstatements. and researched market information about borrowers’ businesses.Our sample of loans and advances to customers selected for We identified the impairment allowances of loans and advances to credit review including in Mainland China Operations focused on customers measured at amortised cost as a key audit matter because of accounts with high risk characteristics including industries features the complexity of the inherent uncertainty and management judgment of loan arrangements types of collateral and credit quality of the involved and because of its significance to the financial results and capital accounts; of the Group.* involving credit risk specialists in assessing the appropriateness of the key assumptions in the ECL models including the criteria used by management in determining loss stages the probability of default loss given default exposure at default discount rate adjustments for forward-looking information and other management adjustments; * for key parameters involving judgement critically assessing input parameters by seeking evidence from external sources and comparing it to the Group’s internal records including historical loss experience and type of collateral. As part of these procedures we challenged the reasons for modifications to estimates and input parameters and considered the consistency of judgement. We compared the economic factors used in the models with market information to assess whether they were aligned with market and economic development; ? F-6 ?东亚银行有限公司 l 2022年报 169 独立核数师报告(续)客户贷款及垫款的减值准备 请参阅综合财务报表附注2(h)(vii)、28(a)和43(a)(ix)关键审计事项审计对策管理层在厘定违约损失率的数额时亦会根据多项因素作出判断。这假设些因素包括收回垫款的方式、借款人的财务状况、抵押品的可收回金*了解并评估与信贷评级流程有关的关键财务报告内部控制的设 额、宏观经济因素、索赔受偿顺序及其他债权人是否存在及其合作意计、实施及操作成效; 向等。在评估持作抵押品的物业的价值时,管理层会参考合资格第三方评估师出具的估值报告,并考虑各种因素的影响,包括物业的市场*了解并评估用于监管和管治预期信贷损失模型中使用的假设的流价格、位置及用途。收回抵押品的法律依据、变现时间和方法亦会影程的关键内部控制的设计、实施及操作成效,包括评估适用于承响抵押品的可收回金额,并从而影响报告期末的减值准备金额。由于担的内部信贷评级; 管理层在厘定中国内地的抵押物的收回策略及评估抵押品价值的过程 中涉及高度的判断,评估此类抵押物的可收回金额具有特别难度。因*采用抽样的方式检查贷款逾期资讯,就借款人的业务运营询问信此,有关此部份业务的客户贷款及垫款减值准备存在较高重大错误陈贷经理,检查借款人的财务信息并查考有关借款人业务的市场资述的内含风险。讯,以评价管理层对于贷款的信贷风险自初始确认以来是否已,或尚未有,显着增加以及贷款是否已成为不良信贷的评估是否恰由于以摊销成本计量的客户贷款及垫款的减值准备所涉及的复杂性、当。我们抽查的客户贷款及垫款样本,包括中国业务的样本,关管理层判断以及内含的不确定性,同时由于其对贵集团财务业绩和注于具有高风险条件的贷款,高风险条件包括行业、贷款安排、资本的重大影响,我们将其认定为一项关键审计事项。抵押品类型及信贷质量; *使用信贷风险专家评估管理层在预期信贷损失模型中使用的假设 的恰当性,包括损失阶段的识别、违约概率、违约损失率、违约风险承担、贴现率、就前瞻性资讯所作的调整以及管理层所作的其他调整; *对于涉及判断的关键参数,从外部来源获得证据并将其与贵集团的内部记录(包括以往损失经验和抵押品的类型)进行比较,以对输入参数进行审慎评估。在这个过程中,我们就管理层对估计及输入参数的修订理据提出质询,并考虑判断的一致性。我们将模型中所运用的经济因素与市场资讯进行对比,以评估这些数据是否与市场及经济发展相符; ? F-7 ?170 The Bank of East Asia Limited l Annual Report 2022 INDEPENDENT AUDITOR’S REPORT (CONTINUED) Impairment allowances of loans and advances to customers Refer to notes 2(h)(vii) 28(a) 43(a)(ix) to the consolidated financial statements Key audit matter How the matter was addressed in our audit * for selected samples of loans and advances to customers that are credit-impaired evaluating management’s assessment of the recoverable amount of the exposure including evaluating management’s assessment of the value of any property collateral held by comparison with market prices based on the location and use of the property and the prices of comparable properties. We also evaluated the timing and means of realisation of other collateral evaluated the forecast cash flows challenged the viability of the Group’s recovery plans and evaluated other credit enhancements that are integral to the contract terms; and * assessing the appropriateness of material manual adjustments and overlays on ECL model outputs.Other audit procedures to assess the Group’s impairment allowances on loans and advances to customers measured at amortised cost included the following: * in respect of evaluating the accounting treatments of disposal of impaired loans during the year inspecting the loan disposal agreements and documents enquiring of management and assessing whether the transactions are recognised appropriately; and * evaluating whether the presentation and disclosures on impairment allowances of loans and advances to customers measured at amortised cost meet the requirements of the prevailing accounting standards.? F-8 ?东亚银行有限公司 l 2022年报 171 独立核数师报告(续)客户贷款及垫款的减值准备 请参阅综合财务报表附注2(h)(vii)、28(a)和43(a)(ix)关键审计事项审计对策 *对于已抽选的不良信贷的客户贷款及垫款样本,评价管理层对信贷风险可收回金额的评估,包括根据持作抵押品的物业的位置及用途以及邻近物业的价格,将持作抵押品的物业的价值与市场价格进行比较,以评价管理层对该类物业价值的评估。我们还评价了其他抵押品的变现时间和方法以及现金流预测,对贵集团回收方案的可行性提出了质询,并对合同条款中的其他信贷提升进行了评价;及 *评估重大的手动调整以及预期信贷损失模型输出值的调整是否恰当; 与评估贵集团以摊销成本计量的客户贷款及垫款的减值准备的其他 审计程式包括: *评估年内减值贷款处置的会计处理,检查相关贷款处置协议和文件,向管理层询问并评估该等交易是否恰当地确认;及*评价以摊销成本计量的客户贷款及垫款的减值准备的列报与披露是否满足现行会计准则的要求。 ? F-9 ?172 The Bank of East Asia Limited l Annual Report 2022 INDEPENDENT AUDITOR’S REPORT (CONTINUED) Impairment assessment of an investment in associate AFFIN Bank Berhad (“AFFIN”) Refer to notes 2(r) 31 to the consolidated financial statements Key audit matter How the matter was addressed in our audit The quoted market price of the Group’s investment in AFFIN has been Our audit procedures to assess the carrying value of the Group’s persistently below the carrying amount for a period of time. This is investment in AFFIN with regards to methodology data and assumptions considered an indicator of potential impairment. used in the estimate included the following: HKAS 36 “Impairment of assets” requires recognition of impairment loss Methodology when the carrying amount exceeds the recoverable amount which is the * engaging our valuation specialists to evaluate the methodology used higher of its fair value less costs of disposal and its value in use (“VIU”). in the VIU calculation; An impairment test was performed by the Group using a VIU model to estimate the investment’s value assuming the Group continues to hold Data this investment. * comparing AFFIN’s budgeted income and profits with the assumptions used by management in its discounted cash flow As at 31 December 2022 the recoverable amount based on the VIU forecast; and calculation was HK$3917 million which was above the carrying value.* comparing the actual results of AFFIN for the past years to forecastsThe VIU model is based on the requirements in HKAS 36 “Impairment prepared by management for the preceding years to assess theof assets” and is dependent on many assumptions both short-term accuracy of management’s forecasting process; and long-term in nature. These assumptions which are judgemental are derived from a combination of management estimates forecasts Assumptions and market data. The assumptions considered the current levels of * discussing with management who sit on the board of AFFIN to uncertainty due to the continuing impact of the COVID-19 pandemic on understand business performance and future business plans of the economy in Malaysia. AFFIN; A number of key judgements were made by management in determining * evaluating the assumptions and judgements adopted by the inputs for the VIU calculation which included: management in its discounted cash flow forecast relating to growth rates terminal value and the discount rate used to derive * forecast cash flows; the recoverable amount of the Group’s investment in AFFIN with support of our valuation specialists through the following * forecast regulatory capital adjustments required; procedures: * growth rates and terminal values; and * conducting research on the assumptions and judgements relating to growth rates terminal value and the discount rate * discount rate applied to the forecast cash flows. based on available market information; We identified the impairment assessment of the Group’s investment * performing an alternative calculation of the discount rate and in AFFIN as a key audit matter because of the increased uncertainty comparing this calculation with the discount rate applied by of the VIU estimation and its significance to the consolidated financial management to assess reasonableness of the discount rate used statements and because assessing the key assumptions involved a by management; significant degree of management judgement which may affect both the carrying value of the Group’s investment in AFFIN at year end and amount of impairment charge for the year.? F-10 ?东亚银行有限公司 l 2022年报 173 独立核数师报告(续) 投资于联营公司,AFFIN Bank Berhad(「AFFIN」),的减值评估请参阅综合财务报表附注2(r)和31关键审计事项审计对策 贵集团对AFFIN的投资的市场报价持续低于账面值一段时间。这是潜 因应估计中使用的方法、数据和假设,我们就 贵集团对AFFIN的投在减值的指标。资的减值评估相关的审计程序包括以下各项: 按《香港会计准则》第36号「资产减值」的要求,当账面值高于可收回方法价值时,便需要确认减值损失。可收回价值为销售净值与使用价值中*使用我们估值专家评估使用价值计算方法; 的较高者。在贵集团继续持有此投资的假设下,贵集团利用使用价值模型进行了减值测试以估计此投资的价值。数据* 对AFFIN的预算收入及盈利与管理层于折现现金流预测使用的假 于二零二二年十二月三十一日,基于使用价值计算的可收回价值为港设作出比较;及币39.17亿元。年内没有确认减值损失。 * 将AFFIN过去的实际业绩与管理层为往年准备的预测进行对比,其使用价值模型是按《香港会计准则》第36号「资产减值」的要求并取以评估管理层预测程式的准确性; 决于很多长期及短期的参数。这些具判断性的参数综合了管理层估计,预测及市场数据。其中假设已经考虑现时由二零一九冠状病毒病假设大流行对马来西亚经济带来持续的影响而产生的不确定性。 * 与同时为AFFIN董事会成员的管理层商讨并了解AFFIN的业务表现及未来商业计划; 管理层于厘定使用价值计算的参数输入时作出一些关键判断,包括: *在我们估值专家的协助下,透过以下程序评估管理层于折现现金* 现金流预测; 流预测用到的假设及判断,包括用于计算对AFFIN投资的可收回价值时用到的增长率,终值及折现率。 *预测的监管资本需求调整; *利用可用市场资讯,对增长率,终值及折现率相关的假设及*增长率及终值;及判断作出调查; *对预测的现金流所使用的折现率。*执行折现率替代性计算,将该计算结果与管理层使用的折现率进行比较,以评估管理层使用的折现率的合理性; 由于估计使用价值涉及较高的不确定性及其对综合财务报表的重要性,关键参数的评估涉及管理层的重大判断,这些重大判断可能影响 贵集团对AFFIN的投资于年末的账面值及年内的减值损失,我们因此将 贵集团对AFFIN的投资的减值评估识别为关键审计事项。 ? F-11 ?174 The Bank of East Asia Limited l Annual Report 2022 INDEPENDENT AUDITOR’S REPORT (CONTINUED) Impairment assessment of an investment in associate AFFIN Bank Berhad (“AFFIN”) Refer to notes 2(r) 31 to the consolidated financial statements Key audit matter How the matter was addressed in our audit * evaluating the assumptions used in forecasting regulatory capital adjustments required; * comparing AFFIN’s budgeted income and profits with externally derived data such as analysts’ reports to assess their reasonableness; * evaluating the sensitivity analyses prepared by management for each of the key assumptions adopted in the discounted cash flow forecast including growth rates applied cash flow forecast and discount rate assumptions and considering any management bias in formulating these assumptions; and * evaluating the probabilities assigned by management to the various economic scenarios in the VIU calculation by assessing whether they were aligned with market and economic development.In addition to the above audit procedures we also considered whether the disclosures in the consolidated financial statements in respect of the impairment assessment of the Group’s investment in AFFIN reflected the risks inherent in the key assumptions with reference to the requirements of the prevailing accounting standards.? F-12 ?东亚银行有限公司 l 2022年报 175 独立核数师报告(续) 投资于联营公司,AFFIN Bank Berhad(「AFFIN」),的减值评估请参阅综合财务报表附注2(r)和31关键审计事项审计对策 *评价用于预测的监管资本需求调整的假设;及 * 对AFFIN的预算收入及盈利,与源自外部的数据,如分析师报告作出比较,以评估其合理性; *评估管理层就于折现现金流预测使用的各项关键参数准备的敏感 性测试包括增长率,现金流预测及折现率的假设,并考虑作出这些假设当中管理层有偏向的可能性;及 *评估管理层于使用价值计算中对不同经济情景使用的概率是否符合市场及经济发展。 除了上述的审计程序,我们还参考现行会计准则的要求,考虑综合财务报表内关于 贵集团对AFFIN的投资的减值评估的披露是否反映了关键假设的固有风险。 ? F-13 ?176 The Bank of East Asia Limited l Annual Report 2022 INDEPENDENT AUDITOR’S REPORT (CONTINUED) INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON The directors are responsible for the other information. The other information comprises all the information included in the annual report other than the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the consolidated financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement whether due to fraud or error.In preparing the consolidated financial statements the directors are responsible for assessing the Group’s ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial reporting process.AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor’s report that includes our opinion. This report is made solely to you as a body in accordance with section 405 of the Hong Kong Companies Ordinance and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.As part of an audit in accordance with HKSAs we exercise professional judgement and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the consolidated financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.* Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.? F-14 ?东亚银行有限公司 l 2022年报 177 独立核数师报告(续)综合财务报表及其核数师报告以外的资讯 董事需对其他资讯负责。其他资讯包括刊载于年报内的全部资讯,但不包括综合财务报表及我们的核数师报告。我们对综合财务报表的意见并不涵盖其他资讯,我们亦不对该等其他资讯发表任何形式的鉴证结论。 结合我们对综合财务报表的审计,我们的责任是阅读其他资讯,在此过程中,考虑其他资讯是否与综合财务报表或我们在审计过程中所了解的情况存在重大抵触或者似乎存在重大错误陈述的情况。 基于我们已执行的工作,如果我们认为其他资讯存在重大错误陈述,我们需要报告该事实。在这方面,我们没有任何报告。 董事就综合财务报表须承担的责任 董事须负责根据香港会计师公会颁布的《香港财务报告准则》及香港《公司条例》拟备真实而中肯的综合财务报表,并对其认为为使综合财务报表的拟备不存在由于欺诈或错误而导致的重大错误陈述所需的内部控制负责。 在拟备综合财务报表时,董事负责评估贵集团持续经营的能力,并在适用情况下披露与持续经营有关的事项,以及使用持续经营为会计基础,除非董事有意将贵集团清盘或停止经营,或别无其他实际的替代方案。 审计委员会协助董事履行监督贵集团的财务报告过程的责任。 核数师就审计综合财务报表承担的责任 我们的目标,是对综合财务报表整体是否不存在由于欺诈或错误而导致的重大错误陈述取得合理保证,并出具包括我们意见的核数师报告。我们是按照香港《公司条例》第405条的规定,仅向整体成员报告。除此以外,我们的报告不可用作其他用途。我们概不就本报告的内容,对任何其他人士负责或承担法律责任。 合理保证是高水平的保证,但不能保证按照《香港审计准则》进行的审计,在某一重大错误陈述存在时总能发现。错误陈述可以由欺诈或错误引起,如果合理预期它们单独或汇总起来可能影响综合财务报表使用者依赖财务报表所作出的经济决定,则有关的错误陈述可被视作重大。 在根据《香港审计准则》进行审计的过程中,我们运用了专业判断,保持了专业怀疑态度。我们亦: *识别和评估由于欺诈或错误而导致综合财务报表存在重大错误陈述的风险,设计及执行审计程序以应对这些风险,以及获取充足和适当的审计凭证,作为我们意见的基础。由于欺诈可能涉及串谋、伪造、蓄意遗漏、虚假陈述,或凌驾于内部控制之上,因此未能发现因欺诈而导致的重大错误陈述的风险高于未能发现因错误而导致的重大错误陈述的风险。 *了解与审计相关的内部控制,以设计适当的审计程序,但目的并非对贵集团内部控制的有效性发表意见。 ? F-15 ?178 The Bank of East Asia Limited l Annual Report 2022 INDEPENDENT AUDITOR’S REPORT (CONTINUED) * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.* Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may cause the Group to cease to continue as a going concern.* Evaluate the overall presentation structure and content of the consolidated financial statements including the disclosures and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.* Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction supervision and performance of the Group audit. We remain solely responsible for our audit opinion.We communicate with the Audit Committee regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable related safeguards.From the matters communicated with the Audit Committee we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.The engagement partner on the audit resulting in this independent auditor’s report is McSheaffrey Paul Kevin.KPMG Certified Public Accountants 8th Floor Prince’s Building 10 Chater Road Central Hong Kong 16 February 2023 ? F-16 ?东亚银行有限公司 l 2022年报 179 独立核数师报告(续) *评价董事所采用会计政策的恰当性及作出会计估计和相关披露的合理性。 *对董事采用持续经营会计基础的恰当性作出结论。根据所获取的审计凭证,确定是否存在与事项或情况有关的重大不确定性,从而可能导致对贵集团的持续经营能力产生重大疑虑。如果我们认为存在重大不确定性,则有必要在核数师报告中提请使用者注意综合财务报中的相关披露。假若有关的披露不足,则我们应当发表非无保留意见。我们的结论是基于核数师报告日止所取得的审计凭证。然而,未来事项或情况可能导致贵集团不能持续经营。 *评价综合财务报表的整体列报方式、结构和内容,包括披露,以及综合财务报表是否中肯反映交易和事项。 *就贵集团内实体或业务活动的财务资讯获取充足、适当的审计凭证,以便对综合财务报表发表意见。我们负责贵集团审计的方向、监督和执行。我们为审计意见承担全部责任。 除其他事项外,我们与审计委员会沟通了计划的审计范围、时间安排、重大审计发现等,包括我们在审计中识别出内部控制的任何重大缺陷。 我们还向审计委员会提交声明,说明我们已符合有关独立性的相关专业道德要求,并与他们沟通有可能合理地被认为会影响我们独立性的所有关系和其他事项,以及为消除对独立性的威胁所采取的行动或防范措施(若适用)。 从与审计委员会沟通的事项中,我们确定哪些事项对本期综合财务报表的审计最为重要,因而构成关键审计事项。我们在核数师报告中描述这些事项,除非法律法规不允许公开披露这些事项,或在极端罕见的情况下,如果合理预期在我们报告中沟通某事项造成的负面后果超过产生的公众利益,我们决定不应在报告中沟通该事项。 出具本独立核数师报告的审计项目合伙人是马绍辉 (McSheaffrey Paul Kevin)。 毕马威会计师事务所执业会计师香港中环遮打道十号太子大厦八楼二零二三年二月十六日 ? F-17 ?180 The Bank of East Asia Limited l Annual Report 2022 CONSOLIDATED INCOME STATEMENT综合收益表 For the year ended 31st December 2022 截至2022年12月31日止年度 20222021 Notes 附注 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Interest income 利息收入 5 24848 18055 Interest income calculated using the 按有效利率方法计算的 effective interest method 利息收入 24871 19123 Related interest expense 相关利息支出 (23) (1068) Interest expense 利息支出 6 (11340) (6870) Net interest income 净利息收入 13508 11185 Fee and commission income 服务费及佣金收入 7 3372 3916 Fee and commission expense 服务费及佣金支出 (619) (847) Net fee and commission income 服务费及佣金收入净额 2753 3069 Net trading profit 交易溢利净额 8 943 879通过损益以反映公平价值金融 Net result on financial instruments at FVTPL 工具的净表现 9 (68) 234 Net result on financial assets measured 通过全面收益以反映公平价值 at FVOCI 金融资产的净表现 10 175 45 Net loss on sale of investments measured 出售按摊销成本计量投资之 at amortised cost 净亏损 (6) (14) Net hedging profit 对冲溢利净额 11 201 144 Net insurance profit 保险业务净溢利 12(a) 158 411 Other operating income 其他经营收入 13 290 330 Non-interest income 非利息收入 4446 5098 Operating income 经营收入 17954 16283 Operating expenses 经营支出 14 (9224) (9321) Operating profit before impairment losses 未扣除减值损失之经营溢利 8730 6962 Impairment losses on financial instruments 金融工具减值损失 15 (5923) (1679) Impairment losses on assets held for sale 持有作出售资产减值损失 (3) – Impairment losses 减值损失 (5926) (1679) Operating profit after impairment losses 已扣除减值损失后之经营溢利 2804 5283 Net profit on sale of assets held for sale 出售持有作出售资产之净溢利 16 1445 1042 Net (loss)/profit on disposal of subsidiaries/ 出售附属公司╱联营公司之净 associates (亏损)╱溢利 (1) 181 出售固定资产之净溢利╱ Net profit/(loss) on disposal of fixed assets (亏损) 17 17 (4) Valuation losses on investment properties 重估投资物业亏损 33 (179) (132) Share of profits less losses of associates and 应占联营公司及合资企业 joint ventures 溢利减亏损 31 855 (234) Profit for the year before taxation 年度内除税前溢利 4941 6136 Income tax 所得税 18 (563) (823) Profit for the year 年度内溢利 4378 5313 ? F-18 ?东亚银行有限公司 l 2022年报 181 CONSOLIDATED INCOME STATEMENT (CONTINUED) 综合收益表(续) For the year ended 31st December 2022 截至2022年12月31日止年度 20222021 Notes 附注 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Attributable to: 可归属于: Owners of the parent 本集团股东 42(j) 4359 5270 Non-controlling interests 非控股权益 19 43 Profit for the year 年度内溢利 4378 5313 HK$ 港币元 HK$ 港币元 Earnings per share 每股盈利 Basic 基本 20 1.32 1.53 Diluted 摊薄 20 1.32 1.53 The notes on pages 189 to 369 form part of these financial statements. Details of 第189至369页之附注属本财务报表之一部分。 dividends payable to equity shareholders of the Bank attributable to the profit for the 有关属年度内溢利并应付予本行股东之股息详情 year are set out in Note 19. 已详载于附注19。 ? F-19 ?182 The Bank of East Asia Limited l Annual Report 2022 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME综合全面收益表 For the year ended 31st December 2022 截至2022年12月31日止年度 20222021 Notes 附注 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Net profit 净溢利 4378 5313 Other comprehensive income for the year: 年度内其他全面收益: Items that will not be reclassified to income statement: 不可转回收益表的项目: Premises: 行址: – unrealised surplus on revaluation of -重估行址所产生的未实现 premises 盈余 42(b) 354 5 – deferred taxes -递延税项 42(b) (4) 6 Fair value reserve (equity instruments): 公平价值储备(股本工具): – net change in fair value -公平价值变动 42(g) 127 (571) – deferred taxes -递延税项 42(g) (4) 1 Liability credit reserve: 负债信贷储备: – net change in fair value attributable to -因集团自身信贷风险而 Group’s own credit risk 引致的公平价值变动 3542(h) 73 (18) – deferred taxes -递延税项 3542(h) (12) 4 Items that may be reclassified subsequently to income statement: 以后可能转回收益表的项目: Fair value reserve (debt instruments): 公平价值储备(债务工具): – net change in fair value -公平价值变动 42(g) (1849) 735 – amount transferred to income statement -于出售时转入收益表的 on disposal 金额 42(g) 13 (492) – deferred taxes -递延税项 42(g) 298 (213) Share of changes in equity of associates and 应占联营公司及合资企业权益 joint ventures 的变动 42(i) 54 (165) 从海外分行、附属公司、 Exchange differences arising from translation 联营公司及合资企业的账项 of accounts/disposal of overseas branches 折算╱出售所产生的汇兑 subsidiaries associates and joint ventures 差额 (2880) 757 Other comprehensive income 其他全面收益 (3830) 49 Total comprehensive income 全面收益总额 548 5362 Total comprehensive income attributable to: 全面收益总额可归属于: Owners of the parent 本集团股东 529 5319 Non-controlling interests 非控股权益 19 43 5485362 The notes on pages 189 to 369 form part of these financial statements. 第189至369页之附注属本财务报表之一部分。 ? F-20 ?东亚银行有限公司 l 2022年报 183 CONSOLIDATED STATEMENT OF FINANCIAL POSITION综合财务状况表 As at 31st December 2022 于2022年12月31日 20222021 Notes 附注 HK$ Mn 港币百万元 HK$ Mn 港币百万元 ASSETS 资产 Cash and balances with banks 现金及在银行的结存 24 54579 55088 Placements with and advances to banks 在银行的存款及垫款 25 60203 74742 Trade bills 贸易票据 26 529 10772 Trading assets 交易用途资产 27 1530 2483 Derivative assets 衍生工具资产 45(b)(ii) 11092 3381 Loans and advances to customers 客户贷款及垫款 28 542394 544437 Investment securities 投资证券 29 147007 147507 Investments in associates and joint ventures 联营公司及合资企业投资 31 9061 8947 Fixed assets 固定资产 33 13476 13844 – Investment properties -投资物业 5166 4992 – Other properties and equipment -其他物业及设备 7593 8015 – Right-of-use assets -使用权资产 717 837 Goodwill and intangible assets 商誉及无形资产 32 1870 1885 Deferred tax assets 递延税项资产 36(b) 1849 1861 Other assets 其他资产 34 39235 42523 Total Assets 资产总额 882825 907470 EQUITY AND LIABILITIES 股东权益及负债 Deposits and balances of banks 银行的存款及结余 25478 31766 – Designated at fair value through -指定为通过损益以反映 profit or loss 公平价值 35 4545 3639 – At amortised cost -摊销成本 20933 28127 Deposits from customers 客户存款 648093 633505 – Demand deposits and current accounts -活期存款及往来账户 65899 79657 – Savings deposits -储蓄存款 145107 196662 – Time call and notice deposits -定期及通知存款 437087 357186 Trading liabilities 交易用途负债 5 5 Derivative liabilities 衍生工具负债 45(b)(ii) 4145 5050 Certificates of deposit issued 已发行存款证 32662 64327 – Designated at fair value through -指定为通过损益以反映 profit or loss 公平价值 35 19001 32618 – At amortised cost -摊销成本 13661 31709 Current taxation 本年税项 36(a) 1252 958 Debt securities issued 已发行债务证券 2892 5847 – Designated at fair value through -指定为通过损益以反映 profit or loss 公平价值 35 811 620 – At amortised cost -摊销成本 2081 5227 Deferred tax liabilities 递延税项负债 36(b) 226 559 Other liabilities 其他负债 37 49799 42915 Loan capital – at amortised cost 借贷资本-摊销成本 38 11927 6488 Total Liabilities 负债总额 776479 791420 Share capital 股本 40 41856 41645 Reserves 储备 42 54131 60133 Total equity attributable to owners of the parent 归属于本集团股东权益总额 95987 101778 Additional equity instruments 额外股本工具 41 10090 13968 Non-controlling interests 非控股权益 269 304 Total Equity 股东权益总额 106346 116050 Total Equity and Liabilities 股东权益及负债总额 882825 907470 Approved and authorised for issue by the Board on 16th February 2023. 董事会于2023年2月16日核准及授权发布。 Executive Chairman David LI Kwok-po 执行主席 李国宝 Co-Chief Executives Adrian David LI Man-kiu 联席行政总裁 李民桥 Brian David LI Man-bun 李民斌 Director Meocre LI Kwok-wing 董事 李国荣 The notes on pages 189 to 369 form part of these financial statements. 第189至369页之附注属本财务报表之一部分。 ? F-21 ?184 The Bank of East Asia Limited l Annual Report 2022 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY综合权益变动表 For the year ended 31st December 2022 截至2022年12月31日止年度 Capital Revaluation reserve – reserve of Exchange staff share Liability Additional Non- Share General bank Capital revaluation options Fair value credit Other Retained equity controlling Total capital reserve premises reserve reserve issued reserve reserve reserves3 profits Total instruments interests equity 资本储备-行址重估汇兑重估已发行雇员公平价值负债信贷额外股本股本一般储备储备资本储备储备认股权储备储备其他储备3留存溢利总额工具非控股权益权益总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 At 1st January 2022 于2022年1月1日 41645 13658 1905 895 1058 152 1925 (46) 5191 35395 101778 13968 304 116050 Changes in equity 权益变动 Profit for the year 年度内溢利 – – – – – – – – – 4359 4359 – 19 4378 Other comprehensive income 其他全面收益 – – 350 – (2880) – (1415) 61 54 – (3830) – – (3830) Total comprehensive income 全面收益总额 – – 350 – (2880) – (1415) 61 54 4359 529 – 19 548 Shares issued in lieu of dividend (Note 40) 以股代息发行的股份( 附注40) 211 – – – – – – – – – 211 – – 211 Equity settled share-based 以股份为基础作支付之交易 transaction (Note 42(f)) (附注42(f)) – – – – – 22 – – – – 22 – – 22 Transfer 转账 – – – – – (24) – – (140) 164 – – – – Distribution/Dividends declared or 年度内的分派及已宣布或 approved during the year 核准派发股息 – – – – – – – – – (3455) (3455) – (48) (3503) Share buy-back1 股份回购 1 – – – – – – – – – (3051) (3051) – – (3051) Redemption of additional equity instruments2 赎回额外股本工具 2 – – – – – – – – – (47) (47) (3878) – (3925) Change of ownership in subsidiaries 附属公司之拥有权变动 – – – – – – – – – – – – (6) (6) At 31st December 2022 于2022年12月31日 41856 13658 2255 895 (1822) 150 510 15 5105 33365 95987 10090 269 106346 1. During the year the Bank bought back 262 million issued shares at a total consideration of 1. 年内,本行以总代价港币30.38亿元回购2.62 HK$3038 million. Together with the direct transaction cost of HK$13 million a total amount 亿股已发行股份。连同直接交易成本港币of HK$3051 million were accounted for as a deduction from retained profits. For details of the 1300万元,总额港币30.51亿元已从留存溢share buy-back please refer to Note 40. 利中扣除。有关股份回购的详情,请参阅附注 40。 2. During the year the Bank redeemed HK$3878 million (USD500 million) undated non- 2. 年内,本行赎回港币38.78亿元(5亿美元)于 cumulative subordinated Additional Tier 1 capital securities issued in 2017. 2017年发行的无到期日非累积后偿额外一级资本工具。 3. Other reserves include statutory reserve and other reserves. 3. 其他储备包括法定储备及其他储备。 The notes on pages 189 to 369 form part of these financial statements. 第189至369页之附注属本财务报表之一部分。 ? F-22 ?东亚银行有限公司 l 2022年报 185 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) 综合权益变动表(续) For the year ended 31st December 2021 截至2021年12月31日止年度 Capital Revaluation reserve – reserve of Exchange staff share Liability Additional Non- Share General bank Capital revaluation options Fair value credit Other Retained equity controlling Total capital reserve premises reserve reserve issued reserve reserve reserves1 profits Total instruments interests equity 资本储备-行址重估汇兑重估已发行雇员公平价值负债信贷额外股本股本一般储备储备资本储备储备认股权储备储备其他储备1留存溢利总额工具非控股权益权益总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 At 1st January 2021 于2021年1月1日 41557 13657 1895 895 301 157 2465 (32) 5138 32852 98885 13968 943 113796 Changes in equity 权益变动 Profit for the year 年度内溢利 – – – – – – – – – 5270 5270 – 43 5313 Other comprehensive income 其他全面收益 – – 11 – 757 – (540) (14) (165) – 49 – – 49 Total comprehensive income 全面收益总额 – – 11 – 757 – (540) (14) (165) 5270 5319 – 43 5362 Shares issued in lieu of 以股代息发行的股份 dividend (Note 40) (附注40) 88 – – – – – – – – – 88 – – 88 Equity settled share-based 以股份为基础作支付之交易 transaction (Note 42(f)) (附注42(f)) – – – – – 19 – – – – 19 – – 19 Transfer 转账 – 1 (1) – – (24) – – 218 (194) – – – – Distribution/Dividends declared or approved 年度内的分派及已宣布或 during the year 核准派发股息 – – – – – – – – – (2533) (2533) – (52) (2585) Change of ownership in subsidiaries 附属公司之拥有权变动 – – – – – – – – – – – – (630) (630) At 31st December 2021 于2021年12月31日 41645 13658 1905 895 1058 152 1925 (46) 5191 35395 101778 13968 304 116050 1. Other reserves include statutory reserve and other reserves. 1. 其他储备包括法定储备及其他储备。 The notes on pages 189 to 369 form part of these financial statements. 第189至369页之附注属本财务报表之一部分。 ? F-23 ?186 The Bank of East Asia Limited l Annual Report 2022 CONSOLIDATED CASH FLOW STATEMENT综合现金流量表 For the year ended 31st December 2022 截至2022年12月31日止年度 20222021 Notes 附注 HK$ Mn 港币百万元 HK$ Mn 港币百万元 OPERATING ACTIVITIES 经营业务活动 Profit for the year before taxation 年度内除税前溢利 4941 6136 Adjustments for: 调整: Charge for impairment losses on financial instruments 金融工具减值损失支销 5923 1679 Charge for impairment losses on assets held for sale 持有作出售资产减值损失支销 3 – Share of profits less losses of associates and 应占联营公司及合资企业溢利 joint ventures 减亏损 (855) 234 Net loss on sale of investments measured at 出售按摊销成本计量投资之 amortised cost 净亏损 6 14 Net profit on sale of debt securities 出售通过全面收益以反映 measured at FVOCI 公平价值债务证券之净溢利 (142) (95) Net loss/(profit) on disposal of subsidiaries 出售附属公司及联营公司之 and associates 净亏损╱(溢利) 1 (181) Net profit on sale of assets held for sale 出售持有作出售资产之净溢利 (1445) (1042) 出售固定资产之净(溢利)╱ Net (gain)/loss on disposal of fixed assets 亏损 (17) 4 Interest expense on debt securities issued 已发行债务证券利息支出 80 131 Interest expense on loan capital issued 已发行借贷资本利息支出 454 368 Interest expense on lease liabilities 租赁负债利息支出 28 29 Depreciation on bank premises furniture fixtures and equipment 行址、傢俬、装修及设备折旧 33 567 581 Depreciation on right-of-use assets 使用权资产折旧 33 295 374 Dividend income from equity securities 通过全面收益以反映公平价值 measured at FVOCI 股份证券股息收入 10 (16) (22) Amortisation of intangible assets 无形资产摊销 14 13 14 Amortisation of premium/discount on debt 已发行债务证券及借贷资本的 securities and loan capital issued 溢价╱折扣摊销 7 11 Revaluation gains on debt securities and loan 重估已发行债务证券及借贷 capital issued 资本盈利 (298) (46) Valuation losses on investment properties 重估投资物业亏损 33 179 132 Equity settled share-based payment expenses 以股份为基础作支付费用 1442(f) 22 19 97468340 ? F-24 ?东亚银行有限公司 l 2022年报 187 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) 综合现金流量表(续) For the year ended 31st December 2022 截至2022年12月31日止年度 20222021 Notes 附注 HK$ Mn 港币百万元 HK$ Mn 港币百万元 (Increase)/decrease in operating assets: 经营资产(增)╱减额: Cash and balances with banks with original 原本期限为3个月以上的现金 maturity beyond three months 及在银行的结存 1457 1492 Placements with and advances to banks with 原本期限为3个月以上在银行 original maturity beyond three months 的存款及垫款 1618 378 Trade bills 贸易票据 10244 1026 Trading assets 交易用途资产 2228 (1471) Derivative assets 衍生工具资产 (7711) 4678 Loans and advances to customers 客户贷款及垫款 (3374) (36838) Debt investment securities measured at amortised cost 按摊销成本计量债务投资证券 2260 (1602)按通过全面收益以反映公平 Investment securities measured at FVOCI 价值计量投资证券 (2761) (5634) Debt investment securities mandatorily 强制按通过损益以反映公平 measured at FVTPL 价值计量债务投资证券 1095 180 Non-trading equity securities mandatorily 强制按通过损益以反映公平 measured at FVTPL 价值非交易用途股份证券 193 135 Other assets 其他资产 624 (10684) Increase/(decrease) in operating liabilities: 经营负债增╱(减)额: Deposits and balances of banks 银行的存款及结余 (6288) 623 Deposits from customers 客户存款 14588 44303 Certificates of deposit issued 已发行存款证 (31595) 3461 Trading liabilities 交易用途负债 – 5 Derivative liabilities 衍生工具负债 (905) (7966) Other liabilities 其他负债 8642 9976 Exchange adjustments 汇兑调整 1476 (383) NET CASH INFLOW FROM OPERATIONS 经营活动现金流入净额 1537 10019 Income tax paid 已付所得税 Hong Kong profits tax paid 已付香港利得税 (199) (167) Outside Hong Kong profits tax paid 已付香港以外利得税 (244) (176) NET CASH GENERATED FROM OPERATING ACTIVITIES 源自经营业务活动之现金净额 1094 9676 The notes on pages 189 to 369 form part of these financial statements. 第189至369页之附注属本财务报表之一部分。 ? F-25 ?188 The Bank of East Asia Limited l Annual Report 2022 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) 综合现金流量表(续) For the year ended 31st December 2022 截至2022年12月31日止年度 20222021 Notes 附注 HK$ Mn 港币百万元 HK$ Mn 港币百万元 INVESTING ACTIVITIES 投资活动 Dividends received from associates and joint ventures 收取联营公司及合资企业股息 209 – Dividends received from equity securities 收取通过全面收益以反映 measured at FVOCI 公平价值股份证券股息 16 22 Purchase of fixed assets 购入固定资产 (555) (605) Proceeds from disposal of other properties and equipment 出售其他物业及设备所得款项 174 113 Proceeds from sale of assets held for sale 出售持有作出售资产所得款项 2290 3135 Returns of investments in associates 联营公司投资返还 – 7 NET CASH GENERATED FROM INVESTING ACTIVITIES 源自投资活动之现金净额 2134 2672 FINANCING ACTIVITIES 融资活动 Ordinary dividends paid 支付普通股股息 (2584) (1686) Distribution to Additional Tier 1 issue 派发予额外一级资本工具 holders 持有人 19(c)42(j) (708) (811) Payment for repurchase of shares 支付股份回购 (3051) – Issue of debt securities 发行债务证券 388 692 Issue of loan capital 发行借贷资本 5793 – Capital element of lease rentals paid 支付租赁负债之资本部份 (274) (362) Interest element of lease rentals paid 支付租赁负债之利息部份 (28) (26) Redemption of debt securities issued 赎回已发行债务证券 (3061) (4) Redemption of loan capital 赎回借贷资本 – (3898) Redemption of additional equity instruments 赎回额外股本工具 (3925) – Interest paid on debt securities issued 支付已发行债务证券利息 (161) (125) Interest paid on loan capital 支付已发行借贷资本利息 (374) (391) NET CASH USED IN FINANCING ACTIVITIES 用于融资活动之现金净额 (7985) (6611) NET (DECREASE)/INCREASE IN 现金及等同现金项目净(减少)╱ CASH AND CASH EQUIVALENTS 增加 (4757) 5737 CASH AND CASH EQUIVALENTS AT 于1月1日之现金及等同现金 1ST JANUARY 项目 47(a) 120646 113702 Effect of foreign exchange rate changes 汇率变动的影响 (3740) 1207 CASH AND CASH EQUIVALENTS AT 于12月31日之现金及等同 31ST DECEMBER 现金项目 47(a) 112149 120646 Cash flows from operating activities 源自经营业务活动的现金流量 included: 包括: Interest received 利息收入 23960 17894 Interest paid 利息支出 9079 6828 Dividend received 股息收入 34 44 The notes on pages 189 to 369 form part of these financial statements. 第189至369页之附注属本财务报表之一部分。 ? F-26 ?东亚银行有限公司 l 2022年报 189 NOTES TO THE FINANCIAL STATEMENTS财务报表附注 1. PRINCIPAL ACTIVITIES 主要业务The Bank and its subsidiaries (the “Group“) are engaged in the provision of banking 本行及其附属公司(「本集团」)的主要业务为and related financial services. 提供银行及有关的金融服务。 2. SIGNIFICANT ACCOUNTING POLICIES 主要会计政策 (a) Statement of Compliance (a) 符合指引声明 These financial statements have been prepared in accordance with all applicable 本财务报表乃按照香港会计师公会颁布所有 HKFRS which collective term includes all applicable individual HKFRS HKAS and 适用的《香港财务报告准则》,其整体已包括Interpretations issued by the HKICPA accounting principles generally accepted 个别适用的《香港财务报告准则》、《香港会in Hong Kong and the requirements of Companies Ordinance. These financial 计准则》及诠释,以及香港一般采用的会计statements also comply with the applicable disclosure provisions of the Listing Rules. 原则及《公司条例》的要求。本财务报表亦符A summary of the significant accounting policies adopted by the Group is set out 合联交所《上市规则》有关的披露规定。本集below. 团采纳的主要会计政策简列如下。 The HKICPA has issued a number of amendments to HKFRSs that are first effective 香港会计师公会已颁布数项《香港财务报告or available for early adoption for the current accounting period of the Group. Note 准则》的修订,并于本年度本集团的会计期首 3 provides information on any changes in accounting policies resulting from initial 次生效或可被提早采纳。附注3提供因首次 application of these developments to the extent that they are relevant to the Group 应用该等准则而引致会计政策变动的资料,for the current and prior accounting periods reflected in these financial statements. 而该等资料只包括与本集团有关而须反映在本期及去年会计期的财务报表。 (b) Basis of Preparation of the Financial Statements (b) 财务报表编制基准 The consolidated financial statements for the year ended 31st December 2022 截至2022年12月31日止年度的综合财务 comprise the Group and the Group’s interest in associates and joint ventures. 报表包括本集团及其应占联营公司及合资企业之权益。 The measurement basis used in the preparation of the financial statements is 除以下资产及负债是以公平价值列账外,本historical cost except that the following assets and liabilities are stated at their fair 财务报表是以原值成本作为计量基准。有关value as explained in the accounting policies set out below: 详情载列于下列会计政策: – financial instruments classified as trading designated or mandatorily measured - 分类作交易用途、指定为或强制按通过 at fair value through profit or loss and measured at fair value through other 损益以反映公平价值及按通过其他全面comprehensive income (Note 2(h)(ii)); 收益以反映公平价值计量的金融工具(附注2(h)(ii)); – derivative financial instruments (Notes 2(l) and 2(k)); and - 衍生金融工具(附注2(l)及2(k));及 – investment properties (Note 2(o)(ii)). - 投资物业(附注2(o)(ii))。 The preparation of financial statements in conformity with HKFRS requires 按《香港财务报告准则》之要求,在编制财务management to make judgements estimates and assumptions that affect the 报表时,管理层须作判断、估计及假设从而application of policies and reported amounts of assets and liabilities income 影响政策实施及资产和负债、及收入与支出 and expenses. The estimates and associated assumptions are based on historical 之呈报金额。有关估计及假设乃按在既定情experience and various other factors that are believed to be reasonable under the 况下可合理地相信,根据过往之经验及其他circumstances the results of which form the basis of making the judgements about 因素,作出判断那些未能从其他来源确定的carrying values of assets and liabilities that are not readily apparent from other 资产及负债的账面值。实际结果可能与此等sources. Actual results may differ from these estimates. 估计存在差异。 ? F-27 ?190 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) The estimates and underlying assumptions are reviewed on an ongoing basis. 有关估计及假设须持续作检讨。若修订只影Revisions to accounting estimates are recognised in the period in which the estimate 响该修订期,会计估计的修订于该修订期内is revised if the revision affects only that period or in the period of the revision and 确认;或如该修订影响本期及未来会计期,future periods if the revision affects both current and future periods. 则于修订期及未来会计期内确认。 Details of judgements made by management in the application of HKFRS that 在附注52内,管理层已解释实施对财务报表have significant effect on the financial statements and major sources of estimation 有重大影响的《香港财务报告准则》所作的详 uncertainty are discussed in Note 52. 细判断及不明朗估计的主要来源。 (c) Basis of Consolidation (c) 综合基准 These consolidated financial statements cover the consolidated position of the Bank 除另外陈述外,本综合财务报表包括本行及and all subsidiaries unless otherwise stated and the Group’s interest in associates 其所有附属公司及本集团所占联营公司及合and joint ventures. For information required to be reported in accordance with the 资企业之权益的综合状况。根据《银行业(披Banking (Disclosures) Rules the basis of consolidation is set out in Note 1 in the 露)规则》所要求汇报的资料,所采纳的综合Unaudited Supplementary Financial Information. 基准已在未经审核补充财务资料附注1列载。 (i) Subsidiaries and non-controlling interests (i) 附属公司及非控股权益 The consolidated financial statements include the financial statements of the 本综合财务报表包括本行及其所有附属 Bank and all its subsidiaries made up to 31st December each year. Subsidiaries 公司截至各相关年度之12月31日止的 are entities controlled by the Group. The Group controls an entity when it is 财务报表。附属公司为本集团所控制之exposed or has rights to variable returns from its involvement with the entity 实体。本集团基于对有关实体之权利、and has the ability to affect those returns through its power over the entity. 参与度及权力并可运用此等条件以影响 When assessing whether the Group has power only substantive rights (held by 其所得回报,则视为本集团对该实体拥the Group and other parties) are considered. 有控制权。在评估是否有控制权时,本集团只考虑实质的权力(由本集团及其他人士所拥有)。 An investment in a subsidiary is consolidated into the consolidated financial 附属公司之投资由控制权生效日起至控 statements from the date that control commences until the date that control 制权失效日止在综合财务报表内计算。 ceases. Intra-group balances transactions and cash flows and any unrealised 在编制综合财务报表时,集团之间的结profits arising from intra-group transactions are eliminated in full in preparing 余、交易及现金流及任何因集团之间交 the consolidated financial statements. Unrealised losses resulting from intra- 易所产生的未实现溢利均被抵销。跟未group transactions are eliminated in the same way as unrealised gains but only 实现盈利相同,因集团之间交易所产生to the extent that there is no evidence of impairment. 的未实现亏损亦同样被抵销,但只局限于未有减值证据。 Non-controlling interests represent the equity in a subsidiary not attributable 非控股权益指无论是直接或间接并不归 directly or indirectly to the Bank and in respect of which the Group has not 属于本行之附属公司的权益部分,及本agreed any additional terms with the holders of those interests which would 集团并未与该等权益持有者达成附加协 result in the Group as a whole having a contractual obligation in respect of 议,致令本集团整体上对该等权益产生those interests that meets the definition of a financial liability. For each business 符合金融负债定义的法定义务。就每一combination the Group can elect to measure any non-controlling interests 业务合并而言,本集团可选择按公平价either at fair value or at the non-controlling interests’ proportionate share of the 值或非控股权益按比例应占该附属公司 subsidiary’s net identifiable assets. 的可辨识净资产以计量非控股权益。 Non-controlling interests are presented in the consolidated statement of 非控股权益在综合财务状况表内的股东 financial position within equity separately from equity attributable to equity 权益中列示,但与可归属于本集团股东shareholders of the Bank. Non-controlling interests in the results of the Group 权益分开。非控股权益占本集团之业绩,are presented on the face of the consolidated income statement and the 在综合收益表内以分配年度溢利之形式 consolidated statement of comprehensive income as an allocation of the net 列示,而在综合全面收益表则以分配年profit and total comprehensive income for the year between non-controlling 度全面收益总额予非控股权益与及可归 interests and equity shareholders of the Bank. 属于本集团股东权益之形式列示。 ? F-28 ?东亚银行有限公司 l 2022年报 191 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Changes in the Group’s interests in a subsidiary that do not result in a loss of 本集团将不导致丧失控股权之附属公司 control are accounted for as equity transactions whereby adjustments are made 权益的变动按权益交易方式入账,即只to the amounts of controlling and non-controlling interests within consolidated 调整在综合权益内之控股及非控股权益 equity to reflect the change in relative interests but no adjustments are made to 的金额以反映其相关权益的变动,但不goodwill and no gain or loss is recognised. 调整商誉及确认盈亏。 When the Group loses control of a subsidiary it is accounted for as a disposal 当本集团丧失对一附属公司之控股权,of the entire interest in that subsidiary with a resulting gain or loss being 将按出售该附属公司之所有权益入账,recognised in profit or loss. Any interest retained in that former subsidiary at the 而所产生的盈亏确认为损益。任何在丧date when control is lost is recognised at fair value and this amount is regarded 失控股权日仍保留该前度附属公司之权 as the fair value on initial recognition of a financial asset (Note 2(h)) or when 益按公平价值确认,而此金额被视为初appropriate the cost on initial recognition of an investment in an associate and 始确认一金融资产(附注2(h))的公平价 joint venture (Note 2(c)(ii)) and is offset against the gain or loss on the loss of 值,或(如适用)按成本初始确认一联营control of that subsidiary. 公司及合资企业投资(附注2(c)(ii)),及当丧失对该附属公司控股权时与盈亏冲销。 In the Bank’s statement of financial position its investments in subsidiaries are 在本行的财务状况表中,附属公司投资stated at cost less any impairment losses if any (Note 2(r)). 是以成本减除任何减值损失(附注2(r))列账。 (ii) Associates and joint ventures (ii) 联营公司及合资企业 The consolidated financial statements include the attributable share of 本综合财务报表包括根据截至每年的12 the results and reserves of associates and joint ventures based on financial 月31日止之前不超过三个月的财务报表 statements prepared at dates not earlier than three months prior to 31st 所编制应占联营公司及合资企业的业绩 December each year. 及储备。 An associate is a company in which the Group or the Bank has significant 联营公司是指本集团或本行可对其管理 influence but not control or joint control over its management including 发挥重大影响力,包括参予其财务及经participation in the financial and operating policy decisions. 营政策的决策,但并不控制或共同控制其管理层。 A joint venture is an arrangement whereby the Group or the Bank and other 合资企业是指本集团或本行与其他合约 parties contractually agree to share control of the arrangement and have rights 方共同拥有该合资企业之控制权,及对to the net assets of the arrangement. 净资产拥有权的安排。 ? F-29 ?192 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续)Investments in associates and joint ventures are accounted for in the 除分类为持有作出售资产(或包括在分类consolidated financial statements under the equity method unless they are 为持有作出售资产的出售组别内)(附注classified as held for sale (or included in a disposal group that is classified 2(ad))外,联营公司及合资企业投资是as held for sale) (Note 2(ad)). Under the equity method the investment is 以权益会计法在综合财务报表内入账。 initially recorded at cost adjusted for any excess of the Group’s share of the 根据权益会计法,投资的入账方法是先acquisition-date fair values of the associate or joint venture’s identifiable net 以成本入账,另调整本集团于购入后应assets over the cost of the investment (if any). Thereafter the investment is 占该联营公司及合资企业的可辨识净资 adjusted for the post acquisition change in the Group’s share of the investee’s 产所超出成本之任何金额。往后,需调net assets and any impairment loss relating to the investment (Note 2(q) and 整在收购后本集团应占被投资方净资产 2(r)). Any excess of fair values of the investees’ net identifiable assets over the 之变动及在(附注2(q)和2(r))所载有关 cost of investment upon acquisition the Group’s share of the post-acquisition 投资的减值损失。任何于收购日应占被post-tax results of the investees and any impairment losses for the year are 投资方可辨识净资产的公平价值超出投 recognised in the consolidated income statement whereas the Group’s share 资成本、本集团应占被投资方收购后和 of the post-acquisition post-tax items of the investees’ other comprehensive 已除税的业绩及年度内的任何减值损失 income is recognised in the consolidated statement of comprehensive income. 均在综合收益表内确认,而本集团应占Any dividend income received from associates and joint ventures reduces the 被投资方收购后和已除税之其他全面收 carrying values of the investments in associates and joint ventures respectively. 益项目则在综合全面收益表内确认。任何由联营公司及合资企业投资收取的股息收入将分别减低联营公司及合资企业投资的账面值。 When the Group’s share of losses exceeds its interest in an associate or a 除本集团对该联营公司及合资企业所作 joint venture the Group’s interest is reduced to nil and recognition of further 具法律或推定义务或替该被投资方偿付 losses is discontinued except to the extent that the Group has incurred legal or 的承担外,当本集团应占该联营公司及constructive obligations or made payments on behalf of the investee. For these 合资企业的亏损超出本集团之应占权益 purposes the Group’s interest in the associate or the joint venture is the carrying 时,超出的亏损将不被确认,而本集团应amount of the investment under the equity method together with the Group’s 占该被投资方之权益将被减值至零。因long-term interests that in substance form part of the Group’s net investment in 此,本集团应占该联营公司及合资企业the associate or the joint venture. 权益即按权益会计法计算投资账面值,及实质上构成本集团应占该联营公司及合资企业净资产的长期权益。 Unrealised profits and losses resulting from transactions between the Group 本集团与联营公司及合资企业交易而产 and its associates and joint ventures are eliminated to the extent of the Group’s 生之未实现溢利及亏损,按本集团应占interest in the investee except when unrealised losses provide evidence of 该被投资方之权益为限作冲销。若有证an impairment of the asset transferred in which case they are recognised 据显示未实现亏损属资产转让的减值损 immediately in profit or loss. 失,则须立即于损益账内确认。 When the Group ceases to have significant influence over an associate or 当本集团丧失对一联营公司之重大影响 joint control over a joint venture it is accounted for as a disposal of the entire 力或合资企业之共同控制权,将按出售interest in that investee with a resulting gain or loss being recognised in profit 该被投资方之所有权益入账,而所产生or loss. Any interest retained in that former investee at the date when significant 的盈亏确认为损益。任何在丧失重大影influence or joint control is lost is recognised at fair value and this amount is 响力或共同控股权日仍保留该前度被投 regarded as the fair value on initial recognition of a financial asset (Note 2(h)). 资方之权益按公平价值确认,而此金额被视为初始确认一金融资产(附注2(h))的公平价值。 The Bank accounts for the results of associates and joint ventures to the extent 本行按照已收取股息计算应占联营公司 of dividends received. Investments in associates and joint ventures are stated 及合资企业之业绩。在本行的财务状况in the Bank’s statement of financial position at cost less any impairment losses 表中,联营公司及合资企业投资是以成(Note 2(r)). 本减除任何减值损失(附注2(r))列账。 ? F-30 ?东亚银行有限公司 l 2022年报 193 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (d) Translation of Foreign Currencies (d) 外币换算 Foreign currencies transactions during the year are translated into Hong Kong 年度内的外币交易按交易日的汇率折算为港 dollars at the rates of exchange ruling at the transaction dates. Monetary assets and 币。以外币为单位的货币性资产及负债按报liabilities denominated in foreign currencies are translated into Hong Kong dollars at 告期结束日的汇率折算为港币。汇兑盈亏则the rates of exchange ruling at the end of the reporting period. Exchange gains and 计入收益表内。 losses are recognised in the income statement.Non-monetary assets and liabilities that are measured in terms of historical cost 以原值成本列账但以外币为单位的非货币性 in a foreign currency are translated into Hong Kong dollars using the foreign 资产及负债按交易日的汇率折算为港币。以exchange rates ruling at the transaction dates. Non-monetary assets and liabilities 外币为单位及按公平价值列账的非货币性资 denominated in foreign currencies that are stated at fair value are translated using 产及负债按厘定其公平价值日的汇率折算。 the foreign exchange rates ruling at the dates the fair value was determined.Exchange differences relating to investments at fair value through profit or loss 有关通过损益以反映公平价值投资及衍生金 (“FVTPL”) and derivative financial instruments are included in gains less losses 融工具的汇兑差额分别包括于交易用途证券 from trading securities or financial instruments at fair value through profit or loss. 净盈亏或通过损益以反映公平价值投资净盈 All other exchange differences relating to monetary items are presented as gains 亏。其他有关货币性资产及负债的汇兑差额less losses from dealing in foreign currencies in the income statement. Differences 则于收益表之外币买卖溢利项下列示。因折arising from translation of equity investments for which an election has been made 算已选择将往后公平价值变动在其他全面收 to present subsequent changes in fair value in other comprehensive income are 益列示的股份证券所产生的差额则于其他全 recognised in other comprehensive income and accumulated separately in equity. 面收益内确认,并在股东权益内分开累计。 The results of foreign operations are translated into Hong Kong dollars at the 海外业务之业绩按交易日相约的汇率折算为 exchange rates approximating the foreign exchange rates ruling at the dates of the 港币。财务状况表的项目中,包括于2005年transactions. Items in the statement of financial position including goodwill arising 1月1日或以后因收购海外业务而在综合时 on consolidation of foreign operations acquired on or after 1st January 2005 are 所产生的商誉,按报告期结束日的汇率折算translated into Hong Kong dollars at the foreign exchange rates ruling at the end of 为港币。产生的汇兑差额直接在其他全面收the reporting period. The resulting exchange differences are recognised directly in 益内确认,并在股东权益之汇兑储备内分开other comprehensive income and accumulated separately in equity in the exchange 累计。因于2005年1月1日以前收购海外业reserve. Goodwill arising on consolidation of a foreign operation acquired before 1st 务而在综合时所产生的商誉按收购海外业务 January 2005 is translated at the foreign exchange rate that applied at the date of 日的汇率折算。 acquisition of the foreign operation.On disposal of a foreign operation the cumulative amount of the exchange 当确认出售海外业务的损益时,因该海外业differences relating to that foreign operation is reclassified from equity to the 务产生的累计汇兑差额由股东权益计入收益 income statement when the profit or loss on disposal is recognised. 表。 (e) Interest (e) 利息 Effective interest rate 有效利率 Interest income for financial assets measured at FVOCI or amortised cost and 按通过其他全面收益以反映公平价值计量或 interest expense on financial liabilities measured at amortised cost is recognised in 按摊销成本计量的金融资产的利息收入及按 the income statement using the effective interest method. 摊销成本计量的金融负债的利息支出均按有效利率方法于收益表内确认。 The effective interest rate is the rate that exactly discounts estimated future cash 有效利率是可准确将金融工具在预计年期内 payments or receipts through the expected life of the financial instrument to the 产生之未来现金支出或收入折算为该金融资 gross carrying amount of the financial asset or the amortised cost of the financial 产的账面值总额或该金融负债的摊销成本的 liability. 利率。 ? F-31 ?194 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) When calculating the effective interest rate for financial instruments other than 在计算除信贷不良资产外的金融工具的有效 credit-impaired assets the Group estimates future cash flows considering all 利率时,本集团计及金融工具的所有合约条contractual terms of the financial instrument but not expected credit losses. For 款,但不计及预期信贷损失,以估计未来现financial assets that were purchased or originated as credit-impaired on initial 金流。就初始确认时已购入或源生的信贷不recognition a credit-adjusted effective interest rate is calculated using estimated 良金融资产,使用估计未来现金流(包括预future cash flows including expected credit losses (i.e. no expected credit loss 期信贷损失)计算信贷调整有效利率(即在初provision is required at initial recognition). 始确认时无需作出预期信贷损失拨备)。 The calculation of the effective interest rate includes transaction costs and fees 有效利率的计算包括构成有效利率组成部分 and points paid or received that are an integral part of the effective interest rate. 的交易成本及费用以及基点支出或收入。交The transaction costs include incremental costs that are directly attributable to the 易成本包括金融资产或金融负债的收购或发 acquisition or issue of a financial asset or financial liability. 行直接应占的增加成本。 The Group adopts Interest Rate Benchmark Reform – Phase 2 Amendments to 本集团采用《香港财务报告准则》第9号、《香HKFRS 9 HKAS 39 HKFRS 7 HKFRS 4 and HKFRS 16 (the “Phase 2 amendments”) 港会计准则》第39号、《香港财务报告准则》 which allows a practical expedient for changes to the basis for determining 第7号、《香港财务报告准则》第4号及《香港contractual cash flows to be treated as changes to a floating rate of interest 财务报告准则》第16号有关利率基准改革之 provided certain conditions are met. The conditions include that the change is 第二期修订(「第二期修订」),第二期修订提necessary as a direct consequence of interest rate benchmark reform and that the 供了合约现金流之改变可视为浮动利率改变 transition takes place on an economically equivalent basis. 的实务操作方法,若符合某些条件。该等条件包括该变动必须是利率基准改革直接导致的结果;和该变动在经济上是等同的。 Amortised cost and gross carrying amount 摊销成本及账面值总额 The “amortised cost” of a financial asset or financial liability is the amount at which 金融资产或金融负债的「摊销成本」是金融资 the financial asset or financial liability is measured on initial recognition minus the 产或金融负债于初始确认时计量的金额减本 principal repayments plus or minus the cumulative amortisation using the effective 金还款额,加减使用有效利率方法计算的初interest method of any difference between that initial amount and the maturity 始确认金额与到期金额之任何差额而计算的 amount and for financial assets adjusted for any expected credit loss allowance. 累计摊销,而就金融资产而言,经任何预期信贷损失准备作调整。 The “gross carrying amount of a financial asset” is the amortised cost of a financial 「金融资产的账面值总额」是金融资产就任何 asset before adjusting for any expected credit loss allowance. 预期信贷损失准备作调整前的摊销成本。 Calculation of interest income and expense 计算利息收入及支出 In calculating interest income and expense the effective interest rate is applied to 在计算利息收入及支出时,有效利率应用于the gross carrying amount of the asset (when the asset is not credit-impaired) or to 资产的账面值总额(当资产并非信贷不良时) the amortised cost of the liability. 或负债的摊销成本。 However for financial assets that have become credit-impaired subsequent to initial 然而,就初始确认后成为信贷不良的金融资recognition interest income is calculated by applying the effective interest rate to 产而言,透过将有效利率应用于该金融资产the amortised cost of the financial asset. If the asset is no longer credit-impaired 的摊销成本而计算利息收入。若资产不再属then the calculation of interest income reverts to the gross basis. 信贷不良,则恢复使用总额基准计算利息收入。 For financial assets that were purchased or originated as credit-impaired on initial 就初始确认时已购入或源生的信贷不良金融 recognition interest income is calculated by applying the credit-adjusted effective 资产而言,透过将经信贷调整的有效利率应interest rate to the amortised cost of the asset. The calculation of interest income 用于该资产的摊销成本计算利息收入。即使does not revert to a gross basis even if the credit risk of the asset improves. 该资产的信贷风险有所改善,亦不恢复使用总额基准计算利息收入。 ? F-32 ?东亚银行有限公司 l 2022年报 195 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) For information on when financial assets are credit-impaired please refer to Note 有关金融资产属信贷不良时的资料见附注 2(h)(vii). 2(h)(vii)。 (f) Fees and Commission (f) 服务费及佣金 Fees and commission income and expense that are integral to the effective interest 有效利率的计算(附注2(e))包括金融资产及 rate on a financial asset or financial liability are included in the effective interest 金融负债中构成有效利率组成部分的服务费 rate calculation (Note 2(e)). Other fee and commission income is recognised in the 及佣金收入及支出。其他服务费及佣金收入income statement when the corresponding service is provided. 在有关服务提供时确认在收益表内。 Origination or commitment fees received/paid by the Group which result in the 因本集团开展或购入金融资产而产生之开立 creation or acquisition of a financial asset are deferred and recognised as an 或承担服务费收入╱支出须递延及确认为有 adjustment to the effective interest rate. If it is uncertain that a loan commitment 效利率之调整。如不确定会否借出贷款,该will result in draw-down of a loan then the related loan commitment fee is 相关承担服务费按承担期限以直线法列作收 recognised as revenue on a straight-line basis over the commitment period. 入。 Other fee and commission expenses relate mainly to transaction and service fees 其他服务费及佣金支出主要是交易及服务 which are expensed when the services are received. 费,并在获得服务时支销。 (g) Other Revenue Recognition (g) 其他收入确认 Other revenue is measured at the fair value of the consideration received or 其他收入按已收或应收价款的公平价值厘 receivable. Provided it is probable that economic benefits will flow to the Group and 定。假设经济利益有可能流向本集团及收入the revenue and costs if applicable can be measured reliably revenue is recognised 和支出(如适用)属可靠计量的,在收益表内in the income statement as follows: 确认收入的方法如下: (i) Net income from financial instruments at fair value through profit or loss and (i) 通过损益以反映公平价值金融工具的净 net trading income 收入及净交易收入 Net income from financial instruments designated as at FVTPL net income from 指定为通过损益以反映公平价值金融工 non-trading financial assets mandatorily measured at FVTPL and net trading 具的净收入,强制按通过损益以反映公income comprises all gains and losses from changes in fair value (net of accrued 平价值之非交易用途金融资产及净交易 coupon) of such financial assets and financial liabilities together with foreign 收入包括所有金融资产及金融负债之exchange differences and dividend income attributable to these financial 公平价值变动产生的盈亏(减除应计利instruments. Coupon interest from these financial assets and financial liabilities 息),以及应归属于该等金融工具的汇measured at FVTPL is accrued and presented as interest income or interest 兑差额及股息收入。由该等通过损益以expense. 反映公平价值金融资产及金融负债产生的应计票面利息列作利息收入或利息支出。 (ii) Finance income from finance leases (ii) 融资租赁收入 Finance income implicit in finance leases is recognised as interest income over 融资租赁隐含财务收入按租赁年期确认 the period of the lease so as to produce an approximately constant periodic rate 为利息收入,以令每个会计年度期间剩of return of the outstanding net investment in the leases for each accounting 余的净租赁投资回报大致相同。 period.(iii) Rental income from operating leases (iii) 经营租赁租金收入 Rental income received under operating leases is recognised as other operating 除非有更具代表性的基准衡量从租赁资 income in equal instalments over the periods covered by the lease term except 产获取利益的模式,其经营租赁之租金where an alternative basis is more representative of the pattern of benefits to 收入按该租期所涵盖的年期以等额分期 be derived from the leased asset. Lease incentives granted are recognised in 确认为其他经营收入。经营租赁协议所the income statement as an integral part of the aggregate net lease payments 涉及的激励措施均在收益表中确认为租 receivable. Contingent rentals receivable are recognised as income in the 赁净收款总额的组成部分。或有租金以accounting period in which they are earned. 赚取该收入的会计期间列作收入。 ? F-33 ?196 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) (iv) Dividend income (iv) 股息收入 Dividend income from unlisted investments is recognised when the 非上市投资股息收入在股东收取权被无 shareholder’s right to receive payment is established unconditionally. Dividend 条件确立时才予以确认。上市投资股息income from listed investments is recognised when the share price of the 收入则在该投资的股价除息时才被确认。 investment is quoted ex-dividend.(v) Net insurance profit (v) 保险业务净溢利 The Group’s operating income from its insurance business is presented as net 本集团的保险业务的经营收入于综合收 insurance profit in the consolidated income statement. The Group follows the 益表中列示为保险业务净溢利。本集团relevant accounting policies for the recognition of such operating income. Gross 跟随相关会计政策以确认有关经营收 insurance premium income represents gross premiums received and receivable 入。保费收入总额指由长期业务及一般in respect of long-term and general insurance business net of discounts and 保险业务产生的已收取和应收取之保费 returns. Details of net insurance profit are set out in Note 12. 总额,并已扣除折扣及回报。保险业务净溢利之详情列于附注12。 (h) Financial Instruments (h) 金融工具 (i) Initial recognition (i) 初始确认 The Group initially recognises financial assets and financial liabilities on the date 当本集团成为金融工具合约其中一方时 it becomes a party to the contractual provisions of the instrument. A regular 初始确认金融资产和金融负债。以正常way purchase or sale of financial assets at FVTPL investment securities classified 方式购买或出售按通过损益以反映公平 as measured at amortised cost or at fair value through other comprehensive 价值的金融资产、按摊销成本或按通过 income (“FVOCI”) derivative transactions or debts issued are recognised 其他全面收益以反映公平价值计量的投 using trade date accounting. Other financial assets and financial liabilities are 资证券、衍生产品交易或已发行债务俱 recognised using settlement date accounting. 按交易日会计法确认。其他金融资产和金融负债则按结算日会计法确认。 Financial instruments are measured initially at fair value which normally will be 金融工具于初始期按公平价值计量,而equal to the transaction price plus in case of a financial asset or financial liability 公平价值大致与交易价相同。如金融资not measured at FVTPL transaction costs that are directly attributable to the 产或金融负债不属于按通过损益以反映 acquisition of the financial asset or issue of the financial liability. Transaction 公平价值,则包括直接归属于购入之金costs on financial assets and financial liabilities measured at FVTPL are expensed 融资产或发行金融负债的交易成本。按immediately. 通过损益以反映公平价值的金融资产或金融负债的交易成本立即作费用支销。 Any gains and losses of the financial assets or financial liabilities measured at fair 自初始确认日期起,按公平价值计量的value are recorded from the date of initial recognition. 金融资产或金融负债产生的任何盈利及亏损均予以记录。 Accrued contractual interests from financial assets and liabilities are presented 金融资产及负债的应计合约利息在财务 as accrued interest receivables and payables separately in the financial 报表中作为应计应收及应付利息分开列 statements. 示。 ? F-34 ?东亚银行有限公司 l 2022年报 197 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (ii) Classification (ii) 分类 Financial assets and liabilities 金融资产及金融负债 Financial assets 金融资产 On initial recognition a financial asset is classified as measured at: amortised 于初始确认时,金融资产分类为:按摊cost FVOCI or FVTPL. 销成本、按通过其他全面收益以反映公平价值或按通过损益以反映公平价值计量。 A financial asset is measured at amortised cost if it meets both of the following 一项金融资产按摊销成本计量,其必须conditions and is not designated as at FVTPL: 符合以下条件及未有指定为通过损益以 反映公平价值: * the asset is held within a business model whose objective is to hold assets * 该资产是在一个以持有该资产以收 to collect contractual cash flows; and 取合约现金流为目的之商业模式中持有;及 * the contractual terms of the financial asset give rise on specified dates to * 该金融资产的合约条款于指定日期 cash flows that are solely payments of principal and interest on the principal 产生符合本金及按本金结余的利息 amount outstanding. 支付特征的现金流。 A debt instrument is measured at FVOCI only if it meets both of the following 一项债务工具按通过其他全面收益以反 conditions and is not designated as at FVTPL: 映公平价值计量,其必须符合以下条件及未有指定为通过损益以反映公平价值: * the asset is held within a business model whose objective is achieved by * 该资产是在一个以收取合约现金流 both collecting contractual cash flows and selling financial assets; and 及出售金融资产为目的之商业模式中持有;及 * the contractual terms of the financial asset give rise on specified dates to * 该金融资产的合约条款于指定日期 cash flows that are solely payments of principal and interest on the principal 产生符合本金及按本金结余的利息 amount outstanding. 支付特征的现金流。 On initial recognition of an equity investment that is not held for trading the 非交易用途之股份投资初始确认时,本Group may irrevocably elect to present subsequent changes in fair value in other 集团可作出不可撤回的选择,将其后续comprehensive income – (Note 2(n)). This election is made on an investment-by- 公平价值变化确认于其他全面收益 - investment basis. (附注2(n))。该选择是按投资逐项作出。 All other financial assets are classified as measured at FVTPL. 所有其他金融资产均分类为按通过损益以反映公平价值计量。 In addition on initial recognition the Group may irrevocably designate a 此外,于初始确认时,在可消除或明显financial asset that otherwise meets the requirements to be measured at 减少会计错配的情况下,本集团可不可amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly 撤回地指定在其他情况下符合按摊销成 reduces an accounting mismatch that would otherwise arise. 本或按通过其他全面收益以反映公平价值计量条件的金融资产为按通过损益以反映公平价值计量。 ? F-35 ?198 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) Business model assessment 商业模式评估 The Group makes an assessment of the objective of a business model in which 本集团评估在组合层面持有资产的商业 an asset is held at a portfolio level because this best reflects the way the business 模式之目标,因为这最能反映业务管理is managed and information is provided to management. The information 的方法及向管理层提供资料的方式。所considered includes: 考虑的资料包括: * the stated policies and objectives for the portfolio and the operation of * 组合的既定政策和目标以及该等政 those policies in practice. In particular whether management’s strategy 策的实际操作。尤其是,管理层的focuses on earning contractual interest revenue maintaining a particular 策略专注于赚取合约利息收入、维 interest rate profile matching the duration of the financial assets to the 持特定的利率曲线、将金融资产的 duration of the liabilities that are funding those assets or realising cash flows 期限与为该等资产提供资金的负债 through the sale of the assets; 或通过出售资产变现现金流的期限相配; * how the performance of the portfolio is evaluated and reported to the * 如何评估组合的表现并向本集团的 Group’s management; 管理层报告; * the risks that affect the performance of the business model (and the * 影响商业模式(及该商业模式下持有financial assets held within that business model) and how those risks are 的金融资产)表现的风险以及如何管 managed; 理该等风险; * how managers of the business are compensated – e.g. whether * 业务管理人员如何得到补偿-例如,compensation is based on the fair value of the assets managed or the 补偿是否根据所管理资产的公平价 contractual cash flows collected; and 值或所收取的合约现金流厘定;及 * the frequency volume and timing of sales in prior periods the reasons * 过往期间的出售频率、销量和出售 for such sales and its expectations about future sales activity. However 时点,出售原因以及其对未来出售information about sales activity is not considered in isolation but as part of 活动的预期。然而,销售活动的资an overall assessment of how the Group’s stated objective for managing the 料并非孤立考虑,而是作为关于本financial assets is achieved and how cash flows are realised. 集团如何实现既定的金融资产管理目标及如何实现现金流的整体评估的一部分。 Financial assets that are held for trading or managed and whose performance is 持作交易用途或管理或按公平值基准评 evaluated on a fair value basis are measured at FVTPL because they are neither 估其表现的金融资产乃按通过损益以反 held to collect contractual cash flows nor held both to collect contractual cash 映公平价值计量,因其既非持作收取合flows and to sell financial assets. 约现金流之用,亦非持作收取合约现金流及出售金融资产之用。 Assessment whether contractual cash flows are solely payments of principal and 评估合约现金流是否纯粹为支付本金及 interest 利息 For the purposes of this assessment “principal” is defined as the fair value of 就此项评估而言,「本金」的定义是金融the financial asset on initial recognition. “Interest” is defined as consideration 资产在初始确认时的公平价值。「利息」for the time value of money and for the credit risk associated with the principal 的定义是货币的时间价值以及与特定时 amount outstanding during a particular period of time and for other basic 段内未偿还本金有关的信用风险以及其lending risks and costs (e.g. liquidity risk and administrative costs) as well as 他基本贷款风险和成本(例如流动性风profit margin. 险和管理费用)及利润率的代价。 ? F-36 ?东亚银行有限公司 l 2022年报 199 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) In assessing whether the contractual cash flows are solely payments of principal 在评估合约现金流是否纯粹为支付本金 and interest the Group considers the contractual terms of the instrument. This 及利息时,本集团考虑工具的合约条款。 includes assessing whether the financial asset contains a contractual term that 这包括评估金融资产是否包含可能改变 could change the timing or amount of contractual cash flows such that it would 合约现金流的时点或金额,致使其不符not meet this condition. In making the assessment the Group considers: 合该项条件。在评估时,本集团考虑: * contingent events that would change the amount and timing of cash flows; * 将会改变现金流金额及时点的或有事件; * leverage features; * 杠杆特征; * prepayment and extension terms; * 提前还款和延期条款; * terms that limit the Group’s claim to cash flows from specified assets (e.g. * 限制本集团要求取得指定资产(例如non-recourse asset arrangements); and 无追索权资产安排)的现金流的条款;及* features that modify consideration of the time value of money (e.g. periodic * 修正金钱时间值代价的特征(例如定reset of interest rates). 期调整利率)。 Reclassifications 重新分类 Financial assets are not reclassified subsequent to their initial recognition 除于本集团改变管理金融资产的商业模 except in the period after the Group changes its business model for managing 式后期间外,金融资产在初始确认后不financial assets. When (and only when) the Group changes its business model 会作出重新分类。当(并且仅当)本集团for managing financial assets it reclassifies all affected financial assets in 更改其管理金融资产的商业模式时,所accordance with the new business model. The reclassification should be applied 有受影响的金融资产会根据新商业模式 prospectively from the “reclassification date” which is defined as “the first day 重新分类。重新分类应由「重分类日」前of the first reporting period following the change in business model that results 瞻性地应用。「重分类日」定义为「因商in reclassifying financial assets”. Accordingly any previously recognised gains 业模式变化而重新分类金融资产后的第 losses or interest will not be restated. 一个报告期首天」。因此,任何之前确认的收益、亏损或利息不会重报。 If a financial asset is reclassified out of the amortised cost measurement 如金融资产从按摊销成本计量重新分类 category and into the FVTPL or FVOCI measurement category its fair value is 为按通过损益以反映公平价值计量或 measured at the reclassification date. Any gain or loss arising from a difference 按通过其他全面收益以反映公平价值计 between the previous amortised cost of the financial asset and fair value is 量,则其公平价值会在重分类日计量。 recognised in profit or loss (if reclassification as FVTPL measurement category) 金融资产的先前摊销成本与公平价值之 or is recognised in other comprehensive income (if reclassification as FVOCI 间的差额产生的任何收益或损失会在收measurement category). 益表内确认(如重分类为按通过损益以反映公平价值计量)或在其他全面收益内确认(如果重新分类为按通过其他全面收益以反映公平价值计量)。 If a financial asset is reclassified out of the FVOCI measurement category and 如金融资产从按通过其他全面收益以反 into the amortised cost measurement category the financial asset is reclassified 映公平价值计量重新分类为按摊销成本 at its fair value at the reclassification date. However the cumulative gain or loss 计量,则金融资产会在重分类日按其公previously recognised in other comprehensive income is removed from equity 平价值重新分类。然而,先前于其他全and adjusted against the fair value of the financial asset at the reclassification 面收益确认的累计收益或亏损将从权益 date. As a result the financial asset is measured at the reclassification date as if 中扣除,并于重分类日按金融资产的公it had always been measured at amortised cost. 平价值调整。因此,金融资产在重分类日进行计量,就好像它一直按摊销成本计量一样。 ? F-37 ?200 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) If a financial asset is reclassified out of the FVOCI measurement category and 如金融资产从按通过其他全面收益以反 into the FVTPL measurement category the financial asset continues to be 映公平价值计量重新分类为按通过损益 measured at fair value. The cumulative gain or loss previously recognised in 以反映公平价值计量,则该金融资产会other comprehensive income is reclassified from equity to profit or loss as a 继续以公平价值计量。先前于其他全面reclassification adjustment at the reclassification date. 收益确认的累计收益或亏损于重分类日重新分类由权益转入收益表作为重新分类调整。 If a financial asset is reclassified out of the FVTPL measurement category 如金融资产从按通过损益以反映公平价 and into the amortised cost measurement category its fair value at the 值计量重新分类为按摊销成本计量,则reclassification date becomes its new gross carrying amount. 其在重新分类日的公平价值作为新的账面值总额。 If an entity reclassifies a financial asset out of the FVTPL measurement category 如金融资产从按通过损益以反映公平价 and into the FVOCI measurement category the financial asset continues to be 值计量重新分类为按通过其他全面收益 measured at fair value and subsequent changes in fair value will be recognised 以反映公平价值计量,则该金融资产会in other comprehensive income. 继续以公平价值计量,而其后的公平价值变动会在其他全面收益中确认。 Financial liabilities 金融负债The Group classifies its financial liabilities other than financial guarantees and 本集团将其金融负债(财务担保及贷款loan commitments as measured at amortised cost or FVTPL. 承担除外)分类为按摊销成本或按通过损益以反映公平价值计量类别。 The Group may at initial recognition irrevocably designate a financial liability as 本集团将其金融负债于初始确认时,在at FVTPL in either of the following circumstances: 以下任一情况下,或分类为不可撤销形式指定为按通过损益以反映公平价值计 量: (i) When doing so results in more relevant information because either: (i) 当指定为按通过损益以反映公平价 值计量可提供更相关资讯,因: * a group of liabilities or a group of financial assets and liabilities is * 该负债组别或金融资产及负债 managed and its performance is evaluated and reported internally on a 是按公平价值作内部管理、评 fair value basis; or 估及呈报;或 * the designation eliminates or significantly reduces a measurement or * 该指定可抵销或明显减少因计 recognition inconsistency that would otherwise arise from measuring 量资产及负债或按不同基准确 assets or liabilities or recognising the gains and losses on them on 认盈利和亏损时可能产生计量 different bases. 或确认的不一致。 (ii) If a liability contract contains one or more embedded derivatives unless (ii) 如负债合约包含一个或多个嵌入式 the embedded derivative(s) does not significantly modify the cash flows 衍生工具,除非该等嵌入式衍生工that would otherwise be required by the contract or if it is obvious that 具不会显着改变合约原本要求的现 separation of the embedded derivative(s) is prohibited. 金流量,或分拆该等嵌入式衍生工具是明显地禁止。 ? F-38 ?东亚银行有限公司 l 2022年报 201 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (iii) Fair value measurement principles (iii) 计量公平价值之原则 The fair value of financial instruments is based on their quoted market prices 金融工具的公平价值是根据报告期结束 where available at the end of the reporting period without any deduction for 日之可得市场报价但未减除将来的估计 estimated future selling costs. 出售成本。 If there is no publicly available latest traded price nor a quoted market price on 如没有公众知悉的最后交易价格或在认 a recognised stock exchange or a price from a broker/dealer for non-exchange- 可交易所的市场报价,或从经纪╱交易traded financial instruments or if the market for it is not active the fair value of 员获得属于非交易所买卖的金融工具报 the instrument is estimated using valuation techniques that provide a reliable 价,又或该市场并不活跃,此工具的公estimate of prices which could be obtained in actual market transactions. 平价值按估值模式估值,而该估值模式可根据实际市埸交易提供可靠的估计价格。 Where discounted cash flow techniques are used estimated future cash flows 当采用现金流折让价格模式,估计将来are based on management’s best estimates and the discount rate used is a 现金流按管理层的最佳估计及采用的贴 market rate at the end of the reporting period applicable for an instrument with 现率是在报告期结束日适用于相同条款 similar terms and conditions. Where other pricing models are used inputs are 工具的市埸利率。当采用其他价格模式based on market data at the end of the reporting period. 时,参数是在报告期结束日的市埸价格资料。 (iv) Derecognition (iv) 终止确认 The Group derecognises a financial asset when the contractual rights to receive 当从金融资产获得现金流的法定权利届 the cash flows from the financial asset expire or where the financial asset 满或已将重大风险及回报拥有权同时转 together with substantially all the risks and rewards of ownership has been 移,或本集团既没有转移也没有保留金transferred or in which the Group neither transfers nor retains substantially 融资产的重大风险和回报,并且也没有all of the risks and rewards of ownership and it does not retain control of the 保留对该金融资产的控制后,本集团终financial asset. 止确认该金融资产。 On derecognition of a financial asset the difference between the carrying 于终止确认金融资产时,资产账面值(或amount of the asset (or the carrying amount allocated to the portion of the 终止确认部分资产的账面值)与 (i)已收asset derecognised) and the sum of (i) the consideration received (including any 代价(包括任何所得新资产减任何新负new asset obtained less any new liability assumed) and (ii) any cumulative gain 债)及 (ii)已于其他全面收益确认的任何 or loss that had been recognised in other comprehensive income is recognised 累计收益或亏损会于收益表内确认。指in the income statement. Any cumulative gain/loss recognised in other 定为通过其他全面收益以反映公平价值 comprehensive income in respect of equity investment securities designated as 的股份投资证券在其他全面收益中确认 at FVOCI is not recognised in the income statement on derecognition of such 的任何累计收益╱亏损均不会在终止确 securities as explained in (Note 2(n)). 认时在收益表中确认(附注2(n))。 A financial liability is derecognised when the obligation specified in the contract 当合约的义务已被履行、取消或期满,is discharged cancelled or expires. 本集团终止确认金融负债。 The Group uses the weighted average or first-in first-out method where 本集团采用加权平均法或先进先出法(如appropriate to determine realised gains and losses to be recognised in the 适用)以厘定在终止确认时须在收益表 income statement on derecognition. 确认的已实现盈利和亏损。 (v) Modifications of financial assets and financial liabilities (v) 修改金融资产及金融负债 If the terms of a financial asset are modified the Group evaluates whether the 若金融资产的条款被修改,本集团会评cash flows of the modified asset are substantially different. If the cash flows 估经修订资产的现金流量是否重大不 are substantially different then the contractual rights to cash flows from the 同。如现金流量有重大不同,则原金融original financial asset are deemed to have expired. In this case the original 资产的现金流量的法定权利被视为已过 financial asset is derecognised (Note 2(h)(iv)) and a new financial asset is 期。在此情况下,原金融资产会被终止recognised at fair value. 确认(附注2(h)(iv)),并按公平价值确认为新金融资产。 ? F-39 ?202 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) If the cash flows of the modified asset carried at amortised cost are not 如果按摊销成本计量的已修订资产之现 substantially different then the modification does not result in derecognition 金流量并无重大差异,则该修订不会终of the financial asset. In this case the Group recalculates the gross carrying 止确认该金融资产。在这种情况下,本集amount of the financial asset and recognises the amount arising from adjusting 团会重新计算金融资产的账面值总额,the gross carrying amount as a modification gain or loss in the income 并将调整账面值总额所产生的金额在收 statement. If such a modification is carried out because of financial difficulties 益表内确认为修订损益。如果由于借款of the borrower (Note 2(h)(vii)) then the gain or loss is presented together with 人的财务困难而进行此类修改(附注2(h)impairment losses. In other cases it is presented as interest income. (vii)),则将损益与减值损失一并列报。 在其他情况下,应列示为利息收入。 The Group derecognises a financial liability when its terms are modified and the 当合约条款被修改及已修订之金融负债 cash flows of the modified liability are substantially different. In this case a new 的现金流量有重大不同,本集团会终止financial liability based on the modified terms is recognised at fair value. The 确认其金融负债。在这种情况下,基于difference between the carrying amount of the financial liability extinguished 修改条款后的新金融负债会按公平价值 and the new financial liability with modified terms is recognised in the income 确认。已终止的金融负债与已修改条款statement. 的新金融负债的账面值差额会在收益表内确认。 In the context of interest rate benchmark reform the Group’s assessment 根据第二期修订容许,本集团会应用第of whether a change to an amortised cost financial instrument is substantial 二期修订的实务操作方法后评估按摊销 is made after applying the practical expedient introduced by the Phase 2 成本计量的金融工具是否有实质变动。 amendments. This requires the transition from an interbank offered rate to a 基准利率被替代基准利率所取代会被视 new alternative benchmark rate to be treated as a change to a floating interest 为浮动利率变动(如以上附注2(e)所述)。 rate as described in (Note 2(e)) above.The Group updates the effective interest rate of the financial asset or financial 本集团更新金融资产或金融负债的有效 liability to reflect the change that is required by the interest rate benchmark 利率,以反映因利率基准改革而导致按reform if the basis for determining the contractual cash flows of a financial 摊销成本计量的金融资产或金融负债之 asset or financial liability measured at amortised cost changes as a result of 合约现金流的基础变动。因利率基准改the reform. A change in the basis for determining the contractual cash flows is 革要求而改变厘定合约现金流的基础必 required by interest rate benchmark reform if the following conditions are met: 须符合以下条件: * the change is necessary as a direct consequence of the reform; and * 该变动必须是利率基准改革直接导致的结果;和 * the new basis for determining the contractual cash flows is economically * 用于确定合约现金流的新基础在经equivalent to the previous basis i.e. the basis immediately before the 济上是等同于旧基础(即变动前的基change. 础)。 If changes are made to a financial asset or financial liability in addition to 如果金融资产或金融负债合约现金流的 changes to the basis for determining the contractual cash flows required by 基础发生除利率基准改革要求以外的变 interest rate benchmark reform then the Group first updates the effective 动,则本集团首先更新该金融资产或金interest rate of the financial asset or financial liability to reflect the change that 融负债的有效利率,以反映利率基准改is required by interest rate benchmark reform. Subsequently the Group applies 革要求的变动。随后,本集团应用以上the policies on accounting for modifications set out above to the additional 修订的会计政策于额外变动。 changes.(vi) Offsetting (vi) 抵销 Financial assets and financial liabilities are offset and the net amount is reported 只有具法定权利抵销确认金额及计划以 in the statement of financial position only where there is a legally enforceable 净额结算,或同时变卖资产以清偿负债,right to set off the recognised amounts and there is an intention to settle on a 金融资产和金融负债互相抵销,并在财net basis or realise the asset and settle the liability simultaneously. 务状况表内以净额列示。 ? F-40 ?东亚银行有限公司 l 2022年报 203 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (vii) Impairment (vii) 减值The Group recognises loss allowances for expected credit losses (“ECL“) on the 本集团就以下非按通过损益以反映公平following financial instruments that are not measured at FVTPL: 价值计量的金融工具的预期信贷损失确 认减值准备: * financial assets that are debt instruments; * 属债务工具的金融资产; * lease receivables; * 租赁应收账款; * financial guarantee contracts issued; * 已发出的财务担保合约; * loan commitments issued; and * 已发出的贷款承担;及 * contract assets * 合约资产 No impairment loss is recognised on equity investments. 无需为股份投资计算减值。 The Group measures loss allowances for 12-month or lifetime ECL using a 本集团使用3阶段法计量12个月或合约 3-stage approach as follows: 期内之预期信贷损失的减值准备如下: Stage Description Impairment Loss Allowance Measurement阶段描述减值损失准备计量 1 Performing 12-month ECL 履行中12个月内之预期信贷损失 2 Performing but with a significant increase in credit risk at reporting date Lifetime ECL compared to initial recognition 合约期内之预期信贷损失履约中但自其初始确认以来于报告日的信用风险大幅增加 3 Non-performing Lifetime ECL 不良合约期内之预期信贷损失 12-month ECL is the portion of ECL that result from default events on a financial 12个月内之预期信贷损失指金融工具在 instrument that are possible within the 12 months after the reporting date. 报告日后之12个月内,所有潜在违约事件所导致的信贷损失。 The mapping between the Group’s Stage Allocation and the HKMA’s 5-Grade 本集团的阶段分配与金管局的5级资产 Asset Classification is as follows: 分类对应关系如下: HKMA’s 5-Grade Asset Classification Stage Allocation金管局的5级资产类别阶段分配General (i.e. do not meet the Bank’s criteria of “Significant Increase of Credit Risk“) 1Pass 一般(即不符合本行的「信贷风险显着增加」的准则)合格 Meet the Bank’s criteria of “Significant Increase of Credit Risk“ 2符合本行的「信贷风险显着增加」的准则 Special Mention 2需要关注 Substandard次级 Doubtful 3 呆滞 Loss亏损 ? F-41 ?204 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续)The criterion of “significant increase of credit risk“ takes into consideration of 「信贷风险显着增加」的准则已计及以下any one of the following key factors: 任何一个关键因素: 1. The exposure has a significant deterioration of internal or external rating as 1. 风险的内部或外部评级与风险产生 compared with the rating at the time when the exposure was originated; 之时的评级相比显着转差; 2. The exposure is classified as Special Mention; 2. 风险被分类为「需要关注」金管局资 产类别; 3. The rating of the exposure falls out of the “Low-Credit Risk Threshold“ that 3. 风险的评级不再属于相当于普遍理is equivalent to the globally understood definition of “investment grade“; 解的「投资级别」定义的「低信贷风or 险界限」;或 4. Other events and indications that the credit risk of the exposure has 4. 其他事件及征兆显示其信贷风险自 significantly increased since origination or purchase. 产生或购买后显着增加。 Measurement of ECL 计量预期信贷损失 ECL are a probability-weighted estimate of credit losses under different 预期信贷损失是在不同经济情景中一个 economic scenarios. They are measured as: 信贷损失的概率在加权后的估算值,以如下方法计量: Exposure at Default x Probability of Default x Loss Given Default 违约风险承担x违约概率x违约损失率 Credit-impaired (non-performing) financial assets 信贷不良金融资产 At each reporting date the Group assesses whether financial assets carried at 于各报告日,本集团评估按摊销成本列amortised cost and debt financial assets carried at FVOCI are credit-impaired. 账的金融资产及按通过其他全面收益以A financial asset is “credit-impaired“ when one or more events that have a 反映公平价值列账的债务金融资产是否detrimental impact on the estimated future cash flows of the financial asset 为信贷不良。当发生一宗或多宗对金融have occurred. 资产的估计未来现金流造成不利影响的事件,则该金融资产属「信贷不良」。 Evidence that a financial asset is credit-impaired includes but not limited to the 金融资产出现信贷减值的证据包括但不 following observable data: 限于以下可观察数据: * significant financial difficulty of the borrower or issuer; * 借款人或发行人出现重大财政困难; * a breach of contract such as a default or past due event; * 违反合约,如拖欠或逾期事件; * the restructuring of a loan or advance by the Group on terms that the * 本集团根据其他情况下不会考虑的 Group would not consider otherwise; 条款重组贷款或垫款; * it is becoming probable that the borrower will enter bankruptcy or other * 借款人很可能会破产或进行其他财 financial reorganisation; or 务重组;或 * the disappearance of an active market for a security because of financial * 因财政困难而导致某担保失去活跃 difficulties. 市场。 A loan that has been renegotiated due to a deterioration in the borrower’s 因借款人的财政状况恶化而重订条款的 condition is usually considered to be credit-impaired unless there is evidence 贷款,除有证据证明无法收取合约现金that the risk of not receiving contractual cash flows has reduced significantly 流的风险已显着减低且并无其他减值迹 and there are no other indicators of impairment. In addition a loan that is 象外,通常被视为信贷不良。此外,逾overdue for 90 days or more is considered impaired. 期90日或以上的贷款被视为已减值。 ? F-42 ?东亚银行有限公司 l 2022年报 205 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Presentation of allowance for ECL in the statement of financial position 在财务状况表中列示预期信贷损失的准备 Loss allowances for ECL are presented in the statement of financial position as 预期信贷损失的损失准备在财务状况表 follows: 中按以下方式列示: * financial assets measured at amortised cost: as a deduction from the gross * 按摊销成本计量的金融资产:从资 carrying amount of the assets; 产的账面值总额中扣除; * loan commitments and financial guarantee contracts: generally as a * 贷款承担及财务担保合约:一般作 provision on the liabilities side; and 为负债方面的拨备;及 * debt instruments measured at FVOCI: no loss allowance is presented in * 按通过其他全面收益以反映公平价 the statement of financial position because the carrying amount of these 值计量的债务工具:在财务状况表 assets is their fair value inclusive of any ECL. However the loss allowance is 中并不列示损失准备,因该等资产disclosed separately. 的账面值为其公平价值,包括任何预期信贷损失。然而,损失准备会分开披露。 Write-off 撇销 Loans and debt securities are written off (either partially or in full) when there 若贷款及债务证券无实际可收回的前 is no realistic prospect of recovery. This is generally the case when the Group 景,则予撇销(部分或全部)。当本集团determines that the borrower does not have assets or sources of income 判断借款人并无资产或收入来源可产生 that could generate sufficient cash flows to repay the amounts subject to the 足够的现金流以偿还应撇销的金额时,write-off. However financial assets that are written off could still be subject 一般会如此处理。然而,已撇销的金融to enforcement activities in order to comply with the Group’s procedures for 资产仍可进行追讨,以遵守本集团收回recovery of amounts due. 应收金额的程序。 (i) Trading Assets and Liabilities (i) 交易用途资产及负债 Trading assets and liabilities are those assets and liabilities which are acquired or 作交易用途的资产和负债包括主要是作短期 incurred principally for the purpose of selling or repurchasing them in the near 出售或购入的金融资产和金融负债,或属于term or are part of a portfolio of identified financial instruments that are managed 组合一部分并共同管理的可辨识金融工具,together and for which there is evidence of a recent actual pattern of short-term 及有证据显示近期有短期出售以赚取利润的 profit-taking. Trading assets and liabilities are initially recognised and subsequently 模式。交易资产和负债于初始确认,及其后measured at FVTPL. 以公平价值计量且其变动计入当期损益。 (j) Contract Assets and Liabilities (j) 合约资产及负债 When revenue is recognised by transferring goods or services to a customer before 若本集团透过向客户转让货品或服务履约并 the consideration is received or before payment is due the Group presents the 于客户支付代价或款项到期前确认收入,则amount of revenue as a contract asset excluding any amounts presented as a 本集团应将该合约有关收益金额列示为合约 receivable. A contract asset is recognised in statement of financial position when 资产,惟任何列示为应收账款的金额除外。 there is a right to consideration that is conditional on factors other than the 若获取代价的权利以随时间流逝以外的因素 passage of time. The contract asset is transferred to receivables when the right to 为条件,则合约资产于财务状况表中确认。 consideration becomes unconditional. Impairment of a contract asset is measured 当获取代价的权利成为无条件时,合约资产on the same basis as a financial asset as (Note 2(h)(vii)) above. The Group includes 将转至应收账款。合约资产减值与金融资产the contract assets in “Others“ under “Other assets“ in the statement of financial (附注2(h)(vii))的计算相同。本集团包括合约position. 资产于财务状况表中「其他资产」内的「其他账项」。 A contract liability is recognised when a customer pays non-refundable 当客户在本集团已获取代价或款项到期时(以consideration or when the Group has a right to an amount of non-refundable 较早者为准)拥有收取不可退还代价的权利,consideration that is unconditional before the Group transfers a good or service to 则确认为合约负债。本集团的合约负债包括the customer. The Group includes the contract liabilities in “Others“ under “Other 在财务状况表内的「其他负债」项下的「其他liabilities“ in the statement of financial position. 账项」。? F-43 ?206 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) As a practical expedient the Group does not adjust the promised amount of 视乎实际情况,若本集团在订立合约时预期consideration for the effects of a significant financing component if the Group 实体向客户转让已承诺的货品或服务之时起 expects at contract inception that the period between when the entity transfers a 至客户支付该货品或服务款项时止的期间为 promised good or service to a customer and when the customer pays for that good 一年或以内,则本集团毋须就重大融资组成or service will be one year or less. The Group may recognise the incremental costs of 部分的影响而调整已承诺的代价金额。若本obtaining a contract as an expense when incurred if the amortisation period of the 集团原本会确认的资产摊销期为一年或以 asset that the Group otherwise would have recognised is one year or less. 内,则本集团可于产生时将获得合约的增加成本确认为支出。 (k) Hedging (k) 对冲 Hedge accounting recognises the offsetting effects on the income statement of 对冲会计法是确认因用作对冲工具与被对冲 changes in the fair values of the hedging instrument and the hedged item. The 项目因公平价值变动而在收益表内产生之相 Group assesses and documents whether the financial instruments that are used in 互抵销损益的影响。于衍生工具开始列作对hedging transactions are highly effective in offsetting changes in fair values or cash 冲工具及在对冲期间,本集团会评估及记录flows of hedged items attributable to the hedged risks both at hedge inception and 用作对冲交易的金融工具是否有效地对冲相 on an ongoing basis. The Group discontinues prospectively hedge accounting when 关项目的公平价值变动或现金流之风险。当(i) the hedging instrument expires or is sold terminated or exercised; (ii) the hedge (i)该用作对冲工具到期或已出售、终止或行 no longer meets the criteria for hedge accounting; or (iii) the Group revokes the 使;(ii)该对冲交易不再符合对冲会计法的要 designation. 求;或 (iii)本集团取消对冲指定,本集团会停止继续采用对冲会计法。 (i) Cash flow hedges (i) 现金流量对冲 Where a derivative financial instrument is designated as a hedge of the 当衍生金融工具被指定对冲已确认资产 variability in cash flows of a recognised asset or liability or a highly probable 或负债的不既定现金流量,或是甚有可forecast transaction or the foreign currency risk of a committed future 能发生的预计交易,或已承诺未来交易transaction the effective part of any gain or loss on remeasurement of the 之外汇风险,其重新计量衍生金融工具derivative financial instrument to fair value is recognised in other comprehensive 至公平价值有效对冲部分盈利或亏损会 income and accumulated separately in equity in the hedging reserve. The 在其他全面收益内确认,并在股东权益ineffective portion of any gain or loss is recognised immediately in the income 中的对冲储备内分开累计。而无效对冲statement. 部份的盈利或亏损则立即在收益表内确认。 If the hedge of a forecast transaction subsequently results in the recognition 如因对冲预计交易而其后须确认为非金 of a non-financial asset or non-financial liability the associated gain or loss 融资产或非金融负债,其相关之盈亏由is reclassified from equity to be included in the initial cost or other carrying 股东权益重新分类并包括在该非金融资 amount of the non-financial asset or liability. If a hedge of a forecast transaction 产或负债的初始成本或其他账面值内。 subsequently results in the recognition of a financial asset or a financial liability 如因对冲一项预计交易而其后须确认为 the associated gain or loss is reclassified from equity to the income statement in 金融资产或金融负债,其相关之盈亏由the same period or periods during which the asset acquired or liability assumed 股东权益转入收益表并计入相同期间或 affects the income statement (such as when interest income or expense is 当购入资产或引起负债而影响该期间之 recognised). 收益表(如当确认为利息收入或支出)。 For cash flow hedges other than those covered by the preceding two policy 就现金流量对冲而言,除以上两段政策statements the associated gain or loss is reclassified from equity to the income 已涵盖外,其相关之盈亏由股东权益重statement in the same period or periods during which the hedged forecast 新分类并包括在相同期间或受对冲预计 transaction affects the income statement. When a hedging instrument expires 交易所影响期间的收益表。当用作对冲or is sold terminated or exercised or the Group revokes designation of the 工具已到期或出售,终止或行使,或当hedge relationship but the hedged forecast transaction is still expected to occur 本集团取消指定对冲关系但对冲预计交 the cumulative gain or loss at that point remains in equity until the transaction 易预期仍会发生,截至此期间所累计的occurs and is recognised in accordance with the above policy. If the hedged 盈利或亏损仍保留在股东权益内,直至transaction is no longer expected to take place the cumulative unrealised gain 交易发生时按以上的政策确认。如预计or loss is reclassified from equity to the income statement immediately. 对冲交易不会发生,在股东权益内的累计盈利或亏损会立即由股东权益转入收益表。 ? F-44 ?东亚银行有限公司 l 2022年报 207 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (ii) Fair value hedges (ii) 公平价值对冲 A fair value hedge seeks to offset risks of changes in the fair value of recognised 公平价值对冲用作抵销已确认资产或负 asset or liability that will give rise to a gain or loss being recognised in the 债因公平价值变动产生须在收益表内入 income statement. 账的盈利和亏损的风险。 The hedging instrument is measured at fair value with fair value changes 对冲工具按公平价值列账,而公平价值recognised in the income statement. The carrying amount of the hedged item 的变动在收益表内入账。被对冲项目的is adjusted by the amount of the changes in fair value of hedging instrument 账面值按对冲工具所对冲之风险的价格 attributable to the risk being hedged. This adjustment is recognised in the 变动予以调整。此调整在收益表内入账income statement to offset the effect of the gain or loss on the hedging 以抵销对冲工具产生的盈利和亏损。 instrument.When a hedging instrument expires or is sold terminated or exercised the 当用作对冲工具到期或已出售,终止或hedge no longer meets the criteria for hedge accounting or the Group revokes 行使,或当对冲不再符合对冲会计法的designation of the hedge relationship any adjustment up to that point to a 要求,或本集团取消对冲指定关系,所hedged item for which the effective interest method is used is amortised to the 有截至此期间内按有效利率方式调整的 income statement as part of the recalculated effective interest rate of the item 被对冲项目,会按该项目余下年期当作over its remaining life. 重新计算有效利率在收益表内摊销。 (iii) Hedge effectiveness testing (iii) 对冲效用测试 In order to qualify for hedge accounting the Group carries out prospective 为符合对冲会计法,本集团必须进行两effectiveness testing to demonstrate that it expects the hedge to be highly 种测试:在开始对冲时进行「预计效用」 effective at the inception of the hedge and throughout its life. Actual 测试,显示预期成效极高;在对冲期内effectiveness (retrospective effectiveness) is also demonstrated on an ongoing 持续进行「追溯效用」测试,证明实际有basis. 效。 The documentation of each hedging relationship sets out how the effectiveness 有关各对冲关系之文件载有如何评估对 of the hedge is assessed. The method which the Group adopts for assessing 冲效用。本集团采纳之对冲效用评估方hedge effectiveness will depend on its risk management strategy. 法,是按照既定风险管理策略而实施。 For fair value hedge relationships the Group utilises the cumulative dollar offset 对于公平价值对冲关系,本集团采用累method or regression analysis as effectiveness testing methodologies. For cash 计价值抵销法或回归分析作为效用测试 flow hedge relationship the Group utilises the change in variable cash flow 之方法。对于现金流量对冲关系,本集团method or the cumulative dollar offset method using the hypothetical derivative 会测试现金流量的变动或对冲组合的规 approach. 模是否充足,或以模拟衍生工具方式,运用累计价值抵销法测试。 For prospective effectiveness the hedging instrument must be expected to 就预计效用而言,对冲工具必须被预期be highly effective in achieving offsetting changes in fair value or cash flows 为在划定对冲期间内,能高度有效地抵attributable to the hedged risk during the period for which the hedge is 销对冲风险之公平价值或现金流量之变 designated. For actual effectiveness the changes in fair value or cash flows must 动。就实际效用而言,公平价值或现金offset each other in the range of 80 per cent to 125 per cent for the hedge to 流量之变动抵销额在80%至125%范 be deemed effective. 围才被视为有效。 (iv) Specific policies for hedges affected by interest rate benchmark reform (iv) 受利率基准改革影响的对冲特定政策 The Group applies Interest Rate Benchmark Reform: Amendments to HKFRS 本集团应用《香港财务报告准则》第9 9 HKAS 39 and HKFRS 7 (the “Phase 1 amendments“) reliefs to hedging 号、《香港会计准则》第39号及《香港财relationships directly affected by interest rate benchmark reform during the 务报告准则》第7号之修订(「第一期修period before the replacement of an existing interest rate benchmark with a 订」)中有关受利率基准改革直接影响的 new alternative benchmark rate. 对冲关系,在现有基准利率被替代基准利率所取代前期间的豁免。 ? F-45 ?208 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) The reliefs cease to apply once certain conditions are met. These include when 当符合某些条件后,该豁免应停止使用。 the uncertainty arising from interest rate benchmark reform is no longer present 条件包括当利率基准改革对被对冲项目 with respect to the timing and amount of the benchmark-based cash flows 或用作对冲工具以利率为基础的现金流 of the hedged item when the hedging relationship is discontinued or once 在时间和金额上于对冲关系终止或金额 amounts in the cash flow hedge reserve have been released. 在现金流对冲储备转出不再存在不确定性时。 The Group also applies the Phase 2 amendments which provides temporary 本集团并采用第二期修订,对某些对冲reliefs that allow the Group’s hedging relationships to continue upon the 会计规定亦提供了临时豁免,当现有基replacement of an existing interest rate benchmark with a new alternative 准利率被替代基准利率所取代时,对冲benchmark rate. 关系得以继续。 (i) The Phase 1 amendments (i) 第一期修订 The Phase 1 amendments modify specific hedge accounting requirements 第一期修订对特定对冲会计的规定 to provide relief from potential effects of the uncertainties caused by 作出修改,以减轻因利率基准改革所interest rate benchmark reform so that entities applying those hedge 引起的不确定因素之潜在影响,以accounting requirements assume that the interest rate benchmark on 使实体采用该等对冲会计规定时,which the hedged cash flows and cash flows of the hedging instrument 假设被对冲的现金流及用作对冲工 are based is not altered as a result of interest rate benchmark reform. 具的现金流所依据的利率基准并无 These amendments replace the need for specific judgements to determine 因利率基准改革而改变。有关修订whether certain hedge accounting relationships that hedge the variability of 豁免了就利率基准预计被改革或取 cash flows or interest rate risk exposures for periods after the interest rate 代后的期间,处理对冲现金流或利benchmarks are expected to be reformed or replaced continue to qualify for 率风险承担变动的若干对冲会计关 hedge accounting. 系时运用特定判断以厘定该等关系是否仍合资格采用对冲会计法的需要。 (ii) The Phase 2 amendments (ii) 第二期修订 The Phase 2 amendments provide a series of temporary exemptions from 第二期修订对某些对冲会计规定亦 certain hedge accounting requirements when a change required by interest 提供了一系列的临时豁免,容许当rate benchmark reform occurs to a hedged item and/or hedging instrument 被对冲项目和╱或用作对冲工具发 that permit the hedging relationship to be continued without interruption. 生利率基准改革所要求的变动时,The Group applies the following relief as and when uncertainty arising from 对冲关系得以继续并不受干扰。当利interest rate benchmark reform is no longer present with respect to the 率基准改革对被对冲项目或用作对 timing and the amount of the interest rate benchmark-based cash flows of 冲工具以利率为基础的现金流在时 the hedged item or hedging instrument: 间和金额上不再存在不确定性时,本集团采用以下操作: * the Group amends the designation of a hedging relationship to reflect * 本集团修改对冲关系的指定,changes that are required by the reform without discontinuing the 以反映改革所要求的变动,且hedging relationship; and 不会导致对冲关系终止;和 * when a hedged item in a cash flow hedge is amended to reflect the * 当现金流对冲的被对冲项目被 changes that are required by the reform the amount accumulated 修改以体现改革要求的变动时,in the cash flow hedge reserve is deemed to be based on the 现金流对冲储备中的累计金额 alternative benchmark rate on which the hedged future cash flows are 将被视为以用于确定未来被对 determined. 冲现金流的替代基准利率为基础而确定的金额。 While uncertainty persists in the timing or amount of the interest rate 当被对冲项目或用作对冲工具基于 benchmark-based cash flows of the hedged item or hedging instrument 利率基准的现金流在时间或金额上 the Group continues to apply the existing accounting policies. 仍存在不确定性,本集团则继续采用现有会计政策。 ? F-46 ?东亚银行有限公司 l 2022年报 209 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (l) Derivatives (l) 衍生工具 Derivatives are recognised initially and are subsequently remeasured at fair value. 衍生工具初始确认及其后按公平价值重新计 Derivatives are classified as assets when their fair value is positive or as liabilities 量。当衍生工具的公平价值为正数时,衍生when their fair value is negative this includes embedded derivatives which are 工具分类为资产;当公平价值为负数时,衍bifurcated from the host contract when they meet the definition of a derivative on 生工具则分类为负债,这包括在独立基础上a standalone basis. 符合衍生工具定义但从主合同分拆的嵌入式衍生工具。 Derivatives may be embedded in another contractual arrangement (a host contract). 衍生工具可能嵌入另一合同(主合同)。在下The Group accounts for an embedded derivative separately from the host contract 列情况下,本集团会分开计算主合同及嵌入when: 的衍生工具: * the host contract is not an asset in the scope of HKFRS 9; * 该主合同并非在《香港财务报告准则》第 9号所覆盖的资产; * the host contract is not itself carried at FVTPL; * 该主合同不是按通过损益以反映公平价值计量; * the terms of the embedded derivative would meet the definition of a derivative * 嵌入衍生工具的条款如果包含在单独的 if they were contained in a separate contract; and 合同中,符合衍生工具的定义;及* the economic characteristics and risks of the embedded derivative are not * 该嵌入衍生工具的经济特性及风险与主 closely related to the economic characteristics and risks of the host contract. 合同并非紧密关连的。 Separated embedded derivatives are measured at fair value with all changes in fair 分离的嵌入式衍生工具按公平价值计量,公value recognised in profit or loss unless they form part of a qualifying cash flow or 平价值的所有变动均在收益内确认,除非他net investment hedging relationship. 们构成合资格现金流量或净投资对冲关系的一部分。 (m) Loans and Advances (m) 贷款及垫款 Loans and advances mainly comprise placements with and advances to banks trade 贷款和垫款主要包括在银行的存款及垫款、 bills and loans and advances to customers: 贸易票据和客户贷款及垫款: * loans and advances measured at amortised cost (Note 2(h)(ii)); they are * 按摊销成本计量的贷款和垫款(附注2(h)initially measured at fair value plus incremental direct transaction costs and (ii));初始以公平价值加上直接相关的 subsequently at their amortised cost using the effective interest method; 交易成本计量,其后以有效利率法按摊销成本计量; * loans and advances mandatorily measured at FVTPL or designated as at FVTPL * 强制按通过损益以反映公平价值计量或 (Note 2(h)(ii)); these are measured at fair value with changes recognised 指定为通过损益以反映公平价值计量的 immediately in the income statement; 贷款及垫款(附注2(h)(ii));以公平价值计量,其变动立即在收益表内确认; * loans and advances measured at FVOCI (Note 2(h)(ii)); and * 按通过其他全面收益以反映公平价值计 量的贷款及垫款(附注2(h)(ii));及 * finance lease receivables (Note 2(s)). * 融资租赁应收款项(附注2(s))。 When the Group purchases a financial asset and simultaneously enters into an 当本集团购买金融资产并同时订立协议以未 agreement to resell the asset (or a substantially similar asset) at a fixed price on a 来日期的固定价格(反向回购或股票借入)转 future date (reverse repo or stock borrowing) the arrangement is accounted for as a 售资产(或实质上相似的资产)时,该安排将loan and the underlying asset is not recognised in the Group’s financial statements. 作为贷款入账,相关资产不会在本集团财务报表中确认。 ? F-47 ?210 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) (n) Investment Securities (n) 投资证券 The “investment securities” caption in the statement of financial position includes: 财务状况表中的「投资证券」包括: * debt investment securities measured at amortised cost (Note 2(h)(ii)); these are * 按摊销成本计量的债务投资证券(附注initially measured at fair value plus incremental direct transaction costs and 2(h)(ii));这些初始按公平价值加上直接 subsequently at their amortised cost using the effective interest method; 相关交易成本计量,其后以有效利率法按摊销成本计量; * debt and equity investment securities mandatorily measured at FVTPL or * 债务和股权投资证券强制按通过损益以 designated as at FVTPL (Note 2(h)(ii)); these are measured at fair value with 反映公平价值计量或指定为通过损益以 changes recognised immediately in the income statement; 反映公平价值计量(附注2(h)(ii)),其公平价值变动立即在收益表中确认; * debt securities measured at FVOCI (Note 2(h)(ii)); and * 按通过其他全面收益以反映公平价值计 量的债务证券(附注2(h)(ii));及 * equity investment securities designated at FVOCI (Note 2(h)(ii)). * 指定为通过其他全面收益以反映公平价 值的股权投资证券(附注2(h)(ii))。 For debt securities measured at FVOCI gains and losses are recognised in other 就按通过其他全面收益以反映公平价值计量 comprehensive income except for the following which are recognised in the 的债务证券而言,收益及亏损于其他全面收income statement in the same manner as for financial assets measured at amortised 益确认,惟以下各项会于收益表内确认,与cost: 按摊销成本计量的金融资产相同: * interest revenue using the effective interest method; * 以有效利率法计算的利息收入; * ECL and reversals; and * 预期信用损失和转回;及 * foreign exchange gains and losses. * 外汇收益和损失。 When a debt security measured at FVOCI is derecognised the cumulative gain or 当按通过其他全面收益以反映公平价值计量 loss previously recognised in other comprehensive income is reclassified from equity 的债务证券被终止确认时,以前在其他全面to the income statement. 收益中确认的累计收益或亏损将从权益重新分类至收益表内。 The Group elects to present changes in the fair value of certain investments in 本集团选择在其他全面收益中列示非持有作 equity instruments that are not held for trading in other comprehensive income. The 交易用途的股份工具投资之公平价值变动。 election is made on an instrument-by-instrument basis on initial recognition and is 该选择是按个别工具于初始确认时进行,并irrevocable. 不可撤销的。 Gains and losses on such equity instruments are never reclassified to the income 此类股份工具的收益和损失不会重新分类至 statement and no impairment is recognised in the income statement. Dividends 收益表,亦不会在收益表中确认减值。股息are recognised in the income statement unless they clearly represent a recovery 在收益表内确认,但若该等股息明确显示为of part of the cost of the investment in which case they are recognised in 收回部分投资成本者,会在其他全面收益中other comprehensive income. Cumulative gains and losses recognised in other 确认。其他全面收益中确认的累计收益和损comprehensive income are transferred to retained earnings on disposal of an 失会于出售投资时转入留存溢利。 investment.? F-48 ?东亚银行有限公司 l 2022年报 211 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (o) Properties (o) 物业 (i) Bank premises are stated in the statement of financial position at cost or at (i) 行址是按成本或于1989年董事参照独 Directors’ valuation as of 1989 by reference to an independent professional 立专业评估作出的估值,减除累计折旧valuation less accumulated depreciation and accumulated impairment loss 及减值损失(附注2(r))后于财务状况表 (Note 2(r)). 中列账。 In 1989 any deficit arising from revaluation was charged to the income 于1989年,任何重估出现亏损时于收益statement to the extent that it exceeded the amount held in the bank premises 表支销的金额,只限于超过以往因重估revaluation reserve in respect of that same asset immediately prior to the 相同行址而存入行址重估储备的结余。 revaluation. Any surplus arising from revaluation was credited to the income 任何重估出现盈余时存入收益表内的金 statement to the extent that a deficit on revaluation in respect of that same 额不可超过以往因重估相同行址曾于收 asset had previously been charged to the income statement. 益表支销的重估亏损。 In preparing these financial statements advantage of the transitional provisions 在编制此等财务报表时,由于可采用香set out in paragraph 80AA of HKAS 16 “Property Plant and Equipment” issued 港会计师公会颁布的《香港会计准则》第 by the HKICPA has been taken with the effect that bank premises have not 16号「物业、厂房及设备」第80AA段所 been revalued to fair value at the end of the reporting period. 载的过渡条款,故行址并未在报告期结束日重估至公平价值。 (ii) Investment properties are properties which are held either to earn rental (ii) 投资物业是持有用作赚取租金收益或资 income for capital appreciation or for both. Investment properties are stated 本增值或二者皆是的物业。投资物业按at fair value. Investment properties are valued semi-annually by external 公平价值列账。投资物业由外来独立估independent valuation companies having an appropriate recognised 价公司每半年作估值,该公司拥有适当professional qualification and recent experience in the location and category of 认可专业资格及对估值物业的所在地和 property being valued. No allowance has been made in the valuations for any 类别有近期经验。估值并未计算任何抵charges mortgages or amounts owing on the properties nor any expenses or 押、按揭、欠款、及在出售时可能产生 taxation which may be incurred in effecting a sale. 的任何费用或税项。 Any gain or loss arising from a change in fair value is recognised in the income 因公平价值变动而产生的损益在收益表 statement. Rental income from investment property is accounted for as 内入账。投资物业租金收入按附注2(g)described in Note 2(g)(iii). (iii)所载计算。 When a bank property is transferred to investment property following a change 如附注2(o)(i)所载,当一项物业因其用in its use any differences arising at the date of transfer between the carrying 途改变而须转作投资物业时,该物业于amount of the bank property immediately prior to transfer and its fair value is 转账日前的账面值与公平价值之差额视 recognised as a revaluation of bank premises as described in Note 2(o)(i). 作行址重估。 If an investment property becomes owner-occupied it is reclassified as bank 如一投资物业转为自用,该物业须重新premises and its fair value at the date of reclassification becomes its cost for 分类为行址。于重新分类日的公平价值subsequent accounting purposes. 视作日后作会计用途的成本值。 A property interest under a lease is classified and accounted for as an 本集团以租赁方式持有用作租金收入或 investment property when the Group holds it to earn rentals or for capital 资本增值或二者皆是的物业权益分类为 appreciation or both. Any such property interest under a lease classified as an 投资物业。此等以租赁方式持有的物业investment property is carried at fair value. Lease payments are accounted for as 权益按公平价值列账。租金支出按附注described in Note 2(s). 2(s)所载入账。 (iii) Profit or loss on disposal of bank premises and investment properties is (iii) 出售行址及投资物业的损益是以出售所 determined as the difference between the net sales proceeds and the carrying 得款项净额与资产账面值的差价计算,amount of the asset and is recognised in the income statement upon disposal. 并在出售时于收益表内入账。任何有关Any surplus that is included in the bank premises revaluation reserve related to 之重估行址盈余于出售时从行址重估储 the bank premises disposed is transferred to the general reserve. 备拨入一般储备内。 ? F-49 ?212 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) (p) Amortisation and Depreciation (p) 摊销及折旧 (i) Bank premises (i) 行址 Freehold land is not amortised. Leasehold land held for own use under an 永久业权之土地不予摊销。用作经营租operating lease the fair value of which cannot be measured separately from 赁的租赁土地,而其公平价值是不能够the fair value of a building situated thereon at the inception of the lease is 与租赁于初始时已存在之建筑物的公平 accounted for as being held under a finance lease. Leasehold land is amortised 价值分开计量,则当作持有融资租赁入on a straight line basis over the remaining term of the lease. Buildings are 账。租赁土地以直线法按租赁剩余年期depreciated on a straight line basis at rates calculated to write off the cost 摊销。建筑物的成本或估值以直线法按or valuation of each building over its estimated useful life of 50 years or the 其预计使用年限50年或其座落土地剩余 remaining lease period of the land on which it is situated whichever is the 租赁期两者中的较短期限计算折旧。 shorter.Investment properties are not depreciated. 投资物业是不予折旧。 (ii) Other fixed assets (ii) 其他固定资产 Other fixed assets are stated in the statement of financial position at cost less 其他固定资产是按成本减累计折旧及减 accumulated depreciation and impairment losses which is calculated on a 值损失于财务状况表中列账。该等资产straight line basis to write off the assets over their estimated useful lives from 4 是以直线法按照由4年至20年的预计使 to 20 years. 用年期计算折旧。 (q) Goodwill (q) 商誉 Goodwill represents the excess of 商誉指 (i) the aggregate of the fair value of the consideration transferred the amount of (i) 对价转让的公平价值、任何被购入者的 any non-controlling interests in the acquiree and the fair value of the Group‘s 非控股权益金额及以往本集团曾经持有 previously held equity interest in the acquiree; over 该被购入者的股东权益公平价值的总和;超出 (ii) the Group’s interest in the net fair value of the acquiree’s identifiable assets and (ii) 本集团在收购日计量应占该被购入者之 liabilities measured as at the acquisition date. 可辨识资产及负债的公平价值净额。 When (ii) is greater than (i) then this excess is recognised immediately in profit or 当 (ii)是大于 (i)时,此超出金额立即在损益账loss as a gain on a bargain purchase. 确认为一项议价收购的盈利。 Goodwill is stated at cost less any accumulated impairment losses. Goodwill arising 商誉按成本减除累计减值损失列账。因商业on a business combination is allocated to each cash-generating unit or groups 合并而产生的商誉被分配予每一现金生产 of cash-generating units that is expected to benefit from the synergies of the 单位,或一组合之现金生产单位,而预计该combination and is tested annually for impairment (Note 2(r)). 现金生产单位是可从商业合并中获得协同效应,以及须每年接受减值测试(附注2(r))。 On disposal of a cash-generating unit any attributable amount of purchased 当出售单一现金生产单位时,计算出售溢利goodwill is included in the calculation of the profit and loss on disposal. 包括任何可归属购入商誉的金额。 Expenditure on internally generated goodwill and brands is recognised as an 由内部产生之商誉及品牌的开支按在发生期 expense in the period in which it is incurred. 间内确认为支出。 ? F-50 ?东亚银行有限公司 l 2022年报 213 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (r) Impairment of Non-Financial Assets (r) 非金融资产减值 Internal and external sources of information are reviewed at each end of the 在报告期结束日,须检讨对内及对外资料来reporting period to identify indications that any non-financial assets may be 源以辨识任何非金融资产是否有减值征兆 impaired or except in the case of goodwill an impairment loss previously 或,除商誉外,以往已确认之减值损失是否recognised no longer exists or may have decreased. 仍然存在或可能已经减少。 If any such indication exists the asset’s recoverable amount is estimated. In addition 如任何该等征兆存在,须估计该资产的可收for goodwill the recoverable amount is estimated annually whether or not there is 回金额。此外,商誉须每年估计可收回金额any indication of impairment. 以确定是否有减值征兆。 Calculation of recoverable amount 可收回金额之计算 The recoverable amount of an asset is the greater of its fair value less costs to sell 可收回金额是公平价值减出售成本及使用值 and its value in use. In assessing value in use the estimated future cash flows are 二者中之较高者。在评估使用值时,会采用discounted to their present value using a pre-tax discount rate that reflects current 一项当时市场评估的时间值及相对于该资产 market assessments of time value of money and the risks specific to the asset. 的风险的税前折扣率将估计未来现金流量折 Where an asset does not generate cash inflows largely independent of those from 实为现在价值。当某资产未能大部分地独立other assets the recoverable amount is determined for the smallest group of assets 于其他资产产生现金流量,其可收回金额取that generates cash inflows independently (i.e. a cash-generating unit). 决于可独立地产生现金流量的最小资产组合(即单一现金生产单位)。 Recognition of impairment losses 减值损失之确认 An impairment loss is recognised in the income statement whenever the carrying 当资产的账面值或其所属的现金生产单位超 amount of an asset or the cash-generating unit to which it belongs exceeds its 过可收回金额时,须于收益表内确认减值损recoverable amount. Impairment losses recognised in respect of cash-generating 失。有关确认现金生产单位减值损失时,首units are allocated first to reduce the carrying amount of any goodwill allocated to 先减低分配予现金生产单位(或其单位群组)the cash-generating unit (or group of units) and then to reduce the carrying amount 之账面值,其后再按比例减低在该单位(或其of the other assets in the unit (or group of units) on a pro rata basis except that the 单位群组)其他资产的账面值,但该资产的carrying value of an asset will not be reduced below its individual fair value less costs 账面值不可低过其个别公平价值减出售成本 to sell if measurable or value in use if determinable. (如可计量的话)或使用值(如可确定的话)。 Reversals of impairment losses 减值损失之转回 In respect of assets other than goodwill an impairment loss is reversed if there 除商誉外的有关资产,如在用来厘定可收回has been a favourable change in the estimates used to determine the recoverable 金额的估计发生有利的变化,则减值损失会amount. An impairment loss in respect of goodwill is not reversed. 被转回。商誉的减值损失不可转回。 A reversal of impairment losses is limited to the asset’s carrying amount that would 减值损失转回只局限至该资产的账面值,犹have been determined had no impairment loss been recognised in prior years. 如该等减值损失从未在往年被确认。 Reversals of impairment losses are credited to the income statement in the year in 减值损失转回在该被确认的年度计入收益表 which the reversals are recognised. 内。 ? F-51 ?214 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) (s) Leases (s) 租赁 At inception of a contract the Group assesses whether a contract is or contains a 本集团于订立合约时会评估有关合约是否属 lease. A contract is or contains a lease if the contract conveys the right to control 于租赁或包含租赁。倘某项合约为换取代价the use of an identified asset for a period of time in exchange for consideration. To 而给予在某段时间内对可识别资产使用的控 assess whether a contract conveys the right to control the use of an identified asset 制权,则该合约属于租赁或包含租赁。为评the Group assesses whether: 估合约会否给予对可识别资产使用的控制权,本集团会评估: – the contract involves the use of an identified asset; - 该合约是否涉及使用可识别资产; – the Group has the right to obtain substantially all of the economic benefits from - 本集团是否有权于整段使用期间从使用 use of the asset throughout the period of use; and 资产获得绝大部分的经济利益;及 – the Group has the right to direct the use of the asset. The Group has this right - 本集团是否有权指示使用资产。当本集when it has the decision-making rights that are most relevant to directing how 团拥有与指示如何及为何使用资产最为 and for what purpose the asset is used. In cases where the decision about how 相关的决策权时,本集团便拥有此项权and for what purpose the asset is used is predetermined the Group has the 利。倘本集团需要预先决定如何及为何right to direct the use of the asset if either: 使用资产,本集团便可在出现以下其中一种情况时有权指示使用资产: – the Group has the right to operate the asset; or - 本集团有权经营该资产;或 – the Group designed the asset in a way that predetermines how and for - 本集团以预先决定将会如何及为何 what purpose it will be used. 使用资产的方式设计资产。 This policy is applied to contracts entered into or changed on or after 1st January 此项政策适用于2019年1月1日或之后订立 2019.或改变的合约。 At inception or on reassessment of a contract that contains a lease component the 本集团会在订立或重新评估包含租赁部分的 Group allocates the consideration in the contract to each lease component on the 合约时,根据各租赁部分的相对单独价格,basis of their relative stand-alone prices. 将合约代价分配予各该等部分。 (i) As a lessee (i) 作为承租人 The Group recognises a right-of-use asset and a lease liability at the lease 本集团于租赁生效日期确认使用权资产 commencement date. The right-of-use asset is initially measured at cost 及租赁负债。使用权资产初步按成本计which comprises the initial amount of the lease liability adjusted for any lease 量,其包括租赁负债的初始金额加上任payments made at or before the commencement date plus any initial direct 何于生效日期或之前已付之租赁款项,costs incurred. Where applicable the cost of right-of-use assets also includes 及任何已付之初始直接成本。如适用,an estimate of costs to dismantle and remove the underlying asset or to restore 使用权资产的成本亦包括拆卸及移除相 the underlying asset or the site on which it is located less any lease incentives 关资产或还原相关资产或其所在的估计 received. 成本之折让现值,并减去任何已收之租赁激励款项。 The right-of-use asset is subsequently measured at cost less any accumulated 使用权资产其后按成本减任何累计折旧 depreciation and impairment losses (Note 2(r)) and adjusted for certain 及减值损失计量(附注2(r)),并调整若remeasurements of the lease liability. When a right-of-use asset meets 干重新计量的租赁负债。倘使用权资产the definition of investment property it is initially measured at cost and 符合投资物业的定义,根据附注2(o)(ii)subsequently at fair value in accordance with the accounting policy set out in 本集团之会计政策,该使用权初始按成Note 2(o)(ii). 本计量,其后按公平价值计量。 ? F-52 ?东亚银行有限公司 l 2022年报 215 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The lease liability is initially measured at the present value of the lease payments 租赁负债初始按照生效日期尚未支付的 that are not paid at the commencement date discounted using the interest 租赁款项之现值计量,并采用租约隐含rate implicit in the lease or if that rate cannot be readily determined the 的利率或(倘该利率无法轻易厘定)本集 Group’s incremental borrowing rate. Generally the Group uses its incremental 团的增量借款率。本集团一般以其增量borrowing rate as the discount rate. 借款利率用作贴现率。 The lease liability is subsequently increased by the interest cost on the lease 租赁负债其后因租赁负债的利息成本而 liability and decreased by lease payment made. Lease payments included in the 增加,并因所付租赁款项而减少。计量measurement of the lease liability comprises the following: 租赁负债时计入的租赁项包括以下项目: – fixed payments including in-substance fixed payments; - 固定款项,包括实质固定款项; – variable lease payments that depend on an index or a rate initially - 基于指数或利率而定且初步采用截 measured using the index or rate as at the commencement date; 至生效日期的指数或利率计量的可变租赁款项; – amounts expected to be payable under a residual value guarantee; and - 根据剩余价值担保预计应付的款项; 及 – the exercise price under a purchase option that the Group is reasonably - 本集团所合理肯定行使的购买选择 certain to exercise lease payments in an optional renewal period if the 权行使价、可选续租年期的租赁款Group is reasonably certain to exercise an extension option and penalties 项(倘本集团合理肯定行使延长选for early termination of a lease unless the Group is reasonably certain not to 择权)以及提早终止租赁的罚款(除terminate early. 非本集团合理肯定不会提早终止租赁)。 The lease liability is measured at amortised cost using the effective interest 租赁负债采用有效利率方法按摊销成本 method. It is remeasured when there is a change in future lease payments 计量。当未来租赁款项因指数或利率变arising from a change in an index or rate a change in the Group’s estimate 动而有所改变,根据剩余价值担保预计of the amount expected to be payable under a residual value guarantee or 应付的款项之估计出现变动、改变有关 as appropriate changes in the Group’s assessment of whether a purchase or 会否合理肯定行使购买或延长选择权或 extension option is reasonably certain to be exercised or a termination option is 是否合理肯定不会行使终止选择权的评 reasonably certain not to be exercised. 估时,租赁负债会重新计量。 When the lease liability is remeasured in this way a corresponding adjustment is 当租赁负债重新计量时,相应调整会在made to the carrying amount of the right-of-use asset or is recorded in profit or 使用权资产之账面值上调整,或要是使loss if the carrying amount of the right-of-use asset has been reduced to zero. 用权资产的账面值巳减至零时,该金额则记入损益账内。 The lease liability is also remeasured when there is a change in the scope of a 当租赁范围或代价变更时,且该变更不lease or the consideration for a lease that is not originally provided for in the 是原租赁合同的一部分(「租赁修改」),lease contract (“lease modification”) and is not accounted for as a separate 租赁负债将重新计量,并且不构成为单lease. In this case the lease liability is remeasured based on the revised lease 独的租赁。在这情况下,租赁负债将根payments and lease term using a revised discount rate at the effective date of 据修订后的租赁款项及租期,在修改生the modification. The only exception is any rent concession which arose as a 效日使用修订后的贴现率重新计量。唯direct consequence of the COVID-19 pandemic and satisfied the conditions 一的例外是因2019冠状病毒大流行而set out in paragraph 46B of HKFRS 16 Leases. In such case the Group took 直接产生,并符合载于《香港财务报告准advantage of the practical expedient set out in paragraph 46A of HKFRS 16 and 则》第16号「租赁」第46B段之条件的任 recognised the change in consideration as if it were not a lease modification. 何租金宽免。在此情况下,本集团采用The rent concessions are recognised as a credit to variable lease expenses in 《香港财务报告准则》第16号第46A段 profit or loss. 所载之务实权宜方法,并确认该代价变动并非租赁修改。有关之租金宽免在损益表中确认为可变租赁款项的贷方。 ? F-53 ?216 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) In the situation that if a lease modification is required by interest rate benchmark 因利率基准改革所要求的租赁修改,在reform the Phase 2 amendments allow the Group to use a revised discount rate 重新计量租赁负债时,第二期修订容许that reflects the change in interest rate when remeasuring a lease liability. 使用修订后的贴现率以反映利率变动。 The Group has applied judgement to determine the lease term for some lease 本集团运用判断以厘定作为承租人若干 contracts that include renewal options in which it is a lessee. The assessment of 包括续租权之租约的租期。本集团是否whether the Group is reasonably certain to exercise such options impacts the 合理肯定行使该等选择权的评估会影响 lease terms which significantly affects the amount of lease liabilities and right- 租期,而租期则会对租赁负债及使用权of-use assets recognised. 资产的确认金额产生重大影响。 The Group presents right-of-use assets that do not meet the definition of 本集团呈列并不符合投资物业定义之使 investment property in “Fixed assets” (Note 33) and lease liabilities in “Other 用权资产于「固定资产」(附注33)中及将liabilities” (Note 37) in the statement of financial position. 租赁负债列于财务状况表内的「其他负债」(附注37)。 Short-term leases and leases of low-value assets 短期租赁及低价值资产租赁 The Group has elected not to recognise right-of-use assets and lease liabilities 本集团已选择不就若干12个月或以下之for short-term leases that have a lease term of 12 months or less (“short-term 租赁(「短期租赁」)及相关资产价值约港leases”) and leases of underlying assets with an approximate value of HK$0.04 币4万元或以下之租赁(「低价值资产租million or less (“low-value assets”). The Group recognises the lease payments 赁」)确认使用权资产及租赁负债。本集associated with these leases as an expense on a straight-line basis over the lease 团将此等租赁相关的租赁款项按租期以 term (Note 14). 直线法确认为支出(附注14)。 (ii) As a lessor (ii) 作为出租人 When the Group acts as a lessor it determines at lease inception whether each 当本集团作为出租人时,其会于租赁生lease is a finance lease or an operating lease. 效时厘定各项租赁属融资租赁或经营租赁。 To classify each lease the Group makes an overall assessment of whether the 为划分各项租赁,本集团会整体评估租lease transfers substantially all of the risks and rewards incidental to ownership 赁会否转移了相关资产拥有权所附带的 of the underlying asset. If this is the case then the lease is a finance lease; 绝大部分风险及回报。如属上述情况,if not then it is an operating lease. As part of this assessment the Group 该租赁便为融资租赁;反之则为经营租 considers certain indicators such as whether the lease is for the major part of the 赁。作为评估的一部分,本集团会考虑economic life of the asset. 若干指标,例如租赁是否占资产经济寿命的大部分。 If an arrangement contains lease and non-lease components the Group applied 倘某项安排包括租赁及非租赁部分,本HKFRS 15 to allocate the consideration in the contract. 集团便按照《香港财务报告准则》第15号分配合约代价。 The amounts due from lessees in respect of finance leases are recorded in the 有关融资租赁的应收承租人款项按净投statement of financial position as advances to customers at the amounts of net 资金额(等于融资租赁项下应收租金总investment which represent the total rentals receivable under finance leases 额减去未实现收入)以客户垫款列载于 less unearned income. Revenue arising from finance leases is recognised in 财务状况表。融资租赁所产生的收益已accordance with the Group’s revenue recognition policies as set out in Notes 根据附注2(g)(ii)及2(e)所载的本集团收 2(g)(ii) and 2(e). 入确认政策获确认。 The Group recognises lease payments received under operating leases as 本集团于租赁期内按直线基准确认经营income on a straight-line basis over the lease period as part of “other operating 租赁项下已收租赁款项为收入,以作为income” as set out in Note 2(g)(iii). 附注2(g)(iii)所载「其他经营收入」的一部分。 ? F-54 ?东亚银行有限公司 l 2022年报 217 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (t) Repossession of Assets (t) 收回资产 In the recovery of impaired loans and advances the Group may take possession of 在收回减值贷款及垫款时,本集团会通过法the collateral assets through court proceedings or voluntary delivery of possession 庭程序或借款人自愿交出拥有权收回抵押品 by the borrowers. In accordance with the Group’s accounting policy set out in Note 资产。根据本集团附注2(h)(vii)所载的会计 2(h)(vii) impairment allowances for impaired loans and advances are maintained 政策,计算减值贷款及垫款之减值准备已顾 after taking into account the net realisable value of the collateral assets usually 及抵押品资产之可变现净值,通常引致须在resulting in a partial write-off of the loans and advances against impairment 减值准备内撇销部分贷款及垫款。如大有可allowances. Repossessed assets are reported as assets held for sale under other 能本集团享有未来经济收益,其账面值须透assets if it is highly probable that the future economic benefits will flow to the 过变卖而不是持续使用该资产,及该资产可Group their carrying amount will be recovered through a sale transaction rather 在现况下出售,收回资产在其他资产的持有than through continuing use and the assets are available for sale in their present 作出售资产项下列账。有关贷款及垫款随后condition. Related loans and advances are then written off. 撇销。 Repossessed assets are recorded at the lower of the amount of the related loans 收回资产按有关贷款及垫款的金额或于转换 and advances and fair value less costs to sell at the date of exchange. They are not 日已减除出售成本后之公平价值,按两者之depreciated or amortised. 较低者入账。收回资产毋须计算折旧或摊销。 Impairment losses subsequent to initial classification are recognised in the income 紧随初始确认后的减值损失于收益表确认。 statement.(u) Income Tax (u) 所得税 (i) Income tax for the year comprises current tax and movements in deferred tax (i) 本年度所得税包括本年及递延税项资产 assets and liabilities. Current tax and movements in deferred tax assets and 和负债的变动。除该税款与其他全面收liabilities are recognised in the income statement except to the extent that 益或股东权益有关而须在其他全面收益 they relate to items recognised in other comprehensive income or directly 或股东权益确认的金额外,本年税项及in equity in which case the relevant amounts of tax are recognised in other 递延税项资产和负债的变动计入收益表 comprehensive income or directly in equity respectively. 内。 (ii) Current tax is the expected tax payable on the taxable income for the year using (ii) 本年税项为年度应课税收入按报告期结 tax rates enacted or substantively enacted at the end of the reporting period 束日已生效或基本上已生效的税率计算 and any adjustment to tax payable in respect of previous years. 的预计应付税项,并已包括以往年度的应付税项的任何调整。 (iii) Deferred tax assets and liabilities arise from deductible and taxable temporary (iii) 递延税项资产及负债是因纳税基础计算 differences respectively being the differences between the carrying amounts 的资产及负债与其账面值之间的差异而 of assets and liabilities for financial reporting purposes and their tax bases. 分别产生的可扣税及应课税的暂时性差 Deferred tax assets also arise from unused tax losses and unused tax credits. 异。递延税项资产也包括未使用的税损及税项抵免。 Apart from certain limited exceptions all deferred tax liabilities and all deferred 除了若干有限的例外情况外,所有递延tax assets to the extent that it is probable that future taxable profits will be 税项负债及未来可能有应课税溢利予以 available against which the asset can be utilised are recognised. Future taxable 抵销的递延税项资产均予确认。未来有profits that may support the recognition of deferred tax assets arising from 应课税溢利可支持由可扣税之暂时性差 deductible temporary differences include those that will arise from the reversal 异引致递延税项资产之确认,包括现存of existing taxable temporary differences provided those differences relate to 之应课税暂时性差异的转回,但该等差the same taxation authority and the same taxable entity and are expected to 异须属于同一税务机关及应课税实体,reverse either in the same period as the expected reversal of the deductible 以及预计在同期内该可扣税之暂时性差 temporary difference or in periods into which a tax loss arising from the 异转回或在若干期限内由该递延税项资 deferred tax asset can be carried back or forward. The same criteria are adopted 产产生的税损可以收回或留存。相同标when determining whether existing deductible temporary differences support 准应用在判断现时可扣税暂时性差异能 the recognition of deferred tax assets arising from unused tax losses and credits 否支持由未使用的税损或税免产生的递 that is those differences are taken into account if they relate to the same 延税项资产确认,即如果是属于同一税taxation authority and the same taxable entity and are expected to reverse in a 务机关及应课税实体,以及预计在某期period or periods in which the tax loss or credit can be utilised. 间内因该税损或税免可使用而转回时,会计入该等差异。 ? F-55 ?218 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) The limited exceptions to recognition of deferred tax assets and liabilities 在有限例外情况下,不确认递延税项资are those temporary differences arising from goodwill not deductible for 产及负债的暂时性差异包括不可扣税的 tax purposes the initial recognition of assets or liabilities that affect neither 商誉、初始时已确认不影响会计及应课accounting nor taxable profit (provided they are not part of a business 税溢利的资产或负债(须不是商业合并combination) and temporary differences relating to investments in subsidiaries 的一部分)、及有关投资附属公司的暂 to the extent that in the case of taxable differences the Group controls the 时性差异,就应课税差异而言,当本集timing of the reversal and it is probable that the differences will not reverse 团可控制该差异转回的时间而该差异在 in the foreseeable future or in the case of deductible differences unless it is 可见将来不会转回;而就可扣税差异而 probable that they will reverse in the future. 言,除非该差异在可见将来可以转回。 Where investment properties are carried at their fair value in accordance 当投资物业根据附注2(o)(ii)所载按公平 with the accounting policy set out in Note 2(o)(ii) the amount of deferred 价值列账,除非该物业是需折旧的及以tax recognised is measured using the tax rates that would apply on sale of 一商业模式持有,而其目的是要透过时those assets at their carrying value at the reporting date unless the property 间使用而并非出售该物业以获取隐含于 is depreciable and is held within a business model whose objective is to 该物业之重大经济利益,确认递延税项consume substantially all of the economic benefits embodied in the property 的金额按该物业于结算日假设以账面值 over time rather than through sale. In all other cases the amount of deferred 出售的税率计算。在其他情况下,确认递tax recognised is measured based on the expected manner of realisation or 延税项的金额是根据预期变现或偿还该 settlement of the carrying amount of the assets and liabilities using tax rates 资产及负债的账面值的方式,按在报告enacted or substantively enacted at the reporting date. Deferred tax assets and 日已生效或基本上已生效的税率计算。 liabilities are not discounted. 递延税项资产及负债不作折让。 The carrying amount of a deferred tax asset is reviewed at the end of each 于每报告期结束日,本行须重新检视有reporting period and is reduced to the extent that it is no longer probable that 关的递延税项资产的账面金额,对预期sufficient taxable profit will be available to allow the related tax benefit to be 不再有足够的应课税溢利以实现相关税 utilised. Any such reduction is reversed to the extent that it becomes probable 务利益予以扣减。可转回之金额不可超that sufficient taxable profit will be available. 过预期将来出现足够可供扣减的应课税溢利。 Additional income taxes that arise from the distribution of dividends are 由派发股息引起的额外所得税在有关股 recognised when the liability to pay the related dividends is recognised. 息的支付责任获确立时确认。 (iv) Current tax balances and deferred tax balances and movements therein are (iv) 本年税项与递延税项结余及其变动之金 presented separately from each other and are not offset. Current tax assets are 额会分别列示而不会相互抵销。本行或offset against current tax liabilities and deferred tax assets against deferred 本集团只在有合法权利对本年税项资产 tax liabilities if the Bank or the Group has the legally enforceable right to set 及负债抵销及符合以下附带条件的情况 off current tax assets against current tax liabilities and the following additional 下,才对本年及递延税项资产及负债作conditions are met: 出抵销: – in the case of current tax assets and liabilities the Bank or the Group intends - 就本年税项资产及负债而言,本行either to settle on a net basis or to realise the asset and settle the liability 或本集团计划支付净额或同时间收 simultaneously; or 回资产及偿还负债;或 ? F-56 ?东亚银行有限公司 l 2022年报 219 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) – in the case of deferred tax assets and liabilities if they relate to income taxes - 有关的递延税项资产及负债属同一 levied by the same taxation authority on either: 税务机关对以下机构征收所得税而 产生: – the same taxable entity; or - 同一个应课税实体;或 – different taxable entities which in each future period in which - 不同的应课税实体,并预计在significant amounts of deferred tax liabilities or assets are expected 未来期间会偿还或收回重大递 to be settled or recovered intend to realise the current tax assets 延税项负债或资产,该实体计and settle the current tax liabilities on a net basis or realise and settle 划以净额形式变现本年税项资 simultaneously. 产及偿还本年税项负债,或同时间变现及偿还。 (v) Insurance Reserves and Provisions for Outstanding Claims (v) 保险基金及未付索偿准备 Insurance reserves except those attributable to long term business represent the 不包括长期业务部分,保险基金指年度内收proportion of retained premiums written in the year relating to the period of risk 取但已作保留的保金部分,而有关的风险是from 1st January in the following year to the subsequent date of expiry of policies 属于下年度1月1日至保单到期日为止,该保which is carried forward as a provision for unearned premiums and calculated on a 留保金视作未赚取保费准备并按每日计算。 daily basis.The insurance reserve for long term business is ascertained by actuarial valuation 长期业务的保险基金是根据本集团之估计未 based on the Group’s estimates of future deaths investment returns and 来死亡率、投资回报及于每一估值日之行政 administration expenses at each valuation date. 费用并按精算估值。 Full provision is made for the estimated cost of claims notified but not settled at the 本集团已就在报告期结束日已通知但未偿付 end of the reporting period and for the estimated cost of claims incurred but not 以及已发生但未汇报的索偿,经扣除了分保reported by that date after deducting the amounts due from reinsurers. Provision 人欠款,作出了充足的准备。此外,已就在has also been made for the estimated cost of servicing claims notified but not settled 报告期结束日已通知但未偿付的索偿及已发 at the end of the reporting period and to meet expenses on claims incurred but not 生但未汇报索偿而引致的估计费用作出了充 reported at the end of the reporting period. 足的准备。 These reserves and provisions are classified as other accounts and provisions. 此等基金及准备分类为其他账项及准备。 (w) Provisions and Contingent Liabilities (w) 准备及或然负债 Provisions are recognised for liabilities of uncertain timing or amount when the 当负债的限期或金额不确定,但有可能因过Group or the Bank has a legal or constructive obligation arising as a result of a past 去事项构成法律或推定义务而须付出经济利 event and it is probable that an outflow of economic benefits will be required to 益以偿责任,并能对此作可靠估计,此负债settle the obligation and a reliable estimate can be made. Where the time value of 便确认为准备。当金额的时间值属重大的,money is material provisions are stated at the present value of the expenditures 准备金额须按估计清偿负债支出的现值列账。 expected to settle the obligation.Where it is not probable that an outflow of economic benefits will be required or 倘可能不需要付出经济利益,或不能对金额the amount cannot be estimated reliably the obligation is disclosed as a contingent 作可靠估计,除非付出的机会是极微,则此liability unless the probability of outflow of economic benefits is remote. Possible 项责任会视作或然负债披露。如潜在义务的obligations whose existence will only be confirmed by the occurrence or non- 存在须视乎会否发生一项或多项未来事件才 occurrence of one or more future events are also disclosed as contingent liabilities 获确定,除非付出经济利益的机会是极微,unless the probability of outflow of economic benefits is remote. 此潜在义务亦视作或然负债披露。 ? F-57 ?220 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) (x) Financial Guarantees and Loan Commitments (x) 财务担保和贷款承诺 “Financial guarantees” are contracts that require the Group to make specified 「财务担保」是指要求本集团支付特定款项以 payments to reimburse the holder for a loss that it incurs because a specified 偿还持有人因其特定债务人在债务工具条款 debtor fails to make payment when it is due in accordance with the terms of a debt 到期时未能支付而产生的损失的合同。「贷instrument. “Loan commitments” are firm commitments to provide credit under 款承诺」是在预定的条款和条件下提供信贷 pre-specified terms and conditions. 的承诺。 Financial guarantees issued or commitments to provide a loan at a below-market 已发行的财务担保或以低于市场利率的贷款 interest rate are initially measured at fair value and the initial fair value is amortised 承诺初始按公平价值计量,初始公平价值在over the life of the guarantee or the commitment. Subsequently they are measured 担保或承诺期内摊销。往后,该担保及承诺at the higher of this amortised amount and the amount of loss allowance (Note 2(h) 按该摊销金额及损失准备(附注2(h)(vii)),(vii)). 二者之较高者,计量。 For other loan commitments the Group recognises impairment loss allowances 对于其他贷款承诺,本集团确认减值损失准(Note 2(h)(vii)). 备(附注2(h)(vii))。 Liabilities arising from financial guarantees and loan commitments are included 财务担保和贷款承诺产生的负债包含在其他 within other liabilities. 负债中。 (y) Employee Benefits (y) 雇员福利 (i) Salaries bonuses and leave benefits (i) 薪酬、花红及假期福利 Employee entitlements to salaries annual bonuses paid annual leave leave 雇员应享有的薪酬、年终花红、有薪年 passage and the cost to the Group of non-monetary benefits are recognised 假、旅行假期及其他同种类之非金钱性 when they accrue to employees. An accrual is made for the estimated liability for 质福利于确立时确认。至报告期结束日annual leave as a result of services rendered by employees up to the end of the 已拨备因雇员提供服务所享有之年假的 reporting period. 估计负债。 Employee entitlements to sick leave and maternity leave are recognised when 雇员应享有的病假及分娩假于发生时确 the absences occur. 认。 (ii) Performance-related bonus plan (ii) 表现奖励花红计划 Liabilities for performance-related bonus plan which are due wholly within 因雇员提供服务而本集团有现存法律或 twelve months after the end of the reporting period are recognised when 推定义务于报告期结束日后12个月内须 the Group has a present legal or constructive obligation as a result of services 全数支付表现奖励花红计划的负债,对rendered by employees and a reliable estimate of the obligation can be made. 此并能作可靠估计,便须予以确认为负债。 (iii) Retirement benefits (iii) 退休福利 Retirement benefits are provided to eligible staff of the Group. Hong Kong 本集团为其合资格的员工提供退休福 employees enjoy retirement benefits under either the Mandatory Provident 利。香港员工可获得强积金豁免的职业Fund Exempted ORSO Scheme (“MPFEOS”) or the Mandatory Provident Fund 退休计划或强制性公积金计划的保障。 Scheme (“MPFS”). Both are defined contribution schemes. The employer’s 此两个计划同时是定额供款计划。雇主monthly contributions to both schemes are at a maximum of 10% of each 对两项计划的每月供款,上限是每位雇employee’s monthly salary. 员月薪的10%。 The pension schemes covering all the Group’s PRC and overseas employees are 本集团为所有国内及海外员工而设的退 defined contribution schemes at various funding rates and are in accordance 休计划是定额供款计划,供款率按当地with local practices and regulations. 惯例及规定而制定。 ? F-58 ?东亚银行有限公司 l 2022年报 221 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The cost of all these schemes is charged to the income statement for the period 上述所有计划的成本在相关期间的收益 concerned and the assets of all these schemes are held separately from those 表内支销,而所有此类计划的资产均与of the Group. Under the MPFEOS the employer’s contribution is not reduced 本集团的资产分开处理。在强积金豁免by contributions forfeited by those employees who leave the scheme prior to 的退休保障计划中,雇主的供款不会因vesting fully in the contributions. Under the MPFS the employer’s contribution 某些雇员于未完全享有雇主的供款前离 is reduced by contributions forfeited by those employees who leave the scheme 开计划被没收的供款而减少。而强制性prior to vesting fully in the contributions. 公积金计划方面,雇主的供款则会因某些雇员于未完全享有雇主的供款前离开计划被没收的供款而减少。 (iv) Share based payments (iv) 以股份为基础作支付 The Bank adopted equity-settled share based payment arrangement under Staff 据雇员认股计划,本行采纳按股权结算Share Option Schemes to grant the options to eligible employees of the Group. 之股份报酬安排向本集团合资格雇员授予购股权。 The fair value of share options granted to employees is recognised as an 授予雇员之认股权的公平价值于收益表 expense in the income statement with a corresponding increase in a capital 内确认为支出,而在股东权益账内的资reserve within equity. The fair value is measured at the grant date using the 本储备作相应的增加。公平价值乃采用trinomial model taking into account the terms and conditions upon which the 三项式期权定价模式,按认股权授予日options were granted. Where the employees have to meet vesting conditions 计算,并顾及授予认股权的条款。当雇before becoming unconditionally entitled to those share options the total 员须符合归属期条件才可无条件享有该 estimated fair value of the share options is spread over the vesting period 等认股权,估计公平价值总额在归属期taking into account the probability that the options will vest. 内摊分入账,并已考虑认股权归属的或然率。 During the vesting period the number of share options that is expected to vest 估计可归属认股权的数目须在归属期内 is reviewed. Any resulting adjustment to the cumulative fair value recognised in 作出检讨。除非原本支出符合资产确认prior years is charged or credited to the income statement for the year of the 之要求,任何已在往年确认的累积公平review unless the original expenses qualify for recognition as an asset with a 价值之所需调整须在检讨期内的收益 corresponding adjustment to the capital reserve. On vesting date the amount 表支销或回拨,并在资本储备作相应调recognised as an expense is adjusted to reflect the actual number of share 整。在归属日,除非因未能符合归属条options that vest (with a corresponding adjustment to capital reserve) except 件引致权利丧失纯粹与本行股份的市价 where forfeiture is only due to not achieving vesting conditions that relate to the 有关,确认为支出之金额按归属认股权market price of the Bank’s shares. 的实际数目作调整(并在资本储备作相应调整)。 The equity amount is recognised in capital reserve until either the option is 属股东权益金额确认在资本储备内,直exercised and new shares allotted (when it is transferred to share capital) or 至当认股权被行使及分配新股时(转入the option expires (when it is released directly to retained profits). For Grantees 股本),或当认股权之有效期届满时(转who do not meet the applicable vesting conditions the unvested options are 入留存溢利)。对于未能符合适用的归forfeited either in whole or in part. Forfeited share options are cancelled. When 属条件的承授人,其未归属的认股权会the options are exercised equity is increased by the amount of the proceeds 全部或部分被撤销。被撤销的认股权会received. 被注销。当认股权被行使时,所得款项计入股东权益。 ? F-59 ?222 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) (z) Related Parties (z) 关联人士 For the purposes of these financial statements a party is considered to be related to 在编制本财务报表时,与本集团关联人士是the Group if: 指: (i) A person or a close member of that person’s family is related to the Group if (i) 个人或该个人之近亲家庭成员,如该个that person: 人在以下情况下视为与本集团有关联: (a) has control or joint control over the Group; (a) 可控制或共同控制本集团; (b) has significant influence over the Group; or (b) 对本集团有重大影响力;或 (c) is a member of the key management personnel of the Group or the Group’s (c) 是本集团或本集团之母公司的主要 parent. 管理人员之成员。 (ii) An entity is related to the Group if any of the following conditions applies: (ii) 在以下任何情况下一实体会视为与本集 团有关联: (a) The entity and the Group are members of the same group (which means (a) 该实体及本集团皆是同一集团成员that each parent subsidiary and fellow subsidiary is related to the others). (即每一间母公司、附属公司及同系附属公司与其他有关联)。 (b) One entity is an associate or joint venture of the other entity (or an associate (b) 一实体是另一实体的联营公司或合or joint venture of a member of a group of which the other entity is a 营公司(或该联营公司或合营公司与member). 该另一实体均属同一集团)。 (c) Both entities are joint ventures of the same third party. (c) 两个实体是同一第三者的合营公司。 (d) One entity is a joint venture of a third entity and the other entity is an (d) 一实体是一第三者的合营公司而另 associate of the third entity. 一实体则是该第三者的联营公司。 (e) The entity is a post-employment benefit plan for the benefit of employees (e) 该实体是提供福利予本集团或与本 of either the Group or an entity related to the Group. 集团有关联之实体的雇员离职后之福利计划。 (f) The entity is controlled or jointly controlled by a person identified in (i). (f) 该实体受在 (i)项中所辨识的个人所控制或共同控制。 (g) A person identified in (i)(a) has significant influence over the entity or is a (g) 在 (i)(a)项中所辨识的个人而该个人 member of the key management personnel of the entity (or of a parent of 对该实体有重大影响力,或该个人the entity). 是该实体(或是该实体的母公司)的主要管理人员之成员。 (h) The entity or any member of a group of which it is a part provides key (h) 该实体或是其集团中一部分之任何 management personnel services to the Group or to the Group’s parent. 成员,而提供主要管理人员服务予本集团或本集团之母公司。 Close members of the family of a person are those family members who may be 个人的近亲家庭成员指可影响,或受该个人expected to influence or be influenced by that person in their dealings with the 影响,他们与该实体交易的家庭成员。 entity.? F-60 ?东亚银行有限公司 l 2022年报 223 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (aa) Segment Reporting (aa) 分部报告 Operating segments and the amounts of each segment item reported in the 经营分部,及在财务报表列报的每一分部项financial statements are identified from the financial information provided regularly 目金额,是从财务资料中辨识出来的,并定to the Group’s most senior executive management for the purposes of allocating 期地提供予本集团的最高行政管理层作为资 resources to and assessing the performance of the Group’s various lines of business 源分配,以及评核本集团各项业务和区域所and geographical locations. 在地的表现。 Individually material operating segments are not aggregated for financial reporting 除非分部有相同经济特性及在产品和服务之 purposes unless the segments have similar economic characteristics and are 性质、生产程序之性质、客户类别和等级、 similar in respect of the nature of products and services the nature of production 用作销售产品和提供服务之方法、及监管环 processes the type or class of customers the methods used to distribute the 境之性质是相同的,个别重大的营运分部不products or provide the services and the nature of the regulatory environment. 会在财务报表内合计。如它们拥有以上大部Operating segments which are not individually material may be aggregated if they 份的标准,并非个别重大的营运分部可能会share a majority of these criteria. 被合计。 (ab) Cash and Cash Equivalents (ab) 现金及等同现金项目 For the purposes of the cash flow statement cash and cash equivalents comprise 就编制现金流量表而言,现金及等同现金项balances with less than three months’ maturity from the date of acquisition 目包括由购入日起少于3个月到期日的结余,including cash and balances with banks treasury bills other eligible bills and 包括现金及在银行结余、国库债券、及其他 certificates of deposit that are readily convertible into known amounts of cash and 受较低风险影响价值及随时可转换成预知金 which are subject to an insignificant risk of changes in value. 额的认可票据及存款证。 (ac) Deposits Debt Securities Issued and Capital Instruments (ac) 存款、已发行债务证券及资本工具 Deposits debt securities issued and capital instruments are the Group’s sources of 存款、已发行债务证券及资本工具是本集团 funding. 筹募资金的来源。 The Group classifies capital instruments as financial liabilities or equity instruments 本集团按工具合约条款的实质分类资本工具 in accordance with the substance of the contractual terms of the instruments. 为金融负债或股本工具。 The substance of a financial instrument rather than its legal form governs its 金融工具的实质而非其法律形式决定其分 classification. A financial instrument is classified as a liability where there is a 类。如有法定义务将现金或另一金融资产交contractual obligation to deliver either cash or another financial asset to the holder 付予该金融工具的持有人,则该金融工具被of that instrument regardless of the manner in which the contractual obligation will 分类为负债,该法定义务的结算方式不影响be settled. 其分类。 Subsequent to initial recognition deposits debt securities issued and capital 紧随初始确认后,本集团为存款、已发行债instruments classified as financial liabilities are measured at their amortised cost 务证券及分类为股本工具的资本工具,惟通using the effective interest method except where the Group designates liabilities at 过损益的负债除外,已按有效利率方式计算FVTPL. 摊销成本。 For those capital instruments classified as equity instruments they are not 就分类为股本工具的资本工具,该等工具是redeemable by holders and bear an entitlement to coupons at the Bank’s sole 不可赎回及视乎本行决定是否可享有利息。 discretion. Accordingly they are presented within equity. Distribution thereon are 因此,该等工具在股东权益内列账。相关分recognised in equity. 派于股东权益内确认。 ? F-61 ?224 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 主要会计政策(续) (ad) Assets Held for Sale (ad) 持有作出售资产 Non-current assets and disposal groups (including both the assets and liabilities of 当 (a)其账面值将主要需通过出售才可收回; the disposal groups) are classified as held for sale and measured at the lower of their (b)它们可以在现况下可供出售;(c)出售之 carrying amount and fair value less cost to sell when: (a) their carrying amounts will 机会率是非常高的,非流动资产及出售组别be recovered principally through sale; (b) they are available for sale in their present (包括出售组别的资产和负债)按其账面值及 condition; and (c) their sale is highly probable. 公平价值减出售成本,两者之较低者,分类为持有作出售资产。 Immediately before the initial classification as held for sale the carrying amounts of 在被初始分类为持有作出售之前,资产的账the asset (or assets and liabilities in the disposal group) are measured in accordance 面值(或出售组别的资产和负债)按适用的 with applicable HKFRSs. On subsequent remeasurement of a disposal group the 《香港财务报告准则》计算。而往后在重新计carrying amounts of the assets and liabilities that are not within the scope of the 算出售组别时,在未决定出售组别的公平价measurement requirements of HKFRS 5 “Non-current Assets Held for Sale and 值减成本前,非在《香港财务报告准则》第5Discontinued Operations” are measured in accordance with applicable HKFRSs 号「持有作出售资产的非流动资产及结束营 before the fair value less costs to sell of the disposal group is determined. 运」所覆盖的计算要求的资产和负债之账面值,按适用的《香港财务报告准则》计算。 Income earned and expenses incurred on assets and liabilities of disposal groups 出售组别的资产和负债之已赚取收入和已发 held for sale continue to be recognised in the appropriate line items in the income 生支出仍继续在收益表内之有关项目中确 statement until the transaction is complete. 认,直至交易完成。 (ae) Interim Financial Reporting and Impairment (ae) 中期财务报告及减值 Under the Listing Rules the Group is required to prepare an interim financial report 根据联交所《上市规则》,本集团须按《香港会in compliance with HKAS 34 “Interim Financial Reporting” in respect of the first six 计准则》第34号「中期财务报告」编制有关年 months of the year. At the end of the interim period the Group applies the same 度首6个月的中期财务报告。于中期期末,impairment testing recognition and reversal criteria as it would at the end of the 本集团采用等同年末的减值测试、确认、及 year (Note 2(h)(vii) and Note 2(r)). 转回标准(附注2(h)(vii)至附注2(r))。 Impairment losses recognised in an interim period in respect of goodwill are not 已确认于中期期间的商誉减值损失,均不能reversed in a subsequent period. This is the case even if no loss or a smaller loss 在较后期间转回。就算假如该减值只在与该would have been recognised had the impairment been assessed only at the end of 中期期间有关之年底作评估而该减值损失是 the financial year to which the interim period relates. 不会发生、或损失之金额会较小,在此情况下亦不可转回。 3. CHANGES IN ACCOUNTING POLICIES 会计政策之变动The HKICPA has issued a number of amendments to HKFRSs that are first effective 香港会计师公会已颁布数项《香港财务报告for the current accounting period of the Group. 准则》的修订,并于本年度本集团的会计期首次生效。 None of these developments have had a material effect on the Group’s results and 以上修订对已编制或已呈报本集团本年度或 financial position for the current or prior periods have been prepared or presented. 往期之业绩及财务状况并无重大影响。本集The Group has not applied any new standard or interpretation that is not yet 团并未采纳任何于本年会计期尚未生效的新 effective for the current accounting period. 准则或诠释。 ? F-62 ?东亚银行有限公司 l 2022年报 225 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 4. BANK-LEVEL STATEMENT OF FINANCIAL POSITION 银行层面之财务状况表 20222021 Note附注 HK$ Mn 港币百万元 HK$ Mn 港币百万元 ASSETS 资产 Cash and balances with banks 现金及在银行的结存 25498 25555 Placements with and advances to banks 在银行的存款及垫款 48296 63177 Trade bills 贸易票据 41 439 Trading assets 交易用途资产 355 851 Derivative assets 衍生工具资产 9733 1635 Loans and advances to customers 客户贷款及垫款 397533 395919 Investment securities 投资证券 125620 124628 Amounts due from subsidiaries 附属公司欠款 14145 12077 Investments in subsidiaries 附属公司投资 19469 19497 Investments in associates and joint ventures 联营公司及合资企业投资 4466 4344 Fixed assets 固定资产 9493 9902 – Investment properties -投资物业 4774 5034 – Other properties and equipment -其他物业及设备 4293 4264 – Right-of-use assets -使用权资产 426 604 Goodwill and intangible assets 商誉及无形资产 1460 1460 Deferred tax assets 递延税项资产 197 152 Other assets 其他资产 9529 10273 – Assets held for sale -持有作出售资产 15 701 – Others -其他 9514 9572 Total Assets 资产总额 665835 669909 EQUITY AND LIABILITIES 股东权益及负债 Deposits and balances of banks 银行的存款及结余 24031 29819 – Designated at fair value through -指定为通过损益以反映 profit or loss 公平价值 4545 3639 – At amortised cost -摊销成本 19486 26180 Deposits from customers 客户存款 483553 463329 Trading liabilities 交易用途负债 5 5 Derivative liabilities 衍生工具负债 2816 3411 Certificates of deposit issued 已发行存款证 27018 52381 – Designated at fair value through -指定为通过损益以反映 profit or loss 公平价值 19001 32618 – At amortised cost -摊销成本 8017 19763 Amounts due to subsidiaries 欠附属公司款项 1777 2012 Current taxation 本年税项 1255 934 Debt securities issued 已发行债务证券 2892 2789 – Designated at fair value through -指定为通过损益以反映 profit or loss 公平价值 811 620 – At amortised cost -摊销成本 2081 2169 Deferred tax liabilities 递延税项负债 185 526 Other liabilities 其他负债 18299 8776 Loan capital – at amortised cost 借贷资本-摊销成本 10232 4655 Total Liabilities 负债总额 572063 568637 Share capital 股本 41856 41645 Reserves 储备 42 41826 45659 Total equity attributable to owners of the Bank 归属于本行股东权益总额 83682 87304 Additional equity instruments 额外股本工具 10090 13968 93772101272 Total Equity and Liabilities 股东权益及负债总额 665835 669909 Approved and authorised for issue by the Board on 16th February 2023. 董事会于2023年2月16日核准及授权发布。 Executive Chairman David LI Kwok-po 执行主席 李国宝 Co-Chief Executives Adrian David LI Man-kiu 联席行政总裁 李民桥 Brian David LI Man-bun 李民斌 Director Meocre LI Kwok-wing 董事 李国荣 ? F-63 ?226 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 5. INTEREST INCOME 利息收入 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Loans placements with banks and trade bills 贷款、在银行的存款、及贸易票据 20624 15595 Investment securities 投资证券 -按摊销成本或通过其他全面收益 – measured at amortised cost or FVOCI 以反映公平价值 4076 2305 – mandatory at FVTPL -强制按通过损益以反映公平价值 120 110 Trading assets 交易用途资产 28 45 2484818055 For the transactions where interest rate risk is hedged the periodic payments 就已对冲利率风险的交易,赚取利息金融资and receipts arising from interest rate contracts which are qualifying hedging 产的合格对冲工具或可个别地与赚取利息金 instruments for or individually managed in conjunction with interest bearing 融资产共同管理的利率合约所产生的定期支 financial assets are first netted together and then combined with the interest income 出及收入首先抵销,净额与其相关金融资产from the corresponding financial assets. 产生的利息收入合并。 The above included interest income of HK$24871 million (2021: HK$19123 在不包括对冲影响前,来自非按公平价值确million) before hedging effect for financial assets that are not recognised at fair 认损益的金融资产之利息收入为港币248.71 value through profit or loss. 亿元(2021年:港币191.23亿元)。 6. INTEREST EXPENSE 利息支出 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Customer deposits and deposits of banks 客户存款及银行的存款 – at amortised cost -按摊销成本 9713 5655 – designated at FVTPL -指定为通过损益以反映公平价值 84 9 Certificates of deposit and debt securities issued 已发行存款证及债务证券 – at amortised cost -按摊销成本 511 617 – designated at FVTPL -指定为通过损益以反映公平价值 485 181 Subordinated notes carried at amortised cost 按摊销成本列账的后偿票据 460 377 Lease liabilities 租赁负债 28 29 Other borrowings 其他借款 59 2 113406870 For the transactions where interest rate risk is hedged the periodic payments 就已对冲利率风险的交易,带息金融负债的and receipts arising from interest rate contracts which are qualifying hedging 合格对冲工具或可个别地与带息金融负债共 instruments for or individually managed in conjunction with interest bearing 同管理的利率合约所产生的定期支出及收入 financial liabilities are first netted together and then combined with the interest 首先抵销,净额与其相关金融负债产生的利expense from the corresponding financial liabilities. 息支出合并。 The above included interest expense of HK$10782 million (2021: HK$6719 在不包括对冲影响前,来自非按公平价值确million) before hedging effect for financial liabilities that are not recognised at fair 认损益的金融负债之利息支出为港币107.82 value through profit or loss. 亿元(2021年:港币67.19亿元)。 ? F-64 ?东亚银行有限公司 l 2022年报 227 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 7. FEE AND COMMISSION INCOME 服务费及佣金收入 Fee and commission income is disaggregated by services: 服务费及佣金收入按服务分类如下 : 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Loans overdrafts and guarantees 贷款、透支及担保 846 947 Credit cards 信用卡 692 801 Sale of third party insurance policies 销售第三者发行的保单 484 296 Trust and other fiduciary activities 信托及其他代理业务 224 305 Securities brokerage 证券经纪 203 403 Other retail banking services 其他零售银行服务 197 176 Investment products 投资产品 195 409 Trade finance 贸易融资 92 90 Others 其他 439 489 Total fee and commission income 服务费及佣金收入总额 3372 3916 Net fee income on financial assets and 由非通过损益以反映公平价值列账之 financial liabilities that are not measured at FVTPL 金融资产或负债所产生之净服务费(other than those included in determining the 收入(不包括用作计算有效利率effective interest rate) 之金额) 2762 3082 Fee income 服务费收入 3372 3916 Fee expenses 服务费支出 (610) (834) 8. NET TRADING PROFIT 交易溢利净额 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Profit on dealing in foreign currencies and funding swaps 外币买卖及外汇掉期溢利 501 436 Loss on trading securities 交易用途证券亏损 (124) (52) Net gain on derivatives 衍生工具净盈利 549 475 Loss on other dealing activities 其他交易业务亏损 (1) (2) Dividend income from trading equity securities 交易用途股份证券的股息收入 18 22 943879 ? F-65 ?228 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 9. NET RESULT ON FINANCIAL INSTRUMENTS AT FVTPL 通过损益以反映公平价值金融工具的净表现 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Net gain from financial instruments designated at 指定为通过损益以反映公平价值金融 FVTPL 工具的净盈利 292 89 Net (loss)/gain from financial instruments mandatorily 强制按通过损益以反映公平价值计量 measured at FVTPL (other than those included in 金融工具的净(亏损)╱盈利(除已net trading profit) 包括在交易溢利净额内) (360) 145 (68)234 10. NET RESULT ON FINANCIAL ASSETS MEASURED AT FVOCI 通过全面收益以反映公平价值金融资产的净表现 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Net profit on sale of debt securities 出售债务证券之净溢利 159 23 Dividend income from equity securities 股份证券股息收入 16 22 17545 11. NET HEDGING PROFIT 对冲溢利净额 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Fair value hedges 公平价值对冲 – Net loss on hedged items attributable to the -可归属于被对冲项目之对冲风险 hedged risk 产生的净亏损 (8541) (2941) – Net gain on hedging instruments -用作对冲工具的净盈利 8742 3085 201144 ? F-66 ?东亚银行有限公司 l 2022年报 229 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 12. NET INSURANCE PROFIT 保险业务净溢利 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 (a) Net insurance profit (a) 保险业务净溢利 Net interest income 净利息收入 18 482 Net trading profit 交易溢利净额 5 77通过损益以反映公平价值金融 Net result on financial instruments at FVTPL 工具的净表现 (12) 150出售通过其他全面收益以反映 Net (loss)/profit on sale of debt investment 公平价值债务投资证券的净 securities measured at FVOCI (亏损)╱溢利 (17) 72 Net insurance premium (b) 净保费 (b) 683 4824 Other operating income 其他经营收入 – 3 6775608 Net insurance claims and expenses (c) 保险索偿及支出净额 (c) (520) (5168) 157440 Operating expenses 经营支出 – (3) Recovery/(impairment losses) on financial instruments 金融工具减值回拨╱(损失) 1 (26) 158411 (b) Net insurance premium (b) 净保费 Gross insurance premium income 保费收入总额 722 4894 Reinsurers’ share of gross insurance premium income 保费收入总额之分保份额 (39) (70) 6834824 (c) Net insurance claims and expenses (c) 保险索偿及支出净额 Claims benefits and surrenders paid 已付索偿、利益及退保 585 3902 Movement in provisions 准备金变动 (128) 1193 4575095 Reinsurers’ share of claim benefits and 已付索偿、利益及退保之 surrenders paid 分保份额 (28) (36) Reinsurers’ share of movement in provisions 准备金变动之分保份额 12 (9) (16)(45) 4415050 Net insurance commission expenses 保险佣金支出净额 79 118 5205168 ? F-67 ?230 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 13. OTHER OPERATING INCOME 其他经营收入 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Rental from safe deposit boxes 保险箱租金收入 120 122 Rental income on properties (Note 33(ii)) 物业租金收入(附注33(ii)) 133 143 Government subsidy – Employment Support Scheme 政府补贴-「保就业」计划 8 – Others 其他 29 65 290330 14. OPERATING EXPENSES 经营支出 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Contributions to defined contribution plan* 定额供款公积金供款* – Hong Kong -香港 170 170 – Outside Hong Kong -香港以外 223 229 Equity settled share-based payment expenses 以股份为基础作支付的费用 (Note 42(f)) (附注42(f)) 22 19 Salaries and other staff costs 薪金及其他员工成本 5078 5105 Total staff costs 员工成本总额 5493 5523 Premises and equipment expenses excluding depreciation 不包括折旧的物业及设备支出 – Expenses relating to short-term leases -有关短期租赁支出 15 20 – Expenses relating to low value assets -有关低价值资产租赁支出 6 1 – Variable lease payments not included in the -不包括计量租赁负债的 measurement of lease liabilities** 可变租赁款项** (2) (4) – Maintenance repairs and others -保养、维修及其他 702 669 Total premises and equipment expenses excluding depreciation 不包括折旧的物业及设备支出总额 721 686 Depreciation on (Note 33) 折旧(附注33) – Bank premises furniture fixtures and equipment -行址、傢俬、装修及设备 567 581 – Right-of-use assets -使用权资产 295 374 862955 Amortisation of intangible assets (Note 32(b)) 无形资产摊销(附注32(b)) 13 14 ? F-68 ?东亚银行有限公司 l 2022年报 231 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Other operating expenses 其他经营支出 – Internet platform charges -互联网平台费用 460 482 – Legal and professional fees -法律及专业服务费 423 399 – Advertising expenses -广告费 298 224 – Communications stationery and printing -通讯、文具及印刷 294 274 – Insurance expenses -保险费 141 111 – St amp duty withholding taxes and value added taxes -印花税、预提税及增值税 84 72 – Card related expenses -有关信用卡支出 74 119 – Business promotions and business travel -业务推广及商务旅游 69 66 – Audit fee -核数师酬金 20 21 – Others -其他 272 375 Total other operating expenses 其他经营支出总额 2135 2143 Total operating expenses*** 经营支出总额*** 9224 9321* Forfeited contributions totalling HK$36 million (2021: HK$35 million) were utilised to * 年度内没收之供款共港币3600万元(2021reduce the Group’s contribution during the year. There were no forfeited contributions 年:港币3500万元)已被用作减少本集团的 available for reducing future contributions at the year end (2021: Nil). 供款。于年末并无任何被没收而可用作减低将来之供款(2021年:无)。 ** Included a credit of HK$2 million (2021: HK$5 million) of COVID-19-related rent ** 包括年度内港币200万元(2021年:港币concessions and a credit of HK$1 million (2021: Nil) of rent concession during the year for 500万元)的2019冠状病毒病相关租金宽免 the purpose of entering into a new lease. 及港币100万元(2021年:无)的订立新租赁的租金宽免。 *** Included direct operating expenses of HK$7 million (2021: HK$8 million) in respect of *** 年度内包括由有租金收益的投资物业产生的investment properties which generated rental income during the year. 直接经营支出,金额为港币700万元(2021年:港币800万元)。 ? F-69 ?232 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 15. IMPAIRMENT LOSSES ON FINANCIAL INSTRUMENTS 金融工具减值损失 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Loans and advances to customers 客户贷款及垫款 5416 1471 Debt securities 债务证券 345 67 Others 其他 162 141 59231679 16. NET PROFIT ON SALE OF ASSETS HELD FOR SALE 出售持有作出售资产之净溢利 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Net (loss)/profit on sale of properties 出售物业之净(亏损)╱溢利 (1) 140 Net profit on sale of disposal groups 出售出售组别之净溢利 1446 902 14451042 17. NET PROFIT/(LOSS) ON DISPOSAL OF FIXED ASSETS 出售固定资产之净溢利╱(亏损) 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Net profit/(loss) on disposal of bank premises 出售行址、傢俬、装修及设备 furniture fixtures and equipment 之净溢利╱(亏损) 18 (5) Net (loss)/profit on termination of lease 终止租赁之净(亏损)╱溢利 (1) 1 17(4) ? F-70 ?东亚银行有限公司 l 2022年报 233 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 18. INCOME TAX 所得税 (a) Taxation in the consolidated income statement represents: (a) 综合收益表内的税项为: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Current tax – Hong Kong 本年税项-香港 Tax for the year 本年度税项 485 514 Over-provision in respect of prior years 往年度过剩的回拨 (57) (96) 428418 Current tax – outside Hong Kong 本年税项-香港以外 Tax for the year 本年度税项 325 271 Over-provision in respect of prior years 往年度过剩的回拨 (16) (18) 309253 Deferred tax 递延税项 Origination and reversal of temporary differences 暂时性差异的源生及转回 (Note 36(b)) (附注36(b)) (174) 152 563823 The provision for Hong Kong profits tax is calculated at 16.5% (2021: 16.5%) of the 香港利得税税款是以年度预计应课税溢利按 estimated assessable profits for the year. 税率16.5%(2021年:16.5%)计算。 Taxation for overseas branches and subsidiaries is charged at the appropriate current 海外分行及附属公司的税款是按其经营所在 rates of taxation ruling in the relevant countries. 地现行税率而计算。 (b) Reconciliation between tax expense and accounting profit at applicable tax rates: (b) 税项支出与会计溢利按适用税率计算税项的 对账: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Profit before tax 除税前溢利 4941 6136 Notional tax on profit before tax calculated at the 根据相关司法地区适用之利得税 rates applicable to profits in the tax jurisdictions 税率按除税前溢利计算的名义 concerned 税款 730 1137 Tax effect of non-deductible expenses 不可扣减支出的税项影响 273 144 Tax effect of non-taxable revenue 毋须课税收入的税项影响 (385) (320) Tax effect of tax losses not recognised 未确认的税损的税项影响 8 3 Write back of over-provision in respect of prior years 往年度过剩的回拨 (73) (114) Others 其他 10 (27) Actual tax expense charged to income statement 于收益表支销的实际税项 563 823 ? F-71 ?234 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 19. DISTRIBUTION/DIVIDENDS 分派╱股息 (a) Dividends attributable to the year (a) 应属本年度股息 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 已宣布派发及支付中期股息予26.89 Interim dividend declared and paid of HK$0.16 per 亿股每股港币0.16元 (2021年: share on 2689 million shares (2021: HK$0.35 per 29.19亿股每股港币0.35元) share on 2919 million shares) (Note 42(j)) (附注42(j)) 430 1022 Special dividend declared and paid of HK$0.48 per 已宣布派发及支付特别股息予26.95 share on 2695 million shares (Note 42(j)) 亿股每股港币0.48元(附注42(j)) 1294 – Second interim dividend of HK$0.17 per share on 第二次中期股息予26.80亿股每股港 2680 million shares (2021: HK$0.35 per share on 币0.17元 (2021年:29.23亿股每 2923 million shares) 股港币0.35元) 456 1023 21802045The total dividend attributable to the year is HK$0.81 per share (2021: HK$0.70 per 应属本年度股息为每股港币0.81元(2021share). The second interim dividend has not been recognised as a liability at the end 年:每股港币0.70元)。于报告期期末,该of the reporting period. 第二次中期股息并未确认为负债。 (b) Dividends attributable to the previous financial year approved and (b) 于年度核准及支付属上年度股息 paid during the year 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Second interim dividend in respect of the previous financial year approved and paid during the year 年度内核准及支付予29.23亿股每股of HK$0.35 per share on 2923 million shares 港币0.35元(2021年:29.17亿股 (2021: HK$0.24 per share on 2917 million shares) 每股港币0.24元)的上年度第二次 (Note 42(j)) 中期股息(附注42(j)) 1023 700 (c) Distribution to holders of Additional Tier 1 capital instruments (c) 分派予额外一级资本工具持有人 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Distribution paid on the Additional Tier 1 capital 已付额外一级资本工具的分派 instruments (Note 42(j)) (附注42(j)) 708 811 ? F-72 ?东亚银行有限公司 l 2022年报 235 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 20. EARNINGS PER SHARE 每股盈利 (a) Basic earnings per share (a) 每股基本盈利 The calculation of basic earnings per share is based on the consolidated profit for 每股基本盈利乃按照已分派予额外一级资本the year attributable to owners of the parent of HK$3651 million (2021: HK$4459 工具持有人港币7.08亿元(2021年:港币million) after accounting for the distribution of HK$708 million (2021: HK$811 8.11亿元)后的可归属于本集团股东溢利港 million) to Additional Tier 1 issue holders and on the weighted average of 2759 币36.51亿元(2021年:港币44.59亿元)及 million ordinary shares outstanding during the year (2021: 2919 million) calculated 年度内已发行普通股份的加权平均数27.59 as follows: 亿股(2021年:29.19亿股)计算。 Weighted average number of ordinary shares 普通股份的加权平均数 20222021 Number of shares Number of shares股份数目股份数目 Million 百万 Million 百万 Issued ordinary shares at 1st January 于1月1日的已发行普通股 2923 2917 Effect of shares issued in lieu of dividends 以股代息发行新股的影响 11 2 Effect of share buy-back 股份回购的影响 (175) – Weighted average number of ordinary shares at 31st December 于12月31日普通股份的加权平均数 2759 2919 (b) Diluted earnings per share (b) 每股摊薄盈利 The calculation of diluted earnings per share is based on the consolidated profit for 每股摊薄盈利乃按照已分派予额外一级资本the year attributable to owners of the parent of HK$3651 million (2021: HK$4459 工具持有人港币7.08亿元(2021年:港币million) after accounting for the distribution of HK$708 million (2021: HK$811 8.11亿元)后的可归属于本集团股东溢利港 million) to Additional Tier 1 issue holders and on the weighted average of 2759 币36.51亿元(2021年:港币44.59亿元)及 million ordinary shares outstanding during the year (2021: 2919 million) adjusted 就年度内所有具备潜在摊薄影响的普通股作 for the effects of all dilutive potential shares. 出调整得出的普通股份的加权平均数27.59 亿股(2021年:29.19亿股)计算。 Weighted average number of ordinary shares (diluted) 普通股份的加权平均数(摊薄) 20222021 Number of shares Number of shares股份数目股份数目 Million 百万 Million 百万 Weighted average number of ordinary shares at 31st December 于12月31日普通股份的加权平均数 2759 2919 Effect of deemed issue of ordinary shares under the 假设按认股权计划发行的普通股份 Bank’s share option schemes 之影响 – – Weighted average number of ordinary shares 于12月31日普通股份的加权平均数 (diluted) at 31st December (摊薄) 2759 2919 ? F-73 ?236 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 21. DIRECTORS’ REMUNERATION 董事酬金Directors’ remuneration disclosed pursuant to section 383(1) of the Companies 根据《公司条例》第383(1)条及《公司(披露Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of 董事利益资料)规则》第2部之规定披露董事 Directors) Regulation is as follows: 酬金如下: Salaries allowances Retirement Directors’ and benefits Discretionary Share scheme 2022 fees in kind bonuses options (Note) contributions Total 薪金、津贴 袍金及实物收益酌情花红认股权(注)退休计划供款总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Executive Chairman 执行主席 Dr. the Hon. Sir David LI Kwok-po 李国宝爵士 0.6 11.8 3.6 2.9 1.1 20.0 Co-Chief Executives 联席行政总裁 Mr. Adrian David LI Man-kiu 李民桥先生 0.5 7.7 6.4 4.7 0.7 20.0 Mr. Brian David LI Man-bun 李民斌先生 0.5 7.7 6.4 4.6 0.7 19.9 Non-executive Directors 非执行董事 Prof. Arthur LI Kwok-cheung 李国章教授 0.6 – – – – 0.6 Mr. Aubrey LI Kwok-sing 李国星先生 0.6 – – – – 0.6 Mr. Winston LO Yau-lai 罗友礼先生 0.4 – – – – 0.4 Mr. Stephen Charles LI Kwok-sze 李国仕先生 0.4 – – – – 0.4 Dr. Daryl NG Win-kong 黄永光博士 0.6 – – – – 0.6 Mr. Masayuki OKU 奥正之先生 0.5 – – – – 0.5 Francisco Javier Dr. Francisco Javier SERRADO SERRADO TREPAT TREPAT 博士 0.5 – – – – 0.5 Independent Non-executive Directors 独立非执行董事 Dr. Allan WONG Chi-yun 黄子欣博士 0.9 – – – – 0.9 Dr. the Hon. Rita FAN HSU Lai-tai 范徐丽泰博士 0.6 – – – – 0.6 Mr. Meocre LI Kwok-wing 李国荣先生 1.2 – – – – 1.2 Dr. the Hon. Henry TANG Ying-yen 唐英年博士 1.0 – – – – 1.0 Dr. Delman LEE 李国本博士 0.9 – – – – 0.9 Mr. William Junior Guilherme DOO 杜家驹先生 0.8 – – – – 0.8 Dr. David MONG Tak-yeung 蒙德扬博士 0.6 – – – – 0.6 11.227.216.412.22.569.5 Note: The share options were granted to Executive Directors under the Bank’s Staff Share 注 : 执行董事是根据本行的雇员认股权计划 Option Schemes. The values of share options represented the fair values of the share 获授予认股权。认股权金额是指该等认options granted in 2022 and prior years amortised over the respective vesting periods 股权于2022年及往年授予并在归属期 without actual cash payment. The details of these benefits in kind are disclosed under 内摊销的公平价值,而并非属于现金支the paragraph “Information on Share Options” in the Report of the Directors and Note 付。有关此等实物收益的详情列载于董 39.事会报告书的「认股权资料」及附注39内。 ? F-74 ?东亚银行有限公司 l 2022年报 237 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Salaries allowances Retirement Directors’ and benefits Discretionary Share scheme 2021 fees in kind bonuses options (Note) contributions Total 薪金、津贴 袍金及实物收益酌情花红认股权(注)退休计划供款总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Executive Chairman 执行主席 Dr. the Hon. Sir David LI Kwok-po 李国宝爵士 0.6 11.8 4.4 3.0 1.1 20.9 Co-Chief Executives 联席行政总裁 Mr. Adrian David LI Man-kiu 李民桥先生 0.5 7.5 7.5 2.9 0.7 19.1 Mr. Brian David LI Man-bun 李民斌先生 0.5 7.5 7.5 2.7 0.7 18.9 Non-executive Directors 非执行董事 Prof. Arthur LI Kwok-cheung 李国章教授 0.5 – – – – 0.5 Mr. Aubrey LI Kwok-sing 李国星先生 0.5 – – – – 0.5 Mr. Winston LO Yau-lai 罗友礼先生 0.4 – – – – 0.4 Mr. Stephen Charles LI Kwok-sze 李国仕先生 0.4 – – – – 0.4 Dr. Daryl NG Win-kong 黄永光博士 0.5 – – – – 0.5 Mr. Masayuki OKU 奥正之先生 0.5 – – – – 0.5 Francisco Javier Dr. Francisco Javier SERRADO TREPAT SERRADO TREPAT 博士 0.5 – – – – 0.5 Independent Non-executive Directors 独立非执行董事 Dr. Allan WONG Chi-yun 黄子欣博士 0.9 – – – – 0.9 Dr. the Hon. Rita FAN HSU Lai-tai 范徐丽泰博士 0.6 – – – – 0.6 Mr. Meocre LI Kwok-wing 李国荣先生 1.1 – – – – 1.1 Dr. the Hon. Henry TANG Ying-yen 唐英年博士 1.0 – – – – 1.0 Dr. Delman LEE 李国本博士 0.8 – – – – 0.8 Mr. William Junior Guilherme DOO 杜家驹先生 0.8 – – – – 0.8 Dr. David MONG Tak-yeung 蒙德扬博士 0.5 – – – – 0.5 10.626.819.48.62.567.9 Note: The share options were granted to Executive Directors under the Bank’s Staff Share 注 : 执行董事是根据本行的雇员认股权计划 Option Schemes. The values of share options represented the fair values of the share 获授予认股权。认股权金额是指该等认options granted in 2021 and prior years amortised over the respective vesting periods 股权于2021年及往年授予并在归属期 without actual cash payment. The details of these benefits in kind are disclosed under 内摊销的公平价值,而并非属于现金支the paragraph “Information on Share Options” in the Report of the Directors and Note 付。有关此等实物收益的详情列载于董 39.事会报告书的「认股权资料」及附注39内。 ? F-75 ?238 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 22. FIVE TOP-PAID EMPLOYEES 5名薪酬最高的雇员 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Salaries and other emoluments 薪金及其他酬金 39 38 Performance-related bonuses 表现奖励花红 24 28 Share options 认股权 16 12 Pension contributions 退休金供款 3 3 8281 The remuneration of the five top-paid employees is within the following bands: 5名薪酬最高的雇员的金额范围如下 20222021 Number of Number of Employees Employees雇员人数雇员人数 HK$港币元 11000001–1150000022 18500001–19000000–1 19000001–19500000–1 19500001–200000002– 20000001–205000001– 20500001–21000000–1Included in the emoluments of the five top-paid employees were the emoluments of 5名薪酬最高的雇员中包括3位(2021年:33 (2021: 3) Directors and 2 (2021: 2) senior management members. Their director’s 位)董事及2位(2021年:2位)高层管理人 emoluments have been included in Note 21 above. 员。他们的董事酬金已包括于上述附注21内。 23. SEGMENT REPORTING 分部报告 (a) Business segments (a) 营业分部 The Group manages its businesses by divisions which are organised by a mixture 本集团按分处管理其业务,而分处则由业务of both business lines and geography. In a manner consistent with the way in 及地区混合组成。分部资料的列报与内部汇which information is reported internally to the Group’s Senior Management for 报予本集团的高层管理人员作为资源分配及 the purposes of resource allocation and performance assessment the Group has 表现评核的方式是一致的。本集团列报以下presented the following nine reportable segments. 九个可汇报分部。 Hong Kong operations 香港业务 Hong Kong operations include Hong Kong banking business and other business 香港业务包括本行在香港经营的银行业务及 operations dividing into the following six reportable segments. 其他业务,分类为以下六个可汇报分部。 Personal Banking includes branch operations personal internet banking 个人银行包括在香港之分行营运、个人电子 consumer finance property loans and credit card business to individual customers in 网络银行、消费贷款、按揭贷款及个人信用 Hong Kong. 卡业务。 ? F-76 ?东亚银行有限公司 l 2022年报 239 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Wholesale Banking includes corporate lending and loan syndication asset based 批发银行包括在香港之企业借贷及银团贷 lending commercial lending securities lending and trade financing activities with 款、资产融资、商业贷款、证劵业务贷款及 correspondent banks and corporates in Hong Kong. 与在香港之全球同业间的银行代理行及企业的金融贸易业务。 Treasury Markets include treasury operations and securities dealing in Hong Kong. 财资市场包括在香港之财资运作及证劵买卖。 Wealth management includes private banking business investment products & 财富管理包括提供予在香港之私人银行业 advisory and securities & futures broking in Hong Kong. 务、投资产品和咨询业务及证券和期货经纪业务。 Centralised operations include supporting units of banking operations in Hong 中央营运包括在香港业务之后勤单位。 Kong.Others mainly include insurance business and trust business carried out by 其他业务主要包括在香港附属公司经营之保 subsidiaries operating in Hong Kong and other supporting units of Hong Kong 险业务及信托业务,及在香港以外但支援香operations located outside Hong Kong. 港业务的后勤单位。 Mainland operations 内地业务 Mainland China operations mainly include the back office unit for Mainland 内地业务主要包括在香港支援内地业务的后 China operations in Hong Kong all subsidiaries and associates operating in 勤单位、所有在内地经营的附属公司及联营 Mainland China except those subsidiaries carrying out data processing and other 公司,但不包括在内地经营资料处理及其他back office operations for Hong Kong operations in Mainland China. 后勤支援香港业务之附属公司。 Overseas operations 国际业务 Overseas operations mainly include the back office unit for overseas banking 国际业务包括在香港支援国际银行业务的后 operations in Hong Kong Macau Branch Taiwan Branch and all branches 勤单位、所有在海外经营的分行包括澳门及 subsidiaries and associates operating overseas. 台湾、附属公司及联营公司。 Corporate management 企业管理 Corporate management absorbs the regulatory capital cost of loan capital issued 企业管理承担本行发行借贷资本的监管资本 by the Bank and receives from Hong Kong operations the interest income on 成本及从香港业务获得由本行发行资本工具 business activities funded by capital instruments issued by the Bank. 所资助之业务活动的利息收入。 For the purposes of assessing segment performance and allocating resources 在评估分部表现及分配分部间的资源时,集among segments the Group’s Senior Management monitors the results assets and 团的高层管理人员根据以下基准监控可归属 liabilities attributable to each reportable segment on the following bases: 于每一可汇报分部之业绩、资产及负债: Segment assets include all assets with the exception of interests in associates and 除联营公司及合资企业之权益及持有作出售 joint ventures and assets held for sale. Segment liabilities include deposits financial 资产外,分部资产包括所有资产。分部负债liabilities and other liabilities attributable to the individual segments. 包括存款、金融负债及可归属于个别分部的其他负债。 Revenue and expenses are allocated to the reportable segments with reference to 收入与支出按有关分部所产生的利息及服务 interest and fee and commission income generated by those segments and the 费用和佣金收入,及由有关分部引致的支出expenses incurred by those segments or which otherwise arise from the depreciation 或可归属于有关分部产生之折旧或摊销来分 or amortisation of assets attributable to those segments. 配予可汇报分部。 ? F-77 ?240 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 23. SEGMENT REPORTING (CONTINUED) 分部报告(续) (a) Business segments (continued) (a) 营业分部(续) 2022 Hong Kong operations香港业务 Hong Kong banking business香港银行业务 Mainland Inter- Personal Wholesale Treasury Wealth Centralised China Overseas Corporate segment banking banking markets management operations Total Others Total operations operations management elimination Total分部间之个人银行批发银行财资市场财富管理中央营运总额其他总额内地业务国际业务企业管理交易抵销总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Net interest income/(expense) 净利息收入╱(支出) 4003 2859 (19) 367 (127) 7083 25 7108 3997 2177 226 – 13508 Non-interest income 非利息收入 1075 625 373 565 249 2887 549 3436 860 179 – (29) 4446 Operating income 经营收入 5078 3484 354 932 122 9970 574 10544 4857 2356 226 (29) 17954 Operating expenses 经营支出 (1659) (476) (168) (358) (2171) (4832) (308) (5140) (3374) (739) – 29 (9224) Operating profit/(loss) before 未扣除减值损失之经营 impairment losses 溢利╱(亏损) 3419 3008 186 574 (2049) 5138 266 5404 1483 1617 226 – 8730 (Charge for)/Write back of impairment losses on financial 金融工具的减值(损失)╱ instruments 回拨 (127) (3258) (70) (40) (1) (3496) 1 (3495) (2088) (340) – – (5923) Impairment losses on assets held 持有作出售资产的减值 for sale 损失 – – – – – – – – (3) – – – (3) Operating profit/(loss) after 已扣除减值损失后之经营 impairment losses 溢利╱(亏损) 3292 (250) 116 534 (2050) 1642 267 1909 (608) 1277 226 – 2804 Net profit/(loss) on sale of assets 出售持有作出售资产之净 held for sale 溢利╱(亏损) – – – – – – 1446 1446 (1) – – – 1445 Net loss on disposal of 出售附属公司╱联营公司 subsidiaries/associates 之净亏损 – – – – (1) (1) – (1) – – – – (1) Net profit/(loss) on disposal of 出售固定资产之净溢利╱ fixed assets (亏损) (16) – – – – (16) – (16) 34 (1) – – 17 Valuation losses on investment properties 重估投资物业亏损 – – – – (148) (148) (29) (177) – (2) – – (179) Share of profits less losses of 应占联营公司及合资企业 associates and joint ventures 溢利减亏损 – – – – – – (9) (9) 221 643 – – 855 Profit/(Loss) before taxation 除税前溢利╱(亏损) 3276 (250) 116 534 (2199) 1477 1675 3152 (354) 1917 226 - 4941 Depreciation for the year 年内折旧 (243) (12) (12) (7) (219) (493) (27) (520) (286) (56) – – (862) Segment assets 分部资产 119881 163395 231299 22679 9964 547218 1845 549063 245349 126730 – (47405) 873737 Investments in associates and joint ventures 联营公司及合资企业投资 – – – – – – 56 56 3893 5112 – – 9061 Other assets – Assets held for 其他资产-持有作出售 sale 资产 – – – – 15 15 – 15 12 – – – 27 Total assets 资产总额 119881 163395 231299 22679 9979 547233 1901 549134 249254 131842 - (47405) 882825 Total liabilities 负债总额 343056 54165 51773 35141 2676 486811 300 487111 220008 116307 - (46947) 776479 Capital expenditure incurred during the year 年度内资本开支 109 32 63 9 107 320 7 327 442 28 - - 797 ? F-78 ?东亚银行有限公司 l 2022年报 241 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Hong Kong operations (Restated) Note香港业务(重报)注 Hong Kong banking business 香港银行业务 Mainland China Inter- Personal Wholesale Treasury Wealth Centralised operations Overseas Corporate segment banking banking markets management operations Total Others Total (Restated)Note operations management elimination Total内地业务分部间之 个人银行批发银行财资市场财富管理中央营运总额其他总额(重报)注国际业务企业管理交易抵销总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Net interest income/(expense) 净利息收入╱(支出) 2287 2532 (30) 334 (21) 5102 70 5172 3917 1775 321 – 11185 Non-interest income 非利息收入 1104 642 577 665 294 3282 801 4083 840 214 – (39) 5098 Operating income 经营收入 3391 3174 547 999 273 8384 871 9255 4757 1989 321 (39) 16283 Operating expenses 经营支出 (1692) (394) (164) (315) (2089) (4654) (437) (5091) (3516) (753) – 39 (9321) Operating profit/(loss) before 未扣除减值损失之经营 impairment losses 溢利╱(亏损) 1699 2780 383 684 (1816) 3730 434 4164 1241 1236 321 – 6962 (Charge for)/Write back of impairment losses on financial 金融工具的减值(损失)╱ instruments 回拨 (103) (1009) (11) 3 – (1120) (5) (1125) (620) 66 – – (1679) Operating profit/(loss) after 已扣除减值损失后之经营 impairment losses 溢利╱(亏损) 1596 1771 372 687 (1816) 2610 429 3039 621 1302 321 – 5283 Net profit on sale of assets held 出售持有作出售资产之净 for sale 溢利 – – – – 133 133 902 1035 7 – – – 1042 Net profit/(loss) on disposal of 出售附属公司╱联营公司之 subsidiaries/associates 净溢利╱(亏损) – – – – – – – – 182 (1) – – 181 Net profit/(loss) on disposal of fixed 出售固定资产之净溢利╱ assets (亏损) (13) – – – (3) (16) – (16) 14 (2) – – (4) Valuation losses on investment properties 重估投资物业亏损 – – – – (110) (110) (22) (132) – – – – (132) Share of profits less losses of 应占联营公司及合资企业 associates and joint ventures 溢利减亏损 – – – – – – (10) (10) (425) 201 – – (234) Profit/(Loss) before taxation 除税前溢利╱(亏损) 1583 1771 372 687 (1796) 2617 1299 3916 399 1500 321 – 6136 Depreciation for the year 年内折旧 (308) (8) (8) (7) (226) (557) (38) (595) (296) (64) – – (955) Segment assets 分部资产 119858 169032 229919 26605 11392 556806 2185 558991 262575 118789 – (44096) 896259 Investments in associates and joint ventures 联营公司及合资企业投资 – – – – – – 66 66 3983 4898 – – 8947 其他资产-持有作出售 Other assets – Assets held for sale 资产 – – – – 15 15 2232 2247 17 – – – 2264 Total assets 资产总额 119858 169032 229919 26605 11407 556821 4483 561304 266575 123687 – (44096) 907470 Segment liabilities 分部负债 331601 58997 65994 29886 2244 488722 384 489106 234937 109059 – (43319) 789783 Other liabilities – Liabilities held for sale 其他负债-持有作出售负债 – – – – – – 1637 1637 – – – – 1637 Total liabilities 负债总额 331601 58997 65994 29886 2244 488722 2021 490743 234937 109059 – (43319) 791420 Capital expenditure incurred during the year 年度内资本开支 255 11 32 1 245 544 32 576 301 49 – – 926 Note: The financials of Hong Kong operations and Mainland China operations have been 注: 香港业务及内地业务之财务数据已经重新分 restated to conform to the current year’s presentation that reflected the organisational 类,以符合本年的呈报方式及反映2022年restructure and other minor reallocations among business segments in 2022. The 业务部门之间的架构重组及其他小规模重新 restructure mainly includes the reorganization of the securities and futures broking 分类。重组主要包括将证券及期货经纪业务businesses from Others segment to Wealth Management segment under Hong Kong 从其他业务分部重组至香港业务下的财富管 operations. 理分部。 ? F-79 ?242 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 23. SEGMENT REPORTING (CONTINUED) 分部报告(续) (b) Geographical segments (b) 地区分部 The information concerning geographical analysis has been classified by the location 按地区分部之资料是根据负责报告业绩或将 of the principal operations of the entities and branches of the Bank responsible for 资产入账之实体或本行之分行的主要业务所 reporting the results or booking the assets or by the location where the subsidiaries 在地点,或按与附属公司或业务单位之营运or business units with special risks associated with operations originate. 有特殊风险关连的所在地点予以划分。 2022 Other Asian Inter- Mainland Countries segment w Hong Kong China and Regions Others elimination Total其他亚洲国家分部间之香港内地及地区其他交易抵销总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Operating income 经营收入 11081 4832 770 1590 (319) 17954 Profit/(loss) before 除税前溢利╱ taxation (亏损) 3167 (179) 938 1015 – 4941 Total assets 资产总额 549662 248570 51427 80336 (47170) 882825 Total liabilities 负债总额 487253 219631 43686 72621 (46712) 776479 Contingent liabilities and commitments 或然负债及承担 94745 242178 8729 6749 – 352401 Capital expenditure during the year 年度内资本开支 327 442 24 4 – 797 2021 Other Asian Inter- Mainland Countries segment Hong Kong China and Regions Others elimination Total其他亚洲国家分部间之香港内地及地区其他交易抵销总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Operating income 经营收入 9955 4749 607 1339 (367) 16283 Profit before taxation 除税前溢利 4332 314 506 984 – 6136 Total assets 资产总额 561867 265892 48636 74969 (43894) 907470 Total liabilities 负债总额 490974 234521 41315 67727 (43117) 791420 Contingent liabilities and commitments 或然负债及承担 85900 175419 9295 7596 – 278210 Capital expenditure during the year 年度内资本开支 577 301 43 5 – 926 ? F-80 ?东亚银行有限公司 l 2022年报 243 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 24. CASH AND BALANCES WITH BANKS (Note 47(a)(ii)) 现金及在银行的结存(附注47(a)(ii)) 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Cash in hand 现金 1465 1016 Balances with central banks 在中央银行的结存 34496 37463 Balances with other banks 在其他银行的结存 18620 16612 5458155091 Less: Impairment allowances (Note 43(a)(ix)) 减:减值准备(附注43(a)(ix)) (2) (3) – Stage 1 -第一阶段 (2) (3) – Stage 2 -第二阶段 – – – Stage 3 -第三阶段 – – 5457955088 25. PLACEMENTS WITH AND ADVANCES TO BANKS (Note 47(a)(ii)) 在银行的存款及垫款(附注47(a)(ii)) 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Placements with and advances to banks 在银行的存款及垫款 Maturing 到期期限 – within one month -1个月内 52337 73104 – after one month but within one year -1个月至1年内 7867 1639 – after one year -1年后 – – 6020474743 Less: Impairment allowances (Note 43(a)(ix)) 减:减值准备(附注43(a)(ix)) (1) (1) – Stage 1 -第一阶段 (1) (1) – Stage 2 -第二阶段 – – – Stage 3 -第三阶段 – – 6020374742 Of which: 其中: Placements with and advances to central banks 在中央银行的存款及垫款 495 – ? F-81 ?244 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 26. TRADE BILLS 贸易票据 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Measured at amortised cost 按摊销成本计量 41 560 Less: Impairment allowances (Note 43(a)(ix)) 减:减值准备(附注43(a)(ix)) – – – Stage 1 -第一阶段 – – – Stage 2 -第二阶段 – – – Stage 3 -第三阶段 – – 41560 按通过其他全面收益以反映公平 Measured at FVOCI 价值计量 488 10212 52910772 27. TRADING ASSETS 交易用途资产 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Treasury bills (including Exchange Fund Bills) 国库债券(包括外汇基金票据) (Note 47(a)(ii)) (附注47(a)(ii)) 292 – Debt securities (Note 47(a)(ii)) 债务证券(附注47(a)(ii)) 983 1632 Equity securities 股份证券 255 851 15302483 28. LOANS AND ADVANCES TO CUSTOMERS 客户贷款及垫款 (a) Loans and advances to customers (a) 客户贷款及垫款 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Loans and advances to customers at amortised cost 按摊销成本计量的客户贷款及垫款 549014 548808 Less: Impairment allowances (Note 43(a)(ix)) 减:减值准备(附注43(a)(ix)) (6620) (4371) – Stage 1 -第一阶段 (1084) (667) – Stage 2 -第二阶段 (1018) (527) – Stage 3 -第三阶段 (4518) (3177) 542394544437 ? F-82 ?东亚银行有限公司 l 2022年报 245 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (b) Loans and advances to customers – by industry sectors (b) 客户贷款及垫款-按行业分类 The analysis of gross advances to customers and the percentage of secured 按行业分类的客户垫款总额及有抵押垫款的 advances by industry sector is based on the categories and definitions used by the 百分比是按照金管局所采用的类别和定义。 HKMA. 20222021 % of gross % of gross Gross advances covered Gross advances covered advances by collateral advances by collateral有抵押垫款有抵押垫款垫款总额的百分比垫款总额的百分比 HK$ Mn 港币百万元 % 百分率 HK$ Mn 港币百万元 % 百分率 Loans for use in Hong Kong 在香港使用的贷款 Industrial commercial and financial 工商金融 – Property development -物业发展 36872 59.19 34103 54.12 – Property investment -物业投资 52366 92.57 50280 91.88 – Financial concerns -金融企业 14892 67.56 15514 50.18 – Stockbrokers -股票经纪 708 99.54 1957 99.99 – Wholesale and retail trade -批发与零售业 6560 56.18 7742 47.86 – Manufacturing -制造业 4485 29.00 4810 32.51 – Transport and transport equipment -运输与运输设备 5495 42.22 5531 46.15 – Recreational activities -娱乐活动 347 93.76 304 87.23 – Information technology -资讯科技 1438 34.22 1268 2.13 – Others -其他 16262 49.00 15365 58.85 – Sub-total -小计 139425 69.69 136874 66.89 Individuals 个人 – Loans for the purchase of flats in the -购买「居者有其屋计划」、 Home Ownership Scheme Private 「私人参建居屋计划」及 Sector Participation Scheme and 「租者置其屋计划」楼宇 Tenants Purchase Scheme 贷款 1200 99.97 1337 100.00 – Loans for the purchase of other residential properties -购买其他住宅物业的贷款 91944 99.95 91532 100.00 – Credit card advances -信用卡垫款 4115 0.00 4284 0.00 – Others -其他 24367 55.23 28182 63.75 – Sub-total -小计 121626 87.61 125335 88.43 Total loans for use in Hong Kong 在香港使用的贷款总额 261051 78.07 262209 77.18 Trade finance 贸易融资 5110 38.56 6088 32.92 Loans for use outside Hong Kong (Note) 在香港以外使用的贷款(注) 282853 35.50 280511 36.83 Total advances to customers 客户垫款总额 549014 55.75 548808 56.07 Note: Loans for use outside Hong Kong include the following loans for use in Mainland China 注 : 在香港以外使用的贷款包括以下在内地 and loans for use outside Hong Kong and Mainland China. 使用的贷款及在内地及香港以外使用的贷款。 ? F-83 ?246 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 28. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) 客户贷款及垫款(续) (b) Loans and advances to customers – by industry sectors (continued) (b) 客户贷款及垫款-按行业分类(续) 20222021 % of gross % of gross Gross advances covered Gross advances covered advances by collateral advances by collateral有抵押垫款有抵押垫款垫款总额的百分比垫款总额的百分比 HK$ Mn 港币百万元 % 百分率 HK$ Mn 港币百万元 % 百分率 Loans for use in Mainland China 在内地使用的贷款 Industrial commercial and financial 工商金融 – Property development -物业发展 38339 33.92 44747 34.37 – Property investment -物业投资 10918 76.61 14134 80.56 – Financial concerns -金融企业 43747 0.79 47765 0.00 – Stockbrokers -股票经纪 678 100.00 – – – Wholesale and retail trade -批发与零售业 9331 13.91 10837 13.94 – Manufacturing -制造业 13291 7.76 11219 5.76 – Transport and transport equipment -运输与运输设备 2077 81.44 811 43.46 – Recreational activities -娱乐活动 – – 25 100.00 – Information technology -资讯科技 1994 0.27 1967 0.43 – Others -其他 18709 11.63 17618 12.24 – Sub-total -小计 139084 20.56 149123 21.10 Individuals 个人 – Loans for the purchase of other residential properties -购买其他住宅物业的贷款 13139 100.00 15762 100.00 – Credit card advances -信用卡垫款 4962 0.00 6370 0.00 – Others -其他 16340 3.34 12724 5.28 – Sub-total -小计 34441 39.73 34856 47.15 Total loans for use in Mainland China 在内地使用的贷款总额 173525 24.37 183979 26.03 Loans for use outside Hong Kong 在内地及香港以外 and Mainland China 使用的贷款 Industrial commercial and financial 工商金融 – Property development -物业发展 11335 56.55 12478 55.51 – Property investment -物业投资 40054 78.58 35709 86.24 – Financial concerns -金融企业 3379 41.54 2960 53.28 – Wholesale and retail trade -批发与零售业 4184 18.43 4017 18.08 – Manufacturing -制造业 13440 3.69 8000 1.09 – Transport and transport equipment -运输与运输设备 3069 44.94 3207 55.06 – Recreational activities -娱乐活动 517 94.78 367 92.39 – Information technology -资讯科技 4063 8.12 3895 8.57 – Others -其他 25444 45.35 21089 37.81 – Sub-total -小计 105485 51.47 91722 55.20 Individuals 个人 – Loans for the purchase of other residential properties -购买其他住宅物业的贷款 3767 100.00 4125 99.68 – Credit card advances -信用卡垫款 2 0.00 2 0.00 – Others -其他 74 87.24 683 97.84 – Sub-total -小计 3843 99.70 4810 99.37 Total loans for use outside Hong Kong and 在内地及香港以外使用 Mainland China 的贷款总额 109328 53.16 96532 57.40 Total loans for use outside Hong Kong 在香港以外使用的贷款总额 282853 35.50 280511 36.83 ? F-84 ?东亚银行有限公司 l 2022年报 247 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Individually impaired loans as well as relevant information in respect of industry 以下按行业分类并占客户垫款总额百分之十 sectors which constitute 10% or more of total advances to customers are as follows: 或以上的垫款中已个别减值的贷款、以及其 相关资料如下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 (i) Property development (i) 物业发展 a. Individually impaired loans a. 已个别减值的贷款 8114 1009 b. Specific provisions b. 特殊准备 2643 326 c. Collective provisions c. 整体准备 502 206 d. New provision charged to income statement d. 于收益表支销的准备 2949 607 e. Written off e. 撇销 659 87 (ii) Property investment (ii) 物业投资 a. Individually impaired loans a. 已个别减值的贷款 3325 2552 b. Specific provisions b. 特殊准备 956 1375 c. Collective provisions c. 整体准备 286 87 d. New provision charged to income statement d. 于收益表支销的准备 589 1644 e. Written off e. 撇销 605 12 (iii) Loans for purchase of residential properties (iii) 购买其他住宅物业的贷款 a. Individually impaired loans a. 已个别减值的贷款 318 270 b. Specific provisions b. 特殊准备 13 10 c. Collective provisions c. 整体准备 40 27 d. New provision charged to income statement d. 于收益表支销的准备 34 146 e. Written off e. 撇销 3 – (iv) Financial concerns (iv) 金融企业 a. Individually impaired loans a. 已个别减值的贷款 43 64 b. Specific provisions b. 特殊准备 27 34 c. Collective provisions c. 整体准备 118 43 d. New provision charged to income statement d. 于收益表支销的准备 107 201 e. Written off e. 撇销 – – The specific provisions represent lifetime expected credit loss provisions for credited 特殊准备指减值信贷风险在合约期内的预期 impaired (Stage 3) exposures and the collective provisions represent the 12-month 信贷损失(第三阶段)准备及整体准备指非减 and lifetime expected credit loss provisions for non-credit impaired (Stage 1 and 值信贷风险在12个月及合约期内的预期信 Stage 2) exposures. 贷损失(第一阶段及第二阶段)准备。 ? F-85 ?248 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 28. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) 客户贷款及垫款(续) (c) Loans and advances to customers – by geographical areas (c) 客户贷款及垫款-按区域分类 The information concerning the breakdown of the gross amount of advances to 根据《银行业(披露)规则》,客户垫款总额customers by countries or geographical areas is derived according to the location of 按国家或区域的分类是根据交易对手的所在 the counterparties after taking into account any transfer of risk in accordance with 地,并考虑转移风险因素后得出的。一般而the requirements of Banking (Disclosure) Rules. In general such transfer of risk takes 言,有关垫款的债权获得并非交易对手所在place if the claims are guaranteed by a party in a country which is different from 地的国家的一方担保,或该债权的履行对象that of the counterparty or if the claims are on an overseas branch of a bank whose 是某银行的海外分行,而该银行的总办事处head office is located in another country. The location of a party is determined 并非设于交易对手的所在地,风险便确认为by its residence which is the economic territory under whose laws the party is 由一个国家转移到另一个国家。一方的所在incorporated or registered. This requirement is different from the allocation under 地由其居住地决定,而该居住地是该缔约方segment reporting in Note 23 which is prepared in a manner consistent with the 注册或登记的法律所规定的经济领土。此要way in which information is reported internally to the Group’s Senior Management. 求与附注23分部报告的分配不同,后者的编The specific provisions represent lifetime expected credit loss provisions for credit 制方法与内部汇报资料予集团高层管理人员 impaired (Stage 3) exposures and the collective provisions represent the 12-month 的方法是一致的。特殊准备指减值信贷风险and lifetime expected credit loss provisions for non-credit impaired (Stage 1 and 在合约期内的预期信贷损失(第三阶段)准备 Stage 2) exposures. 及整体准备指非减值信贷风险12个月及合约期内的预期信贷损失(第一阶段及第二阶段)准备。 2022 Advances Total overdue for Impaired advances to over three advances to Specific Collective customers months customers provisions provisions逾期3个月客户垫款总额以上的垫款减值客户垫款特殊准备整体准备 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元 Hong Kong 香港 270332 552 1924 813 450 Mainland China 内地 183886 4405 10824 3623 1069 Other Asian Countries and Regions 其他亚洲国家及地区 30227 48 58 8 109 Others 其他 64569 – 339 74 474 Total 总额 549014 5005 13145 4518 2102 % of total advances to customers 占客户垫款总额的百分比 2.39% ? F-86 ?东亚银行有限公司 l 2022年报 249 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Advances Total overdue for Impaired advances to over three advances to Specific Collective customers months customers provisions provisions逾期3个月客户垫款总额以上的垫款减值客户垫款特殊准备整体准备 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元 Hong Kong 香港 264285 409 1218 254 136 Mainland China 内地 202365 2020 4589 2822 755 Other Asian Countries and Regions 其他亚洲国家及地区 28036 22 164 101 62 Others 其他 54122 – 6 – 241 Total 总额 548808 2451 5977 3177 1194 % of total advances to customers 占客户垫款总额的百分比 1.09% Impaired loans and advances are individually assessed loans with objective evidence 减值贷款及垫款是个别出现客观减值证据而 of impairment on an individual basis. The above information by countries or 须个别评估的贷款。上述资料按国家或区域geographical areas is derived according to the location of the counterparties after 分类,是根据交易对手的所在地并已考虑转taking into account any transfer of risk. 移风险因素。 ? F-87 ?250 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 28. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) 客户贷款及垫款(续) (d) Loans and advances to customers – net investment in finance leases (d) 客户贷款及垫款-融资租赁的净投资额 Loans and advances to customers include net investment in equipment leased under 客户贷款及垫款包括以融资租赁形式租出的 finance leases. The total minimum lease payments receivable under finance leases 设备。根据融资租赁应收的最低租赁付款总and their present values at the year end are as follows: 额,及其现值如下: 20222021 Present Interest Present Interest value of the income Total value of the income Total minimum relating to minimum minimum relating to minimum lease future lease lease future lease payments periods payments payments periods payments最低租赁相关未来最低租赁最低租赁相关未来最低租赁付款现值利息收入付款总额付款现值利息收入付款总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Amounts receivable: 应收账款: Within one year 1年以内 179 69 248 190 53 243 After one year but within two years 1年以后至2年内 151 62 213 156 49 205 After two years but within three years 2年以后至3年内 141 56 197 144 45 189 After three years but within four years 3年以后至4年内 124 51 175 136 42 178 After four years but within five years 4年以后至5年内 120 48 168 127 39 166 After five years 5年以后 1614 336 1950 1776 287 2063 2329622295125295153044 Less: Impairment allowances 减:减值准备 (10) (11) Net investment in finance leases 融资租赁的净投资额 2319 2518 The net investment in finance leases is carried on the statement of financial position 融资租赁的净投资额被视作客户贷款及垫款 as loans and advances to customers. No accrual is made for the interest income 在财务状况表中列账,未来期间的利息收入relating to future periods. 并无计算。 ? F-88 ?东亚银行有限公司 l 2022年报 251 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 29. INVESTMENT SECURITIES 投资证券 2022 Mandatorily Measured measured at Measured at amortised FVTPL at FVOCI cost Total按通过强制按通过其他全面损益以反映收益以反映按摊销成本公平价值计量公平价值计量计量总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元 Treasury bills (including Exchange Fund Bills) 国库债券(包括外汇基金票据) (Note 47(a)(ii)) (附注47(a)(ii)) – 22390 2428 24818 Certificates of deposits held (Note 47(a)(ii)) 持有存款证(附注47(a)(ii)) – – 809 809 Debt securities (Note 47(a)(ii)) 债务证券(附注47(a)(ii)) 3270 105167 11225 119662 Equity securities 股份证券 37 839 – 876 Investment funds 投资基金 842 – – 842 414912839614462147007 2021 Mandatorily Measured measured Measured at amortised at FVTPL at FVOCI cost Total按通过强制按通过其他全面损益以反映收益以反映按摊销成本公平价值计量公平价值计量计量总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元 Treasury bills (including Exchange Fund Bills) 国库债券(包括外汇基金票据) (Note 47(a)(ii)) (附注47(a)(ii)) – 22844 2025 24869 Certificates of deposits held (Note 47(a)(ii)) 持有存款证(附注47(a)(ii)) – – 646 646 Debt securities (Note 47(a)(ii)) 债务证券(附注47(a)(ii)) 4365 101968 13875 120208 Equity securities 股份证券 42 712 – 754 Investment funds 投资基金 1030 – – 1030 543712552416546147507 Equity securities designated at FVOCI 指定为通过全面收益以反映公平价值的股份证券 20222021 Dividend Dividend income income Fair value recognised Fair value recognised已确认已确认公平价值股息收入公平价值股息收入 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Equity investments held for long-term 持有作长期策略用途的 strategic purposes 股份投资 839 16 712 22 As at 31st December 2022 equity securities designated at FVOCI amounting to 于2022年12月31日,持有作长期策略用途HK$839 million (2021: HK$712 million) were held for long-term strategic purposes 之指定为通过全面收益以反映公平价值的股of which HK$694 million (2021: HK$588 million) was attributable to the fair value 份证券金额为港币8.39亿元(2021年:港币of the Bank’s investment in China UnionPay Co. Ltd. None of these strategic 7.12亿元),其中港币6.94亿元(2021年:investments was disposed of during 2022 and 2021 and there were no transfers of 港币5.88亿元)为本行于中国银联股份有限 any cumulative gain or loss within equity relating to these investments. 公司之投资的公平价值。在2022及2021年度内没有出售该等策略投资,亦没有将该等投资的累计盈利及亏损于股东权益内转账。 ? F-89 ?252 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 30. INVESTMENTS IN SUBSIDIARIES 附属公司投资 The following list contains only the particulars of subsidiaries which principally 以下摘要只包括对本集团的业绩、资产或负债有 affected the results assets or liabilities of the Group. The class of shares held is 重大影响的附属公司。此等股份属普通股份。 ordinary.Details of these companies are as follows: 此等公司的详情如下: Place of % Held by incorporation Issued and The Bank The Group Name of company and operation paid-up capital 银行 集团 Nature of business公司名称注册及营业地点已发行及缴足股本所占权益所占权益业务性质 Ample Delight Limited Hong Kong HK$港币450000000元 100% Investment holding承悦有限公司香港投资控股 Bank of East Asia (Trustees) Limited Hong Kong HK$港币150000000元 100% Trustee service 东亚银行(信托)有限公司香港信托服务 BEA Consortium GS Investors L.P. BVI NIL 100% Acting as a limited partner for the purpose 英属处女群岛 无 of making investment in private equity fund出任有限责任合伙人用作投资私募基金 BEA Union Investment Management Limited Hong Kong HK$港币374580000元 51% Asset management东亚联丰投资管理有限公司香港资产管理 BEA Union Investment Management PRC US$6000000美元 51% Asset management/Investment (Shenzhen) Limited 中华人民共和国 management 东亚联丰投资管理(深圳)有限公司资产管理╱投资管理 Central Town Limited Hong Kong HK$港币2元 100% Property investment汇中兴业有限公司香港物业投资 Century Able Limited Hong Kong HK$港币929752849元 100% Investment holding阶润有限公司香港投资控股 Corona Light Limited BVI HK$港币929752849元 100% Investment holding英属处女群岛投资控股 Credit Gain Finance Company Limited Hong Kong HK$港币640000000元 100% Money lenders领达财务有限公司香港放债人 Crystal Gleaming Limited BVI HK$港币929752849元 100% Investment holding英属处女群岛投资控股 Dragon Jade Holdings Company Limited Hong Kong HK$港币1127510000元 100% Investment holding卓领控股有限公司香港投资控股 East Asia Digital Information Services PRC US$3000000美元 100% Servicing (Guangdong) Limited (Note 1) 中华人民共和国 服务 东亚数据信息服务(广东)有限公司(注1) ? F-90 ?东亚银行有限公司 l 2022年报 253 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Place of % Held by incorporation Issued and The Bank The Group Name of company and operation paid-up capital 银行 集团 Nature of business公司名称注册及营业地点已发行及缴足股本所占权益所占权益业务性质 East Asia Facility Management Limited Hong Kong HK$港币10000元 100% Facility management东亚设施管理有限公司香港设施管理 * East Asia Holding Company Inc. U.S.A. US$5美元 100% Bank holding company美国银行控股公司 East Asia International Trustees Limited BVI US$1301000美元 100% Trustees service英属处女群岛信托服务 East Asia Securities Company Limited Hong Kong HK$港币25000000元 100% Securities broking东亚证券有限公司香港证券买卖 Skyray Holdings Limited BVI HK$港币450000000元 100% Investment holding英属处女群岛投资控股 Speedfull Limited BVI HK$港币450000000元 100% Investment holding英属处女群岛投资控股 The Bank of East Asia (China) Limited (Note 1) PRC CNY人民币14160000000元 100% Banking and related financial services 东亚银行(中国)有限公司(注1)中华人民共和国银行及有关的金融服务 * Audited by auditors other than KPMG with total net assets and total income constituting * 非由毕马威会计师事务所审核的公司,其财approximately 0.6% and less than 0.1% respectively of the related consolidated totals. 务报表之资产净总额及收入总额分别占相关 综合总额的0.6%及低于0.1%。 Note: 注: 1. Represents a wholly foreign owned enterprise registered under the PRC laws. 1. 指根据中华人民共和国法例注册由外资全资拥有之企业。 31. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES 联营公司及合资企业投资 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Share of net assets 应占净资产 9408 9270 Goodwill 商誉 452 476 98609746 Less: Impairment allowances 减:减值准备 (799) (799) 90618947 ? F-91 ?254 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 31. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED) 联营公司及合资企业投资(续) The following list contains only the particulars of principal associates and joint 以下列载只包括本集团的主要联营公司及合 ventures. 资企业。 % of ordinary share普通股 Place of held by incorporation The Bank The Group Name of company and operation 银行 集团 Nature of business公司名称注册及营业地点所占权益所占权益业务性质 Associates联营公司 Listed上市 AFFIN Bank Berhad Malaysia 23.79% Banking and related financial 马来西亚 business银行及有关的金融业务 Unlisted 非上市 Brilliance-BEA Auto Finance Co. Ltd. PRC 22.5% Auto finance and other related 华晨东亚汽车金融有限公司 中华人民共和国 financial businesses汽车贷款及其他有关金融业务 Dolford Property Holdings Limited BVI 30% Investment holding英属处女群岛投资控股 East Asia Qianhai Securities Company Limited PRC 49% Securities business东亚前海证券有限责任公司中华人民共和国证券业务 Guotong Trust Co. Ltd PRC 15.38% Trust and other financial business国通信托有限责任公司中华人民共和国信托及其他金融业务 Industrial and Commercial Bank of China (Canada) Canada 20% Banking services 中国工商银行(加拿大)有限公司加拿大银行服务 Industrial and Commercial Bank of China (USA) N.A. U.S.A. 20% Banking services 中国工商银行(美国)美国银行服务 Million Fortune Development (Shenzhen) Co. Ltd. PRC 25% Property development 寰裕置业(深圳)有限公司中华人民共和国物业发展 Platinum Holdings Company Limited Cayman Islands 30% Investment holding开曼群岛投资控股 Shanghai Ctrip Financial Information Services Co. Ltd. PRC 9.6% Financial services上海携程金融信息服务有限公司中华人民共和国金融服务 ? F-92 ?东亚银行有限公司 l 2022年报 255 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) At 31st December 2022 the fair value of the Group’s investment in AFFIN Bank 于2022年12月31日,按市场报价的公允价Berhad (“AFFIN”) based on the quoted market price had been persistently below 值,本集团对AFFIN Bank Berhad(「AFFIN」)the carrying amount for a period of time. As a result the Group performed an 之投资的市值持续低于账面值一段时间。 impairment test on the investment using a value-in-use (“VIU”) methodology and 因此,本集团对此项投资透过使用价值计算this demonstrated that the recoverable amount of the investment was HK$3917 方法进行减值测试,测试显示此项投资的可million. The recoverable amount was higher than the carrying value of HK$3727 收回金额为港币39.17亿元。由于可收回金million and no further impairment charge was recognised (2021: no impairment 额高于港币37.27亿元之账面值,年度内并charge). The VIU calculation uses discounted cash flow projections based on AFFIN’s 无确认额外减值损失(2021年没有减值损latest forecast of financial results and estimates made by the Group’s management 失)。使用价值计算方法采用了集团管理层for the next five years and extrapolating in perpetuity using a long-term growth rate 基于AFFIN最新的财务业绩的预测以及对未 of 3% to derive a terminal value. Discount rate of 11.95% (2021: 11.49%) which 来五年的估计的折现现金流量预测,并使用is based on a Capital Asset Pricing Model calculation for AFFIN is used in the VIU 3%长期增长率永久性推算得出终端价值。 calculation. 在价值计算方法中使用基于AFFIN的资本资产定价模型计算得出的11.95%(2021年:11.49%)折现率。 The following table illustrates the impact on VIU of reasonably possible changes to 下表列出主要假设的合理可能变动对使用价 key assumptions. This reflects the sensitivity of the VIU to each key assumption on its 值产生的影响。有关资料反映使用价值对各own and it is possible that more than one favourable and/or unfavourable change 主要假设本身的敏感度。超过一项有利及╱may occur at the same time. 或不利变动有可能同时发生。 Favourable change Unfavourable change有利变动不利变动 Increase in VIU VIU Decrease in VIU VIU使用价值增加使用价值使用价值减少使用价值 HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元 At 31st December 2022 于2022年12月31日 Discount rate 折现率 -50 bps基点 269 4186 +50 bps基点 (239) 3678 Long-term growth rate 长期增长率 +50 bps基点 36 3953 -50 bps基点 (32) 3885 Expected cash flows 预计现金流 +10% 392 4309 -10% (392) 3525 ? F-93 ?256 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 31. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)联营公司及合资企业投资(续) 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Aggregate information of associates and joint 个别不重大联营公司及合资企业之 ventures that are not individually material 总和资料 Aggregate carrying amount of individually immaterial associates and joint ventures in the consolidated 个别不重大联营公司及合资企业在 financial statements 综合财务报表之总和账面值 9061 8947 Aggregate amounts of the Group’s share of those 本集团占该等联营公司及合资企业 associates and joint ventures 之总和金额 Profit/(loss) after tax 源自持续营运溢利╱(亏损) 855 (234) Other comprehensive income 其他全面收益 (511) (186) Total comprehensive income 全面收益总额 344 (420) Reconciliation of carrying amounts to the Group’s 账面值与本集团于联营公司及合资 total interest in the associates and joint ventures 企业的权益对账 Carrying amount of material associates and joint ventures 重大联营公司及合资企业之账面值 – – Carrying amount of individually immaterial associates 个别不重大联营公司及合资企业之 and joint ventures 账面值 9061 8947 Interest in associates and joint ventures in the 在综合财务报表中联营公司及合资 consolidated financial statements 企业权益 9061 8947 32. GOODWILL AND INTANGIBLE ASSETS 商誉及无形资产 Goodwill and intangible assets include goodwill arising on business combinations 商誉及无形资产包括因业务合并产生的商誉及购 and acquired intangible assets. Acquired intangible assets are amortised over their 入无形资产。购入无形资产按其估计经济使用期estimated economic useful life. 摊销。 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Goodwill 商誉 1460 1460 Acquired intangible assets 购入无形资产 410 425 18701885 ? F-94 ?东亚银行有限公司 l 2022年报 257 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (a) Goodwill (a) 商誉 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 At 1st January 于1月1日 1460 1474 Transfer to asset classified as assets held for sale (Note 55) 转至分类为持有作出售资产(附注55) – (14) At 31st December 于12月31日 1460 1460 Impairment tests for cash-generating units containing goodwill 包含商誉的现金生产单位之减值测试 Goodwill is allocated to the Group’s cash-generating units (CGU) identified 本集团按业务分部分配商誉予可辨识的现金 according to business segments as follows: 生产单位如下 : 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Personal banking 个人银行 849 849 Wholesale banking 批发银行 453 453 Treasury markets 财资市场 158 158 14601460 The recoverable amount of the CGU is determined based on value-in-use 现金生产单位的可收回金额则根据使用价值 calculations. These calculations use cash flow projections based on financial budgets 计算。计算方法按照管理层已核准的5年财approved by management covering a five-year period. Cash flows beyond the five- 务预算的现金流作估计。超过5年期间的现year period are extrapolated using the estimated rates stated below. The growth 金流按下述的估计利率作推断。增长率不可rate does not exceed the long-term average growth rate for the business in which 超过该现金生产单位所经营业务的长期平均 the CGU operates. 增长率。 The discount rate used for value-in-use calculations is 7.98% (2021: 9.8%) and the 用于计算使用价值的折扣率为7.98%(2021long-term growth rate is 3% (2021: 2.8%). 年:9.8%)及长期增长率为3%(2021年:2.8%)。 Management determined the budgeted net profit based on past performance and 管理层根据过往表现及预计市场发展以厘定 its expectation for market development. The weighted average growth rates used 预算净溢利。所采用的加权平均增长率与内are consistent with the internal forecasts. 部预测是一致的。 ? F-95 ?258 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 32. GOODWILL AND INTANGIBLE ASSETS (CONTINUED) 商誉及无形资产(续) (b) Intangible assets (other than goodwill) (b) 无形资产(商誉除外) Intangible assets consist of building naming rights only. Intangible assets are stated 无形资产只包括建筑物命名权。无形资产at cost less accumulated amortisation and impairment loss (Note 2(r)). 按成本减除累计摊销及减值损失列账(附注 2(r))。 Amortisation of intangible assets with finite useful lives is charged to the income 有限定可用期的无形资产按其估计可用期于 statement over the assets’ estimated useful lives. The following intangible assets 收益表内摊销。以下有限定可用期的无形资with finite useful lives are amortised from the date they are available to use and their 产由可供使用日起按以下的估计可用期摊销: estimated useful lives are as follows: Naming rights: Over the shorter of the lease period of building or land 命名权:按建筑物或土地两者较短的租赁期 Both the period and method of amortisation are reviewed annually. 每年须检讨其期限及摊销方法。 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Cost 成本 At 1st January 于1月1日 1404 1404 Exchange adjustments 汇兑调整 (2) – At 31st December 于12月31日 1402 1404 Accumulated amortisation 累计摊销 At 1st January 于1月1日 (323) (310) Amortisation charge for the year (Note 14) 年度内摊销(附注14) (13) (14) Exchange adjustments 汇兑调整 – 1 At 31st December 于12月31日 (336) (323) Impairment allowance 减值准备 At 1st January 于1月1日 (656) (656) Charge for the year 年度内支销 – – Exchange adjustments 汇兑调整 – – As at 31st December 于12月31日 (656) (656) Carrying amount at 31st December 于12月31日账面值 410 425 ? F-96 ?东亚银行有限公司 l 2022年报 259 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 33. FIXED ASSETS 固定资产 2022 Right-of- Right-of- use assets – Furniture use assets – Furniture Investment Bank fixtures and Bank fixtures and properties premises equipment Sub-total premises equipment Sub-total Total使用权资产 傢俬、装修使用权资产-傢俬、 投资物业行址及设备小计-行址装修及设备小计总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Cost or valuation 成本或估值 At 1st January 2022 于2022年1月1日 4992 8529 6448 14977 1507 23 1530 21499 Additions 增置 – 82 473 555 238 4 242 797 Revaluation deficit 重估亏损 (179) – – – – – – (179) Disposals 出售 – (209) (270) (479) – – – (479) Remeasurement 重新计量 – – – – (15) – (15) (15) Revaluation surplus on bank premises upon transfer to investment properties 行址重估盈余转入投资 (Note 42(b)) 物业(附注42(b)) – 354 – 354 – – – 354 Transfer from bank premises to investment properties 由行址转入投资物业 493 (493) – (493) – – – – Transfer from investment properties to bank premises 由投资物业转入行址 (139) 139 – 139 – – – – Expiry/termination of lease contracts 到期╱终止租赁合约 – – – – (367) (2) (369) (369) Less: Elimination of accumulated depreciation on revalued bank 减:抵 销行址重估的累计 premises 折旧 – (35) – (35) – – – (35) Exchange adjustments 汇兑调整 (1) (303) (173) (476) (59) – (59) (536) At 31st December 2022 于2022年12月31日 5166 8064 6478 14542 1304 25 1329 21037 Accumulated depreciation and amortisation 累计折旧及摊销 At 1st January 2022 于2022年1月1日 – 2378 4584 6962 682 11 693 7655 Charge for the year (Note 14) 年度内支销(附注14) – 139 428 567 290 5 295 862 Expiry/termination of lease contracts 到期╱终止租赁合约 – – – – (350) (2) (352) (352) Elimination of accumulated depreciation on revalued bank premises 抵销行址重估的累计折旧 – (35) – (35) – – – (35) Written off on disposal 出售时撇销 – (83) (239) (322) – – – (322) Exchange adjustments 汇兑调整 – (110) (113) (223) (24) – (24) (247) At 31st December 2022 于2022年12月31日 – 2289 4660 6949 598 14 612 7561 Net book value at 账面净值 31st December 2022 于2022年12月31日 5166 5775 1818 7593 706 11 717 13476 The gross amounts of the above assets are stated: 上述资产的总额列示如下: At cost 按成本 – 7316 6478 13794 1304 25 1329 15123 At Directors’ valuation – 1989 按董事估值-1989年 – 748 – 748 – – – 748 At professional valuation – 2022 按专业估值-2022年 5166 – – – – – – 5166 51668064647814542130425132921037 ? F-97 ?260 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 33. FIXED ASSETS (CONTINUED) 固定资产(续) 2021 Right-of- Right-of- use assets – Furniture use assets – Furniture Investment Bank fixtures and Bank fixtures and properties premises equipment Sub-total premises equipment Sub-total Total使用权资产 傢俬、装修使用权资产-傢俬、 投资物业行址及设备小计-行址装修及设备小计总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Cost or valuation 成本或估值 At 1st January 2021 于2021年1月1日 4961 8595 6311 14906 1549 26 1575 21442 Additions 增置 – 120 485 605 320 1 321 926 Revaluation deficit 重估亏损 (132) – – – – – – (132) Disposals 出售 – (139) (304) (443) – – – (443) Revaluation surplus on bank premises upon transfer to investment properties 行址重估盈余转入投资 (Note 42(b)) 物业(附注42(b)) – 5 – 5 – – – 5 Transfer from bank premises to investment properties 由行址转入投资物业 163 (163) – (163) – – – – Expiry/termination of lease contracts 到期╱终止租赁合约 – – – – (373) (2) (375) (375) Less: Elimination of accumulated depreciation on revalued bank 减:抵 销行址重估的累计 premises 折旧 – (4) – (4) – – – (4) Transfer to asset classified as assets 转至分类为持有作出售 held for sale 资产 – – (102) (102) (2) (2) (4) (106) Exchange adjustments 汇兑调整 – 115 58 173 13 – 13 186 At 31st December 2021 于2021年12月31日 4992 8529 6448 14977 1507 23 1530 21499 Accumulated depreciation and amortisation 累计折旧及摊销 At 1st January 2021 于2021年1月1日 – 2254 4444 6698 670 9 679 7377 Charge for the year (Note 14) 年度内支销(附注14) – 149 432 581 368 6 374 955 Expiry/termination of lease contracts 到期╱终止租赁合约 – – – – (361) (2) (363) (363) Elimination of accumulated depreciation on revalued bank premises 抵销行址重估的累计折旧 – (4) – (4) – – – (4) Written off on disposal 出售时撇销 – (63) (263) (326) – – – (326) Transfer to asset classified as assets held 转至分类为持有作出售 for sale 资产 – – (69) (69) (1) (2) (3) (72) Exchange adjustments 汇兑调整 – 42 40 82 6 – 6 88 At 31st December 2021 于2021年12月31日 – 2378 4584 6962 682 11 693 7655 Net book value at 账面净值 31st December 2021 于2021年12月31日 4992 6151 1864 8015 825 12 837 13844 The gross amounts of the above assets are stated: 上述资产的总额列示如下: At cost 按成本 – 7781 6448 14229 1507 23 1530 15759 At Directors’ valuation – 1989 按董事估值-1989年 – 748 – 748 – – – 748 At professional valuation – 2021 按专业估值-2021年 4992 – – – – – – 4992 49928529644814977150723153021499 ? F-98 ?东亚银行有限公司 l 2022年报 261 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Fair value measurement of properties 物业公平价值之厘定 (i) Fair value hierarchy (i) 公平价值分级 The following table presents the fair value of the Group’s properties measured 根据《香港财务报告准则》第十三号「厘 at the end of the reporting period on a recurring basis categorised into the 定公平价值」三级公平价值分级之分类 three-level fair value hierarchy as defined in HKFRS 13 Fair value measurement. 定义,下表列示本集团于报告期期末按The level into which a fair value measurement is classified is determined 重复发生基准以厘定物业之公平价值。 with reference to the observability and significance of the inputs used in the 分类予每一分级之公平价值厘定取决于 valuation technique as follows: 以下所采用的估值模式的参数之可观察 性及重要性: Level 1 valuations: Fair value measured using only Level 1 inputs i.e. 第一级估值: 厘定公平价值只采用 unadjusted quoted prices in active markets for 第一级参数,即于厘定identical assets or liabilities at the measurement date. 日在活跃市场相同资产或负债的未经调整报价。 Level 2 valuations: Fair value measured using Level 2 inputs i .e. 第二级估值: 厘定公平价值采用第 observable inputs which fail to meet Level 1 and not 二级参数,即不符合第using significant unobservable inputs. Unobservable 一级的可观察参数,及inputs are inputs for which market data are not 未采用重要的非可观 available. 察参数。非可观察参数是指没有市场资料之参数。 Level 3 valuations: Fair value measured using significant unobservable 第三级估值: 厘定公平价值采用重 inputs. 要的非可观察参数。 Fair value at Fair value measurements as at 31st December 2022 31st December categorised into 2022于2022年12月31日厘定公平价值之分类 于2022年12月31日 Level 1 Level 2 Level 3之公平价值第一级第二级第三级 HK$ Mn港币百万元 HK$ Mn港币百万元 HK$ Mn港币百万元 HK$ Mn港币百万元 Recurring fair value measurement 重复发生的公平价值厘定 Investment properties 投资物业 Commercial – Hong Kong 商业-香港 5154 – – 5154 Commercial – Others 商业-其他 12 – – 12 5166––5166 Fair value at Fair value measurements as at 31st December 2021 31st December categorised into 2021于2021年12月31日厘定公平价值之分类 于2021年12月31日 Level 1 Level 2 Level 3之公平价值第一级第二级第三级 HK$ Mn港币百万元 HK$ Mn港币百万元 HK$ Mn港币百万元 HK$ Mn港币百万元 Recurring fair value measurement 重复发生的公平价值厘定 Investment properties 投资物业 Commercial – Hong Kong 商业-香港 4978 – – 4978 Commercial – Others 商业-其他 14 – – 14 4992––4992 ? F-99 ?262 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 33. FIXED ASSETS (CONTINUED) 固定资产(续) Fair value measurement of properties (continued) 物业公平价值之厘定(续) (i) Fair value hierarchy (continued) (i) 公平价值分级(续) During the years ended 31st December 2022 and 2021 there were no 2022年及2021年12月31日止年度 transfers between Level 1 and Level 2 or transfers into or out of Level 3. The 内,没有第一级和第二级两者之间的转Group’s policy is to recognise transfers between levels of fair value hierarchy as 移,亦未有第三级的转入或转出。本集at the end of the reporting period in which they occur. 团的政策是只确认于报告期期末公平价值分级之间发生的转移。 All of the Group’s investment properties were revalued by independent valuers 于2022年及2021年12月31日,所有as at 31st December 2022 and 2021. 本集团的投资物业均由独立估值师估价。 Investment properties in Hong Kong were valued at HK$5154 million (2021: 于2022年12月31日,香港投资物业HK$4978 million) as at 31st December 2022 by an independent valuer Savills 的估值为港币51.54亿元(2021年:港Valuation and Professional Services Limited Chartered Surveyors who has 币49.78亿元)。该等物业由独立估值among their staff Fellows of the Hong Kong Institute of Surveyors with recent 师-特许测量师第一太平戴维斯估价,experience in the location and category of property being valued. The valuation 其雇员具香港测量师学会会士资历并对 has been incorporated in the financial statements as at 31st December 2022 估值物业的所在地及类别有近期经验。 and it was performed on an open market value basis. Details of valuation 估值是以公开市场价值为基础,并已计techniques are described below: 入2022年12月31日之账项内。估值模式详述如下: (ii) Information about Level 3 fair value measurement of properties (ii) 有关第三级厘定公平价值的物业 Valuation techniques Unobservable input估值模式非可观察输入参数 Investment properties Income capitalisation Expected market 投资物业 approach rental收入还原法预期市场租金 Capitalisation rate还原率 Direct comparison Premium (discount) on approach quality of the buildings 直接比较法楼宇质素溢价(折扣) Investment properties not under construction 非正在建筑中的投资物业 The fair value of investment properties is determined by adoption of the 投资物业的公平价值是按采纳收入还原 Income Capitalisation Approach whereby the existing rental income of all 法计算,其方法是将现时物业已出租单lettable units of the property are capitalised for their respective unexpired 位之租金收入按其分别未到期租约条款 terms of contractual tenancies whilst vacant units are assumed to be let at their 还原,而空置单位则假设于估价日每一respective market rents as at the valuation date. Upon expiry of the existing 单位可按市值租金租出,再根据投资者tenancies each unit is assumed to be let at its market rent as at the valuation 预期每一类别物业之市场回报来还原。 date which in turn capitalised at the market yield as expected by investors 其中已顾及并预期政府之租约于期限届 for each type of property. Due consideration has been given to expectations 满后可续约。出租部分期间收入之还原of the renewals of Government lease upon its expiry. The summation of the 值、已适当递延出租部分之归还收入的 capitalised value of the term income for the leased portion the capitalised value 还原值及空置部分之还原值之总和计算 of the reversion income as appropriately deferred for the leased portion and 出物业的市场价值。 the capitalised value for the vacant portion provides the market value of the property.? F-100 ?东亚银行有限公司 l 2022年报 263 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The market rentals of all lettable units are made (a) by reference to the rentals 所有已租出单位市场租金之计算是 (a)参考由 fetched in the property and/or (b) by reference to the lettings of similar 物业赚取的租金及╱或 (b)参考邻近所租出之 properties in the neighbourhood. The capitalisation rate adopted is made by 类同物业。采纳之还原率是参考分析市场出reference to the yields achieved in analysed market sales transactions and 售交易得出之回报及物业投资者对市场的预 the market expectation from property investors. This expected return reflects 期。此预期回报已潜在地反映投资的质素、implicitly the quality of the investment the expectation of the potential for 预期未来租金增长和资本增值的潜力、营运 future rental growth and capital appreciation operating costs risk factor and 成本、风险因素及其他。 the like.As a supporting approach to the Income Capitalisation Approach the Direct 除收入还原法外,亦采纳直接比较法以核实Comparison Approach is also adopted as a check for the valuation. Comparable 估值。在邻近可比较类同物业之出售交易会sales transactions of similar properties in the locality are collected and analysed 被收集及分析,以计算每一平方呎的价值。 each in terms of a price per square footage. The collected comparables are 已收集之比较资料根据物业及可比较资料的 then adjusted to take account of the discrepancies between the property and 差异,并按时间、位置、楼龄、楼宇质素及comparables in terms of time location age building quality and the like. 其他作调整。 The fair value measurement is positively correlated to the market rental and 厘定公平价值与市场租金有正面相互关联及 negatively correlated to the capitalisation rate. 与还原率有负面相互关联。 The movements during the year in the balance of these Level 3 fair value 年内该等第三级公平价值厘定之余额变动如 measurements are as follows: 下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Investment properties – Commercial – Hong Kong 投资物业-商业-香港 At 1st January 于1月1日 4978 4947 Transfer from bank premises to investment properties 由行址转入投资物业 493 163 Transfer from investment properties to bank premises 由投资物业转入行址 (139) – Revaluation deficit 重估亏损 (178) (132) At 31st December 于12月31日 5154 4978 Investment properties – Commercial – Others 投资物业-商业-其他 At 1st January 于1月1日 14 14 Revaluation deficit 重估亏损 (1) – Exchange adjustments 汇兑调整 (1) – At 31st December 于12月31日 12 14 Fair value adjustment of investment properties is recognised in the line item 投资物业的公平价值调整在综合收益表上之 “valuation losses on investment properties” on the face of the consolidated 「重估投资物业亏损」项下确认。 income statement.All the losses recognised in the income statement for the year arise from the 所有确认于年度收益表之亏损均源自于报告 properties held at the end of the reporting period. 期期末持有之物业。 ? F-101 ?264 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 33. FIXED ASSETS (CONTINUED) 固定资产(续) Fair value measurement of properties (continued) 物业公平价值之厘定(续) (ii) Information about Level 3 fair value measurement of properties (continued) (ii) 有关第三级厘定公平价值的物业(续) The net book value of bank premises and investment properties comprises: 行址及投资物业的账面净值包括: 20222021 Investment Bank Investment Bank properties premises properties premises投资物业行址投资物业行址 HK$ Mn港币百万元 HK$ Mn港币百万元 HK$ Mn港币百万元 HK$ Mn港币百万元 Freeholds 永久业权 Held outside Hong Kong 在香港以外地区 12 606 15 607 Leaseholds 租借地 Held in Hong Kong 在香港 On long lease (over 50 years) 长期租约(50年以上) 4003 1620 4177 1610 On medium-term lease (10–50 years) 中期租约(10至50年) 1151 1163 800 1223 Held outside Hong Kong 在香港以外地区 On long lease (over 50 years) 长期租约(50年以上) – 13 – 15 On medium-term lease (10–50 years) 中期租约(10至50年) – 2363 – 2685 On short-term lease(below 10 years) 短期租约 (10年以下) – 10 – 11 5166577549926151 The Group leases out investment properties under operating leases. The leases 本集团以经营租赁形式租出投资物业。 typically run for an initial period from 1 to 5 years with an option to renew 租赁年期通常由1年至5年,到期日后可the leases after that date at which time all terms are renegotiated. None of the 再续约但其他条款须另议。所有租约并leases includes contingent rentals. 不包括或有租金。 Rental income from investment properties held for use under operating leases 于年内,以经营租赁形式租出的投资物amounted to HK$133 million in 2022 (2021: HK$143 million). 业之租金收入为港币1.33亿元(2021年:港币1.43亿元)。 ? F-102 ?东亚银行有限公司 l 2022年报 265 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The total future minimum lease payments of investment properties under non- 以不可撤销经营租赁作出租的投资物业 cancellable operating leases are receivable as follows: 的未来最低应收租赁付款总额如下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Within one year 1年以内 104 108 After one year but within two years 1年以后至2年内 38 55 After two years but within three years 2年以后至3年内 14 16 After three years but within four years 3年以后至4年内 3 5 After four years but within five years 4年以后至5年内 – 3 After five years 5年以后 – – 159187 34. OTHER ASSETS 其他资产 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Accrued interest 应计利息 3537 2649 Customer liabilities under acceptances 承兑客户负债 27796 28674 Other accounts 其他账项 8094 9068 Less: Impairment allowances (Note 43(a)(ix)) 减:减值准备(附注43(a)(ix)) (219) (132) – Stage 1 -第一阶段 (15) (8) – Stage 2 -第二阶段 (10) (2) – Stage 3 -第三阶段 (194) (122) 3920840259 Assets held for sale (Note 55) 持有作出售资产(附注55) 27 2264 3923542523 ? F-103 ?266 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 35. FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS 指定为通过损益以反映公平价值的金融负债 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Deposits and balances of banks 银行的存款及结余 4545 3639 Certificates of deposits issued 已发行存款证 19001 32618 Debt securities issued 已发行债务证券 811 620 2435736877 Financial liabilities above have been designated as at FVTPL when the Group holds 当本集团持有指定为通过损益以反映公平价 related derivatives at FVTPL and designation therefore eliminates or significantly 值的相关衍生工具,以上金融负债被指定为reduces an accounting mismatch that would otherwise arise. 通过损益以反映公平价值,而该指定可消除或明显减少会计错配的情况。 The amount of change during the year and cumulatively in the fair value of 年内及累计结余,下表列示指定为通过损益financial liabilities designated at FVTPL that is attributable to changes in the credit 以反映公平价值的金融负债的公平价值变动 risk of these liabilities and recognised in other comprehensive income is set out 及在其他全面收益表内确认的金额,而该变below. 动是归属于该等负债的信贷风险。 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Balance at 1st January 于1月1日结余 (46) (32) Recognised in other comprehensive income during the year 年内在其他全面收益表内确认的金额 73 (18) Deferred tax 递延税项 (12) 4 Balance at 31st December 于12月31日结余 15 (46) There was no transfer of cumulative gain or loss within equity due to de-recognition 年内(2021年:无)并未有指定为通过损益 of liabilities designated at FVTPL during the year (2021: Nil). 以反映公平价值的负债被终止确认,亦未有将其累计盈利或亏损在股东权益内转账。 The change in fair value attributable to changes in credit risk on financial liabilities 计算可归属于金融负债信贷风险的公平价值 is calculated using the difference between the fair value of the financial liabilities 变动是根据于报告日该等金融负债的的公平 at the reporting date and the present value computed with adjusted asset swap 价值与经调整资产掉期利差之现值后的差额。 spread.The carrying amount of financial liabilities designated as at FVTPL was HK$428 于2022年,指定为通过损益以反映公平价million lower than the contractual amount due at maturity (2021: HK$46 million 值金融负债的账面值较其到期日之合约金额lower). 低港币4.28亿元(2021年:低港币4600万元)。 ? F-104 ?东亚银行有限公司 l 2022年报 267 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 36. INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION 财务状况表内的所得税 (a) Current taxation in the statement of financial position represents: (a) 资产负债表内的本年税项为: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Provision for Hong Kong profits tax for the year 本年度香港利得税准备 486 514 Provisional profits tax paid 已付暂缴利得税 (260) (394) 226120 Balance of profits tax provision relating to prior years 以往年度利得税准备余额 772 643 Taxation outside Hong Kong 在香港以外税项 254 195 1252958 (b) Deferred tax assets and liabilities recognised (b) 递延税项资产及负债确认 The components of deferred tax (assets)/liabilities recognised in the consolidated 确认于综合财务状况表中递延税项(资产)╱ statement of financial position and the movements during the year are as follows: 负债的组成部分及年内之变动如下: 2022 Depreciation allowances in excess of Impairment Revaluation of related Revaluation of losses on financial assets Deferred tax arising from: depreciation properties financial assets at FVOCI Tax losses Others Total按通过其他全面收益以反映超过有关折旧金融资产的公平价值 递延税项源自:的折旧免税额物业重估减值损失金融资产重估税损其他总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 At 1st January 2022 于2022年1月1日 339 109 (1515) 282 (303) (214) (1302) Charged/(credited) to income 收益表内支销╱ statement (Note 18(a)) (存入()附注18(a)) 15 – (494) – 272 33 (174) Charged/(credited) to 储备内支销╱ reserves (Notes 42(b) (g) (存入)(附注42(b)、and (h)) (g)及 (h)) – 4 – (294) – 12 (278) Reversal due to disposal of subsidiaries 出售附属公司的转回 – – – 1 – 1 2 Exchange and other adjustments 汇兑及其他调整 – – 105 (4) 15 13 129 At 31st December 2022 于2022年12月31日 354 113 (1904) (15) (16) (155) (1623) ? F-105 ?268 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 36. INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION (CONTINUED) 财务状况表内的所得税(续) (b) Deferred tax assets and liabilities recognised (continued) (b) 递延税项资产及负债确认(续) 2021 Depreciation allowances in excess of Impairment Revaluation of related Revaluation of losses on financial assets Deferred tax arising from: depreciation properties financial assets at FVOCI Tax losses Others Total按通过其他全面收益以反映超过有关折旧金融资产的公平价值 递延税项源自:的折旧免税额物业重估减值损失金融资产重估税损其他总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 At 1st January 2021 于2021年1月1日 345 115 (1387) 122 (540) (217) (1562) Charged/(credited) to income 收益表内支销╱ statement (Note 18(a)) (存入()附注18(a)) (7) – (91) – 236 14 152 Charged/(credited) to 储备内支销╱(存入)reserves (Notes 42(b) (g) (附注42(b)、(g)and (h)) 及 (h)) – (6) – 212 – (4) 202 Transfer to assets held for sale 转至持有作出售资产 (Note 55) (附注55) (5) – – – – – (5) Reversal due to disposal of subsidiaries 出售附属公司的转回 6 – – (52) 15 – (31) Exchange and other adjustments 汇兑及其他调整 – – (37) – (14) (7) (58) At 31st December 2021 于2021年12月31日 339 109 (1515) 282 (303) (214) (1302) 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Net deferred tax assets recognised on the statement 确认于财务状况表的递延税项资产 of financial position 净额 (1849) (1861) Net deferred tax liabilities recognised on the 确认于财务状况表的递延税项负债 statement of financial position 净额 226 559 (1623)(1302) ? F-106 ?东亚银行有限公司 l 2022年报 269 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (c) Deferred tax assets not recognised (c) 未确认递延税项资产 The Group has not recognised deferred tax assets in respect of cumulative tax losses 由于可能未来没有适用于有关税务机关及实 of HK$101 million (2021: HK$105 million) as it is not probable that future taxable 体的应课税溢利以弥补有关亏损,本集团并profits against which the losses can be utilised will be available in the relevant tax 未确认累计税损港币1.01亿元(2021年:港jurisdiction and entity. Under the current tax legislation the expiry dates of the tax 币1.05亿元)为递延税项资产。根据现时税losses were as follows: 务条例,该等税损的到期日如下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Expiring within 5 years 于五年内到期 41 33 No expiry date 无到期日 60 72 101105 37. OTHER LIABILITIES 其他负债 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Accrued interest payable 应计应付利息 4155 1894 Acceptance draft payable 应付承兑票据 27796 28674 Impairment allowances on financial guarantee contracts issued and loan commitments issued 已发行的财务担保及已发行的贷款承 (Note 43(a)(ix)) 担之减值准备(附注43(a)(ix)) 318 174 – Stage 1 -第一阶段 121 133 – Stage 2 -第二阶段 23 24 – Stage 3 -第三阶段 174 17 Liabilities held for sale (Note 55) 持有作出售负债(附注55) – 1637 Lease Liabilities 租赁负债 774 884 Other accounts (Note) 其他账项(注) 16756 9652 4979942915 Note: Include contract liabilities of HK$2476 million (2021: HK$2625 million) from 注 : 包括由《香港财务报告准则》第15号所产生contracts with customers under HKFRS 15. 的合约负债港币24.76亿元(2021年:港币 26.25亿元)。 ? F-107 ?270 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 38. LOAN CAPITAL 借贷资本 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Subordinated notes/Loss absorbing notes at 按摊销成本及经公平价值对冲调整后 amortised cost with fair value hedge adjustments 列账的后偿票据╱吸收亏损票据 USD500 million fixed rate subordinated notes 在2032年4月22日到期的定息 due 22nd April 2032 (1) 5亿美元后偿票据 (1) 3691 – USD250 million fixed rate loss absorbing notes 在2028年7月7日到期的定息 due 7th July 2028 (2) 2.5亿美元吸收亏损票据 (2) 1876 – Subordinated notes at amortised cost without 按摊销成本列账及并未对冲的 hedging 后偿票据 RMB1500 million fixed rate subordinated notes 在2029年4月25日到期的定息 due 25th April 2029 (3) 人民币15亿元后偿票据 (3) 1695 1833 USD600 million fixed rate subordinated notes 在2030年5月29日到期的定息 due 29th May 2030 (4) 6亿美元后偿票据 (4) 4665 4655 119276488 The Group has not had any defaults of principal interest or other breaches with 截至2022及2021年12月31日止年度内本 respect to its debt securities during the years ended 31st December 2022 and 集团对其所发行之债务证券的本金和利息并 2021.无违约或不履行。 (1) Loan capital with face value of HK$3901 million (US$500 million) and carrying (1) 票面值港币39.01亿元(5亿美元)及账 amount of HK$3691 million represents subordinated notes carrying a coupon 面值港币36.91亿元的借贷资本,是rate of 4.875% p.a. qualifying as Tier 2 capital and meeting the loss-absorbing 指由本行于2022年4月22日发行年息 capacity requirements issued on 22nd April 2022 by the Bank. The notes are 4.875%,并评定为二级资本及符合吸listed on the Hong Kong Stock Exchange will mature on 22nd April 2032 收亏损能力之要求的后偿票据。该等票and are callable on 22nd April 2027. The notes are under fair value hedge 据于联交所上市,并将于2032年4月22accounting and the hedge ineffectiveness of HK$3.8 million profit was recorded 日到期,可于2027年4月22日赎回。 in 2022. 在2022年,因采用公平价值对冲会计法而录得的无效对冲部分溢利港币380万元。 (2) Loan capital with face value of HK$1951 million (US$250 million) and carrying (2) 票面值港币19.51亿元(2.5亿美元)及 amount of HK$1876 million represents non-preferred loss-absorbing capacity 账面值港币18.76亿元的借贷资本,notes carrying a coupon rate of 5.125% p.a. and meeting the loss-absorbing 是指由本行于2022年7月7日发行(于capacity requirements issued on 7th July 2022 (traded on 28th June 2022) by 2022年6月28日交易)年息5.125%,the Bank. The notes are listed on the Hong Kong Stock Exchange will mature 及符合吸收亏损能力之要求的非优先吸 on 7th July 2028 and are callable on 7th July 2027. The notes are under fair 收亏损能力票据。该等票据于联交所上value hedge accounting and the hedge ineffectiveness of HK$0.1 million profit 市,并将于2028年7月7日到期,可于was recorded in 2022. 2027年7月7日赎回。在2022年,因采用公平价值对冲会计法而录得的无效对冲部分溢利港币10万元。 (3) Loan capital of face value of HK$1696 million (RMB1500 million) and carrying (3) 票面值港币16.96亿元(人民币15亿元)amount of HK$1695 million (2021: HK$1833 million) represents subordinated 及账面值港币16.95亿元(2021年:港notes carrying a coupon of 4.94% p.a. issued on 25th April 2019 by the Bank’s 币18.33亿元)的借贷资本,是指由本行subsidiary The Bank of East Asia (China) Limited. The notes will mature on 25th 附属公司东亚中国于2019年4月25日 April 2029 and are callable on 25th April 2024. 发行年息4.94%的后偿票据。该等票据将于2029年4月25日到期,可于2024年4月25日赎回。 (4) Loan capital of face value of HK$4681 million (US$600 million) and carrying (4) 票面值港币46.81亿元(6亿美元)及账amount of HK$4665 million (2021: HK$4655 million) represents subordinated 面值港币46.65亿元(2021年:港币notes carrying a coupon of 4% p.a. qualifying as Tier 2 capital and meeting the 46.55亿元)的借贷资本,是指由本行于loss-absorbing capacity requirements issued on 29th May 2020 by the Bank. 2020年5月29日发行年息4%,并评定The notes are listed on the Hong Kong Stock Exchange will mature on 29th 为二级资本及符合吸收亏损能力之要求 May 2030 and are callable on 29th May 2025. 的后偿票据。该等票据于联交所上市,并将于2030年5月29日到期,可于2025年5月29日赎回。 ? F-108 ?东亚银行有限公司 l 2022年报 271 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 39. EQUITY SETTLED SHARE-BASED TRANSACTIONS 以股份为基础作支付的交易 The Bank has adopted Staff Share Option Schemes (the “Schemes”) whereby the 本行所采纳的雇员认股权计划(「计划」)是 Board of the Bank may at its discretion grant to any employees including Executive 董事会可酌情授出认股权予本集团之任何 Director(s) and Co-Chief Executives of the Group options to subscribe for ordinary 雇员,包括执行董事及联席行政总裁,以认shares of the Bank. Except as provided otherwise in the rules of the relevant 购本行普通股股份。除有关计划的规则另有Scheme(s) share options granted under the 2011 Scheme 2016 Scheme and 2021 规定外,根据2011年计划、2016年计划及Scheme may be exercised beginning on the Vesting Date and ending on the fifth 2021年计划所授予的认股权的行使期限为 anniversary of the Vesting Date. All options were granted for nil consideration. 归属日开始至归属日的第5周年止。所有认股权均以不计价款形式发出。 (a) Particulars of share options: (a) 认股权详情: (i) Share options granted in years 2014 to 2021: (i) 在2014年至2021年所授予的认股权: Date of grant Tranche Vesting period Exercise period Exercise price per share授予日期部分有效期行使期每股行使价 HK$港币元 02/5/2014 T3 02/5/2014 – 01/5/2017 02/5/2017 – 02/5/2022 32.50 04/5/2015 T2 04/5/2015 – 03/5/2017 04/5/2017 – 04/5/2022 34.15 04/5/2015 T3 04/5/2015 – 03/5/2018 04/5/2018 – 04/5/2023 34.15 08/4/2016 T1 08/4/2016 – 07/4/2017 08/4/2017 – 08/4/2022 28.45 08/4/2016 T2 08/4/2016 – 07/4/2018 08/4/2018 – 08/4/2023 28.45 08/4/2016 T3 08/4/2016 – 07/4/2019 08/4/2019 – 08/4/2024 28.45 07/4/2017 T1 07/4/2017 – 06/4/2018 07/4/2018 – 07/4/2023 32.25 07/4/2017 T2 07/4/2017 – 06/4/2019 07/4/2019 – 07/4/2024 32.25 07/4/2017 T3 07/4/2017 – 06/4/2020 07/4/2020 – 07/4/2025 32.25 10/4/2018 T1 10/4/2018 – 09/4/2019 10/4/2019 – 10/4/2024 32.25 10/4/2018 T2 10/4/2018 – 09/4/2020 10/4/2020 – 10/4/2025 32.25 10/4/2018 T3 10/4/2018 – 09/4/2021 10/4/2021 – 10/4/2026 32.25 19/7/2019 T1 19/7/2019 – 18/7/2020 19/7/2020 – 19/7/2025 22.45 19/7/2019 T2 19/7/2019 – 18/7/2021 19/7/2021 – 19/7/2026 22.45 19/7/2019 T3 19/7/2019 – 18/7/2022 19/7/2022 – 19/7/2027 22.45 07/4/2020 T1 07/4/2020 – 06/4/2021 07/4/2021 – 07/4/2026 16.58 07/4/2020 T2 07/4/2020 – 06/4/2022 07/4/2022 – 07/4/2027 16.58 07/4/2020 T3 07/4/2020 – 06/4/2023 07/4/2023 – 07/4/2028 16.58 13/4/2021 T1 13/4/2021 – 12/4/2022 13/4/2022 – 13/4/2027 17.08 13/4/2021 T2 13/4/2021 – 12/4/2023 13/4/2023 – 13/4/2028 17.08 13/4/2021 T3 13/4/2021 – 12/4/2024 13/4/2024 – 13/4/2029 17.08 ? F-109 ?272 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 39. EQUITY SETTLED SHARE-BASED TRANSACTIONS (CONTINUED) 以股份为基础作支付的交易(续) (a) Particulars of share options: (continued) (a) 认股权详情:(续) (ii) Share options granted in year 2022: (ii) 在2022年所授予的认股权: Date of grant Tranche Vesting period Exercise period Exercise price per share授予日期部分有效期行使期每股行使价 HK$港币元 12/4/2022 T1 12/4/2022 – 11/4/2023 12/4/2023 – 12/4/2028 12.17 12/4/2022 T2 12/4/2022 – 11/4/2024 12/4/2024 – 12/4/2029 12.17 12/4/2022 T3 12/4/2022 – 11/4/2025 12/4/2025 – 12/4/2030 12.17 (b) The number and weighted average exercise prices of share options (b) 已行使认股权的数目及加权平均行使 are as follows: 价如下: 20222021 Weighted Weighted average Number average Number exercise price of options exercise price of options加权平均加权平均行使价认股权数目行使价认股权数目 HK$港币元 Million百万 HK$港币元 Million百万 Outstanding at the beginning of the year 年初结余 26.57 36 28.64 38 Exercised during the year 年内行使 – – – – Granted during the year 年内授予 12.17 16 17.08 4 Lapsed during the year 年内失效 32.04 (5) 32.58 (6) Outstanding at the end of the year 年末结余 21.08 47 26.57 36 Exercisable at the end of the year 年末可供行使 27.24 27 29.68 27 There were no share options exercised during the years 2022 and 2021. 于2022年及2021年并无认股权被行使。 The options outstanding at 31st December 2022 had an exercise price from 于2022年12月31日,尚未行使认股权的行HK$12.17 to HK$34.15 (2021: from HK$16.58 to HK$34.15) and a weighted 使价由港币12.17元至港币34.15元(2021average remaining contractual life of 3.91 years (2021: 3.24 years). 年:由港币16.58元至港币34.15元),及剩余合约年期之加权平均数为3.91年(2021年:3.24年)。 ? F-110 ?东亚银行有限公司 l 2022年报 273 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (c) Fair value of share options and assumptions (c) 认股权的公平价值及假设 The fair value of services received in return for share options granted is measured by 获得服务以换取认股权的公平价值按授予认 reference to the fair value of share options granted. The estimate of the fair value 股权的公平价值计量。授予认股权之估计公of the share options granted is measured based on a trinomial lattice model. The 平价值按三项式期权定价模式。认股权的合contractual life of the option is used as an input into this model. 约年期为该定价模式的参数。 20222021 Fair value at measurement date 于计量日的公平价值 – Tranche 1 -部分1 HK$港币1.65元 HK$港币5.05元 – Tranche 2 -部分2 HK$港币1.50元 HK$港币5.34元 – Tranche 3 -部分3 HK$港币1.30元 HK$港币5.57元 Share price at measurement date 于计量日的股价 HK$港币12.17元 HK$港币17.08元 Exercise price 行使价 HK$港币12.17元 HK$港币17.08元 Expected volatility 预计波幅 25.12% 36.72% Option life 认股权年期 – Tranche 1 -部分1 6 years年 6 years年 – Tranche 2 -部分2 7 years年 7 years年 – Tranche 3 -部分3 8 years年 8 years年 Expected dividends 预计股息 16.06%–18.69% 3.24%–3.69% Risk-free interest rate (based on Hong Kong Government Bonds) 无风险利率(根据香港政府债券) 2.67%–2.69% 0.97%–1.29% The expected volatility is based on the historic volatility and the expected dividends 预计波幅是根据过往之波幅及按在发行日前 are based on historical dividends prior to grant date. Changes in the subjective input 过往股息的预计股息。主观输入假设的变动assumptions could materially affect the fair value estimate. 可能重大影响公平价值的估计。 Share options were granted under a service condition. This condition has not been 认股权的授予须符合服务条件。该服务条件taken into account in the grant date fair value measurement of the services received. 并未纳入计算于授予日获得服务的公平价 There were no market conditions associated with the share option grants. 值。授予认股权与市场情况并无关系。 ? F-111 ?274 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 40. SHARE CAPITAL 股本 20222021 No. of shares No. of shares股份数目股份数目 Million百万 HK$ Mn 港币百万元 Million百万 HK$ Mn 港币百万元 Ordinary shares issued and fully paid: 已发行及缴足普通股: At 1st January 于1月1日 2923 41645 2917 41557 Shares issued in lieu of dividend 以股代息发行的股份 19 211 6 88 Share repurchased and cancelled 股份回购和注销 (262) – – – At 31st December 于12月31日 2680 41856 2923 41645 Share buy-back 股份回购 On 28th March 2022 the Bank executed a share buy-back deed with Elliott 于 2 0 2 2 年 3 月 2 8 日,本行与 E l l i o t tInvestment Management’s affiliate entities to repurchase 246510173 shares of Investment Management之附属公司签署 the Bank. The share buy-back transaction was completed on 11th April 2022 at 了股份回购协议,回购本行246510173股a consideration of HK$2904 million. Together with the direct transaction cost of 股份。股份回购交易已于2022年4月11日approximately HK$12 million a total amount of HK$2916 million was accounted 完成,总代价为港币29.04亿元。连同直接交for as deduction from retained profits. The shares repurchased were cancelled on 易成本约港币1200万元,总额为港币29.16 20th April 2022. 亿元,已从留存溢利中扣除。回购的股份已 于2022年4月20日注销。 Pursuant to the general mandate granted to the Board by the Shareholders at the 根据股东在2022年5月6日举行的2022年2022 annual general meeting held on 6th May 2022 the Bank initiated an on- 股东周年常会上授予董事会的一般性授权, market buy-back of its Shares in an amount of up to HK$500 million depending 本行发起不超过港币5.00亿元的场内股份 on the then prevailing market conditions. As at 31st December 2022 15744800 回购,具体取决于当时的市况。截至2022shares had been repurchased on the Hong Kong Stock Exchange at a consideration 年12月31日,本行已于香港联交所回购of HK$134 million. Together with the direct transaction cost of approximately HK$1 15744800股股份,代价为港币1.34亿元。 million a total amount of HK$135 million was accounted for as deduction from 连同直接交易成本约港币100万元,总额为retained profits. 港币1.35亿元已从留存溢利中扣除。 ? F-112 ?东亚银行有限公司 l 2022年报 275 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Below table shows the details of the shares repurchased and cancelled during 2022. 下表列载2022年已回购和注销股份之详情。 Number of Highest price Lowest price Average price Aggregate Month shares paid per share paid per share paid per share price paid每股支付的最每股支付的每股支付的月份股数高价格最低价格平均价格支付总额 HK$ HK$ HK$ HK$ Mn港币港币港币港币百万元 Share repurchased: 已回购股份: Off-market share buy-back 场外股份回购 – April 2022 -2022年4月 246510173 n/a 不适用 n/a 不适用 11.78 2904 On-market share buy-back 场内股份回购 – October 2022 -2022年10月 5829200 8.93 7.52 8.28 48 – November 2022 -2022年11月 6194200 9.03 7.42 8.32 51 – December 2022 -2022年12月 3721400 9.58 8.91 9.31 35 – Settled -已结算 3525200 33 – Not yet settled at year end -于年末尚未结算 196200 2 15744800134 Share cancelled 已注销股份 261568773 The total numbers of shares repurchased and cancelled in 2022 were 262254973 于2022年内回购及注销之股份总数分别为 and 261568773 respectively representing 8.97% and 8.95% of the ordinary 262254973股及261568773股,分别shares in issue. The remaining 686200 shares repurchased in 2022 were cancelled 占已发行普通股的8.97%和8.95%。其余on 9th January 2023. 2022年回购之686200股已于2023年1月 9日注销。 Staff Share Option Schemes 雇员认股权计划 Pursuant to the approved Staff Share Option Schemes options to purchase ordinary 根据已核准的雇员认股权计划,认股权授予shares in the Bank were granted to eligible employees. Except as provided otherwise 合格雇员以认购本行的普通股股份。除在有in the rules of the relevant Scheme(s) share options granted under 2011 Scheme 关计划的规则另有规定外,根据2011年计 2016 Scheme and 2021 Scheme will be exercisable during the period beginning on 划、2016年计划及2021年计划所授予的认 the Vesting Date and ending on the fifth anniversary of the Vesting Date. 股权的行使期限则由归属日开始至归属日的 第5周年止。 There were no options exercised and shares issued under the Schemes during the 于2022年和2021年,在该等计划下并无任years 2022 and 2021. 何认股权和股份被行使和发行。 ? F-113 ?276 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 41. ADDITIONAL EQUITY INSTRUMENTS 额外股本工具 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Additional Tier 1 Capital Securities 额外一级资本工具 USD500 million undated non-cumulative 5亿美元无到期日非累积后偿 subordinated capital securities (1) 资本证券 (1) – 3878 USD650 million undated non-cumulative 6.5亿美元无到期日非累积后偿 subordinated capital securities (2) 资本证券 (2) 5069 5069 USD650 million undated non-cumulative 6.5亿美元无到期日非累积后偿 subordinated capital securities (3) 资本证券 (3) 5021 5021 1009013968 (1) On 18th May 2017 the Bank issued undated non-cumulative subordinated (1) 于2017年5月18日,本行发行面值5capital securities (“Additional Tier 1 Capital Securities”) with a face value of 亿美元(扣除有关发行成本后等值港币US$500 million (equivalent to HK$3878 million net of related issuance costs). 38.78亿元)无到期日非累积后偿资本工 The Additional Tier 1 Capital Securities were undated and bore a 5.625% 具(「额外一级资本工具」)。该额外一级per annum coupon until the first call date on 18th May 2022. The Bank fully 资本工具是无到期日及附带5.625%年 redeemed the Additional Tier 1 Capital Securities on 18th May 2022. 息率,直至2022年5月18日的第一次收回日。本行于2022年5月18日全数赎回该等额外一级资本工具。 (2) On 19th September 2019 the Bank issued undated non-cumulative (2) 于2019年9月19日,本行发行面值6.5subordinated capital securities with a face value of US$650 million (equivalent 亿美元(扣除有关发行成本后等值港币to HK$5069 million net of related issuance costs). The Additional Tier 1 Capital 50.69亿元)无到期日非累积后偿资本 Securities are undated and bear a 5.875% per annum coupon until the first call 工具。该额外一级资本工具是无到期日date on 19th September 2024. The coupon will be reset every five years if the 及附带5.875%年息率,直至2024年9Additional Tier 1 Capital Securities are not redeemed to a fixed rate equivalent 月19日的第一次收回日。如该额外一级to the then-prevailing five-year US Treasury rate plus 4.257% per annum. The 资本工具并非按相等于当时五年期美国 coupon payments may be cancelled at the sole discretion of the Bank. The 库券息率加年息4.257%之固定利率赎 Additional Tier 1 Capital Securities will be written down if a non-viability event 回,息率将会按每五年重新厘定。本行occurs and is continuing. They rank higher than ordinary shares in the event of 可自行决定是否取消支付利息。如出现a winding-up and meet the loss-absorbing capacity requirement. 一项无法经营事件并将会持续,该额外一级资本工具将会被撇销。该额外一级资本工具在发生清盘事件时比普通股有优先权,及符合吸收亏损能力之要求。 The first scheduled coupon payment date was 19th March 2020 and the 第一次既定派息日为2020年3月19coupon shall be payable semi-annually. The Bank has the right to cancel coupon 日,每半年派发一次。本行可自行决定payment (subject to the requirement as set out in the terms and conditions 是否取消支付利息(受限于发行额外一of the Additional Tier 1 Capital Securities) and the coupon cancelled shall not 级资本证券所载规则及条款的要求)及 be cumulative. However the Bank is stopped from declaring dividend to its 利息是不可累计。但是,除非下次利息ordinary shareholders unless the next scheduled coupon payment is paid. 按既定日支付,本行不能宣布派发股息予普通股股东。 ? F-114 ?东亚银行有限公司 l 2022年报 277 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The principal of the Additional Tier 1 Capital Securities will be written off up to 如金管局通知本行并认为本行如不撇销 the amount as directed or agreed with the HKMA if the HKMA notifies the Bank 额外一级资本工具之本金将无法继续经 that in the opinion of the HKMA the Bank would become non-viable if there is 营,本行将按金管局的指示或与金管局no written off of the principal. 共同协商后得出之金额从额外一级资本工具之本金中撇销。 The Bank has a call option to redeem all the outstanding Additional Tier 1 由2024年9月19日或以后任何利息支 Capital Securities from 19th September 2024 or any subsequent coupon 付日,本行可行使认购权以赎回所有额payment date but subject to restriction as set out in the terms and conditions. 外一级资本工具之结余,但须受已列载之条款及细则所规限。 (3) On 21st October 2020 the Bank issued undated non-cumulative subordinated (3) 于2020年10月21日,本行发行面值capital securities with a face value of US$650 million (equivalent to HK$5021 6.5亿美元(扣除有关发行成本后等值港million net of related issuance costs). The Additional Tier 1 Capital Securities 币50.21亿元)无到期日非累积后偿资 are undated and bear a 5.825% per annum coupon until the first call date on 本工具。该额外一级资本工具是无到期 21st October 2025. The coupon will be reset every five years if the Additional 日及附带5.825%年息率,直至2025年 Tier 1 Capital Securities are not redeemed to a fixed rate equivalent to the 10月21日的第一次收回日。如该额外then-prevailing five-year US Treasury rate plus 5.527% per annum. The coupon 一级资本工具并非按相等于当时五年期 payments may be cancelled at the sole discretion of the Bank. The Additional 美国库券息率加年息5.527%之固定利 Tier 1 Capital Securities will be written down if a non-viability event occurs and 率赎回,息率将会按每五年重新厘定。 is continuing. They rank higher than ordinary shares in the event of a winding- 本行可自行决定是否取消支付利息。如up and meet the loss-absorbing capacity requirement. 出现一项无法经营事件并将会持续,该额外一级资本工具将会被撇销。该额外一级资本工具在发生清盘事件时比普通 股有优先权,及符合吸收亏损能力之要求。 The first scheduled coupon payment date was 21st April 2021 and the coupon 第一次既定派息日为2021年4月21shall be payable semi-annually. The Bank has the right to cancel coupon 日,每半年派发一次。本行可自行决定payment (subject to the requirement as set out in the terms and conditions 是否取消支付利息(受限于发行额外一of the Additional Tier 1 Capital Securities) and the coupon cancelled shall not 级资本工具所载规则及条款的要求)及 be cumulative. However the Bank is stopped from declaring dividend to its 利息是不可累计。但是,除非下次利息ordinary shareholders unless the next scheduled coupon payment is paid. 按既定日支付,本行不能宣布派发股息予普通股股东。 The principal of the Additional Tier 1 Capital Securities will be written off up to 如金管局通知本行并认为本行如不撇销 the amount as directed or agreed with the HKMA if the HKMA notifies the Bank 额外一级资本工具之本金将无法继续经 that in the opinion of the HKMA the Bank would become non-viable if there is 营,本行将按金管局的指示或与金管局no written off of the principal. 共同协商后得出之金额从额外一级资本工具之本金中撇销。 The Bank has a call option to redeem all the outstanding Additional Tier 1 由2025年10月21日或以后任何利息支 Capital Securities from 21st October 2025 or any subsequent coupon payment 付日,本行可行使认购权以赎回所有资date but subject to restriction as set out in the terms and conditions. 本工具之结余,但须受已列载之条款及细则所规限。 ? F-115 ?278 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 42. RESERVES 储备 The Group集团 The Bank银行 2022202120222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 (a) General reserve (a) 一般储备 At 1st January 于1月1日 13658 13657 13472 13471 Transferred from property revaluation 出售后转自物业重估 reserve on disposals 储备 – 1 – 1 At 31st December 于12月31日 13658 13658 13472 13472 (b) Revaluation reserve on bank premises (b) 行址重估储备 At 1st January 于1月1日 1905 1895 1899 1891 Recognition of deferred tax 确认递延税项资产╱ assets/(liabilities) (Note 36(b)) (负债()附注36(b)) (4) 6 (4) 6 Transferred to general reserve on disposals 出售后转入一般储备 – (1) – (1) Revaluation surplus on bank premises transferred to investment properties 行址重估盈余转入 (Note 33) 投资物业(附注33) 354 5 – 3 At 31st December 于12月31日 2255 1905 1895 1899 (c) Statutory reserves (c) 法定储备 At 1st January 于1月1日 5273 5055 – – Transfer (to)/from retained profits (拨入)╱拨自留存溢利 (135) 218 – – At 31st December 于12月31日 5138 5273 – – (d) Capital reserve (d) 资本储备 At 1st January 于1月1日 895 895 – – Transfer to retained profits 拨入留存溢利 – – – – At 31st December 于12月31日 895 895 – – (e) Exchange revaluation reserve (e) 汇兑重估储备 At 1st January 于1月1日 1058 301 127 162 Exchange adjustments 汇兑调整 (2880) 757 (252) (35) At 31st December 于12月31日 (1822) 1058 (125) 127 (f) Capital reserve – staff share options (f) 资本储备-已发行 issued 雇员认股权 At 1st January 于1月1日 152 157 152 157 Forfeited options transferred to 已注销认股权转入 retained profits 留存溢利 (24) (24) (24) (24) Additions (Note 14) 增加(附注14) 22 19 22 19 At 31st December 于12月31日 150 152 150 152 ? F-116 ?东亚银行有限公司 l 2022年报 279 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The Group集团 The Bank银行 2022202120222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 (g) Fair value reserve (g) 公平价值储备 At 1st January 于1月1日 1925 2465 1763 1687 Changes in fair value of securities 证券的公平价值变动 (1722) 164 (1545) 221 Reversal upon disposal 于出售时转回 13 (492) (153) (18) Recognition of deferred tax assets/ 确认递延税项资产╱ (liabilities) (Note 36(b)) (负债()附注36(b)) 294 (212) 295 (127) At 31st December 于12月31日 510 1925 360 1763 (h) Liability credit reserve (h) 负债信贷储备 At 1st January 于1月1日 (46) (32) (46) (32) Changes in fair value arising from 自身信贷变动产生的 changes in own credit risk 公平价值变动 73 (18) 73 (18) Recognition of deferred tax assets 确认递延税项资产 (Note 36(b)) (附注36(b)) (12) 4 (12) 4 At 31st December 于12月31日 15 (46) 15 (46) (i) Other reserves (i) 其他储备 At 1st January 于1月1日 (82) 83 – – Transfer to retained profits 拨入留存溢利 (5) – – – Share of changes in equity of associates 应占联营公司及合资企业 and joint ventures 权益的变动 54 (165) – – At 31st December 于12月31日 (33) (82) – – (j) Retained profits (j) 留存溢利 At 1st January 于1月1日 35395 32852 28292 24580 Net profit for the year 年度内溢利 4359 5270 4296 6221 Transfer from capital reserve 拨自资本储备 – staff share options issued -已发行雇员认股权 24 24 24 24 Transfer from/(to) statutory reserve 拨自╱(拨入)法定储备 135 (218) – – Transfer from other reserves 拨自其他储备 5 – – – Share buy-back (Note 40) 股份回购(附注40) (3051) – (3051) – Redemption of Additional Tier 1 capital instruments 赎回额外一级股本工具 (47) – (47) – Distribution/Dividends (Note 19) 分派╱股息(附注19) – Interim dividend -中期股息 (430) (1022) (430) (1022) – Second interim dividend in respect - 上年度第二次中期 of prior years 股息 (1023) (700) (1023) (700) – Special dividend -特别股息 (1294) – (1294) – – Additional Tier 1 capital instruments -额外一级资本工具 (708) (811) (708) (811) At 31st December 于12月31日 33365 35395 26059 28292 (k) Total reserves (k) 储备总额 54131 60133 41826 45659 ? F-117 ?280 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 42. RESERVES (CONTINUED) 储备(续) General reserve was set up from the transfer of retained earnings and the realised 一般储备的建立,包括来自留存溢利及出售revaluation surplus on disposal of properties. 物业时的已实现重估盈余。 Revaluation reserve on bank premises and exchange revaluation reserve have been 行址及汇兑重估储备的建立及处理是根据重 set up and are dealt with in accordance with the accounting policies adopted for the 估行址和外币折算所采用的会计政策。 revaluation of bank premises and foreign currency translation.Statutory reserves are set up to satisfy the statutory requirements of certain overseas 法定储备是用作满足若干海外附属公司及联 subsidiaries and associates mainly for the purpose of covering unidentified potential 营公司之法定要求,主要用途为除按当地现losses on risk assets in addition to those recognised under the prevailing accounting 行会计要求下已确认而需额外涵盖风险资产 requirements in their jurisdictions. 的不可辨别之可能损失。 Capital reserve represents the capitalisation of subsidiaries‘ associates’ and joint 资本储备指附属公司、联营公司及合资企业 ventures’ reserves. 投资储备的资本化发行。 Capital reserve – staff share options issued comprises the fair value of the actual 资本储备(已发行雇员认股权)包括根据已采 or estimated number of unexercised share options granted to employees of the 纳有关附注2(y)(iv)所载以股份为基础作支付 Bank recognised in accordance with the accounting policy adopted for share based 的会计政策确认授予本行雇员之实际或估计 payment in Note 2(y)(iv). 未行使认股权数目的公平价值。 Fair value reserve comprises the cumulative net change in the fair value of FVOCI 公平价值储备包括持有通过全面收益以反映 securities held until the securities are derecognised and is dealt with in accordance 公平价值证券直至证券被终止确认的累计公 with the accounting policies in Note 2(h). 平价值变动净额,有关处理的会计政策已详载于附注2(h)。 Liability credit reserve includes the cumulative changes in the fair value of the 负债信贷储备包括指定为通过损益以反映公 financial liabilities designated as at FVTPL that are attributable to changes in the 平价值金融负债的累计公平价值变动,而有credit risk of these liabilities other than those recognised in profit or loss. 关于该等负债引致的信贷风险变动并非在收益表内确认。 Other reserves represent share of changes in equity of associates in respect of 其他储备包括应占联营公司权益之投资重估 investment revaluation reserve and revaluation reserve of bank premises. 储备及重估行址储备的变动。 A regulatory reserve is maintained to satisfy the provisions of the Hong Kong 为符合香港《银行业条例》有关审慎监管的规 Banking Ordinance for prudential supervision purposes by earmarking amounts 定,本行需在规管储备中维持超过已确认减in respect of losses which the Bank will or may incur on loans and advances and 值损失的可能贷款及投资减值损失金额。经investments in addition to impairment losses recognised. Movements in the reserve 咨询金管局后,储备的变动已直接在留存溢are earmarked directly through retained earnings and in consultation with the 利内划定。于2022年12月31日,该要求的HKMA. As at 31st December 2022 the effect of this requirement is to restrict 影响是要限制本行可派发予本集团股东的储the amount of reserves which can be distributed by the Bank to shareholders by 备,金额为港币17.42亿元(2021年:港币HK$1742 million (2021: HK$2658 million). 26.58亿元)。 At 31st December 2022 the aggregate amount of reserves available for 于2022年12月31日,可派发予本行股东的distribution to equity holders of the Bank was HK$34698 million (2021: HK$37330 储备总额为港币346.98亿元(2021年:港million). After the end of the reporting period the directors declared a second 币373.30亿元)。在报告期期末后董事宣布interim dividend of HK$0.17 per ordinary share (2021: HK$0.35 per share) 派发第二次中期股息每股普通股港币0.17元 amounting to HK$456 million (2021: HK$1023 million). The dividend has not been (2021年:每股港币0.35元),总额达港币recognised as a liability at the end of the reporting period. 4.56亿元(2021年:港币10.23亿元)。于报告期期末并未确认该等股息为负债。 ? F-118 ?东亚银行有限公司 l 2022年报 281 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT 主要风险管理 This section presents information on the Group’s management of principal risks. 本部分载述有关本集团主要风险管理的资料。 The Group has established a risk governance and management framework in line 根据金管局及其他监管机构的规定,本集团with the requirements set out by the HKMA and other regulators. This framework 已建立风险管治及管理架构。该架构让董事is built around a structure that enables the Board and Senior Management to 会及高层管理人员能够以适当授权和制衡方 discharge their risk management-related responsibilities with appropriate delegation 式履行其与风险管理相关的职责。此等职责and checks and balances. These responsibilities include defining risk appetite in 包括根据本集团的业务策略及目标设定风 accordance with the Group’s business strategies and objectives formulating risk 险偏好、制定风险政策以管理上述策略的执 policies that govern the execution of those strategies and establishing procedures 行,并设立风险审批、控制、监控及补救的and limits for the approval control monitoring and remedy of risks. 程序及限额。 The Risk Committee stands at the highest level of the Group’s risk governance 风险委员会为本集团仅次于董事会的最高风 structure under the Board. It consists of five independent non-executive directors 险管治机构,成员包括五名独立非执行董事and two non-executive directors and is chaired by one of the independent non- 及两名非执行董事,并由其中一名独立非执executive directors. The Risk Committee provides direct oversight over the 行董事担任主席。风险委员会直接监督本集formulation of the Group’s risk appetite and sets the levels of risk that the Group 团风险偏好的制定,并因应本集团的财务能is willing to undertake with reference to its financial capacity strategic direction 力、策略性指引、当前市场情况及监管要求 prevailing market conditions and regulatory requirements. 设定可承担的风险水平。 The Risk Committee also ensures that the Group’s risk appetite is reflected in 风险委员会亦确保本集团的风险偏好获反映 the policies and procedures that Senior Management adopt to execute their 于政策及程序上,让高层管理人员加以采用,business functions. Through the Group’s management committees including 以行使其业务职能。透过本集团的各个管理Crisis Management Committee Risk Management Committee Credit Committee 委员会,包括危机管理委员会、风险管理委Asset and Liability Management Committee and Operational Risk Management 员会、信贷委员会、资产负债管理委员会及 Committee – and with overall co-ordination by the Risk Management Division – 营运风险管理委员会,并在风险管理处的整the Risk Committee regularly reviews the Group’s risk management framework and 体协调下,风险委员会定期检讨本集团的风ensures that all important risk-related tasks are performed according to established 险管理架构,确保所有与风险相关的重要任policies with appropriate resources. 务是根据现有政策及运用适当资源执行。 ? F-119 ?282 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) The Crisis Management Committee Risk Management Committee Credit 危机管理委员会、风险管理委员会、信贷委 Committee Asset and Liability Management Committee and Operational Risk 员会、资产负债管理委员会及营运风险管理Management Committee comprise the Senior Management the Group Chief Risk 委员会由高层管理人员、集团风险总监及(在Officer and where appropriate senior executives from relevant areas. 适当情况下)其他有关方面的高级行政人员组成。 The Group has implemented an Enterprise Risk Management framework to identify 本集团已推行企业风险管理架构,旨在全面and manage potential risks in a holistic and effective manner. The ERM framework 有效地识别及管理潜在风险。企业风险管理assists the Group to achieve this and reinforces the “Three Lines of Defence” risk 架构协助本集团达到这目标,以及巩固「三management model. 道防线」风险管理模式。 The Group has adopted the “Three Lines of Defence” risk management structure to 为确保本集团内与风险管理有关的角色与责 ensure that roles and responsibilities in regard to risk management within the Group 任能明确分工,本集团已采纳「三道防线」风are clearly defined. The “Three Lines of Defence” model is summarised as follows: 险管理框架。「三道防线」模式概述如下: * The first line of defence comprises the Risk Owners who are heads of business * 第一道防线为「风险负责人」,由本集团units or supporting units of the Bank Group together with staff under 各业务或后勤单位主管,连同其属下职their management. They are primarily responsible for the day-to-day risk 员组成,主要负责其业务单位的日常风management of their units including establishing and executing specific risk 险管理,包括特定风险管理机制及具体control mechanisms and detailed procedures. 程序的设立及执行。 * The second line of defence consists of the Risk Controllers who are designated * 第二道防线为「风险监控人」,由指定的staff responsible for setting out a risk management governance framework 职员组成,负责为本集团制定风险管理monitoring risks independently and supporting the management committees in 管治架构、独立监控风险及辅助各管理 their oversight of risk management for the Bank Group. 委员会对本银行集团风险管理的监督。 * The third line of defence is the Internal Audit Division which is responsible for * 第三道防线为稽核处,负责为本集团风providing assurance as to the effectiveness of the Group’s risk management 险管理架构(包括风险管治安排)的有效 framework including risk governance arrangements. 性提供保证。 The Group Chief Risk Officer co-ordinates all risk management-related matters 集团风险总监协调本集团所有与风险管理相 of the Group works closely with the Risk Controllers on the formulation of risk 关的事务,与各风险监控人就风险管理政策management policies and exercises risk oversight at the Group level through a 的制定作出紧密协作,并透过与所有风险监functional working relationship with all Risk Controllers and Risk Owners. 控人及风险负责人的职能工作关系,在集团层面监督风险。 The Group faces a variety of risks that could affect its franchise operations and 本集团面临可能影响其品牌、营运及财务状 financial conditions. Under the ERM framework the principal risks comprise credit 况的各类风险。在企业风险管理架构下,主risk interest rate risk market risk liquidity risk operational risk reputation risk 要风险包括信贷风险、利率风险、市场风险、 strategic risk legal risk compliance risk and technology risk. 流动性风险、营运风险、声誉风险、策略性 风险、法律风险、合规风险及科技风险。 The Group has formulated policies to identify measure monitor control and 本集团已制定政策,以识别、衡量、监察、report on the various types of risk and where appropriate to allocate adequate 控制及汇报各类风险,并于适当的情况下调capital to cover those risks. The Group’s major risk management policies and control 配资本以抵御该等风险。本集团的主要风险limits are approved by the Board and are reviewed and enhanced on a regular 管理政策及控制限额由董事会批准,并定期basis to cater for market changes statutory requirements and best practice in risk 予以检讨及改善,以配合市场转变、法定要management processes. The Board has delegated the responsibility for ongoing risk 求,以及达致风险管理程序的最佳做法。董management to the Risk Committee and the management committees. Significant 事会已将持续管理风险的责任授予风险委员 risk management-related issues must be reported to the Board which oversees risk 会及相关的管理委员会。与重要风险管理相management through the Risk Committee. Moreover on a daily basis the Group 关的事项须经由风险委员会上报至监督风险 Chief Risk Officer is responsible for overseeing the Group’s risk management issues 管理的董事会。此外,集团风险总监的日常which include but are not limited to the risk management infrastructure strategies 职责为监督与集团风险管理相关的事项,包appetites culture and resources. 括但不限于风险管理基础架构及策略、风险 偏好、风险管治文化及有关资源。 ? F-120 ?东亚银行有限公司 l 2022年报 283 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Stress testing is an integral part of the Group’s risk management. The Group 压力测试为本集团风险管理的重要部分。本regularly performs stress tests on the principal risks where appropriate to assess the 集团在适当情况下定期对相关的主要风险进potential impact of stressed business conditions (including hypothetical situations 行压力测试,评估受压营商环境(包括中国such as a significant economic downturn in Mainland China and Hong Kong) on 内地及香港出现严重经济下滑等假设情景) the Group’s financial positions in particular capital adequacy profitability and 对本集团的财务状况,尤其是资本充足性、liquidity. Whenever necessary a prompt management response will be developed 盈利能力及流动性的潜在影响。有需要时,and executed to mitigate potential impacts. 管理层亦会及时制定并执行应对措施以减低潜在影响。 (a) Credit risk management (a) 信贷风险管理 Credit risk is the risk of loss arising from a borrower or counterparty failing to meet 信贷风险是指因借款人或交易对手未能履行 its obligations. 其责任而导致损失的风险。 The Credit Committee is responsible for managing all credit risk-related issues of the 信贷委员会负责管理所有与本集团信贷风险 Group while the Credit Risk Management Department under the Risk Management 有关的事项,而本集团风险管理处辖下的信Division of the Group is responsible for monitoring activities relating to credit risk. 贷风险管理部则负责监察与信贷风险有关的 The Group identifies and manages credit risk by defining the target market segment 活动。本集团透过设定目标市场、制定适当formulating appropriate credit policies and carrying out credit assessment and 的信贷政策、进行信贷评核,以及监控资产monitoring of asset quality. Credit risk control limits are set for different levels. 质素,来识别和管理信贷风险。信贷风险控Risk return and market situation are considered when setting all limits. Active limit 制限额设有不同层次。厘定所有限额时会考monitoring is undertaken. 虑风险、回报及市场情况,并且采用积极限额监控程序。 In evaluating the credit risk associated with an individual customer or counterparty 在评估与个别客户或交易对手相关的信贷风 financial strength and repayment ability are always the primary considerations. 险时,其财政实力以及还款能力是主要的考Credit risk may be mitigated by obtaining collateral from the customer or 虑因素。此外,客户或交易对手所提供的抵counterparty. 押品亦有助减低信贷风险。 The Group has established policies procedures and rating systems to identify 本集团已制定多项政策、程序及评级系统,measure monitor control and report on credit risk. In this connection guidelines 以识别、衡量、监察、控制及汇报信贷风险。 for management of credit risk have been laid down in the Group’s Credit Risk 在此方面,本集团已将信贷风险管理指引详Management Manual. These guidelines stipulate delegated lending authorities 列于集团的信贷风险管理手册内,对信贷权credit underwriting criteria credit monitoring processes an internal rating structure 限授权、授信标准、信贷监控程序、内部评级 credit recovery procedures and a provisioning policy. They are reviewed and 架构、信贷追收程序及拨备政策订下规定。 enhanced on an ongoing basis to cater for market changes statutory requirements 本集团持续检讨和改善该等指引,以配合市and best practice in risk management processes. 场转变及有关法定要求,及达致风险管理程序的最佳做法。 ? F-121 ?284 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) The Group’s credit risk management for the major types of credit risk is depicted as 本集团就下列各类主要信贷风险实行信贷风 follows: 险管理: (i) Corporate and financial institutions credit risk (i) 企业及金融机构信贷风险 The Group has laid down policies and procedures to evaluate the potential 本集团已制订多项政策及程序,以评估credit risk of a particular counterparty or transaction and to approve the 特定交易对手或交易的潜在信贷风险,transaction. For corporate and bank customers the Group has different internal 以及决定批核有关交易与否。就企业及rating systems that incorporate different risk factors (e.g. region of operation 银行客户而言,本集团已制定不同的内corporate size) and are applied to each counterparty. For exposure classified as 部评级系统(例如经营地区,企业规模)Specialised Lending in particular supervisory slotting criteria are adopted. To 以适用于所有交易对手。专门性借贷的monitor credit concentration risk the Group has preset limits for exposures to 风险承担则采用监管分类准则。为监控individual industries and for borrowers and groups of borrowers. The Group 信贷集中的风险,本集团已就个别行业also has a review process to ensure that the level of review and approval is 及不同的借款人和借款人团体预设风险 proper and will depend on the size of the facility and rating of the credit. 承担限额。本集团亦已厘定检讨程序,确保按照贷款的规模和信贷评级,为贷款进行适当的检讨和审批。 The Group undertakes on-going credit analysis and monitoring at several levels. 本集团持续进行多个层次的信贷分析和 The policies are designed to promote early detection of counterparty industry 监控。有关政策旨在尽早发现需要特别or product exposures that require special monitoring. The overall portfolio risk 监控的交易对手、行业或产品的风险承 as well as individual impaired loans and potential impaired loans are monitored 担。交易组合的整体风险和个别减值贷on a regular basis. 款及潜在减值贷款,均定期予以监控。 (ii) Retail credit risk (ii) 零售信贷风险 The Group's retail credit policy and approval process are designed for the 本集团的零售信贷政策和审批程序是因 fact that there are high volumes of relatively homogeneous and small value 应各类零售贷款中均有大量类似的小额 transactions in each retail loan category. The design of the internal rating 交易而制定的。在设计内部评级系统和system and formulation of credit policies are primarily based on customers’ 制订信贷政策时,本集团的主要考虑因background credit behaviours and the loss experience of the loan portfolios. 素包括客户背景、信贷行为和有关贷款 The Group monitors its own and industry experience to determine and 组合过往的损失。本集团监控本身和行periodically revise product terms and desired customer profiles. 业状况以厘定和定期修订产品条款和目标客户组合。 (iii) Credit risk of treasury transactions (iii) 财资交易的信贷风险 The credit risk of the Group's treasury transactions is managed in the same way 本集团采用企业及金融机构信贷风险的 as the Group manages its corporate and financial institutions credit risk. The 管理方法,管理本集团财资交易的信贷Group applies an internal rating system to its counterparties and sets individual 风险,包括引用内部评级系统处理交易counterparty limits. 对手及设定个别交易对手的风险限额。 (iv) Credit-related commitments (iv) 与信贷有关的承诺 The risks involved in credit-related commitments and contingencies are 与信贷有关的承诺和或有事项的风险,essentially the same as the credit risk involved in extending loan facilities to 本质上与提供贷款予客户时的信贷风险 customers. These transactions are subject to the same credit application 相同。因此,有关交易必须符合客户申portfolio maintenance and collateral requirements as for customers applying for 请贷款时所要达到的信贷申请、组合保 loans. 存和抵押要求。 ? F-122 ?东亚银行有限公司 l 2022年报 285 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (v) Concentrations of credit risk (v) 信贷集中的风险 Concentration of credit risk exists when changes in geographic economic 信贷集中的风险源于交易对手团体受到 or industry factors similarly affect groups of counterparties whose aggregate 地区、经济或行业因素的影响,而该等credit exposure is material in relation to the Group’s total exposures. The 团体的整体信贷风险承担对本集团的总 Group’s credit portfolio is diversified along geographic industry and product 体风险承担至关重要。本集团的信贷组sectors. For analysis of loans and advances to customers by industry sectors and 合分散覆盖不同地区、行业和产品。有geographical areas please refer to Notes 28(b) and 28(c) respectively. 关按行业分类及区域分类的客户贷款及垫款,请分别参阅附注28(b)及28(c)。 The Group monitors its credit concentration risk by adopting appropriate risk 本集团一直采用适当的风险控制措施,control measures such as setting limits on exposures to different industries and 例如就不同行业和贷款组合厘定限额,loan portfolios. 以监控信贷集中的风险。 (vi) Maximum exposure (vi) 最高风险 The maximum exposure to credit risk at the end of the reporting period without 于报告期结束日并未计算任何抵押品或 taking into consideration of any collateral held or other credit enhancements is 其他信贷提升的最高信贷风险,即指每represented by the carrying amount of each financial asset in the statement of 一项已减除任何减值准备的金融资产在 financial position after deducting any impairment allowance. A summary of the 财务状况表的账面值。最高风险摘要如maximum exposure is as follows: 下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Cash and balances with banks 现金及在银行的结存 53114 54072 Placements with and advances to banks 在银行的存款及垫款 60203 74742 Trade bills 贸易票据 529 10772 Trading assets 交易用途资产 1275 1632 Derivative assets 衍生工具资产 11092 3381 Loans and advances to customers 客户贷款及垫款 542394 554437 Investment securities 投资证券 145289 145723 Other assets 其他资产 38974 42251 Financial guarantees contracts 财务担保合约 14032 24115 Loan commitments 贷款承担 338673 264767 12055751175892 ? F-123 ?286 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (vii) Credit quality analysis (vii) 信贷质素分析 Credit quality of loans and advances 贷款及垫款的信贷质素 The following tables set out information about the credit quality of loans and 下表载列贷款及垫款的信贷质素分析。 advances to customers. Unless specifically indicated the amounts in the table 除特别指明者外,表格内的金额为账面represent gross carrying amounts. 值总额。 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Loans and advances to customers 按摊销成本计量的客户 at amortised cost 贷款及垫款 – Grades 1–15: Pass -1–15级:合格 508308 1534 11543 51 – – 519851 1585 – Grades 16–17: Special Mention -16–17级:需要关注 – – 16018 95 – – 16018 95 – Grade 18: Substandard -18级:次级 – – – – 9498 96 9498 96 – Grade 19: Doubtful -19级:呆滞 – – – – 2756 97 2756 97 – Grade 20: Loss -20级:亏损 – – – – 891 30 891 30 Total gross carrying amount 账面值总额 508308 1534 27561 146 13145 223 549014 1903 Impairment allowances 减值准备 (1084) (5) (1018) (8) (4518) (123) (6620) (136) Carrying amount 账面值 507224 1529 26543 138 8627 100 542394 1767 Market value of collateral held against impaired loans and 减值客户贷款及垫款 advances to customers 抵押品市值 5901 ? F-124 ?东亚银行有限公司 l 2022年报 287 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Loans and advances to customers 按摊销成本计量的客户 at amortised cost 贷款及垫款 – Grades 1–15: Pass -1–15级:合格 512975 1001 23845 58 – – 536820 1059 – Grades 16–17: Special Mention -16–17级:需要关注 – – 6011 16 – – 6011 16 – Grade 18: Substandard -18级:次级 – – – – 4324 24 4324 24 – Grade 19: Doubtful -19级:呆滞 – – – – 1563 50 1563 50 – Grade 20: Loss -20级:亏损 – – – – 90 4 90 4 Total gross carrying amount 账面值总额 512975 1001 29856 74 5977 78 548808 1153 Impairment allowances 减值准备 (667) (3) (527) (1) (3177) (54) (4371) (58) Carrying amount 账面值 512308 998 29329 73 2800 24 544437 1095 Market value of collateral held against impaired loans and 减值客户贷款及垫款 advances to customers 抵押品市值 3656 Collateral includes any tangible security that carries a fair market value and is 抵押品包括任何具公平价值及可随时出readily marketable. This includes (but is not limited to) cash and deposits stocks 售的有形抵押品。这些抵押品包括(但and bonds mortgages over properties and charges over other fixed assets such 不限于)现金及存款、股票及债券、物业 as plant and equipment. Where collateral values are greater than gross loans 按揭及其他固定资产如器材及设备之押 and advances to customers only the amount of collateral up to the gross loans 记。倘抵押品价值高于客户贷款及垫款and advances is included. 总额,则只计入最高达贷款及垫款总额的抵押品金额。 Credit quality of financial assets other than loans and advances 除贷款及垫款外的金融资产的信贷质素 The following tables set out the credit analysis for financial assets other 下表载列除贷款及垫款外并按摊销成本 than loans and advances to customers measured at amortised cost and 及通过其他全面收益以反映公平价值计 FVOCI. Unless specifically indicated for financial assets the amounts in the 量的债务工具的信贷分析。除特别指明table represent gross carrying amounts/fair value. For loan commitment and 者外,就金融资产而言,表格内的金额financial guarantee contracts the amounts in the table represent the amounts 为账面值总额╱公平价值。就贷款承担committed or guaranteed respectively. 及财务担保合约而言,表格内的金额分别为所承担或担保的金额。 ? F-125 ?288 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (vii) Credit quality analysis (continued) (vii) 信贷质素分析(续) Credit quality of financial assets other than loans and advances (continued) 除贷款及垫款外的金融资产的信贷质素 (续) 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Trade bills measured at 按摊销成本计量的贸易 amortised cost 票据 – Grades 1–15: Pass -1–15级:合格 41 – – – – – 41 – – Grades 16–17: Special Mention -16–17级:需要关注 – – – – – – – – – Grade 18: Substandard -18级:次级 – – – – – – – – – Grade 19: Doubtful -19级:呆滞 – – – – – – – – – Grade 20: Loss -20级:亏损 – – – – – – – – Total gross carrying amount 账面值总额 41 – – – – – 41 – Impairment allowances 减值准备 – – – – – – – – Carrying amount 账面值 41 – – – – – 41 – 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Trade bills measured at 按摊销成本计量的贸易 amortised cost 票据 – Grades 1–15: Pass -1–15级:合格 560 – – – – – 560 – – Grades 16–17: Special Mention -16–17级:需要关注 – – – – – – – – – Grade 18: Substandard -18级:次级 – – – – – – – – – Grade 19: Doubtful -19级:呆滞 – – – – – – – – – Grade 20: Loss -20级:亏损 – – – – – – – – Total gross carrying amount 账面值总额 560 – – – – – 560 – Impairment allowances 减值准备 – – – – – – – – Carrying amount 账面值 560 – – – – – 560 – ? F-126 ?东亚银行有限公司 l 2022年报 289 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元按通过其他全面收益以反映公平价值计量的 Trade bills measured at FVOCI 贸易票据 – Grades 1–15: Pass -1–15级:合格 480 – 8 – – – 488 – – Grade 18: Substandard -18级:次级 – – – – – – – – Total carrying amount at fair value 账面值总额-按公平价值 480 – 8 – – – 488 – Impairment allowances 减值准备 – – – – – – – – 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元按通过其他全面收益以反映公平价值计量的 Trade bills measured at FVOCI 贸易票据 – Grades 1–15: Pass -1–15级:合格 10212 – – – – – 10212 – – Grade 18: Substandard -18级:次级 – – – – – – – – Total carrying amount at fair value 账面值总额-按公平价值 10212 – – – – – 10212 – Impairment allowances 减值准备 (2) – – – – – (2) – ? F-127 ?290 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (vii) Credit quality analysis (continued) (vii) 信贷质素分析(续) Credit quality of financial assets other than loans and advances (continued) 除贷款及垫款外的金融资产的信贷质素 (续) 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Placements with and advances to banks 在银行的存款及垫款 – Grades 1–15: Pass -1–15级:合格 60204 122 – – – – 60204 122 Total gross carrying amount 账面值总额 60204 122 – – – – 60204 122 Impairment allowances 减值准备 (1) – – – – – (1) – Carrying amount 账面值 60203 122 – – – – 60203 122 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Placements with and advances to banks 在银行的存款及垫款 – Grades 1–15: Pass -1–15级:合格 74743 10 – – – – 74743 10 Total gross carrying amount 账面值总额 74743 10 – – – – 74743 10 Impairment allowances 减值准备 (1) – – – – – (1) – Carrying amount 账面值 74742 10 – – – – 74742 10 ? F-128 ?东亚银行有限公司 l 2022年报 291 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2022 Lifetime ECL not credit- Lifetime ECL impaired credit-impaired 12-month ECL 非信贷不良的 信贷不良的 12个月内之 合约期内 合约期内 Total 预期信贷损失之预期信贷损失之预期信贷损失总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Loan commitments 贷款承担 – Grades 1–15: Pass -1–15级:合格 334520 3906 – 338426 – Grades 16–17: Special Mention -16–17级:需要关注 – 373 – 373 – Grade 18: Substandard -18级:次级 – – – – Total 总额 334520 4279 – 338799 Impairment allowances 减值准备 (107) (19) – (126) Financial guarantee contracts 财务担保合约 – Grades 1–15: Pass -1–15级:合格 12476 1058 – 13534 – Grades 16–17: Special Mention -16–17级:需要关注 – 28 – 28 – Grade 18: Substandard -18级:次级 – – 662 662 Total 总额 12476 1086 662 14224 Impairment allowances 减值准备 (14) (4) (174) (192) 2021 Lifetime ECL not credit- Lifetime ECL impaired credit-impaired 12-month ECL 非信贷不良的 信贷不良的 12个月内之 合约期内 合约期内 Total 预期信贷损失之预期信贷损失之预期信贷损失总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Loan commitments 贷款承担 – Grades 1–15: Pass -1–15级:合格 261879 2999 – 264878 – Grades 16–17: Special Mention -16–17级:需要关注 – 31 – 31 – Grade 18: Substandard -18级:次级 – – 1 1 Total 总额 261879 3030 1 264910 Impairment allowances 减值准备 (126) (17) – (143) Financial guarantee contracts 财务担保合约 – Grades 1–15: Pass -1–15级:合格 21433 2393 – 23826 – Grades 16–17: Special Mention -16–17级:需要关注 – – – – – Grade 18: Substandard -18级:次级 – – 320 320 Total 总额 21433 2393 320 24146 Impairment allowances 减值准备 (7) (7) (17) (31) ? F-129 ?292 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (vii) Credit quality analysis (continued) (vii) 信贷质素分析(续) Credit quality of financial assets other than loans and advances (continued) 除贷款及垫款外的金融资产的信贷质素 (续) Credit risk of treasury transactions is managed in the same way as the Group 资金交易的信贷风险管理方法,与本集manages its corporate and bank lending risk and risk gradings are applied to the 团管理其企业及银行借贷的方法一致及 counterparties with individual counterparty limits set. 风险级别是适用于设有个别对手限额的对手。 At the end of the reporting period the credit quality of investment in debt 于报告期结束日,按照外部信贷评级机securities analysed by designation of external credit assessment institution 构,穆迪投资服务,或相同等级的评级Moody’s Investor Services or equivalent is as follows: 机构,所指定之债务证券投资的信贷质素分析如下: 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Debt investment securities 按摊销成本计量的 measured at amortised cost 债务投资证券 Aaa Aaa – – – – – – – – Aa1 to Aa3 Aa1至Aa3 3210 1 – – – – 3210 1 A1 to A3 A1至A3 4068 72 – – – – 4068 72 Baa1 to Baa3 Baa1至Baa3 2248 18 – – – – 2248 18 Below Baa3 Baa3以下 538 7 405 4 193 2 1136 13 Unrated 无评级 3584 48 368 8 253 5 4205 61 Total gross carrying amount 账面值总额 13648 146 773 12 446 7 14867 165 Impairment allowances 减值准备 (66) (1) (98) (2) (241) (7) (405) (10) Carrying amount 账面值 13582 145 675 10 205 – 14462 155 ? F-130 ?东亚银行有限公司 l 2022年报 293 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Debt investment securities 按摊销成本计量的 measured at amortised cost 债务投资证券 Aaa Aaa – – – – – – – – Aa1 to Aa3 Aa1至Aa3 2680 – – – – – 2680 – A1 to A3 A1至A3 4363 80 – – – – 4363 80 Baa1 to Baa3 Baa1至Baa3 2464 21 – – – – 2464 21 Below Baa3 Baa3以下 1223 17 524 12 – – 1747 29 Unrated 无评级 5433 61 – – – – 5433 61 Total gross carrying amount 账面值总额 16163 179 524 12 – – 16687 191 Impairment allowances 减值准备 (97) (1) (44) (1) – – (141) (2) Carrying amount 账面值 16066 178 480 11 – – 16546 189 ? F-131 ?294 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (vii) Credit quality analysis (continued) (vii) 信贷质素分析(续) Credit quality of financial assets other than loans and advances (continued) 除贷款及垫款外的金融资产的信贷质素 (续) 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元按通过其他全面收益以 Debt investment securities 反映公平价值计量的 measured at FVOCI 债务投资证券 Aaa Aaa 7305 10 – – – – 7305 10 Aa1 to Aa3 Aa1至Aa3 21855 37 – – – – 21855 37 A1 to A3 A1至A3 56412 798 – – – – 56412 798 Baa1 to Baa3 Baa1至Baa3 37906 419 803 9 – – 38709 428 Below Baa3 Baa3以下 233 2 228 3 – – 461 5 Unrated 无评级 2815 37 – – – – 2815 37 Total carrying amount at fair value 账面值总额-按公平价值 126526 1303 1031 12 – – 127557 1315 where impairment allowances included 包括减值准备 (214) (2) (41) – – – (255) (2) ? F-132 ?东亚银行有限公司 l 2022年报 295 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良的合约期内 信贷不良的合约期内 Total 12个月内之预期信贷损失之预期信贷损失之预期信贷损失总额 Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest本金应计利息本金应计利息本金应计利息本金应计利息 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元按通过其他全面收益以 Debt investment securities 反映公平价值计量的 measured at FVOCI 债务投资证券 Aaa Aaa 7261 9 – – – – 7261 9 Aa1 to Aa3 Aa1至Aa3 20891 6 – – – – 20891 6 A1 to A3 A1至A3 57540 830 – – – – 57540 830 Baa1 to Baa3 Baa1至Baa3 35530 343 159 2 – – 35689 345 Below Baa3 Baa3以下 80 1 15 – – – 95 1 Unrated 无评级 3336 36 – – – – 3336 36 Total carrying amount at fair value 账面值总额-按公平价值 124638 1225 174 2 – – 124812 1227 where impairment allowances included 包括减值准备 (184) (2) (2) – – – (186) (2)按通过其他全面收益以 Debt investment securities 反映公平价值计量的 measured at FVOCI classified as 债务投资证券分类为 assets held for sale 持有作出售资产 Aaa Aaa – – – – – – – – Aa1 to Aa3 Aa1至Aa3 19 – – – – – 19 – A1 to A3 A1至A3 665 4 – – – – 665 4 Baa1 to Baa3 Baa1至Baa3 628 5 – – – – 628 5 Below Baa3 Baa3以下 – – – – – – – – Unrated 无评级 538 3 – – – – 538 3 Total carrying amount at fair value 账面值总额-按公平价值 1850 12 – – – – 1850 12 where impairment allowances included 包括减值准备 (7) – – – – – (7) – ? F-133 ?296 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (vii) Credit quality analysis (continued) (vii) 信贷质素分析(续) Credit quality of financial assets other than loans and advances (continued) 除贷款及垫款外的金融资产的信贷质素 (续) The following table sets out the credit analysis for non-trading financial assets 下表载列按通过损益以反映公平价值计 measured at FVTPL. 量的非交易金融资产的信贷分析。 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Debt investment securities 债务投资证券 Aaa Aaa – – Aa1 to Aa3 Aa1至Aa3 – – A1 to A3 A1至A3 192 352 Baa1 to Baa3 Baa1至Baa3 2963 3887 Below Baa3 Baa3以下 – – Unrated 无评级 115 126 Total carrying amount at fair value 账面值总额-按公平价值 3270 4365 Debt investment securities classified as assets held for sale 债务投资证券分类为持有作出售资产 Aaa Aaa – – Aa1 to Aa3 Aa1至Aa3 – – A1 to A3 A1至A3 – – Baa1 to Baa3 Baa1至Baa3 – 26 Below Baa3 Baa3以下 – – Unrated 无评级 – – Total carrying amount at fair value 账面值总额-按公平价值 – 26 The following table sets out the credit analysis for trading debt investment 下表载列作交易用途债务投资证券的信 securities. 贷分析。 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Debt investment securities 债务投资证券 Aaa Aaa – – Aa1 to Aa3 Aa1至Aa3 99 – A1 to A3 A1至A3 1176 1632 Baa1 to Baa3 Baa1至Baa3 – – Below Baa3 Baa3以下 – – Unrated 无评级 – – Total carrying amount at fair value 账面值总额-按公平价值 1275 1632 ? F-134 ?东亚银行有限公司 l 2022年报 297 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The following table shows the credit quality of the counterparties to which there 下表载列由衍生工具资产交易所产生之 were exposures arising from derivative asset transactions 对手信贷质素分析如下。 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Derivative assets 衍生工具资产 Aa1 to Aa3 Aa1至Aa3 8317 106 A1 to A3 A1至A3 1183 700 Baa1 to Baa3 Baa1至Baa3 612 920 Below Baa3 Baa3以下 – – Unrated 无评级 980 1655 Total carrying amount at fair value 账面值总额-按公平价值 11092 3381 Cash and balances with banks 现金及在银行的结存 At 31st December 2022 the Group held cash and balances with banks of 于2022年12月31日,本集团持有现HK$54581 million (2021: HK$55091 million) of which 97% (2021: 98%) of 金及在银行的结存为港币545.81亿元 cash and balances with banks counterparties that are rated at investment grade (2021年:港币550.91亿元)。基于穆based on Moody’s Investor Services or equivalent ratings. 迪投资服务或相当的评级,其中97% (2021年:98%)的现金及在银行交易对手的结存评级为投资评级。 (viii) Details of key areas in measurement of ECLs (viii「) 预期信贷损失」估算中主要之处的详述 The Group adopts a forward-looking “expected credit loss” model for 本集团采纳一套具前瞻性的「预期信贷measuring and recognising impairment loss to meet the requirement of HKFRS 损失」模型以估算和确认《香港财务报告 9.准则》第9号要求的减值。 The impairment requirements of HKFRS 9 are complex and require management 《香港财务报告准则》第9号的减值规定 judgements estimates and assumptions particularly in the following areas 具复杂性并需要管理层作出判断、估算 which are discussed in detail below: 及假设,特别是在以下将会详述之处: – Assessing whether the credit risk of an asset has increased significantly since - 评估金融资产的信贷风险会否较初 initial recognition; and 始承担时明显增加,及– Incorporating forward-looking information into the measurement of ECLs. - 整合前瞻性资料以作估算预期信贷损失。 The key inputs into the measurement of ECL are Probability of default (PD); Loss 「预期信贷损失」估算的关键输入是违责 given default (LGD); and Exposure at default (EAD). 或然率 (PD)、违责损失率 (LGD)及违责 风险承担 (EAD)。 ? F-135 ?298 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (viii) Details of key areas in measurement of ECLs (continued) (viii「) 预期信贷损失」估算中主要之处的详述 (续) The Group has established a framework to determine whether the credit risk 本集团已建立机制以确定某一金融资产 on a particular financial asset has increased significantly since initial recognition 的信贷风险是否较初始承担时明显增加 (see Note 2(h)(vii)). The framework aligns with the Group’s internal credit risk (详见附注2(h)(vii))。此机制与本集团的management process. 内部信贷风险管理程序吻合。 Credit risk grades 信用风险等级 For majority of the Group’s portfolios the Group assigns each exposure to a 对于本集团大多数信贷组合,本集团为credit risk grade that is determined according to the predicted level of the risk of 每一个信贷风险承担根据违约风险的预 default. Credit risk grades are defined using qualitative and quantitative factors 测而配定一个信贷风险评级。信用风险that are indicative of risk of default. These factors vary depending on the nature 等级使用表明违约风险的定性和定量因 of the exposure and the type of borrower. 素来定义。这些因素取决于风险承担的性质和借款人的类型。 The table below provides the 12-month Probability of default (“PD”) range for 下表提供了零售和非零售投资组合的每 each credit risk grade of retail and non-retail portfolios. The table also provides 个信用风险等级的12个月违责或然率范 an indicative mapping of how the Group’s internal credit risk grades relate to PD 围。该表还提供了本集团非零售信贷组and for the non-retail portfolio to external credit ratings of Standard & Poor’s. 合的内部信用风险等级与标准普尔的外部信用评级的指示性参考。 Internal Credit risk grade Remarks on default risk 12-month PD range External Rating Benchmark 内部信用风险等级 违约风险的备注 12个月PD范围 外部评级基准 1–3 Minimal to Low risk 极小至低的风险 0.0000% to至0.0857% AAA to至A- 4–8 Moderate risk 适度风险 0.0857% to至0.4290% BBB+ to至BBB- 9–11 Substantial risk 略高风险 0.4290% to至1.6500% BB+ to至BB- 12–15 High risk 高风险 1.6500% to至8.3531% B+ to至B- 16–17 Very High risk 很高风险 8.3531% to至100% CCC+ to至C 18–20 Default 违约 100% D For the remaining portfolios without credit risk grade assignment references of peer 对于余下没有信用风险等级分配的信贷组 bank PD estimates of similar portfolios and the long-run average default rate of the 合,我们使用类似信贷组合的同行银行违责portfolios are used. 或然率估计的参考或信贷组合的长期平均违责或然率。 ? F-136 ?东亚银行有限公司 l 2022年报 299 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Generating the term structure of PD 违责或然率的期限结构 Credit risk grades are a primary input into the determination of the term 信用风险等级是确定违责或然率的期限 structure of PD for exposures. The Group also collects historical performance 结构的主要输入。本集团亦会按司法管and default information about portfolios of credit risk exposures analysed by 辖区或地区收集有关分析的信贷风险承 jurisdiction or region and by type of product and borrower as well as by credit 担,以及产品及借款人类别以及信贷风risk grading. For some portfolios with no internal data available information 险评级的历史表现及违约信息。对于一from external data sources is used. In particular 些没有内部数据的投资组合,自外部数据源的信息会被使用。特别是,Portfolio 组合 External data sources 外部数据源 Debt exposures 债务风险承担 Moody’s: Annual default study corporate default and recovery rates Bank exposures 银行风险承担 穆迪:年度违约研究之公司的违约率和恢复率 Moody’s: Sovereign default and recovery rates Sovereign exposures 主体风险承担 穆迪:主权债务的违约率和恢复率 The Group deploys statistical models to analyse the data collected and generate 本集团采用统计模型分析所收集的数据,并estimates of PD of exposures expected to change as a result of the passage 产生预计会因时间推移而发生变化的违责或 of time. The estimation of PD term structure makes use of the annual credit 然率的估计值。具有信用风险等级分配的组risk grade transition for the portfolios with credit risk grade assignment. For 合,我们利用信用风险等级的年度转换以估the portfolios without credit risk grade assignment and no credit risk grade 计对的违责或然率期限结构。对于没有信用transition information available the PD term structure estimation is referenced 风险等级分配的组合或没有可用的信用风险 to forecasts of economic index relevant to the portfolio. 等级转换信息。违责或然率期限结构估计参考了与组合相关的经济指数预测。 LGD is the magnitude of the likely loss if there is a default. For the retail and 如果存在违约,违责损失率是可能损失的幅corporate portfolio with sufficient historical loss and recovery data the collateral 度。对于具有足够历史损失和恢复数据的零recovery rates and the LGD estimates can be derived. For portfolios with 售和公司投资组合,可以推导出抵押品回收insufficient historical loss and recovery data either reference to peer bank LGD 率和违责损失率估计值。对于历史损失和恢estimates of the similar portfolios or external data source are used for deriving 复数据不足的组合,可以使用同行银行类似the LGD estimates. 组合的违责损失率估计值或外部数据源来推导违责损失率估计值。 For portfolio with individual assessment of credit risk mitigation measures 对于单独评估信用风险缓解措施的组合,预collateral values are projected for different economic scenarios so as to reflect 测不同经济情景的抵押品价值,以反映不同the LGD estimates under different economic scenarios. For other portfolios 经济情景下的违约损失率估计。对于其他组different scenario portfolio LGDs are derived by benchmarking to corresponding 合,不同情景组合违责损失率通过在长期历LGDs within a long period of historical LGDs. 史期间对相应的违责损失率进行基准测试而得出。 EAD represents the expected exposure in the event of a default. The EAD of a 违责风险承担表示发生违约时的预期风险。 financial asset is its gross carrying amount at the time of default. For lending 金融资产的违责风险承担是其违约时的账面 commitments or undrawn limit of retail revolving products the EAD is the 值总额。对于贷款承诺或零售周转产品的未potential future amounts that may be drawn under the contract. For financial 提取限额,违责风险承担是可能根据合同提guarantees the EAD represents the amount of the guaranteed exposure when 取的未来潜在金额。对于财务担保,违责风the financial guarantee becomes payable. The EAD estimates are adopted using 险承担表示财务担保到期时的担保风险金 the parameters suggested by BASEL or statistical model based on historical data. 额。违责风险承担估计采用BASEL建议的参数或基于历史数据的统计模型。 ? F-137 ?300 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (viii) Details of key areas in measurement of ECLs (continued) (viii「) 预期信贷损失」估算中主要之处的详述 (续) Significant increase in credit risk 明显增加的信贷风险 Exposures are subject to ongoing monitoring which may result in an exposure 信贷风险承担会持续受监控并在其风险 being moved to a different credit risk grade when the risk of asset changes. 程度有所改变时被调配至不同的信贷风 The Group primarily identifies whether a significant increase in credit risk under 险评级。在《香港财务报告准则》第9号HKFRS 9 has occurred for an exposure by comparing: 下,集团识别一个资产的信贷风险是否明显增加主要透过比较该资产: – the credit risk grade at the reporting date; with - 于结算日的信贷风险评级;和 – the credit risk grade at the initial recognition of the exposure. - 于初始承担时的信贷风险评级。 The Group deems the credit risk of a particular exposure to have increased 如某一资产的现行信贷风险评级已较本 significantly since initial recognition if the current credit risk grade deteriorates 集团初始承担时的评级转差了超过一个 by a pre-determined number of notches. The criteria for determining the 指定数量的级别,本集团视该资产的信number of notches may vary by portfolio and include a backstop based on 贷风险已有明显增加。不同的资产组合delinquency. 会以不同的级别数量作为衡量标准,并以逾期情况作为预设的基本标准。 As a backstop and as required by HKFRS 9 the Group presumptively considers 在《香港财务报告准则》第9号下,作为that a significant increase in credit risk occurs no later than when an asset 一个基本标准,本集团预设某一已逾期is more than 30 days past due. Also being Special-mention under HKMA 超过30日的资产为信贷风险已经明显增 classification is also an indicator of significant increase in credit risk. 加。此外,在金管局贷款分类制度下成为需要关注贷款也表明信贷风险显着增加。 The Group monitors the effectiveness of the criteria used to identify significant 本集团监控识别信贷风险增加的衡量标 increases in credit risk by regular review to confirm that: 准的有效性,透过定期检讨以确保: – the criteria are capable of identifying significant increase in credit risk before - 衡量标准能在风险承担违约前识别 an exposure is in default; 信贷风险增加; – exposures are not generally transferred directly from 12-month ECL - 风险承担一般不会从12个月内之预 measurement to credit-impaired; and 期信贷损失直接转为不良信贷;及 – there is no unwarranted volatility in loss allowance from transfers between - 不会导致减值拨备因为风险承担在 12-month ECL and lifetime ECL measurements. 计算12个月内之预期信贷损失和合 约期内之预期信贷损失中的转变时出现不必要的波动。 Incorporating forward-looking information into the measurement of ECLs 整合前瞻性资料以作估算预期信贷损失 The Group has identified key drivers of systematic credit risk for each portfolio 本集团根据历史数据对宏观经济指标与 of financial assets based on an analysis of historical data in which relationship 系统信用风险之间关系进行分析,确定between macro-economic indicators and the systematic credit risk is exhibited. 了各金融资产组合的系统信用风险的关键驱动因素。 The Group formulates economic forward looking scenarios for the view of the 本集团制定经济前瞻情景,以了解主要future direction of major economic indicators such as GDP unemployment rate 经济指标的未来方向,例如国内生产总property price index interest rate and other economic indicators specific to 值、失业率、房地产价格指数、利率及 particular portfolio. 特定投资组合的其他经济指标。 ? F-138 ?东亚银行有限公司 l 2022年报 301 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) For each portfolio the key drivers under forward looking scenarios are applied 对于每个投资组合,前瞻性情景下的关for estimating the systematic credit risk component of an obligor’s Probability 键驱动因素将用于估算债务人的违约概 of Default (“PD”) used in calculating ECLs. In addition to PD relevant macro- 率的系统信用风险部分以用于计算预期 economic indicators are used for projection of the collateral value for recovery 信贷损失。除违约概率外,相关的宏观rate estimates used in ECL calculation. 经济指标将用于预测抵押品价值以估算回收率并使用作计算预期信贷损失。 The Group adopts the use of three economic scenarios. In each region/country 本集团会采纳使用三个经济情景。在本where the Group operates the Group formulates probability for each scenario 集团经营的每个地区╱国家,本集团将and forecast the major macro-economic indicators to reflect the Group’s 为每个情景制定情景的可能性并预测主 forward-looking view on the future business outcomes in that particular region/ 要的宏观经济指标,以反映集团在每种country under each scenario. 情景下,该地区╱国家未来业务成果的前瞻性观点。 The forecasts of baseline scenario are based on advice from the in-house 基准情景的预测是根据本集团经济专家 economic experts and considerations of a variety of actual and forecast 的建议和对各种外部实际和预测信息的 information such as economic data and forecasts published by governmental 考虑,例如本集团经营所在地区╱国家bodies and monetary authorities in the regions/countries where the Group 的政府机构和金融管理局公布的经济数 operates. The Group also takes reference from forecasts by international 据和预测。同时,本集团尽可能参考国agencies and private sector analysts as far as possible to formulate a more 际机构及私营机构分析师的预测,以及objective forecast while taken into account the current domestic and 考虑现时本地及海外经济发展情况、当 international economic developments and changes in local economic policies. 地经济政策的转变。至于相关地区或国Autoregressive econometric model is applied as a tool to forecast the equity and 家的股票及楼价指数,则使用自回归经property prices movements in the regions/countries concerned. 济模型作出估算。 The baseline scenario represents the most-likely outcome that the Group 基准情景是代表本集团预期中的最具可 expects. The corresponding probability is reflecting the confidence of the future 能性的结果。其相对应的机会率反映了uncertainties are being captured in the baseline scenario forecast. 集团在预测基准情景中对未来不确定性的掌握置信度。 The other scenarios are an optimistic scenario and a pessimistic scenario to 其他情景是一个乐观情景和一个悲观情 capture the less likely yet possible upside and downside divergence from the 景。在这些情景中,我们对可能性较低、baseline forecast. These scenarios and their probabilities represent the Group’s 却可能发生的上行和下行状况作出预 view that in case the future outcome is outside the expectation as in the 测。这些情景及其机会率代表了集团的baseline scenario how likely it would be optimistic (i.e. unexpectedly good) or 观点,即当未来结果超出基准情景预期pessimistic (i.e. unexpectedly bad) and how unexpectedly good or unexpectedly 时,经济将倾向乐观(即出乎意料的好)bad outcomes will be based on current economic outlook potential domestic 或悲观(即出乎意外的差)的可能性有多 and international economic and political risks affecting the regions/countries 大,以及出乎意料的好或意外的坏的结the Group has business presence and the strength of a region/country’s 果将会是怎样,基于当前的经济前景、fundamentals to weather through crises. Forecasts for these two scenarios 潜在的国内外经济及政治风险,及其对are mainly derived based on a modification of the Bank of England’s fan chart 本集团有业务之地区╱国家的影响,并model where the Group’s economic research team assumes the divergences 且这些地区╱国家的经济面、应付危机 from the baseline scenario are derived from historical volatility of the data series. 的能力。这两种情景的预测主要是以英The spread for the pessimistic scenario is greater than that of the optimistic 伦银行扇形图模型为基础再修改而来。 scenario to reflect the Group’s prudent view against downside risks. 本集团的经济研究团队基于数据列的历史波动来假设两种情景与基准情景的差 距来自数据列的历史波动。其中,悲观情景的差距大于乐观情景,反映集团对下行风险持谨慎态度。 The baseline optimistic and pessimistic scenarios are updated quarterly to timely 基准、乐观及悲观情景会每季度更新,reflect a change in the current economic sentiment locally and internationally. 以及时反映当地及国际经济情绪的变化。 ? F-139 ?302 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (viii) Details of key areas in measurement of ECLs (continued) (viii「) 预期信贷损失」估算中主要之处的详述 (续) Incorporating forward-looking information into the measurement of ECLs 整合前瞻性资料以作估算预期信贷损失 (continued) (续) Baseline Scenario – Hong Kong 基准情景-香港 Hong Kong’s economy recorded a worse than expected contraction. Despite 香港经济表现较预期差,并陷入收缩。 the government gradually relaxing pandemic control measures and disbursing 尽管受惠于防疫措施放宽及新一轮消费 another round of consumption vouchers Hong Kong’s economic recovery in 劵,2022年香港经济复苏步伐仍受多 2022 was held back by the pandemic a rapidly tightening global monetary 项因素困扰,包括疫情、全球货币环境 environment escalating geopolitical tensions highly volatile global financial 迅速收紧、地缘政治局势升温、环球金 markets and weak consumer spending and business sentiment etc. Among 融市场波动、以及消费及营商气氛疲弱 the major expenditure components the economic contraction was mainly 等。按主要开支组成部分划分,外需及attributable to the weak external sector and investment performance while 投资疲弱是经济收缩的主因,而私人消domestic private consumer spending stayed largely stagnant. 费则仍然停滞。 Looking forward Hong Kong’s economic outlook remains uncertain. On one 展望未来,香港经济前景仍然不明朗。 hand Hong Kong’s domestic economic activities and employment market are 一方面,若疫情持续稳定及其负面影响expected to further recover if the pandemic situation continues to stabilize and 逐渐减退,本地经济活动及就业市场有its negative impacts fade. Together with the gradual resumption of quarantine 望进一步复苏。再者,入境人士隔离要free travel as well as additional government support measures Hong Kong’s 求逐步放宽,以及特区政府推出支持经domestic economic activity is expected to recover more meaningfully. On the 济的措施,亦料将带动本地经济活动复other hand the external environment is still expected to be weighed by the 苏。另一方面,外围环境将面对高度不ongoing geopolitical tensions a rapidly tightening monetary environment 确定性,包括地缘政治紧张局势、货币potential energy shortage highly volatile global financial markets and other 政策迅速收紧、潜在能源短缺、以及全 headwinds leading to further downside pressure. Overall Hong Kong’s 球金融市场大幅波动等,势将增加香港economic performance is expected to stage a notable recovery in 2023 while 经济下行压力。整体而言,2023年香港inflation remaining moderate. 经济料将明显复苏,通胀则维持温和。 Baseline Scenario – Mainland China 基准情景-内地 Mainland China’s economy was affected by the ongoing pandemic prolonged 内地经济受疫情反复、房地产市场调整 property market correction and global economic slowdown. Industrial sector 及全球经济放缓所困扰。工业及基建投and infrastructure investment played a major role in economic recovery while 资担当推动经济增长的重要角色,服务services and real estate lagged somewhat behind. As such the Mainland 业及房地产业复苏则有所滞后。故此,authorities have enhanced its supportive measures to accelerate investment 内地当局加大政策支持力度以促进投 alleviate financial pressure on enterprises and stabilize demand in the property 资、纾缓企业财务压力、稳定房地产市 market with additional support to finance infrastructure investment. The 场需求及支持基建投资,中国人民银行People’s Bank of China (PBoC) has reduced its loan prime rates and reserve 亦已下调贷款市场报价利率及存款准备 requirement ratio. Furthermore housing policy restrictions at the city level 金率。此外,地方政府亦逐步放宽其楼have also been gradually relaxed indicating a strong intention to stabilize the 市政策,以稳定楼市表现。 property markets.Looking ahead Mainland China’s economic outlook will still be hinged by the 展望未来,内地经济前景仍视乎疫情、evolving pandemic condition property market performance slowing global 房地产市场表现、全球经济前景放缓及 economic outlook escalating geopolitical tensions and other persistent 地缘政治紧张局势等因素。自2022年headwinds. Since November 2022 the Mainland authorities have introduced 11月起,内地当局对疫情防控和房地产a more meaningful change to the policy stance for optimizing the pandemic 政策的取态有所转变,分别有序优化疫control work and expanding funding support for quality property developers. 情防控措施及加强支持财政状况较佳的 With stability remains a priority objective more supportive macro policy stance 开发商。由于稳定经济仍然是主要的政particularly boosting domestic demand is expected in 2023. In the post- 策目标,预计内地当局将于2023年推pandemic era the Mainland China will continue to focus on dual circulation 出更多宏观政策措施,特别是推动扩大strategy as well as innovation and technology-driven growth for its next stage of 内需。于后疫情时期,内地将积极实施economic development. Overall Mainland China’s economic growth is expected 双循环发展战略,重点发展创新科技产to record a more respective growth in 2023 with inflation remaining moderate. 业,推动经济下一阶段的发展。整体而言,2023年内地经济将实现更明显的复苏,通胀压力则仍然温和。 ? F-140 ?东亚银行有限公司 l 2022年报 303 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续)Forecast of Key Macroeconomic Indicators (3 years average (2023 – 2025)) 主要宏观经济指标预测(3年平均(2023–2025)) Scenario Macroeconomic Indicator Hong Kong China情景宏观经济指标香港中国 Optimistic GDP (YoY growth) 6.2% 6.7%乐观情景国内生产总值增长 Property Price Index (Compounded annual growth rate) 2.5% 2.8% 房地产价格指数(复合年均增长率) Unemployment Rate 2.3% 5.0%失业率 3-month Interest Rate 5.9% 4.7% 3个月期利率 Baseline Real GDP (YoY growth) 3.0% 5.0%基准情景国内生产总值增长 Property Price Index (Compounded annual growth rate) -1.0% 1.3% 房地产价格指数(复合年均增长率) Unemployment Rate 3.1% 5.1%失业率 3-month Interest Rate 4.5% 3.6% 3个月期利率 Pessimistic GDP (YoY growth) -0.3% 3.4%悲观情景国内生产总值增长 Property Price Index (Compounded annual growth rate) -4.8% –0.3% 房地产价格指数(复合年均增长率) Unemployment Rate 4.2% 5.2%失业率 3-month Interest Rate 4.1% 2.5% 3个月期利率 ? F-141 ?304 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (ix) Impairment allowances reconciliation (ix) 减值准备对账 The following tables show reconciliations from the opening to the closing 下表列示按金融工具的类别划分的减值 balance of the impairment allowance by type of financial instrument. The 准备的期初结余与期末结余的对账。编reconciliation is prepared by comparing the position of impairment allowance 制对账的方法是比较减值准备于1月1between 1st January and 31st December at transaction level. Transfers between 日至12月31日期间交易层面的状况。 different stages of ECL are deemed to occur at the beginning of the year and 预期信贷损失不同阶段之间的转拨被视 therefore amounts transferred net to zero. The re-measurement of ECL resulting 为于年初发生,故金额转拨净额为零。 from a change in ECL stage is reported under the ECL stage in which they are 因预期信贷损失阶段转变而引致的重新 transferred to. 计量预期信贷损失会记于其所转拨的预期信贷损失阶段项下。 Explanations of 12-month ECL lifetime ECL and credit-impaired are included in 关于12个月内之预期信贷损失、合约期 Note 2. 内之预期信贷损失及信贷不良的解释见附注2。 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良 信贷不良的 12个月内之 的合约期内之 合约期内之 Total 预期信贷损失预期信贷损失预期信贷损失总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Loans and advances to customers 客户贷款及垫款 Balance at 1st January 于1月1日的结余 670 528 3231 4429转至12个月内之预期信贷 Transfer to 12-month ECL 损失 155 (155) – – Transfer to lifetime ECL not 转至非信贷不良的合约期内 credit-impaired 之预期信贷损失 (27) 54 (27) – Transfer to lifetime ECL 转至信贷不良的合约期内之 credit-impaired 预期信贷损失 (24) (141) 165 – New financial assets originated or purchased assets 源生或购入之新金融资产、 derecognised repayments and 撤销确认资产、还款及 further lending 进一步贷款 350 114 273 737 Write-offs 撇销 – – (3095) (3095) Net remeasurement of impairment allowances (including exchange 减值准备的重新计量 adjustments) 净额(包括外汇调整) (35) 626 4094 4685 Balance at 31st December 于12月31日的结余 1089 1026 4641 6756 Of which: 其中: For loans and advances to customers at amortised cost 就按摊销成本的客户贷款 (Note 28(a)) 及垫款(附注28(a)) 1084 1018 4518 6620 For related accrued interest 就相关应收应计利息 receivable (Note 34) (附注34) 5 8 123 136 1089102646416756 ? F-142 ?东亚银行有限公司 l 2022年报 305 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良 信贷不良的 12个月内之 的合约期内之 合约期内之 Total 预期信贷损失预期信贷损失预期信贷损失总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Loans and advances to customers 客户贷款及垫款 Balance at 1st January 于1月1日的结余 849 1041 3025 4915转至12个月内之预期信贷 Transfer to 12-month ECL 损失 150 (150) – – Transfer to lifetime ECL not 转至非信贷不良的合约期内 credit-impaired 之预期信贷损失 (19) 24 (5) – Transfer to lifetime ECL 转至信贷不良的合约期内之 credit-impaired 预期信贷损失 (10) (371) 381 – New financial assets originated or purchased assets 源生或购入之新金融资产、 derecognised repayments and 撤销确认资产、还款及 further lending 进一步贷款 (4) 46 (74) (32) Write-offs 撇销 – – (2397) (2397) Net remeasurement of impairment allowances (including exchange 减值准备的重新计量净额 adjustments) (包括外汇调整) (296) (62) 2301 1943 Balance at 31st December 于12月31日的结余 670 528 3231 4429 Of which: 其中: For loans and advances to customers at amortised cost 就按摊销成本的客户贷款 (Note 28(a)) 及垫款(附注28(a)) 667 527 3177 4371 For related accrued interest 就相关应收应计利息 receivable (Note 34) (附注34) 3 1 54 58 67052832314429 The total contractual amounts of loans and advances to customers written off 在截至2022年及2021年12月31日止 during the year ended 31st December 2022 and 2021 which are still subject to 年度内已撇销的客户贷款及垫款的合约 enforcement activity are HK$1067 million and HK$2397 million respectively. 余额中仍在进行追讨的贷款分别为港币 10.67亿元及港币23.97亿元。 ? F-143 ?306 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (ix) Impairment allowances reconciliation (continued) (ix) 减值准备对账(续) 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良 信贷不良的 12个月内之 的合约期内之 合约期内之 Total 预期信贷损失预期信贷损失预期信贷损失总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Debt investment securities 债务投资证券 Balance at 1st January 于1月1日的结余 284 47 – 331 Transfer to 12-month ECL 转至12个月内之预期信贷损失 – – – – Transfer to lifetime ECL not 转至非信贷不良的合约期内之 credit-impaired 预期信贷损失 (11) 11 – – Transfer to lifetime ECL 转至信贷不良的合约期内之 credit-impaired 预期信贷损失 (5) (13) 18 – New financial assets originated or purchased assets 源生或购入之新金融资产、 derecognised repayments and 撤销确认资产、还款及 further investment 进一步投资 25 21 – 46 Write-offs 撇销 – – – – Net remeasurement of impairment allowances (including exchange 减值准备的重新计量净额 adjustments) (包括外汇调整) (10) 75 230 295 Balance at 31st December 于12月31 日的结余 283 141 248 672 Of which: 其中: For debt investment securities 就按摊销成本计量的债务投资 measured at amortised cost 证券 66 98 241 405 For related accrued interest 就相关应收应计利息 receivable (Note 34) (附注34) 1 2 7 10 67100248415 For debt investment securities 就按通过其他全面收益以反映 measured at FVOCI 公平价值计量的债务投资证券 214 41 – 255 For related accrued interest receivable 就相关应收应计利息 2 – – 2 21641–257 ? F-144 ?东亚银行有限公司 l 2022年报 307 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良 信贷不良的 12个月内之 的合约期内之 合约期内之 Total 预期信贷损失预期信贷损失预期信贷损失总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Debt investment securities 债务投资证券 Balance at 1st January 于1月1日的结余 273 – – 273 Transfer to 12-month ECL 转至12个月内之预期信贷损失 – – – – Transfer to lifetime ECL not 转至非信贷不良的合约期内之 credit-impaired 预期信贷损失 (6) 6 – – Transfer to lifetime ECL 转至信贷不良的合约期内之 credit-impaired 预期信贷损失 – – – – New financial assets originated or purchased assets 源生或购入之新金融资产、 derecognised repayments and 撤销确认资产、还款及 further investment 进一步投资 (27) 26 – (1) Write-offs 撇销 – – – – Net remeasurement of impairment allowances (including exchange 减值准备的重新计量净额 adjustments) (包括外汇调整) 51 15 – 66 Transfer to assets held for sale 转至持有作出售资产 (7) – – (7) Balance at 31st December 于12月31 日的结余 284 47 – 331 Of which: 其中: For debt investment securities 就按摊销成本计量的债务投资 measured at amortised cost 证券 97 44 – 141 For related accrued interest 就相关应收应计利息 receivable (Note 34) (附注34) 1 1 – 2 9845–143 For debt investment securities 就按通过其他全面收益以反映 measured at FVOCI 公平价值计量的债务投资证券 184 2 – 186 For related accrued interest receivable 就相关应收应计利息 2 – – 2 1862–188 The impairment allowances of debt investment securities measured at FVOCI 按通过其他全面收益以反映公平价值计 are not separately recognised in the statement of financial position because 量的债务证券的减值准备并不在财务状 they have been adjusted to the carrying amounts of debt investment securities 况表内确认,因按通过其他全面收益以measured at FVOCI as their fair values. 反映公平价值计量的债务投资证券的账面值是其公平价值。 ? F-145 ?308 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (ix) Impairment allowances reconciliation (continued) (ix) 减值准备对账(续) 2022 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良 信贷不良的 12个月内之 的合约期内之 合约期内之 Total 预期信贷损失预期信贷损失预期信贷损失总额 HK$ Mn港币百万元 HK$ Mn港币百万元 HK$ Mn港币百万元 HK$ Mn港币百万元 Others 其他 Balance at 1st January 于1月1日的结余 143 24 85 252转至12个月内之预期信贷 Transfer to 12-month ECL 损失 2 (2) – – Transfer to lifetime ECL not 转至非信贷不良的合约期内 credit-impaired 之预期信贷损失 – – – – Transfer to lifetime ECL 转至信贷不良的合约期内之 credit-impaired 预期信贷损失 (1) (7) 8 – New financial assets originated or purchased assets 源生或购入之新金融资产、 derecognised and repayments 撤销确认资产及还款 11 (3) 68 76 Write-offs 撇销 – – – – Net remeasurement of impairment allowances (including exchange 减值准备的重新计量净额 adjustments) (包括外汇调整) (22) 11 77 66 Balance at 31st December 于12月31日的结余 133 23 238 394 Of which: 其中: 就按通过其他全面收益以 For trade bills measured at 反映公平价值计量的贸 FVOCI 易票据 – – – – For related accrued interest receivable 就相关应收应计利息 – – – – –––– For trade bills measured at 就按摊销成本计量的贸易 amortised cost (Note 26) 票据(附注26) – – – – For related accrued interest receivable 就相关应收应计利息 – – – – –––– For placements with and 就在银行的存款及垫款 advances to banks (Note 25) (附注25) 1 – – 1 For related accrued interest receivable 就相关应收应计利息 – – – – 1––1 For cash and balances with 就现金及在银行的结存 banks (Note 24) (附注24) 2 – – 2 For related accrued interest receivable 就相关应收应计利息 – – – – 2––2 For loan commitments and financial guarantee contracts 就贷款承担和财务担保合 (Note 37) 约(附注37) 121 23 174 318 For account receivables and other accounts other than 就应收账款及其他账项 accrued interest receivable (应收应计利息除外) (Note 34) (附注34) 9 – 64 73 ? F-146 ?东亚银行有限公司 l 2022年报 309 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Lifetime ECL Lifetime ECL not credit-impaired credit-impaired 12-month ECL 非信贷不良 信贷不良的 12个月内之 的合约期内之 合约期内之 Total 预期信贷损失预期信贷损失预期信贷损失总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Others 其他 Balance at 1st January 于1月1日的结余 89 19 121 229转至12个月内之预期信贷 Transfer to 12-month ECL 损失 2 (2) – – Transfer to lifetime ECL not 转至非信贷不良的合约期内 credit-impaired 之预期信贷损失 – – – – Transfer to lifetime ECL 转至信贷不良的合约期内之 credit-impaired 预期信贷损失 – – – – New financial assets originated or purchased assets 源生或购入之新金融资产、 derecognised and repayments 撤销确认资产及还款 (14) 1 (1) (14) Write-offs 撇销 – – (124) (124) Net remeasurement of impairment allowances (including exchange 减值准备的重新计量净额 adjustments) (包括外汇调整) 66 6 89 161 Balance at 31st December 于12月31日的结余 143 24 85 252 Of which: 其中: 就按通过其他全面收益以 For trade bills measured at 反映公平价值计量的 FVOCI 贸易票据 2 – – 2 For related accrued interest receivable 就相关应收应计利息 – – – – 2––2 For trade bills measured at 就按摊销成本计量的贸易 amortised cost (Note 26) 票据(附注26) – – – – For related accrued interest receivable 就相关应收应计利息 – – – – –––– For placements with and 就在银行的存款及垫款 advances to banks (Note 25) (附注25) 1 – – 1 For related accrued interest receivable 就相关应收应计利息 – – – – 1––1 For cash and balances with 就现金及在银行的结存 banks (Note 24) (附注24) 3 – – 3 For related accrued interest receivable 就相关应收应计利息 – – – – 3––3 For loan commitments and financial guarantee contracts 就贷款承担和财务担保合约 (Note 37) (附注37) 133 24 17 174 For account receivables and other accounts other than 就应收账款及其他账项 accrued interest receivable (应收应计利息除外) (Note 34) (附注34) 4 – 68 72 The impairment allowances of trade bills measured at FVOCI are not recognised 按通过其他全面收益以反映公平价值计 in the statement of financial position because the carrying amount of trade bills 量的债务证券的减值准备并不在财务状 measured at FVOCI is their fair value. 况表内确认,因按通过其他全面收益以反映公平价值计量的债务投资证券的账面值是其公平价值。 ? F-147 ?310 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (a) Credit risk management (continued) (a) 信贷风险管理(续) (x) Collateral and other credit enhancements (x) 抵押品及其他信用提升 The Group has established guidelines on the acceptability of various classes 本集团已制订可接受不同类别抵押品的 of collateral and determined the corresponding valuation parameters. The 指引,并厘定相关估值参数。本集团会guidelines and collateral valuation parameters are subject to regular reviews to 定期检讨指引及抵押品估值参数,以确ensure their effectiveness over credit risk management. 保信贷风险管理的成效。 The extent of collateral coverage over the Group’s loans and advances to 本集团客户贷款及垫款的抵押品范围视 customer depends on the type of customers and the product offered. Types of 乎客户类别及所提供产品而定。抵押品collateral include residential properties (in the form of mortgages over property) 类别包括住宅物业(以物业按揭形式)、 other properties aircraft other registered securities over assets cash deposits 其他物业、飞机、其他登记抵押资产、 standby letters of credit and guarantees. Collateral generally is not held over 现金存款、备用信用证及担保。除持有balances and placements with banks and loans and advances to banks except 用作回购及证券借贷活动的抵押品外,when securities are held as part of sale and repurchase and securities borrowing 在银行的结存及存款,以及银行贷款及activity. The Group takes possession of collateral through court proceedings 垫款一般不需要抵押品。在收回减值贷or voluntary delivery of possession by the borrowers during the course of 款及垫款时,本集团会通过法庭程序或the recovery of impaired loans and advances. These repossessed assets are 借款人自愿交出拥有权收回抵押品。该reported in the statement of financial position within “other assets” (Note 2(t)). 等收回资产于财务状况表中以「其他资 If the recovery from the repossessed assets exceeds the corresponding gross 产」列账(附注2(t))。倘从收回资产所得exposure the surplus fund is made available either to repay the borrower’s other 之追收额超出相关风险承担时,则会使secured loans with lower priority or is returned to the borrower. 用盈余资金偿还借款人优先次序较低的已抵押贷款或退回予借款人。 Collateral held as security for financial assets other than loans and advances is 持有用作非贷款及垫款金融资产的抵押 determined by the nature of the instrument. Debt securities treasury and other 品,是按照工具之性质决定。除以一篮eligible bills are generally unsecured with the exception of asset-based securities 子金融资产作抵押的资产融资证券及相 and similar instruments which are secured by pools of financial assets. However 同工具外,债务证券、库券及其他认可the credit risk may be implicit in the terms or reflected in the fair value of the 票据一般俱属无抵押的。然而,信贷风corresponding instruments. 险可能隐含于相关工具的条款内或于相关工具的公平价值中反映。 The Group’s preferred agreement for documenting derivatives activity is the ISDA的主合约为本集团处理衍生交易 ISDA Master Agreement which covers the contractual framework within which 文件的优先合约,当中涵盖合约框架,dealing activity across a full range of over-the-counter products is conducted 而在合约框架之下,本集团可进行一系and contractually binds both parties to apply close-out netting across all 列的场外产品交易活动,如其中一方违outstanding transactions covered by an agreement if either party defaults 约或发生其他预先协定的终止事件,则or following other pre-agreed termination events. It is also common for the 按合约约束参与者以净额结算合约涵盖 Group to execute a Credit Support Annex in conjunction with the ISDA Master 的所有未履行交易。本集团亦会在签订Agreement with the counterparty under which collateral is passed between ISDA的主合约的同时,与交易对手签订the parties to mitigate the market contingent counterparty risk inherent in the 信贷附约,据此,抵押品可于订约方之outstanding position. 间转交,以降低出现在未履约情况下的内在市场或然交易对手风险。 For contingent liabilities and commitments that are unconditionally cancellable 对于或然负债及可无条件取消的承担(附(Note 45) the Group will assess the necessity to withdraw the credit line when 注45),如本集团对客户的信贷质素有there is a concern over the credit quality of the customers. Accordingly the 疑虑,则会评估是否需要撤回信贷额。 exposure to significant credit risk is considered as minimal. For commitments 因此,本集团面临重大信贷风险机会视that are not unconditionally cancellable the Group assesses the necessity of 为微乎其微。对于不可无条件取消的承collateral depending on the type of customer and the product offered. 担,本集团会视乎客户类别及所提供产品评估是否需要进行抵押。 ? F-148 ?东亚银行有限公司 l 2022年报 311 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (b) Market risk management (b) 市场风险管理 Market risk is the risk arising from adverse movements in market rates and prices 市场风险是指因市场价格,例如利率、汇率、such as interest rates foreign exchange rates equity prices debt security prices 股票价格、债务证券价格及商品价格的不利 and commodity prices which result in potential losses for the Group. The aim in 变动而导致本集团有机会出现亏损的风险。 managing market risk is to reduce the Group’s exposure to the volatility inherent in 市场风险管理旨在减少市场因素的波动为本 market factors. 集团带来的风险。 The Asset and Liability Management Committee deals with all market risk-related 资产负债管理委员会负责处理所有与本集团 issues of the Group. It is also responsible for conducting a regular review of interest 市场风险有关的事项,亦负责定期检讨利率rate trends and deciding the corresponding future business strategy. Market risk 走势及厘定相应的未来业务策略。市场风险is managed daily by the Treasury Markets Division of the Group within the limits 由集团的资金市场处按董事会资产负债管理 approved by the Board or the Asset and Liability Management Committee. The 委员会批准的限额范围进行日常管理。本集Market & Liquidity Risk Management Department under the Risk Management 团风险管理处辖下的市场及流动性风险管理 Division of the Group is responsible for monitoring activities relating to market risk. 部,负责监察与市场风险有关的活动。稽核The Internal Audit Division performs periodic reviews to ensure that the market risk 处会进行定期审查,以确保市场风险管理职management functions are performed effectively. 能得到有效执行。 The use of derivatives for trading and the sale of derivatives to customers as risk 透过衍生工具进行自营交易及向客户出售衍 management products are integral parts of the Group’s business activities. These 生工具以用作风险管理产品,为本集团其中instruments are also used to manage the Group’s own exposures to market risk 一项重要业务。此等工具亦用以管理本集团as part of its asset and liability management process. The principal derivative 所承受的市场风险,作为本集团资产负债管instruments used by the Group are interest rate foreign exchange and equity- 理的一部分。本集团所采用的衍生工具主要related contracts in the form of both over-the-counter derivatives and exchange- 为利率、外汇和股份相关合约,即为场外或traded derivatives. Most of the Group’s derivatives positions have been entered 场内交易的衍生工具。本集团大部分的衍生into to meet customer demand and to manage the risk of these and other trading 工具持仓均为切合客户需求,以及为此等和positions. 其他交易项目而进行对冲。 In this connection the key types of market risk that must be managed are: 在此方面,本集团必须管理的主要市场风险包括: (i) Currency risk (i) 货币风险The Group’s foreign currency positions arise from foreign exchange dealing 本集团的外币持仓源自外汇买卖(包括(including derivatives) commercial banking operations and structural foreign 衍生工具)、商业银行业务和结构性外 currency exposures. The Group’s non-structural foreign currency exposures 汇风险。本集团的非结构性外汇风险以are denominated in major currencies particularly USD and RMB. All foreign 主要货币计值,当中以美元及人民币为currency positions are managed within limits approved by the Board and the 主。所有外币持仓均维持在董事会或资Asset and Liability Management Committee. 产负债管理委员会所订定的限额内。 Structural foreign currency positions which arise mainly from foreign currency 结构性外汇持仓主要源自于本集团分 investments in the Group’s branches subsidiaries and associated companies 行、附属公司和联营公司的外汇投资,are excluded from value-at-risk measurements as related gains or losses are 其有关的溢利或亏损因为已拨入储备,taken to reserves. Such foreign currency positions are held with the intention 所以未计算在风险值内。此等结构性外of hedging any adverse effect partially or totally of exchange rate movements 币持仓的主要目的,是对冲因汇率变动on the capital adequacy ratio. The Group seeks to match its foreign currency 而对本集团资本充足比率产生的部分或 denominated assets closely with corresponding liabilities in the same currencies. 全部不利影响。本集团尽力将以外币计值的资产与以同一货币计值的负债,保持在相若水平。 ? F-149 ?312 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (b) Market risk management (continued) (b) 市场风险管理(续) (i) Currency risk (continued) (i) 货币风险(续) The Group had the following net structural positions which were not less than 于报告期结束日,本集团的以下结构性 10% of the total net structural foreign currency position at the end of the 持仓净额不低于结构性外币净持仓总额 reporting period: 10%: 20222021 RMB MYR USD RMB MYR USD人民币马币美元人民币马币美元 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Net structural position 结构性持仓净额 15727 2335 (9098) 17014 2335 (12983) (ii) Interest rate risk in trading book (ii) 交易账册的利率风险 The Group’s trading interest rate positions arise from treasury and dynamic 本集团的交易组合中的利率持仓来自零 hedging of retail and commercial banking activities. Interest rate risk is 售及商业银行业务的动态对冲。利率风managed daily by the Treasury Markets Division of the Group within the limits 险由本集团资金市场处按董事会或资产 approved by the Board or the Asset and Liability Management Committee. The 负债管理委员会批准的限额范围进行日 instruments used to manage interest rate risk include interest rate swaps and 常管理。管理利率风险的工具包括利率other derivatives. For the interest rate risk management of the Group’s banking 掉期和其他衍生工具。就管理本集团银book positions please refer to Note 43(e). 行账册持仓的利率风险而言,请参阅附注43(e)。 (iii) Equity risk (iii) 股份风险 The Group’s equity positions arise from equity investment and dynamic hedging 本集团的股份持仓来自股份投资及客户 of customer-driven business. Equity risk is managed daily by the Investment 业务的动态对冲。股份风险由投资部按Department within the limits approved by the Board Investment Committee or 董事会、投资委员会或资产负债管理委 the Asset and Liability Management Committee. 员会批准的限额范围进行日常管理。 Market risk control limits have been set at varying levels according to the practical 市场风险控制限额设有不同层次以配合各类 requirements of different units. The Board approves the core control limits and 业务的实际需要。董事会审批核心控制限额has delegated the authority to set detailed control limits to the Asset and Liability 并授权资产负债管理委员会审批具体的控制 Management Committee. Risk return and market conditions are considered when 限额。厘定限额时会考虑风险、回报及市场setting limits. Active limit monitoring is carried out. 情况等因素,并且采用积极限额监控程序。 In this connection the Asset and Liability Management Committee monitors the 在此方面,资产负债管理委员会负责监察本related market risk arising from the risk-taking activities of the Group to ensure that 集团进行风险活动时所产生的相关市场风 market risk exposures are within the Group’s risk tolerance levels. Risk exposures are 险,确保其市场风险处于本集团的风险承受monitored frequently to ensure that they are within established control limits. 范围内。本集团会经常监控风险承担情况,以确保所承担风险属于既定的控制限额内。 The Group quantifies the market risk of the underlying trading portfolio by means of 本集团运用风险值来量化相关交易组合的市 VaR. VaR is a statistical estimate that measures the potential losses in market value 场风险。风险值是统计学上的估计,用来量of a portfolio as a result of unfavourable movements in market rates and prices 度假设于某一时段内持仓维持不变的情况 assuming that positions are held unchanged over a certain horizon time period. 下,因市场息率及价格的不利波动而引致组合的市值潜在亏损。 ? F-150 ?东亚银行有限公司 l 2022年报 313 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The Group estimates VaR for the Group’s trading portfolio by the historical 本集团通过历史模拟法评估本集团交易组合 simulation approach where the VaR is calculated by revaluing the portfolio for 的风险值,其按从历史观察期中截获的每个each of the market movement scenarios obtained from the historical observation 市场波动情景对有关组合进行重新估值以计 period. This methodology uses movements in market rates and prices over a one-day 算风险值。该方法是依据1日持仓期、99%holding period with a 99% confidence level under a two-year observation period. 置信水平以及过往两年观察期来推算市场利率与价格的波动。 The market value of listed shares the fair value of private equity funds and unlisted 上市股份的市值、私人股份基金及非上市股 equities (collectively the “Unlisted Securities”) are subject to limits and these are 份(统称「非上市证券」)的公平价值均由本集 managed by the Investment Department of the Group. The Unlisted Securities are 团投资部按限额管理。非上市证券是根据特not included in the VaR for the equity trading position and are managed through 定限额管理,且不包括在交易股份持仓的风delegated limits. The limits are subject to regular review by the Asset and Liability 险值计算内。资产负债管理委员会须定期检Management Committee. 讨该限额。 Value-at-risk statistics 风险值统计 2022 At 31st December Maximum Minimum Mean于12月31日最高最低平均 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 VaR for total trading activities 交易活动的风险值总额 11 33 11 19 VaR for foreign exchange trading positions* 外汇交易持仓的风险值* 6 12 5 8 VaR for interest rate trading positions 利率交易持仓的风险值 – 5 – 1 VaR for equity trading positions 股份交易持仓的风险值 5 20 5 11 2021 At 31st December Maximum Minimum Mean于12月31日最高最低平均 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 VaR for total trading activities 交易活动的风险值总额 28 36 26 31 VaR for foreign exchange trading positions* 外汇交易持仓的风险值* 10 13 5 9 VaR for interest rate trading positions 利率交易持仓的风险值 2 4 – 1 VaR for equity trading positions 股份交易持仓的风险值 19 26 18 22 * Including all foreign exchange positions but excluding structural foreign exchange * 包括所有外汇持仓但不包括结构性外汇持仓。 positions.? F-151 ?314 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (b) Market risk management (continued) (b) 市场风险管理(续) 2022 At 31st December Maximum Minimum Mean于12月31日最高最低平均 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Stressed VaR for total trading activities 交易活动的受压风险值总额 27 59 24 41 2021 At 31st December Maximum Minimum Mean于12月31日最高最低平均 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Stressed VaR for total trading activities 交易活动的受压风险值总额 57 74 52 64 A stressed VaR measure is intended to replicate a VaR calculation that would 受压风险值是假设相关市场因素在受压期间 be generated on current trading portfolio if the relevant market factors were 下,模拟计算由现行交易组合产生的风险值。 experiencing a period of stress.(c) Operational risk management (c) 营运风险管理 Operational risk is the risk of loss resulting from inadequate or failed internal 营运风险是指由于内部流程、人员和系统不 processes people systems or from external events. 足或缺陷,或因外部事件而导致损失的风险。 The objectives of operational risk management are to identify measure assess 营运风险管理的目的在于识别、衡量、评估 and monitor the operational risk exposures associated to the Group; to control 及监控与本集团有关的营运风险;采取有效 and mitigate the exposures by taking effective measures; to report in a structured 的措施以管控及缓减风险承担;以具组织,systematic and consistent manner; and to comply with the relevant regulatory 系统及一致的方式作出汇报;以及遵守相关 requirements. 监管规定的要求。 The Operational Risk Management Committee is responsible for overseeing the 营运风险管理委员会负责监督集团的营运风 effectiveness of operational risk management of the Group while the Operational 险管理的有效性,而本集团风险管理处辖下Risk Management Department under the Risk Management Division of the Group 的营运风险管理部负责协助管理层管理本集 assists the Management in managing the Group’s operational risk including the 团的营运风险,包括制定和重检营运风险管establishment and review of the operational risk management and resilience policies 理运作及稳健性政策和框架;设计营运风险 and framework designing the operational risk management tools and reporting 的管理工具和汇报机制;评估监察及向管理 mechanism; assessing monitoring and reporting the overall operational risk position 层和风险管理委员会汇报总体营运风险状 to the Management and Risk Management Committee. All the heads of business 况。本集团所有部门或后勤单位主管均负责units and support units of the Group are responsible for the day-to-day operational 其单位的日常营运风险管理。 risk management of their units.The Group has put in place an effective internal control process which requires 本集团建立了有效的内部控制程序,对所有the establishment of policies and control procedures for all the key activities. The 重大活动订下政策及监控措施。设置适当的Group adheres to the fundamental principles of proper segregation of duties and 职责分工和授权乃本集团紧守的基本原则。 authorisation. The Group adopts various operational risk management tools such 本集团采用关键风险指标、风险与管控自我 as key risk indicators risk and control self-assessments operational risk incident 评估、营运风险事件汇报及检查等不同的营 management to identify assess monitor and control the risks inherent in business 运风险管理工具及方法以识别、评估、监察 activities and products as well as purchase of insurance to mitigate unforeseeable 及控制潜在于业务活动及产品内的风险,同and significant operational risk incidents. Business continuity plans are established to 时透过购买保险,将未能预见的重大营运风support business operations in the event of an emergency or disaster. 险减低。对支援紧急或灾难事件时的业务运作备有持续业务运作计划。 ? F-152 ?东亚银行有限公司 l 2022年报 315 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (d) Liquidity risk management (d) 流动性风险管理 Liquidity risk is the risk that the Group may not be able to meet its obligations as 流动性风险是指本集团因未能获得充足资金they come due because of an inability to obtain adequate funding (funding liquidity 投入而可能无法履行到期责任的风险(资金risk); or that the Group cannot easily liquidate assets quickly without significantly 流动性风险);或因市场深度不足或市场失 lowering market prices because of inadequate market depth or market disruptions 序,本集团非得大幅降低市场价格的情况下(market liquidity risk). 无法轻易迅速变现资产的风险(市场流动性风险)。 The purpose of liquidity risk management is to ensure sufficient cash flows to meet 流动性风险管理是为了确保本集团维持充足 all financial commitments and to capitalise on opportunities for business expansion. 的现金流量以履行所有财务承担,并掌握业This includes the Group’s ability to meet deposit withdrawals either on demand or 务扩展的机会。当中包括确保本集团能够在at contractual maturity to repay borrowings as they mature to make new loans 即时或合约期满时满足提款要求,在借款期and investments as opportunities arise and last but not least to comply with all the 满时能够还款,掌握贷款和投资的机会,以及statutory requirements for liquidity risk management including Liquidity Coverage 符合所有有关流动性风险管理的法定规定,Ratio (“LCR”) and Net Stable Funding Ratio (“NSFR”). 包括流动性覆盖比率及稳定资金净额比率。 The Group reviews the risk profile through regular assessments of both qualitative 本集团通过定期评估定性及定量的风险因素 and quantitative risk factors to determine its tolerance of prevailing risk levels 检讨风险状况,根据董事会每年批准的适用against applicable risk appetite statement for liquidity risk approved annually by the 于流动性风险的风险偏好厘定其现行风险 Board. The Asset and Liability Management Committee is delegated by the Board to 承受范围。资产负债管理委员会获董事会授oversee the Group’s liquidity risk management. The Asset and Liability Management 权,负责监察本集团的流动性风险管理。资Committee comprises balanced representation of senior staff from various business 产负债管理委员会由各业务单位、司库、风 units Treasury Risk Management and Finance who jointly formulate funding 险管理及财务的管理层出任以共同制定资金 strategies. The Asset and Liability Management Committee sets the strategy 策略方案。资产负债管理委员会制订管理流policy and limits for managing liquidity risk and the means for ensuring that such 动性风险的策略、政策及限额,以及确保执strategy and policy are implemented. Regular meetings are held to review the 行有关策略与政策的措施。委员会定期举行compliance status of the monitoring matrix established and the need for any change 会议,检讨各既有监控架构的合规情况,以in strategy and policy. Liquidity is managed daily by the Capital Markets & Liquidity 及是否需要改变策略及政策。流动资金状况Management Department under the Treasury Markets Division of the Group within 由本集团资金市场处辖下的资本市场及流动 the set limits. The Market & Liquidity Risk Management Department under the 资金管理部每日按所订限额范围进行管理。 Risk Management Division of the Group is responsible for monitoring the activities 本集团风险管理处辖下的市场及流动性风险 relating to liquidity risk. The Internal Audit Division performs periodic reviews to 管理部负责监察与流动性风险相关的活动。 ensure that the liquidity risk management functions are carried out effectively. 稽核处会定期作出检讨,确保流动性风险管理功能得以有效执行。 The LCR and NSFR statutory requirements are part of the stringent regulatory regime 流动性覆盖比率及稳定资金净额比率的法定 that covers the liquidity risk management of the Group. To ensure compliance with 要求是本集团对流动性风险管理的严格监管 the regulatory requirements internal targets for LCR and NSFR have been set above 制度部份之一。为确保遵守监管要求,本集regulatory required levels after considering the Group’s liquidity risk appetite. In 团考虑过其流动性风险偏好后,为流动性覆addition material changes in the LCR and NSFR are reviewed regularly by the Asset 盖比率及稳定资金净额比率设定的内部目标 and Liability Management Committee together with proposed mitigation actions 均高于上述监管规定水平。此外,资产负债to cope with adverse changes arising from but not limited to composition of the 管理委员会会定期检阅流动性覆盖比率及稳 deposit base and remaining tenor to maturity lending activities with respect to 定资金净额比率的重大变动,并提出建议补different maturity tenors and the Group’s asset and liability mix strategy. In planning 救措施,以应对来自(但不限于)存款基础及the asset and liability mix strategy the Group’s relevant business units contribute to 其余下到期期限、不同到期期限的贷款活动 an assessment of the impact of asset growth and funding structure on the LCR and 以及本集团资产及负债组合策略所产生的不 NSFR for review and decision by the Asset and Liability Management Committee. 利变动。在规划资产及负债组合策略时,本集团的相关业务单位就资产增长及资金结构对流动性覆盖比率及稳定资金净额比率的影 响提交评估,以供资产负债管理委员会检讨和作出决策。 ? F-153 ?316 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (d) Liquidity risk management (continued) (d) 流动性风险管理(续) As part of Group efforts to manage the LCR and NSFR effectively emphasis is placed 为有效地管理流动性覆盖比率及稳定资金净 on strengthening the deposit base by retaining loyal customers and maintaining 额比率,本集团特别着重存留忠实客户及维customer relationships. The Group balances funding among retail small business 持客户关系,藉以增强存款基础。本集团在and wholesale funding to avoid concentration in any one source. Professional 零售、小企业以及批发市埸资金之间保持平 markets are accessed through the issuance of certificates of deposit medium-term 衡,避免资金集中于任何一种来源。本集团notes subordinated debt money market placement and other borrowings for the 透过发行存款证、中期票据、后偿债项、货 purposes of providing additional funding maintaining a presence in local money 币市场拆借及其他借贷进入专业市场,获取markets and optimising asset and liability maturities. 额外资金,以此维持本行于本地金融市场的地位及优化资产及负债的期限。 The Group manages liquidity risk of the overseas branches and significant 本集团全面有效地管理海外分行及主要附属 subsidiary in a holistic approach. The liquidity risk management policies of the 公司的流动性风险。集团的流动性风险管理Group are abided by all of the overseas branches and significant subsidiary while 政策涵盖了所有海外分行及主要附属公司,supplementing their respective local practices and statutory requirements. Reporting 当中包括了当地法定要求及个别管理办法。 to the Group Chief Risk Officer the Risk Management Unit of each of the overseas 各海外分行及主要附属公司的风险管理单位 branches and significant subsidiary reports and escalates liquidity risk related matter 需要向本行风险管理部门汇报有关流动性风 to the liquidity risk management team at Head Office. The respective local Asset and 险事宜,而各风险管理单位需上报集团风险Liability Management Committee or respective local authorities are also established 总监。此外,本集团在各海外分行及主要附for overseeing liquidity risk in accordance with the local regulatory requirements and 属公司当地成立了资产负债管理委员会或相 limits approved. 关管理委员会,以监督各海外分行及主要附属公司需符合当地监管规定及已批准的风险限额。 In addition to observing the statutory LCR and NSFR the Group has established 除了紧守法定的流动性覆盖比率及稳定资金 different liquidity metrics – including but not limited to the loan-to-deposit ratio 净额比率外,本集团已设立不同的流动性指cumulative maturity mismatch ratio funding concentration ratio intra-group 标,以衡量及分析流动性风险,包括(但不exposure threshold and cross currency funding ratio – to measure and analyse 限于)贷存比率、累积到期错配比例、资金 the Group’s liquidity risk. The Group maintains sufficient High-quality liquid assets 集中比率、集团内公司之间风险限额以及跨 (“HQLAs”) as a liquidity cushion that can be accessed in times of stress. The HQLAs 货币资金比率。本集团维持充足的优质流动for fulfilling the LCR consist of cash exchange fund bills and notes high quality 资产,作为能够在资金受压时取用的流动资government debt securities and other equivalent liquid marketable assets. The 金缓冲。作为满足流动性覆盖比率所需的优majority of HQLAs are denominated in Hong Kong dollars. Contingent funding 质流动资产包括:现金、外汇基金票据和债 sources are maintained to provide strategic liquidity to meet unexpected and 券、优质的政府债务票据,以及其他同等的material cash outflows. 而可供出售的流动资产,其中大部分优质流动资产以港币计值。本集团维持应急资金来源,能提供策略性的流动资金,以应付未能预计及大量的资金需求。 Internally intra-group funding transactions are carried out at arm’s length and 内部方面,集团内公司间的融资交易乃按一treated in a manner in line with third-party transactions with regular monitoring 般正常公平交易原则进行,处理方式与第三and appropriate control. A majority of the Group’s liquidity risk arises from the 方交易一致,并会定期进行监察及适当控maturity mismatch gap between the Group’s asset and liability portfolios. The Group 制。本集团大部分流动性风险来自资产与负manages liquidity risk by conducting regular cash flow analysis and projections 债组合之间的期限错配差距。本集团会透过through the use of the Bank’s management information system so as to facilitate the 使用本行的管理资讯系统,对一系列时间内identification of funding needs arising from on and off-balance sheet items over a 的资产负债表内、外项目定期进行现金流量 set of time horizons. 分析及预测,以确定不同时段的资金需要,从而管理流动性风险。 ? F-154 ?东亚银行有限公司 l 2022年报 317 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) The Group also conducts stress-testing regularly to analyse liquidity risk. Both on 本集团亦会定期进行压力测试,以分析流动and off-balance sheet items and their impact on cash flow are considered together 资金风险。透过适用的虚拟及历史假设,本with applicable hypothetical and historical assumptions. The assessment and review 集团的压力测试均已考虑资产负债表内外项 of market liquidity risk are included in the various control processes including 目及其对现金流量造成的影响。市场流动资investment/trading strategy market risk monitoring valuation and portfolio review. 金风险的评估及检讨纳入各个控制环节,包Three stress scenarios – namely an institution-specific crisis a general market crisis 括投资╱交易策略、市场风险监控、估值及 and a crisis involving a combination of the two – are adopted with minimum survival 组合检讨。三个压力情景-即个别银行危机、period defined according to the HKMA’s Supervisory Policy Manual LM-2 “Sound 整体市场危机,以及结合上述两种情况的综Systems and Controls for Liquidity Risk Management”. 合危机-均采用金管局监管政策手册LM-2 「稳健的流动性风险管理系统及管控措施」界定的最短存活期。 With reference to the stress-testing results the Group identifies potential 本集团会参照压力测试结果,确认集团内的vulnerabilities within the Group establishes internal limits and formulates a 潜在弱点,订立内部限额,并制订应急资金contingency funding plan that sets out the Group’s strategy for dealing with any 计划,当中载列了本集团处理流动资金问题liquidity problem and the procedures for making up cash flow deficits in emergency 的策略及于紧急情况下弥补现金流不足的程 situations. 序。 The contingency funding plan is designed to be pro-active and pre-emptive and 应急资金计划旨在提供防患未然的积极措 stipulates the following three stages: 施,并订明以下3个阶段: 1. The Group utilises early warning indicators which cover both qualitative and 1. 本集团运用预早警报指标,当中包括质 quantitative measures and monitors both internal and external factors. Should 量性及数量性的措施,及监察内部及外there be any early signs of significant impact on the Group’s liquidity position 在因素。假如有任何早期迹象显示本集the Asset and Liability Management Committee is informed. The Asset and 团流动资金状况将受重大影响,应通知Liability Management Committee will consider appropriate remedial actions and 资产负债管理委员会。资产负债管理委will consider employing crisis management if the situation warrants. 员会将考虑适当的补救措施,并在情况需要时会考虑采用危机管理措施。 2. A Crisis Management Committee which is chaired by the Co-Chief Executives 2. 本集团已设立危机管理委员会,并由联 is formed to handle the crisis. Strategy and procedures for obtaining 席行政总裁担任该委员会的主席,该委contingency funding as well as roles and responsibilities of the parties 员会专责处理危机,并明确规定取得应concerned are clearly stated. 急资金的策略及程序,以及有关各方的职务及职责。 3. In the final stage a post-crisis review is carried out to recommend necessary 3. 于最后阶段,本集团会在危机结束后对 improvements to avoid incidents of a similar nature in the future. 问题进行检讨,并作出必要改进,避免日后出现同类事件。 An annual drill test is conducted and the contingency funding plan is subject to 为应付商业环境中的任何转变,本集团每年regular review in order to accommodate any changes in the business environment. 进行演习测试,并定期检讨应急资金。应急Any significant changes to the contingency funding plan are approved by the Board. 资金计划如有任何重大变动,均须分别取得董事会的批准。 ? F-155 ?318 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (d) Liquidity risk management (continued) (d) 流动性风险管理(续) Analysis of assets and liabilities by remaining maturity: 资产及负债的剩余期限分析: 2022 3 months 1 year 5 years or less or less or less Repayable Within but over but over but over Over Undated on demand 1 month 1 month 3 months 1 year 5 years or overdue Total 1个月以上3个月以上1年以上无注明日期 即时还款1个月内至3个月至1年至5年5年以上或逾期总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Assets 资产 Cash and balances with banks 现金及在银行的结存 44156 – – 96 – – 10327 54579 Placements with and advances to banks 在银行的存款及垫款 – 52337 7866 – – – – 60203 Trade bills 贸易票据 1 147 148 233 – – – 529 Trading assets 交易用途资产 – 1176 99 – – – 255 1530 Derivative assets 衍生工具资产 – – – – – – 11092 11092 Loans and advances to customers 客户贷款及垫款 2594 53685 38832 116096 202555 121575 7057 542394 Investment securities 投资证券 – 10446 10510 19043 64709 40618 1681 147007 Investments in associates and joint ventures 联营公司及合资企业投资 – – – – – – 9061 9061 Fixed assets 固定资产 – – – – – – 13476 13476 Goodwill and intangible assets 商誉及无形资产 – – – – – – 1870 1870 Deferred tax assets 递延税项资产 – – – – – – 1849 1849 Other assets 其他资产 27 4845 7463 18286 505 437 7672 39235 Total assets 资产总额 46778 122636 64918 153754 267769 162630 64340 882825 Liabilities 负债 Deposits and balances of banks 银行的存款及结余 2263 8074 9255 5886 – – – 25478 Deposits from customers 客户存款 212727 106604 160879 151421 16462 – – 648093 – Demand deposits and current accounts -活期存款及往来账户 65899 – – – – – – 65899 – Savings deposits -储蓄存款 145107 – – – – – – 145107 – Time call and notice deposits -定期及通知存款 1721 106604 160879 151421 16462 – – 437087 Trading liabilities 交易用途负债 – – – – – – 5 5 Derivative liabilities 衍生工具负债 – – – – – – 4145 4145 Certificates of deposit issued 已发行存款证 – 3559 12971 12244 3888 – – 32662 Current taxation 本年税项 – – – 1252 – – – 1252 Debt securities issued 已发行债务证券 – – 1404 672 816 – – 2892 Deferred tax liabilities 递延税项负债 – – – – – – 226 226 Other liabilities 其他负债 779 5027 8261 19697 1124 1541 13370 49799 – Lease liabilities -租赁负债 1 24 40 155 347 207 – 774 – Other accounts -其他账项 778 5003 8221 19542 777 1334 13370 49025 Loan capital 借贷资本 – – – – 11927 – – 11927 Total liabilities 负债总额 215769 123264 192770 191172 34217 1541 17746 776479 Net gap 净差距 (168991) (628) (127852) (37418) 233552 161089 ? F-156 ?东亚银行有限公司 l 2022年报 319 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 3 months 1 year 5 years or less or less or less Repayable Within but over but over but over Over Undated on demand 1 month 1 month 3 months 1 year 5 years or overdue Total 1个月以上3个月以上1年以上无注明日期 即时还款1个月内至3个月至1年至5年5年以上或逾期总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Assets 资产 Cash and balances with banks 现金及在银行的结存 43103 – – – – – 11985 55088 Placements with and advances to banks 在银行的存款及垫款 – 73103 1639 – – – – 74742 Trade bills 贸易票据 – 2596 5553 2623 – – – 10772 Trading assets 交易用途资产 – 122 – – 1424 86 851 2483 Derivative assets 衍生工具资产 – – – – – – 3381 3381 Loans and advances to customers 客户贷款及垫款 2507 69226 31993 119963 198315 120417 2016 544437 Investment securities 投资证券 – 5123 3468 29833 66365 40975 1743 147507 Investments in associates and joint ventures 联营公司及合资企业投资 – – – – – – 8947 8947 Fixed assets 固定资产 – – – – – – 13844 13844 Goodwill and intangible assets 商誉及无形资产 – – – – – – 1885 1885 Deferred tax assets 递延税项资产 – – – – – – 1861 1861 Other assets 其他资产 49 5380 6710 20765 1152 1216 7251 42523 Total assets 资产总额 45659 155550 49363 173184 267256 162694 53764 907470 Liabilities 负债 Deposits and balances of banks 银行的存款及结余 5237 7986 8540 10003 – – – 31766 Deposits from customers 客户存款 277711 95546 164176 86374 9698 – – 633505 – Demand deposits and current accounts -活期存款及往来账户 79657 – – – – – – 79657 – Savings deposits -储蓄存款 196662 – – – – – – 196662 – Time call and notice deposits -定期及通知存款 1392 95546 164176 86374 9698 – – 357186 Trading liabilities 交易用途负债 – – – – – – 5 5 Derivative liabilities 衍生工具负债 – – – – – – 5050 5050 Certificates of deposit issued 已发行存款证 – 7565 11652 35600 9510 – – 64327 Current taxation 本年税项 – – – 958 – – – 958 Debt securities issued 已发行债务证券 – – 3058 234 2555 – – 5847 Deferred tax liabilities 递延税项负债 – – – – – – 559 559 Other liabilities 其他负债 1007 3542 7139 20929 1490 2039 6769 42915 – Lease liabilities -租赁负债 1 29 49 183 434 188 – 884 – Other accounts -其他账项 1006 3513 7090 20746 1056 1851 6769 42031 Loan capital 借贷资本 – – – – 6488 – – 6488 Total liabilities 负债总额 283955 114639 194565 154098 29741 2039 12383 791420 Net gap 净差距 (238296) 40911 (145202) 19086 237515 160655 As the trading assets and debt instruments measured at FVOCI may be sold before 由于作交易资产及反映公平价值之债务工具 maturity or deposits from customers may mature without being withdrawn 可能于到期前出售或客户存款可能在到期前 the contractual maturity dates do not represent expected dates of future cash 未被提取,合约到期日并非代表未来现金流flows. 的预计日期。 ? F-157 ?320 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (d) Liquidity risk management (continued) (d) 流动性风险管理(续) The following tables provide an analysis of the undiscounted cashflow projection of 下表展示于报告期结束日集团的未经折扣之 the non-derivative financial liabilities of the Group at the end of the reporting period 非衍生工具金融负债的预计现金流按其合约 based on the dates of their contractual payment obligations: 支付债务之日期分析: 2022 Between Less than three Between Carrying Gross cash Repayable three months and one and More than amount outflow on demand months one year five years five years Undated现金流出3个月3个月以上1年以上账面值总额即时还款或以下至1年至5年5年以上无注明日期 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Deposits and balances of banks 银行的存款及结余 25478 26017 2263 17510 6244 – – – Deposits from customers 客户存款 648093 655121 212946 270268 155184 16723 – – – Demand deposits and current accounts -活期存款及往来账户 65899 65978 65978 – – – – – – Savings deposits -储蓄存款 145107 145174 145174 – – – – – – Time call and notice deposits -定期及通知存款 437087 443969 1794 270268 155184 16723 – – Trading liabilities 交易用途负债 5 5 – – – – – 5 Certificates of deposit issued 已发行存款证 32662 33270 – 16727 12559 3984 – – Current taxation 本年税项 1252 1252 – – 1252 – – – Debt securities issued 已发行债务证券 2892 2946 – 1435 690 821 – – Loan capital 借贷资本 11927 13918 – 50 511 13357 – – Other liabilities 其他负债 49799 45742 540 11265 18119 982 1466 13370 – Lease liabilities -租赁负债 774 872 1 69 171 398 233 – – Other accounts -其他账项 49025 44870 539 11196 17948 584 1233 13370 Total 总额 772108 778271 215749 317255 194559 35867 1466 13375 ? F-158 ?东亚银行有限公司 l 2022年报 321 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Between Less than three Between Carrying Gross cash Repayable three months and one and More than amount outflow on demand months one year five years five years Undated现金流出3个月3个月以上1年以上账面值总额即时还款或以下至1年至5年5年以上无注明日期 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Deposits and balances of banks 银行的存款及结余 31766 31844 5252 16553 10039 – – – Deposits from customers 客户存款 633505 636607 277785 260716 87586 10520 – – – Demand deposits and current accounts -活期存款及往来账户 79657 79709 79709 – – – – – – Savings deposits -储蓄存款 196662 196674 196674 – – – – – – Time call and notice deposits -定期及通知存款 357186 360224 1402 260716 87586 10520 – – Trading liabilities 交易用途负债 5 5 – – – – – 5 Certificates of deposit issued 已发行存款证 64327 64864 – 19354 35906 9604 – – Current taxation 本年税项 958 958 – – 958 – – – Debt securities issued 已发行债务证券 5847 5999 – 3175 252 2572 – – Loan capital 借贷资本 6488 7505 – – 278 7227 – – Other liabilities 其他负债 42915 41124 960 9788 20326 1228 2053 6769 – Lease liabilities -租赁负债 884 987 1 84 200 484 218 – – Other accounts -其他账项 42031 40137 959 9704 20126 744 1835 6769 Total 总额 785811 788906 283997 309586 155345 31151 2053 6774 ? F-159 ?322 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (d) Liquidity risk management (continued) (d) 流动性风险管理(续) The following tables summarise the undiscounted cashflows of the Group by 下表概述了本集团于12月31日以剩余合约 remaining contractual maturity as at 31st December for derivative financial liabilities 到期日列示之现金流,包括按净额基准结算that will be settled on net and gross basis. The Group's derivative financial liabilities 及所有按总额基准之衍生金融负债。本集团that will be settled on a net basis mainly include interest rate swaps whereas the 按净额基准结算之衍生金融工具主要包括利 derivative financial liabilities that will be settled on a gross basis mainly include 率掉期,而按总额基准结算之衍生金融工具foreign exchange forwards and futures and foreign exchange swaps. 主要包括外汇远期及外汇掉期。 2022 Between Less than three Between Carrying Total cash Repayable three months and one and More than amount outflow on demand months one year five years five years Undated现金流出3个月3个月以上1年以上账面值总额即时还款或以下至1年至5年5年以上无注明日期 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Derivative financial liabilities 衍生金融负债 4145 3978 37 1261 1180 1172 328 – Derivative financial liabilities settled 按净额基准结算之 on a net basis 衍生金融负债 Total net cash outflow 总净现金流出 3074 6 767 998 1024 279 – Derivative financial liabilities settled 按总额基准结算之 on a gross basis 衍生金融负债 Total cash inflow 总现金流入 (51195) (325) (33383) (12552) (4782) (153) – Total cash outflow 总现金流出 52099 356 33877 12734 4930 202 – 2021 Between Less than three Between Carrying Total cash Repayable three months and one and More than amount outflow on demand months one year five years five years Undated现金流出3个月3个月以上1年以上账面值总额即时还款或以下至1年至5年5年以上无注明日期 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Derivative financial liabilities 衍生金融负债 5050 6492 289 1086 1910 2485 722 – Derivative financial liabilities settled 按净额基准结算之 on a net basis 衍生金融负债 Total net cash outflow 总净现金流出 5194 100 654 1433 2284 723 – Derivative financial liabilities settled 按总额基准结算之 on a gross basis 衍生金融负债 Total cash inflow 总现金流入 (56277) (344) (28681) (24313) (2538) (401) – Total cash outflow 总现金流出 57575 533 29113 24790 2739 400 – ? F-160 ?东亚银行有限公司 l 2022年报 323 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Certificates of Deposit Debt Securities Issued and Loan Capital 已发行存款证、债务证券及借贷资本 In 2022 BEA issued floating rate certificates of deposit and debt securities with face 2022年,东亚银行发行了面值为港币2亿元values of HK$200 million and US$20 million; fixed rate certificates of deposit and 及2000万美元的浮息存款证及债务证券; debt securities with face values of US$1671 million; and zero coupon certificates 面值为16.71亿美元的定息存款证及债务证 of deposit and debt securities with face values of HK$1230 million US$1338 券;以及面值为港币12.30亿元、13.38亿 million CNY9920 million and EUR1070 million. The Group redeemed a quantity 美元、人民币99.2亿元及10.7亿欧元的零 of certificates of deposit and debt securities amounting to HK$79153 million 息存款证及债务证券。本集团于到期时赎回equivalent upon maturity. 的各类存款证及债务证券达等值港币791.53亿元。 At the end of December 2022 the face value of the outstanding certificates of 于2022年12月底,已发行在外的存款证及deposit and debt securities issued was equivalent to HK$36041 million with a 债务证券面值相等于港币360.41亿元,账面carrying amount equivalent to HK$35554 million. 值则相等于港币355.54亿元。 Maturity Profile of Certificates of Deposit and Debt Securities Issued 已发行存款证及债务证券的年期 As at 31st December 2022 于2022年12月31日 (All amounts expressed in millions of dollars of respective currencies) (金额以各个货币的百万元位列示) Total Face Value Year of Maturity总面值到期年份 202320242025 Amount in currencies of issuance 发行金额的货币 Floating Rate 浮息 HKD 港元 200 – – 200 USD 美元 818 740 58 20 Fixed Rate (Note) 定息(注) HKD 港元 865 865 – – USD 美元 1703 1172 430 101 Zero Coupon 零息 HKD 港元 1230 1230 – – USD 美元 722 722 – – CNY 人民币 5040 5040 – – EUR 欧元 329 329 – – Total Certificates of Deposit and Debt Securities issued in HKD equivalent 所有已发行存款证及债务证券(港币等值) 36041 31089 3808 1144 Note: Associated interest rate swaps have been arranged in order to manage interest rate 注: 已就管理已发行长期存款证及债务证券 risk arising from long-term certificates of deposit and debt securities issued if deemed 引致的利率风险,安排认为必要的相关necessary. 利率掉期。 ? F-161 ?324 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (d) Liquidity risk management (continued) (d) 流动性风险管理(续) Certificates of Deposit Debt Securities Issued and Loan Capital (continued) 已发行存款证、债务证券及借贷资本(续) In 2022 BEA issued fixed rate loan capital with a face value of USD 250 million and 2022年,东亚银行分别发行了面值为2.50USD 500 million respectively. 亿美元和5亿美元的借贷资本。 At the end of December 2022 the face value of the outstanding loan capital 于2022年12月底,已发行在外的借贷资本issued was equivalent to HK$12229 million with a carrying amount equivalent to 面值相等于港币122.29亿元,账面值则相等HK$11927 million. 于港币119.27亿元。 Maturity Profile of Loan Capital 借贷资本的年期 As at 31st December 2022 于2022年12月31日 (All amounts expressed in millions of dollars of respective currencies) (金额以各个货币的百万元位列示) Total Face Value Year of Maturity总面值到期年份 2028202920302032 Amount in currencies of issuance发行金额的货币USD (Note 2 3 4) 美元(注2 3 4) 1350 250 – 600 500CNY (Note 1) 人民币(注1) 1500 – 1500 – – Total Loan Capital issued in HKD equivalent 所有已发行借贷资本(港币等值)122291951169646813901 Notes: 1. The CNY1500 million loan capital that will mature in 2029 is callable on 25th 注: 1. 将于2029年到期的人民币15亿元借贷 April 2024. 资本于2024年4月25日可赎回。 2. The US$250 million loan capital that will mature in 2028 is callable on 7th July 2. 将于2028年到期的美元2.5亿元借贷资 2027.本于2027年7月7日可赎回。 3. The US$600 million loan capital that will mature in 2030 is callable on 29th May 3. 将于2030年到期的美元6亿元借贷资 2025.本于2025年5月29日可赎回。 4. The US$500 million loan capital that will mature in 2032 is callable on 22nd April 4. 将于2032年到期的美元5亿元借贷资 2027.本于2027年4月22日可赎回。 ? F-162 ?东亚银行有限公司 l 2022年报 325 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (e) Interest rate risk management (e) 利率风险管理 Interest rate risk is the risk resulting from adverse movements in interest rates that 利率风险是指本集团的银行帐内的利率风 affect the earnings and economic value of the Group’s banking book positions. 险(简称「IRRBB」)受到不利的利率走势对其 The Asset and Liability Management Committee is delegated by the Board to 盈利及经济价值造成不利的影响所带来的风 oversee the Group’s interest rate risk management establish the strategy and policy 险。资产负债管理委员会获董事会授权,负for managing interest rate risk and determine the means for ensuring that such 责监察本集团的利率风险管理,订立管理利strategies and policies are implemented. Interest rate risk is managed daily by the 率风险的策略与政策,并制定相应措施,以Treasury Markets Division of the Group within the limits approved by the Board 确保执行有关策略与政策。利率风险由本集or the Asset and Liability Management Committee. The Market & Liquidity Risk 团资金市场处按董事会或资产负债管理委员 Management Department under the Risk Management Division of the Group is 会批核的限额范围进行日常管理。本集团风responsible for monitoring the activities relating to interest rate risk. The Internal 险管理处辖下的市场及流动性风险管理部,Audit Division performs periodic reviews to ensure that the interest rate risk 负责监察利率风险相关的活动。稽核处会定management functions are implemented effectively. 期作出检讨,确保利率风险管理功能得以有效执行。 Interest rate risk primarily results from the timing differences in the re-pricing of 利率风险主要是由银行账册内利率敏感性资 interest rate-sensitive assets liabilities and off-balance sheet items in the banking 产、负债及资产负债表外项目在再定息时的 book. In determining the level of interest rate risk assessments are made for the 时差所致。厘定利率风险水平时,对差距风gap risk basis risk and option risk. The Group manages the interest rate risk on the 险、息率基准风险及期权风险进行评估。本banking book primarily by focusing on re-pricing mismatches. Gap analysis provides 集团管理银行账册上的利率风险主要集中于 a static view of the maturity and re-pricing characteristics of the Group’s interest 重订息率的错配。差距分析可让本集团从静rate-sensitive assets liabilities and off-balance sheet positions. Re-pricing gap 态角度了解利率敏感性资产、负债和资产负 position limits are set to control the Group’s interest rate risk. 债表外持仓的到期情况及重订息率特点。本行设有重订息率差距限额,以控制本集团的利率风险。 Sensitivity analysis in relation to the impact of changes in interest rates on earnings 本集团每月定期进行敏感度分析,以估算利in terms of net interest income (“NII”) and economic value in terms of economic 率变动对盈利和股权经济价值的影响,当中value of equity (“EVE”) is assessed regularly through a number of hypothetical 包括金管局规定的不同利率冲击假设情景。 interest rate shock scenarios prescribed by the HKMA. EVE represents an assessment 股权经济价值反映对按照市场利率折算其预 of the present value of expected net cash flows discounted to reflect market rates. 计净现金流的现值的评估。由于利率变动会As fluctuations in interest rates will affect earnings they will also affect its net 影响本集团的盈利,因此亦会影响本集团的worth. Sensitivity limits are set to control the Group’s interest rate risk exposure 净值。本集团设有敏感度限额,以控制本集under both earnings and economic value perspectives. The results are reported to 团的盈利及经济价值两方面的利率风险承 the Asset and Liability Management Committee on a regular basis. 担。有关结果会定期向资产负债管理委员会汇报。 In order to produce quantitative estimation on IRRBB the Group has assumed 为了对 IRRBB进行定量估计,本集团假设利shock scenarios to interest rate yield curves which allow changes in economic value 率收益率曲线受到冲击并考虑了选择权和 and earnings to be computed with consideration of optionality and behavioural 习性的设定,从而计算经济价值和盈利的变assumptions. These scenarios are applied to IRRBB exposures in each currency for 化。这些情境适用于本集团持有的 IRRBB风which the Group has material positions. 险敞口于各种重要货币。 ? F-163 ?326 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (e) Interest rate risk management (continued) (e) 利率风险管理(续) The prescribed interest rate shock scenarios are provided by the HKMA in their 规定的利率冲击情境是由香港金融管理局在 Supervisory Policy Manual IR-1 Interest Rate Risk in the Banking Book and generally 其监管政策手册 IR-1「银行帐内的利率风险」 described as follows: 中提供,其一般描述如下: 1. Parallel up: A constant parallel shock up across all time buckets 1. 平行向上: 利率收益率曲线在所有时 间段内平行向上移动 2. Parallel down: A constant parallel shock down across all time buckets 2. 平行向下: 利率收益率曲线在所有时 间段内平行向下移动 3. Steepener: Short rates down and long rates up 3. 较倾斜: 短期利率下降而长期利率 上升 4. Flattener: Short rates up and long rates down 4. 较横向: 短期利率上升而长期利率 下降 5. Short rate up: Rates up are greatest at shortest time bucket and diminish 5. 短率上升: 利率在最短的时间段内上 towards current rates in longer time buckets 升差距最大,而差距随着较长时段减少至与当前利率相若 6. Short rate Rates down are greatest at shortest time bucket and diminish 6. 短率下跌: 利率在最短的时间段内下 down: towards current rates in longer time buckets 降差距最大,而差距随着较长时段减少至与当前利率相若 Based on the sensitivity analysis performed by the Group for each of the prescribed 根据本集团在2022年12月31日年度报 interest rate shock scenarios for the annual reporting date at 31st December 2022 告日于规定的利率冲击情境下的敏感性分 the maximum adverse impact on EVE and NII over the next 12 months are HK$1687 析,未来12个月对股权经济价值及净利息million (31st December 2021: HK$1093 million) and HK$2927 million (31st 收入的最高不利影响分别为港币16.87亿元 December 2021: HK$2792 million) respectively. (2021年12月31日:港币10.93亿元)及港币29.27亿元(2021年12月31日:港币 27.92亿元)。 Details of the sensitivity analysis on interest rate risk can be found on the Bank’s 有关利率风险敏感性分析可浏览本行网站 website accessible through the “Regulatory Disclosures” link on the home www.hkbea.com主页内「监管披露」的连系 page of the Bank’s website at www.hkbea.com or at the following direct link: 或按www.hkbea.com/html/tc/bea-about- www.hkbea.com/regulatory_disclosures. bea-regulatory-disclosures.html 的直接连系。 ? F-164 ?东亚银行有限公司 l 2022年报 327 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (f) Strategic risk management (f) 策略性风险管理 Strategic risk is the risk of current or potential impact on the Group’s earnings 策略性风险是指因本集团营运环境变动、不 capital reputation or standing arising from changes in the environment the Group 良策略决策、决策实施不当或对工业、经济或 operates in adverse strategic decisions improper implementation of decisions or 技术变动反应迟缓而对本集团盈利、资本、 lack of responsiveness to industry economic or technological changes. 声誉或地位造成当前或潜在影响的风险。 The objective of managing strategic risk is to identify assess monitor report 策略性风险管理的目的在于识别、评估、监 and mitigate strategic risk and to ensure compliance with the relevant regulatory 控、汇报及降低策略性风险,以及确保符合requirements. 相关监管规定的要求。 The Group establishes comprehensive policies manuals profiles and reports to set 本集团制定全面的政策、指引、状况及报告,out the management framework as well as assessment and monitoring tools. 载列管理架构及评估和监控工具。 The Group formulates and adheres to the Strategic Risk Management Manual 本集团制定并遵从策略性风险管理手册,该which outlines a systematic approach to the management of strategic risk including 手册载录对策略性风险实施系统化管理的方 a framework for strategic risk identification assessment monitoring mitigation and 法,包括识别、评估、监控、缓减及控制策control thereby enhancing the level of strategic risk management of the Group. 略性风险的机制,借此提升本集团的策略性风险管理水平。 The Risk Management Committee is responsible for overseeing the management of 风险管理委员会负责监督本集团的策略性风 the Group’s strategic risk. 险管理。 (g) Legal risk management (g) 法律风险管理 Legal risk is the risk of loss arising from unenforceable contracts lawsuits or adverse 法律风险是指出现合约未能执行、诉讼或不 judgements that may disrupt or otherwise negatively affect the operations or 利审判的情况,可能对本集团的日常运作或financial condition of the Group. 财务状况造成扰乱或负面影响而导致损失的风险。 The objective of managing legal risk is to identify assess monitor and report on 法律风险管理的目的,在于识别、评估、监legal risk and to comply with the relevant legal and regulatory requirements. 控及汇报法律风险,以及遵守相关法律及监管规定的要求。 From time to time the Group provides training conducted by qualified internal 本集团会不时向员工提供由合资格内部人员 personnel and/or external lawyers/professionals to staff members. It also issues 及╱或外聘律师╱专业人士讲解的培训,并reminders to staff members when necessary. When dealing with legal matters the 于有需要时向员工发出提示。当处理法律事Group consults qualified internal personnel and when necessary and appropriate 宜,本集团咨询合资格内部人员,并于必要engages external lawyers with appropriate expertise. 及适当的情况下聘请具备相应专业知识的外聘律师。 The Operational Risk Management Committee is responsible for overseeing the 营运风险管理委员会负责监督本集团的法律 management of the Group’s legal risk. 风险管理。 ? F-165 ?328 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (h) Reputation risk management (h) 声誉风险管理 Reputation risk is the risk that the Group’s reputation is damaged by one or more 声誉风险是指因对本集团一项或多项有关营 events that result in negative publicity about the business practices conduct or 商手法、行为或财务状况事件的负面报导而 financial condition of the Group. Such negative publicity whether true or not may 损及本集团声誉的风险。此等负面报导,不impair public confidence in the Group and may result in costly litigation or lead to 管真确与否,有可能影响公众对本集团的信a decline in the Group’s customer base business and/or revenue. 心,并可能导致高昂的诉讼费用,或令本集团客户基础、业务及╱或收入减少。 The objective of managing reputation risk is to identify assess monitor report 声誉风险管理的目的在于识别、评估、监控、 and mitigate reputation risk and to ensure compliance with the relevant regulatory 汇报及降低声誉风险,以及确保符合相关监requirements. 管规定的要求。 The Group establishes various policies guidelines manuals and codes to ensure 本集团制定各项政策、指引、手册及守则,compliance with applicable laws rules and regulations and to ensure that the 确保遵守适用法例、规则及规例,同时确保Group maintains a high standard of corporate governance which in turn helps to 本集团维持高水准的企业管治,借此保障及safeguard and enhance the Group’s reputation. 提升本集团的声誉。 The Group formulates and adheres to the Reputation Risk Management Manual 本集团制定并遵从声誉风险管理手册,该手which outlines a systematic approach to the management of reputation risk 册载录对声誉风险实施系统化管理的方法,including a framework for reputation risk identification assessment mitigation 包括识别、评估、缓减、控制及监控声誉风 control and monitoring thereby protecting and enhancing the reputation of the 险的机制,借此保护及提升本集团的声誉。 Group. The Guidelines for Incident Response and Management are established for 本集团已建立事件应对及管理指引,以快速swift response to and management of unexpected incidents. The Media Guidelines 应对并管理未能预期的事件。并已建立媒体are established to ensure effective and consistent delivery of the Group’s key 指引,以确保有效及一致地将本集团的关键messages to the media. 信息传达予媒体。 The Operational Risk Management Committee is responsible for overseeing the 营运风险管理委员会负责监督本集团的声誉 management of the Group’s reputation risk. 风险管理。 ? F-166 ?东亚银行有限公司 l 2022年报 329 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (i) Compliance risk management (i) 合规风险管理 Compliance risk is the risk of potential losses arising from legal or regulatory 合规风险是指因未能遵守适用于本集团业务 sanctions fines and penalties financial losses or damage to reputation that the 活动的法例、规例、规则、相关自我监管机 Group may suffer as a result of its failure to comply with laws regulations rules 构所定的标准及行为守则而引致的法律及监 related self-regulatory organisation standards and codes of conduct applicable to its 管制裁、罚金或罚款、财务损失,或令声誉business activities. 受损而导致本集团可能损失的风险。 The Group establishes various policies guidelines and manuals to ensure compliance 本集团已制定各项政策、指引及手册,确保with all applicable legislation rules codes of conduct industry standards 遵守所有适用法例、规则、行为守则、行业 and guidelines issued by the relevant regulatory authorities that govern the 标准及有关监管机构发出的规管本集团营运 Group’s operations. The Group formulates and adheres to the Compliance Risk 的指引。本集团已制定并遵从合规风险管理Management Manual which outlines a systematic approach to the management 手册,该手册载录对合规风险实施系统化管of compliance risk including a framework for compliance risk identification 理的方法,包括识别、评估、监控、缓减及assessment monitoring mitigation and control thereby enabling the Group to 控制合规风险的机制,借此令本集团有效地manage its compliance risk effectively. Independent regulatory compliance reviews 管理合规风险。并采用风险为本的方式对本are conducted on major functions of the Group using a risk-based approach. 集团主要职能进行独立合规监察审查。 (j) Technology risk management (j) 科技风险管理 Technology risk is the risk of loss to the Group due to inadequate or failed technical 科技风险是指因技术程序、人员及╱或计算 processes people and/or computing systems or unauthorised access or disruption 系统不足或出现故障;或因未经授权使用或to technology resources in particular relating to cyber security and e-banking. 破坏技术资源(尤其在涉及网络安全及电子银行时)导致本集团损失的风险。 To address increasing cyber security threats the Group has put in place adequate 为应对日渐上升的网络安全威胁,本集团已security resources and proper control measures based on a defined risk appetite 根据既定风险偏好级别投入充足的网络安全 level. The Group has developed technology risk related policies and cyber security 资源和实施适当的控制措施。本集团已制定strategies as well as comprehensive security awareness programmes to strengthen 科技风险相关政策及网络安全策略,以及全cyber security at all levels. 面的安全意识计划,以加强各个级别的网络安全。 The Group has also established a framework for proper management of technology 本集团亦已为科技风险设立妥善管理框架。 risk. The Board and designated committees at the top level are responsible for 处于集团顶层的董事会及其指定委员会负责 overall management of technology risk for the Group. They lead various working 对本集团科技风险的整体管理,统领各工作teams and the “Three Lines of Defence” to address specific areas of concern. 小组及「三道防线」解决个别领域的问题。 Comprehensive control policies standards guidelines and procedures are 本集团继续落实全面的控制政策、标准、指 maintained to ensure that adequate control measures relating to the security of 引及程序,确保充分实施与网络系统及应用internet systems and applications customer authentication risk assessment for 程式安全、客户身份验证、新产品及服务风 new products and services third-party security and confidentiality integrity and 险评估、第三方安全性、以及资料保密、完 availability of information are all in place. 整性及可用性相关的控制措施。 ? F-167 ?330 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) 主要风险管理(续) (k) Capital management (k) 资本管理 The Group’s primary objectives when managing capital are to meet the regulatory 本集团管理资本的主要目的是要符合监管规 requirements and safeguard the Group’s ability to continue as a going concern 定及保障本集团可持续经营,藉以不断为股so that it can continue to provide returns for shareholders and benefits for other 东提供回报及为其他利益关涉者带来利益。 stakeholders by pricing products and services commensurately with the level of risk 方法包括依照风险水平厘定产品及服务价 and by securing access to finance at a reasonable cost. 格,及以合理的成本提供融资渠道。 Capital managed by the Group to achieve these objectives includes ordinary 以求达至该目的,本集团管理资本包括股share capital retained profits other reserves and non-controlling interests after 本、留存溢利、其他储备,及非控股权益(已deductions for goodwill and intangible assets. It also includes subordinated 扣除商誉和无形资产)。管理资本亦包括无liabilities impairment allowances and regulatory reserve for general banking risks as 偿负债、减值准备及资本规则所容许的一般 allowed under Banking (Capital) Rules. 银行业风险的规管储备。 The Group actively and regularly reviews and manages its capital structure to 本集团积极定期检讨及管理资本架构,以期maintain a balance between the higher shareholder returns that might otherwise be 在争取更高股东回报与维持良好资本的好处 possible with greater gearing and the advantages and security afforded by a sound 和安全之间取得平衡,并且因应经济情况的capital position and makes adjustments to the capital structure in light of changes 转变调整资本架构。 in economic conditions.The Steering Group for Capital Management and Recovery and Resolution Planning 资本管理、恢复及处置规划督导组负责监督 is responsible for overseeing issues related to the capital positions and monitoring 与资本状况相关的事项,并根据监管机构及the capital adequacy against all regulatory and internal reference. The capital 内部指引以监控资本充足度。风险管理委员position is also reviewed regularly by the Risk Management Committee Risk 会、风险委员会及董事会亦会定期检讨资本 Committee and the Board. 状况。 The HKMA supervises the Group on both a consolidated basis and a solo- 金管局按综合基准及单独综合基准以监管本 consolidated basis and as such sets capital requirements and receives information 集团,并制订资本要求及定期收集本集团整of capital adequacy on a regular basis for the Group as a whole. Individual overseas 体性的资本充足资料。个别海外分行及银行branches and banking subsidiaries are directly regulated by respective domestic 附属公司分别由当地的银行监管机关直接监 banking supervisors who set and monitor their capital adequacy requirements. 管,并制订及监控其资本充足要求。在某些In certain jurisdictions non-banking financial subsidiaries are also subject to the 地区,非银行财务附属公司是受当地监管机supervision and capital requirements of domestic regulatory authorities. 关规管及资本要求。 In implementing current capital requirements the HKMA requires the Group to 在实施现行资本要求,金管局要求本集团维maintain a prescribed ratio of total capital to total risk-weighted assets. 持特定的总资本对风险资产总额比率。 The Group monitors its capital structure on the basis of the capital adequacy ratios 本集团以资本充足比率为基准监察资本架 and there have been no material changes in the Group’s policy on the management 构,年度内本集团资本管理政策并无重大改of capital during the year. 变。 The capital adequacy ratios as at 31st December 2022 and 31st December 2021 2022年12月31日及2021年12月31日的 as disclosed are computed on the consolidated basis of the Bank and certain of 资本充足比率的披露是依据金管局为监管目 its subsidiaries as specified by the HKMA for its regulatory purposes and are in 的而制定的,本行及若干附属公司已按综合accordance with the Banking (Capital) Rules of the Hong Kong Banking Ordinance. 基准计算,并符合《银行业条例》的《银行业(资本)规则》。 The Group and its individually regulated operations have complied with all externally 截至2022年12月31日及2021年12月31imposed capital requirements throughout the year ended 31st December 2022 and 日止年度内,本集团及其个别受监管业务已 31st December 2021 and the Group’s capital ratios are well above the minimum 符合所有外间订立的资本规定,以及本集团 required by the HKMA. 俱远高于金管局所定的最低规定比率。 ? F-168 ?东亚银行有限公司 l 2022年报 331 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (l) Climate-related risk management (l) 气候相关风险管理 The Group is of the view that there is growing urgency for immediate climate action 本集团认为应对气候行动刻不容缓,必须建in building resilience and to mitigate potential negative impacts of climate change. 立气候抗御力和缓解气候变化潜在的不利影 The Group distinguishes climate related risk between physical risk and transition 响。本集团将气候相关风险区分为实体风险risk. “Physical risk” refers to the impacts of weather and climate-related events 及转型风险。「实体风险」指天气及气候相关which could lead to disruptions to the business and operations of banks and their 事件的影响,可能对银行及相关客户的业务clients. “Transition risk” refers to the risk related to the process of adjustment 和营运以造成干扰。「转型风险」指与转型至towards a low-carbon economy which can be prompted by policy legal technology 低碳经济过程中的相关风险,可以是归因于and market changes as climate-change mitigation and adaptation measures are 推行气候变化的缓解及适应措施导致的政 adopted. 策、法规、科技和市场变化。 The Bank’s Board of Directors has established a Board-level ESG Committee to 本行董事会已成立董事会层面的环境、社会oversee the Group’s ESG performance. The ESG Steering Committee (“Steering 及管治委员会以监督集团的可持续发展表Committee”) reports directly to the ESG Committee. The Steering Committee 现。环境、社会及管治督导委员会(「督导委chaired by the Co-Chief Executive is responsible for driving ESG strategy 员会」)直接向环境、社会及管治委员会汇 development assessing the materiality of existing and emerging ESG topics and 报。督导委员会由联席行政总裁担任主席,ESG target setting and performance review which is then reported to the ESG 负责促进制订可持续发展策略、评估现有及 Committee. The Group Chief Risk Officer sits on the ESG Steering Committee and is 新兴可持续发展议题的重要性、订立可持续 tasked with managing and reporting on ESG risks. 发展目标和检讨表现,然后向环境、社会及管治委员会汇报。集团风险总监为环境、社会及管治督导委员会的成员之一,专责管理和汇报环境、社会及管治风险。 Through the HKMA-led Climate Risk Stress Test (“CRST”) exercise the Group has 本集团藉着金管局推出的气候风险压力测试 identified emerging climate risks and opportunities which may materially affect the 识别可能对本集团业务及营运构成重大影响 Group’s business and operations. Based on the results from the climate risk and 的新兴气候风险与机遇。本集团根据气候风scenario analysis the Group is able to determine certain financial and non-financial 险及情境分析结果,透过对资产质素(即借impacts of climate change which could manifest in the major risk categories through 款人偿还能力、抵押品质素)、金融票据的估 impacting of the asset quality (i.e. borrower repayment ability collateral quality) 值(即市场波动)、营运抗御力(即银行处所valuation of financial instruments (i.e. market fluctuation) operational resilience 及资产运作受损和业务中断)造成的影响,确(i.e. operational damage to bank premises and assets and business disruption) and 定可能落入主要风险类别的气候变化的财务 reputational impact to the Group. The Group has developed plans to strengthen 及非财务影响,以及对本集团声誉的影响。 its strategies and risk governance framework to ensure its resilience against 本集团已制订多个方案强化策略及风险管治 extreme climate events and to mitigate the vulnerabilities identified during this 架构,确保可以抵御极端气候事件和缓解气CRST exercise. Due to strong capital buffers built up over past years the estimated 候风险压力测试所识别的弱点。由于本集团financial impact from climate change do not create material capital impact to the 过去多年建立了雄厚的缓冲资本,因此气候Group. 变化的估计财务影响不会对本集团的资本构成重大影响。 The Group’s climate risk management measures include supporting customers 本集团的气候风险管理措施包括协助客户过 towards transition to a low carbon economy controlling the Group’s exposure 渡至低碳经济、控制本集团于高气候风险行 to high climate risk sectors and the development of net zero roadmaps for both 业的投资,以及为营运碳排放(范围1及2)operational emissions (Scope 1 and 2) as well as financed emissions (Scope 3). 和本集团提供融资的排放量(范围3)拟定净 The significant climate risk issues will be reported and escalated to management 零碳排放路线图。重大气候风险议题将通过committees and the Board through the existing enterprise risk management 现有的企业风险管理架构汇报给相关的管理 organizational structure. The Group has a risk appetite statement for ESG risk 层委员会和董事会。本集团制订环境、社会supported by quantitative metrics established in 2022 for rollout in 2023 to guide 及管治风险的风险偏好声明,并于2022年its efforts in managing the impacts that climate change could have on its business 确立量化指标,准备于2023年正式实施作and financial performance. 为指引,妥善管理气候变化可能对本集团业务及财务表现造成的各种影响。 ? F-169 ?332 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 44. FAIR VALUES OF FINANCIAL INSTRUMENTS 金融工具的公平价值 (a) Financial instruments carried at fair value (a) 以公平价值列账的金融工具 Fair value estimates are generally subjective in nature and are made as of a specific 公平价值估计是根据金融工具的特性和相关 point in time based on the characteristics of the financial instruments and relevant 市场资料于某一特定时间作出,因此一般是market information. The Group measures fair values using the following hierarchy of 主观的。本集团以下列的分级方法计算公平methods: 价值: Level 1 – Quoted market price in an active market for an identical instrument. 第一级-参考同一工具在活跃市场取得的市场报价。 Level 2 – Valuation techniques based on observable input. This category includes 第二级-根据可观察的参数之估值模式。为instruments valued using: quoted market prices in active markets for similar 此级别估值的工具,包括以下方式:就相若instruments; quoted prices for similar instruments in markets that are considered 工具在活跃市场取得的市场报价;就相若工 less than active; or other valuation techniques where all significant inputs are directly 具在非活跃市场取得的市场报价;或其他估 or indirectly observable from market data. 值模式,而该等估值模式所用的参数,是直接或间接可从市场观察所得的数据。 Level 3 – Valuation techniques using significant unobservable inputs. This category 第三级-根据重要但非可观察得到的参数之 includes all instruments where the valuation technique includes inputs not based on 估值模式。为此级别估值的工具,其估值模observable data and the unobservable inputs could have a significant effect on the 式所输入之参数为非可观察的数据,惟该等instrument’s valuation. This category includes instruments that are valued based on 非可观察的数据可以对估值产生重大影响。 quoted prices for similar instruments where significant unobservable adjustments or 为此级别估值的工具,也包括在活跃市场取assumptions are required to reflect differences between the instruments. 得相若金融工具的市场报价,惟当中需要作出非可观察之调整或假设,以反映不同金融工具之间的差别。 Fair values of financial assets and financial liabilities that are traded in active markets 于活跃市场买卖的金融资产及金融负债,是are based on quoted market prices or counterparty quotations. For all other 根据市场报价或交易对手报价以厘定其公平 financial instruments the Group determines fair values using valuation techniques. 价值。而对于所有其他金融工具,本集团则Valuation techniques include net present value and discounted cash flow models 利用估值模式以厘定公平价值。估值模式包and various market recognised option pricing models. Assumptions and inputs 括净现值及现金流量折现模式、以及其他市 used in valuation techniques include risk-free and benchmark interest rates equity 场广泛应用的期权估值模式。用于估值模式prices foreign currency exchange rates index prices historical or implied volatilities 之假设及参数包括无风险利率、基准利率、 and correlations. The objective of valuation techniques is to arrive at a fair value 股票价格、外币兑换率、指数价格、过往或 measurement that reflects the price of the financial instrument that would be 预期波幅及相联关系。采用估值模式的目的received to sell the asset or paid to transfer the liability in an orderly transaction 是计量公平价值,藉以在申报日能反映金融between market participants at the reporting date. 工具的价格,而该价格可被视为在正常交易下市场人士当卖出资产时可收取或当转移负债时须支付之款项。 ? F-170 ?东亚银行有限公司 l 2022年报 333 财务报表附注(续) The Group uses widely recognised valuation models for determining the fair value 本集团会使用广泛应用的估值模式,以厘定of common and simpler financial instruments like interest rate and currency swaps 一般性及较简单金融工具的公平价值,例如that use only observable market data and require little management judgement 仅使用可观察市场价格、及毋须管理层耗时 and estimation. Observable prices and model inputs are usually available in the 判断及估计之利率及货币掉期。可观察价格market for listed debt and equity securities exchange traded derivatives and simple 及模式的参数,通常可从市场上的上市债务over-the-counter derivatives like interest rate swaps. Availability of observable 及股份证券、在交易所买卖的衍生工具和简 market prices and model inputs reduces the need for management judgement and 单的场外交易衍生工具如利率掉期获取。获estimation and also reduces the uncertainty associated with determination of fair 取可观察市场价格及模式的参数,可以减省values. Availability of observable market prices and inputs varies depending on the 管理层需时判断及估计,也可减少有关厘定products and markets and is prone to changes based on specific events and general 公平价值的不稳定因素。是否取得可观察市conditions in the financial markets. 场价格及参数,视乎产品及市场性质,并会因金融市场的个别事件和一般情况而有不同变化。 For more complex instruments the Group uses valuation models which usually are 至于较复杂的金融工具,本集团会使用通常developed from recognised valuation methodologies. Some or all of the significant 由已有认受性的估值模式改动而来。部分甚inputs into these models may not be observable in the market and are derived from 或所有须予输入模式的重要参数或未能从市 market prices or rates or are estimated based on assumptions. Valuation models 场中观察得出,而必须从市场价格或利率计that employ significant unobservable inputs require a higher degree of management 算、或基于假设而估计而得出。该等须利用judgement and estimation in determination of fair value. Management judgement 重要而非可观察之参数的估值模式,需要管and estimation are usually required for selection of the appropriate valuation model 理层投入较多时间于判断及估计,始能厘定to be used determination of expected future cash flows on the financial instrument 金融工具的公平价值;而拣选适当的估值模 being valued determination of probability of counterparty default and prepayments 式、为估值之金融工具决定其预期的未来现 and selection of appropriate discount rates. 金流、决定交易对手方违约和提早还款的或然率,以及挑选适用的贴现率等,一般皆需要管理层的判断和估计。 The Group has an established control framework with respect to the measurement 本集团已就计算公平价值设立了监控机制。 of fair values. This framework includes a valuation control function namely Financial 此机制包括拥有产品监控功能并独立于前线 Instruments Valuation Group (“FIVG”) which comprises control units independent 管理人员,称为金融工具估值群组(「群组」)。 of front office management. Procedures for price verification have been established. 价格核卖的程序已经确立。任何将被采用的Any pricing models to be used would be subject to a rigorous validation and 价格模式必须经过严格的检测及审批程序。 approval process.? F-171 ?334 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 金融工具的公平价值(续) (a) Financial instruments carried at fair value (continued) (a) 以公平价值列账的金融工具(续) The table below analyses financial instruments measured at fair value at the end of 下表是分析于报告期期末,在公平价值分级the reporting period by the level in the fair value hierarchy into which the fair value 内金融工具之公平价值的处理方式: treatment is categorised: 20222021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 第一级第二级第三级总额第一级第二级第三级总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Recurring fair value measurement 重复发生的公平价值厘定 Assets 资产 贸易票据-按通过其他全面收益 Trade Bills – Measured at FVOCI 以反映公平价值计量 – 488 – 488 – 10212 – 10212 Trading assets 交易用途资产 354 1176 – 1530 851 1632 – 2483 Derivative assets 衍生工具资产 200 10892 – 11092 146 3235 – 3381 Investment securities 投资证券 -强制按通过损益以反映公平 – Mandatorily measured at FVTPL 价值计量 – 3417 732 4149 2 4627 808 5437 -按通过其他全面收益以反映 – Measured at FVOCI 公平价值计量 24654 102903 839 128396 25083 99729 712 125524 252081188761571145655260821194351520147037 Investment securities classified as assets held for sale 投资证券分类为持有作出售资产 -强制按通过损益以反映公平 – Mandatorily measured at FVTPL 价值计量 – – – – 50 26 – 76 -按通过其他全面收益以反映 – Measured at FVOCI 公平价值计量 – – – – – 1850 – 1850 ––––501876–1926 Liabilities 负债 Trading liabilities 交易用途负债 5 – – 5 5 – – 5 Derivative liabilities 衍生工具负债 99 4046 – 4145 98 4952 – 5050指定为通过损益以反映 Financial liabilities designated at FVTPL 公平价值的金融负债 – 24357 – 24357 – 36877 – 36877 10428403–2850710341829–41932 During the years ended 31st December 2022 and 2021 there were no significant 截至2022年及2021年12月31日止之年 transfers of financial instruments between Level 1 and Level 2 of the fair value hierarchy. 内,根据第一级及第二级分级方法厘定公平The Group’s policy is to recognise transfers between levels of fair value hierarchy as at 价值之金融工具,两者之间并无重大的转the end of the reporting period in which they occur. 移。本集团的政策是只确认于报告期期末公平价值分级之间发生的转移。 ? F-172 ?东亚银行有限公司 l 2022年报 335 财务报表附注(续) Information about significant unobservable inputs in Level 3 valuations 有关第三级估值的重要非可观察参数资料 Valuation technique Significant unobservable input(s) Range估值模式重要非可观察参数幅度 Unlisted debt securities equity Counterparty quote N/A N/A securities and investment funds 交易对手报价 不适用 不适用 非上市债务证券、股份证券及 Net asset value N/A N/A投资基金资产净值不适用不适用 Discounted cash flow model Discount rate 12.2% 现金流折扣模式折扣率(2021:15.3%) Marketability discount 20% 市场性折扣(2021:20%) Market-comparable approach Earnings multiple 20.51–27.66 市场可类比法盈利倍数(2021:21.98–36.67) EV/EBIT 21.61–27.78 企业价值╱税息前利润(2021:30.18–37.54) Marketability discount 50% 市场性折扣(2021:50%) The fair values of unlisted equity instruments mandatorily measured at FVTPL 强制按通过损益以反映公平价值计量或通过 or measured at FVOCI are estimated using the discounted cash flow model on 其他全面收益以反映公平价值计量的非上市 the basis of an analysis of the investee’s financial position and results or with 股份工具的公平价值,是采用现金流折扣模reference to multiples of comparable listed companies adjusted for a marketability 式作估算,根据受投资公司的财务状况及业discount to reflect the fact that the shares are not actively traded. An increase in 绩之分析,或参考可比较上市公司之倍数,the ratio/investee’s financial position and results in isolation will result in favourable 并计入市场性折扣以反映该股份并非有活跃 movement in the fair values while an increase in discount rate/marketability 交易之调整。任何因比率╱受投资公司的财discount in isolation will result in unfavourable movement. The fair value of the 务状况及业绩之个别增加对公平价值有正面 unlisted investment funds are estimated by using the net asset valuations (“NAV”) 影响,而因折扣率╱市场性折扣之个别增加provided by the managers of the funds. 则对公平价值有负面影响。非上市投资基金的公平价值是采用基金经理提供的资产净值作估算。 Valuation of financial instruments in Level 3 are subject to the same valuation 在第三级之金融工具估值是受以上所述之相 control framework as described above and reviewed regularly by FIVG. 同估值监控机制及金融工具估值群组的定期检视。 ? F-173 ?336 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 金融工具的公平价值(续) (a) Financial instruments carried at fair value (continued) (a) 以公平价值列账的金融工具(续) (1) Valuation of financial instruments with significant unobservable inputs (1) 使用重要而非可观察之参数的金融工具估值 Movements in the recognised fair values of instruments with significant 已列账并含有重要而非可观察参数的工 unobservable inputs were as follows: 具,其公平价值之变动如下: 20222021 Investment Investment securities Investment securities Investment mandatorily securities mandatorily securities measured at FVTPL measured at FVOCI measured at FVTPL measured at FVOCI按通过其他全面按通过其他全面强制按通过损益收益以反映公平强制按通过损益收益以反映公平以反映公平价值价值计量的以反映公平价值价值计量的计量的投资证券投资证券计量的投资证券投资证券 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Assets 资产 At 1st January 于1月1日 808 712 850 1283 Additions/Purchases 增加╱购入 31 – 413 – Disposals/Settlements 出售╱结算 (27) – (484) – Changes in fair value recognised in the income statement 公平价值变动确认于收益表 (80) – 29 – Changes in fair value recognised in 公平价值变动确认于其他 the other comprehensive income 全面收益 – 127 – (571) At 31st December 于12月31日年度内 732 839 808 712 Total gains/(losses) for the year 于报告期结束日持有按通过 included in FVOCI fair value 其他全面收益以反映公平价值 reserve of the other comprehensive 资产而已计入其他全面收益的 income for assets held at the end 公平价值储备之年度内 of the reporting period 收益╱ (亏损 )总额 – 127 – (571) Total (losses)/gains for the year included in the income statement 于报告期结束日持有之资产而 for assets held at the end of the 已计入期内收益表之通过损益 reporting period recorded in 以反映公平价值金融工具的 net results from other financial 净表现之年度内 (亏损 )╱收益 instruments at FVTPL 总额 (80) – 29 – ? F-174 ?东亚银行有限公司 l 2022年报 337 财务报表附注(续) (2) Effects of changes in significant unobservable assumptions to reasonably (2) 因重要而非可观察之假设变动至合理可 possible alternative assumptions 行之另类假设所产生的影响 2022 Effect recorded in profit or loss Effect recorded directly in equity直接记录于损益上之影响直接记录于股东权益上之影响 Favourable (Unfavourable) Favourable (Unfavourable)有利(不利)有利(不利) HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Financial assets 金融资产 Investment securities mandatorily 强制按通过损益以反映公平价值 measured at FVTPL 计量的投资证券 61 (61) – – Investment securities measured at 按通过其他全面收益以反映公平 FVOCI 价值计量的投资证券 – – 70 (70) 61(61)70(70) 2021 Effect recorded in profit or loss Effect recorded directly in equity直接记录于损益上之影响直接记录于股东权益上之影响 Favourable (Unfavourable) Favourable (Unfavourable)有利(不利)有利(不利) HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Financial assets 金融资产 Investment securities mandatorily 强制按通过损益以反映公平价值 measured at FVTPL 计量的投资证券 67 (67) – – Investment securities measured at 按通过其他全面收益以反映公平 FVOCI 价值计量的投资证券 – – 59 (59) 67(67)59(59) The fair values of financial instruments are in certain circumstances measured 在若干情况下,计算金融工具的公平价using valuation models that incorporate assumptions that are not supported 值所使用的估值模式,其含有的假设并by prices from observable current market transactions in the same instrument 非依据在相同工具的当前可观察市场交 and are not based on observable market data. The table above shows the 易价格,亦非依赖其他可观察的市场数sensitivity of fair values due to parallel movement of plus or minus 10 per cent 据。上表显示公平价值之敏感度,即因转in reasonably possible alternative assumptions. 用至合理可行之另类假定所产生的正、 负10%的价值的并行变动。 ? F-175 ?338 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 金融工具的公平价值(续) (b) Fair values of financial instruments carried at other than fair value (b) 以公平价值以外列账的金融工具公平价值 The following methods and significant assumptions have been applied in 本集团采用下列方法和重要假定,以厘定如determining the fair values of financial instruments presented below: 下的金融工具的公平价值: (i) The fair value of demand deposits and savings accounts with no specific (i) 不设指定期限的活期存款和储蓄账户的 maturity is assumed to be the amount payable on demand at the end of the 公平价值,乃假定为于报告期结束日可reporting period. 按要求而支付的金额。 (ii) The fair value of variable rate financial instruments is assumed to be (ii) 浮息金融工具的公平价值,乃假定为与approximated by their carrying amounts and in the case of loans and unquoted 其账面值相若。如此等工具为贷款和非debt securities does not therefore reflect changes in their credit quality as the 上市债务证券,由于相关的信贷风险影impact of credit risk is recognised separately by deducting the amount of the 响是在账面值和公平价值中将减值准备 impairment allowances from both the carrying amount and fair value. 金额减除后才分别予以确认,因此其公平价值不能反映其信贷素质的改变。 (iii) The fair value of fixed rate loans and mortgages carried at amortised cost is (iii) 以摊销成本入账的定息贷款和按揭贷款 estimated by comparing market interest rates when the loans were granted 的公平价值,乃在此等贷款按相若贷款with current market rates offered on similar loans. Changes in the credit quality 所获提供的目前市场利率批出时,以市of loans within the portfolio are not taken into account in determining gross 场利率比较的方式估计。由于相关的信fair values as the impact of credit risk is recognised separately by deducting the 贷风险影响是在账面值和公平价值中将 amount of the impairment loss and allowances from both the carrying amount 减值准备金额减除后才分别予以确认,and fair value. 在决定公平价值总额时,贷款组合内各项贷款的信贷素质的改变均不会予以考虑。 (iv) The fair value of financial guarantees issued is determined by reference to (iv) 已发出的融资担保之公平价值,是以参fees charged in an arm’s length transaction for similar services when such 考在相若服务的公平交易中所征收费用 information is obtainable or is otherwise estimated by reference to interest 之可取得相关资料而厘定;有关的资料 rate differentials by comparing the actual rates charged by lenders when the 也可参考利率差价而估计,亦可以就贷guarantee is made available with the estimated rates that lenders would have 款机构对发出担保所实际征收的息率,charged had the guarantees not been available where reliable estimates of 与在没有取得担保之情况下而贷款机构 such information can be made. 将可能征收的估计息率作出比较,并在当中取用较可靠的相关资料以厘定公平价值。 The carrying amounts of the Group’s financial instruments carried at cost or 本集团以成本或摊销成本入账的金融工具账 amortised cost are not materially different from their fair values as at 31st 面值,与其于2022年12月31日及2021年December 2022 and 2021. 同日之公平价值相若。 ? F-176 ?东亚银行有限公司 l 2022年报 339 财务报表附注(续) 45. OFF-BALANCE SHEET EXPOSURES 资产负债表以外的风险 (a) Contingent liabilities and commitments (a) 或然负债及承担 The following is a summary of the contractual amounts of each significant class 参照金管局资本充足比率申报表的填报指 of contingent liabilities and commitments and the aggregate credit risk-weighted 示,每项或然负债及承担及信贷风险加权金amount and is prepared with reference to the completion instructions for the HKMA 额的主要类别摘要如下: return of capital adequacy ratio. 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Contingent liabilities 或然负债 Direct credit substitutes 直接信贷代替品 4220 4664 Transaction-related contingencies 与交易有关的或然项目 3846 4295 Trade-related contingencies 与贸易有关的或然项目 6143 5046 1420914005 Commitments 承担 Commitments that are unconditionally cancellable 可无条件取消而毋须事先通知 without prior notice 的承担 303920 232146 Other commitments with an original maturity 其他承担的原到期日 – up to 1 year -1年或以下 2229 3145 – over 1 year -1年以上 32043 28914 338192264205 Total 总额 352401 278210 Credit risk weighted amounts 信贷风险加权金额 23651 21412 The credit risk-weighted amount is calculated in accordance with the Capital Rules. 信贷风险加权金额是按《资本规则》计算。或Contingent liabilities and commitments are credit-related instruments which include 然负债及承担是与信贷有关的工具,包括用acceptances letters of credit guarantees and commitments to extend credit. The 以提供信贷的承兑票据、信用证、担保书和 contractual amounts represent the amounts at risk should the contract be fully 承付款项。合约金额是指当合约被完全提取drawn upon and the client default. Since a significant portion of guarantees and 及客户违约时所承担风险的金额。由于预期commitments is expected to expire without being drawn upon the total of the 担保书及承付款项的大部分金额会在未经提 contract amounts does not represent expected future cash flows. 取前逾期,合约金额并不代表预计未来现金流量。 ? F-177 ?340 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) 资产负债表以外的风险(续) (b) Derivatives (b) 衍生工具 (i) Notional amount of derivatives (i) 衍生工具的名义金额 Derivatives refer to financial contracts whose value depends on the value of one 衍生工具是指由一项或多项潜在资产或 or more underlying assets or indices. 指数价值厘定价值的财务合约。 The following is a summary of the notional amounts of each significant type of 集团的每项衍生工具主要类别的名义金 derivative of the Group: 额摘要如下: 2022 Managed in conjunction with financial instruments designated at Qualifying fair value for hedge through profit Others including accounting or loss held for trading Total按通过损益以 反映公平价值其他,包括符合对冲会计法金融工具模式管理持有作交易用途总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Exchange rate contracts 汇率合约 – 4163 288758 292921 Interest rate contracts 利率合约 113222 19685 186718 319625 Equity contracts 股份合约 – – 4774 4774 11322223848480250617320 2021 Managed in conjunction with financial instruments designated at Qualifying fair value for hedge through profit Others including accounting or loss held for trading Total按通过损益以 反映公平价值其他,包括符合对冲会计法金融工具模式管理持有作交易用途总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Exchange rate contracts 汇率合约 48 5640 286033 291721 Interest rate contracts 利率合约 83518 28201 291839 403558 Equity contracts 股份合约 – – 8370 8370 8356633841586242703649 Derivatives arise from futures forward swap and option transactions 衍生工具是由本集团及本行在外汇、利 undertaken by the Group and the Bank in the foreign exchange interest rate 率及股票市场进行期货、远期、掉期及 and equity markets. The notional amounts of these instruments indicate the 期权交易而产生。这些工具的名义金额volume of transactions outstanding at the end of the reporting period; they do 指在报告期结束日仍未完成的交易量,not represent amounts at risk. 但并不代表所承受风险的金额。 ? F-178 ?东亚银行有限公司 l 2022年报 341 财务报表附注(续) (ii) Fair value of derivatives (ii) 衍生工具之公平价值 20222021 Fair value Fair value公平价值公平价值 Assets Liabilities Assets Liabilities资产负债资产负债 HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元 Exchange rate contracts 汇率合约 1781 1749 1207 1174 Interest rate contracts 利率合约 9220 2297 1764 3548 Equity contracts 股份合约 91 99 410 328 11092414533815050 (iii) Hedge accounting (iii) 对冲会计 (a) Fair value hedges of interest rate risk (a) 利率风险的公平价值对冲 The Group uses interest rate swaps to hedge its exposure to changes in 本集团以利率掉期合约对冲若干其 the fair values of certain fixed rate subordinated notes issued and fixed 发行的定息后偿票据、持有的定息 rate debt investment securities and loans and advances in respect of a 债券投资及贷款和垫款因基准利率 benchmark interest rate. Pay-floating/receive-fixed interest rate swaps are 而导致的公平价值转变的风险。对冲matched to specific issuances of fixed rate subordinated notes or pay-fixed/ 以支付浮动╱收取固定利率掉期合 receive-floating interest rate swaps are matched to fixed rate debt securities 约与定息后偿票据的特定发行配对 investment and loans and advances with terms that closely align with the 或以支付固定利率╱收取浮动利率 critical terms of the hedged item. 掉期合约与定息债券和贷款配对,其条款与被对冲项目的关键条款一致。 The Group’s approach to managing market risk including interest rate risk 本集团管理市场风险的方法,包括is discussed in Note 43(b). Interest rate risk to which the Group applies 利率风险详述于附注43(b)。本集团hedge accounting arises from fixed rate subordinated notes issued and 采用对冲会计的利率风险来自其发 fixed rate debt securities investment and loans and advances whose fair 行定息后偿票据、定息债券投资及 value fluctuates when benchmark interest rates change. The Group hedges 贷款和垫款,其公平价值在基准利interest rate risk only to the extent of benchmark interest rates because the 率变动时波动。因定息债券及贷款changes in fair value of a fixed rate debt security or loan are significantly 和垫款的公平价值变动受基准利率 influenced by changes in the benchmark interest rate. Hedge accounting is 变动的显着影响,本集团仅在基准applied where economic hedge relationships meet the hedge accounting 利率范围内对冲利率风险。对冲会criteria. 计适用于符合对冲会计条件的经济对冲关系。 By using derivative financial instruments to hedge exposures to changes 通过使用衍生金融工具对冲利率变 in interest rates the Group also exposes itself to credit risk of the 动的风险,本集团亦面对衍生工具derivative counterparty which is not offset by the hedged item. The Group 交易对手的信贷风险,而该风险并minimises counterparty credit risk in derivative instruments by entering 未被被对冲项目抵销。本集团通过into transactions with high-quality counterparties and requiring the 与高质量交易对手进行交易,要求counterparties to post collateral (see Note 43(a)(x)). 交易对手提供抵押品,减低衍生工具交易对手的信用风险(详见附注 43(a)(x))。 ? F-179 ?342 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) 资产负债表以外的风险(续) (b) Derivatives (continued) (b) 衍生工具(续) (iii) Hedge accounting (continued) (iii) 对冲会计(续) (a) Fair value hedges of interest rate risk (continued) (a) 利率风险的公平价值对冲(续) Before fair value hedge accounting is applied by the Group the Group 在采用公平价值对冲会计法前,本determines whether an economic relationship between the hedged item 集团根据被对冲项目和对冲工具的 and the hedging instrument exists based on an evaluation of the qualitative 定性特征评估和支持对冲风险评估 characteristics of these items and the hedged risk that is supported by 的定量分析,以确定被对冲项目与quantitative analysis. The Group considers whether the critical terms of 对冲工具之间是否存在经济关系。 the hedged item and hedging instrument closely align when assessing the 本集团在评估经济关系的存在时,presence of an economic relationship. The Group evaluates whether the fair 会考虑被对冲项目及对冲工具的关 value of the hedged item and the hedging instrument respond similarly to 键条款是否一致。本集团评估被对similar risks. The Group further supports this qualitative assessment by using 冲项目和对冲工具的公平价值是否 cumulative dollar offset method or regression analysis to assess whether 对类似风险反应相似。本集团采用the hedging instrument is expected to be and has been highly effective in 累计价值抵销法或回归分析评估对 offsetting changes in the fair value of the hedged item. 冲工具是否预期及非常有效地抵销被对冲项目的公平价值变动以进一步支持定性评估。 The Group establishes a hedge ratio by aligning the par amount of the 本集团通过调整对冲定息贷款或票 hedged fixed-rate loan or note and the notional amount of the interest rate 据的面值与指定为对冲工具的利率 swap designated as a hedging instrument. Under the Group policy in order 掉期合约的名义金额来确定对冲比 to conclude that a hedge relationship is effective all of the following criteria 率。根据本集团政策,有效对冲关should be met. 系应满足以下所有条件: – The regression co-efficient (R squared) which measures the correlation - 测量回归中变量之间相关性的 between the variables in the regression is at least 0.8. 回归系数(R平方)至少为0.8。 – The slope of the regression line is within a 0.8–1.25 range. - 回归线的斜率在0.8–1.25范围内。 – The confidence level of the slope is at least 95%. - 斜率的置信水平至少为95%。 In these hedge relationships the main sources of ineffectiveness are: 在这些对冲关系中,无效对冲部份的主要来源是: – the effect of the counterparty and the Group’s own credit risk on the - 交易对手和本集团自身信用风 fair value of the interest rate swap which is not reflected in the fair 险对利率掉期合约公平价值的 value of the hedged item attributable to the change in interest rate; and 影响未能反映在利率变动导致的被对冲项目的公平价值中; 及 – differences in maturities of the interest rate swap and the loans or the - 利率掉期和相关贷款或债券的 debt securities. 到期日之差异。 ? F-180 ?东亚银行有限公司 l 2022年报 343 财务报表附注(续) At 31st December 2022 and 2021 the Group held the following interest 于2022年及2021年12月31日,rate swaps as hedging instruments in fair value hedges of interest risk: 本集团持有以下利率掉期合约作为 利率风险公平价值对冲的对冲工具: 2022 Maturity到期日 Less than 1 year 1–5 years More than 5 years 少于1年1–5年多于5年Risk category 风险类别 Interest rate risk 利率风险 Hedge of debt securities investment 对冲债务证券投资 Nominal amount (HK$ Mn) 名义金额(港币百万元) 9953 39974 44403 Average fixed interest rate 平均固定利率 2.33% 1.33% 1.33% Hedge of loans and advances 对冲贷款及垫款 Nominal amount (HK$ Mn) 名义金额(港币百万元) 125 869 27 Average fixed interest rate 平均固定利率 2.78% 1.54% 2.59% Hedge of subordinated notes issued 对冲已发行后偿票据 Nominal amount (HK$ Mn) 名义金额(港币百万元) – 5852 – Average fixed interest rate 平均固定利率 – 2.72% – Hedge of deposits from customers 对冲客户存款 Nominal amount (HK$ Mn) 名义金额(港币百万元) 9631 – – Average fixed interest rate 平均固定利率 3.67% – – Hedge of repo 对冲回购 Nominal amount (HK$ Mn) 名义金额(港币百万元) 2388 – – Average fixed interest rate 平均固定利率 4.72% – – 2021 Maturity到期日 Less than 1 year 1–5 years More than 5 years 少于1年1–5年多于5年Risk category 风险类别 Interest rate risk 利率风险 Hedge of debt securities investment 对冲债务证券投资 Nominal amount (HK$ Mn) 名义金额(港币百万元) 10122 37110 35351 Average fixed interest rate 平均固定利率 2.31% 1.31% 1.53% Hedge of loans and advances 对冲贷款及垫款 Nominal amount (HK$ Mn) 名义金额(港币百万元) – 863 72 Average fixed interest rate 平均固定利率 – 1.77% 0.51% ? F-181 ?344 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) 资产负债表以外的风险(续) (b) Derivatives (continued) (b) 衍生工具(续) (iii) Hedge accounting (continued) (iii) 对冲会计(续) (a) Fair value hedges of interest rate risk (continued) (a) 利率风险的公平价值对冲(续) The amounts relating to items designated as hedging instruments and 指定为对冲工具及无效对冲金额如 hedge ineffectiveness were as follows: 下: 2022 Line item in the consolidated Change in statement of fair value Line item in financial position used for consolidated where the hedging calculating Ineffectiveness income statement Carrying amount instrument hedge recognised in that includes hedge 账面值 is included ineffectiveness profit or loss ineffectiveness Nominal 包含对冲工具 公平价值变动 于损益表内 包含无效对冲 amount Assets Liabilities 的综合财务 以计算无效 确认的无效 部份的综合名义金额资产负债状况表的项目对冲部份对冲部份收益表的项目 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元 Interest rate risk利率风险 Interest rate swaps – 94330 7311 (113) Derivative assets/ 8958 172 Net hedging hedge of debt securities (liabilities) profit/(loss) investment 衍生工具资产╱ 对冲溢利╱ 利率掉期-(负债)(亏损)净额对冲债务证券投资 Interest rate swaps – 1021 65 – Derivative assets/ 72 4 Net hedging hedge of loans and advances (liabilities) profit/(loss) 利率掉期-衍生工具资产╱对冲溢利╱ 对冲贷款及垫款(负债)(亏损)净额 Interest rate swaps – 5852 – (299) Derivative assets/ (255) 4 Net hedging hedge of subordinated notes (liabilities) profit/(loss) issued 衍生工具资产╱ 对冲溢利╱ 利率掉期-(负债)(亏损)净额对冲已发行后偿票据 Interest rate swaps – 9631 9 (37) Derivative assets/ (29) (2) Net hedging hedge of deposits from (liabilities) profit/(loss) customers 衍生工具资产╱ 对冲溢利╱ 利率掉期-(负债)(亏损)净额对冲客户存款 Interest rate swaps – 2388 – (1) Derivative assets/ (4) 23 Net hedging hedge of repo (liabilities) profit/(loss) 利率掉期-对冲回购衍生工具资产╱对冲溢利╱(负债)(亏损)净额 ? F-182 ?东亚银行有限公司 l 2022年报 345 财务报表附注(续) 2021 Line item in the consolidated Change in Line item in statement of fair value consolidated financial position used for income where the calculating Ineffectiveness statement that Carrying amount hedging instrument hedge recognised in includes hedge 账面值 is included ineffectiveness profit or loss ineffectiveness Nominal 包含对冲工具 公平价值变动 于损益表内 包含无效对冲 amount Assets Liabilities 的综合财务 以计算无效 确认的无效 部份的综合名义金额资产负债状况表的项目对冲部份对冲部份收益表的项目 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元 Interest rate risk利率风险 Interest rate swaps – 82583 591 (2265) Derivative assets/ 3090 143 Net hedging hedge of debt securities (liabilities) profit/(loss) investment 衍生工具资产╱ 对冲溢利╱ 利率掉期-(负债)(亏损)净额对冲债务证券投资 Interest rate swaps – 935 9 (18) Derivative assets/ 33 1 Net hedging hedge of loans and (liabilities) profit/(loss) advances 衍生工具资产╱ 对冲溢利╱ 利率掉期-(负债)(亏损)净额对冲贷款及垫款 ? F-183 ?346 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) 资产负债表以外的风险(续) (b) Derivatives (continued) (b) 衍生工具(续) (iii) Hedge accounting (continued) (iii) 对冲会计(续) (a) Fair value hedges of interest rate risk (continued) (a) 利率风险的公平价值对冲(续) The amounts relating to items designated as hedged items were as follows: 指定为被对冲项目金额如下: 2022 Accumulated amount of fair value hedge adjustments remaining in the statement of financial position for any hedged Line item in the items that have Accumulated amount of consolidated Change in ceased to be fair value hedge adjustments statement of value used adjusted for hedging included in the carrying financial position for calculating gains and losses amount of the hedged item where the hedged hedge 包含于财务状况表的 Carrying amount 包含于被对冲项目账面值 item is included ineffectiveness 已终止调整对冲盈利及账面值的累计公平价值对冲调整包含被对冲项目公平价值变动亏损的被对冲项目 Assets Liabilities Assets Liabilities 的综合财务 以计算无效 之累计公平价值资产负债资产负债状况表的项目对冲部份对冲调整余额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Debt securities investment 85306 – (7683) – Investment securities (8786) –债务证券投资投资证券 Loans and advances 1028 – (62) – Loans and advances to (68) – 贷款及垫款 customers客户贷款及垫款 Subordinated notes issued – 5567 – (257) Loan capital 259 –已发行后偿票据借贷资本 Deposits from customers – 9604 – (27) Deposits from 27 – 客户存款 customers客户存款 Repo – 2361 – (27) Deposits and balances 27 – 回购 of banks银行的存款及结余 ? F-184 ?东亚银行有限公司 l 2022年报 347 财务报表附注(续) 2021 Accumulated amount of fair value hedge adjustments remaining in the statement of financial position for any hedged Line item in the items that have Accumulated amount of consolidated Change in ceased to be fair value hedge adjustments statement of value used adjusted for hedging included in the carrying financial position for calculating gains and losses amount of the hedged item where the hedged hedge 包含于财务状况表的 Carrying amount 包含于被对冲项目账面值 item is included ineffectiveness 已终止调整对冲盈利及账面值的累计公平价值对冲调整包含被对冲项目公平价值变动亏损的被对冲项目 Assets Liabilities Assets Liabilities 的综合财务 以计算无效 之累计公平价值资产负债资产负债状况表的项目对冲部份对冲调整余额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Debt securities investment 85329 – 432 – Investment securities (2947) –债务证券投资投资证券 Loans and advances 1026 – 6 – Loans and advances to (32) – 贷款及垫款 customers客户贷款及垫款 The Group’s fair value hedge principally consists of interest rate swaps that 本集团的公平价值对冲主要包括利 are used to protect against changes in the fair value of fixed rate long-term 率掉期,用于抵御因市场利率变动financial instruments due to movements in market interest rates. 而导致的定息长期金融工具公平价值变动。 (b) Cash flow hedges of foreign currency risk (b) 外汇风险的现金流对冲 The Group used exchange rate forward contracts to hedge against the 本集团使用汇率远期合约对冲保险 variability in cash flows of certain debt securities investments denominated 附属公司持有的若干以美元计值的 in US dollar held by the insurance subsidiaries. The Group hedged foreign 债券投资的现金流量变动。本集团exchange rate risk to the extent of variability in functional currency 因应美元╱港元变动所导致债务证equivalent cash flows (i.e. in HK dollar) from principal payment of the 券本金支付以功能货币(即以港元计debt securities attributable to movements in US dollar/HK dollar. Hedge 算)计算的等值现金流量变动进行外 accounting was applied where economic hedge relationships meet the 汇风险对冲。对冲会计适用于符合hedge accounting criteria. 对冲会计条件的经济对冲关系。 The Group determined the amount of the exposure to which it applied 本集团通过评估外汇变动对以美元 hedge accounting by assessing the potential impact of changes in foreign 计价的债券投资的未来现金流量可 currency exchange rates on the future cash flows from the debt securities 能导致相应功能货币减少的潜在影 investments denominated in US dollar that would result in a reduction of 响,确定其应用对冲会计的风险金functional currency equivalent cash flow to meet the obligation of insurance 额现金流量,以满足到期保险单的policies at maturity. This assessment was performed using analytical 责任。该评估使用分析技术进行,techniques such as cash flow sensitivity analysis. 例如现金流敏感度分析。 ? F-185 ?348 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) 资产负债表以外的风险(续) (b) Derivatives (continued) (b) 衍生工具(续) (iii) Hedge accounting (continued) (iii) 对冲会计(续) (b) Cash flow hedges of foreign currency risk (continued) (b) 外汇风险的现金流对冲(续) As noted above for fair value hedges the Group exposed itself to credit risk 如上文对于公平价值对冲所述,本of the counterparties to the derivatives which was not offset by the hedged 集团面对衍生工具交易对手的信用 items. This exposure was managed similarly to that for fair value hedges. 风险,而该风险未有被被对冲项目抵销。这种风险与公平价值对冲的风险管理类似。 The Group determined whether an economic relationship exists between 本集团根据对这些项目的定性特征 the cash flows of the hedged item and hedging instrument based on an 的评估以及支持的对冲风险的定量 evaluation of the qualitative characteristics of these items and the hedged 分析,以确定被对冲项目的现金流risk that was supported by quantitative analysis. The Group considered 量与对冲工具之间是否存在经济关 whether the critical terms of the hedged item and hedging instrument 系。本集团在评估经济关系的存在closely align when assessing the presence of an economic relationship. 时,会考虑被对冲项目及对冲工具The Group evaluates whether the cash flows of the hedged item and 的关键条款是否一致。本集团评估the hedging instrument respond similarly to the hedged risk such as the 被对冲项目和对冲工具的现金流量 notional amount maturity and underlying currencies. 是否就对冲风险的反应相似,例如以名义金额,到期日及相关货币评估。 The Group assessed hedge effectiveness using the hypothetical derivative 本集团采用模拟衍生工具方法评估 method which created a derivative instrument to serve as a proxy for the 对冲效用,该方法建立一衍生工具hedged transaction. The terms of the hypothetical derivative matched 作为对冲交易的代理。模拟衍生工the critical terms of the hedged item and it had a fair value of zero at 具的条款与被对冲项目的关键条款 inception. The dollar offset ratio being the periodic change in fair value of 一致,并且在开始时其公平价值为the hypothetical exchange rate forward contract attributable to changes in 零。价值抵销比率,即由远期利率forward rate was calculated to assess whether the hedge can achieve 0.8– 变动引起的模拟汇率远期合约的公 1.25 cumulative dollar offset on each reporting date. 平价值的周期性变化,计算以评估 对冲是否可在每个报告日期实现 0.8–1.25的累计价值抵销。 At 31st December 2022 the Group has completed the disposal of its 于2022年12月31日,本集团已完insurance subsidiaries and had no exposure that is under cash flow hedge 成出售其保险附属公司及并无外汇 for foreign currency risk. 风险的现金流对冲。 ? F-186 ?东亚银行有限公司 l 2022年报 349 财务报表附注(续) At 31st December 2021 the Group held the following instruments to 于2021年12月31日,本集团持有以下工具hedge exposures to changes in foreign currency: 对冲外汇变动风险: 2021 Maturity到期日 Less than 1 year 1–5 years More than 5 years 少于1年1–5年多于5年Foreign currency risk 外汇风险 Exchange rate forward contracts (HKD: USD) 汇率远期合约(港币:美元) Nominal amount (HK$ Mn) 名义金额(港币百万元) 48 – – Average forward price 平均远期金额 7.72 – – The amounts relating to items designated as hedging instruments and 指定为对冲工具及无效对冲金额如 hedge ineffectiveness were as follows: 下: 2021 Line item in Changes in the the consolidated Changes in value of the Line item in statement of fair value hedging Line item in Amount consolidated financial position used for instrument Hedge consolidated reclassified from income Carrying amount where the hedging calculating hedge recognised ineffectiveness income the hedged statement 账面值 instrument is included ineffectiveness in OCI recognised in statement that includes reserve to affected by the Nominal 包含对冲工具的 公平价值变动 确认于其他全面 profit or loss hedge ineffectiveness profit or loss reclassification amount Assets Liabilities 综合财务状况表 以计算无效 收益的对冲工具 确认于收益表的 包含对冲无效的 由对冲储备计入 受转入影响的名义金额资产负债的项目对冲部份公平价值变动无效对冲部份综合收益表的项目收益表金额综合收益表项目 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Currency rate risk外汇风险 Exchange rate forward contracts 48 – – Other liabilities – – – – Net insurance profit – Net insurance profit (HKD: USD) liabilities held for sale 保险业务净溢利 保险业务净溢利 汇率远期合约(港币:美元)其他负债-持有作出售负债 ? F-187 ?350 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) 资产负债表以外的风险(续) (b) Derivatives (continued) (b) 衍生工具(续) (iii) Hedge accounting (continued) (iii) 对冲会计(续) (b) Cash flow hedges of foreign currency risk (continued) (b) 外汇风险的现金流对冲(续) The amounts relating to items designated as hedged items were as follows: 指定为被对冲项目金额如下: 2021 Balances remaining in the cash flow hedge Line item in the reserve from consolidated hedging statement of relationships financial position Change in for which hedge where the hedged value used for accounting is item is included calculating hedge no longer applied 包含被对冲项目 ineffectiveness Cash flow 不再应用对冲 的综合财务 公平价值变动以 hedge reserve 会计法的现金流状况表的项目计算无效对冲部分现金流对冲储备对冲储备余额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Currency rate risk外汇风险 Debt securities investment Other assets – – – – 债务证券投资 assets held for sale 其他资产-持有作出售资产 (c) Capital commitments (c) 资本承担 Capital commitments outstanding at 31st December and not provided for in the 于12月31日未偿付但并未在财务报表中提 financial statements were as follows: 拨准备的资本承担如下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Expenditure authorised and contracted for 已核准支出并已签约 452 285 Expenditure authorised but not contracted for 已核准支出但未签约 138 171 590456 ? F-188 ?东亚银行有限公司 l 2022年报 351 财务报表附注(续) (d) Leases committed but not yet commenced (d) 已承担但仍未开始的租赁 At 31st December 2022 and 2021 the total future cash outflows to which the 于2022年及2021年12月31日,本集团作Group (as a lessee) is exposed that are not reflected in the measurement of lease 为承租人所承担但并未反映于租赁负债计量 liabilities are as follows: 中的未来现金流出总额如下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Properties 物业 Within one year 1年以内 2 10 After one year but within five years 1年至5年内 20 13 After five years 5年以后 6 – 2823 Equipment 设备 Within one year 1年以内 – – After one year but within five years 1年至5年内 – – –– Total lease committed but not yet commenced 已承担但仍未开始的租赁总额 28 23 (e) Contingencies (e) 或有事项 The Group receives legal claims against it arising in the normal courses of business. 本集团收到正常业务过程中产生的法律索 The Group considers none of these matters as material. Where appropriate the 赔。本集团认为这些事项均不重大。在适当Group recognises provisions for liabilities when it is probable that an outflow of 情况下,本集团在很可能需要经济利益流出economic resources embodying economic benefits will be required and for which a 并且可以对该责任作出可靠估计时确认负债 reliable estimate can be made of the obligation. 准备。 ? F-189 ?352 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 46. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES 抵销金融资产及金融负债 To mitigate credit risks the Group enters into master netting arrangements with 本集团与其相同对手签订净额结算总安排以 same counterparties. Netting agreements provide that if an event of default 减低信贷风险。若发生违约事件,根据净额结occurs all outstanding transactions with the counterparty will be terminated and all 算协议,所有与该对手之交易会终止及所有amounts outstanding will be settled on a net basis. Except for the event of default 结余金额以净额结算。除发生违约事件外,all outstanding transactions with the counterparty are settled on a gross basis and 所有与对手之交易会以总额结算及在财务状 generally do not result in offsetting the assets and liabilities in the statement of 况表中的资产和负债通常不会互相抵销。 financial position.The following tables present details of financial instruments subject to offsetting 下表列示受抵销、具法律效力之净额结算总 enforceable master netting arrangements and similar agreements. 安排及相近协议约束的金融工具详情。 2022 Amounts subject to enforceable netting arrangements涉及具法律效力之净额结算安排之金额 Effects of offsetting in the consolidated Amounts not set off in the consolidated statement of financial position statement of financial position在综合财务状况表抵销之影响并无在综合财务状况表内抵销之金额 Net amounts presented Amounts not in the subject to consolidated enforceable statement netting of financial arrangements position 不涉及 Gross Amounts 于综合财务 Financial Non-cash Cash 具法律效力 Total amounts offset 状况表中列示 instruments collateral collateral Net amounts 之净额结算 amounts总额抵销之金额之净金额金融工具非现金抵押品现金抵押品净额安排之金额总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Financial assets 金融资产 Derivative assets 衍生工具资产 9985 – 9985 (2298) – (5264) 2423 1107 11092 Placements with and advances to banks 在银行的存款及垫款 – under reverse repos securities -与银行的反向回购 borrowing and similar agreements 或证券借入及 with banks 相近协议 3498 – 3498 – (3232) (11) 255 – 3498 Other assets 其他资产 431 (396) 35 – – – 35 – 35 Total 总额 13914 (396) 13518 (2298) (3232) (5275) 2713 1107 14625 Financial liabilities 金融负债 Derivative liabilities 衍生工具负债 3404 – 3404 (2298) – (109) 997 741 4145 Deposits and balances of banks 银行的存款及结余 – under repos securities lending -与 银行的回购或证券 and similar agreements with banks 借出及相近协议 2953 – 2953 – (2900) (53) – – 2953 Deposits from customers 客户存款 – u nder repos securities lending and similar agreements with -与 非银行的回购或证券 non-banks 借出及相近协议 283 – 283 – (283) – – – 283 Other liabilities 其他负债 396 (396) – – – – – – – Total 总额 7036 (396) 6640 (2298) (3183) (162) 997 741 7381 ? F-190 ?东亚银行有限公司 l 2022年报 353 财务报表附注(续) 2021 Amounts subject to enforceable netting arrangements涉及具法律效力之净额结算安排之金额 Effects of offsetting in the consolidated Amounts not set off in the consolidated statement of financial position statement of financial position在综合财务状况表抵销之影响并无在综合财务状况表内抵销之金额 Net amounts presented Amounts not in the subject to consolidated enforceable statement netting of financial arrangements position 不涉及 Gross Amounts 于综合财务 Financial Non-cash Cash 具法律效力 Total amounts offset 状况表中列示 instruments collateral collateral Net amounts 之净额结算 amounts总额抵销之金额之净金额金融工具非现金抵押品现金抵押品净额安排之金额总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Financial assets 金融资产 Derivative assets 衍生工具资产 2724 – 2724 (2193) – (28) 503 657 3381 Placements with and advances to banks 在银行的存款及垫款 – u nder reverse repos securities - 与银行的反向回购 borrowing and similar agreements 或证券借入及 with banks 相近协议 2096 – 2096 – (2096) – – – 2096 Other assets 其他资产 633 (554) 79 – – – 79 – 79 Total 总额 5453 (554) 4899 (2193) (2096) (28) 582 657 5556 Financial liabilities 金融负债 Derivative liabilities 衍生工具负债 4278 – 4278 (2193) – (59) 2026 772 5050 Deposits and balances of banks 银行的存款及结余 – under repos securities lending -与 银行的回购或证券 and similar agreements with banks 借出及相近协议 8918 – 8918 – (8900) (18) – – 8918 Deposits from customers 客户存款 – u nder repos securities lending and similar agreements with - 与非银行的回购或证券 non-banks 借出及相近协议 612 – 612 – (612) – – – 612 Other liabilities 其他负债 586 (554) 32 – – – 32 – 32 Total 总额 14394 (554) 13840 (2193) (9512) (77) 2058 772 14612 ? F-191 ?354 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 47. NOTES ON CONSOLIDATED CASH FLOW STATEMENT 综合现金流量表附注 (a) Cash and cash equivalents (a) 现金及等同现金项目 (i) Components of cash and cash equivalents in the consolidated cash flow (i) 在综合现金流量表内现金及等同现金项 statement 目的组成部分 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Cash and balances with banks with original 原本期限为3个月以内之现金及在 maturity within three months 银行的结存 44158 43211 Placements with and advances to banks with 原本期限为3个月以内在银行的存款 original maturity within three months 及垫款 60091 73012 Treasury bills with original maturity within three months 原本期限为3个月以内的国库债券 6107 3774 Certificates of deposit held with original 原本期限为3个月以内之持有的 maturity within three months 存款证 226 – Debt securities with original maturity within three months 原本期限为3个月以内的债务证券 1567 646 Add: Cash and balances with banks 加: 包括在「持有作出售资产」 included in “Assets held for sale” (附注55)的现金及 (Note 55) 在银行的结存 – 3 112149120646 ? F-192 ?东亚银行有限公司 l 2022年报 355 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (ii) Reconciliation with the consolidated statement of financial position (ii) 与综合财务状况表的对账 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Cash and balances with banks (Note 24) 现金及在银行的结存(附注24) 54579 55088 Placements with and advances to banks (Note 25) 在银行的存款及垫款(附注25) 60203 74742 Treasury bills certificates of deposit held and debt securities 国库债券、持有存款证及债务证券 – trading assets (Note 27) -交易用途资产(附注27) 1275 1632 – investment securities (Note 29) -投资证券(附注29) 145289 145723 146564147355 加:包括在「持有作出售资产」 Add: Cash and balances with banks included in 的现金及在银行 “Assets held for sale” (Note 55) 的结存(附注55) – 3 Certificates of deposit held – investmentsecurities included in “Assets held for 包括在「持有作出售资产」持有sale” (Note 55) 存款证-投资证券(附注55) – 690 Debt securities – investment securities included in “Assets held for sale” 包括在「持有作出售资产」债务 (Note 55) 证券-投资证券(附注55) – 1186 Amounts shown in the consolidated statement of financial position 在综合财务状况表列示的金额 261346 279064 Less: Amounts with an original maturity of beyond three months 减:原本期限为3个月以上的金额 (138774) (146538) Cash balance with central bank subject to 受规管限制的在中央银行的现金 regulatory restriction 结存 (10423) (11880) Cash and cash equivalents in the consolidated 在综合现金流量表内的现金及等同 cash flow statement 现金项目 112149 120646 ? F-193 ?356 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 47. NOTES ON CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) 综合现金流量表附注(续) (b) Reconciliation of liabilities arising from financing activities (b) 源自融资活动产生的负债之对账 The table below details changes in the Group’s liabilities from financing activities 下表列载本集团由融资活动产生的负债之变 including both cash and non-cash changes. Liabilities arising from financing 动,包括现金及非现金之变动。源自融资活activities are liabilities for which cash flows were or future cash flows will be 动产生的负债指在本集团的综合现金流量表 classified in the Group’s consolidated cash flow statement as cash flows from 内分类为由融资活动产生的现金流或未来现 financing activities. 金流产生的负债。 Debt Interest securities Loan rate swaps issued capital held to Debt accrued accrued hedge securities Loan interest interest Lease borrowings issued capital payable payable liabilities liabilities Total持有作已发行对冲借款的已发行债务证券借贷资本利率掉期债务证券借贷资本之应计利息之应计利息租赁负债合约负债总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 At 1st January 2022 于2022年1月1日 5847 6488 95 79 884 2 13395 Changes from financing cash flows 源自融资现金流的变动 Issue of debt securities 发行债务证券 388 – – – – – 388 Issue of loan capital 发行借贷资本 – 5793 – – – – 5793 Redemption of debt securities issued 赎回已发行债务证券 (3061) – – – – – (3061) Interest paid on loan capital 支付借贷资本利息 – – – (374) – – (374) Interest paid on debt securities issued 支付已发行债务证券利息 – – (161) – – – (161) Payment of lease liabilities 支付租赁负债 – – – – (302) – (302) Total changes from financing cash flows 源自融资现金流的变动总额 (2673) 5793 (161) (374) (302) – 2283 Exchange adjustments 汇兑调整 (239) (103) – – (41) – (383) Changes in fair value 公平价值变动 (44) – – – – 6 (38) Revaluation under hedge accounting 对冲会汁法的重估 – (257) – – – 299 42 Interest expenses 利息支出 1 6 80 454 28 – 569 Increase in lease liabilities from entering 年度内订立新租赁引致租赁负债 into new leases during the year 增加 – – – – 205 – 205 Total other changes 其他变动总额 (282) (354) 80 454 192 305 395 At 31st December 2022 于2022年12月31日 2892 11927 14 159 774 307 16073 ? F-194 ?东亚银行有限公司 l 2022年报 357 财务报表附注(续) Debt Interest Interest securities Loan rate swaps rate swaps issued capital held to held to Debt accrued accrued hedge hedge securities Loan interest interest Lease borrowings borrowings issued capital payable payable liabilities (assets) liabilities Total持有作持有作已发行对冲借款的对冲借款的已发行债务证券借贷资本利率掉期利率掉期 债务证券借贷资本之应计利息之应计利息租赁负债合约(资产)合约负债总额 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 At 1st January 2021 于2021年1月1日 5057 10311 89 102 936 (45) – 16450 Changes from financing cash flows 源自融资现金流的变动 Issue of debt securities 发行债务证券 692 – – – – – – 692 Issue of loan capital 发行借贷资本 – – – – – – – – Redemption of debt securities issued 赎回已发行债务证券 (4) – – – – – – (4) Redemption of loan capital 赎回已发行借贷资本 – (3898) – – – – – (3898) Interest paid on loan capital 支付借贷资本利息 – – – (391) – – – (391) Interest paid on debt securities issued 支付已发行债务证券利息 – – (125) – – – – (125) Payment of lease liabilities 支付租赁负债 – – – – (388) – – (388) Total changes from financing cash flows 源自融资现金流的变动总额 688 (3898) (125) (391) (388) – – (4114) Exchange adjustments 汇兑调整 104 104 – – 8 – – 216 Changes in fair value 公平价值变动 (4) – – – – – 2 (2) Revaluation under hedge accounting 对冲会汁法的重估 – (38) – – – 45 – 7 Interest expenses 利息支出 2 9 131 368 29 – – 539 Increase in lease liabilities from entering 年度内订立新租赁引致租赁负债 into new leases during the year 增加 – – – – 299 – – 299 Total other changes 其他变动总额 102 75 131 368 336 45 2 1059 At 31st December 2021 于2021年12月31日 5847 6488 95 79 884 – 2 13395 ? F-195 ?358 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 48. ASSETS PLEDGED AS SECURITY 用作抵押品的资产 The following assets have been pledged as collateral for own liabilities at the end of 于报告期期末,以下资产经已用作本身负债the reporting period. 之抵押品。 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Secured liabilities 有抵押负债 3236 9530 Assets pledged: 抵押资产: Investment securities 投资证券 -按通过其他全面收益以反映 – measured at FVOCI 公平价值计量 2999 9950 – measured at amortised cost - 按摊销成本计量 461 – 34609950 The following balances with banks have been pledged as collateral for securities 以下的银行结余已用作证券借贷及衍生工具 borrowings and margin deposits of derivatives. 孖展按金之抵押品。 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Cash collateral for borrowed securities 用作证券借贷的现金抵押品 24 3 Margin accounts for open futures and forward contracts 用作开立期货及远期合约的孖展账户 3125 3889 31493892 These transactions are conducted under terms that are usual and customary to 此等交易之条款是按一般及惯常标准借款及 standard lending and securities borrowing and lending activities. 证券借贷交易进行。 ? F-196 ?东亚银行有限公司 l 2022年报 359 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 49. LOANS TO DIRECTORS AND ENTITIES CONNECTED WITH DIRECTORS 董事及与董事有关连实体的贷款The aggregate of loans to directors of the Bank and entities connected with 根据《公司条例》第383(1) (d)条及《公司(披directors disclosed pursuant to Section 383(1)(d) of the Hong Kong Companies 露董事利益资料)规则》第3部规定,本行董Ordinance and Part 3 of the Companies (Disclosure of Information about Benefits of 事及与董事有关连实体之贷款总额披露如下: Directors) Regulation are as follows: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Aggregate amount of relevant loans outstanding at 31st December 相关贷款于12月31日的结欠总额 By the Bank 由银行借出 1613 1749 By subsidiaries 由附属公司借出 – – 16131749 The maximum aggregate amount of relevant loans outstanding during the year 年度内相关贷款之最高结欠总额 By the Bank 由银行借出 2465 2977 By subsidiaries 由附属公司借出 – – 24652977 As at 31st December 2022 and 2021 there was no interest due but unpaid and the 于2022年12月31日及2021年12月31日,impairment allowance made against these loans as required under HKFRS 9 were 没有逾期未偿付利息,面对该等贷款按《香insignificant. 港财务报告准则》第9号所作出之减值准备是不重大的。 50. MATERIAL RELATED PARTY TRANSACTIONS 关联人士的重大交易 (a) Key management personnel remuneration (a) 主要管理人员薪酬 Remuneration for key management personnel of the Group including amounts 本集团之主要管理人员薪酬,已包括在附注paid to the Bank’s directors as disclosed in Note 21 and certain of the highest paid 21中所披露支付予本行董事及在附注22中 employees as disclosed in Note 22 is as follows: 所披露支付予本行若干最高薪酬雇员的金额 如下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Short-term employee benefits 短期雇员福利 169 182 Post-employment benefits 雇员退休福利 8 8 Equity compensation benefits 股份补偿福利 23 19 200209 ? F-197 ?360 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 50. MATERIAL RELATED PARTY TRANSACTIONS (CONTINUED) 关联人士的重大交易(续) (b) The Group maintains certain retirement benefit schemes for its staff as per Note 2(y) (b) 本集团为其职员提供若干退休保障计划,并(iii). In 2022 the total amount of contributions the Group made to the schemes was 已于附注2(y)(iii)披露。于2022年内,本集HK$204 million (2021: HK$200 million). 团对该等计划的供款总数为港币2.04亿元 (2021年:港币2亿元)。 The Group enters into a number of transactions with the Group’s related 本集团与其关联人士进行多项交易,该等人parties including its associates shareholders with significant influence and key 士包括联营公司、有重大影响力之股东、及 management personnel and their close family members and companies controlled 主要行政人员与其直系亲属、及受该等人士 or significantly influenced by them. The transactions include accepting deposits 所控制或具有重大影响力的公司。该等交易from and extending credit facilities to them. All interest rates in connection with 包括接受该等人士存款及为他们提供信贷。 the deposits taken and credit facilities extended are under terms and conditions 所有存款及信贷的利率,均按照给予一般相normally applicable to customers of comparable standing. 若水平客户的条款。 The interest received from and interest paid to the Group’s related parties for the 年度内,本集团从关联人士所收取与支付的year outstanding balances of amounts due from and due to at the year end and 利息,及在年末关联人士的欠款及欠关联人maximum outstanding balance of amounts due from and due to them during the 士的款项,及在年度内关联人士最高欠款及year are aggregated as follows: 欠关联人士的最高款项现总结如下: Shareholders with Key management personnel Associates significant influence主要管理人员联营公司有重大影响力之股东 202220212022202120222021 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn港币百万元港币百万元港币百万元港币百万元港币百万元港币百万元 Interest income 利息收入 40 18 76 76 – – Interest expense 利息支出 26 45 – – – – Amounts due from 关联人士的欠款 1763 1847 1335 1767 120 4187 Amounts due to 欠关联人士的款项 3075 2209 34 329 1 44 Maximum amounts due from 关联人士的最高欠款 2636 2057 2219 2517 8054 8863 Maximum amounts due to 欠关联人士的最高款项 6599 5234 438 487 43 745 Committed facilities to 给予信贷承诺 876 395 2244 1807 – – ? F-198 ?东亚银行有限公司 l 2022年报 361 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 51. EQUITY COMPENSATION PLANS 股份补偿计划 The Bank has adopted Staff Share Option Schemes whereby the Board of the Bank 本行所采纳的雇员认股权计划是董事会可酌 may at its discretion grant to any employees of the Group including Executive 情发出认股权予本集团之任何雇员,包括执Director and Co-Chief Executives options to subscribe for ordinary shares of the 行董事及联席行政总裁,以认购本行普通股Bank. All options were granted for nil consideration. 股份。所有认股权均以无计价款形式发出。 (a) Particulars of share options (a) 认股权详情 Date of grant Vesting period Exercise period Exercise price per share授予日期有效期行使期每股行使价 HK$港币元 02/5/2014(T3) 02/5/2014 – 01/5/2017 02/5/2017 – 02/5/2022 32.50 04/5/2015(T2) 04/5/2015 – 03/5/2017 04/5/2017 – 04/5/2022 34.15 04/5/2015(T3) 04/5/2015 – 03/5/2018 04/5/2018 – 04/5/2023 34.15 08/4/2016(T1) 08/4/2016 – 07/4/2017 08/4/2017 – 08/4/2022 28.45 08/4/2016(T2) 08/4/2016 – 07/4/2018 08/4/2018 – 08/4/2023 28.45 08/4/2016(T3) 08/4/2016 – 07/4/2019 08/4/2019 – 08/4/2024 28.45 07/4/2017(T1) 07/4/2017 – 06/4/2018 07/4/2018 – 07/4/2023 32.25 07/4/2017(T2) 07/4/2017 – 06/4/2019 07/4/2019 – 07/4/2024 32.25 07/4/2017(T3) 07/4/2017 – 06/4/2020 07/4/2020 – 07/4/2025 32.25 10/4/2018(T1) 10/4/2018 – 09/4/2019 10/4/2019 – 10/4/2024 32.25 10/4/2018(T2) 10/4/2018 – 09/4/2020 10/4/2020 – 10/4/2025 32.25 10/4/2018(T3) 10/4/2018 – 09/4/2021 10/4/2021 – 10/4/2026 32.25 19/7/2019(T1) 19/7/2019 – 18/7/2020 19/7/2020 – 19/7/2025 22.45 19/7/2019(T2) 19/7/2019 – 18/7/2021 19/7/2021 – 19/7/2026 22.45 19/7/2019(T3) 19/7/2019 – 18/7/2022 19/7/2022 – 19/7/2027 22.45 07/4/2020(T1) 07/4/2020 – 06/4/2021 07/4/2021 – 07/4/2026 16.58 07/4/2020(T2) 07/4/2020 – 06/4/2022 07/4/2022 – 07/4/2027 16.58 07/4/2020(T3) 07/4/2020 – 06/4/2023 07/4/2023 – 07/4/2028 16.58 13/4/2021(T1) 13/4/2021 – 12/4/2022 13/4/2022 – 13/4/2027 17.08 13/4/2021(T2) 13/4/2021 – 12/4/2023 13/4/2023 – 13/4/2028 17.08 13/4/2021(T3) 13/4/2021 – 12/4/2024 13/4/2024 – 13/4/2029 17.08 12/4/2022(T1) 12/4/2022 – 11/4/2023 12/4/2023 – 12/4/2028 12.17 12/4/2022(T2) 12/4/2022 – 11/4/2024 12/4/2024 – 12/4/2029 12.17 12/4/2022(T3) 12/4/2022 – 11/4/2025 12/4/2025 – 12/4/2030 12.17 ? F-199 ?362 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 51. EQUITY COMPENSATION PLANS (CONTINUED) 股份补偿计划(续) (b) Movement of share options during the year (b) 年内认股权之变动 2022 Number of share options 认股权数目 Exercise price Outstanding Outstanding Date of grant Tranche per share at 1/1/2022 Granted Exercised Lapsed at 31/12/2022于2022年于2022年 1月1日12月31日 授予日期部分每股行使价尚未行使已授予已行使已失效尚未行使 HK$港币元 02/5/2014 T3 32.50 1903500 – – 1903500 – 04/5/2015 T2 34.15 1980000 – – 1980000 – 04/5/2015 T3 34.15 1955746 – – – 1955746 08/4/2016 T1 28.45 1064000 – – 1064000 – 08/4/2016 T2 28.45 1946000 – – – 1946000 08/4/2016 T3 28.45 2046500 – – – 2046500 07/4/2017 T1 32.25 2080000 – – – 2080000 07/4/2017 T2 32.25 2080000 – – – 2080000 07/4/2017 T3 32.25 1563000 – – – 1563000 10/4/2018 T1 32.25 2125000 – – – 2125000 10/4/2018 T2 32.25 1613500 – – – 1613500 10/4/2018 T3 32.25 1673000 – – 50000 1623000 19/7/2019 T1 22.45 1493500 – – – 1493500 19/7/2019 T2 22.45 1543500 – – 50000 1493500 19/7/2019 T3 22.45 1550500 – – – 1550500 07/4/2020 T1 16.58 1778165 – – 50000 1728165 07/4/2020 T2 16.58 1785328 – – – 1785328 07/4/2020 T3 16.58 1818336 – – – 1818336 13/4/2021 T1 17.08 1443797 – – – 1443797 13/4/2021 T2 17.08 1443906 – – – 1443906 13/4/2021 T3 17.08 1448850 – – – 1448850 12/4/2022 T1 12.17 – 5353820 – – 5353820 12/4/2022 T2 12.17 – 5347653 – – 5347653 12/4/2022 T3 12.17 – 5417117 – – 5417117 Total 总额 36336128 16118590 – 5097500 47357218 ? F-200 ?东亚银行有限公司 l 2022年报 363 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 2021 Number of share options 认股权数目 Exercise price Outstanding Outstanding Date of grant Tranche per share at 1/1/2021 Granted Exercised Lapsed at 31/12/2021于2021年于2021年 1月1日12月31日 授予日期部分每股行使价尚未行使已授予已行使已失效尚未行使 HK$港币元 03/5/2013 T3 31.40 1840000 – – 1840000 – 02/5/2014 T2 32.50 1942000 – – 1942000 – 02/5/2014 T3 32.50 1953500 – – 50000 1903500 04/5/2015 T1 34.15 2030000 – – 2030000 – 04/5/2015 T2 34.15 2030000 – – 50000 1980000 04/5/2015 T3 34.15 2005746 – – 50000 1955746 08/4/2016 T1 28.45 1064000 – – – 1064000 08/4/2016 T2 28.45 1996000 – – 50000 1946000 08/4/2016 T3 28.45 2096500 – – 50000 2046500 07/4/2017 T1 32.25 2130000 – – 50000 2080000 07/4/2017 T2 32.25 2130000 – – 50000 2080000 07/4/2017 T3 32.25 1600500 – – 37500 1563000 10/4/2018 T1 32.25 2225000 – – 100000 2125000 10/4/2018 T2 32.25 1663500 – – 50000 1613500 10/4/2018 T3 32.25 1673000 – – – 1673000 19/7/2019 T1 22.45 1543500 – – 50000 1493500 19/7/2019 T2 22.45 1543500 – – – 1543500 19/7/2019 T3 22.45 1550500 – – – 1550500 07/4/2020 T1 16.58 1778165 – – – 1778165 07/4/2020 T2 16.58 1785328 – – – 1785328 07/4/2020 T3 16.58 1818336 – – – 1818336 13/4/2021 T1 17.08 – 1443797 – – 1443797 13/4/2021 T2 17.08 – 1443906 – – 1443906 13/4/2021 T3 17.08 – 1448850 – – 1448850 Total 总额 38399075 4336553 – 6399500 36336128 (c) There were no share option forfeited and cancelled during the year ended 31st (c) 截至 2022年 12月 31日及 2021年 12月December 2022 and 2021. 31日止年度内并无被撤销并注销的认股权。 ? F-201 ?364 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 52. ACCOUNTING ESTIMATES AND JUDGEMENTS 会计估计及判断 In preparing these consolidated financial statements management has made 在编制本综合财务报表时,管理层经已作出judgements estimates and assumptions that affect the application of the Group’s 若干对应用本集团会计政策及所汇报的资 accounting policies and the reported amounts of assets liabilities income and 产、负债、收入及支出之金额披露有影响的 expenses. Actual results may differ from these estimates. 判断、估计和假定。最终结果与该等估计可能不尽相同。 Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions 估计及相关假定会定期作检讨。估计之修改to estimates are recognised prospectively. 不会被追溯确认。 (a) Key sources of estimation uncertainty (a) 估计不稳定因素的主要来源 Notes 32 39 and 44 contain information about the assumptions and their risk 附注32、39和44载述有关商誉减值、已授 factors relating to goodwill impairment fair value of share options granted and fair 予股权的公平价值和金融工具的公平价值的 values of financial instruments. Other key sources of estimation uncertainty are as 假设及其风险因素。估计不稳定因素的其他follows: 主要来源如下: (i) Impairment losses (i) 减值损失 Note 43(a)(viii): impairment of financial instruments involves determining inputs 附注43(a)(viii): 金融工具减值涉及决定 into the ECL measurement model including incorporation of forward-looking 预期信贷损失计量模型的计算因素,包information. 括植入具前瞻性的资料。 Note 31: impairment testing of investments in associates involves significant 附注31: 联营公司投资的减值测试包括 judgement in determining the value in use and in particular estimating the 估计使用值的重大判断,及估算因持续present values of cash flows expected to arise from continuing to hold the 持有该投资而产生的预计现金流的现值。 investment.(ii) Valuation of financial instruments (ii) 金融工具的估值 The Group’s accounting policy for valuation of financial instruments is included 本集团对金融工具估值的会计政策列载 in Note 2. The fair value of the financial instruments is mainly based on 于附注2。金融工具的公平价值主要根the quoted market price on a recognised stock exchange or a price quoted 据认可之交易所的市场报价,或就非在from a broker/dealer for non-exchanged traded financial instruments. For all 交易所作交易的金融工具而言,则根据other financial instruments the Group determines fair values using valuation 经纪╱交易员的报价。而对于所有其他techniques. Valuation techniques include net present value and discounted cash 金融工具,本集团则利用估值模式以厘flow models and various market recognised pricing models. Some or all of the 定公平价值。估值模式包括净现值及现significant inputs into these models may not be observable in the market and 金流量折现模式、以及其他市场广泛应 are derived from market prices or rates or are estimated based on assumptions. 用的期权估值模式。部分或所有须予输Valuation models that employ significant unobservable inputs require a 入模式的重要参数或未能从市场中观察 higher degree of management judgement and estimation in determination 得出,而必须从市场价格或利率计算、of fair value. Management estimation are usually required for selection of the 或基于假设而估计而得出。该等须利用appropriate valuation model assumptions and inputs to be used. 重要而非可观察之参数的估值模式,需要管理层投入较多时间于判断及估计,始能厘定金融工具的公平价值。一般而言,拣选适当的估值模式、假设及参数亦需要管理层估计。 (iii) Provisions for tax uncertainties (iii) 税务不确定性之拨备 The Group makes provisions for tax uncertainties by either estimating the most 本集团对税务之不确定性会以最大可 likely amount which is the single most likely amount in a range of possible 能,即最具可能性或预期价值的结果范outcomes or the expected value in a range of possible outcomes. The estimate 围内,作出拨备。该估计值可能与实际could be different from the actual results of resolution. Any increase or decrease 情况有差异。拨备的任何增加或减少将in the provision would affect profit or loss in future years. 影响未来年度的损益。 ? F-202 ?东亚银行有限公司 l 2022年报 365 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) (b) Critical accounting judgements in applying the Group’s accounting (b) 本集团应用会计政策的重要会计判断 policies Certain critical accounting judgements in applying the Group’s accounting policies 本集团应用会计政策的若干重要会计判断如 are described below: 下: (i) Classification of financial assets (i) 金融资产分类 Note 2(h)(ii): assessment of the business model within which the assets are held 附注2(h)(ii): 评估持有资产的商业模型,and assessment of whether the contractual terms of the financial asset are SPPI 即金融资产合约期内是否纯粹是本金及 on the principal amount outstanding. 按本金结余的利息支付。 (ii) Measurement of ECL (ii) 预期信贷损失计量 Note 43(a)(viii): establishing the criteria for determining whether credit risk 附注43(a)(viii): 订立标准以决定金融资 on the financial asset has increased significantly since initial recognition 产的信贷风险是否比初始确认时经已大 determining methodology for incorporating forward-looking information into 幅增加及制定方法以植入具前瞻性计量 measurement of ECL and selection of models used to measure ECL. 预期信贷损失的资料及选择模型以计算预期信贷损失。 (iii) Recognition of deferred tax assets (iii) 递延税项资产之确认 The Group recognises deferred tax assets only to the extent that it is probable 须在未来可能有应课税溢利予以抵销递 that future taxable profits will be available against which the asset can be 延税项资产的情况下,本集团才确认递utilised. Estimates and judgements are applied in determining the amount of 延税项资产。在厘定未来应课税溢利的future taxable profits and the probability that such future taxable profits are 金额及其可能性时,须估计及判断在可available in the foreseeable future to support recognition of the deferred tax 见之将来该未来应课税溢利可否支持确 assets. The Group uses all readily available information including estimates 认该递延税项资产。本集团使用所有已based on reasonable and supportable assumptions and projections of revenue 有的资料,包括根据合理及可支持之假and operating costs in determining future taxable profits. Changes in these 设和对收入及支出成本的估计,以厘定estimates could significantly affect the timing of deferred tax asset recognition 未来应课税溢利。此等估计的变动可能and the amount of asset recognised. 对递延税项资产确认的时间及资产确认的金额有重大影响。 53. COMPARATIVE FIGURES 比较数字 Certain 2021 comparative figures have been restated to conform to current year’s 若干2021年的比较数字经已重报以符合本 presentation. Please refer to Note 23 for the effect of restatement. 年度的呈报方式。请参阅附注23中所述的重报影响。 54. NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD 毋须调整的报告期结束日后的事件 After the end of the reporting period the directors declared a second interim 董事于报告期结束日后拟派发第二次中期股 dividend. Further details are disclosed in Note 19(a). 息。详情已在附注19(a)作披露。 ? F-203 ?366 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 55. ASSETS HELD FOR SALE 持有作出售资产 The assets held for sale and liabilities held for sale after elimination of inter- 持有作出售之资产及负债,并撇销与本集团companies balances are summarised below: 属下业务公司之间的交易摘要如下: 20222021 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Assets held for sale (Note 34) 持有作出售资产(附注34) Disposal groups held for sale (Note) 持有作出售组别(注) – 2232 Other properties 其他物业 27 32 272264 Liabilities held for sale (Note 37) 持有作出售负债(附注37) Disposal groups held for sale (Note) 持有作出售组别(注) – 1637 Note: 注 : 2021 – Include Blue Cross (Asia-Pacific) Insurance Limited. On 26th August 2022 the Bank 2021:包括蓝十字(亚太)保险有限公司。本行已 completed the disposal of Blue Cross (Asia-Pacific) Insurance Limited. 于2022年8月26日出售蓝十字(亚太)保险有限公司。 There was no disposal group held for sale as at 31st December 2022. As at 31st 于2022年12月31日并无持有作出售组别。 December 2021 the assets and liabilities of the disposal groups held for sale after 于2021年12月31日,持有作出售组别的资elimination of inter-companies balances are summarised below: 产和负债,并撇销与本集团属下业务公司之间的交易摘要如下: 2021 HK$ Mn 港币百万元 ASSETS 资产 Cash and balances with banks 现金及在银行的结存 3 Investment securities 投资证券 1926 Fixed assets 固定资产 34 – Other properties and equipment -其他物业及设备 33 – Right-of-use assets -使用权资产 1 Goodwill 商誉 14 Other assets 其他资产 255 Assets held for sale 持有作出售资产 2232 LIABILITIES 负债 Current taxation 本年税项 4 Deferred tax liabilities 递延税项负债 5 Other liabilities 其他负债 1628 Liabilities held for sale 持有作出售负债 1637 As at 31st December 2021 the total equity of the disposal groups attributable to 于2021年12月31日,可归属于本集团之出the Group was HK$770 million. 售组别的股东权益总额为港币7.70亿元。 ? F-204 ?东亚银行有限公司 l 2022年报 367 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) Investment Securities 投资证券 2021 Mandatorily Measured measured Measured at at FVTPL at FVOCI amortised cost Total按通过其他强制按通过全面收益以损益以反映反映公平价值按摊销成本公平价值计量计量计量总额 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Certificates of deposits held 持有存款证 – 690 – 690 Debt securities 债务证券 26 1160 – 1186 Equity securities 股份证券 50 – – 50 761850–1926 The cumulative income recognised in other comprehensive income relating to 有关持有作出售组别在其他全面收益内确认 disposal groups held for sale is as follows: 之累计收入如下: 2021 HK$ Mn 港币百万元 Cumulative income recognised in other comprehensive income 确认在其他全面收益内之累计收入 (36) 56. EXPOSURES TO INTERBANK OFFERED RATES 银行同业拆借利率风险 Following the decision of global regulators to phase out LIBORs and replace them 因应全球监管机构决定逐步停止使用伦敦银 with risk free rates as alternative reference rates (“ARRs”) LIBORs of CHF EUR GBP 行同业拆借利率「( LIBORs」),转用无风险利and JPY were ceased available after 2021. 1-week and 2-month USD LIBORs were 率作为替代参考利率「( ARRs」),瑞士法郎、also ceased. Other tenors of USD LIBOR will cease available after June 2023. 欧元、英镑及日元的LIBOR已于2021年后停止使用。1星期和2个月美元LIBOR亦已停止使用。其他年期的美元LIBOR将于2023年6月后停止使用。 With the completion of the IBOR Reform Project the Group has the operational 随着银行同业拆借利率改革项目的完成,本capability to trade in ARRs and manage the transition of the aforesaid LIBORs and 集团已具备交易ARRs及处理上述LIBORs和the remaining demising regional rates that yet to transit to alternative benchmarks 其余尚未过渡至替代基准(包括新加坡元掉which include SG Swap Offer Rate and SIBOR. 期利率和新加坡银行同业拆借利率)的淘汰 利率挂钩过渡至ARRs的能力。 ? F-205 ?368 The Bank of East Asia Limited l Annual Report 2022 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) 56. EXPOSURES TO INTERBANK OFFERED RATES (CONTINUED) 银行同业拆借利率风险(续) The following table shows outstanding amounts of financial instruments referencing 下表载列了截至 2022 年 12 月 31 日参考 the interest rate benchmarks that have yet to transit to alternative benchmark rates 利率基准而又尚未过渡至替代基准利率的金 as at 31st December 2022 excluding the financial instruments that will expire 融工具之余额,并不包括将在过渡日之前到before the transition date. The amounts of financial assets and liabilities are shown 期的金融工具。金融资产和负债的金额以账at gross carrying amounts and derivatives are shown at notional amounts. 面值总额列示,而衍生工具则以名义金额列示。 2022 Gross Carrying Amount/Notional Amount 账面值总额/名义金额 USD LIBOR GBP LIBOR SG Swap Offer Rate SIBOR美元伦敦银行英镑伦敦银行新加坡元新加坡银行同业拆借利率同业拆借利率掉期利率同业拆借利率 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 HK$ Mn 港币百万元 Assets 资产 Loans and advances to customers 客户贷款及垫款 35270 94 1743 4276 Placements with and advances to banks 在银行的存款及垫款 4276 – – – Negotiable debt instruments held including 已持有可转让债务工具,negotiable certificates of deposit 包括可转让存款证 78 – – – Total asset 资产总额 39624 94 1743 4276 Liabilities 负债 Certificate of deposit and debt securities issued 已发行存款证及债务证券 2715 – – – Total liabilities 负债总额 2715 – – – Derivatives 衍生工具 Interest rate swaps 利率掉期 53628 – – – Cross currency swaps 交叉货币掉期 1515 – – – Other derivatives 其他衍生工具 156 – – – Gross total derivatives 衍生工具总额 55299 – – – The Group has fair value hedge accounting relationships maturing beyond the 本集团的公平价值对冲会计关系在银行同业 anticipated cessation date for IBORs. Significant judgement will be required in 拆借利率的预期终止日后到期。于厘定何时determining when uncertainty is expected to be resolved and when targeted relief 能解决因银行同业拆借利率改革所引起的不 will cease to apply. As at 31st December 2022 the Group believes uncertainty 确定因素,并停止应用有关豁免,须运用重continues to exist as to when and how the replacement may occur with respect 大判断。于2022年12月31日,本集团认为to the relevant derivative hedging instruments and so the targeted reliefs apply to 有关衍生对冲工具何时以及如何进行替代仍 the Group’s hedge accounting relationships that reference benchmarks subject to 存在不确定性,故此,有关豁免适用于本集reform or replacement. 团所有对冲会计关系,当中的参考基准可予改革或取代。 ? F-206 ?东亚银行有限公司 l 2022年报 369 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 财务报表附注(续) As at 31st December 2022 the details of derivative instruments designated in 于2022年12月31日,下表载列了与银行同fair value hedge accounting relationships linked to IBORs excluding the derivative 业拆借利率相关的按公平价值对冲会计关系 instruments that will expire before the transition date are as follows: 指定的衍生工具,但不包括将在过渡日之前到期的衍生工具: 2022 Notional Weighted average designated exposure years指定名义金额加权平均承担年期 HK$ Mn 港币百万元 Interest rate swaps 利率掉期 USD LIBOR 美元伦敦银行同业拆借利率 44908 4.29 449084.29 57. POSSIBLE IMPACT OF AMENDMENTS NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31ST DECEMBER 2022 在截至2022年12月31日止年度前已公布但尚未生效的修订、新准则和诠释所产生的可能影响 Up to the date of issue of these financial statements the HKICPA has issued a 直至此等财务报表之发布日期,香港会计师number of amendments to standards and new standards which are not yet effective 公会已颁布了多项修订及新准则;但该等修 for the year ended 31st December 2022 and which have not been adopted in these 订和新准则于截至2022年12月31日止会 financial statements. These include the following which may be relevant to the 计年度尚未生效,因此尚未应用于此等财务Group. 报表。可能与本集团有关之修订和新准则如下。 Effective for accounting periods beginning on or after由会计期开始或以后起生效 Amendments to HKAS 1 Classification of Liabilities as Current or Non-current 1st January 2023 《香港会计准则》第1号之修订「流动及非流动负债的分类」2023年1月1日 Amendments to HKAS 1 and HKFRS Practice Statement 2 Disclosure of accounting policies 1st January 2023 《香港会计准则》第1号及《香港财务报告准则实务公告》第2号之修订「会计政策之披露」2023年1月1日 Amendments to HKAS 8 Definition of accounting estimates 1st January 2023 《香港会计准则》第8号之修订「会计估计之定义」2023年1月1日 Amendments to HKAS 12 Deferred tax related to assets and liabilities arising from a single transaction 1st January 2023 《香港会计准则》第12号之修订「与单一交易所产生之资产及负债有关之递延税项」2023年1月1日 HKFRS 17 and amendments to HKFRS 17 Insurance Contracts 1st January 2023 《香港财务报告准则》第17号「保险合约」及其修订2023年1月1日 Amendments to HKFRS 16 Lease Liability in a Sale and Leaseback 1st January 2024 《香港财务报告准则》第16号之修订「售后租回交易中的租赁负债」2024年1月1日 The Group is in the process of making an assessment of what the impact of 本集团正在评估该等修订和新准则对首个应 these amendments and new standards are expected to be in the period of initial 用期可能产生的影响。至今所得结论是若采application. So far the adoption of them is unlikely to have a significant impact on 纳该等修订、新准则和诠释对本集团的综合 the consolidated financial statements. 财务报表不可能构成重大影响。 ? F-207 ?Page 1 Independent auditor’s report to the members of The Bank of East Asia Limited (Incorporated in Hong Kong with limited liability) Opinion We have audited the consolidated financial statements of The Bank of East Asia Limited (“the Bank”) and its subsidiaries (together “the Group”) set out on pages 17 to 177 which comprise the consolidated statement of financial position as at 31 December 2023 the consolidated income statement the consolidated statement of comprehensive income the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended and notes to the consolidated financial statements including material accounting policy information.In our opinion the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2023 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.Basis for opinion We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Key audit matters Key audit matters are those matters that in our professional judgement were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.Impairment allowances of loans and advances to customers Refer to notes 2(h)(vii) 27(a) 43(a)(ix) to the consolidated financial statements Key audit matter How the matter was addressed in our audit The Group’s advances to customers as at 31 Our audit procedures to assess the Group’s December 2023 amounted to HK$532111 million impairment allowances on loans and advances to with total expected credit losses (“ECL”) amounting customers measured at amortised cost with regards to HK$5127 million as at 31 December 2023. Hong to the methodology data and assumptions used in Kong and Chinese Mainland Operations contributed the estimate included the following: to 55.0% and 26.6% of the Group’s advances to customers and 48.2% and 40.8% of the Group’s Methodology total ECL respectively.understanding and assessing the design Impairment allowances of loans and advances to implementation and operating effectiveness of customers across the banking industry continues to key internal controls on the ECL model be an area of elevated focus due to ongoing monitoring and governance process and on the challenges in the China real estate sector and controls around the final review and tightening monetary policy by many central banks to determination of impairment allowances by combat inflation. This has led to a more difficult management; environment for borrowers and leads to challenges in assessing impairment provisions.? F-208 ?Page 2 2(h)(vii) 27(a) 43(a)(ix) ? F-209 ?Page 3 Impairment allowances of loans and advances to customers Refer to notes 2(h)(vii) 27(a) 43(a)(ix) to the consolidated financial statements Key audit matter How the matter was addressed in our audit The Group applies its ECL models to assess involving credit risk specialists in assessing the impairment allowances of loans and advances to appropriateness of the methodology and customers measured at amortised cost. Loan reliability of the ECL models used by exposures that are not already credit-impaired are management in determining impairment classified as stage 1 on origination and a 12-month allowances; and ECL provision is recognised. Loan exposures will in respect of assessing the accuracy of ECL remain in stage 1 until they are repaid experience a calculation calculating the amount of credit loss significant increase in credit risk (stage 2) or become allowance for 12-month and life-time credit credit-impaired (stage 3) for which a lifetime ECL losses using the ECL models based on the provision is recognised. above parameters and assumptions for a sample of loans and advances to customers The difficulty in identifying those loans which may where the credit risk of the loan has not or has have significant increase in credit risk or impaired increased significantly since initial recognition has remained high. Past historical experience on respectively and comparing to the results from repayment may be less representative of the the Group; borrowers’ financial conditions and therefore more judgement is required. Data understanding and assessing the design Impairment allowances may be materially misstated implementation and operating effectiveness of if the exposures with a significant increase in credit key internal controls on financial reporting over risk are not properly identified and classified in the approval recording and monitoring of loans appropriate stages. measured at amortised cost including the recording of key data elements used in the ECL The determination of impairment allowances using model; the ECL models is subject to a number of key assessing the completeness and accuracy of parameters and assumptions including the data used for the key parameters in the ECL identification of loss stages estimates of probability models by comparing individual loan of default loss given default exposures at default information on a sample basis with the and discount rate adjustments for forward-looking underlying agreements and other related information and other adjustment factors. documentation to assess the accuracy of the Management judgment is involved in the selection of loan information in the ECL models. For key those parameters and the application of the parameters derived from external data we assumptions. selected samples to inspect the accuracy of In particular the determination of the impairment such data by comparing them with publicly allowances is heavily dependent on the external available sources; and macro environment. The expected credit losses are for key parameters used in the ECL models derived from estimates including the historical which were derived from system-generated losses internal and external credit grading and other internal data assessing the accuracy of input adjustment factors. The expected credit losses for data by comparing the input data with original personal loans are derived from estimates whereby documents on a sample basis. We involved our management takes into consideration historical information technology specialists in assessing overdue data the historical loss experience for the information systems controls critical to the personal loans and other adjustment factors. financial reporting process such as the compilation of the overdue reports for advances to customers. We also assessed the design implementation and operating effectiveness of relevant automated application controls within these systems as well as key internal controls over these underlying systems including controls over access to these systems and controls over data and change management; ? F-210 ?Page 4 2(h)(vii) 27(a) 43(a)(ix) ? F-211 ?Page 5 Impairment allowances of loans and advances to customers Refer to notes 2(h)(vii) 27(a) 43(a)(ix) to the consolidated financial statements Key audit matter How the matter was addressed in our audit Management also exercises judgement in Assumptions determining the quantum of loss given default based on a range of factors. These include available understanding and assessing the design remedies for recovery the financial situation of the implementation and operating effectiveness of borrower the recoverable amount of collateral key internal controls on financial reporting over macroeconomic factors the seniority of the claim the credit grading process; and the existence and cooperativeness of other understanding and assessing the design creditors. Management refers to valuation reports implementation and operating effectiveness of issued by qualified third party valuers and considers key internal controls on the monitoring and the influence of various factors including the market governance process for the assumptions used in price location and use when assessing the value of the ECL models including the assessment of property held as collateral. The enforceability timing the internal credit grading applied to exposures; and means of realisation of collateral can also have evaluating the validity of management’s an impact on the recoverable amount from collateral assessment on whether the credit risk of the loan and therefore the amount of impairment allowances has or has not increased significantly since as at the end of the reporting period. The initial recognition and whether the loan is credit- assessment of the recoverable amount of collateral impaired by selecting samples for which we is particularly challenging in the Chinese Mainland checked loan overdue information made as the extent of judgement exercised by enquiries of the credit managers about the management in the process of determining the borrowers’ business operations checked strategy of recovery and assessing the collateral borrowers’ financial information and researched value of these exposures is high. As a result the market information about borrowers’ impairment allowances of loans and advances to businesses. Our sample of loans and advances customers in this particular part of business is to customers selected for credit review including subject to a higher inherent risk of material in Chinese Mainland Operations focused on misstatements. accounts with high risk characteristics including industries features of loan arrangements types We identified the impairment allowances of loans of collateral and credit quality of the accounts; and advances to customers measured at amortised cost as a key audit matter because of the complexity involving credit risk specialists in assessing the of the inherent uncertainty and management appropriateness of the key assumptions in the judgment involved and because of its significance to ECL models including the criteria used by the financial results and capital of the Group. management in determining loss stages the probability of default loss given default exposure at default discount rate adjustments for forward-looking information and other management adjustments; for key parameters involving judgement critically assessing input parameters by seeking evidence from external sources and comparing it to the Group’s internal records including historical loss experience and type of collateral.As part of these procedures we challenged the reasons for modifications to estimates and input parameters and considered the consistency of judgement. We compared the economic factors used in the models with market information to assess whether they were aligned with market and economic development; ? F-212 ?Page 6 2(h)(vii) 27(a) 43(a)(ix) ? F-213 ?Page 7 Impairment allowances of loans and advances to customers Refer to notes 2(h)(vii) 27(a) 43(a)(ix) to the consolidated financial statements Key audit matter How the matter was addressed in our audit for selected samples of loans and advances to customers that are credit-impaired evaluating management’s assessment of the recoverable amount of the exposure including evaluating management’s assessment of the value of any property collateral held by comparison with market prices based on the location and use of the property and the prices of comparable properties. We also evaluated the timing and means of realisation of other collateral evaluated the forecast cash flows challenged the viability of the Group’s recovery plans and evaluated other credit enhancements that are integral to the contract terms; and assessing the appropriateness of material manual adjustments and overlays on ECL model outputs.Other audit procedures to assess the Group’s impairment allowances on loans and advances to customers measured at amortised cost included the following: in respect of evaluating the accounting treatments of disposal of impaired loans during the year inspecting the loan disposal agreements and documents enquiring of management and assessing whether the transactions are recognised appropriately; and evaluating whether the presentation and disclosures on impairment allowances of loans and advances to customers measured at amortised cost meet the requirements of the prevailing accounting standards.? F-214 ?Page 8 2(h)(vii) 27(a) 43(a)(ix) ? F-215 ?Page 9 Impairment assessment of an investment in associate AFFIN Bank Berhad (“AFFIN”) Refer to notes 2(r) 30 to the consolidated financial statements Key audit matter How the matter was addressed in our audit The quoted market price of the Group’s investment Our audit procedures to assess the carrying value of in AFFIN has been persistently below the carrying the Group’s investment in AFFIN with regards to amount for a period of time. This is considered an methodology data and assumptions used in the indicator of potential impairment. estimate included the following: HKAS 36 “Impairment of assets” requires Methodology recognition of impairment loss when the carrying amount exceeds the recoverable amount which is engaging our valuation specialists to evaluate the higher of its fair value less costs of disposal and the methodology used in the VIU calculation; its value in use (“VIU”). An impairment test was performed by the Group using a VIU model to Data estimate the investment’s value assuming the Group continues to hold this investment. comparing AFFIN’s budgeted income and profits As at 31 December 2023 the recoverable amount with the assumptions used by management in its based on the VIU calculation was HK$3012 million. discounted cash flow forecast; and The carrying value was written down to the recoverable amount and an additional impairment comparing the actual results of AFFIN for the charge of HK$726 million was recognised in 2023. past years to forecasts prepared by management for the preceding years to assess The VIU model is based on the requirements in the accuracy of management’s forecasting HKAS 36 “Impairment of assets” and is dependent process; on many assumptions both short-term and long- term in nature. These assumptions which are Assumptions judgemental are derived from a combination of management estimates forecasts and market data. discussing with management who sit on the The assumptions considered the current levels of board of AFFIN to understand business uncertainty on the economy in Malaysia. performance and future business plans of AFFIN; A number of key judgements were made by evaluating the assumptions and judgements management in determining the inputs for the VIU adopted by management in its discounted cash calculation which included: flow forecast relating to growth rates terminal value and the discount rate used to derive the forecast cash flows; recoverable amount of the Group’s investment in forecast regulatory capital adjustments required; AFFIN with support of our valuation specialists growth rates and terminal values; and through the following procedures: discount rate applied to the forecast cash flows. conducting research on the assumptions and judgements relating to growth rates We identified the impairment assessment of the terminal value and the discount rate based Group’s investment in AFFIN as a key audit matter on available market information; because of the increased uncertainty of the VIU performing an alternative calculation of the estimation and its significance to the consolidated discount rate and comparing this calculation financial statements and because assessing the key with the discount rate applied by assumptions involved a significant degree of management to assess reasonableness of management judgement which may affect both the the discount rate used by management; carrying value of the Group’s investment in AFFIN at year end and amount of impairment charge for the year.? F-216 ?Page 10 AFFIN Bank Berhad “AFFIN” 2(r) 30 AFFIN AFFIN AFFIN AFFIN AFFIN AFFIN AFFIN AFFIN AFFIN ? F-217 ?Page 11 Impairment assessment of an investment in associate AFFIN Bank Berhad (“AFFIN”) Refer to notes 2(r) 30 to the consolidated financial statements Key audit matter How the matter was addressed in our audit evaluating the assumptions used in forecasting regulatory capital adjustments required; comparing AFFIN’s budgeted income and profits with externally derived data such as analysts’ reports to assess their reasonableness; evaluating the sensitivity analyses prepared by management for each of the key assumptions adopted in the discounted cash flow forecast including growth rates applied cash flow forecast and discount rate assumptions and considering any management bias in formulating these assumptions; and evaluating the probabilities assigned by management to the various economic scenarios in the VIU calculation by assessing whether they were aligned with market and economic development.In addition to the above audit procedures we also considered whether the disclosures in the consolidated financial statements in respect of the impairment assessment of the Group’s investment in AFFIN reflected the risks inherent in the key assumptions with reference to the requirements of the prevailing accounting standards.? F-218 ?Page 12 AFFIN Bank Berhad “AFFIN” 2(r) 30 AFFIN AFFIN ? F-219 ?Page 13 Information other than the consolidated financial statements and auditor’s report thereon The directors are responsible for the other information. The other information comprises all the information included in the annual report other than the consolidated financial statements and our auditor’s report thereon.Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the consolidated financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.Responsibilities of the directors for the consolidated financial statements The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement whether due to fraud or error.In preparing the consolidated financial statements the directors are responsible for assessing the Group’s ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial reporting process.Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor’s report that includes our opinion. This report is made solely to you as a body in accordance with section 405 of the Hong Kong Companies Ordinance and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.As part of an audit in accordance with HKSAs we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.? F-220 ?Page 14 ? F-221 ?Page 15 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.However future events or conditions may cause the Group to cease to continue as a going concern.Evaluate the overall presentation structure and content of the consolidated financial statements including the disclosures and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction supervision and performance of the Group audit. We remain solely responsible for our audit opinion.We communicate with the Audit Committee regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable actions taken to eliminate threats or safeguards applied.From the matters communicated with the Audit Committee we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.The engagement partner on the audit resulting in this independent auditor’s report is Wong Po Shan.KPMG Certified Public Accountants 8th Floor Prince’s Building 10 Chater Road Central Hong Kong 21 February 2024 ? F-222 ?Page 16 ? F-223 ?Page 17 CONSOLIDATED INCOME STATEMENT For the year ended 31st December 2023 2023 12 31 20232022 Notes HK$ Mn HK$ Mn Interest income 5 39685 24848 Interest income calculated using the effective interest method 36788 24871 Related interest income/(expense) 2897 (23) Interest expense 6 (22811) (11340) Net interest income 16874 13508 Fee and commission income 7 3361 3372 Fee and commission expense (721) (619) Net fee and commission income 2640 2753 Net trading profit 8 1225 943 Net result on financial instruments at FVTPL 9 (262) (68) Net result on financial assets measured at FVOCI 10 (26) 175 Net loss on sale of financial assets measured at amortised cost (22) (6) Net hedging profit 11 30 201 Other operating income 12 287 448 Non-interest income 3872 4446 Operating income 20746 17954 Operating expenses 13 (9432) (9224) Operating profit before impairment losses 11314 8730 Impairment losses on financial instruments 14 (5483) (5923) Impairment losses on associate 30 (726) - Impairment losses on other assets (6) (3) Impairment losses (6215) (5926) Operating profit after impairment losses 5099 2804 Net profit on sale of assets held for sale 15 2 1445 Net loss on disposal of subsidiaries/ associates (12) (1) Net profit on disposal of fixed assets 16 14 17 Valuation losses on investment properties 32 (86) (179) Share of profits less losses of associates and joint ventures 30 293 855 Profit for the year before taxation 5310 4941 Income tax 17 (1174) (563) Profit for the year 4136 4378 Attributable to: Owners of the parent 42(j) 4118 4359 Non-controlling interests 18 19 Profit for the year 4136 4378 HK$ HK$ Earnings per share Basic 19 1.32 1.32 Diluted 19 1.32 1.32 The notes on pages 24 to 177 form part of these financial statements. Details of 24 177 dividends payable to equity shareholders of the Bank attributable to the profit for the year are set out in Note 18. 18 ? F-224 ?Page 18 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31st December 2023 2023 12 31 20232022 Notes HK$ Mn HK$ Mn Net profit 4136 4378 Other comprehensive income for the year: Items that will not be reclassified to income statement: Premises: - unrealised surplus on revaluation - of premises 42(b) 13 354 - deferred taxes - 42(b) 2 (4) Fair value reserve (equity instruments): - net change in fair value - 42(g) 120 127 - deferred taxes - 42(g) - (4) Liability credit reserve: - net change in fair value attributable to Group’s own - credit risk 34 42(h) (13) 73 - deferred taxes - 34 42(h) 2 (12) Items that may be reclassified subsequently to income statement: Fair value reserve (debt instruments): - net change in fair value - 42(g) 760 (1849) - amount transferred to income - statement on disposal 42(g) 82 13 - deferred taxes - 42(g) (134) 298 Share of changes in equity of associates and joint ventures 42(i) 51 54 Exchange differences arising from translation of accounts/disposal of overseas Macau and Taiwan branches subsidiaries associates and joint ventures (723) (2880) Other comprehensive income 160 (3830) Total comprehensive income 4296 548 Total comprehensive income attributable to: Owners of the parent 4278 529 Non-controlling interests 18 19 4296548 The notes on pages 24 to 177 form part of these financial statements. 24 177 ? F-225 ?Page 19 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31st December 2023 2023 12 31 20232022 Notes HK$ Mn HK$ Mn ASSETS Cash and balances with banks 23 45903 54579 Placements with and advances to banks 24 43691 60203 Trade bills 25 373 529 Trading assets 26 3049 1530 Derivative assets 45(b)(ii) 9056 11092 Loans and advances to customers 27 526984 542394 Investment securities 28 167270 147007 Investments in associates and joint ventures 30 8384 9061 Fixed assets 32 13493 13476 - Investment properties - 5105 5166 - Other properties and equipment - 7603 7593 - Right-of-use assets - 785 717 Goodwill and intangible assets 31 1852 1870 Deferred tax assets 35(b) 1836 1849 Other assets 33 38470 39235 Total Assets 860361 882825 EQUITY AND LIABILITIES Deposits and balances of banks 25619 25478 - Designated at fair value through - profit or loss 34 3199 4545 - At amortised cost - 22420 20933 Deposits from customers 36 628598 648093 - Demand deposits and current accounts - 65643 65899 - Savings deposits - 118163 145107 - Time call and notice deposits - 444792 437087 Trading liabilities - 5 Derivative liabilities 45(b)(ii) 4007 4145 Certificates of deposit issued 27618 32662 - Designated at fair value through - profit or loss 34 9415 19001 - At amortised cost - 18203 13661 Current taxation 35(a) 1602 1252 Debt securities issued 844 2892 - Designated at fair value through - profit or loss 34 688 811 - At amortised cost - 156 2081 Deferred tax liabilities 35(b) 468 226 Other liabilities 37 47312 49799 Loan capital – at amortised cost - 38 15967 11927 Total Liabilities 752035 776479 Share capital 40 41915 41856 Reserves 42 56058 54131 Total equity attributable to owners of the parent 97973 95987 Additional equity instruments 41 10090 10090 Non-controlling interests 263 269 Total Equity 108326 106346 Total Equity and Liabilities 860361 882825 Approved and authorised for issue by the Board on 21st February 2024. 2024 2 21 Executive Chairman David LI Kwok-po Co-Chief Executives Adrian David LI Man-kiu Brian David LI Man-bun Director Meocre LI Kwok-wing The notes on pages 24 to 177 form part of these financial statements. 24 177 ? F-226 ?Page 20 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31st December 2023 2023 12 31 Capital reserve – Revaluation staff share reserve of Exchange options Liability Additional Non- bank revaluation issued Fair value credit equity controlling Share General premises Capital reserve – reserve reserve Other Retained instruments interests Total capital reserve reserve reserves 2 profits Total equity 2 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn At 1st January 2023 20231141856136582255895(1822)150510155105333659598710090269106346 Changes in equity Profit for the year ---------41184118-184136 Other comprehensive income --15-(723)-828(11)51-160--160 Total comprehensive income --15-(723)-828(11)5141184278-184296 Shares issued in lieu of dividend (Note 40) 4059---------59--59 Equity settled share- based transaction (Note 42(f)) 42(f) - - - - - 24 - - - - 24 - - 24 Transfer -----(35)--(2)37---- Distribution/Dividends declared or approved during the year ---------(2008)(2008)-(24)(2032) Share buy-back 1 1---------(367)(367)--(367) At 31st December 2023 2023123141915136582270895(2545)139133845154351459797310090263108326 1. During the year the Bank bought back 36 million issued shares on the Stock Exchange at 1. 3.66 3600 a total consideration of HK$366 million. Together with the direct transaction cost of 100 3.67 approximately HK$1 million a total amount of HK$367 million was accounted for as a 40 deduction from retained profits. For details of the share buy-back please refer to Note 40. 2. Other reserves include statutory reserve and other reserves. 2. The notes on pages 24 to 177 form part of these financial statements. 24 177 ? F-227 ?Page 21 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) () For the year ended 31st December 2022 2022 12 31 Capital reserve – Revaluation staff share reserve of Exchange options Liability Additional Non- bank revaluation issued Fair value credit equity controlling Share General premises Capital reserve – reserve reserve Other Retained instruments interests Total capital reserve reserve reserves 3 profits Total equity 3 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn At 1st January 2022 2022114164513658190589510581521925(46)51913539510177813968304116050 Changes in equity Profit for the year ---------43594359-194378 Other comprehensive income --350-(2880)-(1415)6154-(3830)--(3830) Total comprehensive income --350-(2880)-(1415)61544359529-19548 Shares issued in lieu of dividend (Note 40) 40211---------211--211 Equity settled share- based transaction (Note 42(f)) 42(f) - - - - - 22 - - - - 22 - - 22 Transfer -----(24)--(140)164---- Distribution/Dividends declared or approved during the year ---------(3455)(3455)-(48)(3503) Share buy-back 1 1---------(3051)(3051)--(3051) Redemption of additional equity instruments 2 2---------(47)(47)(3878)-(3925) Change of ownership in subsidiaries ------------(6)(6) At 31st December 2022 2022123141856136582255895(1822)150510155105333659598710090269106346 1. In 2022 the Bank bought back 262 million issued shares at a total consideration of 1. 2022 30.38 2.62 HK$3038 million. Together with the direct transaction cost of HK$13 million a total amount 1300 30.51 of HK$3051 million were accounted for as a deduction from retained profits. For details of 40 the share buy-back please refer to Note 40. 2. In 2022 the Bank redeemed HK$3878 million (US$500 million) undated non-cumulative 2. 2022 38.78 5 2017 subordinated Additional Tier 1 capital securities issued in 2017. 3. Other reserves include statutory reserve and other reserves. 3. The notes on pages 24 to 177 form part of these financial statements. 24 177 ? F-228 ?Page 22 CONSOLIDATED CASH FLOW STATEMENT For the year ended 31st December 2023 2023 12 31 20232022 Notes HK$ Mn HK$ Mn OPERATING ACTIVITIES Profit for the year before taxation 5310 4941 Adjustments for: Charge for impairment losses on financial instruments 5483 5923 Charge for impairment losses on associate 726 - Charge for impairment losses on other assets 6 3 Share of profits less losses of associates and joint ventures (293) (855) Net loss on sale of financial assets measured at amortised cost 22 6 Net loss/(profit) on sale of debt securities measured at FVOCI 60 (142) Net loss on disposal of subsidiaries and associates 12 1 Net profit on sale of assets held for sale (2) (1445) Net profit on disposal of fixed assets (14) (17) Interest expense on debt securities issued 51 80 Interest expense on loan capital issued 949 454 Interest expense on lease liabilities 29 28 Depreciation on bank premises furniture fixtures and equipment 32 547 567 Depreciation on right-of-use assets 32 260 295 Dividend income from equity securities measured at FVOCI 10 (34) (16) Amortisation of intangible assets 31(b) 13 13 Amortisation of premium/discount on debt securities and loan capital issued 11 7 Revaluation losses/(gains) on debt securities and loan capital issued 201 (298) Valuation losses on investment properties 32 86 179 Equity settled share-based payment expenses 13 42(f) 24 22 134479746 (Increase)/decrease in operating assets: Cash and balances with banks with 3 original maturity beyond three months 1533 1457 Placements with and advances to banks with original maturity beyond three 3 months (4028) 1618 Trade bills 156 10244 Trading assets (2728) 2228 Derivative assets 2036 (7711) Loans and advances to customers 10778 (3374) Debt investment securities measured at amortised cost 5187 2260 Investment securities measured at FVOCI (17193) (2761) Debt investment securities mandatorily measured at FVTPL 1194 1095 Non-trading equity securities mandatorily measured at FVTPL 95 193 Other assets 182 624 Increase/(decrease) in operating liabilities: Deposits and balances of banks 141 (6288) Deposits from customers (19495) 14588 Certificates of deposit issued (5056) (31595) Trading liabilities (5) - Derivative liabilities (138) (905) Other liabilities (2727) 8642 Exchange adjustments 453 1476 NET CASH (OUTFLOW)/INFLOW FROM OPERATIONS (16168) 1537 Income tax paid Hong Kong profits tax paid (261) (199) Outside Hong Kong profits tax paid (489) (244) NET CASH (USED IN)/GENERATED FROM OPERATING ACTIVITIES (16918) 1094 ? F-229 ?Page 23 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) () For the year ended 31st December 2023 2023 12 31 20232022 Notes HK$ Mn HK$ Mn INVESTING ACTIVITIES Dividends received from associates and joint ventures 71 209 Dividends received from equity securities measured at FVOCI 34 16 Purchase of fixed assets (680) (555) Proceeds from disposal of other properties and equipment 42 174 Proceeds from sale of assets held for sale 22 2290 NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES (511) 2134 FINANCING ACTIVITIES Ordinary dividends paid (1377) (2584) Distribution to Additional Tier 1 issue holders 18(c)42(j) (596) (708) Payment for repurchase of shares (367) (3051) Issue of debt securities - 388 Issue of loan capital 3893 5793 Capital element of lease rentals paid (245) (274) Interest element of lease rentals paid (29) (28) Redemption of debt securities issued (2090) (3061) Redemption of additional equity instruments - (3925) Interest paid on debt securities issued (58) (161) Interest paid on loan capital (873) (374) NET CASH USED IN FINANCING ACTIVITIES (1742) (7985) NET DECREASE IN CASH AND CASH EQUIVALENTS (19171) (4757) CASH AND CASH EQUIVALENTS AT 1ST JANUARY 1 1 47(a) 112149 120646 Effect of foreign exchange rate changes (844) (3740) CASH AND CASH EQUIVALENTS AT 31ST DECEMBER 12 31 47(a) 92134 112149 Cash flows from operating activities included: Interest received 39022 23960 Interest paid 20771 9079 Dividend received 10 34 The notes on pages 24 to 177 form part of these financial statements. 24 177 ? F-230 ?Page 24 NOTES TO THE FINANCIAL STATEMENTS 1. PRINCIPAL ACTIVITIES The Bank and its subsidiaries (the “Group”) are engaged in the provision of banking and related financial services. 2. MATERIAL ACCOUNTING POLICIES (a) Statement of Compliance (a) These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRS”) which collective term includes all applicable individual HKFRS Hong Kong Accounting Standards (“HKAS”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) accounting principles generally accepted in Hong Kong and the requirements of Companies Ordinance. These financial statements also comply with the applicable disclosure provisions of the Listing Rules. A summary of the material accounting policies adopted by the Group is set out below.The HKICPA has issued a number of amendments to HKFRSs that are first effective or available for early adoption for the current accounting period of the Group. Note 3 provides information on any 3 changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these financial statements.(b) Basis of Preparation of the Financial Statements (b) The consolidated financial statements for the year ended 31st 2023 12 31 December 2023 comprise the Group and the Group’s interest in associates and joint ventures.The measurement basis used in the preparation of the financial statements is historical cost except that the following assets and liabilities are stated at their fair value as explained in the accounting policies set out below: - financial instruments classified as trading designated or - mandatorily measured at fair value through profit or loss and measured at fair value through other comprehensive income 2(h)(ii) (Note 2(h)(ii)); - 2(k) 2(l) - derivative financial instruments (Notes 2(k) and 2(l)); and - investment properties (Note 2(o)(ii)). - 2(o)(ii) The preparation of financial statements in conformity with HKFRS requires management to make judgements estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.Details of judgements made by management in the application of 52 HKFRS that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in Note 52.? F-231 ?Page 25 (c) Basis of Consolidation (c) These consolidated financial statements cover the consolidated position of the Bank and all subsidiaries unless otherwise stated and the Group’s interest in associates and joint ventures. For information required to be reported in accordance with the Banking (Disclosures) Rules the basis of consolidation is set out in Note 1 in the Unaudited Supplementary Financial Information. 1 (i) Subsidiaries and non-controlling interests (i) The consolidated financial statements include the financial statements of the Bank and all its subsidiaries made up to 31st 12 31 December each year. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Group has power only substantive rights (held by the Group and other parties) are considered.An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances transactions and cash flows and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements.Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Bank and in respect of which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. For each business combination the Group can elect to measure any non-controlling interests either at fair value or at the non- controlling interests’ proportionate share of the subsidiary’s net identifiable assets.Non-controlling interests are presented in the consolidated statement of financial position within equity separately from equity attributable to equity shareholders of the Bank. Non- controlling interests in the results of the Group are presented on the face of the consolidated income statement and the consolidated statement of comprehensive income as an allocation of the net profit and total comprehensive income for the year between non-controlling interests and equity shareholders of the Bank.Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in relative interests but no adjustments are made to goodwill and no gain or loss is recognised.When the Group loses control of a subsidiary it is accounted for as a disposal of the entire interest in that subsidiary with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial 2(h) asset (Note 2(h)) or when appropriate the cost on initial recognition of an investment in an associate and joint venture 2(c)(ii) (Note 2(c)(ii)) and is offset against the gain or loss on the loss of control of that subsidiary.In the Bank’s statement of financial position its investments in subsidiaries are stated at cost less any impairment losses if 2(r) any (Note 2(r)).? F-232 ?Page 26 (ii) Associates and joint ventures (ii) The consolidated financial statements include the attributable 12 31 share of the results and reserves of associates and joint ventures based on financial statements prepared at dates not earlier than three months prior to 31st December each year.An associate is a company in which the Group or the Bank has significant influence but not control or joint control over its management including participation in the financial and operating policy decisions.A joint venture is an arrangement whereby the Group or the Bank and other parties contractually agree to share control of the arrangement and have rights to the net assets of the arrangement.Investments in associates and joint ventures are accounted for in the consolidated financial statements under the equity 2(ac) method unless they are classified as held for sale (or included in a disposal group that is classified as held for sale) (Note 2(ac)). Under the equity method the investment is initially recorded at cost adjusted for any excess of the Group’s share of the acquisition-date fair values of the associate or joint venture’s identifiable net assets over the cost of the investment (if any). Thereafter the investment is adjusted for the post acquisition change in the Group’s share of the investee’s net 2(q) 2(r) assets and any impairment loss relating to the investment (Note 2(q) and 2(r)). Any excess of fair values of the investees’ net identifiable assets over the cost of investment upon acquisition the Group’s share of the post-acquisition post-tax results of the investees and any impairment losses for the year are recognised in the consolidated income statement whereas the Group’s share of the post-acquisition post-tax items of the investees’ other comprehensive income is recognised in the consolidated statement of comprehensive income. Any dividend income received from associates and joint ventures reduces the carrying values of the investments in associates and joint ventures respectively.When the Group’s share of losses exceeds its interest in an associate or a joint venture the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investee. For these purposes the Group’s interest in the associate or the joint venture is the carrying amount of the investment under the equity method together with the Group’s long-term interests that in substance form part of the Group’s net investment in the associate or the joint venture.Unrealised profits and losses resulting from transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in the investee except when unrealised losses provide evidence of an impairment of the asset transferred in which case they are recognised immediately in profit or loss.When the Group ceases to have significant influence over an associate or joint control over a joint venture it is accounted for as a disposal of the entire interest in that investee with a resulting gain or loss being recognised in profit or loss. Any interest retained in that former investee at the date when significant influence or joint control is lost is recognised at fair value and this amount is regarded as the fair value on initial 2(h) recognition of a financial asset (Note 2(h)).The Bank accounts for the results of associates and joint ventures to the extent of dividends received. Investments in associates and joint ventures are stated in the Bank’s statement of financial position at cost less any impairment 2(r) losses (Note 2(r)).? F-233 ?Page 27 (d) Translation of Foreign Currencies (d) Foreign currencies transactions during the year are translated into Hong Kong dollars at the rates of exchange ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into Hong Kong dollars at the rates of exchange ruling at the end of the reporting period. Exchange gains and losses are recognised in the income statement.Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated into Hong Kong dollars using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair value was determined.Exchange differences relating to investments at fair value through profit or loss (“FVTPL”) and derivative financial instruments are included in gains less losses from trading securities or financial instruments at FVTPL. All other exchange differences relating to monetary items are presented as gains less losses from dealing in foreign currencies in the income statement. Differences arising from translation of equity investments for which an election has been made to present subsequent changes in fair value in other comprehensive income are recognised in other comprehensive income and accumulated separately in equity.The results of foreign operations are translated into Hong Kong dollars at the exchange rates approximating the foreign exchange 2005 1 1 rates ruling at the dates of the transactions. Items in the statement of financial position including goodwill arising on consolidation of foreign operations acquired on or after 1st January 2005 are translated into Hong Kong dollars at the foreign exchange rates ruling at the end of the reporting period. The resulting exchange 2005 1 1 differences are recognised directly in other comprehensive income and accumulated separately in equity in the exchange reserve.Goodwill arising on consolidation of a foreign operation acquired before 1st January 2005 is translated at the foreign exchange rate that applied at the date of acquisition of the foreign operation.On disposal of a foreign operation the cumulative amount of the exchange differences relating to that foreign operation is reclassified from equity to the income statement when the profit or loss on disposal is recognised.(e) Interest (e) Effective interest rate Interest income for financial assets measured at fair value through other comprehensive income (“FVOCI”) or amortised cost and interest expense on financial liabilities measured at amortised cost is recognised in the income statement using the effective interest method.The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset or the amortised cost of the financial liability.When calculating the effective interest rate for financial instruments other than credit-impaired assets the Group estimates future cash flows considering all contractual terms of the financial instrument but not expected credit losses. For financial assets that were purchased or originated as credit-impaired on initial recognition a credit- adjusted effective interest rate is calculated using estimated future cash flows including expected credit losses (i.e. no expected credit loss provision is required at initial recognition).The calculation of the effective interest rate includes transaction costs and fees and points paid or received that are an integral part of the effective interest rate. The transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or financial liability.? F-234 ?Page 28 The Group adopts Interest Rate Benchmark Reform – Phase 2 9 Amendments to HKFRS 9 HKAS 39 HKFRS 7 HKFRS 4 and 39 7 HKFRS 16 (the “Phase 2 amendments”) which allows a practical 4 expedient for changes to the basis for determining contractual cash 16 flows to be treated as changes to a floating rate of interest provided certain conditions are met. The conditions include that the change is necessary as a direct consequence of interest rate benchmark reform and that the transition takes place on an economically equivalent basis.Amortised cost and gross carrying amount The “amortised cost” of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition minus the principal repayments plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and for financial assets adjusted for any expected credit loss allowance.The “gross carrying amount of a financial asset” is the amortised cost of a financial asset before adjusting for any expected credit loss allowance.Calculation of interest income and expense In calculating interest income and expense the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability.However for financial assets that have become credit-impaired subsequent to initial recognition interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired then the calculation of interest income reverts to the gross basis.For financial assets that were purchased or originated as credit- impaired on initial recognition interest income is calculated by applying the credit-adjusted effective interest rate to the amortised cost of the asset. The calculation of interest income does not revert to a gross basis even if the credit risk of the asset improves.For information on when financial assets are credit-impaired please 2(h)(vii) refer to Note 2(h)(vii).(f) Fees and Commission (f) Fees and commission income and expense that are integral to the 2(e) effective interest rate on a financial asset or financial liability are included in the effective interest rate calculation (Note 2(e)). Other fee and commission income is recognised in the income statement when the corresponding service is provided.Origination or commitment fees received/paid by the Group which result in the creation or acquisition of a financial asset are deferred and recognised as an adjustment to the effective interest rate. If it is uncertain that a loan commitment will result in draw-down of a loan then the related loan commitment fee is recognised as revenue on a straight-line basis over the commitment period.Other fee and commission expenses relate mainly to transaction and service fees which are expensed when the services are received.(g) Other Revenue Recognition (g) Other revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that economic benefits will flow to the Group and the revenue and costs if applicable can be measured reliably revenue is recognised in the income statement as follows: (i) Net income from financial instruments at FVTPL and net (i) trading income ? F-235 ?Page 29 Net income from financial instruments designated at FVTPL net income from non-trading financial assets mandatorily measured at FVTPL and net trading income comprises all gains and losses from changes in fair value (net of accrued coupon) of such financial assets and financial liabilities together with foreign exchange differences and dividend income attributable to these financial instruments. Coupon interest from these financial assets and financial liabilities measured at FVTPL is accrued and presented as interest income or interest expense.(ii) Finance income from finance leases (ii) Finance income implicit in finance leases is recognised as interest income over the period of the lease so as to produce an approximately constant periodic rate of return of the outstanding net investment in the leases for each accounting period.(iii) Rental income from operating leases (iii) Rental income received under operating leases is recognised as other operating income in equal instalments over the periods covered by the lease term except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives granted are recognised in the income statement as an integral part of the aggregate net lease payments receivable. Contingent rentals receivable are recognised as income in the accounting period in which they are earned.(iv) Dividend income (iv) Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is established unconditionally. Dividend income from listed investments is recognised when the share price of the investment is quoted ex-dividend.(h) Financial Instruments (h) (i) Initial recognition (i) The Group initially recognises financial assets and financial liabilities on the date it becomes a party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets at FVTPL investment securities classified as measured at amortised cost or at FVOCI derivative transactions or debts issued are recognised using trade date accounting.Other financial assets and financial liabilities are recognised using settlement date accounting.Financial instruments are measured initially at fair value which normally will be equal to the transaction price plus in case of a financial asset or financial liability not measured at FVTPL transaction costs that are directly attributable to the acquisition of the financial asset or issue of the financial liability.Transaction costs on financial assets and financial liabilities measured at FVTPL are expensed immediately.Any gains and losses of the financial assets or financial liabilities measured at fair value are recorded from the date of initial recognition.Accrued contractual interests from financial assets and liabilities are presented as accrued interest receivables and payables separately in the financial statements.(ii) Classification (ii) Financial assets and liabilities Financial assets ? F-236 ?Page 30 On initial recognition a financial asset is classified as measured at: amortised cost FVOCI or FVTPL.A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL: the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated at FVTPL: the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.On initial recognition of an equity investment that is not held for trading the Group may irrevocably elect to present subsequent changes in fair value in other comprehensive income (Note (2(n) 2(n)). This election is made on an investment-by-investment basis.All other financial assets are classified as measured at FVTPL.In addition on initial recognition the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.Business model assessment The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular whether management’s strategy focuses on earning contractual interest revenue maintaining a particular interest rate profile matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets; how the performance of the portfolio is evaluated and reported to the Group’s management; the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; how managers of the business are compensated – e.g.whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and ? F-237 ?Page 31 the frequency volume and timing of sales in prior periods the reasons for such sales and its expectations about future sales activity. However information about sales activity is not considered in isolation but as part of an overall assessment of how the Group’s stated objective for managing the financial assets is achieved and how cash flows are realised.Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets.Assessment whether contractual cash flows are solely payments of principal and interest For the purposes of this assessment “principal” is defined as the fair value of the financial asset on initial recognition.“Interest” is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs) as well as profit margin.In assessing whether the contractual cash flows are solely payments of principal and interest the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment the Group considers: contingent events that would change the amount and timing of cash flows; leverage features; prepayment and extension terms; terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse asset arrangements); and features that modify consideration of the time value of money (e.g. periodic reset of interest rates).Reclassifications Financial assets are not reclassified subsequent to their initial recognition except in the period after the Group changes its business model for managing financial assets. When (and only when) the Group changes its business model for managing financial assets it reclassifies all affected financial assets in accordance with the new business model. The reclassification should be applied prospectively from the “reclassification date”which is defined as “the first day of the first reporting periodfollowing the change in business model that results inreclassifying financial assets”. Accordingly any previously recognised gains losses or interest will not be restated.If a financial asset is reclassified out of the amortised cost measurement category and into the FVTPL or FVOCI measurement category its fair value is measured at the reclassification date. Any gain or loss arising from a difference between the previous amortised cost of the financial asset and fair value is recognised in profit or loss (if reclassification as FVTPL measurement category) or is recognised in other comprehensive income (if reclassification as FVOCI measurement category).? F-238 ?Page 32 If a financial asset is reclassified out of the FVOCI measurement category and into the amortised cost measurement category the financial asset is reclassified at its fair value at the reclassification date. However the cumulative gain or loss previously recognised in other comprehensive income is removed from equity and adjusted against the fair value of the financial asset at the reclassification date. As a result the financial asset is measured at the reclassification date as if it had always been measured at amortised cost.If a financial asset is reclassified out of the FVOCI measurement category and into the FVTPL measurement category the financial asset continues to be measured at fair value. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment at the reclassification date.If a financial asset is reclassified out of the FVTPL measurement category and into the amortised cost measurement category its fair value at the reclassification date becomes its new gross carrying amount.If an entity reclassifies a financial asset out of the FVTPL measurement category and into the FVOCI measurement category the financial asset continues to be measured at fair value and subsequent changes in fair value will be recognised in other comprehensive income.Financial liabilities The Group classifies its financial liabilities other than financial guarantees and loan commitments as measured at amortised cost or FVTPL.The Group may at initial recognition irrevocably designate a financial liability as measured at FVTPL in either of the following circumstances: (i) When doing so results in more relevant information (i) because either: a group of liabilities or a group of financial assets and liabilities is managed and its performance is evaluated and reported internally on a fair value basis; or the designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.(ii) If a liability contract contains one or more embedded (ii) derivatives unless the embedded derivative(s) does not significantly modify the cash flows that would otherwise be required by the contract or if it is obvious that separation of the embedded derivative(s) is prohibited.(iii) Fair value measurement principles (iii) The fair value of financial instruments is based on their quoted market prices where available at the end of the reporting period without any deduction for estimated future selling costs.If there is no publicly available latest traded price nor a quoted market price on a recognised stock exchange or a price from a broker/dealer for non-exchange-traded financial instruments or if the market for it is not active the fair value of the instrument is estimated using valuation techniques that provide a reliable estimate of prices which could be obtained in actual market transactions.? F-239 ?Page 33 Where discounted cash flow techniques are used estimated future cash flows are based on management’s best estimates and the discount rate used is a market rate at the end of the reporting period applicable for an instrument with similar terms and conditions. Where other pricing models are used inputs are based on market data at the end of the reporting period.(iv) Derecognition (iv) The Group derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire or where the financial asset together with substantially all the risks and rewards of ownership has been transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.On derecognition of a financial asset the difference between the carrying amount of the asset (or the carrying amount allocated (i) to the portion of the asset derecognised) and the sum of (i) the (ii) consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in the income statement. Any cumulative gain/loss recognised in other comprehensive income in respect of equity investment securities designated at FVOCI is not recognised in 2(n) the income statement on derecognition of such securities as explained in (Note 2(n)).A financial liability is derecognised when the obligation specified in the contract is discharged cancelled or expires.The Group uses the weighted average or first-in first-out method where appropriate to determine realised gains and losses to be recognised in the income statement on derecognition.(v) Modifications of financial assets and financial liabilities (v) If the terms of a financial asset are modified the Group evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different then the contractual rights to cash flows from the original financial asset are deemed to have expired. In this case the original financial asset is derecognised (Note 2(h)(iv)) and a 2(h)(iv) new financial asset is recognised at fair value.If the cash flows of the modified asset carried at amortised cost are not substantially different then the modification does not result in derecognition of the financial asset. In this case the Group recalculates the gross carrying amount of the financial asset and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the income statement. If such a modification is carried out because of financial difficulties of the borrower (Note 2(h)(vii)) then the 2(h)(vii) gain or loss is presented together with impairment losses. In other cases it is presented as interest income.The Group derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different. In this case a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in the income statement.In the context of interest rate benchmark reform the Group’s assessment of whether a change to an amortised cost financial instrument is substantial is made after applying the practical expedient introduced by the Phase 2 amendments. This requires the transition from an interbank offered rate to a new alternative benchmark rate to be treated as a change to a 2(e) floating interest rate as described in (Note 2(e)) above.? F-240 ?Page 34 The Group updates the effective interest rate of the financial asset or financial liability to reflect the change that is required by the interest rate benchmark reform if the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortised cost changes as a result of the reform.A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met: the change is necessary as a direct consequence of the reform; and the new basis for determining the contractual cash flows is economically equivalent to the previous basis i.e. the basis immediately before the change.If changes are made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform then the Group first updates the effective interest rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. Subsequently the Group applies the policies on accounting for modifications set out above to the additional changes.(vi) Offsetting (vi) Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position only where there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.(vii) Impairment (vii) The Group recognises loss allowances for expected credit losses (“ECL”) on the following financial instruments that are not measured at FVTPL: financial assets that are debt instruments; lease receivables; financial guarantee contracts issued; loan commitments issued; and contract assets No impairment loss is recognised on equity investments.The Group measures loss allowances for 12-month or lifetime 3 12 ECL using a 3-stage approach as follows:- Stage Description Impairment Loss Allowance Measurement 1 Performing 12-month ECL 12 2 Performing but with a significant increase in Lifetime ECL credit risk at reporting date compared to initial recognition 3 Non-performing Lifetime ECL 12-month ECL is the portion of ECL that result from default 12 events on a financial instrument that are possible within the 12 12 months after the reporting date.? F-241 ?Page 35 The mapping between the Group’s Stage Allocation and the 5 HKMA’s 5-Grade Asset Classification is as follows:- HKMA’s 5-Grade Asset Classification Stage Allocation 5 Pass General 1(i.e. do not meet the Bank’s criteria of “Significant Increaseof Credit Risk”)Meet the Bank’s criteria of “Significant Increase of Credit 2Risk” Special Mention 2 Substandard Doubtful 3 Loss The criterion of “significant increase of credit risk” takes into consideration of any one of the following key factors:- 1. The exposure has a significant deterioration of internal or 1. external rating as compared with the rating at the time when the exposure was originated; 2. The exposure is classified as Special Mention; 2. 3. The rating of the exposure falls out of the “Low-Credit Risk 3.Threshold” that is equivalent to the globally understood definition of “investment grade”; or 4. Other events and indications that the credit risk of the 4. exposure has significantly increased since origination or purchase.Measurement of ECL ECL are a probability-weighted estimate of credit losses under different economic scenarios. They are measured as: Exposure at Default x Probability of Default x Loss x x Given Default Credit-impaired (non-performing) financial assets At each reporting date the Group assesses whether financial assets carried at amortised cost and debt financial assets carriedat FVOCI are credit-impaired. A financial asset is “credit-impaired” when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.Evidence that a financial asset is credit-impaired includes but not limited to the following observable data: significant financial difficulty of the borrower or issuer; a breach of contract such as a default or past due event; the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise; ? F-242 ?Page 36 it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or the disappearance of an active market for a security because of financial difficulties.A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced significantly and there are no other 90 indicators of impairment. In addition a loan that is overdue for 90 days or more is considered impaired. Presentation of allowance for ECL in the statement of financial position Loss allowances for ECL are presented in the statement of financial position as follows: financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets; loan commitments and financial guarantee contracts: generally as a provision on the liabilities side; and debt instruments measured at FVOCI: no loss allowance is presented in the statement of financial position because the carrying amount of these assets is their fair value inclusive of any ECL. However the loss allowance is disclosed separately.Write-off Loans and debt securities are written off (either partially or in full) when there is no realistic prospect of recovery. This is generally the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.However financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.(i) Trading Assets and Liabilities (i) Trading assets and liabilities are those assets and liabilities which are acquired or incurred principally for the purpose of selling or repurchasing them in the near term or are part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Trading assets and liabilities are initially recognised and subsequently measured at FVTPL.(j) Contract Assets and Liabilities (j) When revenue is recognised by transferring goods or services to a customer before the consideration is received or before payment is due the Group presents the amount of revenue as a contract asset excluding any amounts presented as a receivable. A contract asset is recognised in statement of financial position when there is a right to consideration that is conditional on factors other than the passage of time. The contract asset is transferred to receivables when the right to consideration becomes unconditional. Impairment of a 2(h)(vii) contract asset is measured on the same basis as a financial asset as (Note 2(h)(vii)) above. The Group includes the contract assets in “Others” under “Other assets” in the statement of financial position.A contract liability is recognised when a customer pays non- refundable consideration or when the Group has a right to an amount of non-refundable consideration that is unconditional before the Group transfers a good or service to the customer. The Group includes the contract liabilities in “Others” under “Otherliabilities” in the statement of financial position.? F-243 ?Page 37 As a practical expedient the Group does not adjust the promised amount of consideration for the effects of a significant financing component if the Group expects at contract inception that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. The Group may recognise the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the Group otherwise would have recognised is one year or less.(k) Hedging (k) Hedge accounting recognises the offsetting effects on the income statement of changes in the fair values of the hedging instrument and the hedged item. The Group assesses and documents whether the financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items attributable to the hedged risks both at hedge inception and on an ongoing basis. The Group discontinues (i) (ii) prospectively hedge accounting when (i) the hedging instrument (iii) expires or is sold terminated or exercised; (ii) the hedge no longer meets the criteria for hedge accounting; or (iii) the Group revokes the designation.(i) Cash flow hedges (i) Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk of a committed future transaction the effective part of any gain or loss on remeasurement of the derivative financial instrument to fair value is recognised in other comprehensive income and accumulated separately in equity in the hedging reserve. The ineffective portion of any gain or loss is recognised immediately in the income statement.If the hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability the associated gain or loss is reclassified from equity to be included in the initial cost or other carrying amount of the non- financial asset or liability. If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability the associated gain or loss is reclassified from equity to the income statement in the same period or periods during which the asset acquired or liability assumed affects the income statement (such as when interest income or expense is recognised).For cash flow hedges other than those covered by the preceding two policy statements the associated gain or loss is reclassified from equity to the income statement in the same period or periods during which the hedged forecast transaction affects the income statement. When a hedging instrument expires or is sold terminated or exercised or the Group revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur the cumulative gain or loss at that point remains in equity until the transaction occurs and is recognised in accordance with the above policy.If the hedged transaction is no longer expected to take place the cumulative unrealised gain or loss is reclassified from equity to the income statement immediately.(ii) Fair value hedges (ii) A fair value hedge seeks to offset risks of changes in the fair value of recognised asset or liability that will give rise to a gain or loss being recognised in the income statement.The hedging instrument is measured at fair value with fair value changes recognised in the income statement. The carrying amount of the hedged item is adjusted by the amount of the changes in fair value of hedging instrument attributable to the risk being hedged. This adjustment is recognised in the income statement to offset the effect of the gain or loss on the hedging instrument.? F-244 ?Page 38 When a hedging instrument expires or is sold terminated or exercised the hedge no longer meets the criteria for hedge accounting or the Group revokes designation of the hedge relationship any adjustment up to that point to a hedged item for which the effective interest method is used is amortised to the income statement as part of the recalculated effective interest rate of the item over its remaining life.(iii) Hedge effectiveness testing (iii) In order to qualify for hedge accounting the Group carries out prospective effectiveness testing to demonstrate that it expects the hedge to be highly effective at the inception of the hedge and throughout its life. Actual effectiveness (retrospective effectiveness) is also demonstrated on an ongoing basis.The documentation of each hedging relationship sets out how the effectiveness of the hedge is assessed. The method which the Group adopts for assessing hedge effectiveness will depend on its risk management strategy.For fair value hedge relationships the Group utilises the cumulative dollar offset method or regression analysis as effectiveness testing methodologies. For cash flow hedge relationship the Group utilises the change in variable cash flow method or the cumulative dollar offset method using the hypothetical derivative approach.For prospective effectiveness the hedging instrument must be expected to be highly effective in achieving offsetting changes in fair value or cash flows attributable to the hedged risk during the period for which the hedge is designated. For actual 80% effectiveness the changes in fair value or cash flows must offset each other in the range of 80 per cent to 125 per cent for 125% the hedge to be deemed effective.(iv) Specific policies for hedges affected by interest rate benchmark (iv) reform The Group applies Interest Rate Benchmark Reform: 9Amendments to HKFRS 9 HKAS 39 and HKFRS 7 (the “Phase 39 1 amendments”) reliefs to hedging relationships directly 7 affected by interest rate benchmark reform during the period before the replacement of an existing interest rate benchmark with a new alternative benchmark rate.The reliefs cease to apply once certain conditions are met.These include when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and amount of the benchmark-based cash flows of the hedged item when the hedging relationship is discontinued or once amounts in the cash flow hedge reserve have been released.The Group also applies the Phase 2 amendments which provides temporary reliefs that allow the Group’s hedging relationships to continue upon the replacement of an existing interest rate benchmark with a new alternative benchmark rate.(i) The Phase 1 amendments (i) The Phase 1 amendments modify specific hedge accounting requirements to provide relief from potential effects of the uncertainties caused by interest rate benchmark reform so that entities applying those hedge accounting requirements assume that the interest rate benchmark on which the hedged cash flows and cash flows of the hedging instrument are based is not altered as a result of interest rate benchmark reform. These amendments replace the need for specific judgements to determine whether certain hedge accounting relationships that hedge the variability of cash flows or interest rate risk exposures for periods after the interest rate benchmarks are expected to be reformed or replaced continue to qualify for hedge accounting.? F-245 ?Page 39 (ii) The Phase 2 amendments (ii) The Phase 2 amendments provide a series of temporary exemptions from certain hedge accounting requirements when a change required by interest rate benchmark reform occurs to a hedged item and/or hedging instrument that permit the hedging relationship to be continued without interruption. The Group applies the following relief as and when uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark- based cash flows of the hedged item or hedging instrument: the Group amends the designation of a hedging relationship to reflect changes that are required by the reform without discontinuing the hedging relationship; and when a hedged item in a cash flow hedge is amended to reflect the changes that are required by the reform the amount accumulated in the cash flow hedge reserve is deemed to be based on the alternative benchmark rate on which the hedged future cash flows are determined.While uncertainty persists in the timing or amount of the interest rate benchmark-based cash flows of the hedged item or hedging instrument the Group continues to apply the existing accounting policies.(l) Derivatives (l) Derivatives are recognised initially and are subsequently remeasured at fair value. Derivatives are classified as assets when their fair value is positive or as liabilities when their fair value is negative this includes embedded derivatives which are bifurcated from the host contract when they meet the definition of a derivative on a standalone basis.Derivatives may be embedded in another contractual arrangement (a host contract). The Group accounts for an embedded derivative separately from the host contract when: the host contract is not an asset in the scope of HKFRS 9; 9 the host contract is not itself carried at FVTPL; the terms of the embedded derivative would meet the definition of a derivative if they were contained in a separate contract; and the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract.Separated embedded derivatives are measured at fair value with all changes in fair value recognised in profit or loss unless they form part of a qualifying cash flow or net investment hedging relationship.(m) Loans and Advances (m) Loans and advances mainly comprise placements with and advances to banks trade bills and loans and advances to customers: loans and advances measured at amortised cost (Note 2(h)(ii)); 2(h)(ii) they are initially measured at fair value plus incremental direct transaction costs and subsequently at their amortised cost using the effective interest method; ? F-246 ?Page 40 loans and advances mandatorily measured at FVTPL or designated at FVTPL (Note 2(h)(ii)); these are measured at fair value with changes recognised immediately in the income 2(h)(ii) statement; ; loans and advances measured at FVOCI (Note 2(h)(ii)); and 2(h)(ii) finance lease receivables (Note 2(s)). 2(s) When the Group purchases a financial asset and simultaneously enters into an agreement to resell the asset (or a substantially similar asset) at a fixed price on a future date (reverse repo or stock borrowing) the arrangement is accounted for as a loan and the underlying asset is not recognised in the Group’s financial statements.(n) Investment Securities (n) The “investment securities” caption in the statement of financial position includes: debt investment securities measured at amortised cost (Note 2(h)(ii)); these are initially measured at fair value plus 2(h)(ii) incremental direct transaction costs and subsequently at their amortised cost using the effective interest method; debt and equity investment securities mandatorily measured at FVTPL or designated at FVTPL (Note 2(h)(ii)); these are measured at fair value with changes recognised immediately in 2(h)(ii) the income statement; debt securities measured at FVOCI (Note 2(h)(ii)); and 2(h)(ii) equity investment securities designated at FVOCI (Note 2(h)(ii)). 2(h)(ii) For debt securities measured at FVOCI gains and losses are recognised in other comprehensive income except for the following which are recognised in the income statement in the same manner as for financial assets measured at amortised cost: interest revenue using the effective interest method; ECL and reversals; and foreign exchange gains and losses.When a debt security measured at FVOCI is derecognised the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the income statement.The Group elects to present changes in the fair value of certain investments in equity instruments that are not held for trading in other comprehensive income. The election is made on an instrument-by-instrument basis on initial recognition and is irrevocable.Gains and losses on such equity instruments are never reclassified to the income statement and no impairment is recognised in the income statement. Dividends are recognised in the income statement unless they clearly represent a recovery of part of the cost of the investment in which case they are recognised in other comprehensive income. Cumulative gains and losses recognised in other comprehensive income are transferred to retained earnings on disposal of an investment.? F-247 ?Page 41 (o) Properties (o) (i) Bank premises are stated in the statement of financial position (i) 1989 at cost or at Directors’ valuation as of 1989 by reference to an independent professional valuation less accumulated 2(r) depreciation and accumulated impairment loss (Note 2(r)).In 1989 any deficit arising from revaluation was charged to the 1989 income statement to the extent that it exceeded the amount held in the bank premises revaluation reserve in respect of that same asset immediately prior to the revaluation. Any surplus arising from revaluation was credited to the income statement to the extent that a deficit on revaluation in respect of that same asset had previously been charged to the income statement.In preparing these financial statements advantage of the transitional provisions set out in paragraph 80AA of HKAS 16 16 “Property Plant and Equipment” issued by the HKICPA has 80AA been taken with the effect that bank premises have not been revalued to fair value at the end of the reporting period.(ii) Investment properties are properties which are held either to (ii) earn rental income for capital appreciation or for both.Investment properties are stated at fair value. Investment properties are valued semi-annually by external independent valuation companies having an appropriate recognised professional qualification and recent experience in the location and category of property being valued. No allowance has been made in the valuations for any charges mortgages or amounts owing on the properties nor any expenses or taxation which may be incurred in effecting a sale.Any gain or loss arising from a change in fair value is recognised in the income statement. Rental income from 2(g)(iii) investment property is accounted for as described in Note 2(g)(iii). When a bank property is transferred to investment property 2(o)(i) following a change in its use any differences arising at the date of transfer between the carrying amount of the bank property immediately prior to transfer and its fair value is recognised as a revaluation of bank premises as described in Note 2(o)(i).If an investment property becomes owner-occupied it is reclassified as bank premises and its fair value at the date of reclassification becomes its cost for subsequent accounting purposes.A property interest under a lease is classified and accounted for as an investment property when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under a lease classified as an investment property is 2(s) carried at fair value. Lease payments are accounted for as described in Note 2(s).(iii) Profit or loss on disposal of bank premises and investment (iii) properties is determined as the difference between the net sales proceeds and the carrying amount of the asset and is recognised in the income statement upon disposal. Any surplus that is included in the bank premises revaluation reserve related to the bank premises disposed is transferred to the general reserve.? F-248 ?Page 42 (p) Amortisation and Depreciation (p) (i) Bank premises (i) Freehold land is not amortised. Leasehold land held for own use under an operating lease the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease is accounted for as being held under a finance lease. Leasehold land is amortised on a straight line basis over the remaining term of the lease.Buildings are depreciated on a straight line basis at rates 50 calculated to write off the cost or valuation of each building over its estimated useful life of 50 years or the remaining lease period of the land on which it is situated whichever is the shorter.Investment properties are not depreciated.(ii) Other fixed assets (ii) Other fixed assets are stated in the statement of financial position at cost less accumulated depreciation and impairment losses which is calculated on a straight line basis to write off 4 20 the assets over their estimated useful lives from 4 to 20 years.(q) Goodwill (q) Goodwill represents the excess of: (i) the aggregate of the fair value of the consideration transferred (i) the amount of any non-controlling interests in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree; over (ii) the Group’s interest in the net fair value of the acquiree’s (ii) identifiable assets and liabilities measured as at the acquisition date.When (ii) is greater than (i) then this excess is recognised (ii) (i) immediately in profit or loss as a gain on a bargain purchase.Goodwill is stated at cost less any accumulated impairment losses.Goodwill arising on a business combination is allocated to each cash-generating unit or groups of cash-generating units that is expected to benefit from the synergies of the combination and is tested annually for impairment (Note 2(r)). 2(r) On disposal of a cash-generating unit any attributable amount of purchased goodwill is included in the calculation of the profit and loss on disposal.Expenditure on internally generated goodwill and brands is recognised as an expense in the period in which it is incurred.(r) Impairment of Non-Financial Assets (r) Internal and external sources of information are reviewed at each end of the reporting period to identify indications that any non- financial assets may be impaired or except in the case of goodwill an impairment loss previously recognised no longer exists or may have decreased.If any such indication exists the asset’s recoverable amount is estimated. In addition for goodwill the recoverable amount is estimated annually whether or not there is any indication of impairment.? F-249 ?Page 43 Calculation of recoverable amount The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. In assessing value in use the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).Recognition of impairment losses An impairment loss is recognised in the income statement whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash- generating unit (or group of units) and then to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis except that the carrying value of an asset will not be reduced below its individual fair value less costs to sell if measurable or value in use if determinable.Reversals of impairment losses In respect of assets other than goodwill an impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed.A reversal of impairment losses is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior years.Reversals of impairment losses are credited to the income statement in the year in which the reversals are recognised.(s) Leases (s) At inception of a contract the Group assesses whether a contract is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset the Group assesses whether: - the contract involves the use of an identified asset; - - the Group has the right to obtain substantially all of the - economic benefits from use of the asset throughout the period of use; and - the Group has the right to direct the use of the asset. The - Group has this right when it has the decision-making rights that are most relevant to directing how and for what purpose the asset is used. In cases where the decision about how and for what purpose the asset is used is predetermined the Group has the right to direct the use of the asset if either: - the Group has the right to operate the asset; or - - the Group designed the asset in a way that predetermines - how and for what purpose it will be used.At inception or on reassessment of a contract that contains a lease component the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.? F-250 ?Page 44 (i) As a lessee (i) The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. Where applicable the cost of right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located less any lease incentives received.The right-of-use asset is subsequently measured at cost less any accumulated depreciation and impairment losses (Note 2(r) 2(r)) and adjusted for certain remeasurements of the lease liability. When a right-of-use asset meets the definition of 2(o)(ii) investment property it is initially measured at cost and subsequently at fair value in accordance with the accounting policy set out in Note 2(o)(ii).The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted using the interest rate implicit in the lease or if that rate cannot be readily determined the Group’s incremental borrowing rate. Generally the Group uses its incremental borrowing rate as the discount rate.The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made.Lease payments included in the measurement of the lease liability comprises the following: - fixed payments including in-substance fixed payments; - - variable lease payments that depend on an index or a - rate initially measured using the index or rate as at the commencement date; - amounts expected to be payable under a residual value - guarantee; and - the exercise price under a purchase option that the Group - is reasonably certain to exercise lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee or as appropriate changes in the Group’s assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.When the lease liability is remeasured in this way a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.? F-251 ?Page 45 The lease liability is also remeasured when there is a change in the scope of a lease or the consideration for a lease that isnot originally provided for in the lease contract (“leasemodification”) and is not accounted for as a separate lease. In this case the lease liability is remeasured based on the revised lease payments and lease term using a revised discount rate 2019 at the effective date of the modification. The only exception is any rent concession which arose as a direct consequence of 16 46B the COVID-19 pandemic and satisfied the conditions set out in paragraph 46B of HKFRS 16 Leases. In such case the Group 16 46A took advantage of the practical expedient set out in paragraph 46A of HKFRS 16 and recognised the change in consideration as if it were not a lease modification. The rent concessions are recognised as a credit to variable lease expenses in profit or loss.In the situation that if a lease modification is required by interest rate benchmark reform the Phase 2 amendments allow the Group to use a revised discount rate that reflects the change in interest rate when remeasuring a lease liability.The Group has applied judgement to determine the lease term for some lease contracts that include renewal options in which it is a lessee. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease terms which significantly affects the amount of lease liabilities and right-of-use assets recognised.The Group presents right-of-use assets that do not meet the definition of investment property in “Fixed assets” (Note 32) and 32 lease liabilities in “Other liabilities” (Note 37) in the statement of financial position. 37 Short-term leases and leases of low-value assets The Group has elected not to recognise right-of-use assets and 12 lease liabilities for short-term leases that have a lease term of 4 12 months or less (“short-term leases”) and leases of underlying assets with an approximate value of HK$0.04 million or less (“low-value assets”). The Group recognises the lease payments associated with these leases as an expense on a 13 straight-line basis over the lease term (Note 13).(ii) As a lessor (ii) When the Group acts as a lessor it determines at lease inception whether each lease is a finance lease or an operating lease.To classify each lease the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case then the lease is a finance lease; if not then it is an operating lease. As part of this assessment the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.If an arrangement contains lease and non-lease components the Group applied HKFRS 15 to allocate the consideration in 15 the contract.The amounts due from lessees in respect of finance leases are recorded in the statement of financial position as advances to customers at the amounts of net investment which represent the total rentals receivable under finance leases less unearned 2(g)(ii) 2(e) income. Revenue arising from finance leases is recognised in accordance with the Group’s revenue recognition policies as set out in Notes 2(g)(ii) and 2(e).? F-252 ?Page 46 The Group recognises lease payments received under operating leases as income on a straight-line basis over the 2(g)(iii) lease period as part of “other operating income” as set out in Note 2(g)(iii).(t) Repossession of Assets (t) In the recovery of impaired loans and advances the Group may take possession of the collateral assets through court proceedings or voluntary delivery of possession by the borrowers. In accordance 2(h)(vii) with the Group’s accounting policy set out in Note 2(h)(vii) impairment allowances for impaired loans and advances are maintained after taking into account the net realisable value of the collateral assets usually resulting in a partial write-off of the loans and advances against impairment allowances. Repossessed assets are reported as assets held for sale under other assets if the risks and rewards of ownership of the relevant repossessed assets have been substantially transferred to the Group and it is highly probable that the future economic benefits will flow to the Group their carrying amount will be recovered through a sale transaction rather than through continuing use and the assets are available for sale in their present condition. Related loans and advances are then written off.Repossessed assets are recorded at the lower of the amount of the related loans and advances and fair value less costs to sell at the date of exchange. They are not depreciated or amortised.Impairment losses subsequent to initial classification are recognised in the income statement.(u) Income Tax (u) (i) Income tax for the year comprises current tax and movements (i) in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in the income statement except to the extent that they relate to items recognised in other comprehensive income or directly in equity in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity respectively.(ii) Current tax is the expected tax payable on the taxable income (ii) for the year using tax rates enacted or substantively enacted at the end of the reporting period and any adjustment to tax payable in respect of previous years.(iii) Deferred tax assets and liabilities arise from deductible and (iii) taxable temporary differences respectively being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.Deferred tax assets also arise from unused tax losses and unused tax credits.Apart from certain limited exceptions all deferred tax liabilities and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences provided those differences relate to the same taxation authority and the same taxable entity and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing deductible temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits that is those differences are taken into account if they relate to the same taxation authority and the same taxable entity and are expected to reverse in a period or periods in which the tax loss or credit can be utilised.? F-253 ?Page 47 The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination) and temporary differences relating to investments in subsidiaries to the extent that in the case of taxable differences the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future or in the case of deductible differences unless it is probable that they will reverse in the future.Where investment properties are carried at their fair value in 2(o)(ii) accordance with the accounting policy set out in Note 2(o)(ii) the amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying value at the reporting date unless the property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the property over time rather than through sale. In all other cases the amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available.Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the related dividends is recognised.(iv) Current tax balances and deferred tax balances and (iv) movements therein are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities and deferred tax assets against deferred tax liabilities if the Bank or the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met: - in the case of current tax assets and liabilities the Bank or - the Group intends either to settle on a net basis or to realise the asset and settle the liability simultaneously; or - in the case of deferred tax assets and liabilities if they - relate to income taxes levied by the same taxation authority on either: - the same taxable entity; or - - different taxable entities which in each future period - in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered intend to realise the current tax assets and settle the current tax liabilities on a net basis or realise and settle simultaneously.(v) Provisions and Contingent Liabilities (v) Provisions are recognised for liabilities of uncertain timing or amount when the Group or the Bank has a legal or constructive obligation arising as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material provisions are stated at the present value of the expenditures expected to settle the obligation.? F-254 ?Page 48 Where it is not probable that an outflow of economic benefits will be required or the amount cannot be estimated reliably the obligation is disclosed as a contingent liability unless the probability of outflow of economic benefits is remote. Possible obligations whose existence will only be confirmed by the occurrence or non- occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.(w) Financial Guarantees and Loan Commitments (w) “Financial guarantees” are contracts that require the Group to make specified payments to reimburse the holder for a loss that it incurs because a specified debtor fails to make payment when it is due inaccordance with the terms of a debt instrument. “Loancommitments” are firm commitments to provide credit under pre- specified terms and conditions.Financial guarantees issued or commitments to provide a loan at a below-market interest rate are initially measured at fair value and the initial fair value is amortised over the life of the guarantee or the commitment. Subsequently they are measured at the higher of this 2(h)(vii) amortised amount and the amount of loss allowance (Note 2(h)(vii)).For other loan commitments the Group recognises impairment loss allowances (Note 2(h)(vii)). 2(h)(vii) Liabilities arising from financial guarantees and loan commitments are included within other liabilities.(x) Employee Benefits (x) (i) Salaries bonuses and leave benefits (i) Employee entitlements to salaries annual bonuses paid annual leave leave passage and the cost to the Group of non- monetary benefits are recognised when they accrue to employees. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.Employee entitlements to sick leave and maternity leave are recognised when the absences occur.(ii) Performance-related bonus plan (ii) Liabilities for performance-related bonus plan which are due wholly within twelve months after the end of the reporting 12 period are recognised when the Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.(iii) Retirement benefits (iii) Retirement benefits are provided to eligible staff of the Group.Hong Kong employees enjoy retirement benefits under either the Mandatory Provident Fund Exempted ORSO Scheme (“MPFEOS”) or the Mandatory Provident Fund Scheme (“MPFS”). Both are defined contribution schemes. The employer’s monthly contributions to both schemes are at a 10% maximum of 10% of each employee’s monthly salary.The pension schemes covering all the Group’s PRC overseas Macau and Taiwan employees are defined contribution schemes at various funding rates and are in accordance with local practices and regulations.? F-255 ?Page 49 The cost of all these schemes is charged to the income statement for the period concerned and the assets of all these schemes are held separately from those of the Group. Under the MPFEOS the employer’s contribution is not reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions. Under the MPFS the employer’s contribution is reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions.(iv) Share based payments (iv) The Bank adopted equity-settled share based payment arrangement under Staff Share Option Schemes to grant the options to eligible employees of the Group.The fair value of share options granted to employees is recognised as an expense in the income statement with a corresponding increase in a capital reserve within equity. The fair value is measured at the grant date using the trinomial model taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to those share options the total estimated fair value of the share options is spread over the vesting period taking into account the probability that the options will vest.During the vesting period the number of share options that is expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognised in prior years is charged or credited to the income statement for the year of the review unless the original expenses qualify for recognition as an asset with a corresponding adjustment to the capital reserve. On vesting date the amount recognised as an expense is adjusted to reflect the actual number of share options that vest (with a corresponding adjustment to capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Bank’s shares.The equity amount is recognised in capital reserve until either the option is exercised and new shares allotted (when it is transferred to share capital) or the option expires (when it is released directly to retained profits). For Grantees who do not meet the applicable vesting conditions the unvested options are forfeited either in whole or in part. Forfeited share options are cancelled. When the options are exercised equity is increased by the amount of the proceeds received.(y) Related Parties (y) For the purposes of these financial statements a party is considered to be related to the Group if: (i) A person or a close member of that person’s family is related (i) to the Group if that person: (a) has control or joint control over the Group; (a) (b) has significant influence over the Group; or (b) (c) is a member of the key management personnel of the (c) Group or the Group’s parent.(ii) An entity is related to the Group if any of the following conditions (ii) applies: (a) The entity and the Group are members of the same group (a) (which means that each parent subsidiary and fellow subsidiary is related to the others).(b) One entity is an associate or joint venture of the other (b) entity (or an associate or joint venture of a member of a group of which the other entity is a member).(c) Both entities are joint ventures of the same third party. (c) ? F-256 ?Page 50 (d) One entity is a joint venture of a third entity and the other (d) entity is an associate of the third entity.(e) The entity is a post-employment benefit plan for the (e) benefit of employees of either the Group or an entity related to the Group.(f) The entity is controlled or jointly controlled by a person (f) (i) identified in (i).(g) A person identified in (i)(a) has significant influence over (g) (i)(a) the entity or is a member of the key management personnel of the entity (or of a parent of the entity).(h) The entity or any member of a group of which it is a part (h) provides key management personnel services to the Group or to the Group’s parent.Close members of the family of a person are those family members who may be expected to influence or be influenced by that person in their dealings with the entity.(z) Segment Reporting (z) Operating segments and the amounts of each segment item reported in the financial statements are identified from the financial information provided regularly to the Group’s most senior executive management for the purposes of allocating resources to and assessing the performance of the Group’s various lines of business and geographical locations.Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services the nature of production processes the type or class of customers the methods used to distribute the products or provide the services and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria.(aa) Cash and Cash Equivalents (aa) For the purposes of the cash flow statement cash and cash equivalents comprise balances with less than three months’ maturity 3 from the date of acquisition including cash and balances with banks treasury bills other eligible bills and certificates of deposit that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.(ab) Deposits Debt Securities Issued and Capital Instruments (ab) Deposits debt securities issued and capital instruments are the Group’s sources of funding.The Group classifies capital instruments as financial liabilities or equity instruments in accordance with the substance of the contractual terms of the instruments.The substance of a financial instrument rather than its legal form governs its classification. A financial instrument is classified as a liability where there is a contractual obligation to deliver either cash or another financial asset to the holder of that instrument regardless of the manner in which the contractual obligation will be settled.Subsequent to initial recognition deposits debt securities issued and capital instruments classified as financial liabilities are measured at their amortised cost using the effective interest method except where the Group designates liabilities at FVTPL.For those capital instruments classified as equity instruments they are not redeemable by holders and bear an entitlement to coupons at the Bank’s sole discretion. Accordingly they are presented within equity. Distribution thereon are recognised in equity.? F-257 ?Page 51 (ac) Assets Held for Sale (ac) Non-current assets and disposal groups (including both the assets (a) (b) and liabilities of the disposal groups) are classified as held for sale (c) and measured at the lower of their carrying amount and fair value less cost to sell when: (a) their carrying amounts will be recovered principally through sale; (b) they are available for sale in their present condition; and (c) their sale is highly probable.Immediately before the initial classification as held for sale the carrying amounts of the asset (or assets and liabilities in the disposal group) are measured in accordance with applicable HKFRSs. On subsequent remeasurement of a disposal group the carrying amounts of the assets and liabilities that are not within the scope ofthe measurement requirements of HKFRS 5 “Non-current Assets 5Held for Sale and Discontinued Operations” are measured in accordance with applicable HKFRSs before the fair value less costs to sell of the disposal group is determined.Income earned and expenses incurred on assets and liabilities of disposal groups held for sale continue to be recognised in the appropriate line items in the income statement until the transaction is complete.(ad) Interim Financial Reporting and Impairment (ad) Under the Listing Rules the Group is required to prepare an interimfinancial report in compliance with HKAS 34 “Interim Financial 34 6Reporting” in respect of the first six months of the year. At the end of the interim period the Group applies the same impairment testing 2(h)(vii) recognition and reversal criteria as it would at the end of the year (Note 2(h)(vii) and Note 2(r)). 2(r) Impairment losses recognised in an interim period in respect of goodwill are not reversed in a subsequent period. This is the case even if no loss or a smaller loss would have been recognised had the impairment been assessed only at the end of the financial year to which the interim period relates.? F-258 ?Page 52 3. CHANGES IN ACCOUNTING POLICIES The HKICPA has issued a number of new and amendments to HKFRSs that are first effective for the current accounting period of the Group.None of these developments have had a material effect on the Group’s results and financial position for the current or prior periods have been prepared or presented. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.New HKICPA guidance on the accounting implications of the abolition of the MPF-LSP offsetting mechanism In June 2022 the Hong Kong SAR Government (the “Government”) 2022 6 gazetted the Hong Kong Employment and Retirement Schemes 2022 Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022 (the “Amendment Ordinance”) which will come into effect from 1st May 2025 2025 5 1 (the “Transition Date”). Once the Amendment Ordinance takes effect an employer can no longer use any of the accrued benefits derived from its mandatory contributions to mandatory provident fund (“MPF”) scheme to reduce the long service payment (“LSP”) in respect of an employee’s service from the Transition Date (the abolition of the “offsetting mechanism”). In addition the LSP in respect of the service before the Transition Date will be calculated based on the employee’s monthly salary immediately before the Transition Date and the years of service up to that date.In July 2023 the HKICPA published “Accounting implications of the 2023 7abolition of the MPF-LSP offsetting mechanism in Hong Kong” that provides accounting guidance relating to the offsetting mechanism and the abolition of the mechanism. In particular the guidance indicates that entities may account for the accrued benefits derived from mandatory MPF contributions that are expected to be used to reduce the LSP payable to an employee as deemed contributions by that employee towards the LSP.Applying this approach upon the enactment of the Amendment 2022 6 Ordinance in June 2022 it is no longer permissible to apply the practical 19 93(b) expedient in paragraph 93(b) of HKAS 19 that previously allowed such deemed contributions to be recognised as reduction of service cost (negative service cost) in the period the contributions were made.Instead these deemed contributions should be attributed to periods of service in the same manner as the gross LSP benefit. The Amendment Ordinance has no material impact on the Group’s LSP liability and staff cost.? F-259 ?Page 53 4. BANK-LEVEL STATEMENT OF FINANCIAL POSITION Note 20232022 HK$ Mn HK$ Mn ASSETS Cash and balances with banks 22336 25498 Placements with and advances to banks 36752 48296 Trade bills 224 41 Trading assets 285 355 Derivative assets 7644 9733 Loans and advances to customers 387217 397533 Investment securities 144710 125620 Amounts due from subsidiaries 14705 14145 Investments in subsidiaries 19461 19469 Investments in associates and joint ventures 4483 4466 Fixed assets 9501 9493 - Investment properties - 4718 4774 - Other properties and equipment - 4338 4293 - Right-of-use assets - 445 426 Goodwill and intangible assets 1460 1460 Deferred tax assets 72 197 Other assets 9643 9529 - Assets held for sale - 15 15 - Others - 9628 9514 Total Assets 658493 665835 EQUITY AND LIABILITIES Deposits and balances of banks 24538 24031 - Designated at fair value through profit or loss - 3199 4545 - At amortised cost - 21339 19486 Deposits from customers 487537 483553 Trading liabilities - 5 Derivative liabilities 2707 2816 Certificates of deposit issued 10876 27018 - Designated at fair value through profit or loss - 9415 19001 - At amortised cost - 1461 8017 Amounts due to subsidiaries 1561 1777 Current taxation 1444 1255 Debt securities issued 844 2892 - Designated at fair value through profit or loss - 688 811 - At amortised cost - 156 2081 Deferred tax liabilities 420 185 Other liabilities 16979 18299 Loan capital - at amortised cost - 14318 10232 Total Liabilities 561224 572063 Share capital 40 41915 41856 Reserves 42(k) 45264 41826 Total equity attributable to owners of the Bank 87179 83682 Additional equity instruments 41 10090 10090 9726993772 Total Equity and Liabilities 658493 665835 Approved and authorised for issue by the Board on 21st February 2024. 2024 2 21 Executive Chairman David LI Kwok-po Co-Chief Executives Adrian David LI Man-kiu Brian David LI Man-bun Director Meocre LI Kwok-wing ? F-260 ?Page 54 5. INTEREST INCOME 20232022 HK$ Mn HK$ Mn Loans placements with banks and trade bills 31179 20624 Investment securities - - measured at amortised cost or FVOCI 8269 4076 - - mandatorily measured at FVTPL 141 120 Trading assets 96 28 3968524848 For the transactions where interest rate risk is hedged the periodic payments and receipts arising from interest rate contracts which are qualifying hedging instruments for or individually managed in conjunction with interest bearing financial assets are first netted together and then combined with the interest income from the corresponding financial assets.The above included interest income of HK$36788 million (2022: HK$24871 million) before hedging effect for financial assets that are 367.88 2022 not recognised at fair value through profit or loss. 248.71 6. INTEREST EXPENSE 20232022 HK$ Mn HK$ Mn Customer deposits and deposits of banks - at amortised cost - 19914 9713 - - designated at FVTPL 202 84 Certificates of deposit and debt securities issued - at amortised cost - 581 511 - - designated at FVTPL 914 485 Subordinated notes carried at amortised cost 960 460 Lease liabilities 29 28 Other borrowings 211 59 2281111340 For the transactions where interest rate risk is hedged the periodic payments and receipts arising from interest rate contracts which are qualifying hedging instruments for or individually managed in conjunction with interest bearing financial liabilities are first netted together and then combined with the interest expense from the corresponding financial liabilities.The above included interest expense of HK$21491 million (2022: HK$10782 million) before hedging effect for financial liabilities that 214.91 2022 are not recognised at fair value through profit or loss. 107.82 ? F-261 ?Page 55 7. FEE AND COMMISSION INCOME Fee and commission income is disaggregated by services: 20232022 HK$ Mn HK$ Mn Loans overdrafts and guarantees 888 846 Credit cards 759 692 Sale of third party insurance policies 528 484 Other retail banking services 208 197 Trust and other fiduciary activities 177 224 Investment products 162 195 Securities brokerage 141 203 Trade finance 96 92 Others 402 439 Total fee and commission income 3361 3372 Net fee income on financial assets and financial liabilities that are not measured at FVTPL (other than those included in determining the effective interest rate) 2648 2762 Fee income 3361 3372 Fee expenses (713) (610) 8. NET TRADING PROFIT 20232022 HK$ Mn HK$ Mn Profit on dealing in foreign currencies and funding swaps 382 501 Profit/(loss) on trading securities 22 (124) Net gain on derivatives 811 549 Loss on other dealing activities - (1) Dividend income from trading equity securities 10 18 1225943 9. NET RESULT ON FINANCIAL INSTRUMENTS AT FVTPL 20232022 HK$ Mn HK$ Mn Net (loss)/gain from financial instruments designated at FVTPL (263) 292 Net gain/(loss) from financial instruments mandatorily measured at FVTPL (other than those included in net trading profit) 1 (360) (262)(68) ? F-262 ?Page 56 10. NET RESULT ON FINANCIAL ASSETS MEASURED AT FVOCI 20232022 HK$ Mn HK$ Mn Net (loss)/profit on sale of debt securities (60) 159 Dividend income from equity securities 34 16 (26)175 11. NET HEDGING PROFIT 20232022 HK$ Mn HK$ Mn Fair value hedges - Net gain/(loss) on hedged items attributable to the hedged risk 1735 (8541) - Net (loss)/gain on hedging instruments (1705) 8742 30201 12. OTHER OPERATING INCOME 20232022 HK$ Mn HK$ Mn Net insurance profit - 158 Rental from safe deposit boxes 117 120 Rental income on properties (Note 32(ii)) 32(ii) 129 133 Government subsidy – Employment Support Scheme - 8 Others 41 29 287448 ? F-263 ?Page 57 13. OPERATING EXPENSES 20232022 HK$ Mn HK$ Mn Contributions to defined contribution plan* * - Hong Kong - 191 170 - Outside Hong Kong - 223 223 Equity settled share-based payment expenses (Note 42(f)) 42(f) 24 22 Salaries and other staff costs 5007 5078 Total staff costs 5445 5493 Premises and equipment expenses excluding depreciation - Expenses relating to short-term leases - 8 15 - Expenses relating to low value assets - 10 6 - Variable lease payments not included in the - measurement of lease liabilities** 1 (2) - Maintenance repairs and others - 739 702 Total premises and equipment expenses excluding depreciation 758 721 Depreciation and amortisation 820 875 Other operating expenses - Internet platform charges - 560 460 - Legal and professional fees - 457 423 - Communications stationery and printing - 295 294 - Advertising and business promotion expenses - 294 298 - Others - 803 660 Total other operating expenses 2409 2135 Total operating expenses*** *** 9432 9224 * Forfeited contributions totalling HK$27 million (2022: HK$36 * 2700 million) were utilised to reduce the Group’s contribution during 2022 3600 the year. There were no forfeited contributions available for reducing future contributions at the year end (2022: Nil). 2022 ** For the year ended 31st December 2022 there were a credit ** 2022 12 31 2019 of HK$2 million of COVID-19-related rent concessions and a 200 credit of HK$1 million of rent concession for the purpose of 100 entering into a new lease. There was no such rental concession during the year.*** Included direct operating expenses of HK$10 million (2022: *** HK$7 million) in respect of investment properties which 1000 generated rental income during the year. 2022 700 14. IMPAIRMENT LOSSES ON FINANCIAL INSTRUMENTS 20232022 HK$ Mn HK$ Mn Loans and advances to customers 5164 5416 Debt securities 211 345 Others 108 162 54835923 ? F-264 ?Page 58 15. NET PROFIT ON SALE OF ASSETS HELD FOR SALE 20232022 HK$ Mn HK$ Mn Net loss on sale of properties (2) (1) Net profit on sale of disposal groups 4 1446 21445 16. NET PROFIT ON DISPOSAL OF FIXED ASSETS 20232022 HK$ Mn HK$ Mn Net profit on disposal of bank premises furniture fixtures and equipment 14 18 Net loss on termination of lease - (1) 1417 17. INCOME TAX (a) Taxation in the consolidated income statement represents: (a) 20232022 HK$ Mn HK$ Mn Current tax – Hong Kong - Tax for the year 482 485 Over-provision in respect of prior years (63) (57) 419428 Current tax – outside Hong Kong - Tax for the year 693 325 Over-provision in respect of prior years (17) (16) 676309 Deferred tax Origination and reversal of temporary differences (Note 35(b)) 35(b) 79 (174) 1174563 The provision for Hong Kong profits tax is calculated at 16.5% (2022: 16.5%) of the estimated assessable profits for the year. 16.5% 2022 16.5% Taxation for overseas Macau and Taiwan branches and subsidiaries is charged at the appropriate current rates of taxation ruling in the relevant countries.? F-265 ?Page 59 17. INCOME TAX (CONTINUED) (b) Reconciliation between tax expense and accounting profit at (b) applicable tax rates: 20232022 HK$ Mn HK$ Mn Profit before tax 5310 4941 Notional tax on profit before tax calculated at the rates applicable to profits in the tax jurisdictions concerned 1000 730 Tax effect of non-deductible expenses 484 273 Tax effect of non-taxable revenue (234) (385) Tax effect of tax losses not recognised 3 8 Write back of over-provision in respect of prior years (80) (73) Others 1 10 Actual tax expense charged to income statement 1174 563 ? F-266 ?Page 60 18. Distribution/Dividends (a) Dividends payable to equity owners of the parent attributable to (a) the year 20232022 HK$ Mn HK$ Mn Interim dividend declared and paid of 26.58 0.36 HK$0.36 per share on 2658 million shares 2022 26.89 (2022: HK$0.16 per share on 2689 million 0.16 42(j) shares) (Note 42(j)) 957 430 Special dividend declared and paid (2022: 2022 26.95 HK$0.48 per share on 2695 million 0.48 42(j) shares) (Note 42(j)) - 1294 Second interim dividend of HK$0.18 per share on 2650 million shares (2022: 26.50 HK$0.17 per share on 2680 million 0.18 2022 shares) 26.80 0.17 477 456 14342180 The total dividends attributable to the year is HK$0.54 per 0.54 2022 share (2022: HK$0.81 per share). The second interim dividend 0.81 has not been recognised as a liability at the end of the reporting period.(b) Dividends payable to equity owners of the parent attributable (b) to the previous financial year approved and paid during the year 20232022 HK$ Mn HK$ Mn 26.77 Second interim dividend in respect of the previous financial year approved and paid 0.17 2022 during the year of HK$0.17 per share on 29.23 0.35 2677 million shares (2022: HK$0.35 per share on 2923 million shares) (Note 42(j)) 42(j) 455 1023 (c) Distribution to holders of Additional Tier 1 capital (c) instruments 20232022 HK$ Mn HK$ Mn Distribution paid on the Additional Tier 1 capital instruments (Note 42(j)) 42(j) 596 708 ? F-267 ?Page 61 19. EARNINGS PER SHARE (a) Basic earnings per share (a) The calculation of basic earnings per share is based on the consolidated profit for the year attributable to owners of the 5.96 2022 7.08 parent of HK$3522 million (2022: HK$3651 million) after 35.22 2022 accounting for the distribution of HK$596 million (2022: 36.51 HK$708 million) to Additional Tier 1 issue holders and on the weighted average of 2668 million ordinary shares outstanding 26.68 2022 27.59 during the year (2022: 2759 million) calculated as follows: Weighted average number of ordinary shares 20232022 Number of Number of shares shares Million Million Issued ordinary shares at 1st January 1 1 2680 2923 Effect of shares issued in lieu of dividends 2 11 Effect of share buy-back (14) (175) Weighted average number of ordinary shares 12 31 at 31st December 2668 2759 (b) Diluted earnings per share (b) The calculation of diluted earnings per share is the same as the calculation of basic earnings per share except that the weighted average of ordinary shares is adjusted for the effects 2023 12 31 of all dilutive potential shares. For the year ended 31st December 2023 the weighted average of ordinary shares adjusted for the effects of all dilutive potential shares was 2668 26.68 2022 million (2022: 2759 million). 27.59 Weighted average number of ordinary shares (diluted) 20232022 Number of Number of shares shares Million Million Weighted average number of ordinary shares 12 31 at 31st December 2668 2759 Effect of deemed issue of ordinary shares under the Bank’s share option schemes - - Weighted average number of ordinary shares 12 31 (diluted) at 31st December 2668 2759 ? F-268 ?Page 62 20. DIRECTORS’ REMUNERATION Directors’ remuneration disclosed pursuant to section 383(1) of the 383(1) Companies Ordinance and Part 2 of the Companies (Disclosure of 2 Information about Benefits of Directors) Regulation is as follows: Salaries allowances Retirement and benefits scheme Directors’ in kind Discretionary Share contributions 2023 fees bonuses options (Note) Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Executive Chairman Dr. the Hon. Sir David LI Kwok-po 0.711.83.82.71.120.1 Co-Chief Executives Mr. Adrian David LI Man-kiu 0.58.07.05.20.721.4 Mr. Brian David LI Man-bun 0.58.07.05.20.721.4 Non-executive Directors Prof. Arthur LI Kwok-cheung 0.6----0.6 Mr. Aubrey LI Kwok-sing 0.6----0.6 Mr. Winston LO Yau-lai 0.5----0.5 Mr. Stephen Charles LI Kwok-sze 0.5----0.5 Dr. Daryl NG Win-kong 0.6----0.6 Mr. Masayuki OKU 0.5----0.5 Dr. Francisco Javier SERRADO TREPAT Francisco Javier SERRADO TREPAT 0.5 - - - - 0.5 Independent Non-executive Directors Dr. Allan WONG Chi-yun 1.0----1.0 Dr. the Hon. Rita FAN HSU Lai-tai 0.6----0.6 Mr. Meocre LI Kwok-wing 0.9----0.9 Dr. the Hon. Henry TANG Ying-yen 1.1----1.1 Dr. Delman LEE 1.0----1.0 Mr. William Junior Guilherme DOO 0.9----0.9 Dr. David MONG Tak-yeung 0.7----0.7 11.727.817.813.12.572.9 Note: The share options were granted to Executive Directors under the Bank’s Staff Share Option Schemes. The values of share options 2023 represented the fair values of the share options granted in 2023 and prior years amortised over the respective vesting periods without actual cash payment. The details of these benefits in kind are disclosed under the paragraph “Information on Share Options” 39 in the Report of the Directors and Note 39.? F-269 ?Page 63 20. DIRECTORS’ REMUNERATION (CONTINUED) Salaries allowances Retirement and benefits scheme Directors’ in kind Discretionary Share contributions 2022 fees bonuses options (Note) Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Executive Chairman Dr. the Hon. Sir David LI Kwok-po 0.611.83.62.91.120.0 Co-Chief Executives Mr. Adrian David LI Man-kiu 0.57.76.44.70.720.0 Mr. Brian David LI Man-bun 0.57.76.44.60.719.9 Non-executive Directors Prof. Arthur LI Kwok-cheung 0.6----0.6 Mr. Aubrey LI Kwok-sing 0.6----0.6 Mr. Winston LO Yau-lai 0.4----0.4 Mr. Stephen Charles LI Kwok-sze 0.4----0.4 Dr. Daryl NG Win-kong 0.6----0.6 Mr. Masayuki OKU 0.5----0.5 Dr. Francisco Javier SERRADO TREPAT Francisco Javier SERRADO TREPAT 0.5 - - - - 0.5 Independent Non-executive Directors Dr. Allan WONG Chi-yun 0.9----0.9 Dr. the Hon. Rita FAN HSU Lai-tai 0.6----0.6 Mr. Meocre LI Kwok-wing 1.2----1.2 Dr. the Hon. Henry TANG Ying-yen 1.0----1.0 Dr. Delman LEE 0.9----0.9 Mr. William Junior Guilherme DOO 0.8----0.8 Dr. David MONG Tak-yeung 0.6----0.6 11.227.216.412.22.569.5 Note: The share options were granted to Executive Directors under the Bank’s Staff Share Option Schemes. The values of share options 2022 represented the fair values of the share options granted in 2022 and prior years amortised over the respective vesting periods without actual cash payment. The details of these benefits in kind are disclosed under the paragraph “Information on Share Options” 39 in the Report of the Directors and Note 39.? F-270 ?Page 64 21. FIVE TOP-PAID EMPLOYEES 5 20232022 HK$ Mn HK$ Mn Salaries and other emoluments 41 39 Performance-related bonuses 26 24 Share options 17 16 Pension contributions 3 3 8782 The remuneration of the five top-paid employees is within the 5 following bands: 20232022 Number of Number of Employees Employees HK$ 11000001–11500000-2 12000001–125000002- 19500001–20000000-2 20000001–2050000011 21000001–215000002- Included in the emoluments of the five top-paid employees were the 5 3 2022 3 emoluments of 3 (2022: 3) Directors and 2 (2022: 2) senior 2 2022 2 management members. Their director’s emoluments have been 20 included in Note 20 above. 22. SEGMENT REPORTING (a) Business segments (a) The Group manages its businesses by divisions which are organised by a mixture of both business lines and geography.In a manner consistent with the way in which information is reported internally to the Group’s Senior Management for the purposes of resource allocation and performance assessment the Group has presented the following eight reportable segments.Hong Kong operations divided into the following five reportable segments.Personal banking includes branch operations personal internet banking consumer finance property loans MPF business and credit card business.Wholesale banking includes corporate lending and loan syndication asset based lending commercial lending securities lending and trade financing activities with correspondent banks and corporates.? F-271 ?Page 65 22. SEGMENT REPORTING (CONTINUED) (a) Business segments (continued) (a) Treasury markets include treasury operations and securities dealing.Wealth management includes private banking business investment products & advisory and securities & futures broking.Others mainly include trust business carried out by subsidiaries operating in Hong Kong and other supporting units of Hong Kong operations.Chinese Mainland operations mainly include the back office unit for Chinese Mainland operations in Hong Kong all subsidiaries and associates operating in Chinese Mainland except those subsidiaries carrying out data processing and other back office operations for Hong Kong operations in Chinese Mainland.Overseas Macau and Taiwan operations mainly include the back office unit for Overseas Macau and Taiwan operations in Hong Kong Macau Branch Taiwan Branch and all branches subsidiaries and associates operating overseas.Corporate management absorbs the regulatory capital cost of loan capital issued by the Bank and receives from Hong Kong operations the interest income on business activities funded by capital instruments issued by the Bank.For the purposes of assessing segment performance and allocating resources among segments the Group’s Senior Management monitors the results assets and liabilities attributable to each reportable segment on the following bases: Segment assets include all assets with the exception of interests in associates and joint ventures and assets held for sale.Segment liabilities include deposits financial liabilities and other liabilities attributable to the individual segments.Revenue and expenses are allocated to the reportable segments with reference to interest and fee and commission income generated by those segments and the expenses incurred by those segments or which otherwise arise from the depreciation or amortisation of assets attributable to those segments.? F-272 ?? F-273 ? Page 66 22. SEGMENT REPORTING (CONTINUED) (a) Business segments (continued) (a) 2023 Hong Kong operations Overseas Macau and Inter- Chinese Taiwan segment Personal Wholesale Treasury Wealth Mainland operations Corporate elimination banking banking markets management Others Total operations management Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Net interest income/(expense) 5653 2888 1352 387 (251) 10029 4082 2637 126 - 16874 Non-interest income/(expense) 1189 676 (42) 554 345 2722 978 202 - (30) 3872 Operating income 6842 3564 1310 941 94 12751 5060 2839 126 (30) 20746 Operating expenses (1792) (485) (194) (399) (2378) (5248) (3409) (805) - 30 (9432) Operating profit/(loss) before impairment losses 5050 3079 1116 542 (2284) 7503 1651 2034 126 - 11314 (Charge for)/write back of impairment losses on financial instruments (128) (3652) 95 (261) (3) (3949) (1657) 123 - - (5483) Impairment losses on associate - - - - - - - (726) - - (726) Impairment losses on other assets - - - - - - (6) - - - (6) Operating profit/(loss) after impairment losses 4922 (573) 1211 281 (2287) 3554 (12) 1431 126 - 5099 Net profit/(loss) on sale of assets held for sale - - - - 4 4 (2) - - - 2 Net profit/(loss) on disposal of subsidiaries/associates - - - - 1 1 - (13) - - (12) Net profit/(loss) on disposal of fixed assets (4) - - - 1 (3) 17 - - - 14 Valuation losses on investment properties - - - - (84) (84) - (2) - - (86) Share of profits less losses of associates and joint ventures - - - - (9) (9) 51 251 - - 293 Profit/(loss) before taxation 4918 (573) 1211 281 (2374) 3463 54 1667 126 - 5310 Depreciation for the year (207) (19) (12) (9) (206) (453) (295) (59) - - (807) Segment assets 124381 150293 233644 17488 11299 537105 231335 128647 - (45125) 851962 Investments in associates and joint ventures - - - - 48 48 3843 4493 - - 8384 Other assets – Assets held for sale – - - - - 15 15 - - - - 15 Total assets 124381 150293 233644 17488 11362 537168 235178 133140 - (45125) 860361 Total liabilities 358753 41148 37547 33026 3139 473613 206654 116422 - (44654) 752035 Capital expenditure incurred during the year 225 26 12 11 245 519 457 32 - - 1008? F-274 ? Page 67 22. SEGMENT REPORTING (CONTINUED) (a) Business segments (continued) (a) 2022 Hong Kong operations (Restated) Note Overseas Macau and Inter- Chinese Taiwan segment Personal Wholesale Treasury Wealth Mainland operations Corporate elimination banking banking markets management Others Total operations management Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Net interest income/(expense) 4007 2859 (19) 367 (106) 7108 3997 2177 226 - 13508 Non-interest income 1249 657 373 565 592 3436 860 179 - (29) 4446 Operating income 5256 3516 354 932 486 10544 4857 2356 226 (29) 17954 Operating expenses (1713) (500) (168) (358) (2401) (5140) (3374) (739) - 29 (9224) Operating profit/(loss) before impairment losses 3543 3016 186 574 (1915) 5404 1483 1617 226 - 8730 Impairment losses on financial instruments (127) (3258) (70) (40) - (3495) (2088) (340) - - (5923) Impairment losses on other assets - - - - - - (3) - - - (3) Operating profit/(loss) after impairment losses 3416 (242) 116 534 (1915) 1909 (608) 1277 226 - 2804 Net profit/(loss) on sale of assets held for sale - - - - 1446 1446 (1) - - - 1445 Net loss on disposal of subsidiaries/associates - - - - (1) (1) - - - - (1) Net profit/(loss) on disposal of fixed assets (16) - - - - (16) 34 (1) - - 17 Valuation losses on investment properties - - - - (177) (177) - (2) - - (179) Share of profits less losses of associates and joint ventures - - - - (9) (9) 221 643 - - 855 Profit/(loss) before taxation 3400 (242) 116 534 (656) 3152 (354) 1917 226 - 4941 Depreciation for the year (239) (16) (12) (7) (246) (520) (286) (56) - - (862) Segment assets 120111 163414 231299 22679 11560 549063 245349 126730 - (47405) 873737 Investments in associates and joint ventures - - - - 56 56 3893 5112 - - 9061 Other assets – Assets held for sale - - - - 15 15 12 - - - 27 Total assets 120111 163414 231299 22679 11631 549134 249254 131842 - (47405) 882825 Total liabilities 342982 54275 51773 35141 2940 487111 220008 116307 - (46947) 776479 Capital expenditure incurred during the year 108 33 63 9 114 327 442 28 - - 797 Note: The financials of Hong Kong operations have been restated to conform to the current year’s presentation that reflected the organisational restructure during the year. The restructure includes regrouping MPF business from “Others” segment to “Personalbanking” segment regrouping merchant acquiring business from “Personal banking” segment to “Wholesale banking” segment and combining previous “Centralised operations” segment and “Others” segment into one single “Others” segment under Hong Kong operations.Page 68 22. SEGMENT REPORTING (CONTINUED) (b) Geographical segments (b) The information concerning geographical analysis has been classified by the location of the principal operations of the entities and branches of the Bank responsible for reporting the results or booking the assets or by the location where the subsidiaries or business units with special risks associated with operations originate. 2023 Other Asian Inter- Countries segment Chinese and Regions elimination Hong Kong Mainland Others Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Operating income 13181 5031 888 1953 (307) 20746 Profit/(loss) before taxation 3512 83 (188) 1903 - 5310 Total assets 537607 234486 48322 84781 (44835) 860361 Total liabilities 473670 206304 40901 75525 (44365) 752035 Contingent liabilities and commitments 90012 270752 7795 6533 - 375092 Capital expenditure during the year 521 456 20 11 - 1008 2022 Other Asian Inter- Countries segment Chinese and Regions elimination Hong Kong Mainland Others Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Operating income 11081 4832 770 1590 (319) 17954 Profit/(loss) before taxation 3167 (179) 938 1015 - 4941 Total assets 549662 248570 51427 80336 (47170) 882825 Total liabilities 487253 219631 43686 72621 (46712) 776479 Contingent liabilities and commitments 94745 242178 8729 6749 - 352401 Capital expenditure during the year 327 442 24 4 - 797 ? F-275 ?Page 69 23. CASH AND BALANCES WITH BANKS (Note 47(a)(ii)) 47(a)(ii) 20232022 HK$ Mn HK$ Mn Cash in hand 1417 1465 Balances with central banks 32 139 34496 Balances with other banks 12348 18620 Gross carrying amount before impairment allowances 45904 54581 Less: Impairment allowances (Note 43(a)(ix)) 43(a)(ix) (1) (2) 4590354579 24. PLACEMENTS WITH AND ADVANCES TO BANKS (Note 47(a)(ii)) 47(a)(ii) 20232022 HK$ Mn HK$ Mn Placements with and advances to banks Maturing - within one month - 1 40885 52337 - after one month but within one year - 1 1 2808 7867 Gross carrying amount before impairment allowances 43693 60204 Less: Impairment allowances (Note 43(a)(ix)) 43(a)(ix) (2) (1) 4369160203 Of which: Placements with and advances to central banks 2142 495 ? F-276 ?Page 70 25. TRADE BILLS 20232022 HK$ Mn HK$ Mn Measured at amortised cost Gross carrying amount before impairment allowances 251 41 Less: Impairment allowances (Note 43(a)(ix)) 43(a)(ix) - - 25141 Measured at FVOCI 122 488 373529 26. TRADING ASSETS 20232022 HK$ Mn HK$ Mn Treasury bills (including Exchange Fund Bills) (Note 47(a)(ii)) 47(a)(ii) - 292 Debt securities (Note 47(a)(ii)) 47(a)(ii) 2764 983 Equity securities 285 255 30491530 27. LOANS AND ADVANCES TO CUSTOMERS (a) Loans and advances to customers (a) 20232022 HK$ Mn HK$ Mn Gross carrying amount before impairment allowances 532111 549014 Less: Impairment allowances (Note 43(a)(ix)) 43(a)(ix) (5127) (6620) 526984542394 ? F-277 ?Page 71 27. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) (b) Loans and advances to customers - by industry sectors (b) The analysis of gross advances to customers and the percentage of secured advances by industry sector is based on the categories and definitions used by the HKMA. 20232022 % of gross % of gross advances advances covered by covered by Gross collateral Gross collateral advances advances HK$ Mn % HK$ Mn % Loans for use in Hong Kong Industrial commercial and financial - Property development - 28590 59.39 36872 59.19 - Property investment - 50155 92.35 52366 92.57 - Financial concerns - 14171 54.48 14892 67.56 - Stockbrokers - 1218 91.77 708 99.54 - Wholesale and retail trade - 5996 53.85 6560 56.18 - Manufacturing - 3219 39.40 4485 29.00 - Transport and transport equipment - 4106 50.05 5495 42.22 - Recreational activities - 108 99.41 347 93.76 - Information technology - 2093 63.13 1438 34.22 - Others - 20868 54.76 16262 49.00 Sub-total 130524 70.14 139425 69.69 Individuals - Loans for the purchase of flats in the Home Ownership Scheme - Private Sector Participation Scheme and Tenants Purchase Scheme 1081 99.10 1200 99.97 - Loans for the purchase of other - residential properties 96147 99.53 91944 99.95 - Credit card advances - 4740 0.00 4115 0.00 - Others - 20555 58.71 24367 55.23 Sub-total 122523 88.83 121626 87.61 Total loans for use in Hong Kong 253047 79.19 261051 78.07 Trade finance 5592 32.97 5110 38.56 Loans for use outside Hong Kong (Note) 273472 35.82 282853 35.50 Total advances to customers 532111 56.41 549014 55.75 ? F-278 ?Page 72 27. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) (b) Loans and advances to customers - by industry sectors (continued) (b) Note: Loans for use outside Hong Kong include the following loans for use in Chinese Mainland and loans for use outside Hong Kong and Chinese Mainland. 20232022 % of gross % of gross advances advances covered by covered by Gross collateral Gross collateral advances advances HK$ Mn % HK$ Mn % Loans for use in Chinese Mainland Industrial commercial and financial - Property development - 29598 43.16 38339 33.92 - Property investment - 7796 67.72 10918 76.61 - Financial concerns - 43746 10.19 43747 0.79 - Stockbrokers - 440 100.00 678 100.00 - Wholesale and retail trade - 8509 10.42 9331 13.91 - Manufacturing - 14255 7.35 13291 7.76 - Transport and transport equipment - 1921 61.89 2077 81.44 - Information technology - 1194 0.74 1994 0.27 - Others - 18123 14.07 18709 11.63 Sub-total 125582 22.80 139084 20.56 Individuals - Loans for the purchase of other - residential properties 10398 99.96 13139 100.00 - Credit card advances - 3825 0.00 4962 0.00 - Others - 18552 3.67 16340 3.34 Sub-total 32775 33.79 34441 39.73 Total loans for use in Chinese Mainland 158357 25.08 173525 24.37 Loans for use outside Hong Kong and Chinese Mainland Industrial commercial and financial - Property development - 8239 50.27 11335 56.55 - Property investment - 33696 77.20 40054 78.58 - Financial concerns - 14109 73.80 3379 41.54 - Wholesale and retail trade - 4808 15.39 4184 18.43 - Manufacturing - 15032 1.41 13440 3.69 - Transport and transport equipment - 2693 44.13 3069 44.94 - Recreational activities - 885 80.27 517 94.78 - Information technology - 4741 3.66 4063 8.12 - Others - 27536 40.97 25444 45.35 Sub-total 111739 49.11 105485 51.47 Individuals - Loans for the purchase of other - residential properties 3297 99.91 3767 100.00 - Credit card advances - 1 0.00 2 0.00 - Others - 78 99.65 74 87.24 Sub-total 3376 99.86 3843 99.70 Total loans for use outside Hong Kong and Chinese Mainland 115115 50.60 109328 53.16 Total loans for use outside Hong Kong 273472 35.82 282853 35.50 ? F-279 ?Page 73 27. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) (b) Loans and advances to customers - by industry sectors (continued) (b) - Individually impaired loans as well as relevant information in respect of industry sectors which constitute 10% or more of total advances to customers are as follows: 20232022 HK$ Mn HK$ Mn (i) Property development (i) a. Individually impaired loans a. 7581 8114 b. Specific provisions b. 2162 2643 c. Collective provisions c. 404 502 d. New provision charged to income statement d. 2157 2949 e. Written off e. 3934 659 (ii) Property investment (ii) a. Individually impaired loans a. 4094 3325 b. Specific provisions b. 441 956 c. Collective provisions c. 67 286 d. New provision charged to income statement d. 227 589 e. Written off e. 910 605 (iii) Loans for purchase of residential properties (iii) a. Individually impaired loans a. 359 318 b. Specific provisions b. 12 13 c. Collective provisions c. 25 40 d. New provision charged to income statement d. 17 34 e. Written off e. 1 3 (iv) Financial concerns (iv) a. Individually impaired loans a. 640 43 b. Specific provisions b. 50 27 c. Collective provisions c. 121 118 d. New provision charged to income statement d. 140 107 e. Written off e. 45 - The specific provisions represent lifetime expected credit loss provisions for credit impaired (Stage 3) exposures and the collective provisions represent the 12-month and lifetime expected credit loss 12 provisions for non-credit impaired (Stage 1 and Stage 2) exposures.? F-280 ?Page 74 27. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) (c) Loans and advances to customers – by geographical areas (c) – The information concerning the breakdown of the gross amount of advances to customers by geographical areas is derived according to the location of the counterparties after taking into account any transfer of risk in accordance with the requirements of Banking (Disclosure) Rules. In general such transfer of risk takes place if the claims are guaranteed by a party in a country which is different from that of the counterparty or if the claims are on an overseas branch of a bank whose head office is located in another country. The location of a party is determined by its residence which is the economic territory under whose laws the party is incorporated or registered. This requirement is different from the allocation under segment reporting in Note 22 which 22 is prepared in a manner consistent with the way in which information is reported internally to the Group’s Senior Management. The specific provisions represent lifetime expected credit loss provisions for credit impaired (Stage 3) exposures and the collective provisions represent the 12-month and lifetime expected credit loss provisions for non-credit 12 impaired (Stage 1 and Stage 2) exposures. 2023 Advances Total overdue for Impaired advances to over three advances to customers months customers Specific Collective 3 provisions provisions HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Hong Kong 251929 2329 4863 825 215 Chinese Mainland 174954 5393 8567 2648 1072 Other Asian Countries and Regions 31279 61 111 31 121 Others 73949 297 793 32 183 Total 532111 8080 14334 3536 1591 % of total advances to customers 2.69% 2022 Advances Total overdue for Impaired advances to over three advances to customers months customers Specific Collective 3 provisions provisions HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Hong Kong 270332 552 1924 813 450 Chinese Mainland 183886 4405 10824 3623 1069 Other Asian Countries and Regions 30227 48 58 8 109 Others 64569 - 339 74 474 Total 549014 5005 13145 4518 2102 % of total advances to customers 2.39% ? F-281 ?Page 75 27. LOANS AND ADVANCES TO CUSTOMERS (CONTINUED) (c) Loans and advances to customers – by geographical areas (c) – (continued) Impaired loans and advances are individually assessed loans with objective evidence of impairment on an individual basis. The above information by geographical areas is derived according to the location of the counterparties after taking into account any transfer of risk.(d) Loans and advances to customers – net investment in finance leases (d) Loans and advances to customers include net investment in equipment leased under finance leases. The total minimum lease payments receivable under finance leases and their present values at the year end are as follows: 20232022 Present Interest Present Interest value of the income Total value of the income Total minimum relating minimum minimum relating minimum lease to future lease lease to future lease payments periods payments payments periods payments HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Amounts receivable: Within one year 1 165 72 237 179 69 248 After one year but within two years 1 2 148 64 212 151 62 213 After two years but within three years 2 3 138 58 196 141 56 197 After three years but within four years 3 4 130 52 182 124 51 175 After four years but within five years 4 5 124 47 171 120 48 168 After five years 5 1463 312 1775 1614 336 1950 2168605277323296222951 Less: Impairment allowances (12) (10) Net investment in finance leases 2156 2319 The net investment in finance leases is carried on the statement of financial position as loans and advances to customers. No accrual is made for the interest income relating to future periods.? F-282 ?Page 76 28. INVESTMENT SECURITIES 2023 Treasury bills (including Exchange Fund Bills) Certificates of deposit Debt Equity Investment held securities securities funds Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Investment securities measured at amortised cost Gross carrying amount before impairment allowances 2660 1103 8099 - - 11862 Less: Impairment allowances - - (672) - - (672) 266011037427--11190 Investment securities measured at FVOCI 27914 - 124347 959 - 153220 Investment securities mandatorily measured at FVTPL - - 2076 - 784 2860 305741103133850959784167270 2022 Treasury bills (including Exchange Fund Bills) Certificates of deposit Debt Equity Investment held securities securities funds Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Investment securities measured at amortised cost Gross carrying amount before impairment allowances 2428 809 11630 - - 14867 Less: Impairment allowances - - (405) - - (405) 242880911225--14462 Investment securities measured at FVOCI 22390 - 105167 839 - 128396 Investment securities mandatorily measured at FVTPL - - 3270 37 842 4149 24818809119662876842147007 ? F-283 ?Page 77 28. INVESTMENT SECURITIES (CONTINUED) Equity securities designated at FVOCI 20232022 Dividend Dividend income income recognised recognised Fair value Fair value HK$ Mn HK$ Mn HK$ Mn HK$ Mn Equity investments held for long-term strategic purposes 959 34 839 16 As at 31st December 2023 equity securities designated at FVOCI 2023 12 31 amounting to HK$959 million (2022: HK$839 million) were held for long-term strategic purposes of which HK$809 million (2022: HK$694 9.59 2022 8.39 million) was attributable to the fair value of the Bank’s investment in 8.09 2022 6.94 China UnionPay Co. Ltd. None of these strategic investments was disposed of during 2023 and 2022 and there were no transfers of any 2023 cumulative gain or loss within equity relating to these investments. 2022 ? F-284 ?Page 78 29. INVESTMENTS IN SUBSIDIARIES The following list contains only the particulars of subsidiaries which principally affected the results assets or liabilities of the Group. The class of shares held is ordinary.Details of these companies are as follows: % Held by The Place of Group incorporation The (Note 3) and operation Issued and paid-up Bank Name of company capital Nature of business 3 Ample Delight Limited Hong Kong HK$ 450000000 100% Investment holding Bank of East Asia Hong Kong HK$ 150000000 100% Trustee service (Trustees) Limited BEA Union Investment Hong Kong HK$ 374580000 51% Asset management Management Limited BEA Union Investment PRC US$7000000 51% Asset management/ Management (Shenzhen) Investment Limited (Note 1) management Central Town Limited Hong Kong HK$ 2 100% Property investment Century Able Limited Hong Kong HK$ 929752849 100% Investment holding Corona Light Limited BVI HK$ 929752849 100% Investment holding Credit Gain Finance Company Hong Kong HK$ 640000000 100% Money lenders Limited Crystal Gleaming Limited BVI HK$ 929752849 100% Investment holding Dragon Jade Holdings Hong Kong HK$ 1127510000 100% Investment holding Company Limited East Asia Digital Information PRC US$3000000 100% Servicing Services (Guangdong) Limited (Note 1) 1 ? F-285 ?Page 79 29. INVESTMENTS IN SUBSIDIARIES (CONTINUED) % Held by The Place of Group incorporation The (Note 3) and operation Issued and paid-up Bank Name of company capital Nature of business 3 East Asia Holding Company U.S.A. US$5 100% Investment holding Inc. (Note 2) East Asia Securities Hong Kong HK$ 25000000 100% Securities broking Company Limited East Asia Services (Holdings) Hong Kong HK$ 10000 100% Holding company Limited Skyray Holdings Limited BVI HK$ 450000000 100% Investment holding Speedfull Limited BVI HK$ 450000000 100% Investment holding The Bank of East Asia PRC CNY 100% Banking and related (China) Limited (Note 1) 14160000000 financial services 1 Note: 1. Represents a wholly foreign owned enterprise registered under the 1. PRC laws. 2. Audited by auditors other than KPMG with total net assets and total 2. income constituting approximately 0.6% and less than 0.1% respectively of the related consolidated totals. 0.6% 0.1% 3. Entities held by the Bank’s subsidiaries. 3. ? F-286 ?Page 80 30. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES 20232022 HK$ Mn HK$ Mn Share of net assets 9469 9408 Goodwill 440 452 99099860 Less: Impairment allowances (1525) (799) 83849061 The following list contains only the particulars of principal associates and joint ventures.% of ordinary shares held by Place of The Group incorporation (Note 1) Name of company and operation The Bank Nature of business 1 Associates Listed AFFIN Bank Berhad Malaysia 23.93% Banking and related financial business Unlisted Brilliance-BEA Auto Finance Co. Ltd. PRC 22.5% Auto finance and other related financial businesses Dolford Property Holdings Limited BVI 30% Property investment East Asia Qianhai Securities Company PRC 49% Securities business Limited GUOTONG Trust Co. Ltd. PRC 15.38% Trust and other financial business Industrial and Commercial Bank of China Canada 20% Banking services (Canada) Industrial and Commercial Bank of China U.S.A. 20% Banking services (USA) N.A.Million Fortune Development (Shenzhen) PRC 25% Property development Co. Ltd.Platinum Holdings Company Limited Cayman Islands 30% Investment holding Shanghai Ctrip Financial Information PRC 9.6% Financial services Services Co. Ltd.Note: 1. Entities held by the Bank’s subsidiaries. 1. ? F-287 ?Page 81 30. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED) At 31st December 2023 the fair value of the Group’s investment in 2023 12 31 AFFIN Bank Berhad (“AFFIN”) based on the quoted market price had AFFIN Bank Berhad AFFIN been persistently below the carrying amount. As a result the Group performed an impairment test on the investment using a value-in-use (“VIU”) methodology and this demonstrated that the recoverable amount of the investment was HK$3012 million. The recoverable 30.12 amount was lower than the carrying value of HK$3738 million thus 37.38 an additional impairment charge of HK$726 million was recognised in 2023 7.26 2022 2023 (2022: no impairment charge). The VIU calculation uses discounted cash flow projections based on AFFIN’s latest forecast of AFFIN financial results and estimates made by the Group’s management for 3% the next five years and extrapolating in perpetuity using a long-term growth rate of 3% to derive a terminal value. Discount rate of 12.03% (2022: 11.95%) which is based on a Capital Asset Pricing Model AFFIN calculation for AFFIN is used in the VIU calculation. 12.03% 2022 11.95% The following table illustrates the impact on VIU of reasonably possible changes to key assumptions. This reflects the sensitivity of the VIU to each key assumption on its own and it is possible that more than one favourable and/or unfavourable change may occur at the same time.Favourable change Unfavourable change Decrease in Increase in VIU VIU VIU VIU HK$ Mn HK$ Mn HK$ Mn HK$ Mn At 31st December 2023 20231231 Discount rate -50 bps +50 bps 1993211(177)2835 Long-term growth rate +50 bps -50 bps 23014(3)3009 Expected cash flows +10%3023314-10%(301)2711 20232022 HK$ Mn HK$ Mn Aggregate information of associates and joint ventures that are not individually material Aggregate carrying amount of individually immaterial associates and joint ventures in the consolidated financial statements 8384 9061 Aggregate amounts of the Group’s share of those associates and joint ventures Profit after tax 293 855 Other comprehensive income (217) (511) Total comprehensive income 76 344 Reconciliation of carrying amounts to the Group’s total interest in the associates and joint ventures Carrying amount of material associates and joint ventures - - Carrying amount of individually immaterial associates and joint ventures 8384 9061 Interest in associates and joint ventures in the consolidated financial statements 8384 9061 ? F-288 ?Page 82 31. GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets include goodwill arising on business combinations and acquired intangible assets. Acquired intangible assets are amortised over their estimated economic useful life. 20232022 HK$ Mn HK$ Mn Goodwill 1460 1460 Acquired intangible assets 392 410 18521870 (a) Goodwill (a) 20232022 HK$ Mn HK$ Mn At 1st January and 31st December 1 1 12 31 1460 1460 Impairment tests for cash-generating units containing goodwill Goodwill is allocated to the Group’s cash-generating units (CGU) identified according to business segments as follows: 20232022 HK$ Mn HK$ Mn Personal banking 849 849 Wholesale banking 453 453 Treasury markets 158 158 14601460 The recoverable amount of the CGU is determined based on value- in-use calculations. These calculations use cash flow projections 5 based on financial budgets approved by management covering a 5 five-year period. Cash flows beyond the five-year period are extrapolated using the estimated rates stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates.The discount rate used for value-in-use calculations is 9.62% (2022: 9.62% 2022 7.98%) and the long-term growth rate is 3% (2022: 3%). 7.98% 3% 2022 3% Management determined the budgeted net profit based on past performance and its expectation for market development. The weighted average growth rates used are consistent with the internal forecasts.? F-289 ?Page 83 31. GOODWILL AND INTANGIBLE ASSETS (CONTINUED) (b) Intangible assets (other than goodwill) (b) Intangible assets consist of building naming rights only. Intangible assets are stated at cost less accumulated amortisation and impairment loss (Note 2(r)). 2(r) Amortisation of intangible assets with finite useful lives is charged to the income statement over the assets’ estimated useful lives. The following intangible assets with finite useful lives are amortised from the date they are available to use and their estimated useful lives are as follows: Naming rights: Over the shorter of the lease period of building or land Both the period and method of amortisation are reviewed annually. 20232022 HK$ Mn HK$ Mn Cost At 1st January 1 1 1402 1404 Exchange adjustments - (2) At 31st December 12 31 1402 1402 Accumulated amortisation At 1st January 1 1 (336) (323) Amortisation charge for the year (13) (13) Exchange adjustments - - At 31st December 12 31 (349) (336) Impairment allowance At 1st January 1 1 (656) (656) Charge for the year (5) - Exchange adjustments - - As at 31st December 12 31 (661) (656) Carrying amount at 31st December 12 31 392 410 ? F-290 ?Page 84 32. FIXED ASSETS 2023 Right-of-use assets Right-of- - Furniture Furniture use assets fixtures and fixtures and - Bank equipment Investment Bank equipment premises properties premises Sub-total Sub-total Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Cost or valuation At 1st January 2023 2023 1 1 5166 8064 6478 14542 1304 25 1329 21037 Additions - 13 667 680 326 2 328 1008 Revaluation deficit (86) - - - - - - (86) Disposals - (24) (191) (215) - - - (215) Revaluation surplus on bank premises upon transfer to investment properties (Note 42(b)) 42(b) - 13 - 13 - - - 13 Transfer from bank premises to investment properties 24 (24) - (24) - - - - Expiry/termination of lease contracts - - - - (199) (4) (203) (203) Less: Elimination of accumulated depreciation on revalued bank premises - (3) - (3) - - - (3) Transfer to asset classified as assets held for sale - (21) - (21) - - - (21) Exchange adjustments 1 (87) (44) (131) (3) - (3) (133) 202312 At 31st December 2023 31 5105 7931 6910 14841 1428 23 1451 21397 Accumulated depreciation and impairment At 1st January 2023 2023 1 1 - 2289 4660 6949 598 14 612 7561 Depreciation for the year - 134 413 547 255 5 260 807 Impairment for the year - 1 - 1 - - - 1 Expiry/termination of lease contracts - - - - (199) (4) (203) (203) Elimination of accumulated depreciation on revalued bank premises - (3) - (3) - - - (3) Written off on disposal - (13) (174) (187) - - - (187) Transfer to asset classified as assets held for sale - (8) - (8) - - - (8) Exchange adjustments - (35) (26) (61) (3) - (3) (64) 202312 At 31st December 2023 31 - 2365 4873 7238 651 15 666 7904 Net book value at 202312 31st December 2023 31 5105 5566 2037 7603 777 8 785 13493 The gross amounts of the above assets are stated: At cost - 7183 6910 14093 1428 23 1451 15544 At Directors’ valuation -1989-1989-748-748---748 At professional valuation -2023-20235105------5105 51057931691014841142823145121397 ? F-291 ?Page 85 32. FIXED ASSETS (CONTINUED) 2022 Right-of-use assets Right-of-use - Furniture Furniture assets fixtures and fixtures and - Bank equipment Investment Bank equipment premises properties premises Sub-total Sub-total Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Cost or valuation At 1st January 2022 2022 1 1 4992 8529 6448 14977 1507 23 1530 21499 Additions - 82 473 555 238 4 242 797 Revaluation deficit (179) - - - - - - (179) Disposals - (209) (270) (479) - - - (479) Remeasurement - - - - (15) - (15) (15) Revaluation surplus on bank premises upon transfer to investment properties (Note 42(b)) 42(b) - 354 - 354 - - - 354 Transfer from bank premises to investment properties 493 (493) - (493) - - - - Transfer from investment properties to bank premises (139) 139 - 139 - - - - Expiry/termination of lease contracts - - - - (367) (2) (369) (369) Less: Elimination of accumulated depreciation on revalued bank premises - (35) - (35) - - - (35) Exchange adjustments (1) (303) (173) (476) (59) - (59) (536) 202212 At 31st December 2022 31 5166 8064 6478 14542 1304 25 1329 21037 Accumulated depreciation and impairment At 1st January 2022 2022 1 1 - 2378 4584 6962 682 11 693 7655 Depreciation for the year - 139 428 567 290 5 295 862 Expiry/termination of lease contracts - - - - (350) (2) (352) (352) Elimination of accumulated depreciation on revalued bank premises - (35) - (35) - - - (35) Written off on disposal - (83) (239) (322) - - - (322) Exchange adjustments - (110) (113) (223) (24) - (24) (247) 202212 At 31st December 2022 31 - 2289 4660 6949 598 14 612 7561 Net book value at 202212 31st December 2022 31 5166 5775 1818 7593 706 11 717 13476 The gross amounts of the above assets are stated: At cost - 7316 6478 13794 1304 25 1329 15123 At Directors’ valuation -1989-1989-748-748---748 At professional valuation -2022-20225166------5166 51668064647814542130425132921037 ? F-292 ?Page 86 32. FIXED ASSETS (CONTINUED) Fair value measurement of properties (i) Fair value hierarchy (i) The following table presents the fair value of the Group’s properties measured at the end of the reporting period on a recurring basis categorised into the three-level fair value hierarchy as defined in HKFRS 13 Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows: Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.Level 2 valuations: Fair value measured using Level 2 inputs i.e.observable inputs which fail to meet Level 1 and not using significant unobservable inputs.Unobservable inputs are inputs for which market data are not available.Level 3 valuations: Fair value measured using significant unobservable inputs.Fair value at Fair value measurements as at 31st December 31st December 2023 categorised into 202320231231 2023 12 31 Level 1 Level 2 Level 3 HK$ Mn HK$ Mn HK$ Mn HK$ Mn Recurring fair value measurement Investment properties Commercial - Hong Kong 5094 - - 5094 Commercial - Others 11 - - 11 5105--5105 Fair value at Fair value measurements as at 31st December 31st December 2022 categorised into 202220221231 2022 12 31 Level 1 Level 2 Level 3 HK$ Mn HK$ Mn HK$ Mn HK$ Mn Recurring fair value measurement Investment properties Commercial - Hong Kong 5154 - - 5154 Commercial - Others 12 - - 12 5166--5166 ? F-293 ?Page 87 32. FIXED ASSETS (CONTINUED) Fair value measurement of properties (continued) (i) Fair value hierarchy (continued) (i) During the years ended 31st December 2023 and 2022 there were 2023 2022 12 31 no transfers between Level 1 and Level 2 or transfers into or out of Level 3. The Group’s policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.All of the Group’s investment properties were revalued by 2023 2022 12 31 independent valuers as at 31st December 2023 and 2022.Investment properties in Hong Kong were valued at HK$5094 2023 12 31 million (2022: HK$5154 million) as at 31st December 2023 by an 50.94 2022 51.54 independent valuer Savills Valuation and Professional Services Limited Chartered Surveyors who has among their staff Fellows of the Hong Kong Institute of Surveyors with recent experience in the location and category of property being valued. The valuation has 2023 12 31 been incorporated in the financial statements as at 31st December 2023 and it was performed on an open market value basis. Details of valuation techniques are described below: (ii) Information about Level 3 fair value measurement of properties (ii) Valuation techniques Unobservable input Investment properties Income capitalisation Expected market rental approach Capitalisation rate Direct comparison approach Premium (discount) on quality of the buildings Investment properties not under construction The fair value of investment properties is determined by adoption of the Income Capitalisation Approach whereby the existing rental income of all lettable units of the property are capitalised for their respective unexpired terms of contractual tenancies whilst vacant units are assumed to be let at their respective market rents as at the valuation date. Upon expiry of the existing tenancies each unit is assumed to be let at its market rent as at the valuation date which in turn capitalised at the market yield as expected by investors for each type of property. Due consideration has been given to expectations of the renewals of Government lease upon its expiry.The summation of the capitalised value of the term income for the leased portion the capitalised value of the reversion income as appropriately deferred for the leased portion and the capitalised value for the vacant portion provides the market value of the property.The market rentals of all lettable units are made (a) by reference to (a) the rentals fetched in the property and/or (b) by reference to the (b) lettings of similar properties in the neighbourhood. The capitalisation rate adopted is made by reference to the yields achieved in analysed market sales transactions and the market expectation from property investors. This expected return reflects implicitly the quality of the investment the expectation of the potential for future rental growth and capital appreciation operating costs risk factor and the like.As a supporting approach to the Income Capitalisation Approach the Direct Comparison Approach is also adopted as a check for the valuation. Comparable sales transactions of similar properties in the locality are collected and analysed each in terms of a price per square footage. The collected comparables are then adjusted to take account of the discrepancies between the property and comparables in terms of time location age building quality and the like.? F-294 ?Page 88 32. FIXED ASSETS (CONTINUED) Fair value measurement of properties (continued) (ii) Information about Level 3 fair value measurement of properties (ii) (continued) The fair value measurement is positively correlated to the market rental and negatively correlated to the capitalisation rate.The movements during the year in the balance of these Level 3 fair value measurements are as follows: 20232022 HK$ Mn HK$ Mn Investment properties – Commercial – Hong Kong – – At 1st January 1 1 5154 4978 Transfer from bank premises to investment properties 24 493 Transfer from investment properties to bank premises - (139) Revaluation deficit (84) (178) At 31st December 12 31 5094 5154 Investment properties – Commercial – Others – – At 1st January 1 1 12 14 Revaluation deficit (2) (1) Exchange adjustments 1 (1) At 31st December 12 31 11 12 Fair value adjustment of investment properties is recognised in the line item “valuation losses on investment properties” on the face of the consolidated income statement.All the losses recognised in the income statement for the year arise from the properties held at the end of the reporting period.The net book value of bank premises and investment properties comprises: 20232022 Investment Bank Investment Bank properties premises properties premises HK$ Mn HK$ Mn HK$ Mn HK$ Mn Freeholds Held outside Hong Kong 11 610 12 606 Leaseholds Held in Hong Kong On long lease (over 50 years) 50 3952 1611 4003 1620 On medium-term lease (10 - 50 years) 10 50 1142 1113 1151 1163 Held outside Hong Kong On long lease (over 50 years) 50 - 12 - 13 On medium-term lease (10 - 50 years) 10 50 - 2210 - 2363 On short-term lease (below 10 years) 10 - 10 - 10 5105556651665775 ? F-295 ?Page 89 32. FIXED ASSETS (continued) Fair value measurement of properties (continued) (ii) Information about Level 3 fair value measurement of properties (ii) (continued) The Group leases out investment properties under operating leases.The leases typically run for an initial period from 1 to 5 years with 1 5 an option to renew the leases after that date at which time all terms are renegotiated. None of the leases includes contingent rentals.Rental income from investment properties held for use under operating leases amounted to HK$129 million in 2023 (2022: 1.29 2022 1.33 HK$133 million).The total future minimum lease payments of investment properties under non-cancellable operating leases are receivable as follows: 20232022 HK$ Mn HK$ Mn Within one year 1 105 104 After one year but within two years 1 2 55 38 After two years but within three years 2 3 25 14 After three years but within four years 3 4 8 3 After four years but within five years 4 5 5 - After five years 5 6 - 204159 33. OTHER ASSETS 20232022 HK$ Mn HK$ Mn Accrued interest 4200 3537 Customer liabilities under acceptances 26771 27796 Other accounts 7776 8094 Gross carrying amount before impairment allowances 38747 39427 Less: Impairment allowances (Note 43(a)(ix)) 43(a)(ix) (292) (219) 3845539208 Assets held for sale 15 27 3847039235 ? F-296 ?Page 90 34. FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS 20232022 HK$ Mn HK$ Mn Deposits and balances of banks 3199 4545 Deposits from customers (Note 36) 36 199 - Certificates of deposits issued 9415 19001 Debt securities issued 688 811 1350124357 Financial liabilities above have been designated at FVTPL when the Group holds related derivatives at FVTPL and designation therefore eliminates or significantly reduces an accounting mismatch that would otherwise arise.The amount of change during the year and cumulatively in the fair value of financial liabilities designated at FVTPL that is attributable to changes in the credit risk of these liabilities and recognised in other comprehensive income is set out below. 20232022 HK$ Mn HK$ Mn Balance at 1st January 1 1 15 (46) Recognised in other comprehensive income during the year (Note 42(h)) 42(h) (13) 73 Deferred tax (Note 42(h)) 42(h) 2 (12) Balance at 31st December 12 31 4 15 There was no transfer of cumulative gain or loss within equity due to 2022 de-recognition of liabilities designated at FVTPL during the year (2022: Nil).The change in fair value attributable to changes in credit risk on financial liabilities is calculated using the difference between the fair value of the financial liabilities at the reporting date and the present value computed with adjusted asset swap spread.The carrying amount of financial liabilities designated at FVTPL was 2023 HK$120 million lower than the contractual amount due at maturity 1.20 (2022: HK$428 million lower). 2022 4.28 35. INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION (a) Current taxation in the statement of financial position represents: (a) 20232022 HK$ Mn HK$ Mn Provision for Hong Kong profits tax for the year 482 486 Provisional profits tax paid (217) (260) 265226 Balance of profits tax provision relating to prior years 891 772 Taxation outside Hong Kong 446 254 16021252 ? F-297 ?Page 91 35. INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION (CONTINUED) (b) Deferred tax assets and liabilities recognised (b) The components of deferred tax assets/(liabilities) recognised in the consolidated statement of financial position and the movements during the year are as follows: 2023 Revaluation Depreciation of financial allowances Impairment assets at in excess of losses on FVOCI related Revaluation financial depreciation of assets Tax Deferred tax arising from: properties losses Others Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn At 1st January 2023 2023 1 1 (354) (113) 1904 15 16 155 1623 (Charged)/credited to income statement (Note 17(a)) 17(a) (27) - 2 - (13) (41) (79) (Charged)/credited to reserves (Notes 42(b) (g) 42(b) (g) and (h)) (h) - 2 - (134) - 2 (130) Exchange and other adjustments - - (43) - - (3) (46) At 31st December 202320231231(381)(111)1863(119)31131368 2022 Revaluation Depreciation of financial allowances Impairment assets at in excess of losses on FVOCI related Revaluation financial depreciation of assets Tax Deferred tax arising from: properties losses Others Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn At 1st January 2022 2022 1 1 (339) (109) 1515 (282) 303 214 1302 (Charged)/credited to income statement (Note 17(a)) 17(a) (15) - 494 - (272) (33) 174 (Charged)/credited to reserves (Notes 42(b) (g) 42(b) (g) and (h)) (h) - (4) - 294 - (12) 278 Reversal due to disposal of subsidiaries - - - (1) - (1) (2) Exchange and other adjustments - - (105) 4 (15) (13) (129) At 31st December 202220221231(354)(113)190415161551623 ? F-298 ?Page 92 35. INCOME TAX IN THE STATEMENT OF FINANCIAL POSITION (CONTINUED) (b) Deferred tax assets and liabilities recognised (continued) (b) 20232022 HK$ Mn HK$ Mn Net deferred tax assets recognised on the statement of financial position 1836 1849 Net deferred tax liabilities recognised on the statement of financial position (468) (226) 13681623 (c) Deferred tax assets not recognised (c) The Group has not recognised deferred tax assets in respect of cumulative tax losses of HK$109 million (2022: HK$101 million) as it is not probable that future taxable profits against which the losses 1.09 2022 1.01 can be utilised will be available in the relevant tax jurisdiction and entity. Under the current tax legislation the expiry dates of the tax losses were as follows: 20232022 HK$ Mn HK$ Mn Expiring within 5 years 47 41 No expiry date 62 60 109101 36. Deposits from customers 20232022 HK$ Mn HK$ Mn Measured at amortised cost 628399 648093 Designated at FVTPL (Note 34) 34 199 - 628598648093 37. OTHER LIABILITIES 20232022 HK$ Mn HK$ Mn Accrued interest payable 5265 4155 Acceptance draft payable 26771 27796 Impairment allowances on financial guarantee contracts issued and loan commitments issued (Note 43(a)(ix)) 43(a)(ix) 415 318 Lease Liabilities 852 774 Other accounts (Note) 14009 16756 4731249799 Note: Include contract liabilities of HK$2162 million (2022: 15 HK$2476 million) from contracts with customers under 21.62 2022 24.76 HKFRS 15.? F-299 ?Page 93 38. LOAN CAPITAL 20232022 HK$ Mn HK$ Mn Subordinated notes/Loss absorbing notes at amortised cost with fair value hedge adjustments USD500 million fixed rate subordinated 2032 4 22 notes due 22nd April 2032 (1) 5 (1) 3750 3691 USD600 million fixed rate subordinated 2030 5 29 notes due 29th May 2030 (2) 6 (2) 4727 4665 USD250 million fixed rate loss absorbing 2028 7 7 notes due 7th July 2028 (3) 2.5 (3) 1899 1876 USD500 million fixed rate loss absorbing 2027 3 15 notes due 15th March 2027 (4) 5 (4) 3942 - Subordinated notes at amortised cost without hedging RMB1500 million fixed rate subordinated 2029 4 25 notes due 25th April 2029 (5) 15 (5) 1649 1695 1596711927 The Group has not had any defaults of principal interest or other 2023 2022 12 31 breaches with respect to its debt securities during the years ended 31st December 2023 and 2022. (1) Loan capital with face value of US$500 million (equivalent to (1) 5 39.06 HK$3906 million) and carrying amount of HK$3750 million (2022: 37.50 2022 12 HK$3691 million) represents subordinated notes carrying a coupon 31 36.91 rate of 4.875% p.a. qualifying as Tier 2 capital and meeting the loss- absorbing capacity requirements issued on 22nd 2022422 April 2022 by the Bank. The notes are listed on the Hong Kong Stock Exchange will 4.875% mature on 22nd April 2032 and are callable on 22nd April 2027. The notes are under fair value hedge accounting and the hedge 2032 4 22 ineffectiveness of HK$0.6 million loss was recorded in 2023. 2027 4 22 2023 60 (2) Loan capital with face value of US$600 million (equivalent to (2) 6 46.87 HK$4687 million) and carrying amount of HK$4727 million (2022: 47.27 2022 12 HK$4665 million) represents subordinated notes carrying a coupon 31 46.65 of 4% p.a. qualifying as Tier 2 capital and meeting the loss- 2020 5 29 4% absorbing capacity requirements issued on 29th May 2020 by the Bank. The notes are listed on the Hong Kong Stock Exchange will mature on 29th May 2030 and are callable on 29th May 2025. The notes are under fair value hedge accounting and the hedge 2030 5 29 2025 ineffectiveness of HK$17.7 million loss was recorded in 2023. 5 29 2023 1770 (3) Loan capital with face value of US$250 million (equivalent to (3) 2.5 19.53 HK$1953 million) and carrying amount of HK$1899 million (2022: 18.99 2022 12 31 HK$1876 million) represents non-preferred loss-absorbing 18.76 capacity notes carrying a coupon rate of 5.125% p.a. and meeting the loss-absorbing capacity requirements issued on 7th 2022775.125% July 2022 by the Bank. The notes are listed on the Hong Kong Stock Exchange will mature on 7th July 2028 and are callable on 7th July 2027. The notes are under fair value hedge accounting and 2028 7 7 2027 7 7 insignificant hedge ineffectiveness was recorded in 2023. 2023 (4) Loan capital with face value of US$500 million (equivalent to (4) 5 39.06 HK$3906 million) and carrying amount of HK$3942 million 39.42 represents non-preferred loss-absorbing capacity notes carrying a 2023 3 15 6.75% coupon rate of 6.75% p.a. and meeting the loss-absorbing capacity requirements issued on 15th March 2023 by the Bank. The notes are listed on the Hong Kong Stock Exchange will mature on 15th March 2027 and are callable on 15th March 2026. The notes are 2027 3 15 2026 3 15 under fair value hedge accounting and the hedge ineffectiveness of 2023 HK$4.8 million loss was recorded in 2023. 480 ? F-300 ?Page 94 38. LOAN CAPITAL (CONTINUED) (5) Loan capital with face value of RMB1500 million (equivalent to (5) 15 16.50 HK$1650 million) and carrying amount of HK$1649 million (2022: 16.49 2022 12 HK$1695 million) represents subordinated notes carrying a coupon 31 16.95 of 4.94% p.a. issued on 25th April 2019 by the Bank’s subsidiary 2019 4 25 The Bank of East Asia (China) Limited. The notes will mature on 25th April 2029 and are callable on 25th April 2024. 4.94% 20294252024425 39. EQUITY SETTLED SHARE-BASED TRANSACTIONS The Bank has adopted Staff Share Option Schemes whereby the Board of the Bank may at its discretion grant to any employees including Executive Director(s) and Co-Chief Executives of the Group options to subscribe for ordinary shares of the Bank. Except as provided otherwise 2011 2016 in the rules of the relevant Scheme(s) share options granted under the 2011 Scheme 2016 Scheme and 2021 Scheme may be exercised 2021 beginning on the Vesting Date and ending on the fifth anniversary of the 5 Vesting Date. All options were granted for nil consideration.(a) Particulars of share options: (a) (i) Share options granted in years 2015 to 2022: (i) 2015 2022 Date of grant Tranche Vesting period Exercise period Exercise price per share HK$ 04/5/2015 T3 04/5/2015 – 03/5/2018 04/5/2018 – 04/5/2023 34.15 08/4/2016 T2 08/4/2016 – 07/4/2018 08/4/2018 – 08/4/2023 28.45 08/4/2016 T3 08/4/2016 – 07/4/2019 08/4/2019 – 08/4/2024 28.45 07/4/2017 T1 07/4/2017 – 06/4/2018 07/4/2018 – 07/4/2023 32.25 07/4/2017 T2 07/4/2017 – 06/4/2019 07/4/2019 – 07/4/2024 32.25 07/4/2017 T3 07/4/2017 – 06/4/2020 07/4/2020 – 07/4/2025 32.25 10/4/2018 T1 10/4/2018 – 09/4/2019 10/4/2019 – 10/4/2024 32.25 10/4/2018 T2 10/4/2018 – 09/4/2020 10/4/2020 – 10/4/2025 32.25 10/4/2018 T3 10/4/2018 – 09/4/2021 10/4/2021 – 10/4/2026 32.25 19/7/2019 T1 19/7/2019 – 18/7/2020 19/7/2020 – 19/7/2025 22.45 19/7/2019 T2 19/7/2019 – 18/7/2021 19/7/2021 – 19/7/2026 22.45 19/7/2019 T3 19/7/2019 – 18/7/2022 19/7/2022 – 19/7/2027 22.45 07/4/2020 T1 07/4/2020 – 06/4/2021 07/4/2021 – 07/4/2026 16.58 07/4/2020 T2 07/4/2020 – 06/4/2022 07/4/2022 – 07/4/2027 16.58 07/4/2020 T3 07/4/2020 – 06/4/2023 07/4/2023 – 07/4/2028 16.58 13/4/2021 T1 13/4/2021 – 12/4/2022 13/4/2022 – 13/4/2027 17.08 13/4/2021 T2 13/4/2021 – 12/4/2023 13/4/2023 – 13/4/2028 17.08 13/4/2021 T3 13/4/2021 – 12/4/2024 13/4/2024 – 13/4/2029 17.08 12/4/2022 T1 12/4/2022 – 11/4/2023 12/4/2023 – 12/4/2028 12.17 12/4/2022 T2 12/4/2022 – 11/4/2024 12/4/2024 – 12/4/2029 12.17 12/4/2022 T3 12/4/2022 – 11/4/2025 12/4/2025 – 12/4/2030 12.17 (ii) Share options granted in year 2023: (ii) 2023 Date of grant Tranche Vesting period Exercise period Exercise price per share HK$ 12/4/2023 T1 12/4/2023 – 11/4/2024 12/4/2024 – 12/4/2029 10.08 12/4/2023 T2 12/4/2023 – 11/4/2025 12/4/2025 – 12/4/2030 10.08 12/4/2023 T3 12/4/2023 – 11/4/2026 12/4/2026 – 12/4/2031 10.08 ? F-301 ?Page 95 39. EQUITY SETTLED SHARE-BASED TRANSACTIONS (CONTINUED) (b) The number and weighted average exercise prices of share (b) options are as follows: 20232022 Weighted Weighted average average exercise exercise price Number price Number of options of options HK$ Million HK$ Million Outstanding at the beginning of the year 21.08 47 26.57 36 Exercised during the year - - - - Granted during the year 10.08 12 12.17 16 Lapsed during the year 30.81 (7) 32.04 (5) Outstanding at the end of the year 17.37 52 21.08 47 Exercisable at the end of the year 22.36 28 27.24 27 There were no share options exercised during the years 2023 and 2023 2022 2022. The options outstanding at 31st December 2023 had an exercise 2023 12 31 price from HK$10.08 to HK$32.25 (2022: from HK$12.17 to 10.08 32.25 2022 HK$34.15) and a weighted average remaining contractual life of 12.17 34.15 4.09 years (2022: 3.91 years). 4.09 2022 3.91 (c) Fair value of share options and assumptions (c) The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The estimate of the fair value of the share options granted is measured based on a trinomial lattice model. The contractual life of the option is used as an input into this model. 20232022 Fair value at measurement date - Tranche 1 - 1 HK$ 1.88 HK$ 1.65 - Tranche 2 - 2 HK$ 1.88 HK$ 1.50 - Tranche 3 - 3 HK$ 1.80 HK$ 1.30 Share price at measurement date HK$ 10.08 HK$ 12.17 Exercise price HK$ 10.08 HK$ 12.17 Expected volatility 26.97% 25.12% Option life - Tranche 1 - 1 6 years 6 years - Tranche 2 - 2 7 years 7 years - Tranche 3 - 3 8 years 8 years Expected dividends 9.64%-12.95% 16.06%-18.69% Risk-free interest rate (based on Hong Kong Government Bonds) 2.88% 2.67%-2.69% The expected volatility is based on the historic volatility and the expected dividends are based on historical dividends prior to grant date. Changes in the subjective input assumptions could materially affect the fair value estimate.Share options were granted under a service condition. This condition has not been taken into account in the grant date fair value measurement of the services received. There were no market conditions associated with the share option grants.? F-302 ?Page 96 40. SHARE CAPITAL 20232022 No. of shares No. of shares HK$ Mn HK$ Mn Million Million Ordinary shares issued and fully paid: At 1st January 1 1 2680 41856 2923 41645 Shares issued in lieu of dividend 6 59 19 211 Share repurchased and cancelled (36) - (262) - At 31st December 12 31 2650 41915 2680 41856 Share buy-back In 2023 35940800 shares were repurchased on the Stock Exchange at 2023 an aggregate consideration (excluding expenses) of HK$366 million and 3.66 35940800 35797200 shares were cancelled (including 686200 shares 35797200 2022 repurchased in 2022) representing 1.34% and 1.34% of the ordinary 686200 shares in issue at the beginning of the year respectively. The remaining 829800 shares repurchased in 2023 were cancelled on 8th January 1.34% 1.34% 2023 829800 2024.202418 In 2022 the Bank repurchased 246510173 shares of the Bank by share 2022 Elliot Investment Management buy-back deed with Elliot Investment Management’s affiliate entities at a consideration of HK$2904 million and 15744800 shares on the Stock 246510173 29.04 Exchange at a consideration of HK$134 million. As at 31st December 15744800 2022 the total number of shares repurchased and cancelled were 262254973 and 261568773 respectively representing 8.97% and 1.34 2022 12 31 8.95% of the ordinary shares in issue at the beginning of the year. 262254973 2615687738.97% 8.95% Below table shows the details of the shares repurchased and cancelled 2023 during 2023.Highest price Lowest price Average price Number per share per share per share Aggregate Month of shares consideration HK$ HK$ HK$ HK$ Mn Share repurchased: On-market share buy-back - February 2023 - 2023 2 2932400 11.24 10.50 10.86 32 - April 2023 - 2023 4 3991200 10.50 9.88 10.16 41 - May 2023 - 2023 5 6884000 10.72 9.58 10.18 70 - June 2023 - 2023 6 4032600 10.56 9.77 10.17 41 - July 2023 - 2023 7 3906800 12.20 10.38 11.28 44 - August 2023 - 2023 8 1494400 11.34 10.92 11.14 17 - September 2023 - 2023 9 259400 11.42 11.18 11.33 3 - October 2023 - 2023 10 4754600 10.34 9.23 9.66 46 - November 2023 - 2023 11 4455400 9.92 9.01 9.46 42 - December 2023 - 2023 12 3230000 9.72 9.09 9.39 30 - Settled - 2919400 27 - Not yet settled - at year end 310600 3 35940800366 Share cancelled 35797200 ? F-303 ?Page 97 40. SHARE CAPITAL (CONTINUED) Staff Share Option Schemes Pursuant to the approved Staff Share Option Schemes (the “Schemes”) options to purchase ordinary shares in the Bank were granted to eligible employees. Except as provided otherwise in the rules of the relevant 2011 Scheme(s) share options granted under 2011 Scheme 2016 Scheme 2016 2021 and 2021 Scheme will be exercisable during the period beginning on the Vesting Date and ending on the fifth anniversary of the Vesting Date. 5 There were no options exercised and shares issued under the Schemes 2023 2022 during the years 2023 and 2022. 41. ADDITIONAL EQUITY INSTRUMENTS 20232022 HK$ Mn HK$ Mn Additional Tier 1 capital securities USD650 million undated non- cumulative subordinated capital 6.5 securities (1) (1) 5069 5069 USD650 million undated non- cumulative subordinated capital 6.5 securities (2) (2) 5021 5021 1009010090 (1) On 19th September 2019 the Bank issued Additional Tier 1 capital (1) 2019 9 19 6.5 securities with a face value of US$650 million (equivalent to 50.69 HK$5069 million net of related issuance costs). The Additional Tier 1 capital securities are undated non-cumulative subordinated capital 5.875% securities and bear a 5.875% per annum coupon until the first call date on 19th September 2024. The coupon will be reset every five 2024 9 19 years if the Additional Tier 1 capital securities are not redeemed to a fixed rate equivalent to the then-prevailing five-year US Treasury rate plus 4.257% per annum. The coupon payments may be 4.257% cancelled at the sole discretion of the Bank. The Additional Tier 1 capital securities will be written down if a non-viability event occurs and is continuing. They rank higher than ordinary shares in the event of a winding-up and meet the loss-absorbing capacity requirement.The first scheduled coupon payment date was 19th March 2020 and 2020 3 19 the coupon shall be payable semi-annually. The Bank has the right to cancel coupon payment (subject to the requirement as set out in the terms and conditions of the Additional Tier 1 capital securities) and the coupon cancelled shall not be cumulative. However the Bank is stopped from declaring dividend to its ordinary shareholders unless the next scheduled coupon payment is paid.The principal of the Additional Tier 1 capital securities will be written off up to the amount as directed or agreed with the HKMA if the HKMA notifies the Bank that in the opinion of the HKMA the Bank would become non-viable if there is no written off of the principal.The Bank has a call option to redeem all the outstanding Additional 2024 9 19 Tier 1 capital securities from 19th September 2024 or any subsequent coupon payment date but subject to restriction as set out in the terms and conditions.? F-304 ?Page 98 41. ADDITIONAL EQUITY INSTRUMENTS (CONTINUED) (2) On 21st October 2020 the Bank issued Additional Tier 1 capital (2) 2020 10 21 6.5 securities with a face value of US$650 million (equivalent to 50.21 HK$5021 million net of related issuance costs). The Additional Tier 1 capital securities are undated non-cumulative subordinated capital 5.825% securities and bear a 5.825% per annum coupon until the first call date on 21st October 2025. The coupon will be reset every five 2025 10 21 years if the Additional Tier 1 capital securities are not redeemed to a fixed rate equivalent to the then-prevailing five-year US Treasury rate plus 5.527% per annum. The coupon payments may be 5.527% cancelled at the sole discretion of the Bank. The Additional Tier 1 capital securities will be written down if a non-viability event occurs and is continuing. They rank higher than ordinary shares in the event of a winding-up and meet the loss-absorbing capacity requirement.The first scheduled coupon payment date was 21st April 2021 and 2021 4 21 the coupon shall be payable semi-annually. The Bank has the right to cancel coupon payment (subject to the requirement as set out in the terms and conditions of the Additional Tier 1 capital securities) and the coupon cancelled shall not be cumulative. However the Bank is stopped from declaring dividend to its ordinary shareholders unless the next scheduled coupon payment is paid.The principal of the Additional Tier 1 capital securities will be written off up to the amount as directed or agreed with the HKMA if the HKMA notifies the Bank that in the opinion of the HKMA the Bank would become non-viable if there is no written off of the principal.The Bank has a call option to redeem all the outstanding Additional 2025 10 21 Tier 1 capital securities from 21st October 2025 or any subsequent coupon payment date but subject to restriction as set out in the terms and conditions. 42. RESERVES The Group The Bank 2023202220232022 HK$ Mn HK$ Mn HK$ Mn HK$ Mn (a) General reserve (a) At 1st January 1 1 13658 13658 13472 13472 Transferred from property revaluation reserve on disposals - - - - At 31st December 12 31 13658 13658 13472 13472 (b) Revaluation reserve on bank (b) premises At 1st January 1 1 2255 1905 1895 1899 Recognition of deferred tax assets/(liabilities) (Note 35(b)) 35(b) 2 (4) 2 (4) Revaluation surplus on bank premises transferred to investment properties (Note 32) 32 13 354 13 - At 31st December 12 31 2270 2255 1910 1895 ? F-305 ?Page 99 42. RESERVES (CONTINUED) The Group The Bank 2023202220232022 HK$ Mn HK$ Mn HK$ Mn HK$ Mn (c) Statutory reserves (c) At 1st January 1 1 5138 5273 - - Transfer to retained profits (2) (135) - - At 31st December 12 31 5136 5138 - - (d) Capital reserve (d) At 1st January 1 1 895 895 - - Transfer to retained profits - - - - At 31st December 12 31 895 895 - - (e) Exchange revaluation reserve (e) At 1st January 1 1 (1822) 1058 (125) 127 Exchange adjustments (723) (2880) 223 (252) At 31st December 12 31 (2545) (1822) 98 (125) (f) Capital reserve – staff share (f) - options issued At 1st January 1 1 150 152 150 152 Forfeited options transferred to retained profits (35) (24) (35) (24) Additions (Note 13) 13 24 22 24 22 At 31st December 12 31 139 150 139 150 (g) Fair value reserve (g) At 1st January 1 1 510 1925 360 1763 Changes in fair value of securities 880 (1722) 897 (1545) Reversal upon disposal 82 13 121 (153) Recognition of deferred tax (liabilities)/assets (Note 35(b)) 35(b) (134) 294 (148) 295 At 31st December 12 31 1338 510 1230 360 ? F-306 ?Page 100 42. RESERVES (CONTINUED) The Group The Bank 2023202220232022 HK$ Mn HK$ Mn HK$ Mn HK$ Mn (h) Liability credit reserve (h) At 1st January 1 1 15 (46) 15 (46) Changes in fair value arising from changes in own credit risk (Note 34) 34 (13) 73 (13) 73 Recognition of deferred tax assets/(liabilities) 34 (Notes 34 and 35(b)) 35(b) 2 (12) 2 (12) At 31st December 12 31 4 15 4 15 (i) Other reserves (i) At 1st January 1 1 (33) (82) - - Transfer to retained profits - (5) - - Share of changes in equity of associates and joint ventures 51 54 - - At 31st December 12 31 18 (33) - - (j) Retained profits (j) At 1st January 1 1 33365 35395 26059 28292 Net profit for the year 4118 4359 4692 4296 Transfer from capital reserve - staff share options - issued 35 24 35 24 Transfer from statutory reserve 2 135 - - Transfer from other reserves - 5 - - Share buy-back (367) (3051) (367) (3051) Redemption of Additional Tier 1 capital instruments - (47) - (47) Distribution/Dividends (Note 18) 18 - Interim dividend - (957) (430) (957) (430) - Second interim dividend - in respect of prior years (455) (1023) (455) (1023) - Special dividend - - (1294) - (1294) - Additional Tier 1 capital - instruments (596) (708) (596) (708) At 31st December 12 31 35145 33365 28411 26059 (k) Total reserves (k) 56058 54131 45264 41826 ? F-307 ?Page 101 42. RESERVES (CONTINUED) General reserve was set up from the transfer of retained earnings and the realised revaluation surplus on disposal of properties.Revaluation reserve on bank premises and exchange revaluation reserve have been set up and are dealt with in accordance with the accounting policies adopted for the revaluation of bank premises and foreign currency translation.Statutory reserves are set up to satisfy the statutory requirements of certain overseas subsidiaries and associates mainly for the purpose of covering unidentified potential losses on risk assets in addition to those recognised under the prevailing accounting requirements in their jurisdictions.Capital reserve represents the capitalisation of subsidiaries’ associates’ and joint ventures’ reserves.Capital reserve – staff share options issued comprises the fair value of the actual or estimated number of unexercised share options granted to 2(x)(iv) employees of the Bank recognised in accordance with the accounting policy adopted for share based payment in Note 2(x)(iv).Fair value reserve comprises the cumulative net change in the fair value of FVOCI securities held until the securities are derecognised and is dealt with in accordance with the accounting policies in Note 2(h). 2(h) Liability credit reserve includes the cumulative changes in the fair value of the financial liabilities designated at FVTPL that are attributable to changes in the credit risk of these liabilities other than those recognised in profit or loss.Other reserves represent share of changes in equity of associates in respect of investment revaluation reserve and revaluation reserve of bank premises.A regulatory reserve is maintained to satisfy the provisions of the Hong Kong Banking Ordinance for prudential supervision purposes by earmarking amounts in respect of losses which the Bank will or may incur on loans and advances and investments in addition to impairment losses 2023 12 recognised. Movements in the reserve are earmarked directly through retained earnings and in consultation with the HKMA. As at 31st 31 December 2023 the effect of this requirement is to restrict the amount of 21.38 2022 reserves which can be distributed by the Bank to shareholders by 17.42 HK$2138 million (2022: HK$1742 million).At 31st December 2023 the aggregate amount of reserves available for 2023 12 31 distribution to equity holders of the Bank was HK$37462 million (2022: 374.62 2022 346.98 HK$34698 million). After the end of the reporting period the directors declared a second interim dividend of HK$0.18 per ordinary share (2022: 0.18 2022 HK$0.17 per share) amounting to HK$477 million (2022: HK$456 million). The dividend has not been recognised as a liability at the end of 0.17 4.77 2022 the reporting period. 4.56 ? F-308 ?Page 102 43. PRINCIPAL RISK MANAGEMENT This section presents information on the Group’s management of principal risks.The Group has established a risk governance and management framework in line with the requirements set out by the HKMA and other regulators. This framework is built around a structure that enables the Board and Senior Management to discharge their risk management- related responsibilities with appropriate delegation and checks and balances. These responsibilities include defining risk appetite in accordance with the Group’s business strategies and objectives formulating risk policies that govern the execution of those strategies and establishing procedures and limits for the approval control monitoring and remedy of risks.The Risk Committee stands at the highest level of the Group’s risk governance structure under the Board. It consists of five independent non- executive directors and two non-executive directors and is chaired by one of the independent non-executive directors. The Risk Committee provides direct oversight over the formulation of the Group’s risk appetite and sets the levels of risk that the Group is willing to undertake with reference to its financial capacity strategic direction prevailing market conditions and regulatory requirements.The Risk Committee also ensures that the Group s risk appetite is reflected in the policies and procedures that Senior Management adopt to execute their business functions. Through the Group s management committees including Crisis Management Committee Risk Management Committee Credit Committee Asset and Liability Management Committee and Operational Risk Management Committee – and with overall co-ordination by the Risk Management Division – the Risk Committee regularly reviews the Group s risk management framework and ensures that all important risk-related tasks are performed according to established policies with appropriate resources.The Crisis Management Committee Risk Management Committee Credit Committee Asset and Liability Management Committee and Operational Risk Management Committee comprise the Senior Management the Group Chief Risk Officer and where appropriate senior executives from relevant areas.The Group has implemented an Enterprise Risk Management framework to identify and manage potential risks in a holistic and effective manner.The ERM framework assists the Group to achieve this and reinforces the “Three Lines of Defence” risk management model.The Group has adopted the “Three Lines of Defence” risk management structure to ensure that roles and responsibilities in regard to riskmanagement within the Group are clearly defined. The “Three Lines ofDefence” model is summarised as follows:- The first line of defence comprises the Risk Owners who are heads of business units or supporting units of the Bank Group together with staff under their management. They are primarily responsible for the day-to-day risk management of their units including establishing and executing specific risk control mechanisms and detailed procedures.The second line of defence consists of the Risk Controllers who are designated staff responsible for setting out a risk management governance framework monitoring risks independently and supporting the management committees in their oversight of risk management for the Bank Group.The third line of defence is the Internal Audit Division which is responsible for providing assurance as to the effectiveness of the Group’s risk management framework including risk governance arrangements.? F-309 ?Page 103 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) The Group Chief Risk Officer co-ordinates all risk management-related matters of the Group works closely with the Risk Controllers on the formulation of risk management policies and exercises risk oversight at the Group level through a functional working relationship with all Risk Controllers and Risk Owners.The Group faces a variety of risks that could affect its franchise operations and financial conditions. Under the ERM framework the principal risks comprise credit risk interest rate risk market risk liquidity risk operational risk reputation risk strategic risk legal risk compliance risk and technology risk.The Group has formulated policies to identify measure monitor control and report on the various types of risk and where appropriate to allocate adequate capital to cover those risks. The Group’s major risk management policies and control limits are approved by the Board and are reviewed and enhanced on a regular basis to cater for market changes statutory requirements and best practice in risk management processes. The Board has delegated the responsibility for ongoing risk management to the Risk Committee and the management committees.Significant risk management-related issues must be reported to the Board which oversees risk management through the Risk Committee.Moreover on a daily basis the Group Chief Risk Officer is responsible for overseeing the Group’s risk management issues which include but are not limited to the risk management infrastructure strategies appetites culture and resources.Stress testing is an integral part of the Group’s risk management. The Group regularly performs stress tests on the principal risks where appropriate to assess the potential impact of stressed business conditions (including hypothetical situations such as a significant economic downturn in Chinese Mainland and Hong Kong) on the Group’s financial positions in particular capital adequacy profitability and liquidity. Whenever necessary a prompt management response will be developed and executed to mitigate potential impacts.(a) Credit risk management (a) Credit risk is the risk of loss arising from a borrower or counterparty failing to meet its obligations.The Credit Committee is responsible for managing all credit risk- related issues of the Group while the Credit Risk Management Department under the Risk Management Division of the Group is responsible for monitoring activities relating to credit risk. The Group identifies and manages credit risk by defining the target market segment formulating appropriate credit policies and carrying out credit assessment and monitoring of asset quality.Credit risk control limits are set for different levels. Risk return and market situation are considered when setting all limits. Active limit monitoring is undertaken.In evaluating the credit risk associated with an individual customer or counterparty financial strength and repayment ability are always the primary considerations. Credit risk may be mitigated by obtaining collateral from the customer or counterparty.The Group has established policies procedures and rating systems to identify measure monitor control and report on credit risk. In this connection guidelines for management of credit risk have been laid down in the Group’s Credit Risk Management Manual. These guidelines stipulate delegated lending authorities credit underwriting criteria credit monitoring processes an internal rating structure credit recovery procedures and a provisioning policy. They are reviewed and enhanced on an ongoing basis to cater for market changes statutory requirements and best practice in risk management processes.? F-310 ?Page 104 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) The Group’s credit risk management for the major types of credit risk is depicted as follows: (i) Corporate and financial institutions credit risk (i) The Group has laid down policies and procedures to evaluate the potential credit risk of a particular counterparty or transaction and to approve the transaction. For corporate and bank customers the Group has different internal rating systems that incorporate different risk factors (e.g. region of operation corporate size) and are applied to each counterparty. For exposure classified as Specialised Lending in particular supervisory slotting criteria are adopted. To monitor credit concentration risk the Group has preset limits for exposures to individual industries and for borrowers and groups of borrowers. The Group also has a review process to ensure that the level of review and approval is proper and will depend on the size of the facility and rating of the credit.The Group undertakes on-going credit analysis and monitoring at several levels. The policies are designed to promote early detection of counterparty industry or product exposures that require special monitoring. The overall portfolio risk as well as individual impaired loans and potential impaired loans are monitored on a regular basis.(ii) Retail credit risk (ii) The Group's retail credit policy and approval process are designed for the fact that there are high volumes of relatively homogeneous and small value transactions in each retail loan category. The design of the internal rating system and formulation of credit policies are primarily based on customers’ background credit behaviours and the loss experience of the loan portfolios. The Group monitors its own and industry experience to determine and periodically revise product terms and desired customer profiles.(iii) Credit risk of treasury transactions (iii) The credit risk of the Group's treasury transactions is managed in the same way as the Group manages its corporate and financial institutions credit risk. The Group applies an internal rating system to its counterparties and sets individual counterparty limits.(iv) Credit–related commitments (iv) The risks involved in credit-related commitments and contingencies are essentially the same as the credit risk involved in extending loan facilities to customers. These transactions are subject to the same credit application portfolio maintenance and collateral requirements as for customers applying for loans.(v) Concentrations of credit risk (v) Concentration of credit risk exists when changes in geographic economic or industry factors similarly affect groups of counterparties whose aggregate credit exposure is material in relation to the Group’s total exposures. The Group’s credit portfolio is diversified along geographic industry and product sectors. For analysis of loans and advances to customers by industry sectors and geographical areas please refer to Notes 27(b) and 27(c) respectively. 27(b) 27(c) The Group monitors its credit concentration risk by adopting appropriate risk control measures such as setting limits on exposures to different industries and loan portfolios.? F-311 ?Page 105 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vi) Maximum exposure (vi) The maximum exposure to credit risk at the end of the reporting period without taking into consideration of any collateral held or other credit enhancements is represented by the carrying amount of each financial asset in the statement of financial position after deducting any impairment allowance. A summary of the maximum exposure is as follows: 20232022 HK$ Mn HK$ Mn Cash and balances with banks 44486 53114 Placements with and advances to banks 43691 60203 Trade bills 373 529 Trading assets 2764 1275 Derivative assets 9056 11092 Loans and advances to customers 526984 542394 Investment securities 165527 145289 Other assets 38218 38974 Financial guarantees contracts 13570 14032 Loan commitments 360382 338673 12050511205575 (vii) Credit quality analysis (vii) Credit quality of loans and advances The following tables set out information about the credit quality of loans and advances to customers. Unless specifically indicated the amounts in the table represent gross carrying amounts. 2023 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Loans and advances to customers at amortised cost - Grades 1–15: Pass -1–1549373017481406050--5077901798 - Grades 16–17: Special Mention -16–17--998755--998755 - Grade 18: Substandard -18----67111206711120 - Grade 19: Doubtful -19----191899191899 - Grade 20: Loss -20----57052305705230 Total gross carrying amount 493730174824047105143344495321112302 Impairment allowances (900)(4)(691)(7)(3536)(163)(5127)(174) Carrying amount 49283017442335698107982865269842128 Market value of collateral held against impaired loans and advances to customers 7041 ? F-312 ?Page 106 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) 2022 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Loans and advances to customers at amortised cost - Grades 1–15: Pass -1–1550830815341154351--5198511585 - Grades 16–17: Special Mention -16–17--1601895--1601895 - Grade 18: Substandard -18----949896949896 - Grade 19: Doubtful -19----275697275697 - Grade 20: Loss -20----8913089130 Total gross carrying amount 508308153427561146131452235490141903 Impairment allowances (1084)(5)(1018)(8)(4518)(123)(6620)(136) Carrying amount 50722415292654313886271005423941767 Market value of collateral held against impaired loans and advances to customers 5901 Collateral includes any tangible security that carries a fair market value and is readily marketable. This includes (but is not limited to) cash and deposits stocks and bonds mortgages over properties and charges over other fixed assets such as plant and equipment. Where collateral values are greater than gross loans and advances to customers only the amount of collateral up to the gross loans and advances is included.Credit quality of financial assets other than loans and advances The following tables set out the credit analysis for financial assets other than loans and advances to customers measured at amortised cost and FVOCI. Unless specifically indicated for financial assets the amounts in the table represent gross carrying amounts/fair value. For loan commitment and financial guarantee contracts the amounts in the table represent the amounts committed or guaranteed respectively.? F-313 ?Page 107 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) 2023 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Trade bills measured at amortised cost - Grades 1–15: Pass -1–15250-1---251- Total gross carrying amount 250-1---251- Impairment allowances -------- Carrying amount 250-1---251- 2022 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Trade bills measured at amortised cost - Grades 1–15: Pass -1–1541-----41- Total gross carrying amount 41-----41- Impairment allowances -------- Carrying amount 41-----41- ? F-314 ?Page 108 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) 2023 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Trade bills measured at FVOCI - Grades 1–15: Pass -1–15122-----122- Total carrying amount at fair value 122-----122- Impairment allowances -------- 2022 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Trade bills measured at FVOCI - Grades 1–15: Pass -1–15480-8---488- Total carrying amount at fair value 480-8---488- Impairment allowances -------- ? F-315 ?Page 109 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) 2023 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Placements with and advances to banks - Grades 1–15: Pass -1–1543693164----43693164 Total gross carrying amount 43693164----43693164 Impairment allowances (2)-----(2)- Carrying amount 43691164----43691164 2022 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Placements with and advances to banks - Grades 1–15: Pass -1–1560204122----60204122 Total gross carrying amount 60204122----60204122 Impairment allowances (1)-----(1)- Carrying amount 60203122----60203122 ? F-316 ?Page 110 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) 2023 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Loan commitments - Grades 1–15: Pass -1–153551184843-359961 - Grades 16–17: Special Mention -16–17-522-522 Total 355118 5365 - 360483 Impairment allowances (90)(11)-(101) Financial guarantee contracts - Grades 1–15: Pass -1–15131108-13118 - Grades 16–17: Special Mention -16–17-136-136 - Grade 18: Substandard -18--630630 Total 13110 144 630 13884 Impairment allowances (22)(11)(281)(314) 2022 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Loan commitments - Grades 1–15: Pass -1–153345203906-338426 - Grades 16–17: Special Mention -16–17-373-373 Total 334520 4279 - 338799 Impairment allowances (107)(19)-(126) Financial guarantee contracts - Grades 1–15: Pass -1–15124761058-13534 - Grades 16–17: Special Mention -16–17-28-28 - Grade 18: Substandard -18--662662 Total 12476 1086 662 14224 Impairment allowances (14)(4)(174)(192) ? F-317 ?Page 111 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) Credit risk of treasury transactions is managed in the same way as the Group manages its corporate and bank lending risk and risk gradings are applied to the counterparties with individual counterparty limits set.At the end of the reporting period the credit quality of investment in debt securities analysed by designation of external credit assessment institution Moody’s Investor Services or equivalent is as follows: 2023 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Debt investment securities measured at amortised cost Aaa Aaa - - - - - - - - Aa1 to Aa3 Aa1 Aa3 3252 2 - - - - 3252 2 A1 to A3 A1 A3 2244 49 - - - - 2244 49 Baa1 to Baa3 Baa1 Baa3 1886 8 - - - - 1886 8 Below Baa3 Baa3 650 6 172 1 682 29 1504 36 Unrated 239527207637416297649 Total gross carrying amount 1042792379710564511862144 Impairment allowances (19)-(8)-(645)(45)(672)(45) Carrying amount 10408923717411-1119099 ? F-318 ?Page 112 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) 2022 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Debt investment securities measured at amortised cost Aaa Aaa - - - - - - - - Aa1 to Aa3 Aa1 Aa3 3210 1 - - - - 3210 1 A1 to A3 A1 A3 4068 72 - - - - 4068 72 Baa1 to Baa3 Baa1 Baa3 2248 18 - - - - 2248 18 Below Baa3 Baa3 538 7 405 4 193 2 1136 13 Unrated 35844836882535420561 Total gross carrying amount 1364814677312446714867165 Impairment allowances (66)(1)(98)(2)(241)(7)(405)(10) Carrying amount 1358214567510205-14462155 ? F-319 ?Page 113 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) 2023 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Debt investment securities measured at FVOCI Aaa Aaa 9057 3 - - - - 9057 3 Aa1 to Aa3 Aa1 Aa3 30720 131 - - - - 30720 131 A1 to A3 A1 A3 66383 848 - - - - 66383 848 Baa1 to Baa3 Baa1 Baa3 42922 473 - - - - 42922 473 Below Baa3 Baa3 76 - 315 3 14 4 405 7 Unrated 2243435319--277452 Total carrying amount at fair value 1514011498846121441522611514 where impairment allowances included (98)(1)(14)-(48)(4)(160)(5) ? F-320 ?Page 114 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) 2022 Lifetime ECL Lifetime ECL 12-month ECL not credit-impaired credit-impaired 12 Total Accrued Accrued Accrued Accrued Principal interest Principal interest Principal interest Principal interest HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Debt investment securities measured at FVOCI Aaa Aaa 7305 10 - - - - 7305 10 Aa1 to Aa3 Aa1 Aa3 21855 37 - - - - 21855 37 A1 to A3 A1 A3 56412 798 - - - - 56412 798 Baa1 to Baa3 Baa1 Baa3 37906 419 803 9 - - 38709 428 Below Baa3 Baa3 233 2 228 3 - - 461 5 Unrated 281537----281537 Total carrying amount at fair value 1265261303103112--1275571315 where impairment allowances included (214)(2)(41)---(255)(2) ? F-321 ?Page 115 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) The following table sets out the credit analysis for non-trading debt investment securities measured at FVTPL. 20232022 HK$ Mn HK$ Mn Non-trading debt investment securities measured at FVTPL Aaa Aaa - - Aa1 to Aa3 Aa1 Aa3 - - A1 to A3 A1 A3 - 192 Baa1 to Baa3 Baa1 Baa3 2076 2963 Below Baa3 Baa3 - - Unrated - 115 Total carrying amount at fair value 2076 3270 The following table sets out the credit analysis for trading debt investment securities. 20232022 HK$ Mn HK$ Mn Trading debt investment securities measured at FVTPL Aaa Aaa - - Aa1 to Aa3 Aa1 Aa3 - 99 A1 to A3 A1 A3 2764 1176 Baa1 to Baa3 Baa1 Baa3 - - Below Baa3 Baa3 - - Unrated - - Total carrying amount at fair value 2764 1275 ? F-322 ?Page 116 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (vii) Credit quality analysis (continued) (vii) Credit quality of financial assets other than loans and advances (continued) The following table shows the credit quality of the counterparties to which there were exposures arising from derivative asset transactions. 20232022 HK$ Mn HK$ Mn Derivative assets Aa1 to Aa3 Aa1 Aa3 6438 8317 A1 to A3 A1 A3 989 1183 Baa1 to Baa3 Baa1 Baa3 698 612 Below Baa3 Baa3 - - Unrated 931 980 Total carrying amount at fair value 9056 11092 Cash and balances with banks At 31st December 2023 the Group held cash and balances 2023 12 31 with banks of HK$45904 million (2022: HK$54581 million) 459.04 2022 of which 96% (2022: 97%) of cash and balances with banks 545.81 counterparties that are rated at investment grade based on 96% 2022 97% Moody’s Investors Service or equivalent ratings.? F-323 ?Page 117 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (viii) Details of key areas in measurement of ECLs (viii) The Group adopts a forward-looking “expected credit loss” model for measuring and recognising impairment loss to meet the requirement of HKFRS 9. 9 The impairment requirements of HKFRS 9 are complex and 9 require management judgements estimates and assumptions particularly in the following areas which are discussed in detail below: - Assessing whether the credit risk of an asset has increased - significantly since initial recognition; and - Incorporating forward-looking information into the - measurement of ECLs.The key inputs into the measurement of ECL are Probability of default (PD); Loss given default (LGD); and Exposure at (PD) (LGD) default (EAD). (EAD) The Group has established a framework to determine whether the credit risk on a particular financial asset has increased significantly since initial recognition (see Note 2(h)(vii)). The 2(h)(vii) framework aligns with the Group’s internal credit risk management process.Credit risk grades For majority of the Group’s portfolios the Group assigns each exposure to a credit risk grade that is determined according to the predicted level of the risk of default. Credit risk grades are defined using qualitative and quantitative factors that are indicative of risk of default. These factors vary depending on the nature of the exposure and the type of borrower.The table below provides the 12-month Probability of default (“PD”) range for each credit risk grade of retail and non-retail 12 portfolios. The table also provides an indicative mapping of how the Group’s internal credit risk grades relate to PD and for the non-retail portfolio to external credit ratings of Standard & Poor’s.Internal Credit risk Remarks on default risk 12-month PD range External Rating grade 12 PD Benchmark 1-3 Minimal to Low risk 0.0000% to 0.0857% AAA to A- 4-8 Moderate risk 0.0857% to 0.4290% BBB+ to BBB- 9-11 Substantial risk 0.4290% to 1.6500% BB+ to BB- 12-15 High risk 1.6500% to 8.3531% B+ to B- 16-17 Very High risk 8.3531% to 100% CCC+ to C 18-20 Default 100% D For the remaining portfolios without credit risk grade assignment references of peer bank PD estimates of similar portfolios and the long-run average default rate of the portfolios are used.? F-324 ?Page 118 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (viii) Details of key areas in measurement of ECLs (continued) (viii) Generating the term structure of PD Credit risk grades are a primary input into the determination of the term structure of PD for exposures. The Group also collects historical performance and default information about portfolios of credit risk exposures analysed by jurisdiction or region and by type of product and borrower as well as by credit risk grading. For some portfolios with no internal data available information from external data sources is used. In particular Portfolio External data sources Debt exposures Moody's Investors Service: Annual default study report Bank exposures Wind Information Co. Ltd: Debt default report Sovereign exposures The Group deploys statistical models to analyse the data collected and generate estimates of PD of exposures expected to change as a result of the passage of time. The estimation of PD term structure makes use of the annual credit risk grade transition for the portfolios with credit risk grade assignment.For the portfolios without credit risk grade assignment and no credit risk grade transition information available the PD term structure estimation is referenced to forecasts of economic index relevant to the portfolio.LGD is the magnitude of the likely loss if there is a default. For the retail and corporate portfolio with sufficient historical loss and recovery data the collateral recovery rates and the LGD estimates can be derived. For portfolios with insufficient historical loss and recovery data either reference to peer bank LGD estimates of the similar portfolios or external data source are used for deriving the LGD estimates.For portfolio with individual assessment of credit risk mitigation measures collateral values are projected for different economic scenarios so as to reflect the LGD estimates under different economic scenarios. For other portfolios different scenario portfolio LGDs are derived by benchmarking to corresponding LGDs within a long period of historical LGDs.EAD represents the expected exposure in the event of a default. The EAD of a financial asset is its gross carrying amount at the time of default. For lending commitments or undrawn limit of retail revolving products the EAD is the potential future amounts that may be drawn under the contract.For financial guarantees the EAD represents the amount of the guaranteed exposure when the financial guarantee becomes payable. The EAD estimates are adopted using the BASEL parameters suggested by BASEL or statistical model based on historical data.Significant increase in credit risk Exposures are subject to ongoing monitoring which may result in an exposure being moved to a different credit risk grade when the risk of asset changes. The Group primarily identifies 9 whether a significant increase in credit risk under HKFRS 9 has occurred for an exposure by comparing: ? F-325 ?Page 119 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (viii) Details of key areas in measurement of ECLs (continued) (viii) - the credit risk grade at the reporting date; with - - the credit risk grade at the initial recognition of the - exposure.The Group deems the credit risk of a particular exposure to have increased significantly since initial recognition if the current credit risk grade deteriorates by a pre-determined number of notches. The criteria for determining the number of notches may vary by portfolio and include a backstop based on delinquency.As a backstop and as required by HKFRS 9 the Group 9 presumptively considers that a significant increase in credit risk 30 occurs no later than when an asset is more than 30 days past due. Also being Special-mention under HKMA classification is also an indicator of significant increase in credit risk.The Group monitors the effectiveness of the criteria used to identify significant increases in credit risk by regular review to confirm that: - the criteria are capable of identifying significant increase in - credit risk before an exposure is in default; - exposures are not generally transferred directly from 12- - 12 month ECL measurement to credit-impaired; and - there is no unwarranted volatility in loss allowance from - transfers between 12-month ECL and lifetime ECL 12 measurements.Incorporating forward-looking information into the measurement of ECLs The Group has identified key drivers of systematic credit risk for each portfolio of financial assets based on an analysis of historical data in which relationship between macro-economic indicators and the systematic credit risk is exhibited.The Group formulates economic forward looking scenarios for the view of the future direction of major economic indicators such as GDP unemployment rate property price index interest rate and other economic indicators specific to particular portfolio.For each portfolio the key drivers under forward looking scenarios are applied for estimating the systematic credit risk component of an obligor’s Probability of Default (“PD”) used in calculating ECLs. In addition to PD relevant macro-economic indicators are used for projection of the collateral value for recovery rate estimates used in ECL calculation.The Group adopts the use of three economic scenarios. In each region/country where the Group operates the Group formulates probability for each scenario and forecast the major macro-economic indicators to reflect the Group’s forward- looking view on the future business outcomes in that particular region/country under each scenario.? F-326 ?Page 120 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (viii) Details of key areas in measurement of ECLs (continued) (viii) Incorporating forward-looking information into the measurement of ECLs (continued) The forecasts of baseline scenario are based on advice from the in-house economic experts and considerations of a variety of actual and forecast information such as economic data and forecasts published by governmental bodies and monetary authorities in the regions/countries where the Group operates.The Group also takes reference from the forecasts by international agencies and private sector analysts to formulate an objective assessment while taking into account domestic and international economic and political developments and changes in local economic policies. Econometric methods such as autoregressive and linear regression models are applied as a tool to forecast the variables like equity and property prices movements etc. in the regions/countries concerned.The baseline scenario represents the most-likely outcome that the Group expects. The corresponding probability is reflecting the confidence of the future uncertainties are being captured in the baseline scenario forecast.The other scenarios are an optimistic scenario and a pessimistic scenario to capture the less likely yet possible upside and downside divergence from the baseline forecast.These scenarios and their probabilities represent the Group’s view that in case the future outcome is outside the expectation as in the baseline scenario how likely it would be optimistic (i.e. unexpectedly good) or pessimistic (i.e. unexpectedly bad) and how unexpectedly good or unexpectedly bad outcomes will be based on economic outlook potential domestic and international economic and political risks affecting the regions/countries the Group has business presence and the strength of a region/country’s fundamentals to weather through crises. Forecasts for these two scenarios are mainly derived from the historical volatility of the data series with a wider divergence from the baseline over time.The baseline optimistic and pessimistic scenarios are updated quarterly to timely reflect a change in the current economic sentiment locally and internationally.Baseline Scenario - Hong Kong – The Hong Kong economy continued to recover driven by economic reopening and pent-up demand. For the first three 2023 3 quarters of 2023 Hong Kong's real GDP grew by 2.8% year- 2.8% on-year. Solid private consumption and a rebound in inbound tourism have served as the primary growth engines for the economic recovery. Meanwhile global monetary tightening and rising geopolitical risks have adversely affected investment sentiment and external demand. The Government also implemented measures to support the economy such as the disbursement consumption vouchers and launching a series of mega events to encourage household spending and 2021 2022 attract tourists while overall public spending has gradually returned to the pre-pandemic trend after the huge Covid- related budgets in 2021 and 2022.? F-327 ?Page 121 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (viii) Details of key areas in measurement of ECLs (continued) (viii) Incorporating forward-looking information into the measurement of ECLs (continued) Looking ahead the Hong Kong economy is set to leverage its solid fundamentals against a challenging external environment. On one hand private consumption and inbound tourism two major supporting forces for the economy are expected to remain resilient to ensure a continued recovery. In particular ongoing progress in resuming cross-border and international transportation capacity is likely to further boost visitor arrivals to Hong Kong. Besides the Government’s 9 6 efforts to attract talent have begun to bear fruit. As of the end 1.6% of September about 60000 talents have already arrived Hong Kong nearly 1.6% of the labour force. The talent inflows would help relieve the labour market’s tightness further boosting the recovery momentum. On the external front with global monetary tightening remaining intact as interest rates are poised to stay higher for longer investment and merchandise 2023 trade demand are likely to remain a drag on growth. It is worth noting that the 2023 Policy Address announced a series of measures to support the residential property market and rolled out a- comprehensive plan to develop Hong Kong’s economic strengths in the “eight centres” as outlined in the 14th Five Year Plan. On balance the Hong Kong economy is anticipated to continue a steady recovery ahead.Baseline Scenario - Chinese Mainland – The Chinese Mainland economy has staged a steady recovery 2023 3 in the post-pandemic period. For the first three quarters of 5.2% 2023 gross domestic product growth reached 5.2% year-on- year. Domestic consumption particularly in the services sector took the lead in the recovery. Industrial production and infrastructure investment expanded steadily. Moreover the policy easing measures by the Mainland authorities are gaining momentum. The policy measures are not only limited to conventional fiscal and monetary policy such as reductions of reserve requirement ratio and policy rates and support to the targeted sectors but also include raising fiscal deficits and frontloading local government special bond issuances etc. In addition the enhanced policy mix also covered demand-side property easing and developers’ funding support as well as measures to foster capital market developments improve the operating environment of private sector and attract foreign investment etc.Looking ahead the Chinese Mainland economy will maintain a more balanced and stable growth with a continued focus on high-quality development. In the near-term there is still room for stronger policy support to reinforce consumption and investment ensuring stability in growth employment and prices. In the medium-to-long term dual-circulation strategy is upheld as the top economic agenda. Domestic consumption will be increasingly playing a pivotal role in the economy with continued measures to expand middle income consumers.Innovation and technology will be further developed into a major growth driver with a focus in fostering strategic emerging industries such as advanced manufacturing next- generation information technology biological sciences new materials new energy artificial intelligence etc.? F-328 ?Page 122 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (viii) Details of key areas in measurement of ECLs (continued) (viii) Incorporating forward-looking information into the measurement of ECLs (continued) Forecast of Key Macroeconomic Indicators (3 years average 3 2024 – (2024-2026))2026 Scenario Macroeconomic Indicator Hong Kong Chinese Mainland Optimistic Real GDP (YoY growth) 6.4% 6.6% Property Price Index (Compounded 5.9% 3.2% annual growth rate) Unemployment Rate 2.0% 4.9% 3-month Interest Rate 5.5% 4.5% 3 Baseline Real GDP (YoY growth) 3.3% 5.0% Property Price Index (Compounded 2.3% 1.8% annual growth rate) Unemployment Rate 2.8% 5.0% 3-month Interest Rate 4.5% 3.4% 3 Pessimistic Real GDP (YoY growth) 0.2% 3.3% Property Price Index (Compounded -1.7% 0.3% annual growth rate) Unemployment Rate 3.8% 5.1% 3-month Interest Rate 2.5% 2.3% 3 ? F-329 ?Page 123 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (ix) Impairment allowances reconciliation (ix) The following tables show reconciliations from the opening to the closing balance of the impairment allowance by type of financial instrument. The reconciliation is prepared by 1 1 12 31 comparing the position of impairment allowance between 1st January and 31st December at transaction level. Transfers between different stages of ECL are deemed to occur at the beginning of the year and therefore amounts transferred net to zero. The re-measurement of ECL resulting from a change in ECL stage is reported under the ECL stage in which they are transferred to.Explanations of 12-month ECL lifetime ECL and credit- 12 impaired are included in Note 2. 2 2023 Lifetime ECL not Lifetime ECL credit-impaired credit-impaired 12-month ECL 12 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Loans and advances to customers Balance at 1st January 1 1 1089 1026 4641 6756 Transfer to 12-month 12 ECL 117 (117) - - Transfer to lifetime ECL not credit-impaired (24) 24 - - Transfer to lifetime ECL credit-impaired (37) (493) 530 - New financial assets originated or purchased assets derecognised repayments and further lending 106 232 344 682 Write-offs - - (6819) (6819) Changes in models (175) (34) - (209) Net remeasurement of impairment allowances (including exchange adjustments) (172) 60 5003 4891 Balance at 31st December 12 31 904 698 3699 5301 Of which: For loans and advances to customers at amortised cost (Note 27(a)) 27(a) 900 691 3536 5127 For related accrued interest receivable (Note 33) 33 4 7 163 174 90469836995301 ? F-330 ?Page 124 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (ix) Impairment allowances reconciliation (continued) (ix) 2022 Lifetime ECL not Lifetime ECL credit-impaired credit-impaired 12-month ECL 12 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Loans and advances to customers Balance at 1st January 1 1 670 528 3231 4429 Transfer to 12-month 12 ECL 155 (155) - - Transfer to lifetime ECL not credit-impaired (27) 54 (27) - Transfer to lifetime ECL credit-impaired (24) (141) 165 - New financial assets originated or purchased assets derecognised repayments and further lending 350 114 273 737 Write-offs - - (3095) (3095) Net remeasurement of impairment allowances (including exchange adjustments) (35) 626 4094 4685 Balance at 31st December 12 31 1089 1026 4641 6756 Of which: For loans and advances to customers at amortised cost (Note 27(a)) 27(a) 1084 1018 4518 6620 For related accrued interest receivable (Note 33) 33 5 8 123 136 1089102646416756 The total contractual amounts of loans and advances to 2023 2022 12 31 customers written off during the year ended 31st December 2023 and 2022 which are still subject to enforcement activity are 55.13 10.67 HK$5513 million and HK$1067 million respectively.? F-331 ?Page 125 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (ix) Impairment allowances reconciliation (continued) (ix) 2023 Lifetime ECL not credit- Lifetime ECL impaired credit-impaired 12-month ECL 12 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Debt investment securities Balance at 1st January 1 1 283 141 248 672 Transfer to 12-month 12 ECL 12 (12) - - Transfer to lifetime ECL not credit-impaired (7) 7 - - Transfer to lifetime ECL credit-impaired - (99) 99 - New financial assets originated or purchased assets derecognised repayments and further investment (16) (10) - (26) Write-offs - - - - Net remeasurement of impairment allowances (including exchange adjustments) (154) (5) 395 236 Balance at 31st December 12 31 118 22 742 882 Of which: For debt investment securities measured at amortised cost (Note 28) 28 19 8 645 672 For related accrued interest receivable (Note 33) 33 - - 45 45 198690717 For debt investment securities measured at FVOCI 98 14 48 160 For related accrued interest receivable 1 - 4 5 991452165 ? F-332 ?Page 126 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (ix) Impairment allowances reconciliation (continued) (ix) 2022 Lifetime ECL not credit- Lifetime ECL impaired credit-impaired 12-month ECL 12 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Debt investment securities Balance at 1st January 1 1 284 47 - 331 Transfer to 12-month 12 ECL - - - - Transfer to lifetime ECL not credit-impaired (11) 11 - - Transfer to lifetime ECL credit-impaired (5) (13) 18 - New financial assets originated or purchased assets derecognised repayments and further investment 25 21 - 46 Write-offs - - - - Net remeasurement of impairment allowances (including exchange adjustments) (10) 75 230 295 Balance at 31st December 12 31 283 141 248 672 Of which: For debt investment securities measured at amortised cost (Note 28) 28 66 98 241 405 For related accrued interest receivable (Note 33) 33 1 2 7 10 67100248415 For debt investment securities measured at FVOCI 214 41 - 255 For related accrued interest receivable 2 - - 2 The impairment allowances of debt investment securities measured at FVOCI are not separately recognised in the statement of financial position because they have been adjusted to the carrying amounts of debt investment securities measured at FVOCI as their fair values.? F-333 ?Page 127 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (ix) Impairment allowances reconciliation (continued) (ix) 2023 Lifetime ECL not Lifetime ECL credit-impaired credit-impaired 12-month ECL 12 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Others Balance at 1st January 1 1 133 23 238 394 12 Transfer to 12-month ECL 12 (12) - - Transfer to lifetime ECL not credit-impaired (1) 1 - - Transfer to lifetime ECL credit-impaired - - - - New financial assets originated or purchased assets derecognised and repayments (18) 2 (11) (27) Write-offs - - (2) (2) Net remeasurement of impairment allowances (including exchange adjustments) (4) 8 122 126 Balance at 31st December 12 31 122 22 347 491 Of which: For trade bills measured at FVOCI - - - - For related accrued interest receivable - - - - ---- For trade bills measured at amortised cost (Note 25) 25 - - - - For related accrued interest receivable - - - - ---- For placements with and advances to banks (Note 24)242--2 For related accrued interest receivable - - - - 2--2 For cash and balances with banks (Note 23) 23 1 - - 1 For related accrued interest receivable - - - - 1--1 For loan commitments and financial guarantee contracts (Note 37) 37 112 22 281 415 For account receivables and other accounts other than accrued interest receivable (Note 33) 33 7 - 66 73 ? F-334 ?Page 128 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (ix) Impairment allowances reconciliation (continued) (ix) 2022 Lifetime ECL not credit- Lifetime ECL impaired credit-impaired 12-month ECL 12 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Others Balance at 1st January 1 1 143 24 85 252 12 Transfer to 12-month ECL 2 (2) - - Transfer to lifetime ECL not credit-impaired - - - - Transfer to lifetime ECL credit-impaired (1) (7) 8 - New financial assets originated or purchased assets derecognised and repayments 11 (3) 68 76 Write-offs - - - - Net remeasurement of impairment allowances (including exchange adjustments) (22) 11 77 66 Balance at 31st December 12 31 133 23 238 394 Of which: For trade bills measured at FVOCI - - - - For related accrued interest receivable - - - - ---- For trade bills measured at amortised cost (Note 25)25---- For related accrued interest receivable - - - - ---- For placements with and advances to banks (Note 24) 24 1 - - 1 For related accrued interest receivable - - - - 1--1 For cash and balances with banks (Note 23) 23 2 - - 2 For related accrued interest receivable - - - - 2--2 For loan commitments and financial guarantee contracts (Note 37) 37 121 23 174 318 For account receivables and other accounts other than accrued interest receivable (Note 33) 33 9 - 64 73 The impairment allowances of trade bills measured at FVOCI are not recognised in the statement of financial position because the carrying amount of trade bills measured at FVOCI is their fair value.? F-335 ?Page 129 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (a) Credit risk management (continued) (a) (x) Collateral and other credit enhancements (x) The Group has established guidelines on the acceptability of various classes of collateral and determined the corresponding valuation parameters. The guidelines and collateral valuation parameters are subject to regular reviews to ensure their effectiveness over credit risk management.The extent of collateral coverage over the Group’s loans and advances to customer depends on the type of customers and the product offered. Types of collateral include residential properties (in the form of mortgages over property) other properties aircraft other registered securities over assets cash deposits standby letters of credit and guarantees. Collateral generally is not held over balances and placements with banks and loans and advances to banks except when securities are held as part of sale and repurchase and securities borrowing activity. The Group takes possession of collateral through court proceedings or voluntary delivery of possession by the borrowers during the course of the recovery of impaired loans and advances. These 2(t) repossessed assets are reported in the statement of financial position within “other assets” (Note 2(t)). If the recovery from the repossessed assets exceeds the corresponding gross exposure the surplus fund is made available either to repay the borrower’s other secured loans with lower priority or is returned to the borrower.Collateral held as security for financial assets other than loans and advances is determined by the nature of the instrument. Debt securities treasury and other eligible bills are generally unsecured with the exception of asset-based securities and similar instruments which are secured by pools of financial assets.However the credit risk may be implicit in the terms or reflected in the fair value of the corresponding instruments.The Group’s preferred agreement for documenting derivatives ISDA activity is the ISDA Master Agreement which covers the contractual framework within which dealing activity across a full range of over-the-counter products is conducted and contractually binds both parties to apply close-out netting across all outstanding transactions covered by an agreement if either party defaults or following other pre-agreed termination events. It is also common for the Group to execute a Credit Support Annex in conjunction ISDA with the ISDA Master Agreement with the counterparty under which collateral is passed between the parties to mitigate the market contingent counterparty risk inherent in the outstanding position.For contingent liabilities and commitments that are unconditionally cancellable (Note 45) the Group will assess the necessity to 45 withdraw the credit line when there is a concern over the credit quality of the customers. Accordingly the exposure to significant credit risk is considered as minimal. For commitments that are not unconditionally cancellable the Group assesses the necessity of collateral depending on the type of customer and the product offered.? F-336 ?Page 130 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (b) Market risk management (b) Market risk is the risk arising from adverse movements in market rates and prices such as interest rates foreign exchange rates equity prices debt security prices and commodity prices which result in potential losses for the Group. The aim in managing market risk is to reduce the Group’s exposure to the volatility inherent in market factors.The Asset and Liability Management Committee deals with all market risk-related issues of the Group. It is also responsible for conducting a regular review of interest rate trends and deciding the corresponding future business strategy. Market risk is managed daily by the Treasury Markets Division of the Group within the limits approved by the Board or the Asset and Liability Management Committee. The Market & Liquidity Risk Management Department under the Risk Management Division of the Group is responsible for monitoring activities relating to market risk. The Internal Audit Division performs periodic reviews to ensure that the market risk management functions are performed effectively.The use of derivatives for trading and the sale of derivatives to customers as risk management products are integral parts of the Group’s business activities. These instruments are also used to manage the Group’s own exposures to market risk as part of its asset and liability management process. The principal derivative instruments used by the Group are interest rate foreign exchange and equity-related contracts in the form of both over-the-counter derivatives and exchange-traded derivatives. Most of the Group’s derivatives positions have been entered into to meet customer demand and to manage the risk of these and other trading positions.In this connection the key types of market risk that must be managed are: (i) Currency risk (i) The Group’s foreign currency positions arise from foreign exchange dealing (including derivatives) commercial banking operations and structural foreign currency exposures. The Group’s non-structural foreign currency exposures are denominated in major currencies particularly USD and RMB.All foreign currency positions are managed within limits approved by the Board and the Asset and Liability Management Committee.Structural foreign currency positions which arise mainly from foreign currency investments in the Group’s branches subsidiaries and associated companies are excluded from value-at-risk measurements as related gains or losses are taken to reserves. Such foreign currency positions are held with the intention of hedging any adverse effect partially or totally of exchange rate movements on the capital adequacy ratio. The Group seeks to match its foreign currency denominated assets closely with corresponding liabilities in the same currencies.The Group had the following net structural positions which were not less than 10% of the total net structural foreign 10% currency position at the end of the reporting period: 20232022 RMB MYR USD RMB MYR USD HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Net structural position 15297 2269 (9111) 15727 2335 (9098) ? F-337 ?Page 131 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (b) Market risk management (continued) (b) (ii) Interest rate risk in trading book (ii) The Group’s trading interest rate positions arise from treasury and dynamic hedging of retail and commercial banking activities. Interest rate risk is managed daily by the Treasury Markets Division of the Group within the limits approved by the Board or the Asset and Liability Management Committee. The instruments used to manage interest rate risk include interest rate swaps and other derivatives. For the interest rate risk management of the Group’s banking book positions please 43(e) refer to Note 43(e).(iii) Equity risk (iii) The Group’s equity positions arise from equity investment and dynamic hedging of customer-driven business. Equity risk is managed daily by the Investment Department within the limits approved by the Board Investment Committee or the Asset and Liability Management Committee.Market risk control limits have been set at varying levels according to the practical requirements of different units. The Board approves the core control limits and has delegated the authority to set detailed control limits to the Asset and Liability Management Committee.Risk return and market conditions are considered when setting limits. Active limit monitoring is carried out.In this connection the Asset and Liability Management Committee monitors the related market risk arising from the risk-taking activities of the Group to ensure that market risk exposures are within the Group’s risk tolerance levels. Risk exposures are monitored frequently to ensure that they are within established control limits.The Group quantifies the market risk of the underlying trading portfolio by means of value-at-risk (“VaR”). VaR is a statistical estimate that measures the potential losses in market value of a portfolio as a result of unfavourable movements in market rates and prices assuming that positions are held unchanged over a certain horizon time period.The Group estimates VaR for the Group’s trading portfolio by the historical simulation approach where the VaR is calculated by revaluing the portfolio for each of the market movement scenarios obtained from the historical observation period. This methodology 1 99% uses movements in market rates and prices over a one-day holding period with a 99% confidence level under a two-year observation period.The market value of listed shares the fair value of private equity funds and unlisted equities (collectively the “Unlisted Securities”) are subject to limits and these are managed by the Investment Department of the Group. The Unlisted Securities are not included in the VaR for the equity trading position and are managed through delegated limits. The limits are subject to regular review by the Asset and Liability Management Committee.? F-338 ?Page 132 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (b) Market risk management (continued) (b) Value-at-risk statistics 2023 At 31st December Maximum Minimum Mean 1231 HK$ Mn HK$ Mn HK$ Mn HK$ Mn VaR for total trading activities 7 13 7 9 VaR for foreign exchange trading positions* * 2 7 1 3 VaR for interest rate trading positions 1 3 - 2 VaR for equity trading positions 5 6 4 5 2022 At 31st December Maximum Minimum Mean 1231 HK$ Mn HK$ Mn HK$ Mn HK$ Mn VaR for total trading activities 11 33 11 19 VaR for foreign exchange trading positions* * 6 12 5 8 VaR for interest rate trading positions - 5 - 1 VaR for equity trading positions 5 20 5 11 * Including all foreign exchange positions but excluding structural * foreign exchange positions. 2023 At 31st December Maximum Minimum Mean 1231 HK$ Mn HK$ Mn HK$ Mn HK$ Mn Stressed VaR for total trading activities 16 29 15 22 2022 At 31st December Maximum Minimum Mean 1231 HK$ Mn HK$ Mn HK$ Mn HK$ Mn Stressed VaR for total trading activities 27 59 24 41 A stressed VaR measure is intended to replicate a VaR calculation that would be generated on current trading portfolio if the relevant market factors were experiencing a period of stress.? F-339 ?Page 133 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (c) Operational risk management (c) Operational risk is the risk of loss resulting from inadequate or failed internal processes people systems or from external events.The objectives of operational risk management are to identify measure assess and monitor the operational risk exposures associated to the Group; to control and mitigate the exposures by taking effective measures; to report in a structured systematic and consistent manner; and to comply with the relevant regulatory requirements.The Operational Risk Management Committee is responsible for overseeing the effectiveness of operational risk management of the Group while the Operational Risk Management Department under the Risk Management Division of the Group assists the Management in managing the Group’s operational risk including the establishment and review of the operational risk management third party risk management and operational resilience policies and framework; designing the operational risk management tools and reporting mechanism; assessing monitoring and reporting the overall operational risk position to the Management and Risk Management Committee. All the heads of business units and support units of the Group are responsible for the day-to-day operational risk management of their units.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 adopts various operational risk management tools such as key risk indicators risk and control self- assessments operational risk incident management to identify assess monitor and control the risks inherent in business activities and products as well as purchase of insurance to mitigate unforeseeable and significant operational risk incidents. Business continuity plans are established to support business operations in the event of an emergency or disaster.(d) Liquidity risk management (d) Liquidity risk is the risk that the Group may not be able to meet its obligations as they come due because of an inability to obtain adequate funding (funding liquidity risk); or that the Group cannot easily liquidate assets quickly without significantly lowering market prices because of inadequate market depth or market disruptions (market liquidity risk).The purpose of liquidity risk management is to ensure sufficient cash flows to meet all financial commitments and to capitalise on opportunities for business expansion. This includes the Group’s ability to meet deposit withdrawals either on demand or at contractual maturity to repay borrowings as they mature to make new loans and investments as opportunities arise and last but not least to comply with all the statutory requirements for liquidity risk management including Liquidity Coverage Ratio (“LCR”) and Net Stable Funding Ratio (“NSFR”).? F-340 ?Page 134 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) The Group reviews the risk profile through regular assessments of both qualitative and quantitative risk factors to determine its tolerance of prevailing risk levels against applicable risk appetite statement for liquidity risk approved annually by the Board. The Asset and Liability Management Committee is delegated by the Board to oversee the Group’s liquidity risk management. The Asset and Liability Management Committee comprises balanced representation of senior staff from various business units Treasury Risk Management and Finance who jointly formulate funding strategies. The Asset and Liability Management Committee sets the strategy policy and limits for managing liquidity risk and the means for ensuring that such strategy and policy are implemented.Regular meetings are held to review the compliance status of the monitoring matrix established and the need for any change in strategy and policy. Liquidity is managed daily by the Capital Markets & Liquidity Management Department under the Treasury Markets Division of the Group within the set limits. The Market & Liquidity Risk Management Department under the Risk Management Division of the Group is responsible for monitoring the activities relating to liquidity risk. The Internal Audit Division performs periodic reviews to ensure that the liquidity risk management functions are carried out effectively.The LCR and NSFR statutory requirements are part of the stringent regulatory regime that covers the liquidity risk management of the Group. To ensure compliance with the regulatory requirements internal targets for LCR and NSFR have been set above regulatory required levels after considering the Group’s liquidity risk appetite.In addition material changes in the LCR and NSFR are reviewed regularly by the Asset and Liability Management Committee together with proposed mitigation actions to cope with adverse changes arising from but not limited to composition of the deposit base and remaining tenor to maturity lending activities with respect to different maturity tenors and the Group’s asset and liability mix strategy. In planning the asset and liability mix strategy the Group’s relevant business units contribute to an assessment of the impact of asset growth and funding structure on the LCR and NSFR for review and decision by the Asset and Liability Management Committee.As part of Group efforts to manage the LCR and NSFR effectively emphasis is placed on strengthening the deposit base by retaining loyal customers and maintaining customer relationships. The Group balances funding among retail small business and wholesale funding to avoid concentration in any one source.Professional markets are accessed through the issuance of certificates of deposit medium-term notes subordinated debt money market placement and other borrowings for the purposes of providing additional funding maintaining a presence in local money markets and optimising asset and liability maturities.The Group manages liquidity risk of the branches in Macau Taiwan and overseas and significant subsidiary in a holistic approach. The liquidity risk management policies of the Group are abided by all of the branches in Macau Taiwan and overseas and significant subsidiary while supplementing their respective local practices and statutory requirements. Reporting to the Group Chief Risk Officer the Risk Management Unit of each of the branches in Macau Taiwan and overseas and significant subsidiary reports and escalates liquidity risk related matter to the liquidity risk management team at Head Office. The respective local Asset and Liability Management Committee or respective local authorities are also established for overseeing liquidity risk in accordance with the local regulatory requirements and limits approved.? F-341 ?Page 135 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) In addition to observing the statutory LCR and NSFR the Group has established different liquidity metrics – including but not limited to the loan-to-deposit ratio cumulative maturity mismatch ratio funding concentration ratio intra-group exposure threshold and cross currency funding ratio – to measure and analyse the Group’s liquidity risk. The Group maintains sufficient High-quality liquid assets (“HQLAs”) as a liquidity cushion that can be accessed in times of stress. The HQLAs for fulfilling the LCR consist of cash exchange fund bills and notes high quality government debt securities and other equivalent liquid marketable assets. The majority of HQLAs are denominated in Hong Kong dollars.Contingent funding sources are maintained to provide strategic liquidity to meet unexpected and material cash outflows.Internally intra-group funding transactions are carried out at arm’s length and treated in a manner in line with third-party transactions with regular monitoring and appropriate control. A majority of the Group’s liquidity risk arises from the maturity mismatch gap between the Group’s asset and liability portfolios. The Group manages liquidity risk by conducting regular cash flow analysis and projections through the use of the Bank’s management information system so as to facilitate the identification of funding needs arising from on and off-balance sheet items over a set of time horizons.The Group also conducts stress-testing regularly to analyse liquidity risk. Both on and off-balance sheet items and their impact on cash flow are considered together with applicable hypothetical and historical assumptions. The assessment and review of market liquidity risk are included in the various control processes including investment/trading strategy market risk monitoring valuation and portfolio review. Three stress scenarios – namely an institution- – specific crisis a general market crisis and a crisis involving a combination of the two – are adopted with minimum survival period – defined according to the HKMA’s Supervisory Policy Manual LM-2 LM-2 “Sound Systems and Controls for Liquidity Risk Management”.With reference to the stress-testing results the Group identifies potential vulnerabilities within the Group establishes internal limits and formulates a contingency funding plan that sets out the Group’s strategy for dealing with any liquidity problem and the procedures for making up cash flow deficits in emergency situations.The contingency funding plan is designed to be pro-active and pre- emptive and stipulates the following three stages: 3 1. The Group utilises early warning indicators which cover both 1. qualitative and quantitative measures and monitors both internal and external factors. Should there be any early signs of significant impact on the Group’s liquidity position the Asset and Liability Management Committee is informed. The Asset and Liability Management Committee will consider appropriate remedial actions and will consider employing crisis management if the situation warrants. 2. A Crisis Management Committee which is chaired by the Co- 2. Chief Executives is formed to handle the crisis. Strategy and procedures for obtaining contingency funding as well as roles and responsibilities of the parties concerned are clearly stated. 3. In the final stage a post-crisis review is carried out to recommend 3. necessary improvements to avoid incidents of a similar nature in the future.An annual drill test is conducted and the contingency funding plan is subject to regular review in order to accommodate any changes in the business environment. Any significant changes to the contingency funding plan are approved by the Board.? F-342 ?Page 136 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) Analysis of assets and liabilities by remaining maturity: 2023 3 months 1 year or 5 years or less less but or less but over over 3 but over Undated Repayable Within 1 1 month months 1 year Over or overdue on demand month 1 3 1 5 years Total 13155 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Assets Cash and balances with banks 37014 12 20 121 - - 8736 45903 Placements with and advances to banks - 40883 2687 121 - - - 43691 Trade bills 94 62 133 84 - - - 373 Trading assets - - 66 1925 773 - 285 3049 Derivative assets - - - - - - 9056 9056 Loans and advances to customers 2460 64389 47667 118973 170070 115063 8362 526984 Investment securities - 10854 18513 21090 60567 54242 2004 167270 Investments in associates and joint ventures - - - - - - 8384 8384 Fixed assets - - - - - - 13493 13493 Goodwill and intangible assets - - - - - - 1852 1852 Deferred tax assets - - - - - - 1836 1836 Other assets 23 6748 12635 10463 575 571 7455 38470 Total assets 39591 122948 81721 152777 231985 169876 61463 860361 Liabilities Deposits and balances of banks 633 9318 8777 6891 - - - 25619 Deposits from customers 185225 125787 188736 113622 15228 - - 628598 - Demand deposits and current - accounts 65643 - - - - - - 65643 - Savings deposits - 118163 - - - - - - 118163 - Time call and notice - deposits 1419 125787 188736 113622 15228 - - 444792 Derivative liabilities - - - - - - 4007 4007 Certificates of deposit issued - 2783 5296 8851 10688 - - 27618 Current taxation - - - 1602 - - - 1602 Debt securities issued - - 155 306 383 - - 844 Deferred tax liabilities - - - - - - 468 468 Other liabilities 1005 7392 13936 11373 1445 1317 10844 47312 - Lease liabilities - - 27 43 167 389 226 - 852 - Other accounts - 1005 7365 13893 11206 1056 1091 10844 46460 Loan capital - - - 1649 14318 - - 15967 Total liabilities 186863 145280 216900 144294 42062 1317 15319 752035 Net gap (147272) (22332) (135179) 8483 189923 168559 ? F-343 ?Page 137 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) 2022 3 months 1 year or 5 years or less less but or less but over over 3 but over Undated Repayable Within 1 1 month months 1 year Over or overdue on demand month 1 3 1 5 years Total 13155 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Assets Cash and balances with banks 44156 - - 96 - - 10327 54579 Placements with and advances to banks - 52337 7866 - - - - 60203 Trade bills 1 147 148 233 - - - 529 Trading assets - 1176 99 - - - 255 1530 Derivative assets - - - - - - 11092 11092 Loans and advances to customers 2594 53685 38832 116096 202555 121575 7057 542394 Investment securities - 10446 10510 19043 64709 40618 1681 147007 Investments in associates and joint ventures - - - - - - 9061 9061 Fixed assets - - - - - - 13476 13476 Goodwill and intangible assets - - - - - - 1870 1870 Deferred tax assets - - - - - - 1849 1849 Other assets 27 4845 7463 18286 505 437 7672 39235 Total assets 46778 122636 64918 153754 267769 162630 64340 882825 Liabilities Deposits and balances of banks 2263 8074 9255 5886 - - - 25478 Deposits from customers 212727 106604 160879 151421 16462 - - 648093 - Demand deposits and current - accounts 65899 - - - - - - 65899 - Savings deposits - 145107 - - - - - - 145107 - Time call and notice - deposits 1721 106604 160879 151421 16462 - - 437087 Trading liabilities - - - - - - 5 5 Derivative liabilities - - - - - - 4145 4145 Certificates of deposit issued - 3559 12971 12244 3888 - - 32662 Current taxation - - - 1252 - - - 1252 Debt securities issued - - 1404 672 816 - - 2892 Deferred tax liabilities - - - - - - 226 226 Other liabilities 779 5027 8261 19697 1124 1541 13370 49799 - Lease liabilities - 1 24 40 155 347 207 - 774 - Other accounts - 778 5003 8221 19542 777 1334 13370 49025 Loan capital - - - - 11927 - - 11927 Total liabilities 215769 123264 192770 191172 34217 1541 17746 776479 Net gap (168991) (628) (127852) (37418) 233552 161089 As the trading assets and debt instruments measured at FVOCI may be sold before maturity or deposits from customers may mature without being withdrawn the contractual maturity dates do not represent expected dates of future cash flows.? F-344 ?Page 138 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) The following tables provide an analysis of the undiscounted cashflow projection of the non-derivative financial liabilities of the Group at the end of the reporting period based on the dates of their contractual payment obligations: 2023 Between three Less than months Between Gross cash three and one one and Carrying outflow Repayable months year five years More than amount on demand 3 3 1 five years Undated 155 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Deposits and balances of banks 25619 26283 633 18341 7309 - - - Deposits from customers 628598 637171 185665 319344 116501 15661 - - - Demand deposits and - current accounts 65643 65737 65737 - - - - - - Savings deposits - 118163 118335 118335 - - - - - - Time call and notice - deposits 444792 453099 1593 319344 116501 15661 - - Certificates of deposit issued 27618 29053 - 8248 9119 11686 - - Current taxation 1602 1602 - - 1602 - - - Debt securities issued 844 870 - 164 316 390 - - Loan capital 15967 18056 - 182 2290 15584 - - Other liabilities 47312 42157 587 20016 9369 472 869 10844 - Lease liabilities - 852 962 - 78 187 448 249 - - Other accounts - 46460 41195 587 19938 9182 24 620 10844 Total 747560 755192 186885 366295 146506 43793 869 10844 ? F-345 ?Page 139 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) 2022 Between three Less than months Between Gross cash three and one one and Carrying outflow Repayable months year five years More than Amount on demand 3 3 1 five years Undated 155 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Deposits and balances of banks 25478 26017 2263 17510 6244 - - - Deposits from customers 648093 655121 212946 270268 155184 16723 - - - Demand deposits and - current accounts 65899 65978 65978 - - - - - - Savings deposits - 145107 145174 145174 - - - - - - Time call and notice - deposits 437087 443969 1794 270268 155184 16723 - - Trading liabilities 5 5 - - - - - 5 Certificates of deposit issued 32662 33270 - 16727 12559 3984 - - Current taxation 1252 1252 - - 1252 - - - Debt securities issued 2892 2946 - 1435 690 821 - - Loan capital 11927 13918 - 50 511 13357 - - Other liabilities 49799 45742 540 11265 18119 982 1466 13370 - Lease liabilities - 774 872 1 69 171 398 233 - - Other accounts - 49025 44870 539 11196 17948 584 1233 13370 Total 772108 778271 215749 317255 194559 35867 1466 13375 ? F-346 ?Page 140 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) The following tables summarise the undiscounted cashflows of 12 31 the Group by remaining contractual maturity as at 31st December for derivative financial liabilities that will be settled on net and gross basis. The Group's derivative financial liabilities that will be settled on a net basis mainly include interest rate swaps whereas the derivative financial liabilities that will be settled on a gross basis mainly include foreign exchange forwards and futures and foreign exchange swaps. 2023 Between three Less than months Between Total cash three and one one and Carrying outflow Repayable months year five years More than amount on demand 3 3 1 five years Undated 155 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Derivative financial liabilities 40072675(10)1407748705(175)- Derivative financial liabilities settled on a net basis Total net cash outflow/(inflow) 183515763615617(175)- Derivative financial liabilities settled on a gross basis Total cash inflow (64063)(9409)(47133)(5749)(1772)-- Total cash outflow 6490393844777758821860-- 2022 Between three Less than months Between Total cash three and one one and Carrying outflow Repayable months year five years More than amount on demand 3 3 1 five years Undated 155 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Derivative financial liabilities 4145397837126111801172328- Derivative financial liabilities settled on a net basis Total net cash outflow 307467679981024279- Derivative financial liabilities settled on a gross basis Total cash inflow (51195)(325)(33383)(12552)(4782)(153)- Total cash outflow 5209935633877127344930202- ? F-347 ?Page 141 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) Certificates of Deposit Debt Securities Issued and Loan Capital In 2023 BEA issued fixed rate certificates of deposit and debt 2023 11.29 securities with face values of US$1129 million CNY10614 million 106.14 0.5 EUR50 million; and zero coupon certificates of deposit and debt 4.88 129 securities with face values of US$488 million CNY12900 million 1.58 4.03 GBP158 million and EUR403 million. The Group redeemed a quantity of certificates of deposit and debt securities amounting to HK$51198 million equivalent upon maturity. 511.98 At the end of December 2023 the face value of the outstanding 2023 12 certificates of deposit and debt securities issued was equivalent to 287.59 HK$28759 million with a carrying amount equivalent to HK$28462 284.62 million.Maturity Profile of Certificates of Deposit and Debt Securities Issued As at 31st December 2023 2023 12 31 (All amounts expressed in millions of dollars of respective currencies) Total Face Value Year of Maturity 202420252026 Amount in currencies of issuance Floating Rate HKD 200 - 200 - USD 78 58 20 - Fixed Rate (Note) USD 884 763 121 - CNY 9055 155 - 8900 EUR 50 50 - - Zero Coupon USD 173 173 - - CNY 6250 6250 - - GBP 158 158 - - EUR 100 100 - - Total Certificates of Deposit and Debt Securities issued in HKD equivalent 287591766913029788 Note: Associated interest rate swaps have been arranged in order to manage interest rate risk arising from long-term certificates of deposit and debt securities issued if deemed necessary.In 2023 BEA issued fixed rate loan capital with a face value of 2023 5 US$500 million.At the end of December 2023 the face value of the outstanding loan 2023 12 capital issued was equivalent to HK$16102 million with a carrying 161.02 amount equivalent to HK$15967 million. 159.67 ? F-348 ?Page 142 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (d) Liquidity risk management (continued) (d) Maturity Profile of Loan Capital As at 31st December 2023 2023 12 31 (All amounts expressed in millions of dollars of respective currencies) Total Face Value Year of Maturity 20272028202920302032 Amount in currencies of issuance USD (Note 1 2 4 5) 1 2 4 5 1850 500 250 - 600 500 CNY (Note 3) 3 1500 - - 1500 - - Total Loan Capital issued in HKD equivalent 1610239061953165046873906 Notes: 1. The US$500 million loan capital that will mature in 2027 1. 2027 5 is callable on 15th March 2026. 2026 3 15 2. The US$250 million loan capital that will mature in 2028 2. 2028 2.5 is callable on 7th July 2027. 2027 7 7 3. The CNY1500 million loan capital that will mature in 3. 2029 15 2029 is callable on 25th April 2024. 2024 4 25 4. The US$600 million loan capital that will mature in 2030 4. 2030 6 is callable on 29th May 2025. 2025 5 29 5. The US$500 million loan capital that will mature in 2032 5. 2032 5 is callable on 22nd April 2027. 2027 4 22 (e) Interest rate risk management (e) Interest rate risk is the risk resulting from adverse movements in interest rates that affect the earnings and economic value of the IRRBB Group’s banking book positions. The Asset and Liability Management Committee is delegated by the Board to oversee the Group’s interest rate risk management establish the strategy and policy for managing interest rate risk and determine the means for ensuring that such strategies and policies are implemented. Interest rate risk is managed daily by the Treasury Markets Division of the Group within the limits approved by the Board or the Asset and Liability Management Committee. The Market & Liquidity Risk Management Department under the Risk Management Division of the Group is responsible for monitoring the activities relating to interest rate risk. The Internal Audit Division performs periodic reviews to ensure that the interest rate risk management functions are implemented effectively.Interest rate risk primarily results from the timing differences in the re-pricing of interest rate-sensitive assets liabilities and off- balance sheet items in the banking book. In determining the level of interest rate risk assessments are made for the gap risk basis risk and option risk. The Group manages the interest rate risk on the banking book primarily by focusing on re-pricing mismatches.Gap analysis provides a static view of the maturity and re-pricing characteristics of the Group’s interest rate-sensitive assets liabilities and off-balance sheet positions. Re-pricing gap position limits are set to control the Group’s interest rate risk.? F-349 ?Page 143 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (e) Interest rate risk management (continued) (e) Sensitivity analysis in relation to the impact of changes in interest rates on earnings in terms of net interest income (“NII”) and economic value in terms of economic value of equity (“EVE”) is assessed regularly through a number of hypothetical interest rate shock scenarios prescribed by the HKMA. EVE represents an assessment of the present value of expected net cash flows discounted to reflect market rates. As fluctuations in interest rates will affect earnings they will also affect its net worth. Sensitivity limits are set to control the Group’s interest rate risk exposure under both earnings and economic value perspectives. The results are reported to the Asset and Liability Management Committee on a regular basis.In order to produce quantitative estimation on IRRBB the IRRBB Group has assumed shock scenarios to interest rate yield curves which allow changes in economic value and earnings to be computed with consideration of optionality and IRRBB behavioural assumptions. These scenarios are applied to IRRBB exposures in each currency for which the Group has material positions.The prescribed interest rate shock scenarios are provided by the HKMA in their Supervisory Policy Manual IR-1 Interest IR-1 Rate Risk in the Banking Book and generally described as follows: 1. Parallel up: A constant parallel shock up across all 1. time buckets 2. Parallel down: A constant parallel shock down across 2. all time buckets 3. Steepener: Short rates down and long rates up 3. 4. Flattener: Short rates up and long rates down 4. 5. Short rate up: Rates up are greatest at shortest time 5. bucket and diminish towards current rates in longer time buckets 6. Short rate down: Rates down are greatest at shortest 6. time bucket and diminish towards current rates in longer time buckets Based on the sensitivity analysis performed by the Group for 2023 12 31 each of the prescribed interest rate shock scenarios for the 12 annual reporting date at 31st December 2023 the maximum 18.39 adverse impact on EVE and NII over the next 12 months are 2022 12 31 16.87 26.74 HK$1839 million (31st December 2022: HK$1687 million) and HK$2674 million (31st December 2022: HK$2927 2022 12 31 29.27 million) respectively.Details of the sensitivity analysis on interest rate risk can be found on the Bank’s website accessible through the www.hkbea.com “Regulatory Disclosures” link on the home page of the www.hkbea.com/html/tc/bea-about-bea-regulatory- Bank’s website at www.hkbea.com or at the following direct disclosures.html link: www.hkbea.com/regulatory_disclosures.? F-350 ?Page 144 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (f) Strategic risk management (f) Strategic risk is the risk of current or potential impact on the Group’s earnings capital reputation or standing arising from changes in the environment the Group operates in adverse strategic decisions improper implementation of decisions or lack of responsiveness to industry economic or technological changes.The objective of managing strategic risk is to identify assess monitor report and mitigate strategic risk and to ensure compliance with the relevant regulatory requirements.The Group establishes comprehensive policies manuals profiles and reports to set out the management framework as well as assessment and monitoring tools.The Group formulates and adheres to the Strategic Risk Management Manual which outlines a systematic approach to the management of strategic risk including a framework for strategic risk identification assessment monitoring mitigation and control thereby enhancing the level of strategic risk management of the Group.The Risk Management Committee is responsible for overseeing the management of the Group’s strategic risk.(g) Legal risk management (g) Legal risk is the risk of loss arising from unenforceable contracts lawsuits or adverse judgements that may disrupt or otherwise negatively affect the operations or financial condition of the Group.The objective of managing legal risk is to identify assess monitor and report on legal risk and to comply with the relevant legal and regulatory requirements.From time to time the Group provides training conducted by qualified internal personnel and/or external lawyers/professionals to staff members. It also issues reminders to staff members when necessary. When dealing with legal matters the Group consults qualified internal personnel and when necessary and appropriate engages external lawyers with relevant expertise.The Operational Risk Management Committee is responsible for overseeing the management of the Group’s legal risk.(h) Reputation risk management (h) Reputation risk is the risk that the Group’s reputation is damaged by one or more events that result in negative publicity about the business practices conduct or financial condition of the Group.Such negative publicity whether true or not may impair public confidence in the Group and may result in costly litigation or lead to a decline in the Group’s customer base business and/or revenue.The objective of managing reputation risk is to identify assess monitor report and mitigate reputation risk and to ensure compliance with the relevant regulatory requirements.The Group establishes various policies guidelines manuals and codes to ensure compliance with applicable laws rules and regulations and to ensure that the Group maintains a high standard of corporate governance which in turn helps to safeguard and enhance the Group’s reputation.? F-351 ?Page 145 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (h) Reputation risk management (continued) (h) The Group formulates and adheres to the Reputation Risk Management Manual which outlines a systematic approach to the management of reputation risk including a framework for reputation risk identification assessment mitigation control and monitoring thereby protecting and enhancing the reputation of the Group. The Guidelines for Incident Response and Management are established for swift response to and management of unexpected incidents. The Media Guidelines are established to ensure effective and consistent delivery of the Group’s key messages to the media.The Operational Risk Management Committee is responsible for overseeing the management of the Group’s reputation risk.(i) Compliance risk management (i) Compliance risk is the risk of potential losses arising from legal or regulatory sanctions fines and penalties financial losses or damage to reputation that the Group may suffer as a result of its failure to comply with laws regulations rules related self-regulatory organisation standards and codes of conduct applicable to its business activities.The Group establishes various policies guidelines and manuals to ensure compliance with all applicable legislation rules codes of conduct industry standards and guidelines issued by the relevant regulatory authorities that govern the Group’s operations. The Group formulates and adheres to the Compliance Risk Management Manual which outlines a systematic approach to the management of compliance risk including a framework for compliance risk identification assessment monitoring mitigation and control thereby enabling the Group to manage its compliance risk effectively. Independent regulatory compliance reviews are conducted on major functions of the Group using a risk-based approach.(j) Technology risk management (j) Technology risk is the risk of loss to the Group due to inadequate or failed technical processes people and/or computing systems or unauthorised access or disruption to technology resources in particular relating to cyber security and e-banking.To address increasing cyber security threats the Group has put in place adequate security resources and proper control measures based on a defined risk appetite level. The Group has developed technology risk related policies and cyber security strategies as well as comprehensive security awareness programmes to strengthen cyber security at all levels.The Group has also established a framework for proper management of technology risk. The Board and designated committees at the top level are responsible for overall management of technology risk for the Group. They lead various working teams and the “Three Lines of Defence” to address specific areas of concern.Comprehensive control policies standards guidelines and procedures are maintained to ensure that adequate control measures relating to the security of internet systems and applications customer authentication risk assessment for new products and services third-party security and confidentiality integrity and availability of information are all in place.? F-352 ?Page 146 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (k) Capital management (k) The Group’s primary objectives when managing capital are to meet the regulatory requirements and safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost.Capital managed by the Group to achieve these objectives includes ordinary share capital retained profits other reserves and non- controlling interests after deductions for goodwill and intangible assets. It also includes subordinated liabilities impairment allowances and regulatory reserve for general banking risks as allowed under Banking (Capital) Rules.The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might otherwise be possible with greater gearing and the advantages and security afforded by a sound capital position and makes adjustments to the capital structure in light of changes in economic conditions.The Steering Group for Capital Management and Recovery and Resolution Planning is responsible for overseeing issues related to the capital positions and monitoring the capital adequacy against all regulatory and internal reference. The capital position is also reviewed regularly by the Risk Management Committee Risk Committee and the Board.The HKMA supervises the Group on both a consolidated basis and a solo-consolidated basis and as such sets capital requirements and receives information of capital adequacy on a regular basis for the Group as a whole. Individual branches in Macau Taiwan and overseas and banking subsidiaries are directly regulated by respective domestic banking supervisors who set and monitor their capital adequacy requirements. In certain jurisdictions non- banking financial subsidiaries are also subject to the supervision and capital requirements of domestic regulatory authorities.In implementing current capital requirements the HKMA requires the Group to maintain a prescribed ratio of total capital to total risk- weighted assets.The Group monitors its capital structure on the basis of the capital adequacy ratios and there have been no material changes in the Group’s policy on the management of capital during the year.The capital adequacy ratios as at 31st December 2023 and 31st 2023 12 31 2022 12 31 December 2022 as disclosed are computed on the consolidated basis of the Bank and certain of its subsidiaries as specified by the HKMA for its regulatory purposes and are in accordance with the Banking (Capital) Rules of the Hong Kong Banking Ordinance.The Group and its individually regulated operations have complied 2023 12 31 2022 12 31 with all externally imposed capital requirements throughout the year ended 31st December 2023 and 31st December 2022 and the Group’s capital ratios are well above the minimum required by the HKMA.? F-353 ?Page 147 43. PRINCIPAL RISK MANAGEMENT (CONTINUED) (l) Climate-related risk management (l) The Group is of the view that there is growing urgency for immediate climate action in building resilience and to mitigate potential negative impacts of climate change. The Group distinguishes climate related risk between physical risk and transition risk. “Physical risk” refers to the impacts of weather and climate-related events which could lead to disruptions to the business and operations of banks and their clients. “Transition risk” refers to the risk related to the process of adjustment towards a low-carbon economy which can be prompted by policy legal technology and market changes as climate-change mitigation and adaptation measures are adopted. The Group views climate risk as a transverse risk that can manifest in the traditional and principal risk types such as credit operational and reputation risks etc. The impacts can materialise in the business and operational activities of the Bank.The Bank’s Board of Directors has established a Board-level ESG Committee to oversee the Group’s ESG performance. The ESG Steering Committee (“Steering Committee”) reports directly to the ESG Committee. The Steering Committee chaired by the Co-Chief Executive is responsible for driving ESG strategy development assessing the materiality of existing and emerging ESG topics and ESG target setting and performance review which is then reported to the ESG Committee. The Group Chief Risk Officer sits on the ESG Steering Committee and is tasked with managing and reporting on ESG risks.Through the HKMA-led Climate Risk Stress Test (“CRST”) exercise the Group has identified emerging climate risks and opportunities which may materially affect the Group’s business and operations. Based on the results from the climate risk and scenario analysis the Group is able to determine certain financial and non- financial impacts of climate change which could manifest in the major risk categories through impacting of the asset quality (i.e.borrower repayment ability collateral quality) valuation of financial instruments (i.e. market fluctuation) operational resilience (i.e.operational damage to bank premises and assets and business disruption) and reputational impact to the Group. The Group has developed plans to strengthen its strategies and risk governance framework to ensure its resilience against extreme climate events and to mitigate the vulnerabilities identified during this CRST exercise. Due to strong capital buffers built up over past years the estimated financial impact from climate change do not create material capital impact to the Group.The Group’s climate risk management measures include supporting customers towards transition to a low carbon economy expanding green and sustainable finance products controlling the Group’s exposure to high climate risk sectors and the development 1 2 of net zero roadmaps for both operational emissions (Scope 1 and 3 2) as well as financed emissions (Scope 3). The significant climate risk issues will be reported and escalated to management committees and the Board through the existing enterprise risk management organizational structure. To strengthen our climate risk management capability and assess the operational and 2023 financial impact arising from extreme weather events the Group has developed and implemented new risk management tools in 2023 including qualitative and quantitative risk appetite statement for climate risk and climate risk heatmap and strengthened ESG risk assessment to customers and debt securities issuers.? F-354 ?Page 148 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (a) Financial instruments carried at fair value (a) Fair value estimates are generally subjective in nature and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The Group measures fair values using the following hierarchy of methods: Level 1 – Quoted market price in an active market for an identical – instrument.Level 2 – Valuation techniques based on observable input. This – category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.Level 3 – Valuation techniques using significant unobservable – inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs could have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.? F-355 ?Page 149 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) (a) Financial instruments carried at fair value (continued) (a) Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or counterparty quotations. For all other financial instruments the Group determines fair values using valuation techniques. Valuation techniques include net present value and discounted cash flow models and various market recognised option pricing models.Assumptions and inputs used in valuation techniques include risk- free and benchmark interest rates equity prices foreign currency exchange rates index prices historical or implied volatilities and correlations. The objective of valuation techniques is to arrive at a fair value measurement that reflects the price of the financial instrument that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the reporting date.The Group uses widely recognised valuation models for determining the fair value of common and simpler financial instruments like interest rate and currency swaps that use only observable market data and require little management judgement and estimation. Observable prices and model inputs are usually available in the market for listed debt and equity securities exchange traded derivatives and simple over-the-counter derivatives like interest rate swaps. Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.For more complex instruments the Group uses valuation models which usually are developed from recognised valuation methodologies. Some or all of the significant inputs into these models may not be observable in the market and are derived from market prices or rates or are estimated based on assumptions.Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in determination of fair value. Management judgement and estimation are usually required for selection of the appropriate valuation model to be used determination of expected future cash flows on the financial instrument being valued determination of probability of counterparty default and prepayments and selection of appropriate discount rates.The Group has an established control framework with respect to the measurement of fair values. This framework includes a valuation control function namely Financial Instruments Valuation Group (“FIVG”) which comprises control units independent of front office management. Procedures for price verification have been established. Any pricing models to be used would be subject to a rigorous validation and approval process.? F-356 ?Page 150 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) (a) Financial instruments carried at fair value (continued) (a) The table below analyses financial instruments measured at fair value at the end of the reporting period by the level in the fair value hierarchy into which the fair value treatment is categorised: 20232022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Recurring fair value measurement Assets – Trade Bills – Measured at FVOCI - 122 - 122 - 488 - 488 Trading assets 285 2764 - 3049 354 1176 - 1530 Derivative assets 12 9044 - 9056 200 10892 - 11092 Investment securities - Mandatorily measured at - FVTPL - 2327 533 2860 - 3417 732 4149 - - Measured at FVOCI 35922 116339 959 153220 24654 102903 839 128396 362191305961492168307252081188761571145655 Liabilities Trading liabilities - - - - 5 - - 5 Derivative liabilities - 4007 - 4007 99 4046 - 4145 Financial liabilities designated at FVTPL - 13501 - 13501 - 24357 - 24357 -17508-1750810428403-28507 During the years ended 31st December 2023 and 2022 there were 2023 2022 12 31 no significant transfers of financial instruments between Level 1 and Level 2 of the fair value hierarchy. The Group’s policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.? F-357 ?Page 151 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) (a) Financial instruments carried at fair value (continued) (a) Information about significant unobservable inputs in Level 3 valuations Valuation technique Significant unobservable input(s) Range Unlisted debt securities equity Counterparty quote N/A N/A securities and investment funds Net asset value N/A N/A Discounted cash flow Discount rate 13.4% model (2022 12.2%) Marketability discount 20% (202220%) Market-comparable Earnings multiple 14.38 – 36.36 approach (2022 20.51 – 27.66) EV/EBIT 18.26 – 26.75 (202221.61–27.78) Marketability discount 50% (202250%) The fair values of unlisted equity instruments mandatorily measured at FVTPL or measured at FVOCI are estimated using the discounted cash flow model on the basis of an analysis of the investee’s financial position and results or with reference to multiples of comparable listed companies adjusted for a marketability discount to reflect the fact that the shares are not actively traded. An increase in the ratio/investee’s financial position and results in isolation will result in favourable movement in the fair values while an increase in discount rate/marketability discount in isolation will result in unfavourable movement. The fair value of the unlisted investment funds are estimated by using the net asset valuations (“NAV”) provided by the managers of the funds.Valuation of financial instruments in Level 3 are subject to the same valuation control framework as described above and reviewed regularly by FIVG.? F-358 ?Page 152 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) (a) Financial instruments carried at fair value (continued) (a) (1) Valuation of financial instruments with significant (1) unobservable inputs Movements in the recognised fair values of instruments with significant unobservable inputs were as follows: 20232022 Investment Investment Investment Investment securities securities securities securities mandatorily measured at mandatorily measured at measured at FVOCI measured at FVOCI FVTPL FVTPL HK$ Mn HK$ Mn HK$ Mn HK$ Mn Assets At 1st January 1 1 732 839 808 712 Additions/Purchases 8 - 31 - Disposals/Settlements (208) - (27) - Changes in fair value recognised in the income statement 1 - (80) - Changes in fair value recognised in the other comprehensive income - 120 - 127 At 31st December 12 31 533 959 732 839 Total gains for the year included in FVOCI fair value reserve of the other comprehensive income for assets held at the end of the reporting period - 120 - 127 Total gains/(losses) for the year included in the income statement for assets held at the end of the reporting period recorded in net results from other financial instruments at FVTPL 1 - (80) - ? F-359 ?Page 153 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) (a) Financial instruments carried at fair value (continued) (a) (2) Effects of changes in significant unobservable assumptions to (2) reasonably possible alternative assumptions 2023 Effect recorded in profit or loss Effect recorded directly in equity Favourable (Unfavourable) Favourable (Unfavourable) HK$ Mn HK$ Mn HK$ Mn HK$ Mn Financial assets Investment securities mandatorily measured at FVTPL 45 (45) - - Investment securities measured at FVOCI - - 80 (80) 45(45)80(80) 2022 Effect recorded in profit or loss Effect recorded directly in equity Favourable (Unfavourable) Favourable (Unfavourable) HK$ Mn HK$ Mn HK$ Mn HK$ Mn Financial assets Investment securities mandatorily measured at FVTPL 61 (61) - - Investment securities measured at FVOCI - - 70 (70) 61(61)70(70) The fair values of financial instruments are in certain circumstances measured using valuation models that incorporate assumptions that are not supported by prices from observable current market transactions in the same instrument and are not based on observable market data. The table above shows the sensitivity of fair values due to parallel movement of plus or minus 10 per cent in reasonably possible alternative 10% assumptions.? F-360 ?Page 154 44. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) (b) Fair values of financial instruments carried at other than fair value (b) The following methods and significant assumptions have been applied in determining the fair values of financial instruments presented below: (i) The fair value of demand deposits and savings accounts with (i) no specific maturity is assumed to be the amount payable on demand at the end of the reporting period.(ii) The fair value of variable rate financial instruments is (ii) assumed to be approximated by their carrying amounts and in the case of loans and unquoted debt securities does not therefore reflect changes in their credit quality as the impact of credit risk is recognised separately by deducting the amount of the impairment allowances from both the carrying amount and fair value.(iii) The fair value of fixed rate loans and mortgages carried at (iii) amortised cost is estimated by comparing market interest rates when the loans were granted with current market rates offered on similar loans. Changes in the credit quality of loans within the portfolio are not taken into account in determining gross fair values as the impact of credit risk is recognised separately by deducting the amount of the impairment loss and allowances from both the carrying amount and fair value.(iv) The fair value of financial guarantees issued is determined by (iv) reference to fees charged in an arm’s length transaction for similar services when such information is obtainable or is otherwise estimated by reference to interest rate differentials by comparing the actual rates charged by lenders when the guarantee is made available with the estimated rates that lenders would have charged had the guarantees not been available where reliable estimates of such information can be made.The carrying amounts of the Group’s financial instruments carried at cost or amortised cost are not materially different from their fair 2023 12 31 2022 values as at 31st December 2023 and 2022.? F-361 ?Page 155 45. OFF-BALANCE SHEET EXPOSURES (a) Contingent liabilities and commitments (a) The following is a summary of the contractual amounts of each significant class of contingent liabilities and commitments and the aggregate credit risk-weighted amount and is prepared with reference to the completion instructions for the HKMA return of capital adequacy ratio. 20232022 HK$ Mn HK$ Mn Contingent liabilities Direct credit substitutes 3522 4220 Transaction-related contingencies 3927 3846 Trade-related contingencies 7741 6143 1519014209 Commitments Commitments that are unconditionally cancellable without prior notice 332203 303920 Other commitments with an original maturity - up to 1 year – 1 2531 2229 - over 1 year – 1 25168 32043 359902338192 Total 375092 352401 Credit risk-weighted amounts 17458 23651 The credit risk-weighted amount is calculated in accordance with the Capital Rules. Contingent liabilities and commitments are credit-related instruments which include acceptances letters of credit guarantees and commitments to extend credit. The contractual amounts represent the amounts at risk should the contract be fully drawn upon and the client default. Since a significant portion of guarantees and commitments is expected to expire without being drawn upon the total of the contract amounts does not represent expected future cash flows.(b) Derivatives (b) (i) Notional amount of derivatives (i) Derivatives refer to financial contracts whose value depends on the value of one or more underlying assets or indices.? F-362 ?Page 156 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) (b) Derivatives (continued) (b) (i) Notional amount of derivatives (continued) (i) The following is a summary of the notional amounts of each significant type of derivative of the Group: 2023 Managed in conjunction with financial instruments designated at fair value Others through profit including Qualifying or loss held for for hedge trading accounting Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Exchange rate contracts - 2932 311977 314909 Interest rate contracts 115455 8171 195198 318824 Equity contracts - - 6245 6245 11545511103513420639978 2022 Managed in conjunction with financial instruments designated at fair value Others through profit including Qualifying or loss held for for hedge trading accounting Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn Exchange rate contracts - 4163 288758 292921 Interest rate contracts 113222 19685 186718 319625 Equity contracts - - 4774 4774 11322223848480250617320 Derivatives arise from futures forward swap and option transactions undertaken by the Group in the foreign exchange interest rate and equity markets. The notional amounts of these instruments indicate the volume of transactions outstanding at the end of the reporting period; they do not represent amounts at risk.? F-363 ?Page 157 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) (b) Derivatives (continued) (b) (ii) Fair value of derivatives (ii) 20232022 Fair value Fair value Assets Liabilities Assets Liabilities HK$ Mn HK$ Mn HK$ Mn HK$ Mn Exchange rate contracts 1650 1733 1781 1749 Interest rate contracts 7307 2169 9220 2297 Equity contracts 99 105 91 99 90564007110924145 (iii) Hedge accounting (iii) Fair value hedges of interest rate risk The Group’s fair value hedge principally consists of interest rate swaps that are used to protect against changes in the fair value of fixed rate long-term financial instruments due to movements in market interest rates.The Group uses interest rate swaps to hedge its exposure to changes in the fair values of certain fixed rate financial assets and financial liabilities in respect of a benchmark interest rate. Pay-floating/receive-fixed interest rate swaps are matched to specific issuances of fixed rate financial liabilities or pay-fixed/receive-floating interest rate swaps are matched to fixed rate financial assets with terms that closely align with the critical terms of the hedged item.? F-364 ?Page 158 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) (b) Derivatives (continued) (b) (iii) Hedge accounting (continued) (iii) Fair value hedges of interest rate risk (continued) The Group’s approach to managing market risk including interest rate risk is discussed in Note 43(b). Interest rate risk 43(b) to which the Group applies hedge accounting arises from fixed rate financial assets and financial liabilities whose fair value fluctuates when benchmark interest rates change. The Group hedges interest rate risk only to the extent of benchmark interest rates because the changes in fair value of a fixed rate financial asset and financial liability are significantly influenced by changes in the benchmark interest rate. Hedge accounting is applied where economic hedge relationships meet the hedge accounting criteria.By using derivative financial instruments to hedge exposures to changes in interest rates the Group also exposes itself to credit risk of the derivative counterparty which is not offset by the hedged item. The Group minimises counterparty credit risk in derivative instruments by entering into transactions with high-quality counterparties and requiring the counterparties to post collateral (see Note 43(a)(x)). 43(a)(x) Before fair value hedge accounting is applied by the Group the Group determines whether an economic relationship between the hedged item and the hedging instrument exists based on an evaluation of the qualitative characteristics of these items and the hedged risk that is supported by quantitative analysis.The Group considers whether the critical terms of the hedged item and hedging instrument closely align when assessing the presence of an economic relationship. The Group evaluates whether the fair value of the hedged item and the hedging instrument respond similarly to similar risks. The Group further supports this qualitative assessment by using cumulative dollar offset method or regression analysis to assess whether the hedging instrument is expected to be and has been highly effective in offsetting changes in the fair value of the hedged item.The Group establishes a hedge ratio by aligning the par amount of the hedged item and the notional amount of the interest rate swap designated as a hedging instrument. Under the Group policy in order to conclude that a hedge relationship is effective all of the following criteria should be met.- The regression co-efficient (R squared) which measures - the correlation between the variables in the regression is R 0.8 at least 0.8.- The slope of the regression line is within a 0.8–1.25 range. - 0.8-1.25 - The confidence level of the slope is at least 95%.-95 In these hedge relationships the main sources of ineffectiveness are: - the effect of the counterparty and the Group’s own credit - risk on the fair value of the interest rate swap which is not reflected in the fair value of the hedged item attributable to the change in interest rate; and - differences in maturities of the interest rate swap and the - hedged item.? F-365 ?Page 159 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) (b) Derivatives (continued) (b) (iii) Hedge accounting (continued) (iii) Fair value hedges of interest rate risk (continued) At 31st December 2023 and 2022 the Group held the 2023 2022 12 31 following interest rate swaps as hedging instruments in fair value hedges of interest risk: 2023 Maturity Less than More than 1 year 1-5 years 5 years Risk category 1 1–5 5 Interest rate risk Hedge of debt securities investment Nominal amount (HK$ Mn) 6832 40841 51483 Average fixed interest rate 2.21% 1.54% 1.47% Hedge of loans and advances Nominal amount (HK$ Mn) 124 698 27 Average fixed interest rate 2.76% 1.19% 2.59% Hedge of subordinated notes issued Nominal amount (HK$ Mn) - 14452 - Average fixed interest rate - 3.98% - Hedge of deposits from customers Nominal amount (HK$ Mn) 998 - - Average fixed interest rate 4.04% - - 2022 Maturity Less than More than 1 year 1-5 years 5 years Risk category 1 1–5 5 Interest rate risk Hedge of debt securities investment Nominal amount (HK$ Mn) 9953 39974 44403 Average fixed interest rate 2.33% 1.33% 1.33% Hedge of loans and advances Nominal amount (HK$ Mn) 125 869 27 Average fixed interest rate 2.78% 1.54% 2.59% Hedge of subordinated notes issued Nominal amount (HK$ Mn) - 5852 - Average fixed interest rate - 2.72% - Hedge of deposits from customers Nominal amount (HK$ Mn) 9631 - - Average fixed interest rate 3.67% - - Hedge of repo Nominal amount (HK$ Mn) 2388 - - Average fixed interest rate 4.72% - - ? F-366 ?Page 160 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) (b) Derivatives (continued) (b) (iii) Hedge accounting (continued) (iii) Fair value hedges of interest rate risk (continued) The amounts relating to items designated as hedging instruments and hedge ineffectiveness were as follows: 2023 Line item in the Line item in Carrying amount consolidated statement Change in fair consolidated of financial position value used for Ineffectiveness income statement where the hedging calculating hedge recognised in that includes hedge Nominal instrument is included ineffectiveness profit or loss ineffectiveness amount Assets Liabilities HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Interest rate risk Interest rate swaps – 99156 5689 (412) Derivative assets/ (1860) 76 Net hedging hedge of debt (liabilities) profit/(loss) securities investment – Interest rate swaps – 849 42 - Derivative assets/ (24) (2) Net hedging hedge of loans and (liabilities) profit/(loss) advances – Interest rate swaps – 14452 29 (402) Derivative assets/ 147 (23) Net hedging hedge of subordinated (liabilities) profit/(loss) notes issued – Interest rate swaps – 998 - (2) Derivative assets/ 28 2 Net hedging hedge of deposits from (liabilities) profit/(loss) customers – Interest rate swaps – - - - Derivative assets/ 4 (23) Net hedging hedge of repo (liabilities) profit/(loss) – 2022 Line item in the Line item in Carrying amount consolidated statement Change in fair consolidated of financial position value used for Ineffectiveness income statement where the hedging calculating hedge recognised in that includes hedge Nominal instrument is included ineffectiveness profit or loss ineffectiveness amount Assets Liabilities HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Interest rate risk Interest rate swaps – 94330 7311 (113) Derivative assets/ 8958 172 Net hedging hedge of debt (liabilities) profit/(loss) securities investment – Interest rate swaps – 1021 65 - Derivative assets/ 72 4 Net hedging hedge of loans and (liabilities) profit/(loss) advances – Interest rate swaps – 5852 - (299) Derivative assets/ (255) 4 Net hedging hedge of subordinated (liabilities) profit/(loss) notes issued – Interest rate swaps – 9631 9 (37) Derivative assets/ (29) (2) Net hedging hedge of deposits from (liabilities) profit/(loss) customers – Interest rate swaps – 2388 - (1) Derivative assets/ (4) 23 Net hedging hedge of repo (liabilities) profit/(loss) – ? F-367 ?Page 161 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) (b) Derivatives (continued) (b) (iii) Hedge accounting (continued) (iii) Fair value hedges of interest rate risk (continued) The amounts relating to items designated as hedged items were as follows: 2023 Accumulated amount Accumulated amount of of fair value hedge fair value hedge adjustments included Line item in the adjustments remaining in in the carrying consolidated the statement of financial amount of the statement of position for any hedged hedged item financial position items that have ceased to where the Change in value be adjusted for hedging Carrying amount hedged item is used for gains and losses included calculating hedge ineffectiveness Assets Liabilities Assets Liabilities HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Debt securities 92652 - (4449) - Investment 1936 - investment securities Loans and advances 845 - (40) - Loans and 22 - advances to customers Subordinated notes - 14318 - (88) Loan capital (170) - issued Deposits from - 997 - (2) Deposits from (26) - customers customers Repo - - - - Deposits and (27) - balances of banks 2022 Accumulated amount Accumulated amount of of fair value hedge fair value hedge adjustments included Line item in the adjustments remaining in in the carrying consolidated the statement of financial amount of the statement of position for any hedged hedged item financial position items that have ceased to where the Change in value be adjusted for hedging Carrying amount hedged item is used for gains and losses included calculating hedge ineffectiveness Assets Liabilities Assets Liabilities HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Debt securities 85306 - (7683) - Investment (8786) - investment securities Loans and advances 1028 - (62) - Loans and (68) - advances to customers Subordinated notes - 5567 - (257) Loan capital 259 - issued Deposits from - 9604 - (27) Deposits from 27 - customers customers Repo - 2361 - (27) Deposits and 27 - balances of banks ? F-368 ?Page 162 45. OFF-BALANCE SHEET EXPOSURES (CONTINUED) (c) Capital commitments (c) Capital commitments outstanding at 31st December and not 12 31 provided for in the financial statements were as follows: 20232022 HK$ Mn HK$ Mn Expenditure authorised and contracted for 484 452 Expenditure authorised but not contracted for 90 138 574590 (d) Leases committed but not yet commenced (d) At 31st December 2023 and 2022 the total future cash outflows to 2023 2022 12 31 which the Group (as a lessee) is exposed that are not reflected in the measurement of lease liabilities are as follows: 20232022 HK$ Mn HK$ Mn Properties Within one year 1 4 2 After one year but within five years 1 5 5 20 After five years 5 - 6 928 Equipment Within one year 1 - - After one year but within five years 1 5 - - -- Total lease committed but not yet commenced 9 28 (e) Contingencies (e) The Group receives legal claims against it arising in the normal courses of business. The Group considers none of these matters as material. Where appropriate the Group recognises provisions for liabilities when it is probable that an outflow of economic resources embodying economic benefits will be required and for which a reliable estimate can be made of the obligation. 46. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES To mitigate credit risks the Group enters into master netting arrangements with same counterparties. Netting agreements provide that if an event of default occurs all outstanding transactions with the counterparty will be terminated and all amounts outstanding will be settled on a net basis. Except for the event of default all outstanding transactions with the counterparty are settled on a gross basis and generally do not result in offsetting the assets and liabilities in the statement of financial position.The following tables present details of financial instruments subject to offsetting enforceable master netting arrangements and similar agreements.? F-369 ?Page 163 46. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES (CONTINUED) 2023 Amounts subject to enforceable netting arrangements Effects of offsetting in the consolidated Amounts not set off in the consolidated statement of statement of financial position financial position Net amounts presented in the Amounts not consolidated subject to statement of enforceable financial netting position Non-cash arrangements Gross Amounts Financial collateral Cash Net amounts offset instruments collateral amounts Total amounts HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Financial assets Derivative assets 7672-7672(2094)-(2821)275713849056 Placements with and advances to banks - under reverse repos securities borrowing and similar agreements with banks - 4932-4932-(4828)(104)--4932 Loans and advances to customers - under reverse repos securities borrowing and similar agreements with non-banks - 11940-11940-(11546)(394)--11940 Other assets 2381(2124)257---257-257 Total 26925 (2124) 24801 (2094) (16374) (3319) 3014 1384 26185 ? F-370 ?Page 164 46. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES (CONTINUED) Amounts subject to enforceable netting arrangements Effects of offsetting in the consolidated Amounts not set off in the consolidated statement of statement of financial position financial position Net amounts presented in the Amounts not consolidated subject to statement of enforceable financial netting position Non-cash arrangements Gross Amounts Financial collateral Cash Net amounts offset instruments collateral amounts Total amounts HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Financial liabilities Derivative liabilities 2781-2781(2094)-(65)62212264007 Deposits and balances of banks - under repos securities lending and similar agreements with banks - 5250-5250-(4246)(1004)--5250 Other liabilities 2124(2124)------- Total 10155 (2124) 8031 (2094) (4246) (1069) 622 1226 9257 ? F-371 ?Page 165 46. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES (CONTINUED) 2022 Amounts subject to enforceable netting arrangements Effects of offsetting in the consolidated Amounts not set off in the consolidated statement of statement of financial position financial position Net amounts presented in the Amounts not consolidated subject to statement of enforceable financial netting position Non-cash arrangements Gross Amounts Financial collateral Cash Net amounts offset instruments collateral amounts Total amounts HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Financial assets Derivative assets 9985-9985(2298)-(5264)2423110711092 Placements with and advances to banks - under reverse repos securities borrowing and similar agreements with banks - 3498-3498-(3232)(11)255-3498 Other assets 431(396)35---35-35 Total 13914 (396) 13518 (2298) (3232) (5275) 2713 1107 14625 ? F-372 ?Page 166 46. OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES (CONTINUED) Amounts subject to enforceable netting arrangements Effects of offsetting in the consolidated Amounts not set off in the consolidated statement of statement of financial position financial position Net amounts presented in the Amounts not consolidated subject to statement of enforceable financial netting position Non-cash arrangements Gross Amounts Financial collateral Cash Net amounts offset instruments collateral amounts Total amounts HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Financial liabilities Derivative liabilities 3404-3404(2298)-(109)9977414145 Deposits and balances of banks - under repos securities lending and similar agreements with banks - 2953-2953-(2900)(53)--2953 Deposits from customers - under repos securities lending and similar agreements with non-banks - 283-283-(283)---283 Other liabilities 396(396)------- Total 7036 (396) 6640 (2298) (3183) (162) 997 741 7381 ? F-373 ?Page 167 47. NOTES ON CONSOLIDATED CASH FLOW STATEMENT (a) Cash and cash equivalents (a) (i) Components of cash and cash equivalents in the (i) consolidated cash flow statement 20232022 HK$ Mn HK$ Mn Cash and balances with banks with original maturity within three 3 months 37014 44158 Placements with and advances to banks with original maturity within 3 three months 39552 60091 Treasury bills with original maturity within three months 3 14394 6107 Certificates of deposit held with original maturity within three 3 months 516 226 Debt securities with original maturity within three months 3 658 1567 92134112149 (ii) Reconciliation with the consolidated statement of (ii) financial position 20232022 HK$ Mn HK$ Mn Cash and balances with banks (Note 23) 23 45903 54579 Placements with and advances to banks (Note 24) 24 43691 60203 Treasury bills certificates of deposit held and debt securities - trading assets (Note 26) 26 2764 1275 - investment securities (Note 28) 28 165527 145289 168291146564 Amounts shown in the consolidated statement of financial position 257885 261346 Less: Amounts with an original maturity of beyond three months 3 (156861) (138774) Cash balance with central bank subject to regulatory restriction (8890) (10423) Cash and cash equivalents in the consolidated cash flow statement 92134 112149 ? F-374 ?Page 168 47. NOTES ON CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) (b) Reconciliation of liabilities arising from financing activities (b) The table below details changes in the Group’s liabilities from financing activities including both cash and non-cash changes.Liabilities arising from financing activities are liabilities for which cash flows were or future cash flows will be classified in the Group’s consolidated cash flow statement as cash flows from financing activities.Debt Interest rate Interest rate securities swaps held swaps held to issued to hedge hedge accrued Loan capital borrowings borrowings Debt interest accrued (assets) liabilities securities payable interest issued payable Lease Loan capital liabilities Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn At 1st January 2023 20231128921192714159774-30716073 Changes from financing cash flows Issue of loan capital -3893-----3893 Redemption of debt securities issued (2090)------(2090) Interest paid on loan capital ---(873)---(873) Interest paid on debt securities issued --(58)----(58) Payment of lease liabilities ----(274)--(274) Total changes from financing cash flows (2090)3893(58)(873)(274)--598 Exchange adjustments 10(34)--1--(23) Changes in fair value 32-----(7)25 Revaluation under hedge accounting -170---(29)102243 Interest expenses -115194929--1040 Increase in lease liabilities from entering into new leases during the year ----322--322 Total other changes 4214751949352(29)951607 At 31st December 2023 20231231844159677235852(29)40218278 ? F-375 ?Page 169 47. NOTES ON CONSOLIDATED CASH FLOW STATEMENT (CONTINUED) (b) Reconciliation of liabilities arising from financing activities (b) (continued) Interest rate swaps held to Debt securities hedge issued accrued Loan capital borrowings Debt interest accrued liabilities securities payable interest issued payable Loan capital Lease liabilities Total HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn At 1st January 2022 202211584764889579884213395 Changes from financing cash flows Issue of debt securities 388-----388 Issue of loan capital -5793----5793 Redemption of debt securities issued (3061)-----(3061) Interest paid on loan capital ---(374)--(374) Interest paid on debt securities issued --(161)---(161) Payment of lease liabilities ----(302)-(302) Total changes from financing cash flows (2673)5793(161)(374)(302)-2283 Exchange adjustments (239)(103)--(41)-(383) Changes in fair value (44)----6(38) Revaluation under hedge accounting -(257)---29942 Interest expenses 168045428-569 Increase in lease liabilities from entering into new leases during the year ----205-205 Total other changes (282)(354)80454192305395 At 31st December 2022 202212312892119271415977430716073 ? F-376 ?Page 170 48. ASSETS PLEDGED AS SECURITY The following assets have been pledged as collateral for own liabilities at the end of the reporting period. 20232022 HK$ Mn HK$ Mn Secured liabilities 5250 3236 Assets pledged: : On-balance sheet Investment securities - - measured at FVOCI 5071 2999 - measured at amortised cost - - 461 50713460 Off-balance sheet Repledged collateral received 392 - 54633460 The following balances with banks have been pledged as collateral for securities borrowings and margin deposits of derivatives. 20232022 HK$ Mn HK$ Mn Cash collateral for borrowed securities 497 24 Margin accounts for open futures and forward contracts 3671 3125 41683149 These transactions are conducted under terms that are usual and customary to standard lending and securities borrowing and lending activities. 49. LOANS TO DIRECTORS AND ENTITIES CONNECTED WITH DIRECTORS The aggregate of loans to directors of the Bank and entities connected 383(1)(d) with directors disclosed pursuant to Section 383(1)(d) of the Hong Kong 3 Companies Ordinance and Part 3 of the Companies (Disclosure of Information about Benefits of Directors) Regulation are as follows: 20232022 HK$ Mn HK$ Mn Aggregate amount of relevant loans outstanding at 31st December 12 31 By the Bank 867 1613 By subsidiaries - - 8671613 The maximum aggregate amount of relevant loans outstanding during the year By the Bank 1712 2465 By subsidiaries - - 17122465 As at 31st December 2023 and 2022 there was no interest due but 2023 12 31 2022 12 31 unpaid and the impairment allowance made against these loans as required under HKFRS 9 were insignificant. 9 ? F-377 ?Page 171 50. MATERIAL RELATED PARTY TRANSACTIONS (a) Key management personnel remuneration (a) Remuneration for key management personnel of the Group 20 including amounts paid to the Bank’s directors as disclosed in Note 21 20 and certain of the highest paid employees as disclosed in Note 21 is as follows: 20232022 HK$ Mn HK$ Mn Short-term employee benefits 164 169 Post-employment benefits 7 8 Equity compensation benefits 23 23 194200 (b) The Group maintains certain retirement benefit schemes for its (b) staff as per Note 2(x)(iii). In 2023 the total amount of contributions 2(x)(iii) 2023 the Group made to the schemes was HK$219 million (2022: 2.19 2022 HK$204 million). 2.04 The Group enters into a number of transactions with the Group’s related parties including its associates shareholders with significant influence and key management personnel and their close family members and companies controlled or significantly influenced by them. The transactions include accepting deposits from and extending credit facilities to them. All interest rates in connection with the deposits taken and credit facilities extended are under terms and conditions normally applicable to customers of comparable standing.The interest received from and interest paid to the Group’s related parties for the year outstanding balances of amounts due from and due to at the year end and maximum outstanding balance of amounts due from and due to them during the year are aggregated as follows: Key management Shareholders with personnel Associates significant influence 202320222023202220232022 HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn HK$ Mn Interest income 41 40 73 76 12 - Interest expense 96 26 1 - - - Amounts due from 815 1763 1374 1335 422 120 Amounts due to 218030752093451 Maximum amounts due from 1681 2636 1988 2219 1316 8054 Maximum amounts due to 5273 6599 789 438 212 43 Committed facilities to 1293 876 1755 2244 59 - ? F-378 ?Page 172 51. EQUITY COMPENSATION PLANS The Bank has adopted Staff Share Option Schemes whereby the Board of the Bank may at its discretion grant to any employees of the Group including Executive Director and Co-Chief Executives options to subscribe for ordinary shares of the Bank. All options were granted for nil consideration.(a) Particulars of share options (a) Exercise price Date of grant Vesting period Exercise period per share HK$ 04/5/2015(T3) 04/5/2015 - 03/5/2018 04/5/2018 - 04/5/2023 34.15 08/4/2016(T2) 08/4/2016 - 07/4/2018 08/4/2018 - 08/4/2023 28.45 08/4/2016(T3) 08/4/2016 - 07/4/2019 08/4/2019 - 08/4/2024 28.45 07/4/2017(T1) 07/4/2017 - 06/4/2018 07/4/2018 - 07/4/2023 32.25 07/4/2017(T2) 07/4/2017 - 06/4/2019 07/4/2019 - 07/4/2024 32.25 07/4/2017(T3) 07/4/2017 - 06/4/2020 07/4/2020 - 07/4/2025 32.25 10/4/2018(T1) 10/4/2018 - 09/4/2019 10/4/2019 - 10/4/2024 32.25 10/4/2018(T2) 10/4/2018 - 09/4/2020 10/4/2020 - 10/4/2025 32.25 10/4/2018(T3) 10/4/2018 - 09/4/2021 10/4/2021 - 10/4/2026 32.25 19/7/2019(T1) 19/7/2019 - 18/7/2020 19/7/2020 - 19/7/2025 22.45 19/7/2019(T2) 19/7/2019 - 18/7/2021 19/7/2021 - 19/7/2026 22.45 19/7/2019(T3) 19/7/2019 - 18/7/2022 19/7/2022 - 19/7/2027 22.45 07/4/2020(T1) 07/4/2020 - 06/4/2021 07/4/2021 - 07/4/2026 16.58 07/4/2020(T2) 07/4/2020 - 06/4/2022 07/4/2022 - 07/4/2027 16.58 07/4/2020(T3) 07/4/2020 - 06/4/2023 07/4/2023 - 07/4/2028 16.58 13/4/2021(T1) 13/4/2021 - 12/4/2022 13/4/2022 - 13/4/2027 17.08 13/4/2021(T2) 13/4/2021 - 12/4/2023 13/4/2023 - 13/4/2028 17.08 13/4/2021(T3) 13/4/2021 - 12/4/2024 13/4/2024 - 13/4/2029 17.08 12/4/2022(T1) 12/4/2022 - 11/4/2023 12/4/2023 - 12/4/2028 12.17 12/4/2022(T2) 12/4/2022 - 11/4/2024 12/4/2024 - 12/4/2029 12.17 12/4/2022(T3) 12/4/2022 - 11/4/2025 12/4/2025 - 12/4/2030 12.17 12/4/2023(T1) 12/4/2023 - 11/4/2024 12/4/2024 - 12/4/2029 10.08 12/4/2023(T2) 12/4/2023 - 11/4/2025 12/4/2025 - 12/4/2030 10.08 12/4/2023(T3) 12/4/2023 - 11/4/2026 12/4/2026 - 12/4/2031 10.08 ? F-379 ?Page 173 51. EQUITY COMPENSATION PLANS (CONTINUED) (b) Movement of share options during the year (b) 2023 Number of share options Outstanding Outstanding at 1/1/2023 at 31/12/2023 Exercise price 2023 2023 Date of grant Tranche per share 1 1 Granted Exercised Lapsed 12 31 HK$ 04/5/2015 T3 34.15 1955746 - - 1955746 - 08/4/2016 T2 28.45 1946000 - - 1946000 - 08/4/2016 T3 28.45 2046500 - - 50000 1996500 07/4/2017 T1 32.25 2080000 - - 2080000 - 07/4/2017 T2 32.25 2080000 - - 50000 2030000 07/4/2017 T3 32.25 1563000 - - 50000 1513000 10/4/2018 T1 32.25 2125000 - - 50000 2075000 10/4/2018 T2 32.25 1613500 - - 50000 1563500 10/4/2018 T3 32.25 1623000 - - 50000 1573000 19/7/2019 T1 22.45 1493500 - - 50000 1443500 19/7/2019 T2 22.45 1493500 - - 50000 1443500 19/7/2019 T3 22.45 1550500 - - 100000 1450500 07/4/2020 T1 16.58 1728165 - - 50000 1678165 07/4/2020 T2 16.58 1785328 - - 100000 1685328 07/4/2020 T3 16.58 1818336 - - - 1818336 13/4/2021 T1 17.08 1443797 - - 100000 1343797 13/4/2021 T2 17.08 1443906 - - - 1443906 13/4/2021 T3 17.08 1448850 - - - 1448850 12/4/2022 T1 12.17 5353820 - - - 5353820 12/4/2022 T2 12.17 5347653 - - - 5347653 12/4/2022 T3 12.17 5417117 - - - 5417117 12/4/2023 T1 10.08 - 3906879 - - 3906879 12/4/2023 T2 10.08 - 3906877 - - 3906877 12/4/2023 T3 10.08 - 3911167 - - 3911167 Total 47357218 11724923 - 6731746 52350395 ? F-380 ?Page 174 51. EQUITY COMPENSATION PLANS (CONTINUED) (b) Movement of share options during the year (continued) (b) 2022 Number of share options Outstanding Outstanding at 1/1/2022 at 31/12/2022 Exercise price 2022 2022 Date of grant Tranche per share 1 1 Granted Exercised Lapsed 12 31 HK$ 02/5/2014 T3 32.50 1903500 - - 1903500 - 04/5/2015 T2 34.15 1980000 - - 1980000 - 04/5/2015 T3 34.15 1955746 - - - 1955746 08/4/2016 T1 28.45 1064000 - - 1064000 - 08/4/2016 T2 28.45 1946000 - - - 1946000 08/4/2016 T3 28.45 2046500 - - - 2046500 07/4/2017 T1 32.25 2080000 - - - 2080000 07/4/2017 T2 32.25 2080000 - - - 2080000 07/4/2017 T3 32.25 1563000 - - - 1563000 10/4/2018 T1 32.25 2125000 - - - 2125000 10/4/2018 T2 32.25 1613500 - - - 1613500 10/4/2018 T3 32.25 1673000 - - 50000 1623000 19/7/2019 T1 22.45 1493500 - - - 1493500 19/7/2019 T2 22.45 1543500 - - 50000 1493500 19/7/2019 T3 22.45 1550500 - - - 1550500 07/4/2020 T1 16.58 1778165 - - 50000 1728165 07/4/2020 T2 16.58 1785328 - - - 1785328 07/4/2020 T3 16.58 1818336 - - - 1818336 13/4/2021 T1 17.08 1443797 - - - 1443797 13/4/2021 T2 17.08 1443906 - - - 1443906 13/4/2021 T3 17.08 1448850 - - - 1448850 12/4/2022 T1 12.17 - 5353820 - - 5353820 12/4/2022 T2 12.17 - 5347653 - - 5347653 12/4/2022 T3 12.17 - 5417117 - - 5417117 Total 36336128 16118590 - 5097500 47357218 (c) There were no share option forfeited and cancelled during the year (c) 2023 12 31 2022 12 31 ended 31st December 2023 and 2022.? F-381 ?Page 175 52. ACCOUNTING ESTIMATES AND JUDGEMENTS In preparing these consolidated financial statements management has made judgements estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets liabilities income and expenses. Actual results may differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.(a) Key sources of estimation uncertainty (a) Notes 31 39 and 44 contain information about the assumptions 31 39 44 and their risk factors relating to goodwill impairment fair value of share options granted and fair values of financial instruments.Other key sources of estimation uncertainty are as follows: (i) Impairment losses (i) Note 43(a)(viii): impairment of financial instruments 43(a)(viii) involves determining inputs into the ECL measurement model including incorporation of forward-looking information.Note 30: impairment testing of investments in associates 30 involves significant judgement in determining the value in use and in particular estimating the present values of cash flows expected to arise from continuing to hold the investment.(ii) Valuation of financial instruments (ii) The Group’s accounting policy for valuation of financial instruments is included in Note 2. The fair value of the 2 financial instruments is mainly based on the quoted market price on a recognised stock exchange or a price quoted from a broker/dealer for non-exchanged traded financial instruments. For all other financial instruments the Group determines fair values using valuation techniques.Valuation techniques include net present value and discounted cash flow models and various market recognised pricing models. Some or all of the significant inputs into these models may not be observable in the market and are derived from market prices or rates or are estimated based on assumptions. Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in determination of fair value. Management estimation are usually required for selection of the appropriate valuation model assumptions and inputs to be used.(iii) Provisions for tax uncertainties (iii) The Group makes provisions for tax uncertainties by either estimating the most likely amount which is the single most likely amount in a range of possible outcomes or the expected value in a range of possible outcomes. The estimate could be different from the actual results of resolution. Any increase or decrease in the provision would affect profit or loss in future years.? F-382 ?Page 176 52. ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) (b) Critical accounting judgements in applying the Group’s (b) accounting policies Certain critical accounting judgements in applying the Group’s accounting policies are described below: (i) Classification of financial assets (i) Note 2(h)(ii): assessment of the business model within 2(h)(ii) which the assets are held and assessment of whether the contractual terms of the financial asset are SPPI on the principal amount outstanding.(ii) Measurement of ECL (ii) Note 43(a)(viii): establishing the criteria for determining 43(a)(viii) whether credit risk on the financial asset has increased significantly since initial recognition determining methodology for incorporating forward-looking information into measurement of ECL and selection of models used to measure ECL.(iii) Recognition of deferred tax assets (iii) The Group recognises deferred tax assets only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Estimates and judgements are applied in determining the amount of future taxable profits and the probability that such future taxable profits are available in the foreseeable future to support recognition of the deferred tax assets. The Group uses all readily available information including estimates based on reasonable and supportable assumptions and projections of revenue and operating costs in determining future taxable profits. Changes in these estimates could significantly affect the timing of deferred tax asset recognition and the amount of asset recognised. 53. COMPARATIVE FIGURES Certain 2022 comparative figures have been restated to conform to 2022 current year’s presentation. Please refer to Note 22 for the effect of 22 restatement. 54. NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD After the end of the reporting period the directors declared a second interim dividend. Further details are disclosed in Note 18(a). 18(a) ? F-383 ?Page 177 55. POSSIBLE IMPACT OF AMENDMENTS NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED 31ST DECEMBER 2023 20231231 Up to the date of issue of these financial statements the HKICPA has issued a number of amendments to standards and new standards which are not yet effective for the year ended 31st December 2023 and 2023 12 31 which have not been adopted in these financial statements. These include the following which may be relevant to the Group.Effective for accounting periods beginning on or after Amendments to HKFRS 16 Lease Liability in a Sale and Leaseback 1st January 2024 16202411 Amendments to HKAS 1 Classification of Liabilities as Current or Non-current and Non-current 1st January 2024 Liabilities with Covenants 2024 1 1 1 Amendments to HKAS 7 and HKFRS 7 Supplier Finance Arrangements 1st January 2024 77202411 Amendments to HKAS 21 Lack of Exchangeability 1st January 2025 21202511 The Group is in the process of making an assessment of what the impact of these amendments and new standards are expected to be in the period of initial application. So far the adoption of them is unlikely to have a significant impact on the consolidated financial statements.? F-384 ?ISSUER Head Office The Bank of East Asia Limited 东亚银行有限公司 Bank of East Asia Building 10 Des Voeux Road Central Hong Kong ARRANGER AND DEALER The Hongkong and Shanghai Banking Corporation Limited HSBC Main Building 1 Queen’s Road Central Hong Kong DEALERS Barclays Bank PLC CCB International Capital Limited Citigroup Global Markets Limited CLSA Limited 1 Churchill Place 12/F CCB Tower Citigroup Centre 中信里昂证券有限公司 London E14 5HP 3 Connaught Road Canada Square 18/F One Pacific Place United Kingdom Central Canary Wharf 88 Queensway Hong Kong London E14 5LB Hong Kong United Kingdom Crédit Agricole Corporate DBS Bank Ltd. Deutsche Bank AG Hong Kong Branch Goldman Sachs (Asia) L.L.C.and Investment Bank 99 Queen’s Road Central 60/F International Commerce Centre 高盛(亚洲)有限责任公司 30th Floor Central 1 Austin Road West 68th Floor Cheung Kong Centre Two Pacific Place Hong Kong Kowloon 2 Queen’s Road 88 Queensway Hong Kong Central Hong Kong J.P. Morgan Securities Merrill Lynch Mizuho Securities Asia Limited Morgan Stanley & Co. (Asia Pacific) Limited (Asia Pacific) Limited 瑞穗证券亚洲有限公司 International plc 28/F Chater House 55/F Cheung Kong Center 14-15/F K11 Atelier 25 Cabot Square 8 Connaught Road 2 Queen’s Road Central 18 Salisbury Road Canary Wharf Central Hong Kong Central Hong Kong Tsim Sha Tsui Kowloon London Hong Kong E14 4QA United Kingdom Shinkin International Ltd. SMBC Nikko Securities (Hong Kong) Limited Société Générale Standard Chartered Bank 1st Floor 85 London Wall Suites 807-811 8/F One International Finance Centre 29 boulevard Haussmann One Basinghall Avenue London EC2M 7AD 1 Harbour View Street 75009 Paris London EC2V 5DD Central France United Kingdom Hong Kong Standard Chartered Bank The Bank of East Asia Limited The Hongkong and Shanghai Banking (Hong Kong) Limited 东亚银行有限公司 Corporation Limited 渣打银行(香港)有限公司 10/F 10 Des Voeux Road Central Level 17 HSBC Main Building 15/F Two International Finance Centre Hong Kong 1 Queen’s Road Central 8 Finance Street Hong Kong Central Hong Kong UBS AG Hong Kong Branch United Overseas Bank Limited Hong Kong Branch Wells Fargo Securities International Limited 52/F Two International Finance Centre 大华银行有限公司香港分行 33 King William Street 8 Finance Street 6/F Lee Garden Two London EC4R 9AT Central Hong Kong 28 Yun Ping Road United Kingdom Causeway Bay Hong Kong AUDITORS OF THE ISSUER KPMG 8th Floor Prince’s Building 10 Chater Road Central Hong KongTRUSTEE ISSUING AND PAYING AGENT PAYING AGENT DB Trustees Deutsche Bank AG Deutsche Bank AG (Hong Kong) Limited Hong Kong Branch Hong Kong Branch 60/F International Commerce Centre 60/F International Commerce Centre 60/F International Commerce Centre 1 Austin Road West 1 Austin Road West 1 Austin Road West Kowloon Kowloon Kowloon Hong Kong Hong Kong Hong Kong REGISTRAR AND TRANSFER AGENT CMU LODGING AND PAYING AGENT REGISTRAR AND TRANSFER AGENT IN RESPECT OF EACH SERIES OF IN RESPECT OF EACH SERIES OF CMU NOTES Deutsche Bank AG NOTES OR UNDATED CAPITAL SECURITIES Hong Kong Branch OTHER THAN CMU NOTES Deutsche Bank AG 60/F International Commerce Centre Hong Kong Branch 1 Austin Road West Deutsche Bank 60/F International Commerce Centre Kowloon Luxembourg S.A. 1 Austin Road West Hong Kong 2 Boulevard Konrad Adenauer Kowloon L-1115 Luxembourg Hong Kong Luxembourg LEGAL ADVISERS To the Issuer To the Arranger and the Dealers as to English and Hong Kong law as to English law Deacons Linklaters 5th Floor 11th Floor Alexandra House Alexandra House 18 Chater Road Chater Road Central Central Hong Kong Hong Kong To the Trustee as to English law Linklaters 11th Floor Alexandra House Chater Road Central Hong KongPrinted by ProTop Financial Press Limited 240303-01APPENDIX 2 – PRICING SUPPLEMENT DATED 20TH JUNE 2024IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE UNITED STATES OR TO ANY U.S. PERSON OR ANY PERSON ACTING FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE “SECURITIES ACT”).IMPORTANT: You must read the following before continuing. 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THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S.PERSONS EXCEPT PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THIS OFFERING IS MADE SOLELY IN OFFSHORE TRANSACTIONS PURSUANT TO THE SECURITIES ACT.THIS PRICING SUPPLEMENT MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER AND IN PARTICULAR MAY NOT BE FORWARDED TO ANY ADDRESS IN THE UNITED STATES OR TO ANY U.S. PERSONS. ANY FORWARDING DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.Confirmation of your Representation: In order to be eligible to view this Pricing Supplement or make an investment decision with respect to the securities investors must not be located in the United States or be U.S. persons.This Pricing Supplement is being sent at your request and by accepting the e-mail and accessing this Pricing Supplement you shall be deemed to have represented to each of the Issuer (as defined in the attached Pricing Supplement) The Bank of East Asia Limited Citigroup Global Markets Limited Crédit Agricole Corporate and Investment Bank Deutsche Bank AG Hong Kong Branch Goldman Sachs (Asia) L.L.C. Morgan Stanley & Co. International plc Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Limited J.P. Morgan Securities (Asia Pacific) Limited SMBC Nikko Securities (Hong Kong) Limited and Wells Fargo Securities International Limited (collectively the “Managers”) that (1) you are not in the United States and are not a U.S. person nor acting for the account or benefit of a U.S. person and to the extent you purchase the securities described herein you will be doing so pursuant to Regulation S under the Securities Act; (2) the electronic mail address that you provided and to which this e-mail has been delivered is not located in the United States its territories or possessions; and (3) you consent to delivery of this Pricing Supplement and any amendments or supplements thereto by electronic transmission.You are reminded that this Pricing Supplement has been delivered to you on the basis that you are a person into whose possession this Pricing Supplement may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor are you authorised to deliver this Pricing Supplement to any other person. If you have gained access to this transmission contrary to the foregoing restrictions you are not allowed to purchase any of the securities described in the attached.Actions that you may not take: If you receive this document by e-mail you should not reply by e- mail to this document and you may not purchase any securities by doing so. Any reply e-mail 2008658856 1communications including those you generate by using the “Reply” function on your e-mail software will be ignored or rejected.The materials relating to the offering of securities to which this Pricing Supplement relates do not constitute and may not be used in connection with an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and any Manager or any affiliate of any Manager is a licensed broker or dealer in that jurisdiction the offering shall be deemed to be made by such Manager or such affiliate on behalf of the Issuer in such jurisdiction.This Pricing Supplement has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Issuer or the Managers nor any person who controls the Issuer or the Managers nor any director officer employee representative or agent of the Issuer or the Managers or any affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Pricing Supplement distributed to you in electronic format and the hard copy version available to you on request from any Manager.You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature. 2008658856 2MiFID II PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPs ONLY TARGET MARKET — Solely for the purposes of the manufacturer’s product approval process the target market assessment in respect of the Notes (as defined below) has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients only each as defined in Directive 2014/65/EU (as amended “MiFID II”); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering selling or recommending the Notes (a “distributor”) should take into consideration the manufacturer’s target market assessment; however a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer’s target market assessment) and determining appropriate distribution channels.UK MiFIR PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPs ONLY TARGET MARKET — Solely for the purposes of the manufacturer’s product approval process the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is only eligible counterparties as defined in the FCA Handbook Conduct of Business Sourcebook (“COBS”) and professional clients as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”) (“UKMiFIR”); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any distributor should take into consideration the manufacturer’s target market assessment; however a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR Product Governance Rules”) is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer’s target market assessment) and determining appropriate distribution channels.PRIIPs REGULATION – Prohibition of Sales to EEA Retail Investors – The Notes (as defined below) are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended the “Insurance Distribution Directive”) where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.UK PRIIPs REGULATION – Prohibition of Sales to UK Retail Investors – The Notes are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the EUWA; or (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the “FSMA”) and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by the PRIIPs Regulation as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation. 2008658856 3In connection with Section 309B of the Securities and Futures Act 2001 of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”) the Issuer (as defined below) has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA) that the Notes are prescribed capital markets products (as defined in the CMP Regulations 2018) and are Excluded Investment Products (as defined in the MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).This document is for distribution to Professional Investors (as defined in Chapter 37 of the RulesGoverning the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Hong KongStock Exchange”)) (“Professional Investors”) only.Notice to Hong Kong investors: The Issuer confirms that the Notes are intended for purchase by Professional Investors only and will be listed on the Hong Kong Stock Exchange on that basis.Accordingly the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved. The Hong Kong Stock Exchange has not reviewed the contents of this document other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Programme or the Notes on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Programme the Notes the Issuer the Group or the quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this document make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.This document together with the Offering Circular (as defined below) includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer and the Group. The Issuer accepts full responsibility for the accuracy of the information contained in this document and confirms having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.The Notes are complex and high risk financial instruments. Please read the section titled “InvestmentConsiderations” contained in the Offering Circular. The Notes are intended to qualify as Tier 2 capital under the Banking (Capital) Rules (Cap. 155L) of Hong Kong and a Loss Absorbing Instrument under the Financial Institutions (Resolution) (Loss-absorbing Capacity Requirements – Banking Sector) Rules (Cap. 628B) of Hong Kong. There are risks inherent in the holding of any Notes including the risks in relation to their subordination and the circumstances in which Noteholders (as defined in the Conditions) may suffer loss as a result of holding any Notes. Potential investors shouldhave regard to the factors described under the section headed “Considerations Relating to Non-preferred Loss Absorbing Notes Dated Subordinated Notes and Undated Capital Securities” in the Offering Circular for a discussion of certain considerations to be taken into account in connection with an investment in the Notes. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in the Offering Circular and this document and the merits and risks of investing in the Notes in the context of their financial position and particular circumstances. Investors also should have the financial capacity to bear the risks associated with an investment in the Notes. Investors must not purchase the Notes unless they understand and are able to bear risks associated with the Notes. 2008658856 4It is intended that the Notes will constitute “loan capital” and/or a “regulatory capital security” for the purposes of the Stamp Duty Ordinance (Cap. 117) of the Laws of Hong Kong. To the extent there are any concerns specific Hong Kong tax advice should be sought.Pricing Supplement dated 20 June 2024 The Bank of East Asia Limited 东亚银行有限公司 Issue of U.S.$650000000 Dated Subordinated Notes due 2034 (the “Notes”) under the U.S.$6000000000 Medium Term Note Programme (the “Programme”) This document constitutes the pricing supplement (“Pricing Supplement”) relating to the issue of the Notes described herein.Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions of the Notes other than the Undated Capital Securities (the “Conditions”) set forth in the Offering Circular dated 5 March 2024 (the “Offering Circular”). This Pricing Supplement contains the final terms of the Notes and must be read in conjunction with the Offering Circular. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of the Offering Circular and this Pricing Supplement. 1 Issuer The Bank of East Asia Limited 东亚银行有限公司 2 (i) Series Number: 154 (ii) Tranche Number: 1 3 Specified Currency or Currencies: U.S. dollars (U.S.$) 4 Aggregate Principal Amount: (i) Series: U.S.$650000000 (ii) Tranche: U.S.$650000000 5 (i) Issue Price: 99.616 per cent. of the Aggregate Principal Amount (ii) Net Proceeds: Approximately U.S.$646529000 6 (i) Specified Denominations: U.S.$250000 and integral multiples of U.S.$1000 in excess thereof (ii) Calculation Amount: U.S.$1000 subject to adjustment following the occurrence of a Non-Viability Event or the exercise of any Hong Kong Resolution Authority Power 7 (i) Issue Date: 27 June 2024 (ii) Interest Commencement Date: Issue Date 8 Maturity Date: 27 June 2034 9 Interest Basis: Fixed Rate (further particulars specified below) 2008658856 510 Redemption/Payment Basis: Redemption at par 11 Change of Interest or Redemption/ Payment Not Applicable Basis: 12 Put/Call Options: Issuer Call (further particulars specified below) The Issuer shall not redeem any of the Notes unless the prior written consent of the Monetary Authority thereto shall have been obtained to the extent such consent is required under the Banking Ordinance (Cap. 155) of Hong Kong the Financial Institutions (Resolution) (Loss- absorbing Capacity Requirements – Banking Sector) Rules (Cap. 628B) of Hong Kong or the Banking (Capital) Rules (Cap. 155L) of Hong Kong or any successor legislation or regulations made thereunder or any supervisory guidance issued by the Monetary Authority in relation thereto. 13 (i) Status of the Notes: Dated Subordinated (ii) Qualification of the Notes: The Notes are intended to qualify as a Tier 2 Capital Instrument.The Notes are intended to qualify as a Loss Absorbing Instrument.(iii) Date of Board approval for issuance of 23 April 2024 Notes obtained: 14 Listing and admission to trading: The Hong Kong Stock Exchange (Expected effective listing date of the Notes: 28 June 2024) 15 Method of distribution: Syndicated PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16 Fixed Rate Note Provisions: Applicable (i) Rates of Interest: From and including the Issue Date to butexcluding 27 June 2029 (the “OptionalRedemption Date”) 6.750 per cent. per annum payable semi-annually in arrear.From and including the Optional Redemption Date to but excluding the Maturity Date a fixed rate per annum (expressed as a percentage) equal to the aggregate of (a) the then-prevailing U.S. Treasury Rate and (b) the Spread payable semi-annually in arrear.“Calculation Business Day” means any day excluding a Saturday Sunday or public holiday on which banks are open for general business 2008658856 6(including dealings in foreign currencies) in New York City and Hong Kong.“Calculation Date” means the Calculation Business Day preceding the Optional Redemption Date.“Comparable Treasury Issue” means the U.S.Treasury security selected by the Calculation Agent as having a maturity of five years that would be utilised at the time of selection and in accordance with customary financial practice in pricing new issues of corporate debt securities with a maturity of five years.“Comparable Treasury Price” means with respect to any Calculation Date the average of three Reference Treasury Dealer Quotations for such Calculation Date.“Reference Treasury Dealer” means each of the three nationally recognized investment banking firms selected by the Issuer that are primary U.S. Government securities dealers.“Reference Treasury Dealer Quotations” means with respect to each Reference Treasury Dealer and any Calculation Date the average as determined by the Calculation Agent of the bid and asked prices for the Comparable Treasury Issue expressed in each case as a percentage of its principal amount quoted in writing to the Calculation Agent by such Reference Treasury Dealer at 10.00 p.m.(New York City time) on such Calculation Date.“Spread” means 2.550 per cent. per annum which is calculated as (a) 6.842 per cent. per annum (being the yield on the Notes at the date of this Pricing Supplement) minus (b) 4.292 per cent. For information purposes only (b) is the rate in per cent. per annum equal to the yield on U.S. Treasury securities having a maturity of five years as on 20 June 2024.“U.S. Treasury Rate” means the rate in percentage per annum notified by the Calculation Agent to the Issuer and the Noteholders (in accordance with Condition 17) equal to the yield on U.S. Treasury securities having a maturity of five years as is displayed on Bloomberg page “PX1” (or any successor page or service displaying yields on U.S.Treasury securities as agreed between the Issuer and the Calculation Agent) at 6:00 p.m. 2008658856 7(New York time) on the Calculation Date. If such page (or any successor page or service) does not display the relevant yield at 6:00 p.m. (New York time) on the Calculation Date U.S.Treasury Rate shall mean the rate in percentage per annum equal to the semi- annual equivalent yield to maturity of the Comparable Treasury Issue calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the Calculation Date. The U.S.Treasury Rate will be calculated on the Calculation Date.(ii) Interest Payment Dates: 27 June and 27 December in each year commencing on 27 December 2024 and ending on the Maturity Date not adjusted (iii) Business Day Convention: Not Applicable (iv) Fixed Coupon Amount(s): Not Applicable (v) Broken Amount(s): Not Applicable (vi) Day Count Fraction: 30/360 (vii) Determination Dates: Not Applicable (viii) Other terms relating to the method of Not Applicable calculating interest for Fixed Rate Notes: 17 Floating Rate Note Provisions: Not Applicable 18 Zero Coupon Note Provisions: Not Applicable 19 Index Linked Interest Note Provisions: Not Applicable 20 Dual Currency Note Provisions: Not Applicable PROVISIONS RELATING TO REDEMPTION 21 Call Option: Applicable (i) Optional Redemption Date: 27 June 2029 subject to the prior written consent of the Monetary Authority (ii) Optional Redemption Amount of each U.S.$1000 per Calculation Amount subject to Note and specified denomination adjustment following the occurrence of a Non- method if any of calculation of such Viability Event or the exercise of any Hong amount: Kong Resolution Authority Power (iii) If redeemable in part: Not Applicable (iv) Notice period: As set out in Condition 6(d) 22 Put Option: Not Applicable 2008658856 823 Final Redemption Amount of each Note: U.S.$1000 per Calculation Amount subject to adjustment following the occurrence of a Non- Viability Event or the exercise of any Hong Kong Resolution Authority Power 24 Early Redemption Amount: U.S.$1000 per Calculation Amount subject to adjustment following the occurrence of a Non- Viability Event or the exercise of any Hong Kong Resolution Authority Power 25 Early Redemption Amount per Calculation U.S.$1000 per Calculation Amount subject to Amount payable on redemption for taxation adjustment following the occurrence of a Non- reasons or on event of default and/or the Viability Event or the exercise of any Hong method of calculating the same (if required or if Kong Resolution Authority Power different from that set out in the Conditions): PROVISIONS RELATING TO NON-VIABILITY AND LOSS ABSORPTION OF DATED SUBORDINATED NOTES AND NON-PREFERRED LOSS ABSORBING NOTES 26 Loss Absorption: Applicable (a) Suspension Period: As set out in Condition 2(f) (b) Non-Viability Event: As set out in Condition 7(a) (c) Non-Viability Event Notice: As set out in Condition 7(a) (d) Write-off: Applicable (e) Loss-absorbing capacity: As set out in Condition 7 (f) Others: Not Applicable GENERAL PROVISIONS APPLICABLE TO THE NOTES 27 Form of Notes: Registered Notes: Regulation S Global Certificate (U.S.$650000000 principal amount) registered in the name of a nominee of a common depositary for Euroclear and Clearstream 28 Financial Centre(s) or other special provisions Not Applicable relating to Payment Dates: 29 Talons for future Coupons or Receipts to be Not Applicable attached to Definitive Notes (and dates on which such Talons mature): 30 Details relating to Partly Paid Notes: amount of Not Applicable each payment comprising the Issue Price and date on which each payment is to be made and consequences (if any) of failure to pay including any right of the Issuer to forfeit the Notes and interest due on late payment: 2008658856 931 Details relating to Instalment Notes: amount of Not Applicable each instalment (Instalment Amount) date on which each payment is to be made (Instalment Date): 32 Other terms or special conditions: Refer to Schedule hereto DISTRIBUTION 33 (i) If syndicated names of Managers: Joint Global Coordinators Joint Bookrunners and Joint Lead Managers: The Bank of East Asia Limited (Debt Capital Markets) Citigroup Global Markets Limited Crédit Agricole Corporate and Investment Bank Deutsche Bank AG Hong Kong Branch Goldman Sachs (Asia) L.L.C.Morgan Stanley & Co. International plc Standard Chartered Bank Joint Bookrunners and Joint Lead Managers: The Hongkong and Shanghai Banking Corporation Limited J.P. Morgan Securities (Asia Pacific) Limited SMBC Nikko Securities (Hong Kong) Limited Wells Fargo Securities International Limited (ii) Stabilisation Manager (if any): Any of the Managers (other than The Bank of East Asia Limited) appointed and acting in its capacity as stabilisation manager 34 If non-syndicated name of Dealer: Not Applicable 35 U.S. selling restrictions: TEFRA not applicable Regulation S (Category 2) 36 Prohibition of Sales to EEA Retail Investors: Applicable 37 Prohibition of Sales to UK Retail Investors: Applicable 38 Additional selling restrictions: Not Applicable 39 Private bank rebate/commission: Not Applicable OPERATIONAL INFORMATION 40 ISIN Code: XS2813323685 41 Common Code: 281332368 42 CMU Instrument Number: Not Applicable 2008658856 1043 Legal Entity Identifier (LEI): CO6GC26LCGGRTUESIP55 44 Any clearing system(s) other than The Central Not Applicable Moneymarkets Unit Service and/or Euroclear Bank SA/NV and Clearstream Banking S.A.and the relevant identification number(s): 45 Delivery: Delivery against payment 46 Names and addresses of additional Paying Not Applicable Agent(s) (if any): GENERAL 47 The aggregate principal amount of Notes Not Applicable issued has been translated into U.S. dollars at the rate of ___ producing a sum of (for Notes not denominated in U.S. dollars): 48 In the case of Registered Notes specify the Not Applicable location of the office of the Registrar if other than Luxembourg: 49 In the case of Bearer Notes specify the Not Applicable location of the office of the Issuing and Paying Agent if other than Dublin Ireland: 50 Governing Law: English law save that Conditions 3(e) 3(f) and 7 shall be governed by and construed in accordance with the laws of Hong Kong 51 Ratings: The Notes to be issued are expected to be rated: Moody’s Investors Service Inc.: Baa2 S&P Global Ratings: BBB- HONG KONG SFC CODE OF CONDUCT 52 Rebates: Not Applicable 53 Contact email addresses where underlying dcm@hkbea.com investor information in relation to omnibus DCM.Omnibus@citi.com orders should be sent: Project.Rhodora@ca-cib.com Project.rhodora@list.db.com gs-hk-dcm-omnibus@gs.com omnibus_debt@morganstanley.com SYNHK@sc.com 54 Marketing and Investor Targeting Strategy: As indicated in the Offering Circular PURPOSE OF PRICING SUPPLEMENT This Pricing Supplement comprises the final terms required for issue and admission to trading on the Hong Kong Stock Exchange of the Notes described herein pursuant to the U.S.$6000000000 Medium Term Note Programme. 2008658856 11STABILISATION In connection with this issue any of the Managers (other than The Bank of East Asia Limited) named as stabilisation manager (the “Stabilisation Manager”) (or persons acting on behalf of any Stabilisation Manager) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail for a limited period after the closing date of the relevant Tranche of Notes. However there is no obligation on such Stabilisation Manager to do this. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and if begun may cease at any time but must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the Stabilisation Manager (or persons acting on behalf of any Stabilisation Manager) in accordance with all applicable laws and rules.INVESTMENT CONSIDERATIONS There are significant risks associated with the Notes including but not limited to counterparty risk country risk price risk and liquidity risk. Investors should contact their own financial legal accounting and tax advisers about the risks associated with an investment in these Notes the appropriate tools to analyse that investment and the suitability of the investment in each investor ’s particular circumstances. No investor should purchase the Notes unless that investor understands and has sufficient financial resources to bear the price market liquidity structure and other risks associated with an investment in these Notes. In particular investors in the Notes should read the section titled "Investment Considerations" contained in the Offering Circular including but not limited to the risk factors titled “Considerations relating to the Notes and the Undated Capital Securities”and “Considerations relating to Non-Preferred Loss Absorbing Notes Dated Subordinated Notesand Undated Capital Securities” which apply to the issue of Notes described herein.Before entering into any transaction investors should ensure that they fully understand the potential risks and rewards of that transaction and independently determine that the transaction is appropriate given their objectives experience financial and operational resources and other relevant circumstances. Investors should consider consulting with such advisers as they deem necessary to assist them in making these determinations.MATERIAL ADVERSE CHANGE STATEMENT Save as disclosed in the Offering Circular there has been no significant change in the financial or trading position of the Issuer or the Group since 31 December 2023 and no material adverse change in the financial position or prospects of the Issuer or the Group since 31 December 2023. 2008658856 12RESPONSIBILITY The Issuer accepts responsibility for the information contained in this Pricing Supplement.Signed on behalf of The Bank of East Asia Limited SIGNATURE PAGE - PRICING SUPPLEMENTSchedule This Schedule sets out the special conditions referred to in Item 32 (Other terms or special conditions) of the Pricing Supplement such that the following modifications shall apply in respect of this series of Notes only: Condition 7(a)(i) shall be deemed to be deleted in its entirety and replaced with the following: “If “Write-off” is specified as being applicable for the Loss Absorption option in the applicable Pricing Supplement for any Dated Subordinated Notes and a Non-Viability Event occurs and is continuing the Issuer shall on or prior to the provision of a Non-Viability Event Notice irrevocably (without the need for the consent of the Trustee or the holders of any Dated Subordinated Notes) reduce the then principal amount of and cancel any accrued but unpaid interest in respect of each Dated Subordinated Note (in each case in whole or in part) by an amount equal to the Non-Viability Event Write-off Amount per Dated Subordinated Note (such reduction and cancellation and the reduction and cancellation or conversion of any other Subordinated Capital Instruments so reduced and cancelled or converted upon theoccurrence of a Non-Viability Event where applicable being referred to herein as the “Write-off” and “Written-off” shall be construed accordingly). Any failure to provide a Non-Viability Event Notice whether at all or otherwise in accordance with the prescribed time period in theConditions shall not invalidate any Write-off.” 2008658856 S-1