IBA Reports Profits of HK$300 Million for 2004, more than double the 2003 result

Net profit up by 117% in 2004 compared with 2003

(Hong Kong: March 1, 2005) International Bank of Asia announced today that the net profit attributable to shareholders for the year ended 31 December 2004 was HK$300.4 million, an increase of 117% over 2003. Net interest income of HK$610.2 million, together with other operating income which rose by 11% to HK$225.1 million, produced total operating income of HK$835.3 million, an increase of 4% over 2003. Total assets as of 31 December 2004 increased by 21% to HK$45.8 billion, with net loans increasing by 16% to HK$18 billion. Total customer deposits reached HK$30 billion.

Growth achieved in net interest income

Other operating income increased by 11%

"We achieved a very impressive growth in net profit in 2004, more than doubling the 2003 result" said Jin-Yi Lee, Managing Director and Chief Executive Officer. "Throughout 2004, although keen competition in the banking industry caused a decline in net interest spread, we nevertheless managed to achieve growth in net interest income by expanding the Bank's loan portfolio. In addition, other operating income recorded a more significant increase of 11%. This growth was mainly driven by income from sales of new investment products, securities brokerage, wealth management services and other banking services. Other operating income represented a higher proportion of the Bank's total income, increasing from 25% in 2003 to 27% in 2004".

Operating expenses increased by 23%

Total provision charges fell by 98%

Operating expenses increased by 23% to HK$602 million as a result of opening a new branch and a wealth management center, increased staffing and business promotion costs, depreciation of new information technology systems and one-off expenses in relation to retiring senior executives. Total provision charges, including provisions for bad and doubtful loans, investments and repossessed assets, fell by 98% as a result of the improved economic environment, an increasingly effective credit risk management system and disposals of repossessed assets.

Total assets rose by 21%

Loan portfolio grew by 16

Total assets rose 21% to HK$45.8 billion. A remarkable 16% growth in the loan portfolio contributed HK$2.4 billion of this growth. Advances to customers increased to HK$18 billion with major growth seen in residential mortgages, hire purchase contracts, commercial and syndication loans. The investment portfolio, which comprised Hong Kong Exchange Fund paper, U.S. Treasuries, bank certificates of deposit and a small proportion of high grade corporate bonds, reduced by HK$5 billion, as the Bank increased its holdings of shorter term funds, which went up by HK$6.4 billion.

Deposits from customers reached HK$30 billion

With the introduction of a wide range of structured investment deposits, IBA has achieved great success in retaining customer deposits in a very low interest rate environment with deposits from customers growing from HK$28.8 billion to HK$30.1 billion. Fixed deposits stood at HK$18 billion whereas low cost deposits, including the 3M account (an interest bearing current account), checking, savings and call accounts all recorded slight increases as compared with 2003. Shareholders' funds stood at HK$3.7 billion as of 31 December 2004.

Looking forward to 2005, management is optimistic about the Bank's prospects, as reflected in a number of new business developments currently underway. Following the acquisition of a 75% stake in IBA by Fubon Financial Holding Co., Ltd. in March 2004, both parties have been working on a number of new business initiatives with a view to expanding the customer base and the scope of services, achieving synergy in operations, enhancing product development capabilities and broadening distribution channels.

IBA to change its name to Fubon Bank (Hong Kong) Limited

One of the important business initiatives being undertaken is the rebranding of IBA as a member of the Fubon Financial Group. IBA has recently obtained shareholders' approval to the change of its name to "Fubon Bank (Hong Kong) Limited", which will become effective on 6 April 2005. The new name will not only help the Bank to promote its products and services to Taiwanese customers but will also introduce the new identity of the Bank to our local customers.

Other new business initiatives to be undertaken in 2005 will include cross-selling campaigns directed at Fubon Financial Group's customers and express funds transfer between Hong Kong and Taiwan accounts. In addition, IBA has set up a Taiwan Division to coordinate different business activities and facilitate communication between divisions of the two institutions. IBA will continue to explore opportunities for business cooperation with various members of the Fubon Financial Group to further expand its customer base and income sources. With new market segments opening up as a result of integration into the Fubon Financial Group, the stage has been set for sustained growth.

In addition, the Bank has commenced a reorganization of its retail distribution network to improve operational efficiency and has launched marketing programs tailored to the needs of local customers. IBA will continue to expand its treasury operations and wealth management services, provide a comprehensive range of investment products and all round personal lending services, increase lending to small and medium enterprises and equipment financing and become the platform to service Fubon's individual and corporate clients in Hong Kong and Southern China.

Fubon Financial is a leading financial services group in Taiwan and is listed on the Taiwan Stock Exchange with its shares traded under the symbol "2881". Fubon Financial provides a comprehensive range of financial products and services, including commercial banking, non-life and life insurance, securities brokerage, asset management and investment banking services, with more than 6 million customers served through a network of more than 330 branches and 9,000 sales and marketing representatives. It holds an A-3 short-term, BBB long-term rating from Standard & Poor's. Fubon Financial has recently reported a net profit after tax of NT$15 billion for the year ended 31 December 2004, representing a 7.8% growth as compared with 2003.

IBA is listed on the Stock Exchange of Hong Kong (stock code: 636) and holds an A-3 short-term, BBB long-term rating from Standard & Poor's, first awarded in 1996. The rating reflects IBA's strong capitalisation, good liquidity, and sound asset quality.

The Directors propose the payment of a final dividend of 11 Hong Kong cents per ordinary share in respect of the year ended 31 December 2004, subject to approval at the forthcoming Annual General Meeting to be held on 28 April 2005.