1
The Directors of Dah Sing Financial Holdings Limited (the “Company”)
are pleased to present the Interim Report and condensed
consolidated financial statements of the Company and its
subsidiaries (collectively the “Group”) for the six months ended 30
June 2007. The unaudited profit attributable to shareholders after
minority interests was HK$664.2 million for the six months ended
30 June 2007.
UNAUDITED INTERIM FINANCIAL STATEMENTS

The unaudited 2007 interim condensed consolidated financial
statements of the Group have been prepared in accordance with
Hong Kong Accounting Standard No. 34 “Interim Financial
Reporting” issued by the Hong Kong Institute of Certified Public
Accountants.
=S~
(Incorporated in Hong Kong with limited liability under the Companies Ordinance)
Vki0440
(Stock Code: 0440)
@MM<{h9
2007 INTERIM REPORT

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2
UNAUDITED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June
v
Restated
=@MM<@MM
]HK$’000 Note 2007 2006 Variance

%
!CInterest income 2,856,268 2,499,747
!Interest expense (1,770,206) (1,474,783)
!CNet interest income 3 1,086,062 1,024,964 6.0
R|CFee and commission income 351,371 295,176
R|Fee and commission expense (47,949) (40,027)
R|CNet fee and commission income 4 303,422 255,149 18.9
UCNet trading income/(loss) 5 143,225 (13,204)
RC/CNet insurance premium income
and other income 819,564 325,272
/COther operating income 6 29,518 38,119
COperating income 2,381,791 1,630,300 46.1
nW>Net insurance claims and movement in
A~liabilities to policyholders (736,035) (207,219)
nW~CTotal operating income net of
insurance claims 1,645,756 1,423,081 15.6
Operating expenses 7 (706,840) (612,753) 15.4
X$Operating profit before impairment losses
JF~6!on loans and advances 938,916 810,328 15.9
X~$JFImpairment losses on loans and advances 8 (87,854) (75,315) 16.6
s^Operating profit before gains on certain
)~6!investments and fixed assets 851,062 735,013 15.8
^~CKNet gain/(loss) on disposal of fixed assets 452 (9)
T)~)Net gain on disposal of interests in subsidiaries 9 – 189,443
4)Net gain on disposal of
available-for-sale securities 97,785 64,536
s9~Share of results of jointly controlled entities 4,339 2,675
2~Share of results of associates (7,717) (9,465)
4~$FReversal of impairment losses on
available-for-sale securities – 25,891
6!Profit before income tax 945,921 1,008,084 – 6.2
Income tax expense 10 (123,878) (138,928)
h6!Profit for the period 822,043 869,156
UV6!Profit attributable to minority interests (157,864) (140,846)
/V6!Profit attributable to shareholders
of the Company 11 664,179 728,310 – 8.8
VDividend 187,566 187,566
V!Earnings per share 12
%/Basic HK$2.66 HK$2.91
ADiluted HK$2.65 HK$2.91
VVDividends per share
{hVInterim dividend HK$0.75 HK$0.75
0~C)
MJ/

3
UNAUDITED CONSOLIDATED BALANCE SHEET

@MM<@MM
MJJ@MJ9
=As at As at
]HK$’000 Note 30 June 2007 31 Dec. 2006
ASSETS

|/Cash and balances with banks and
|?Wother financial institutions 13 6,134,816 7,440,296
9J@/Placements with banks maturing between
7h?one and twelve months 1,622,080 853,327
UB?4Trading securities 14 12,061,816 9,113,785
!$t/Financial assets at fair value
C)?|through profit or loss 14 1,266,015 1,276,671
A|n.Derivative financial instruments 15 803,876 374,317
X/LAdvances and other accounts 16 60,583,049 52,029,818
4Available-for-sale securities 18 34,913,283 33,336,794
7h4Held-to-maturity securities 19 339,010 458,395
2Investments in associates 49,865 57,647
s9Investments in jointly controlled entities 41,531 37,192
wGoodwill 950,992 950,992
|Intangible assets 193,976 208,238
/^Premises and other fixed assets 20 1,586,468 1,597,491
0Investment properties 21 500,235 484,465
}hn~$Value of in-force long-term life assurance business 846,445 810,778
)hCurrent income tax assets 14,061 14,414
Deferred income tax assets 416 3,377
Total assets 121,907,934 109,047,997
LIABILITIES

Deposits from banks 2,607,622 1,678,259
A|n.Derivative financial instruments 15 560,483 323,809
UB?Trading liabilities 8,469,893 6,526,233
!$t/Deposits from customers designated at
C)?fair value through profit or loss 22 3,706,712 3,393,048
Deposits from customers 23 65,966,319 63,595,931
p?Certificates of deposit issued 24 10,064,051 8,768,472
p?4Issued debt securities 25 2,309,668 2,299,574
Subordinated notes 26 5,004,716 3,480,127
/LQJOther accounts and accruals 7,410,964 4,051,157
nA~Liabilities to policyholders under insurance contracts 2,782,567 2,286,088
)hCurrent income tax liabilities 172,533 91,498
Deferred income tax liabilities 146,451 144,256
Total liabilities 109,201,979 96,638,452
)EQUITY
UV)Minority interests 2,412,975 2,364,803
/V)Equity attributable to the Company’s shareholders
V/Share capital 500,176 500,176
!Retained earnings 7,509,582 7,032,969
/Other reserves 27 2,095,656 2,111,456
bVProposed dividend 187,566 400,141
V|Shareholders’ funds 10,292,980 10,044,742
)Total equity 12,705,955 12,409,545
)Total equity and liabilities 121,907,934 109,047,997
0~Cr

4
UNAUDITED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY

For the six months ended 30 June 2007
/V)
Attributable to the Shareholders of the Company
U
V/Vk6/!V))
Share Share Other Retained Minority Total
]HK$’000 capital premium reserves earnings interests equity
@MM<99WBalance at 1 January 2007 500,176 984,286 1,127,170 7,433,110 2,364,803 12,409,545
4~!$)Fair value gains on
available-for-sale securities ––62,963 – 15,621 78,584
4Disposal of available-for-sale securities (77,405) – (20,380) (97,785)
4!$Deferred income tax liabilities recognised
)~on fair value gains on and disposal
of available-for-sale securities ––(1,620) – (69) (1,689)
R7TExchange differences arising on
r?translation of the financial
statements of foreign entities ––262 – 187 449
B)~Net expense recognised
directly in equity ––(15,800) – (4,641) (20,441)
h6!Profit for the period –664,179 157,864 822,043
@MM<MJTotal recognised (expense)/income
/~for the six months ended
C30 June 2007 ––(15,800) 664,179 153,223 801,602
T/UDividend paid to minority
VbVshareholders of subsidiaries ––––(105,051) (105,051)
@MM1hV2006 final dividend –(400,141) – (400,141)
–––(400,141) (105,051) (505,192)
@MM<MJWBalance at 30 June 2007 500,176 984,286 1,111,370 7,697,148 2,412,975 12,705,955
MJ/
Six months ended 30 June
2007 2006

@MM<@MM
"!~b{hVProposed interim dividend included in retained earnings 187,566 187,566
0~C)r
@MM<MJ/

5
UNAUDITED CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY (Continued)
For the six months ended 30 June 2007 (Continued)
/V)
Attributable to the Shareholders of the Company
U
V/Vk6/!V))
Share Share Other Retained Minority Total
]HK$’000 capital premium reserves earnings interests equity
@MM99WBalance at 1 January 2006 500,176 984,286 1,048,202 6,563,670 1,920,202 11,016,536
4~!$KFair value losses on
available-for-sale securities – – (73,036) – (27,082) (100,118)
4Disposal of available-for-sale securities – – (48,896) – (15,640) (64,536)
4!$KDeferred income tax liabilities released
F~on fair value losses on and disposal
of available-for-sale securities – – 20,953 – 7,007 27,960
R7TExchange differences arising on
r?translation of the financial
statements of a foreign subsidiary – – 65 – 22 87
B)~Net expense recognised
directly in equity – – (100,914) – (35,693) (136,607)
h6!Profit for the period – – – 728,310 140,846 869,156
@MMMJTotal recognised (expense)/income
/~for the six months ended
C30 June 2006 – – (100,914) 728,310 105,153 732,549
T)Disposal of interests in subsidiaries – – – – 316,630 316,630
T/UDividend paid to minority
VbVshareholders of subsidiaries – – – – (88,710) (88,710)
@MM1hV2005 final dividend – – – (340,120) – (340,120)
––(100,914) 388,190 333,073 620,349
@MMMJWBalance at 30 June 2006 500,176 984,286 947,288 6,951,860 2,253,275 11,636,885
0~C)ri
@MM<MJ/i

6
UNAUDITED CONSOLIDATED CASH FLOW
STATEMENT

For the six months ended 30 June
=@MM<@MM
]HK$’000 Note 2007 2006
aB|>Net cash from/(used in) operating activities 30 465,280 (2,702,675)
~|ZtCash flows from investing activities
j^Purchase of fixed assets (32,661) (13,207)
j0Purchase of investment properties (15,770) (20,059)
^aProceeds from disposal of fixed assets 482 –
T)Disposal of interests in subsidiaries
~||L(net of cash and cash equivalents disposed of) – 500,122
|BZC>Net cash (used in)/from investing activities (47,949) 466,856
~|ZtCash flows from financing activities
Certificates of deposit issued 1,869,541 2,038,761
Certificates of deposit redeemed (596,661) (1,306,741)
Subordinated notes issued 1,562,570 1,162,210
Subordinated notes redeemed – (970,069)
b]VVDividends paid on ordinary shares (400,141) (340,120)
T/UVbVDividends paid to minority shareholders of subsidiaries (105,051) (88,710)
|ZC>Net cash from financing activities 2,330,258 495,331
||LNet increase/(decrease) in
>cash and cash equivalents 2,747,589 (1,740,488)
hq||LCash and cash equivalents at beginning of the period 11,970,929 13,559,222
h1||LCash and cash equivalents at end of the period 14,718,518 11,818,734
||LW~iAnalysis of the balance of cash and cash equivalents:
|/|?WCash and balances with banks and other financial institutions 1,866,053 1,629,087
Ch7hMoney at call and short notice 4,268,763 4,833,863
H/hoM/?4Treasury bills with original maturity within three months 6,961,622 4,743,267
H/hoM/?Placement with banks with original maturity within three months 1,622,080 1,125,051
H/hoM/?Deposits and balances of banks with original maturity
Wwithin three months – (512,534)
14,718,518 11,818,734

0~C|Zt7r
MJ/

7
Note:
1. General information
Dah Sing Financial Holdings Limited (the “Company”) and its
subsidiaries (together the “Group”) provides banking, insurance,
financial and other related services in Hong Kong, Macau, and the
People’s Republic of China.
2. Basis of preparation and accounting policies
With effect from 1 January 2007, interest income or expense arising
from trading assets and liabilities, financial instruments designated
at fair value through profit or loss, and interest rate derivatives not
held for trading purposes are reported under “Interest income” and
“Interest expense” instead of “Net trading income/(loss)” in the
previous reporting periods. Comparative figures have been restated
to conform with the current period’s presentation. This revised
classification has been made mainly to match interest expense on
financial liabilities designated at fair value through profit or loss with
the interest income and expense of the interest rate derivatives
entered to hedge these liabilities.
With the exception of the restatement described above, the
accounting policies and methods of computation used in the
preparation of the 2007 interim financial statements are consistent
with those used and described in the Group’s annual audited financial
statements for the year ended 31 December 2006. The Group has
not early adopted Hong Kong Financial Reporting Standard No. 7
“Financial Instruments: Disclosure” and the Amendment to Hong Kong
Accounting Standard No. 1 “Presentation of Financial Statements –
Capital disclosures” in its 2007 interim financial statements. The
Group has assessed that the adoption of these new standards will
result in more qualitative and quantitative disclosures primarily related
to fair value measurement and risk management but they will have
no effect on the Group’s results of operations or financial position.
The interim condensed consolidated financial statements are
presented in thousands of Hong Kong dollars (HK$’000), unless
otherwise stated.
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8
3. Net interest income
For the six months ended 30 June
v
Restated
@MM<@MM
2007 2006

!Cc;iInterest income arising from:
|Cash and balances with banks and
/|?Wother financial institutions 148,474 220,269
~4Debt securities held 955,145 711,708
X/LAdvances and other accounts 1,751,272 1,565,165
/Others 1,377 2,605
2,856,268 2,499,747

!c;iInterest expense arising from:
Deposits from banks/Deposits from customers 1,299,805 1,121,939
p?Certificates of deposit issue 214,027 171,175
p?4Issued debt securities 66,642 58,868
Subordinated notes 147,995 82,949
/Others 41,737 39,852
1,770,206 1,474,783

!CDiIncluded within interest income:
0!$tInterest income on financial assets
/C)?|not designated at fair value
~!Cthrough profit or loss 2,763,928 2,409,479
$X!CInterest income on impaired loans 2,716 1,925
!DiIncluded within interest expenses:
0!$tInterest expenses on financial liabilities
/C)?|not designated at fair value through
~!profit or loss 1,496,245 1,282,418
@MM<@MM
2007 2006

R|CFee and commission income
X~R|Credit related fees and commissions 29,245 31,256
WTrade finance 31,077 31,729
BCredit card 97,054 91,042
4|Securities brokerage and investment services 57,991 33,387
n;/Insurance distribution and others 26,790 22,165
M%|GRetail investment funds and fiduciary services 71,348 59,126
/RBOther fees 37,866 26,471
351,371 295,176

R|Fee and commission expense
iRp|Handling fees and commission paid 41,862 33,994
p/RBOther fees paid 6,087 6,033
47,949 40,027
303,422 255,149

4. Net fee and commission income
For the six months ended 30 June
(M)!C
MJ/
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MJ/

9
5. Net trading income/(loss)
For the six months ended 30 June
v
Restated
@MM<@MM
2007 2006

UB?4~VCDividend income from trading securities
P– listed investments 11,302 7,101
P– unlisted investments – 2,808
7U)Net gain arising from dealing in foreign currencies 54,230 54,356
UB?4~Net gain/(loss) from
)Ktrading securities 77,539 (32,830)
UB?An.~Net gain/(loss) from derivatives entered
)Kinto for trading purpose 19,680 (3,352)
162,751 28,083

!$t/CNet loss arising from financial instruments designated
)~|n.~Kat fair value through profit or loss (19,526) (41,287)
143,225 (13,204)
@MM<@MM
2007 2006

4~VCDividend income from investments in available-for-sale securities
P– listed investments 5,512 1,260
P– unlisted investments 2,988 20,995
0~H|C">Gross rental income from investment properties 9,336 8,073
/H|COther rental income 3,458 3,318
/Others 8,224 4,473
29,518 38,119

6. Other operating income
For the six months ended 30 June
@MM<@MM
2007 2006

mW@-"-|Staff costs (including directors’ remuneration) 412,348 339,250
/^cPremises and other fixed assets expenses,
z"excluding depreciation 75,405 62,191
Depreciation 43,654 44,514
$RBAdvertising costs 45,183 39,652
|;RBAmortisation of intangible assets 14,262 18,924
/Others 115,988 108,222
706,840 612,753

7. Operating expenses
For the six months ended 30 June
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10
8. Impairment losses on loans and advances
For the six months ended 30 June
@MM<@MM
2007 2006

X$Net charge of impairment losses on loans and advances
/?– Individually assessed 27,520 41,084
C?– Collectively assessed 60,334 34,231
87,854 75,315

/{iOf which:
>"hB– new and additional (including amounts directly
;~|> written off in the period) 130,895 128,817
– recoveries (43,041) (53,502)
87,854 75,315

9. Net gain on disposal of interests in subsidiaries
For the six months ended 30 June
@MM<@MM
2007 2006

T)~)Net gain on disposal of interests in subsidiaries – 189,443
The net gain on disposal of interests in subsidiaries in 2006 mainly
arose from the Company’s placing of 3.6% interest in Dah Sing
Banking Group Limited (“DSBG”) to increase DSBG’s public float to
25.1%.
10. Income tax expense
Hong Kong profits tax has been provided at the rate of 17.5% (2006:
17.5%) on the estimated assessable profit for the period. Taxation
on overseas profits has been calculated on the estimated assessable
profit for the period at the rates of taxation prevailing in the countries
in which the Group operates.
Deferred taxation is calculated in full on temporary differences under
the liability method using a taxation rate of 17.5% (2006: 17.5%).
For the six months ended 30 June
@MM<@MM
2007 2006

)hCurrent income tax
!a– Hong Kong profits tax 108,608 107,428
– Overseas taxation 11,804 7,936
Deferred income tax
W?AF– relating to the origination and reversal of timing differences – 23,564
BK– utilisation of tax losses 3,466 –
123,878 138,928

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11
11. Profit attributable to shareholders
The normalised profit attributable to shareholders for the six months
ended 30 June 2006, excluding HK$189.4 million profit on disposal
of interests in subsidiaries, was HK$538.9 million.
This attributable profit for the six months ended 30 June 2007
represents an increase of 23.3% from the normalised attributable
profit in 2006.
12. Basic and diluted earnings per share
The calculation of basic earnings per share is based on earnings of
HK$664,179,000 (2006: HK$728,310,000) and the weighted average
number of 250,088,234 (2006: 250,088,234) shares in issue during
the period.
The calculation of diluted earnings per share is based on earnings of
HK$664,179,000 (2006: HK$728,310,000) and the weighted average
number of 250,667,582 (2006: 250,336,842) shares in issue during
the period after adjusting for the effect of all dilutive potential ordinary
shares as shown below:
@MM<@MM
VUNumber of shares 2007 2006
MJ~Weighted average number of
]V!OUordinary shares as at 30 June 250,088,234 250,088,234
V?Adjustments for share options 579,348 248,608
MJ7VWeighted average number of
A!~]ordinary shares for diluted earnings
V!OUper share as at 30 June 250,667,582 250,336,842
Basic and fully diluted earnings per share for the six months ended
30 June 2007 were HK$2.66 and HK$2.65 respectively which are
higher than the normalised basic and diluted earnings per share in
the same period last year (HK$2.15) if the HK$189,443,000 net gain
on the disposal of interests in subsidiaries in 2006 was excluded.
13. Cash and balances with banks and other financial institutions
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
{?WBalances with central banks 259,941 188,540
|?WCash and balances with banks 1,596,450 1,645,980
|/|?WCash and balances with other financial institutions 9,662 10,895
Ch7hMoney at call and short notice 4,268,763 5,594,881
6,134,816 7,440,296

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12
14. Trading securities and financial assets at fair value through profit
or loss
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
UB?4iTrading securities:
4iDebt securities:
P– Listed in Hong Kong 1,432,166 1,114,426
P– Unlisted 9,051,484 6,559,624
10,483,650 7,674,050

)4iEquity securities:
P– Listed in Hong Kong 527,787 532,272
P– Listed outside Hong Kong 465,199 337,994
P– Unlisted 585,180 569,469
1,578,166 1,439,735

UB?4">Total trading securities 12,061,816 9,113,785
!$t/CFinancial assets at fair value through profit or loss:
)?|
4iDebt securities:
P– Unlisted 1,266,015 1,276,671
!$tC)?Total financial assets at fair value through profit or loss
|">1,266,015 1,276,671
UB?4!$tTotal trading securities and financial assets at
/C)?|">fair value through profit or loss 13,327,831 10,390,456
P4~$Market value of listed securities 2,425,152 1,984,692
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
"4iIncluded within debt securities are:
"UB– Government bonds included in
4~'4trading securities 9,116,178 6,367,125
?– Certificates of deposit held 361,500 367,572
/'4– Other government bonds 11,600 –
/4– Other debt securities 2,260,387 2,216,024
11,749,665 8,950,721

(J)UB?4!$t/
C)?|

13
15. Derivative financial instruments
The notional principal amounts of outstanding derivatives contracts
and their fair values were as follows:
@MM<MJ@MMJ@MJ9
As at 30 Jun 2007 As at 31 Dec 2006

!$

!$
/|
Fair values
/|
Fair values
Contract/ Contract/
notionalnotional
amount Assets Liabilities amount Assets Liabilities
1)UB~An.1) Derivatives held for trading
a)An.a) Foreign exchange derivatives
hhForward and future contracts 66,191,362 182,535 197,631 53,347,607 134,544 57,367
hCurrency swaps 1,139,355 86,937 22,348 1,370,700 45,470 27,559
jChCurrency options purchased
and written 1,023,434 1,559 1,559 545,816 957 957
b)!An.b) Interest rate derivatives
!hInterest rate swaps 31,310,275 69,844 224,058 20,733,671 43,875 127,636
jC!hInterest rate options purchased
and written 50,643,612 1,781 1,814 53,085,262 3,489 3,789
c))An.c) Equity derivatives
jC)hEquity options purchased
and written 97,050 587 587 125,749 1,719 1,701
d)XAn.d) Credit derivatives
B"ZRCredit default swaps 703,620 3,114 834 1,088,913 6,570 1,322
UB~An.Total derivatives held for trading 151,108,708 346,357 448,831 130,297,718 236,624 220,331
2)B~An.2) Derivatives held for hedging
a)!$~a) Derivatives designated
An.as fair value hedges
!hInterest rate swaps 15,918,981 457,519 111,652 10,684,881 137,693 103,478
B~An.Total derivatives held for hedging 15,918,981 457,519 111,652 10,684,881 137,693 103,478
~A|n.Total recognised derivative
financial instruments 167,027,689 803,876 560,483 140,982,599 374,317 323,809
As at 30 June 2007, the credit risk weighted amounts of the above
off-balance sheet exposures (including credit default swaps)
calculated under Basel II basis and without taking into account the
effect of bilateral netting arrangements that the Group entered into,
are as follows:
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
An.Derivatives
– Exchange rate contracts 368,412 151,477
!– Interest rate contracts 337,128 247,460
)– Equity contracts 3,009 2,533
/– Other contracts 3,435 –
711,984 401,470

As at 31 December 2006, the credit risk weighted amount of credit
default swaps calculated under Basel I basis amounting to
HK$855,575,000 is included in the total credit risk weighted amount
of contingent liabilities and commitments in Note 28.
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14
16. Advances and other accounts
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
X">Gross advances to customers 56,244,648 49,908,688
/|X">Gross advances to banks and other financial institutions 153,307 155,102
W)Trade bills 853,433 694,604
4Accounts receivable on sale of investments in securities 1,504,592 300
/Other assets 2,185,347 1,626,221
X/L">Gross advances and other accounts 60,941,327 52,384,915
i$ELess: impairment allowances
/?– Individually assessed (136,782) (136,746)
C?– Collectively assessed (221,496) (218,351)
(358,278) (355,097)
X/LAdvances and other accounts 60,583,049 52,029,818
(a)Gross advances to customers by industry sector classified
according to the usage of loans and analysed by percentage
covered by collateral
@MM<MJ@MMJ@MJ9
As at 30 Jun 2007 As at 31 Dec 2006
X">GX">G

~~
% of gross % of gross
0yWadvances0yWadvances
Outstanding covered Outstanding covered
balance by collateral Balance by collateral
B?XLoans for use in Hong Kong
n|Industrial, commercial and financial
0– Property development 422,178 99.6 409,887 99.9
0– Property investment 7,698,075 90.9 6,107,283 94.6
|l– Financial concerns 454,294 75.6 424,368 82.6
V)– Stockbrokers 71,882 38.8 49,845 38.2
dM– Wholesale and retail trade 1,071,147 87.0 1,086,361 87.5
– Manufacturing 1,300,005 70.3 1,334,677 74.9
OO– Transport and transport equipment 3,878,237 92.5 3,563,617 91.2
Ve`– Recreational activities 61,512 21.9 49,086 2.4
– Information technology 36,237 2.9 36,087 4.0
/– Others 1,940,883 80.9 1,325,409 82.9
16,934,450 87.5 14,386,620 89.4

/AIndividuals
jUQ/rd– Loans for the purchase of flats in Home
ArOwnership Scheme, Private Sector
HQ/rParticipation Scheme and Tenants
bXPurchase Scheme 1,843,010 99.7 1,850,462 99.7
jU/0X– Loans for purchase of other
residential properties 11,553,318 99.7 10,917,179 99.5
BX– Credit card advances 3,221,049 – 3,154,851 –
/– Others 6,728,853 50.9 5,614,419 53.7
23,346,230 71.9 21,536,911 73.0

B?XLoans for use in Hong Kong 40,280,680 78.4 35,923,531 79.6
WTrade finance 4,614,828 50.9 4,385,560 45.5
B?XLoans for use outside Hong Kong 11,349,140 74.8 9,599,597 70.4
56,244,648 75.4 49,908,688 74.8

(J)X/L
F~X">-
XBG?

15
16. Advances and other accounts (Continued)
(a)Gross advances to customers by industry sector classified
according to the usage of loans and analysed by percentage
covered by collateral (Continued)
For each industry sector reported above with loan balance
constituting 10% or more of the total balance of advances to
customers, the attributable amount of impaired loans, overdue
loans, and individually and collectively assessed loan
impairment allowances are as follows:
@MM<MJ
As at 30 Jun 2007
X">
)h0y
Z&M//?C?
Gross$E$E
advances Individually Collectively
0yW$Xoverdue for assessed assessed
Outstanding Impaired over 3 impairment impairment
balance loans months allowances allowances
B?XLoans for use in Hong Kong
n|Industrial, commercial and financial
0– Property investment 7,698,075 – 1,122 – 12,627
/AIndividuals
jU/– Loans for purchase of other
0Xresidential properties 11,553,318 3,193 14,667 1,366 5,852
@MMJ@MJ9
As at 31 Dec 2006
X">
)h0y
Z&M//?C?
Gross$E$E
advances Individually Collectively
0yW$Xoverdue for assessed assessed
Outstanding Impaired over 3 impairment impairment
balance loans months allowances allowances
B?XLoans for use in Hong Kong
n|Industrial, commercial and financial
0– Property investment 6,107,283 6,590 8,105 2,214 12,672
/AIndividuals
jU/– Loans for purchase of other
0Xresidential properties 10,917,179 10,320 23,694 3,739 11,854
(J)X/Li
F~X">-
XBG?
i
P{X"W~
JP?c/$X
>d)hX>/WC??
X$ENi

16
16. Advances and other accounts (Continued)
(b) Non-bank Mainland exposures
@MM<MJ
As at 30 Jun 2007
/?$
rrE
?W>?W>Individually
On-balance Off-balance assessed
sheet sheet"W>impairment
Z-Type of counterparties exposure exposure Total allowances
{cMainland entities 1,697,301 5,662 1,702,963 –
{cCompanies and individuals outside
/Ac?Mainland where the credits are
X{cBgranted for use in the Mainland 9,407,525 797,874 10,205,399 52,991
/Z/nOther counterparties the exposures to
}owhom are considered by the Group to
nbe non-bank Mainland exposures 63,342 6,501 69,843 –
@MMJ@MJ9
As at 31 Dec 2006
/?$
rrE
?W>?W>Individually
On-balance Off-balance assessed
sheet sheet"W>impairment
Z-Type of counterparties exposure exposure Total allowances
{cMainland entities 1,835,834 2,187 1,838,021 –
{cCompanies and individuals outside
/Ac?Mainland where the credits are
X{cBgranted for use in the Mainland 8,415,195 767,331 9,182,526 78,942
/Z/nOther counterparties the exposures to
}owhom are considered by the Group to
nbe non-bank Mainland exposures 41,904 2,496 44,400 –
Note: The balances of exposures reported above include gross
advances and other balances of claims on the
customers.
(c) Analysis of gross advances to customers and overdue loans
by geographical area
Advances to customers by geographical area are classified
according to the location of the counterparties after taking
into account the transfer of risk. In general, risk transfer applies
when an advances is guaranteed by a party located in an area
which is different from that of the counterparty.
At 30 June 2007, over 90% of the Group’s advances to
customers, including related impaired advances and overdue
advances, were classified under Hong Kong (a position
unchanged from that as at 31 December 2006).
(J)X/Li
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17
16. Advances and other accounts (Continued)
(d) Impaired, overdue and rescheduled assets
(i) Impaired loans
As at As at
30 Jun 2007 31 Dec 2006
@MM<@MM
MJJ@MJ9
$X">=FGross impaired loans (Note (a)) 215,477 254,533
X">~As a percentage of total advances to customers 0.38% 0.51%
/$EIndividual impairment allowances 136,782 136,746
$Amount of collateral held 81,764 122,343
Note:
a. Impaired loans are defined as those loans having
objective evidence of impairment as a result of
one or more events that occurred after the initial
recognition of the asset (a “loss event”) and that
loss event has an impact on the estimated future
cash flows of the loans that can be reliably
estimated. Impaired loans are individually
determined to be impaired.
b. The above individual impairment allowances were
made after taking into account the value of
collateral in respect of such advances as at 30
June/31 December.
(ii) Overdue loans
XX
@MM<@MM
MJ% of totalJ@MJ9% of total
As at advances to As at advances to
30 Jun 2007 customers 31 Dec 2006 customers
0yX">cGross advances to customers which
p)hihave been overdue for:
bbM/P– six months or less but over
b/three months 97,210 0.17 99,855 0.20
bb/P9– one year or less but over six months 66,662 0.12 61,973 0.12
bb9P– over one year 103,872 0.19 119,804 0.24
267,744 0.48 281,632 0.56

)hX?Market value of securities held against
$the secured overdue advances 169,342 168,065
)hXSecured overdue advances 113,635 133,324
)hXUnsecured overdue advances 154,109 148,308
/$EIndividual impairment allowances 118,002 118,518
(J)X/Li
;$c)h0yB
(i)$X
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18
16. Advances and other accounts (Continued)
(d) Impaired, overdue and rescheduled assets (Continued)
(iii) Rescheduled advances net of amounts included in
overdue advances shown above
XX
@MM<@MM
MJ% of totalJ@MJ9% of total
As at advances to As at advances to
30 Jun 2007 customers 31 Dec 2006 customers
BXRescheduled advances 62,285 0.11 69,106 0.14
$EImpairment allowances 2,862 6,886
There were no advances to banks and other financial
institutions, which were impaired, overdue for over 3
months or rescheduled as at 30 June 2007 and 31
December 2006.
(iv) Trade bills
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
)hiOverdue for:
M/P/– six months or less but over three months 935 –
/P9– one year or less but over six months 1,180 –
2,115 –
(e) Repossessed assets
The repossessed assets of the Group were as follows:
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
0Repossessed properties 20,506 31,485
/Others 9,206 738
29,712 32,223

(J)X/Li
;$c)h0yBi
(iii)BXpP
)h0yX
@MM<MJ@
MMJ@MJ9
/|~X
}vo$d)hM/
PdB~Xe
(iv)W)
'
/?Ni

19
17. Impairment allowances against advances to customers
/?C?
Individually Collectively
assessed assessed Total
@MM<99At 1 January 2007 136,746 218,351 355,097
>Amounts written off (30,557) (94,441) (124,998)
p~XRecoveries of advances written off in previous years 5,789 37,252 43,041
)~New impairment allowances charged
$JFto income statement 27,520 60,334 87,854
$E$FUnwind of discount of impairment allowance (2,716) – (2,716)
@MM<MJAt 30 June 2007 136,782 221,496 358,278
iDeducted from:
W)Trade bills –8,118 8,118
XAdvances to customers 136,782 213,190 349,972
/|Advances to banks and
Xother financial institutions – 188 188
@MM<MJAt 30 June 2007 136,782 221,496 358,278
/?C?
Individually Collectively
assessed assessed Total
@MM99At 1 January 2006 167,436 230,743 398,179
>Amounts written off (126,824) (168,889) (295,713)
p~XRecoveries of advances written off in previous years 20,889 76,245 97,134
)~$JFNew impairment allowances charged
to income statement 87,205 74,048 161,253
$E$FUnwind of discount of impairment allowance (5,756) – (5,756)
Reclassification (6,204) 6,204 –
@MMJ@MJ9At 31 December 2006 136,746 218,351 355,097
iDeducted from:
W)Trade bills – 6,515 6,515
XAdvances to customers 136,746 211,058 347,804
/|XAdvances to banks and other financial institutions – 778 778
@MMJ@MJ9At 31 December 2006 136,746 218,351 355,097
(J<)X$E

20
18. Available-for-sale securities
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
4Debt securities
P– Listed in Hong Kong 1,510,504 1,316,532
P– Listed outside Hong Kong 16,767,572 14,457,750
P– Unlisted 14,595,879 16,085,860
32,873,955 31,860,142

)4iEquity securities:
P– Listed in Hong Kong 202,304 107,408
P– Listed outside Hong Kong 546,395 342,231
%|~)– Interests in investment funds 461,244 961,462
/=F– Others (Note (a)) 829,385 65,551
2,039,328 1,476,652

4">Total available-for-sale securities 34,913,283 33,336,794
P4~$Market value of listed securities 19,026,775 16,223,921
"4iIncluded within debt securities are:
?– Certificates of deposit held 868,713 100,167
/4– Other debt securities 32,005,242 31,759,975
32,873,955 31,860,142

4Available-for-sale securities are analysed by
Nicategories of issuers as follows:
{'W{– Central governments and central banks 3,039,856 3,554,021
– Public sector entities 340,004 274,108
/|– Banks and other financial institutions 20,033,769 19,828,138
l– Corporate entities 11,491,502 9,678,749
/– Others 8,152 1,778
34,913,283 33,336,794

Note:
(a)Included in unlisted equity securities is the Group’s investment
in Chongqing Commercial Bank amounting to
HK$703,339,000 as at 30 June 2007.
(JD)4
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DP)4{e
@MM<MJ~">o
703,339,000e

21
19. Held-to-maturity securities
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
4Debt securities
P– Listed outside Hong Kong 31,262 62,252
P– Unlisted 307,748 396,143
339,010 458,395

P4~$Market value of listed securities 31,277 62,269
"4iIncluded within debt securities are:
?– Certificates of deposit held 57,813 138,449
/4– Other debt securities 281,197 319,946
339,010 458,395

7h4Held-to-maturity securities are analysed
Niby issuer as follows:
– Public sector entities 22,627 31,167
/|– Banks and other financial institutions 286,019 396,673
l– Corporate entities 30,364 30,555
339,010 458,395

20. Premises and other fixed assets
d

Furniture,
equipment
and
motor
Premises vehicles Total
@MM<MJ/Six months ended 30 June 2007
hq$Opening net book amount 1,486,140 111,351 1,597,491
Additions – 32,661 32,661
Disposals –(30)(30)
Depreciation charge (20,275) (23,379) (43,654)
h1$Closing net book amount 1,465,865 120,603 1,586,468
@MM<MJAt 30 June 2007
/$Cost/valuation 1,518,708 288,312 1,807,020
CAccumulated depreciation (52,843) (167,709) (220,552)
$Net book amount 1,465,865 120,603 1,586,468
@MMJ@MJ9Year ended 31 December 2006
q$Opening net book amount 1,267,450 122,242 1,389,692
Additions – 40,855 40,855
Reclassification 142,701 – 142,701
$Revaluation surplus 111,749 – 111,749
Disposals – (1,745) (1,745)
Depreciation charge (35,760) (50,001) (85,761)
1$Closing net book amount 1,486,140 111,351 1,597,491
@MMJ@MJ9At 31 December 2006
/$Cost/valuation 1,486,140 249,411 1,735,551
CAccumulated depreciation – (138,060) (138,060)
$Net book amount 1,486,140 111,351 1,597,491
The Group’s premises were last revalued at 31 December 2006.
Valuations were made on the basis of open market value by
independent, professionally qualified valuers (1) Knight Frank Hong
Kong Limited in respect of properties in Hong Kong and China, and
(2) Savills (Hong Kong) Limited in respect of properties in Macau.
(J>)7h4
(@J)/^
/~$@MMJ@
MJ9le?ES?
t K
{~019!P\
~~0$
%Ele

22
21. Investment properties

@MM<
MJ@MM
/J@MJ9
Six months
ended Year ended
30 Jun 2007 31 Dec 2006
hqqAt beginning of the period/year 484,465 362,690
Additions 15,770 234,401
Reclassification – (142,701)
~!$)Fair value gains on revaluation – 30,075
h11At end of the period/year 500,235 484,465
The Group’s investment properties were last revalued at 31 December
2006. Valuations were made on the basis of open market value by
independent, professionally qualified valuers (1) Knight Frank Hong
Kong Limited in respect of properties in Hong Kong and China, and
(2) Savills (Hong Kong) Limited in respect of properties in Macau.
22. Deposits from customers designated at fair value through profit
or loss
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
Structured deposits 3,545,388 3,224,673
/Other deposits from customers 161,324 168,375
3,706,712 3,393,048

The change in the fair value of deposits from customers designated
at fair value through profit or loss not attributable to changes in interest
rate is minimal. The amount that the Group would be contractually
required to pay at maturity to the holders of these deposits is HK$227
million (31 December 2006: HK$218 million) higher than the above
carrying amount.
23. Deposits from customers
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
`hDemand deposits and current accounts 6,929,673 6,972,502
kSavings deposits 8,781,889 8,530,676
hdChTime, call and notice deposits 50,254,757 48,092,753
65,966,319 63,595,931

(9)0
/0~$@MM
J@MJ9lo?ES?
t K
{~019!P\
~~0
$%Ele
(@)!$t/C)?

!~V!$t
/C)?~!$
~'#ie/7h
~A?|>P
v~$227,000,000@MM
J@MJ9i218,000,000e
(M)

23
24. Certificates of deposit issued
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
!$tDesignated at fair value through
/C)profit or loss 5,209,683 5,549,938
!$N!$tAt fair value under fair value hedge 1,582,899 –
W/At amortised cost 3,271,469 3,218,534
10,064,051 8,768,472

The change in the fair value of certificates of deposit issued and
carried at fair value under fair value hedge, and certificates of deposit
issued and designated at fair value through profit or loss not
attributable to changes in interest rate is minimal. The amount that
the Group would be contractually required to pay at maturity to the
holders of these certificates of deposit is HK$55 million (31 December
2006: HK$14 million) higher than the above carrying amount.
25. Issued debt securities
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
!$tDesignated at fair value through
/C)profit or loss 1,136,968 1,132,882
W/At amortised cost 1,172,700 1,166,692
2,309,668 2,299,574

Issued debt securities represent the US$150 million fixed rate and
the US$150 million floating rate Senior Guaranteed Notes (the
“Notes”) issued by Dah Sing MTN Financing Limited, a wholly-owned
subsidiary of Dah Sing Bank, Limited (“DSB”), on 1 December 2004
under DSB’s Euro Medium Term Note Programme which are listed
on the Luxembourg Stock Exchange. The Notes are guaranteed by
DSB, unsecured, and have a final maturity on 1 December 2009.
Through interest rate swap arrangements entered into by DSB, the
cost of the fixed rate Notes is determined on floating rate basis.
The change in the fair value of issued debt securities designated at
fair value under fair value hedge and at fair value through profit or
loss not attributable to changes in interest rate is minimal. The amount
that the Group would be contractually required to pay at maturity to
the holders of these issued debt securities is HK$36 million (31
December 2006: HK$34 million) higher than the above carrying
amount.
()p?
!~V!$N
!$t~p?
!$t/C)~p?
~!$~'#ie/
7h~
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i14,000,000e
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MTN Financing Limited&c~iX
{h)rc@MMJ@
9rZP~
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cdoc7ho
@MM>J@9c//&c
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MMJ@MJ9i34,000,000
e

24
26. Subordinated notes
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
150,000,000@M9US$150,000,000 Subordinated Floating
7h?=FRate Notes due 2015 (Note (a)) 1,172,700 1,166,693
150,000,000@M9<US$150,000,000 Subordinated Fixed
7h?=:Rate Notes due 2017 (Note (b)) 1,142,796 1,146,742
150,000,000@M9US$150,000,000 Subordinated Floating
7h?=Rate Notes due 2016 (Note (c)) 1,172,700 1,166,692
200,000,000US$200,000,000 Perpetual Subordinated Fixed
7T=;Rate Notes (Note (d)) 1,516,520 –
5,004,716 3,480,127

!$tDesignated at fair value through
/C)profit or loss 1,142,796 1,146,742
!$N!$tAt fair value under fair value hedge 1,516,520 –
W/At amortised cost 2,345,400 2,333,385
5,004,716 3,480,127

Note:
(a) This represents US$150,000,000 Subordinated Floating Rate
Notes qualifying as Tier 2 capital of DSB issued on 29 April
2005 (the “Notes”), which are listed on the Luxembourg Stock
Exchange. The Notes will mature on 6 May 2015 with an
optional redemption date falling on 6 May 2010. Interest rate
for the Notes is set on a quarterly basis based on 3-month
LIBOR plus 60 basis points from the issue date to the optional
redemption date. Thereafter, if the Notes are not redeemed,
the interest rate will reset and the Notes will bear interest at 3-
month LIBOR plus 160 basis points. DSB may, subject to
receiving the prior approval of the HKMA, redeem the Notes
in whole but not in part, at par either on the optional redemption
date or for taxation reasons on interest payment date.
(b) This represents US$150,000,000 5.451% Subordinated Fixed
Rate Notes qualifying as Tier 2 capital of DSB issued on 18
August 2005 (the “Notes”), which are listed on the Luxembourg
Stock Exchange. The Notes will mature on 18 August 2017
with an optional redemption date falling on 18 August 2012.
Interest at 5.451% p.a. is payable semi annually from the issue
date to the optional redemption date. Thereafter, if the Notes
are not redeemed, the interest rate will be reset and the Notes
will bear interest at the then prevailing 5-year US Treasury rate
plus 220 basis points. DSB may, subject to receiving the prior
approval of the HKMA, redeem the Notes in whole but not in
part, at par either on the optional redemption date or for
taxation reasons on interest payment date. An interest rate
swap contract to swap the fixed rate payment liability of the
Notes to floating interest rate based on LIBOR has been
entered into with an international bank.
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25
26. Subordinated notes (Continued)
Note: (Continued)
(c) This represents US$150,000,000 Subordinated Floating Rate
Notes qualifying as Tier 2 capital of DSB issued on 2 June
2006 (the “Notes”), which are listed on the Singapore Stock
Exchange Securities Trading Limited. The Notes will mature
on 3 June 2016 with an optional redemption date falling on 3
June 2011. Interest rate for the Notes is set on a quarterly
basis based on 3-month LIBOR plus 75 basis points from the
issue date to the optional redemption date. Thereafter, if the
Notes are not redeemed, the interest rate will reset and the
Notes will bear interest at 3-month LIBOR plus 100 basis
points. DSB may, subject to receiving the prior approval of the
HKMA, redeem the Notes in whole but not in part, at par either
on the optional redemption date or for taxation reasons on
interest payment date.
(d) This represents US$200,000,000 Perpetual Subordinated
Fixed Rate Notes qualifying as upper Tier 2 capital of DSB
issued on 16 February 2007 (the “Notes”), which are listed on
the Singapore Stock Exchange Securities Trading Limited. The
Notes carry an optional redemption date falling on 17 February
2017. Interest at 6.253% p.a. is payable semi annually from
the issue date to the optional redemption date. Thereafter, if
the Notes are not redeemed, the interest rate will reset and
the Notes will bear interest at 3-month LIBOR plus 190 basis
points. DSB may, subject to receiving the prior approval of the
HKMA, redeem the Notes in whole but not in part, at par either
on the optional redemption date or for taxation reasons on
interest payment date. An interest rate swap contract to swap
the fixed rate payment liability of the Notes to floating interest
rate based on LIBOR has been entered into with an
international bank.
The change in the fair value of subordinated notes carried at fair
value under fair value hedge, and subordinated notes designated at
fair value through profit or loss not attributable to changes in interest
rate is minimal. The amount that the Group would be contractually
required to pay at maturity to the holders of these subordinated notes
is HK$77 million (31 December 2006: HK$20 million) higher than the
above carrying amount.
27. Other reserves
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
Reserves
Vk6Share premium 984,286 984,286
Premises revaluation reserve 541,930 541,930
Investment revaluation reserve (5,401) 10,661
Exchange reserve 229 (33)
9General reserve 574,612 574,612
2,095,656 2,111,456

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!$t~!$
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26
28. Contingent liabilities and commitments
The contract and credit risk weighted amounts of the Group’s off-
balance sheet financial instruments that commit it to extend credit to
customers are as follows:
|>
Contract amounts
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
BXgDirect credit substitutes 618,249 1,628,553
dZ~LTransaction-related contingencies 276 4,576
dW~LTrade-related contingencies 1,070,787 1,066,214
/cgEOther commitments which are unconditionally cancelable 27,738,630 24,612,456
/c/H/hoiOther commitments with an original maturity of:
9– under 1 year 6,608,256 7,725,382
9P– 1 year and over 2,206,043 790,570
hForward forward deposits placed 115,403 1,923,185
38,357,644 37,750,936

XnU>
Credit risk weighted amounts
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
Contingent liabilities and commitments 2,536,705 2,287,097
(D)
/rJ~%
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27
29. Maturity profile
The table below analyses the Group’s assets and liabilities into relevant
maturity groupings based on the remaining period at balance sheet
date to the contractual maturity date.
M/P
M/99P
)7hNOver
Repayable on 3 months 3 months Over 1 yearP=h
@MM<MJAs at 30 June 2007 demand or less to 1 year to 5 years Over 5 years Undated Total
Assets
|Cash and balances with banks
/|?Wand other financial institutions 4,711,971 1,422,845 – – – – 6,134,816
9J@/Placement with banks
7h?maturing between one and
twelve months – 506,704 1,115,376 – – – 1,622,080
UB?4Trading securities 305 5,774,532 2,732,416 752,998 2,129,517 672,048 12,061,816
!$t/CFinancial assets at fair value
)?|through profit or loss –1,219,079 46,936 – – – 1,266,015
A|n.Derivative financial instruments 10,280 104,265 85,728 125,385 452,970 25,248 803,876
X/LAdvances and other accounts 6,189,572 12,734,404 5,707,177 15,450,258 19,810,410 691,228 60,583,049
4Available-for-sale securities –3,522,336 7,871,751 5,686,896 15,777,647 2,054,653 34,913,283
7h4Held-to-maturity securities – 73,292 48,172 209,648 7,898 – 339,010
2Investments in associates –––––49,865 49,865
s9Investments in jointly
controlled entities –––––41,531 41,531
wGoodwill 950,992 950,992
|Intangible assets –––––193,976 193,976
/^Premises and other fixed assets 1,586,468 1,586,468
0Investment properties –––––500,235 500,235
}hn~Value of in-force long-term life
$assurance business –––––846,445 846,445
)hCurrent income tax assets ––14,061 – – – 14,061
Deferred income tax assets –––416––416
Total Assets 10,912,128 25,357,457 17,621,617 22,225,601 38,178,442 7,612,689 121,907,934
Liabilities
Deposits from banks 905,831 1,467,251 – 234,540 – – 2,607,622
A|n.Derivative financial instruments 22,029 110,546 97,920 172,110 157,878 – 560,483
UB?Trading liabilities –6,117,063 2,132,176 220,654 – – 8,469,893
!$tDeposits from customers
/C)?designated at fair value
through profit or loss –3,353,389 224,279 129,044 – – 3,706,712
Deposits from customers 20,812,117 39,944,130 4,157,444 1,052,628 – – 65,966,319
p?Certificates of deposit issued – 924,649 4,003,992 4,905,780 229,630 – 10,064,051
p?4Issued debt securities ––––2,309,668 – 2,309,668
Subordinated notes 1,172,700 3,832,016 – 5,004,716
/LQJOther accounts and accruals 749,792 5,680,136 117,313 16,827 2,940 843,956 7,410,964
nLiabilities to policyholders under
A~insurance contracts –––––2,782,567 2,782,567
)hCurrent income tax liabilities –3,765 166,647 2,121 – – 172,533
Deferred income tax liabilities –1,373 2,293 142,785 – – 146,451
Total Liabilities 22,489,769 57,602,302 10,902,064 8,049,189 6,532,132 3,626,523 109,201,979
Z]Net liquidity gap (11,577,641) (32,244,845) 6,719,553 14,176,412 31,646,310 3,986,166 12,705,955
(>)7hq
Nr7hW
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28
29. Maturity profile (Continued)
M/M/P9P
)7hN9
Repayable on 3 months Over 3 months Over 1 yearP=h
@MMJ@MJ9As at 31 December 2006 demand or less to 1 year to 5 years Over 5 years Undated Total
Assets
|Cash and balances with banks
/|?Wand other financial institutions 5,026,436 2,413,860 – – – – 7,440,296
9J@/Placement with banks maturing
7h?between one and
twelve months – 303,637 549,690 – – – 853,327
UB?4Trading securities 49,781 3,261,945 1,478,285 1,007,901 1,925,812 1,390,061 9,113,785
!$t/CFinancial assets at fair value
)?|through profit or loss – 1,228,467 48,204 – – – 1,276,671
A|n.Derivative financial instruments 591 119,382 50,118 70,802 130,595 2,829 374,317
X/LAdvances and other accounts 6,577,803 9,492,434 5,230,311 12,883,120 17,366,939 479,211 52,029,818
4Available-for-sale securities – 4,787,588 7,692,854 6,190,032 13,174,355 1,491,965 33,336,794
7h4Held-to-maturity securities 55,512 90,644 125,873 178,464 7,902 – 458,395
2Investments in associates – – – – – 57,647 57,647
s9Investments in jointly
controlled entities – – – – – 37,192 37,192
wGoodwill – – – – – 950,992 950,992
|Intangible assets – – – – – 208,238 208,238
/^Premises and other fixed assets – – – – – 1,597,491 1,597,491
0Investment properties – – – – – 484,465 484,465
}hn~Value of in-force long-term
$life assurance business – – – – – 810,778 810,778
)hCurrent income tax assets – – 14,414 – – – 14,414
Deferred income tax assets – – – 3,377 – – 3,377
Total Assets 11,710,123 21,697,957 15,189,749 20,333,696 32,605,603 7,510,869 109,047,997
Liabilities
Deposits from banks 362,412 1,315,847 – – – – 1,678,259
A|n.Derivative financial instruments 1,706 43,610 45,518 121,331 111,644 – 323,809
UB?Trading liabilities – 5,756,137 571,168 198,928 – – 6,526,233
!$t/Deposits from customers
C)?designated at fair value
through profit or loss – 3,176,469 65,908 150,671 – – 3,393,048
Deposits from customers 19,220,306 39,501,677 4,257,668 616,280 – – 63,595,931
p?Certificates of deposit issued – 79,401 1,712,184 6,629,838 347,049 – 8,768,472
p?4Issued debt securities – – – 2,299,574 – – 2,299,574
Subordinated notes – – – 1,166,692 2,313,435 – 3,480,127
/LQJOther accounts and accruals 631,796 1,522,181 207,644 10,244 1,064,662 614,630 4,051,157
nLiabilities to policyholders under
A~insurance contracts – – – – – 2,286,088 2,286,088
)hCurrent income tax liabilities – 1,951 89,547 – – – 91,498
Deferred income tax liabilities – 8,427 880 134,949 – – 144,256
Total Liabilities 20,216,220 51,405,700 6,950,517 11,328,507 3,836,790 2,900,718 96,638,452
Z]Net liquidity gap (8,506,097) (29,707,743) 8,239,232 9,005,189 28,768,813 4,610,151 12,409,545
(>)7hqi

29
30. Reconciliation of operating profit after impairment charges to
cash generated from/(absorbed by) operations
For the six months ended 30 June
@MM<@MM
2007 2006

6!Operating profit 851,062 735,013
!CNet interest income (1,086,062) (1,024,964)
VCDividend income (19,802) (32,164)
X~$JFImpairment charges on loans and advances 87,854 75,315
X$E~$FUnwind of discount on loan impairment allowances (2,716) (1,925)
Depreciation 43,654 44,514
|~;Amortisation of intangible assets 14,262 18,924
~X>Advances written off net of recoveries (81,957) (75,623)
p!Interest received 2,562,215 2,489,405
p!Interest paid (1,076,790) (1,020,394)
pVDividend received 19,802 32,164
~Operating profit before changes in operating
6!assets and liabilities 1,311,522 1,240,265
UB?4~Change in trading securities 336,285 320,881
A|n.~Change in derivative financial instruments (192,885) (267,261)
!$t/CChange in financial assets designated at fair
)?|~value through profit or loss 10,656 158,987
X~Change in advances to customers (6,494,788) (1,594,328)
/|Change in advances to banks and other
X~financial institutions 1,795 261,591
/L~Change in other accounts (1,806,087) (659,415)
4~Change in available-for-sale securities (1,497,904) (5,691,126)
7h4~Change in held-to-maturity securities 119,385 143,733
}hn~Change in value of in-force long-term life
$~assurance business (35,667) 31,623
~Change in deposits from banks 929,363 –
UB?~Change in trading liabilities 1,943,660 1,429,966
~Change in deposits from customers 2,370,388 1,635,916
!$t/CChange in deposits from customers designated
)?~at fair value through profit or loss 313,664 692,956
/LQJ~Change in other accounts and accruals 2,915,934 (75,137)
nAChange in liabilities to policyholders under
~~insurance contracts 496,479 39,317
Exchange adjustments 83,610 12,858
EaB?|Cash generated from/(absorbed by) operations 805,410 (2,319,174)
pp?4Interest paid on issued debt securities
?!and subordinated notes (161,304) (183,404)
pp??!Interest paid on certificates of deposit issued (176,588) (150,150)
p!aHong Kong profits tax paid (1,564) (49,841)
pOverseas tax paid (674) (106)
aB~|>Net cash from/(used in) operating activities 465,280 (2,702,675)
(MJ)$JF~6!d
aB|>r
MJ/

30
31. Segment reporting
(A) By business segments
For the six months ended 30 June 2007
/An
Personal CommercialInsurance0;"
Banking Banking Treasury Business Unallocated Elimination Total
!CInterest income from
– external customers 872,855 932,410 978,899 48,268 23,836 – 2,856,268
L– inter-segments 632,899 – 10 3,424 424,316 (1,060,649) –
!Interest expense to
– external customers (992,006) (251,388) (160,551) – (366,261) – (1,770,206)
L– inter-segments 2,297 (318,854) (741,502) – (2,590) 1,060,649 –
!CNet interest income 516,045 362,168 76,856 51,692 79,301 – 1,086,062
RNet fee and commission
|C) income/(expense) 229,246 63,401 (734) 4,778 8,836 (2,105) 303,422
U/Net trading and other operating
Cincome/(expense) 8,443 10,107 17,702 89,001 44,930 2,560 172,743
RCNet insurance premium income
/Cand other income –––820,119 – (555) 819,564
COperating income 753,734 435,676 93,824 965,590 133,067 (100) 2,381,791
nW>Net insurance claims and
Amovement in liabilities
~to policyholders –––(736,035) – – (736,035)
nW~Total operating income net
Cof insurance claims 753,734 435,676 93,824 229,555 133,067 (100) 1,645,756
Operating expenses (422,342) (142,386) (42,893) (72,309) (27,010) 100 (706,840)
XOperating profit before
$JFimpairment losses on
~6!loans and advances 331,392 293,290 50,931 157,246 106,057 – 938,916
X~Impairment losses on loans
$JFand advances (42,241) (45,636) 23 – – – (87,854)
s^Operating profit before gains
)~on certain investments and
6!fixed assets 289,151 247,654 50,954 157,246 106,057 – 851,062
/^~Net (loss)/gain on disposal
K)of fixed assets (29) (4) – – 485 – 452
4~Net (loss)/gain on disposal of
K)available-for-sale securities (13) – 77,434 – 20,364 – 97,785
s9Share of results of jointly
~controlled entities – –––4,339 – 4,339
2~Share of results of associates – –––(7,717) – (7,717)
6!Profit before income tax 289,109 247,650 128,388 157,246 123,528 – 945,921
@MM<MJAs at 30 June 2007
Total assets 27,670,126 31,743,952 53,371,073 6,160,798 3,314,817 (352,832) 121,907,934
Total liabilities 53,135,235 14,419,804 22,993,700 4,107,736 14,898,336 (352,832) 109,201,979
@MM<For the six months
MJ/ended 30 June 2007
Depreciation 21,097 9,257 3,003 2,459 7,838 – 43,654
/Capital expenditure incurred 20,750 1,907 496 1,547 7,961 – 32,661
(9)9
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@MM<MJ/

31
31. Segment reporting (Continued)
(A) By business segments (Continued)
For the six months ended 30 June 2006 (Restated)
/An
Personal CommercialInsurance0;"
Banking Banking Treasury Business Unallocated Elimination Total
!CInterest income from
b – external customers 820,726 810,876 797,636 40,770 29,739 – 2,499,747
b L– inter-segments 584,940 – 107 2,306 328,828 (916,181) –
!Interest expense to
b – external customers (891,136) (221,781) (104,256) 994 (258,604) – (1,474,783)
b L– inter-segments (15,335) (244,238) (656,606) – (2) 916,181 –
!CNet interest income 499,195 344,857 36,881 44,070 99,961 – 1,024,964
R|Net fee and commission
Cincome/(expense) 182,500 58,779 4,123 3,656 7,914 (1,823) 255,149
U/Net trading and other
Coperating income/(expense) 12,750 6,473 58,796 (12,560) (40,544) – 24,915
RCNet insurance premium
/Cincome and other income – – – 325,272 – – 325,272
COperating income 694,445 410,109 99,800 360,438 67,331 (1,823) 1,630,300
nW>Net insurance claims and
Amovement in liabilities
~to policyholders – – – (207,219) – – (207,219)
nW~Total operating income net of
Cinsurance claims 694,445 410,109 99,800 153,219 67,331 (1,823) 1,423,081
Operating expenses (382,861) (131,978) (28,719) (51,233) (19,785) 1,823 (612,753)
X$Operating profit before
JF~impairment losses on loans
and advances 311,584 278,131 71,081 101,986 47,546 – 810,328
X~Impairment losses on loans
$JFFand advances (25,210) (50,078) – (45) 18 – (75,315)
s^Operating profit before gains on
)~6!certain investments and
fixed assets 286,374 228,053 71,081 101,941 47,564 – 735,013
/^Net (loss)/gain on disposal
~K)of fixed assets (12) – – 8 (5) – (9)
TNet gain on disposal of
)~6!interests in subsidiaries – – ––189,443 – 189,443
4~Net (loss)/gain on disposal of
K)available-for-sale securities (6) – 62,409 – 2,133 – 64,536
s9Share of results of jointly
~controlled entities – – – – 2,675 – 2,675
2~Share of results of associates – – – – (9,465) – (9,465)
4~Reversal of impairment losses
$Fon available-for-sale securities – – 25,891 – – – 25,891
6!Profit before income tax 286,356 228,053 159,381 101,949 232,345 – 1,008,084
@MMAs at 31 December 2006
J@MJ9
Total assets 24,952,007 27,542,139 47,003,768 6,294,879 3,370,945 (115,741) 109,047,997
Total liabilities 50,418,508 14,752,513 15,672,008 4,314,914 11,596,250 (115,741) 96,638,452
@MMFor the six months ended
MJ/30 June 2006
Depreciation 26,780 9,299 2,090 3,035 3,310 – 44,514
/Capital expenditure incurred 9,709 822 323 308 2,045 – 13,207
(9)9i
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32
31. Segment reporting (Continued)
(A) By business segments (Continued)
Personal banking business includes the acceptance of
deposits from individual customers and the extension of
residential mortgage lending, personal loans, overdraft and
credit card services, the provision of insurance sales and
investment services.
Commercial banking business includes the acceptance of
deposits from and the advance of loans and working capital
finance to commercial, industrial and institutional customers,
and the provision of trade financing. Hire purchase finance
and leasing related to equipment, vehicle and transport
financing are included.
Treasury activities are mainly the provision of foreign exchange
services and centralised cash management for deposit taking
and lending, interest rate risk management, management of
investment in securities and the overall funding of the Group.
Insurance business includes the Group’s life assurance and
general insurance businesses. Through the Group’s life
insurance subsidiaries in Hong Kong and Macau, the Group
offers a variety of life insurance products and services. The
Group’s general insurance business is conducted through a
wholly-owned subsidiary in Hong Kong and a 96% owned
subsidiary in Macau.
Unallocated items include results of operations and corporate
investments (including properties) not directly identified under
other business divisions.
(B) By geographical segments

/;
Hong Kong~Inter-segment"
and others Macau elimination Total
@MM<For the six months ended
MJ/30 June 2007
COperating income 1,468,706 177,050 – 1,645,756
6!Profit before income tax 862,228 83,693 – 945,921
h6!Profit for the period 749,460 72,583 – 822,043
Depreciation 34,528 9,126 – 43,654
/Capital expenditure incurred 27,994 4,667 – 32,661
@MM<MJAs at 30 June 2007
Total assets 110,414,949 12,584,444 (1,091,459) 121,907,934
Total liabilities 99,743,733 10,549,705 (1,091,459) 109,201,979
Contingent liabilities
and commitments 45,174,613 1,947,833 – 47,122,446

/;
Hong Kong~Inter-segment"
and others Macau elimination Total
@MMFor the six months ended
MJ/30 June 2006
COperating income 1,266,556 156,525 – 1,423,081
6!Profit before income tax 944,655 63,429 – 1,008,084
h6!Profit for the period 813,332 55,824 – 869,156
Depreciation 34,418 10,096 – 44,514
/Capital expenditure incurred 10,209 2,998 – 13,207
@MMJ@MJ9As at 31 December 2006
Total assets 99,497,800 11,436,218 (1,886,021) 109,047,997
Total liabilities 89,064,397 9,460,076 (1,886,021) 96,638,452
Contingent liabilities and
commitments 43,148,836 1,974,306 (163,408) 44,959,734
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33
32. Related-party transactions
During the first half of 2007, the Group entered into various continuing
connected transactions with related parties including fellow
subsidiaries of the Group, companies directly or indirectly controlled
or significantly influenced by shareholders or directors of the
Company.
There were no material change in the terms of these continuing
connected transactions since the review by the Company’s
independent non-executive directors of related-party transactions of
the Group for the year ended 31 December 2006 and related
disclosures set out in the Group’s 2006 annual financial statements.
For the six months’ period ended 30 June 2007, all continuing
connected transactions were conducted in the ordinary and usual
course of business of the Group, on normal commercial terms, and
in accordance with the relevant agreements on terms that are fair
and reasonable and in the interests of the shareholders of the
Company as a whole.
The Company and its wholly-owned subsidiaries within the Group
received and incurred income and expense from the continuing
connected transactions (within the definition of Rule 14A.14 of the
Rules Governing the Listing of Securities on The aggregate values of these
transactions are not material and are well within the respective annual
caps applicable to the Group under Rules 14A.35(2) and 14A.36(1)
of the Listing Rules.
The Group provides credit facilities to, and takes deposits from the
Group’s key management personnel, their spouses and companies
which the key management personnel have significant influence.
During the first half of 2007, there were no significant change in the
balances of these credit facilities and deposits as compared to 31
December 2006.
Key management personnel of the Company are executive directors
and there were no significant changes to their remuneration terms
since 31 December 2006 in the six months ended 30 June 2007.
33. Risk management
A. Banking Group
The Group recognises the changing nature of risk and manages
it through a well-developed management structure.
Risk management is focused on the five major areas of risk –
credit risk, market risk, interest rate risk, liquidity risk and
operational risk. Credit risk occurs mainly in the Group’s credit
portfolios comprising commercial, wholesale and retail lending,
equipment and hire purchase financing, and treasury and
financial institutions wholesale lending.
Market risk arises mainly in Treasury and is associated
principally with the Group’s on-balance sheet positions in the
trading book, and off-balance sheet trading positions including
positions taken to hedge elements of the trading book.
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34
33. Risk management (Continued)
A. Banking Group (Continued)
Interest rate risk means the risk to the Group’s financial
condition resulting from adverse movements in interest rates.
Liquidity risk arises across the Group’s balance sheet.
Operational risk is the risk of loss (direct or indirect) resulting
from inadequate or failed internal processes, people and
systems or from external events.
(a) The risk management structure of the Group
The Board of Directors has the broad overall responsibility for
the management of all types of risk. The responsibilities of the
Board in relation to risk control are:
•the approval of the overall strategy and policies to
ensure that credit and other risks are properly managed
at both the transaction and portfolio levels;
•the management of risk, both financial and non-financial,
conducted through operational and administrative
control systems including the operation of the Group
Audit Committee; review of key results (against
forecasts), operational statistics and policy compliance;
and
• financial performance by analysis against approved
budgets and analysis of variations in key non-financial
measures.
The Executive Committee has been delegated the authority to
oversee and guide the management of different risks which
are more particularly managed and dealt with by Group Risk
and different functional committees.
(b) Group risk function
The independent Group Risk function is responsible for
ensuring that policies and mandates are established for the
Group as a whole. Group Risk monitors and reports the Group
risk positions to the Board via the Risk Management Committee
and the Executive Committee, sets standards for financial risks
and data integrity and ensures that the financial risks are fully
considered in the product planning and pricing process. Group
Risk reviews and approves all credit and risk exposure policies
for the Group including the approval of exposures to new
markets, economic sectors, organisations, credit products and
financial instruments which expose the Group to different types
of risks. In determining risk policies, Group Risk takes into
account the guidelines established by the Hong Kong Monetary
Authority, business direction, and risk adjusted performance
of each business. Group Risk is also represented on the lending
or risk committees of the Group’s operating divisions and
businesses.
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35
33. Risk management (Continued)
A. Banking Group (Continued)
(b) Group risk function (Continued)
The Group’s risk management expertise continues to advance
the overall quality of the Group’s lending portfolios, and enables
the Group to meet the changing regulatory requirements and
enter into credit exposures with the confidence that it
understands the associated risks and rewards.
The Group is continuing to evolve its risk management
capabilities under the aegis of the Head of Group Risk,
increasing the focus of its risk strategy on risk and reward and
returns on capital. The Group uses a range of risk measurement
and analytical tools in its management of the various risks
which it faces in its day-to-day businesses and these are
continually being enhanced and upgraded to reflect the ever-
changing business needs and the requirements of the
regulators. The Risk Management and Control function is part
of Group Risk and reports directly to the Head of Group Risk.
(c) Business division credit committees
Each of the operating divisions of the Group has its own credit
or risk committee responsible for approving and recommending
policies, limits and mandates for risk control within their
respective business areas. This is consistent with the Group’s
approach of devolving responsibility for risk management to
the individual business areas under the aegis of the Group
Risk function. As such, each business credit risk function
reports to both Group Risk and the business area which it
supports.
(d) Strategy in using financial instruments
The Group accepts deposits from customers at both fixed and
floating rates, and for various periods, and seeks to earn
positive interest margins by investing these funds in high-quality
assets. The Group seeks to increase these margins by
consolidating short-term funds and lending for longer periods
at higher rates, while maintaining sufficient liquidity to meet all
claims that might fall due.
The Group also seeks to raise its interest margins through
lending to commercial and retail borrowers with a range of
credit standing by charging customers appropriate lending
rates and fees, taking into consideration credit risk and market
conditions. Such exposures involve not just on-balance sheet
loans and advances, as the Group also enters into guarantees
and other commitments such as letters of credit and
performance, and other bonds.
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36
33. Risk management (Continued)
A. Banking Group (Continued)
(d) Strategy in using financial instruments (Continued)
The Group also trades in financial instruments where it takes
positions in exchange-traded and over-the-counter
instruments, including derivatives, to take advantage of short-
term market movements in equities and bonds and in currency,
interest rate and commodity prices. The Board places trading
limits on the level of exposure that can be taken in relation to
market positions. Apart from specific hedging arrangements,
foreign exchange and interest rate exposures are normally
offset by entering into counterbalancing positions (including
transactions with customers or market counterparties), or by
the use of derivatives, thereby controlling the variability in the
net cash amounts required to liquidate market positions.
The Group also uses interest rate swap and other interest rate
derivatives to mitigate interest rate risk arising from changes
in interest rates that will result in decrease in the fair value of
fixed rate assets or increase in the fair value of fixed rate term
liabilities. Certain of these financial instruments are designated
as fair value hedges, and the terms of hedge including hedged
item, amount, interest rates, hedge period and purpose are
determined and documented at the inception of each fair value
hedge. Hedge effectiveness is assessed at inception on a
prospective basis and is reassessed, on an ongoing basis,
based on actual experience and valuation. Fair value hedge
relationships that do not meet the effectiveness test
requirement of hedge accounting are discontinued with effect
from the date of ineffectiveness of the fair value hedge.
(e) Credit risk
The Group’s main credit risk is that borrowers or counterparties
may default on their payment obligations due to the Group.
These obligations arise from the Group’s lending and
investment activities, and trading of financial instruments
(including derivatives).
The Group has a Group Credit Committee and for each
business division a credit committee made up of certain
Executive Directors and senior credit officers and chaired by
the Chief Executive. Each credit committee has the
responsibility for formulating and revising credit policies and
procedures for that division within the parameters of the Group
Risk Policy and regulatory framework. Credit policies and
procedures define the credit assessment and approval criteria
and guidelines, use of scoring, review and monitoring process
and the systems of loan classification and impairment.
(M)n3i
Fi
(d)B|n.i
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37
33. Risk management (Continued)
A. Banking Group (Continued)
(e) Credit risk (Continued)
The Group manages all types of credit risk on a prudent basis,
in accordance with the credit approval and review policies, by
evaluating the credit-worthiness of different types of customers
and counterparties based on assessment of business,
financial, market and industry risks applicable to the types of
loans, collateral and counterparty dealings including dealing
in or use of derivative financial instruments. Credits are
extended within the parameters set out in the credit policies
and are approved by different levels of management based
upon established guidelines. Credit exposures, limits and asset
quality are regularly monitored and controlled by management,
credit committees and Group Risk. The Group’s internal
auditors conduct regular reviews and audits to ensure
compliance with credit policies and procedures and regulatory
guidelines.
The individual business’ credit policies also establish policies
and processes for the approval and review of new products
and activities, together with details of the facility grading, or
credit scoring, processes and impairment policies.
To avoid concentration of risk, large exposures to individual
customers or related groups are limited to a percentage of the
capital base, and exposures to industry sectors and countries/
regions are managed within approved limits to achieve a
balanced portfolio.
In order to mitigate the credit risk and where appropriate, the
Group will obtain collateral to support the credit facility. To
control credit risk exposure to counterparty arising from
derivative positions, the Group limits its derivative dealings with
approved financial institutions, and uses established market
practices on credit support and collateral settlement to reduce
credit risk exposure to derivative counterparties. Overall credit
risk limit for each financial institution counterparty, including
valuation limit for derivatives, is approved by the Group Credit
Committee with reference to the financial strength and credit
rating of each counterparty. The acceptable types of collateral
and their characteristics are established within the credit
policies, as are the respective margins of finance.
Irrespective of whether collateral is taken, all credit decisions
are based upon the customer’s or counterparty’s cashflow
position and ability to repay.
(M)n3i
Fi
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38
33. Risk management (Continued)
A. Banking Group (Continued)
(e) Credit risk (Continued)
(e)(i) Derivatives
The Group maintains strict control limits on net open
derivative positions (i.e., the difference between
purchase and sale contracts), by both amount and term.
At any one time, the amount subject to credit risk is
limited to the current fair value of instruments that are
favourable to the Group (i.e., assets where their fair
values are positive), which in relation to derivatives is
only a small fraction of the contract, or notional values
used to express the volume of instruments outstanding.
This credit risk exposure is managed as part of the
overall lending limits with customers, together with
potential exposures from market movements. Collateral
or other security is not usually obtained for credit risk
exposures on these instruments, except where the
Group requires margin deposits from counterparties.
(e)(ii) Master netting arrangements
The Group further restricts its exposure to credit losses
by entering into master netting arrangements with
counterparties with which it undertakes a significant
volume of transactions. Master netting arrangements
do not generally result in an offset of balance sheet
assets and liabilities, as transactions are usually settled
on a gross basis. However, the credit risk associated
with favourable contracts is reduced by a master netting
arrangement to the extent that if an event of default
occurs, all amounts with the counterparty are terminated
and settled on a net basis.
(e)(iii) Credit-related commitments
The primary purpose of these instruments is to ensure
that funds are available to a customer as required.
Guarantees and standby letters of credit – which
represent irrevocable assurances that the Group will
make payments in the event that a customer cannot
meet its obligations to third parties – carry the same
credit risk as loans. Documentary and commercial letters
of credit – which are written undertakings by the Group
on behalf of a customer authorising a third party to draw
drafts on the Group up to a stipulated amount under
specific terms and conditions – are normally
collateralised by the underlying shipments of goods to
which they relate and therefore carry less risk than a
direct borrowing.
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39
33. Risk management (Continued)
A. Banking Group (Continued)
(e) Credit risk (Continued)
(e)(iii) Credit-related commitments (Continued)
Commitments to extend credit represent unused
portions of authorisations to extend credit in the form
of loans, guarantees or letters of credit. With respect to
credit risk on commitments to extend credit, the Group
is potentially exposed to loss in an amount equal to the
total unused commitments. However, the likely amount
of loss is less than the total unused commitments, as
most commitments to extend credit are contingent upon
customers maintaining specific credit standards. The
Group monitors the term to maturity of credit
commitments because longer-term commitments
generally have a greater degree of credit risk than
shorter-term commitments.
An analysis on the breakdown of the Group’s principal
credit risk, as reflected in the Group’s loan portfolio by
industry sector, is set out in Note 16.
(f) Market risk
Market risk is the risk of losses in assets, liabilities and off-
balance sheet positions arising from movements in market
rates and prices. Generally, the Group’s market risk is
associated with its positions in foreign exchange, debt
securities, equity securities and derivatives in the trading book.
Market risk exposure for different types of transactions is
managed within risk limits and guidelines approved by the
Board, Executive Committee (“EXCO”) and Treasury Risk
Committee (“TRC”). Risk limits are set by products and by
different risk types. Limits comprise a combination of notional,
stop loss, sensitivity and value-at-risk (“VaR”) controls. All
trading positions are subject to daily mark-to-market valuation.
Risk Management and Control Department (“RMCD”) in Group
Risk Division, as an independent risk management and control
unit, identifies, measures, monitors and controls the risk
exposures against approved limits and initiates specific action
to ensure the overall and the individual market risks are
managed within an acceptable level. Any exceptions have to
be reviewed and sanctioned by the appropriate level of
management of TRC or by EXCO.
The Group’s Internal Audit function performs regular
independent review and testing to ensure compliance with the
market risk policies and procedures by Treasury, RMCD and
other relevant units.
Banco Comercial de Macau, S.A. (“BCM”), a subsidiary of the
Company, runs its treasury functions locally under its own set
of limits and policies and within the overall market risk limits
set by Dah Sing Bank, Limited (“DSB”). RMCD of DSB oversees
and controls the market risk arising from BCM’s treasury
operation.
(M)n3i
Fi
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(e)(iii)X;i
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40
33. Risk management (Continued)
A. Banking Group (Continued)
(f) Market risk (Continued)
The Group uses value-at-risk (“VaR”) statistical technique to
estimate the potential losses that could arise on risk positions
taken, due to movements in foreign exchange, interest rates
and equity prices over a specified time horizon and to a given
level of confidence. The model used by the Group to calculate
portfolio and individual VaR on a variance/co-variance basis
uses historical movements in market rates and prices, a 99%
confidence level and a 1-day holding period.
The VaR for the various types of exposures in the trading book
were as follows:
@MM<@MM
MJJ@MJ9
As at As at
30 Jun 2007 31 Dec 2006
!nU~n$Interest rate risk trading exposures 2,022 2,779
U~!n$Foreign exchange trading exposures 594 924
XU~n$Credit trading exposures 155 413
Un~n$Market risk trading exposures 2,771 4,116
h!On$Average VaR for the period/year 3,549 3,172
The average daily revenue earned from the Group’s market
risk related treasury activities in the six months ended 30 June
2007 was HK$46,000 (2006: HK$378,000) and the standard
deviation for such daily revenue was HK$4,636,000 (2006:
HK$3,363,000). The following are the average daily revenue
and the standard deviation for daily revenue analysed by
principal dealing activities for the six months ended 30 June:
!O)_E
Average daily revenue Standard deviation
@MM<@MM@MM<@MM
2007 2006 2007 2006

ZForeign exchange dealing 367 332 4,168 3,273
XZCredit trading (24) 10 385 446
!ZInterest rate dealing (298) 36 1,274 619
(M)n3i
Fi
(f)ni
/BnU$,9-+
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V)~
n8vK~;
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@MMi378,000c/
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41
33. Risk management (Continued)
A. Banking Group (Continued)
(f) Market risk (Continued)
The following histograms show the frequency of daily revenues
related to market-risk activities:
@MM<MJ/
Six months ended 30 June 2007
1
-16-15 -14-13 -12-11 -10-9-8-7-6-5-4-3-2-1 012345678910111213

1
2
1
2 2
3
3 3
11
6
11 11

12
15
10 10

2
4
3
2
1
2
3
0
2
4
6
8
10
12
14
16
U
Number of days
C
Revenue (HK$ million)
@MMMJ/
Six months ended 30 June 2006
3
1
4
6
7
17
9
13
22
23
11
8
10
2 1
4
1
2
0
5
10
15
20
25
-16-15 -14-13 -12-11 -10-9-8-7-6-5-4-3-2-1 012345678910111213

U
Number of days
C
Revenue (HK$ million)
During the six months ended 30 June 2007, the highest daily
gain was HK$11,831,000 (2006: HK$9,732,000) and the
maximum daily loss was HK$14,101,000 (2006:
HK$8,882,000).
(M)n3i
Fi
(f)ni
N0dn?C
qi
@MM<MJ/
c)o11,831,000
@MMi9,732,000cc
Ko14,101,000@MM
i8,882,000e

42
33. Risk management (Continued)
A. Banking Group (Continued)
(g) Currency risk
The Group has limited net foreign exchange exposure (except
for USD) as foreign exchange positions and foreign currency
balances arising from customer transactions are normally
matched against other customer transactions or transactions
with the market. The net exposure positions, both by individual
currency and in aggregate, are managed by the Treasury of
the Group on a daily basis within established foreign exchange
limits.
Long-term foreign currency funding, to the extent that this is
used to fund Hong Kong dollar assets, is normally matched
using foreign exchange forward contracts to reduce exposure
to foreign exchange risk.
(h) Interest rate risk
The Group’s interest rate risk mainly arises from the funding of
fixed-rate loans and investments in fixed income securities by
floating rate deposits. When interest rates rise or fall, the
interest spread and net interest income will be affected as
interest income generated by the existing fixed-rate loans or
securities will not change. In addition to changes in earnings,
the variations in market interest rates will also affect the
economic values of the Group’s assets, liabilities and off-
balance sheet positions, which can, in turn affect the net worth
of the Group.
(i) Liquidity risk
The Group manages its liquidity on a prudent basis to ensure
that a sufficiently high liquidity ratio relative to the statutory
minimum is maintained throughout the year. The average
liquidity ratio of the banking subsidiaries of the Group during
the period was well above the 25% minimum ratio set by the
Hong Kong Banking Ordinance.
The Group’s Asset and Liability Management Committee
regularly reviews the Group’s current loan and deposit mix and
changes, funding requirements and projections, and monitors
the liquidity ratio and maturity mismatch on an ongoing basis.
Appropriate limits on liquidity ratio and maturity mismatch are
set and sufficient liquid assets are held to ensure that the Group
can meet all short-term funding requirements.
The Group’s funding comprises mainly deposits of customers,
certificates of deposit and medium term notes issued. The
issuance of certificates of deposit and medium term notes
helps lengthen the funding maturity and reduce the maturity
mismatch. Short-term interbank deposits are taken on a limited
basis and the Group is a net lender to the interbank market.
Details of the Group’s assets and liabilities analysed into
relevant maturity groupings based on the remaining period at
balance sheet date to the contractual maturity date are shown
in Note 29.
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43
33. Risk management (Continued)
A. Banking Group (Continued)
(i) Liquidity risk (Continued)
The matching and controlled mismatching of the maturities
and interest rates of assets and liabilities are fundamental to
the management of the Group. It is unusual for banks to be
completely matched, as businesses transacted are often of
uncertain term and of different types. An unmatched position
potentially enhances profitability, but also increases the risk of
losses.
The maturities of assets and liabilities and the ability to replace,
at an acceptable cost, interest-bearing liabilities as they mature
are important factors in assessing the liquidity of the Group
and its exposure to changes in interest rates and exchange
rates.
Liquidity requirements to support calls under guarantees and
standby letters of credit are considerably less than the amount
of the commitment because the Group does not generally
expect the third parties to fully draw funds under the
agreement. The total outstanding contractual amount of
commitments to extend credit does not necessarily represent
future cash requirements, as many of these commitments will
expire or terminate without being funded.
(j) Operational risk
The Group manages operational risk at department level under
respective businesses within a structure coordinated by the
Operations Division with reporting to senior management.
Since 2003, the Group has started the operational risk incident
reporting and tracking of operational loss data.
A dedicated operational risk management function has been
established to drive and implement the operational risk project
of the Group with the objective to improve operations quality,
internal control process and to meet the Basel II requirements.
The function is responsible for promoting the operational risk
control culture, and providing support to various departments
in implementing and complying with the operational risk
management policy and requirements.
(k) Reputation risk
Reputation risk is the risk arising from the potential that
negative publicity regarding the Group’s business practices,
operational errors or operating performance, whether true or
not, could cause customer concerns or negative view, decline
in the customer base or market share, or lead to costly litigation
or revenue reductions.
The Group manages reputation risk through upholding a high
standard of corporate governance and management oversight,
maintenance of effective policies and procedures with
emphasis on internal control, risk management and
compliance; proper staff training and supervision; proper
handling of customer complaints or dissatisfaction; and
adherence to sound business practices. Standards are set
and policies and procedures are established by the Group in
all areas, which operate to reduce vulnerability to reputation
risk.
(M)n3i
Fi
(i)Zni
dh!?WG
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l?ZRz?h
zccgr
?qz]'ez?8+
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ne
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44
33. Risk management (Continued)
A. Banking Group (Continued)
(l) Strategic risk
Strategic risk generally refers to the corporate risk that may
bring significant immediate or future negative impact on the
financial and market positions of the Group because of poor
strategic decisions, unacceptable financial performance,
improper implementation of strategies and lack of effective
response to the market changes.
The Board of Directors, assisted by senior management, is
directly responsible for the management of strategic risk.
Directors formulate the strategic goals and key direction of
the Group, ensure business strategies are developed to
achieve these goals, oversee the strategic development and
implementation to secure compatibility with the Group’s
strategic goals, review business performance, deploy proper
resources to achieve the Group’s objectives, and authorise
management to take appropriate actions to mitigate risks.
(m) Implementation of the Basel II Capital Accord
The revised capital adequacy framework known as Basel II
has come into force for all locally incorporated authorized
institutions in Hong Kong from January 2007. To implement
Basel II, the Hong Kong Monetary Authority published the final
Banking (Capital) Rules and Banking (Disclosure) Rules at the
end of 2006.
Basel II is structured around three “pillars”. Pillar 1 sets out
the minimum capital requirements for a bank’s operational risk,
in addition to revising the “Basel I” treatment of credit risk and
market risk. Pillar 2 requires that banks should have in place
sound internal processes to assess the adequacy of their
capital, based on a thorough assessment of their risks including
those risks not covered under Pillar 1, and that supervisors
should carry out supervisory review of this process. Pillar 3
complements Pillar 1 and Pillar 2 through enhanced market
transparency and market discipline by requiring banks to make
public disclosure of information on their risk profiles, capital
adequacy and risk management.
Starting January 2007, Dah Sing Bank and MEVAS Bank adopt
the standardised approach for credit risk and market risk, and
the basic indicator approach for operational risk. These are
the default approaches as specified in the Banking (Capital)
Rules. Accordingly, the Group has overhauled its systems and
controls in order to meet the standards required for these
approaches. As a step forward, the Group is preparing for the
use of the more advanced approach i.e. foundation internal
ratings-based (“FIRB”) approach for the calculation of credit
risk. This will enable the Group to enhance significantly its risk
management capabilities in identifying, assessing, monitoring,
controlling and mitigating risks. The Group also targets to
advance to the standardised approach in calculating its
operational risk.
(M)n3i
Fi
(l)n
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dz~rdk~
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c'~lne
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7?[7X
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Qd?dd9n
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B_E7noL_e

45
33. Risk management (Continued)
A. Banking Group (Continued)
(m) Implementation of the Basel II Capital Accord (Continued)
A dedicated Basel II team has been set up with the
responsibility to provide an overall direction to and co-ordinate
with relevant business divisions and support units in revamping
the infrastructure and operations for meeting the compliance
imperative. The team will continue to expand and upgrade its
capabilities in the coming years to meet the requirements of
Pillar 2 and Pillar 3, and to build the foundation for migration
to the FIRB approach.
(n) Fair value of financial assets and liabilities
The fair value of financial instruments traded in active markets
(such as publicly traded derivatives, trading and available-for-
sale securities) is based on quoted market prices at the balance
sheet date. The quoted market price used for financial assets
held by the Group is the current bid price; the appropriate
quoted market price for financial liabilities is the current ask
price.
The fair value of financial instruments that are not traded in an
active market (for example, over-the counter derivatives) is
determined by using valuation techniques. The Group uses a
variety of methods and makes assumptions that are based on
market conditions existing at each balance sheet date. Quoted
market prices or dealer quotes for similar instruments are used
for long-term debt. Other techniques, such as estimated
discounted cash flows, are used to determine fair value for
the remaining financial instruments. The fair value of interest-
rate swaps is calculated as the present value of the estimated
future cash flows. The fair value of forward foreign exchange
contracts is determined using forward exchange market rates
at the balance sheet date.
The fair value of financial assets and financial liabilities for
disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that
is available to the Group for similar financial instruments.
(o) Fiduciary activities
The Group provides custody, trustee, wealth management and
advisory services to third parties, which involve the Group
making allocation and purchase and sale decisions in relation
to a variety of financial instruments. Those assets that are held
in a fiduciary capacity are not included in the Group’s financial
statements. These services could give rise to the risk that the
Group will be accused of mal-administration.
B. Insurance Group
The Group’s insurance business is exposed to multiple risks,
including insurance risk, product risk, investment risk and
business risks. We believe that effective risk management is
an integral part of our insurance business’ control process
and operations, and that effective control of risks assists to
maintain the profitability and stability of our business.
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46
33. Risk management (Continued)
B. Insurance Group (Continued)
The key risks of our insurance business and related risk control
process are as follows:
(a) Insurance risk
The Group’s insurance operation is in the business of
underwriting insurance risk and retains various maximum
amounts per risk or event dependent on the type of risk with
the excess being reinsured through various reinsurance and
related agreements which are regularly reviewed. Catastrophe
cover arrangements are also in place whereby a number of
claims relating to a specific incident in aggregate would
represent a material risk to the Group are reinsured.
Underwriting and claims practices and procedures are
documented and reviewed. External independent actuaries are
engaged to evaluate the adequacy of the insurance reserves.
(b) Product risk
New products and major revisions to existing products undergo
a product approval process with the profitability being reviewed
and where appropriate assessed by internal and external
independent actuaries.
(c) Investment risk
Our investment practice is to maintain a conservatively invested
portfolio which attempts to maintain value whilst matching
assets and policyholder liabilities as appropriate, by yield,
duration and currency taking account of the associated risks,
taxation and regulatory requirements.
(d) Business risks
Dah Sing Life Assurance Company Limited and Dah Sing
General Insurance Company Limited follow the policies and
procedures of the Group in assessing business risk in terms
of contingency and interruption planning as well as providing
training for staff and agents to comply with the relevant rules
and regulations covering their businesses. Macau Insurance
Company Limited and Macau Life Insurance Company Limited,
insurance subsidiaries acquired by the Group at the end of
2005, have their own policies and procedures to comply with
the relevant requirements in Macau.
C. The role of Internal Audit
The Group’s Internal Audit Division is an independent, objective
assurance and consulting unit, which is designed to focus on
enhancing and sustaining sound internal control in all business
and operational units of the Group. The Division reports
functionally to the Group Audit Committee, which is chaired
by an Independent Non-Executive Director. The Division
conducts a wide variety of internal control activities such as
compliance audits and operations and systems reviews to
ensure the integrity, efficiency and effectiveness of the systems
of control of the Group.
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47
FINANCIAL RATIOS

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//
Six months Six months
ended ended
30 Jun 2007 30 Jun 2006
!CCNet interest income/operating income 66.0% 72.0%
/CCost to income ratio 42.9% 43.1%
X"Loan to deposit (including certificates
of deposit) ratio 70.5% 66.8%
!O"=i9Return on average total assets (Note 1) 1.1% 1.0%
!OV|=i9Return on average shareholders’ funds (Note 1) 12.2% 10.8%
bV=i9Dividend payout ratio (Note 1) 28.2% 34.8%
Net interest margin 2.27% 2.46%
Note:
1. The normalised attributable profit of HK$538.9 million, excluding profit
realised mainly on the placing of 3.6% interest in DSBG totalling
HK$189.4 million, is used in calculating the profitability and dividend
payout ratios for the six months ended 30 June 2006.
INTERIM DIVIDEND

The Directors have declared an interim dividend of HK$0.75 per
share for 2007 payable on or after Wednesday, 3 October 2007 to
shareholders whose names are on the Register of Shareholders at
the close of business on Friday, 28 September 2007.
CLOSING OF REGISTER OF SHAREHOLDERS

The Register of Shareholders will be closed from Monday, 24
September 2007 to Friday, 28 September 2007, both days inclusive.
In order to qualify for the interim dividend, all transfers accompanied
by the relevant share certificates must be lodged with the Company’s
Registrars, Computershare Hong Kong Investor Services Limited,
17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong
for registration not later than 4:30 p.m. on Friday, 21 September
2007.

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48
CORPORATE AND BUSINESS OVERVIEW
HIGHLIGHTS

Against a backdrop of a generally positive operating environment,
growing economies in Hong Kong and Macau, extremely robust
economic growth in the Mainland, and driven by a higher operating
income (net of insurance claims) rising from HK$1.42 billion in the
same period last year to HK$1.65 billion in the period, our profit
attributable to shareholders increased by 23% from HK$539 million
in the first half of 2006 (excluding the exceptional gain on disposal
of shares in Dah Sing Banking Group (“DSBG”)) to HK$664 million
in the first six months of 2007. Earnings per share increased by
24% to HK$2.66 if the exceptional gain on the disposal of DSBG
shares in 2006 was excluded in calculating the normalised earnings
per share for the first half of 2006. The Board of Directors has
declared an interim dividend of HK$0.75 per share.
Our key businesses all performed well during the period, with the
contribution from our banking business increasing by 9% to HK$616
million, and our insurance business reporting extremely strong growth
in earnings of 57% to HK$151 million for the period.
Loan growth was particularly strong, with an increase of 22% year
on year, and 13% since 31 December 2006, driven mainly by our
commercial lending business. Deposit growth was also significant,
with an increase of 16% year on year, and 5% since the end of
2006.

Non-interest income grew strongly by 41% to HK$560 million,
boosted by a particularly strong performance from our insurance
business as well as good performance from our banking business,
particularly related to wealth management businesses.
Operating expenses increased by around 15% year on year, reflecting
the costs of the expansion of our businesses, in the Hong Kong,
Macau and Mainland markets.
During the period under review, we completed our acquisition of
17% of Chongqing Commercial Bank, and contracted to acquire a
further 3%, subj