It has been over 60 years since the establishment of Tai Fung Bank, formerly known as Tai Fung moneychanger, in 1942. It was the first locally registered bank following the enactment of the banking law in 1971. In September 1984, Bank of China through capital injection held 50% of the shares, subsequently increased to 50.31%. Innovation in recent years has led to the Bank’s business to diversify. It currently has 20 branches in Macao. The reform accomplished in the late 80’s and fortification in the 90’s have made stronger the foundation of the Bank.

The US-Iraqi war made the first half of 2003 an extremely difficult time for the world economy. Uncertainties prevailed and dulled investment. The SARS rampancy across the world, by all means, added to the adversity. The economy at one time found itself at bottom low. Nevertheless, with the war declared over and the epidemic subdued, the global economy in the second-half recuperated with the same recovery pace of the post financial crisis. Meanwhile, the Hong Kong and Macao’s economies began to see improvement, benefiting from China’s distinguished economic performance. In addition, the Closer Economic Partnership Arrangement (CEPA) and Individual Visit Scheme introduced by the Mainland in Hong Kong and Macao’s favor have given a lasting and enlivening shot to the domestic economic development. This, in conjunction with a set of prudent economic policies put in place by the SAR government, brought about a satisfactory rise in Macao’s GDP. It has given local consumer and investor confidence a boost.

Pushed by these favorable conditions, banking environment improved, particularly in the third quarter of the year. Although general loan demand remained weak, there was a growth in construction and mortgage loans. However, with record-low deposit rates and narrowing spreads on lending, intense market competition shifted to the promotion of non-interest yielding products.

Despite the fact that the year 2003 alike confronted the Bank with great challenges arising from the epidemic in the first-half of the year, the Bank, supported by clients’ patronage and due to assiduity of the staff, achieved a solid growth. At year-end, total deposits increased by 7.95% compared to last year. Loans went up by 4.08%. Non-performance loans were substantially lower than in the previous year. Profit after tax recorded a 17.67% growth. Due to the satisfactory contributions from each business segment, the Bank’s liquidity was in a strong position; ratios of capital adequacy and the first tier capital adequacy were 17.39% and 16.71% respectively, both higher than in 2002, thereby strengthening the asset and liability portfolio of the Bank.

In order to minimize the impact caused by the falling Hong Kong interbank rates, being close to zero, productive measures were taken. The Bank put up on market a series of high yielding deposit and investment products to cater for the demand of value oriented customers, adjusted its internal investment portfolio for bigger revenue, strengthened agency services by re-allocating system resources, and also expanded cross-selling capacity by taking advantages of its extensive branch network.

In response to the Credit Guarantee Scheme for Small and Medium Sized Enterprises initiated by the SAR government, we processed applications with a satisfactory success rate. However, trade financing dropped slightly, reflecting caution among the European and American buyers as a result of the Iraqi war sentiment.

During the year, we upgraded our capital management system to further reinforce supervision and risk management. Besides, our senior management met constantly to review risk control, assessing and monitoring various risk indexes, safeguard the interests of our clients and the shareholders.

2004, as projected, will be a year full of challenges and opportunities. We believe that Macao’s economy will develop steadily, continuously and smoothly amidst economic revival that is continuing, favorable, worldwide and regional. As ever committed, Tai Fung Bank will continue to serve people from all sectors of the society, to further improve our service quality and upgrade our main business, while diversification is still our objective. By offering such financial and wealth management products as investment and insurance, as well as Internet banking services, and by building up closer ties with our customers, on a mutual benefit basis, we will devote greater effort to Macao’s economic growth, prosperity and stability.