2006 Interim Report－A Share.pdf - 中国银行

Notes to the Condensed Financial Statements
For the six month period ended 30 June 2006
(Amount in millions of Renminbi, unless otherwise stated)
VII . ASSETS AND LIABILITIES BY CURRENCY
The Group's net foreign currency positions as at 30 June 2006 and 31 December 2005 are analysed below:
Foreign Currency Positon
As at 30 June 2006 As at 31 December 2005
In RMB In USD In RMB In USD
billion billion billion billion
equivalent equivalent equivalent equivalent
Net on-balance sheet foreign currency
position of the Group 601 75 485 60
Less:
Net off-balance sheet foreign currency
position of the Group (232) (29) (171) (21)
Net foreign currency position of the
Group
369 46 314 39
Less:
Foreign currency denominated net
investments in foreign operations*
(103) (13) (105) (13)
Net position 266 33 209 26
*The foreign currency denominated net investments in foreign operations represent the net assets/liabilities of overseas
subsidiaries, branches or associated undertakings, the functional currencies of which are currencies other than
RMB. The results and financial position of these operations are translated into RMB, for reporting purposes with all
exchange differences arising from the translation recognised under the "Currency Translation Difference" as a separate
component of equity. These exchange differences therefore do not impact the consolidated results of the Group.
The Group manages its sources and uses of foreign currencies to minimize potential currency mismatches. However,
the Group's ability to manage its foreign currency positions in relation to the RMB is limited as RMB is not a freely
convertible currency. According to the current applicable foreign currency policies of the PRC government, the
conversion of foreign currency is subject to application and approval by the relevant PRC government authorities.
The Bank has significant foreign currency positions, largely as a result of the foreign currency capital contributions
from certain equity holders, the foreign currency surplus arising from the Bank's foreign currency operations
and related accumulated profits and losses.
In 2005, the Bank entered into a foreign currency option agreement with Huijin hauing a notional amount of USD18
billion to economically hedge a portion of its net on-balance sheet foreign currency position.
During the six month period ended 30 June 2006, the Bank executed certain foreign exchange transactions to reduce
its net foreign currency position by USD3.3 billion.
Subsequent to the balance sheet date in August 2006, the Bank further effected certain foreign exchange transactions,
further reducing its net foreign currency position by USD14.2 billion.
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