A DIFFICULT operating environment, combined with appreciation of the yuan, has hit pre-tax profit at Bank of China (BOC).
The Chinese banking group expected to announce pre-tax profits of about 10.5 billion yuan (about HK$9.76 billion) for last year, down 12.5 per cent from 12 billion yuan in 1994, according to Xinhua (the New China News Agency).
The result would still make the leading foreign exchange bank in China the best earner among the country's state-owned commercial banks.
Tao Liming, deputy director of the Institute of International Finance of the BOC's head office in Beijing, said foreign exchange business accounted for about 70 per cent to 80 per cent of all its businesses, and the depreciation of the yuan inflated 1994's results.
The unification of the exchange rate in January 1994 saw the yuan effectively devalued by one-third, to 8.7 against the US dollar from 5.7, with the currency eventually rising to end that year at 8.4 yuan to the dollar.
Mr Tao said the yuan appreciated against the greenback last year, so profit from foreign exchange business was smaller when translated into yuan.
The yuan rose slightly against the dollar last year to close at 8.3.