China Merchants Bank Announces Its 2006 Annual Results.

Results Highlights

* Net profit up 81.22 % to RMB6,794 million (2005: RMB3,749 million)

* Profit before tax up 56.05 % to RMB10,084 million (2005: RMB6,462 million)

* Earnings per share up 55.88% to RMB0.53 (2005: RMB0.34)

* Net assets per share up 49.40% from previous year to RMB3.75 (2005: RMB2.51)

* Total assets up 27.16% to RMB934.10 billion (2005: RMB734.61 billion)

(Notice: China Merchants Bank Co., Ltd.'s 2006 annual results report was prepared in accordance with International Financial Reporting Standard (IFRS) and was audited. The Board of Directors and the directors of China Merchants Bank Co., Ltd. hereby confirm that the information contained in this report does not contain any false representations, misleading statements or material omissions. The Directors jointly and severally accept full responsibility for the truthfulness, accuracy and completeness of the information contained in this report.)

HONG KONG -- China Merchants Bank Co., Ltd. (SSE: 600036; HKEx: 3968; "China Merchants Bank" or the "Bank") today announced its results for 2006 today. During the year ended December 31, 2006, net profit reached RMB6,794 million (2005: RMB3,749 million), an increase of 81.22% over 2005. Total assets as of December 31, 2006 reached RMB934.10 billion, an increase of 27.16% from RMB734.61 billion December 31, 2005. Earnings per share (basic) were RMB0.53, up RMB0.19 from 2005. The Broad of Directors has recommended a final dividend of RMB0.12 per share, up RMB0.04 or 50.00% from 2005. The total dividend payout ratio for the year was 25.96%.

Mr. Qin Xiao, Chairman of China Merchants Bank, said, "Over the past year, the Bank consistently followed the philosophy of 'balanced development in respect of profitability, quality and scale', with the support of regulatory authorities, shareholders and various sectors of the society. The Bank actively sought to adjust its business strategies and further improved management standards, as well as realizing the goals of balanced growth and financial budget that set out by the Board, in order to achieve significant operating results."

Mr. Ma Weihua, President of China Merchants Bank, said, "2006 was a fruitful year for the Bank in terms of operational management. During the year, the Bank faced a number of challenges, including implementation of the macro-control policies, the full reform and opening-up of the banking industry, the acceleration of interest rate and exchange rate liberalization, and the rapid development of direct financing. The Bank has followed by the guidelines to "updating the mindset, deepening the reform, strengthening innovation and preventing risks" in accordance with the directions of the Board. The Bank has moved closer to its goal of "10 reforms", and is on the way to adjusting its business strategies and internationalizing its management, as well as accomplishing all targets set out in the beginning of the year."

During the year 2006, the Bank recorded steady growth in deposits and ongoing improvement in loan quality. By the end of 2006, the Bank's gross assets reached RMB934.10 billion, up by 27.16% over the figure for the beginning of the year; total deposits were RMB773.76 billion, an increase of 21.97%; and total loans were RMB549.42 billion, a rise of 19.78%. Net profit for the year was RMB6,794 million, an increase of 81.22% over 2005. For the year 2006, the Bank's net interest income reached RMB21.51 billion, a significant increase of 29.25% over 2005.

There were four characteristics in the Bank's business development in 2006. Firstly, it further enhanced its profitability. Its return on average assets (ROAA) (after-tax) reached 0.81% at the end of the year, 0.24 percentage points higher than that of the previous year, and its return on average equity (ROAE) (after-tax) was 16.74%, an increase of 1.1 percentage points compared with the previous year. Secondly, the Bank's capital strength has improved significantly. The capital adequacy ratio was 11.40% at the end of the year, 2.39 percentage points higher than that at the beginning of the year. The core capital adequacy ratio was 9.58%, 4.01 percentage points higher than that for the start of the year. Thirdly, the Bank's retail banking business grew rapidly. By the end of 2006, the Bank's retail deposit balance comprised 40.32% of the total deposits, same as the level in 2005 but higher than the industry's average. The Bank's retail loan balance comprised 18.03% of its loans to customers, up 2.35 percentage points from the end of 2005. Fourthly, the Bank's income derived from fee and commission business experienced rapid growth. Total net fee and commission income for the year was RMB2,514 million, up RMB947 million or 60.43% from 2005. This comprised 10.11% of the total business operating income, an increase of 1.95 percentage points over that of the previous year.

In 2006, the Bank accelerated the reform of its credit risk management mechanism. This was achieved through establishing a Credit Management Department, Credit Approval Department and Special Asset Management Centre at its headquarters; intensifying its research of industry policies and; strengthening its loan approval system; centralizing management of customer credit limits at its headquarters, gradually introducing customer credit assessments and quickening the pace of the facility rating system's development; while continuously improving asset quality. The Bank also improved its internal control mechanism, established a legal and compliance department at its headquarters; accomplished a vertically integrated reform for its audit system; organized and commenced three regulatory monitoring exercises; and intensified disciplinary actions for malpractices. During the year, there were no criminal convictions or material liabilities related to the Bank. As a result, the Bank's asset quality has been substantially enhanced. The year-end NPL balance was RMB12,006 million, down RMB161 million or 1.32% compared with the beginning of the year; year-end NPL ratio was 2.58%, down 0.46 percentage points from the start of the year.

In 2006, the Bank stepped up its marketing efforts on establishment of its "Lifetime Partner" and introduced cutting-edge products such as cash management and online banking, while achieving its marketing goals. It issued 2.09 million All-in-one cards during the year, bringing the total number of cards in issue to 38.849 million, with a total of RMB240.68 billion deposited in All-in-one card accounts, comprising 77.15% of total retail deposits. Deposit per card averaged RMB6,195. As of 31 December, 2006, a total of 10.34 million credit cards were issued, with 5.17 million added during the year. About 7.12 million of them are in circulation and used by 4.47 million card users. Total amount processed through card transactions for the year was RMB66.4 billion. The balance of outstanding revolving credit totaled RMB3.60 billion.

On September 22, 2006, China Merchants Bank successfully listed its H shares on the Hong Kong Stock Exchange. "The successful issuance and listing of H shares substantially boosted China Merchants Bank's capital strength and competitive edge, and secured for the Bank a prospect of sustainable development. With an offshore listing, China Merchants Bank adheres strictly to regulatory requirements in corporate governance of the offshore markets. This will secure a channel of replenishing capital to support the bank's strategic development in the future," said Chairman Qin.

"The marketability, growth and stability of the Bank were recognized by international investors. In evaluation exercises conducted by the media and various other organizations, we won many honors including "The Best Retail Bank in China," "The Best Bank in China" and "The Most Respected Enterprise of China." These achievements underscore a unanimous recognition of the Bank's investment value by the market participants," said President Ma.

Looking to 2007, Mr. Qin, the Chairman, said: "China's economy will continue a stable and healthy growth. While entering into our third decade, we are confident in facing all kinds of competition and challenges. I strongly believe that the Bank will distinguish itself among the competitors. Let us make concerted efforts to develop the Bank into the best commercial bank in China with international competitiveness, and sustain its success, with the aim of bringing better return to the shareholders and the society."

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About China Merchants Bank Co., Ltd.

China Merchants Bank was founded on April 8, 1987. It is headquartered in Shenzhen and mainly focuses on the Chinese domestic market. It has been listed on the Shanghai Stock Exchange since April 9, 2002 under the stock code 600036 and started trading on the main board of the Hong Kong Stock Exchange under stock code 3968 on September 22, 2006. Since A share listing, China Merchants Bank has adopted both PRC GAAP and IFRS when preparing its financial statements.

China Merchants Bank provides a broad range of corporate and retail banking products and services. It also conducts treasury operations for its own account and on behalf of its customers. China Merchants Bank has been successfully providing innovative products and services which are widely accepted in China. They include the "All-in-one Card"- a multi-function debit card, "All-in-one Net", which provides comprehensive online banking services, a dual-currency credit card, wealth management services under the Sunflower brand, and "Bank-Customs Express", which provides electronic tariff payment services. As a result, China Merchants Bank is one of the leaders in the credit card market in China. As of December 31, 2006, the Company had issued a total of approximately 10.34 million cards.

Over the last 20 years, China Merchants Bank has set up 36 branches and 464 sub-branches in 36 cities in China, a branch and a subsidiary in Hong Kong and a U.S. representative office in New York. China Merchants Bank has also established correspondent banking relations with over 1,150 banks in 89 countries and regions.

As of December 31, 2006, the total assets of China Merchants Bank exceeded RMB930 billion. The bank is constantly improving the quality of its assets and is keenly focused on risk control. Today, China Merchants Bank is one of the best Chinese banks in terms of asset quality, based on the People's Bank of China's (PBOC) "5-category" loan classification system.