New Return of Consolidated Accounts and revised submission deadlines for selected returns

Our Ref.: B4/1C
16 November 2020
The Chief Executive
All Authorized Institutions
Dear Sir / Madam,
New Return of Consolidated Accounts and revised submission deadlines for selected returns I am writing to inform you that the Hong Kong Monetary Authority (HKMA) has developed a new Return of Consolidated Accounts (Form MA(BS)1H) and revised the submission deadlines of several existing returns. Consultation on the new Return and the revised submission deadlines with The Hong Kong Association of Banks and The DTC Association has been completed. (I) Return of Consolidated Accounts (“Return”) As authorized institutions (AIs) are expanding their overseas presence, it is necessary for the HKMA to introduce the Return so as to 1) monitor the developments of the banking sector in a more comprehensive manner, and 2) strengthen the consolidated supervision of locally incorporated AIs. The Monetary Authority requires locally incorporated licensed banks with one or more subsidiaries which are banks to provide information in the form of the enclosed Return of Consolidated Accounts in accordance with Section 63(2) of the Banking Ordinance starting with the reporting position of December 2021. The finalised Return and the Completion Instructions for the Return are enclosed in
Annex 1 to 4. The electronic files for reporting will be available for downloading
from the HKMA’s supervisory communication website (http://www.stet.iclnet.hk) before the end of December 2021. Reporting institutions will be informed by email when the STET software is available. In response to the request by the industry, the submission deadline of the Return will be six weeks after the end of each quarter during the first year of submission (i.e. the reporting positions of December 2021, March 2022, June 2022 and September 2022) to provide reporting institutions with sufficient time to adopt the

• 2 -
  reporting of the new Return; thereafter, the deadline will be one month after each quarter end. (II) Revised submission deadlines for selected returns The increasingly complex economic environment has raised the importance of collecting data on a timely manner. Doing so will enhance our monitoring of the banking sector’s performance and help inform our supervisory priorities. As such, we have reviewed the submission deadlines of all returns and consider that the submission deadlines of several key returns need to be revised. We initially proposed that the new submission deadlines for the returns listed in
  Annex 5 became effective starting from the reporting position of June 2021.
  Having considered the comment from the industry that sufficient time should be provided for AIs to adapt to the revised deadlines, we have decided that the new submission deadlines will become effective starting from the reporting position of March 2022. Should you have any questions regarding the above, please contact Mr Si-Chun Lam on 2878-8120 or Ms Joyce Pang on 2878-1941. Yours faithfully, Raymond Chan for the Monetary Authority Encl cc: The Chairperson, The Hong Kong Association of Banks The Chairperson, The DTC Association FSTB (Attn: Ms Eureka Cheung)

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S1 SECRET Co. No. MM YY
(For Official Use Only)
Information required under the Banking Ordinance Chief Accountant Chief Executive Name and telephone number of responsible person who may be contacted by the Monetary Authority in case of any query. RETURN OF CONSOLIDATED ACCOUNTS (Consolidated position)
for the quarter ended .........................................................................
(last day of the quarter)
Name of Authorized Institution Date of Submission The Banking Ordinance The Monetary Authority requires the submitting Authorized Institution to provide the information specified in this return to the Monetary Authority, in the form set out in the return, in accordance with section 63(2) of the Banking Ordinance. The information, in the form of the duly completed return, must be submitted to the Monetary Authority not later than one month after the end of each quarter ending on 31 March, 30 June, 30 September and 31 December, unless otherwise advised by the Monetary Authority. This return must be completed in accordance with the completion instructions issued by the Monetary Authority to ensure that all requisite information is provided and submitted in the required form. We certify that this Return is, to the best of our knowledge and belief, correct. Name Telephone Number MA(BS)1H (12/2021)

Part I - Assets and Liabilities
(HK$'000)
2. Non-controlling interests
3. Qualifying capital instruments
4. Other capital-type instruments
5. Notes in circulation
6. Due to Exchange Fund
7. Deposits from customers
I. LIABILITIES
1. Capital and reserves
1.1 Paid up capital
1.2 Reserves
1.3 Current profit/loss
1.4 Total
8.2 Banks outside Hong Kong
8.3 Non-bank customers (including the Exchange Fund)
8.4 Total
9. Due to banks
9.1 Authorized institutions in Hong Kong connected with the reporting institution
9.2 Other authorized institutions in Hong Kong
7.1 Demand deposits and current accounts
7.2 Savings deposits
7.3 Time, call & notice deposits
7.4 Total deposits from customers
8. Amounts payable under repos
8.1 Authorized institutions in Hong Kong
10.3 Total
11. Other liabilities
11.1 Accrued interest payable
11.2 Suspense items
11.3 Insurance contract liabilities
11.4 Others
9.3 Banks outside Hong Kong connected with the reporting institution
9.4 Other banks outside Hong Kong
9.5 Total balances due to banks
10. Negotiable debt instruments issued and outstanding
10.1 Negotiable certificates of deposit (NCDs)
10.2 Other negotiable debt instruments
16. Loans and advances to customers
16.1 Loans and advances other than trade financing
16.2 Trade financing
16.3 Total loans and advances to customers
17. Amount receivable under reverse repos
17.1 Authorized institutions in Hong Kong
11.5 Total
12. Total liabilities
II. ASSETS
13. Cash
14. Government certificate of indebtedness for notes issued
15. Due from Exchange Fund
18.3 Banks outside Hong Kong connected with the reporting institution
18.4 Other banks outside Hong Kong
18.5 Total balances due from banks
17.2 Banks outside Hong Kong
17.3 Non-bank customers (including the Exchange Fund)
17.4 Total
18. Due from banks (other than holdings of negotiable debt instruments)
18.1 Authorized institutions in Hong Kong connected with the reporting institution
18.2 Other authorized institutions in Hong Kong

Part I - Assets and Liabilities
(HK$'000)
19. Negotiable certificates of deposit (NCDs) held
19.1 Issued by authorized institutions in Hong Kong
19.2 Issued by banks outside Hong Kong
d. Issued by non-bank institutions outside Hong Kong e. Total
20.2 Acceptance and bills of exchange held
a. Accepted or payable by banks (including restricted license banks and deposit-taking companies) b. Accepted or payable by non-banks
c. Total
19.3 Total NCDs held
20. All negotiable debt instruments held, other than NCDs
20.1 Floating rate notes held (other than holdings reported under 20.4)
a. Issued by authorized institutions in Hong Kong b. Issued by other non-bank institutions in Hong Kong
c. Issued by banks outside Hong Kong
b. Issued outside Hong Kong
c. Total
20.5 Other debt instruments held
a. Issued in Hong Kong b. Issued outside Hong Kong
c. Total
20.3 Commercial paper held
a. Issued in Hong Kong b. Issued outside Hong Kong
c. Total
20.4 Government bills, notes and bonds
a. Issued in Hong Kong
21.2 Investments in associates and joint ventures
21.3 Other investments
21.4 Total investments
22. Interests in land and buildings
22.1 Bank premises and office premises
22.2 Other interests in land & buildings
20.6 Total negotiable debt instruments held, other than NCDs (20.1e + 20.2c + 20.3c + 20.4c + 20.5c)
21. Investments
21.1 Investments in shareholdings
a. Listed b. Unlisted
c. Total
24.4 Others
24.5 Total
25. Total assets
26. Less: Provisions
27. Total assets less provisions
22.3 Total
23. Goodwill and intangible assets
24. Other assets
24.1 Accrued interest receivable
24.2 Fixed assets
24.3 Suspense items

Part II - Profit and Loss Account
Amount attributable to insurance related subsidiaries (HK$'000)
I. PROFIT & LOSS ACCOUNT
INCOME
1.1 Interest income
1.2 Interest expenses
1. Net interest income
2.1A Gains less losses arising from trading in foreign currencies 2.1B Gains less losses arising from non-trading activities in foreign currencies
2.2 Gains less losses arising from trading in interest rate derivatives
2.3 Gains less losses arising from trading in other derivatives
2. Gains less losses from foreign exchange operations and trading in derivatives
3.1 Income from investments held for trading
3.2 Dividend Income
3.3 Income from non-trading investments
3. Income from investments
4. Income from fees and commissions
5. Profit/(loss) on sale of fixed assets
6.1 Net insurance premium income
6.2 Share of profit on associates and joint ventures
6.3 Others
6. Other income
7. Total income
EXPENSES AND OTHER CHARGES
8.1 Staff expenses
8.2 Rental expenses
8. Staff and rental expenses
9.1 Net insurance claims incurred and movement in liabilities to policyholders
9.2 Others
9. Other expenses
10. Net charge/(credit) for debt provision
11. Net charge for other provisions
11A. Deficit/(surplus) on revaluation of land and buildings 11B. Impairment loss/(reversal of impairment loss) on assets
12. Total expenses and other charges
CURRENT PROFIT/(LOSS)
13. Profit/(loss) before tax
14. Net charge for tax provision
15. Profit/(loss) after tax
16. Extraordinary profit/(loss) net of tax
17. Profit/(loss) for the period
OTHER INFORMATION
18. Profit/(Loss) reported in item17 above attributable to non-controlling interests
19. Dividend declared
20. Unrealised and deferred losses in derivatives
II. Provisions
1. Changes in provision for bad and doubtful debts
Consolidated Position
(HK$'000)
(HK$'000)
Specific (a)
(HK$'000)
(HK$'000)
General (b)
1.1 Previous balance as at _____________
1.2 Adjustments for exchange difference
1.3 Recoveries
1.4 New Provisions
1.4A Net provisions arising from new financial assets originated or acquired 1.4B Increase in provisions arising from changes in credit risk 1.4C Others
1.5 Amount written off
1.6 Amount released
1.6A Release of provisions arising from changes in credit risk 1.6B Others
1.7 Net charge / release due to changes in estimation methodology
1.8 Other movements
1.9 Current balance (=sum of 1.1 to 1.8)
(HK$'000)
2. Provisions against value of other claims and investments
3. Total provisions (1.9(a)+1.9(b)+2)
4. Gross value of loans against which specific provisions (as shown in 1.9a) have been made

Return of Consolidated Accounts
Part III - Analysis of Loans and Advances and Provisions
Section (1) - Classification of loans and advances by economic sectors based on internal classification used by individual institutions
Subsector code Subsector code Subsector code Subsector code Sector or Subsector Sector code 1 2 3 4 name Below is an illustration of how to report of loans by economic sectors:
(i) Provide a full list of the sectors and sub-sectors adopted by your institution in each reporting period (ii) Report the outstanding loan amount against the lowest hierarchy level of each of the sectors Note: The final reporting template may vary due to technical limitation of the STET software Total (HK$'000) A. Total Loans and Advances (should equal part I 16.3 and part III (2) item A5) 225,000 100 1001 1001 100101 Chemical Manufacturing Pharmaceutical and Medicine Manufacturing Medicinal and Botanical Manufacturing blank blank 0 100 1001 100102 Pharmaceutical Preparation Manufacturing 5,000 100 1001 100103 Biological Product Manufacturing 0 200 Computer and Electronic Product Manufacturing blank 200 2001 Computer and Peripheral Equipment Manufacturing blank 200 2001 200101 Electronic Computer Manufacturing 10,000 200 2001 200102 Computer Storage Device Manufacturing 0 200 2001 200103 Computer Terminal and Other Computer Peripheral Equipment Manufacturing 30,000 200 2002 Communications Equipment Manufacturing 0 200 2002 200201 Telephone Apparatus Manufacturing 50,000 200 2002 200202 Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing 0 200 2002 200203 Other Communications Equipment Manufacturing 60,000 200 2003 Audio and Video Equipment Manufacturing blank 200 2003 200301 Audio and Video Equipment Manufacturing blank 200 2003 200301 20030101 Television 0 200 2003 200301 20030102 Audio equipments 70,000

Part III - Analysis of Loans and Advances and Provisions
Section (2) - Asset quality and provisions (HK$'000)
Pass
(1)
Special Mention
(2)
Substandard
(3)
Doubtful
(4)
Loss
(5)
Total (1+2+3+4+5)
(6)
A. Loans and advances
1. Hong Kong office
2. Overseas branches
(i) Mainland China
(ii) Others
3. Banking subsidiaries of the reporting institution in :
(i) Hong Kong
(ii) Mainland China
(iii) Others
4. Other non-bank subsidiaries of the reporting institution in :
(i) Hong Kong
(ii) Mainland China
(iii) Others
5. Total (A.1 to A.4)
Provisions made against A.5
6. General provisions
1. Hong Kong office
2. Overseas branches
(i) Mainland China
(ii) Others
3. Banking subsidiaries of the reporting institution in :
(i) Hong Kong
(ii) Mainland China
(iii) Others
4. Other non-bank subsidiaries of the reporting institution in :
(i) Hong Kong
(ii) Mainland China
(iii) Others
7. Specific provisions
1. Hong Kong office
2. Overseas branches
(i) Mainland China
(ii) Others
3. Banking subsidiaries of the reporting institution in :
(i) Hong Kong
(ii) Mainland China
(iii) Others
4. Other non-bank subsidiaries of the reporting institution in :
(i) Hong Kong
(ii) Mainland China
(iii) Others
Provisions made against B.1
2. General provisions
3. Specific provisions
4. Total (B.2 to B.3)
8. Total (A.6 to A.7)
B. Balances due from banks
1. Due from banks

Part III - Analysis of Loans and Advances and Provisions
Section (2) - Asset quality and provisions (HK$'000)
Pass Special Mention Substandard Doubtful Loss Total (1+2+3+4+5) (1) (2) (3) (4) (5) (6)
C. Acceptances and bills of exchange held
1. Accepted or payable by non-banks
2. Accepted or payable by banks
3. Total (C.1 to C.2)
Provisions made against C.3
4. General provisions
5. Specific provisions
6. Total (C.4 to C.5)
D. Investment debt securities
1. Issued by banks, governments & international organizations
2. Issued by others
3. Total (D.1 to D.2)
Provisions made against D.3
4. General provisions
5. Specific provisions
6. Total (D.4 to D.5)
E. Accrued interest
1. Accrued interest on A.1, B.1, C.3 and D.3
2. Provisions made against E.1
F. Commitments and contingent liabilities
1. To or on behalf of non-banks
2. To or on behalf of Banks
3. Total (F.1 to F.2)
Provisions made against F.3
4. General provisions
5. Specific provisions
6. Total (F.4 to F.5)
G. Value of security
1. In support of loans & advances in A.5
2. In support of other exposures in B.1,C.3,D.3,E.1,F.3
H. Assets acquired through security enforcement Notes: (HK$'000) Loans Other assets (c) assets which have been overdue for more than 6 months and up to 1 year (1) - Overdue and rescheduled assets Please indicate the book value of (a) assets which have been overdue for more than 1 month and up to 3 months (b) assets which have been overdue for more than 3 months and up to 6 months (d) assets which have been overdue for more than 1 year (e) sub-total (a) to (d) (f) total assets which have been rescheduled (i) of which rescheduled assets included in (a) above (ii) of which rescheduled assets included in (b) to (d) above

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MA(BS)1/P. 1 (12/2021)
Completion Instructions
Returns of Assets and Liabilities
Form MA(BS)1, Form MA(BS)1A, Form MA(BS)1B and Part I of Form MA(BS)1H Introduction

1. These completion instructions are applicable to the following 4 return forms: MA(BS)1,
   MA(BS)1A, MA(BS)1B and Part I of MA(BS)1H.
2. Section A gives instructions on the general reporting requirements. Section B
   explains the reporting requirements for each individual item in the return forms.
   Section A : General Instructions
3. The general reporting requirements for the 4 forms are asfollows:
   If the submission deadline falls on a public holiday, it will be deferred to the next working day. Report the positions as at the last calendar day of each month/quarter. Form To be reported by Coverage Reporting frequency and submission deadline MA(BS)1 All authorized Institutions Positions of the HK offices Monthly; not later than 14 days (except Parts IX and X which may be submitted not later than 1 month) after the last day of each calendar month MA(BS)1A Overseas branches of locally incorporated institutions Position of overseas branches in each country Half yearly; not later than 1 month after 30 June and 31 December MA(BS)1B Locally incorporated institutions with overseas branches Combined positions of the HK offices and overseas branches Quarterly; not later than 1 month after 31 March, 30 June, 30 September and 31 December
   Part I of
   MA(BS)1H
   Licensed banks incorporated in
   Hong Kong that have one or more subsidiaries which are banks. Consolidated positions of the HK offices, overseas branches and ALL subsidiaries consolidated in published accounts Quarterly; not later than 1 month after 31 March, 30 June, 30 September and 31 December

MA(BS)1/P. 2 (12/2021)
4. Except where otherwise stated, book value should be used for reporting these returns.
Report figures on an accrual basis and report the gross and not the net position. However, where the accrued interest has been credited to the interest in suspense account instead of the profit and loss account, it should be netted off against the corresponding accounts in suspense whether or not it has been capitalised. Total liabilities must equal total assets less provisions.
5. Institutions should apply consistent accounting policies in compiling the returns. Any
change in accounting policies (i.e. different to those used in previous returns or the institution's most recent statutory accounts) should be notified to the Monetary Authority in writing.
6. Amounts should be shown to the nearest thousand in HK$ or HK$ equivalent in the
case of foreign currency items. Transactions denominated in gold should be reported under the column of “other currencies”. The closing middle market T/T rates should be used for conversion purposes.
7. For the purposes of these returns:
(i) “Authorized institutions” refer to institutions authorized under the Banking Ordinance and “authorized institutions in Hong Kong” refer to the Hong Kong office of authorized institutions. (ii) “Banks” refer to institutions which are regarded by the appropriate supervisory authorities as banks in their place of incorporation, and the central bank of a country. “Banks outside Hong Kong” refer to the overseas offices of authorized institutions and banks which are not authorized institutions. (iii) “Repo and Reverse Repo” refer to (a) sale & repurchase agreement (“Repo”)/Stock lending (b) purchase & resale agreement (“Reverse Repo”)/Stock borrowing Report repo/reverse repo by economic substance approach. Detailed reporting instructions are provided in Annex 1. (iv) Report securities transactions by trade date approach. The reporting treatments of unmatured purchases and unmatured sales are provided in
Annex 2.
(v) Capital, reserves and profit/loss and general provisions should be reported in the base currency of the reporting institution or in the currency in which the capital is denominated. Specific and country risk provisions should be reported in the currency of the underlying assets against which the provisions are made. (vi) The aggregate balance of the exchange position account (commonly known as “exchange equalisation account”) should be reported in the base currency of the reporting institution. This refers to the balancing item which arises due to the need to translate the balance sheet into the base currency for reporting

MA(BS)1/P. 3 (12/2021) purposes. Report as “other liabilities” in the case of a net credit balance and “other assets” in the case of a net debit balance under item 10.3 or 22.4 of MA(BS)1, item 8 or 18 of MA(BS)1A, item 10 or 21 of MA(BS)1B and item
11.4 or item 24.4 in Part I of MA(BS)1H, as the case may be.
(vii) With the exception of securities transactions, all other unmatured spot or forward contracts are regarded as forward transactions (i.e. off- balance sheet items). Matured but unsettled spot or forward contracts are regarded as spot transactions (i.e. on-balance sheet items) except for FX margin trading arrangements where such contracts are also regarded as forward transactions.
8. For the purposes of Form MA(BS)1 and Part I of MA(BS)1H, two institutions are
regarded as connected if one institution holds directly or indirectly 20% or more of the voting capital of another institution, or both institutions are members of the same group of companies (items 8.1 and 17.1 of MA(BS)1 and items 9.1, 9.3, 18.1 and
18.3 in Part I of MA(BS)1H).
9. For Form MA(BS)1, “overseas offices” refer, in the case of a locally incorporated
institution, to its branches and representative offices outside Hong Kong and, in the case of an institution incorporated outside Hong Kong, to its head office and other branches and representative offices outside Hong Kong.
10. For items with maturity classifications, the remaining period to maturity as at
reporting date should be used as the basis for reporting. The remaining period to maturity should be counted by reference to calendar days. Some examples are given in Annex 3.
11. Definition of residency:
An individual who has, or will have, resided in Hong Kong for over a consecutive period of one year. The individual’s residency in Hong Kong should be supported by his Hong Kong home address for the period of his residency. If the place and/or period of residency cannot be ascertained, the holding of Hong Kong Identity Card may be used as a proxy for residence. A company has its place of operation (e.g. production of goods and/or provision of services) in Hong Kong for over a consecutive period of one year. The company’s operation in Hong Kong should be supported by its Hong Kong business address for the period of its residency. If the place of operation and/or the period of operation cannot be ascertained, the holding of Hong Kong business registration certificate and the business address appearing on the certificate may be used as a proxy for residence. For address in Hong Kong, both temporary address and correspondence address should not be considered unless the residency cannot be ascertained by the reporting institution. For negotiable debt instruments issued by the reporting institution, they should, to the extent possible, be allocated on the basis of the residency of the holder. Where this cannot be ascertained, the place of issue may be used as a proxy of residence.

MA(BS)1/P. 4 (12/2021)
12. As stipulated in our guidance note “Review on Impact of the New Hong Kong
Accounting Standards on Authorized Institutions’ Capital Base and Regulatory Reporting” issued to all AIs on 12 April 2005, locally incorporated AIs and overseas-incorporated AIs whose head offices have chosen to adopt IFRS or comparable standards shall neglect any reference made thereto in this return on “interest in suspense’ and “country risk provision”.
13. Specific provisions or general provisions mentioned in this completion instruction
should follow the definitions of specific provisions and collective provisions defined in section 2(1) of the Banking (Capital) Rules respectively. The categorisation of accounting provisions into specific provisions or general provisions follows the treatment adopted in MA(BS)3.
14. In reporting Part I of MA(BS)1H, authorized institutions should use the same scope
of reporting as their published consolidated accounts.

MA(BS)1/P. 5 (12/2021)
Section B : Specific Instructions
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H
I. I. I. I. LIABILITIES

• • 1. • Capital & reserves
         This is the sum of paid-up capital, reserves and current profit/(loss) of the institution as a whole.
         1.1 - - 1.1 Paid-up capital
         Report all the paid-up share capital of the authorized institution at paid-up value 1 . This includes ordinary and preference share capital.
         1.2 - - 1.2 Reserves
         Report all published reserves, including retained earnings, general reserves and revaluation reserves but exclude provisions however described. The amount to be included shall be net of any dividends paid or declared (i.e. on or before the reporting date) out of retained earnings. Accumulated losses, if any, should also be reported in this item. Subsequent changes of published reserves should be confirmed by auditors.
         1.3 - - 1.3 Current profits/losses
         Report any balance in the current year's profit and loss account (which should be the same as the amount reported in item 17 of the Return of Current Year's Profit & Loss Account [MA(BS)1C]) less any dividend which has been paid or declared (i.e. on or before the reporting date) out of the current year's profit or, in the case of an institution incorporated overseas, any amount which has been remitted back to the head office. Unaudited profit/loss of the previous year, net of dividends paid and declared, should also be reported in this item.

1 This includes share premium accounts and capital redemption reserves which were previously included in reserves (item 1.2) before commencement of the new Hong Kong Companies Ordinance (Cap. 622) section 135 on 3 March 2014.

MA(BS)1/P. 6 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H

• • • 2. Non-controlling interests
      Report the amount of non-controlling interests under this item.

2. • 2. 3. Qualifying capital instruments
           This comprises other capital instruments accepted by the Monetary Authority for capital adequacy ratio purposes, e.g. perpetual subordinated debt and qualifying term subordinated debt. Report the book value of these instruments.
3. • 3. 4. Other capital-type instruments
           This comprises loan capital and capital instruments other than those qualifying capital instruments reported in item 2 of MA(BS)1, MA(BS)1B and item 3 in Part I of MA(BS)1H.
4. • 4. 5. Notes in circulation
           This comprises bank notes issued by the reporting institution.

• 1. • • Capital from head office
         Report balances which are of a capital nature due to the head office in Hong Kong.
• 2. • • Statutory reserves
         Report all statutory reserves required by local laws in the country where the reporting overseas branch is located.

5. 3. 5. 6. Due to Exchange Fund
            Report balances due to the Exchange Fund.
            Where balances due to the Exchange Fund arise from repo transactions with the Hong Kong Monetary Authority for Discount Window purposes, they should be reported under item 7 of MA(BS)1 and M(BS)1B, item 5 of MA(BS)1A, and item 8 in Part I of MA(BS)1H.

MA(BS)1/P. 7 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H
6. 4. 6. 7. Deposits from customers
Report all deposit liabilities (including balances denominated in gold) due to parties other than banks and other authorized institutions. Include deposits from the Hong Kong Government (e.g. The Treasury) but exclude deposits from the Exchange Fund, which should be reported under item 5 of MA(BS)1 and MA(BS)1B, item 3 of MA(BS)1A and item 6 in Part I of MA(BS)1H. Exclude negotiable debt instruments issued by the reporting institution. Exclude also cash margins which do not form part of the savings, current or other deposit accounts. “Cash margins” refers to cash collateral pledged by a customer for obtaining general banking facilities such as leveraged foreign exchange trading. Such amounts should be reported under item 10.3 of MA(BS)1, item 8 of MA(BS)1A, item 10 of MA(BS)1B and item 11.4 in Part I of MA(BS)1H. However, where the cash margins form part of the deposit accounts, they should be reported under this item. When reporting deposits with embedded derivative contract, the value of the deposit leg before adjusting the effect of fair value on the embedded derivative contract should be reported under this item, while the fair value of the embedded derivative contract should be reported as “other liabilities” in the case of losses arising from changes in fair value of derivatives and “other assets” in the case of gains arising from changes in fair value of derivatives under item 10.3 or 22.4 of MA(BS)1, item 8 or 18 of MA(BS)1A, item 10 or 21 of MA(BS)1B and item 11.4 or 24.4 in Part I of MA(BS)1H, as the case may be. The term “deposit” is defined in
section 2 of the Banking Ordinance.
6.1 - - 7.1 Demand deposits and current accounts
Report all demand deposits and current accounts, analysing them into interest bearing and non￾interest bearing, based on the product feature of the deposit accounts. Interest bearing deposits shall continue to be classified as such even though the prevailing interest rates offered on them fall to zero or the depositors are not entitled to receive interest

MA(BS)1/P. 8 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H because the average balance of their deposits is below a minimum threshold specified by the reporting institution.
7. 5. 7. 8. Amount payable under repos
Report the amount payable to the counterparty under “repo” transactions.
8. 6. 8. 9. Due to banks
In MA(BS)1, 1A, 1B, and Part I of MA(BS)1H this includes interbank takings and borrowings from other authorized institutions in Hong Kong, banks abroad, and overseas head office and branches of the reporting institution. Negotiable debt instruments issued by the reporting institution should be reported in item 9 of MA(BS)1 and MA(BS)1B, item 7 of MA(BS)1A and item 10 in
Part I of MA(BS)1H. In the case of an institution
incorporated overseas, balances due to head office which are of a capital nature should be reported under item 8.3 of MA(BS)1.
9. 7. 9. 10. Negotiable debt instruments issued and outstanding
If the reporting institution’s own negotiable debt instruments are being repurchased, whether for trading or market making purposes, they should be netted off under this item.
9.1 7.1 9.1 10.1 Negotiable certificates of deposit (NCDs)
This comprises all outstanding NCDs issued by the reporting institution. Report the issue, redemption, repurchase and sale of the reporting institution’s own NCDs in nominal value. The difference between the nominal value and the book value should be reported in item 10.3 or 22.4 of MA(BS)1, item 8 or 18 of MA(BS)1A, item 10 or 21 of MA(BS)1B and item 11.4 or 24.4 in Part I of MA(BS)1H as appropriate. These transactions

MA(BS)1/P. 9 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H should also be reported under Memorandum items IV(a)1, IV(a)2, IV(a)3 and IV(a)4 of MA(BS)1 respectively.
9.2 7.2 9.2 10.2 Other negotiable debt instrument
This refers to negotiable securities, other than shares, stocks or negotiable certificates of deposit, issued by the reporting institution. These include instruments such as promissory notes, bonds, bills, bankers’ acceptances, etc.
10. 8. 10. 11. Other liabilities
Report all other liabilities of the reporting institution that have not been reported elsewhere. For MA(BS)1A only, the current year's profit/loss and any unremitted profit/loss of the reporting branch(es) should also be reported in this item.
10.1 - - 11.1 Accrued interest payable
Report all accrued interest payable.
10.2 - - 11.2 Suspense items
This comprises all credit balances not in customers’ names but relating to customers’ funds, e.g. accounts holding customers' funds awaiting investment, meeting acceptances or other payments. Exclude interest in suspense which has been netted off from the corresponding accounts.

• • • 11.3 Insurance contract liabilities
      Report all insurance contract liabilities outstanding.
      10.3 - - 11.4 Others
      Report all other liabilities of the reporting institution that have not been reported elsewhere including its net short positions of individual issues in Exchange Fund Bills and Notes, Hong Kong Government Bonds and other money and capital market instruments, i.e. netting between long and short position in different issues is not required.

MA(BS)1/P. 10 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H
Cash margins (which do not form any part of the savings, current or other deposit account) held by the reporting institution for the provision of credit facilities should be reported under this item. Include also the amount payable on unmatured spot and forward purchases of securities.
11. 9. 11. 12. Total liabilities
This is the total of items 1 to 10 of MA(BS)1, MA(BS)1B, items 1 to 8 of MA(BS)1A and items 1 to 11 in Part I of MA(BS)1H.
II. II. II. ASSETS
12. 10. 12. 13. Cash
Report holdings of all notes and coins in any currency.
13. - 13. 14. Government certificates of indebtedness for
notes issued
Report holdings of Hong Kong Government certificates of indebtedness for bank notes issued.
14. 11. 14. 15. Due from Exchange Fund
Report all balances due from the Exchange Fund.
15. 12. 15. 16. Loans and advances to customers
Report all loans and advances to customers other than the Exchange Fund, banks and other authorized institutions in gross amount before provisions. Holdings of debt instruments which are not negotiable should be regarded as loans and advances. However, interest in suspense should be netted off against the corresponding loan accounts where the accrued interest has been capitalised.

MA(BS)1/P. 11 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H
Exclude holdings of negotiable bills accepted or payable by banks or non-banks which should be reported as negotiable debt instruments.
15.3 - - - Other loans for use in Hong Kong
A loan is regarded as for use in Hong Kong if it finances or has a direct impact on the economic activity of Hong Kong. This is usually determined by the place of business of the customer or by the place in which the loan is drawn.
15.5 &
15.6

• • • Other loans where the place of use is not known
      Include in item 15.5 all other loans to a customer in Hong Kong which are not included in item 15.1 or
      15.2 and the place of use is unknown; include in
      item 15.6 if the loans are made to a customer outside Hong Kong and the place of use is unknown.
• • • 16.1 Loans and advances other than trade financing
      Report loans for use in Hong Kong, loans for use outside Hong Kong and other loans where the place of use is not known in this item.
• • • 16.2 Trade financing should include loans and advances
      covering finance of imports to Hong Kong, exports and re-exports from Hong Kong and merchandising trade.
      15.7 - - 16.3 Total loans and advances to customers
      All loans, with the exception of overdrafts, are to be classified according to their residual maturity. For MA(BS)1, loans to the extent of the amount which is actually overdue should be reported under item 15.7b. Institutions should note that the instructions for reporting overdue loans in the Return of Loans and Advances and Provisions [MA(BS)2A] and in the Return on Liquidity Monitoring Tools [MA(BS)23] are not the same as those mentioned above.

MA(BS)1/P. 12 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H
16. 13. 16. 17. Amount receivable under reverse repos
Report the amount receivable from the counterparty under “reverse repo” transactions.
17. 14. 17. 18. Due from banks
Report all placements with and advances to authorized institutions in Hong Kong, banks abroad and overseas head office and branches of the reporting institution but exclude holdings of negotiable certificates of deposit and other negotiable debt instruments issued by these parties. For locally incorporated institutions, balances due from overseas offices which are of a capital nature (i.e. capital injection) should be reported under item 17.3 of MA(BS)1. Holdings of export trade bills accepted and payable by banks should be reported in item 19.2 of MA(BS)1, item 15.2 of MA(BS)1A, item 18.2 of MA(BS)1B and item 20.2 in Part I of MA(BS)1H.
18. 15.1 18.1 19. Negotiable certificates of deposit (NCDs) held
Report all holdings of NCDs issued by authorized institutions in Hong Kong and banks abroad. Such holdings are to be reported in nominal values. The difference between the nominal value and the book value should be reported in item 10.3 or 22.4 of MA(BS)1, item 8 or 18 of MA(BS)1A, item 10 or 21 of MA(BS)1B and item11.4 or 24.4 of Part I of MA(BS)1H as appropriate. NCDs issued by non￾banks are regarded as other debt instruments.
19. 15.2 18.2 20. All negotiable debt instruments held, other than
NCDs
Report holdings of all other negotiable debt instruments (such as floating rate notes, acceptances, bills of exchange, commercial paper, government debt securities and other negotiable debt instruments), other than NCDs, issued by authorized institutions, banks abroad, non-bank institutions in and outside Hong Kong and

MA(BS)1/P. 13 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H governments.
19.2 - - 20.2 Acceptances and bills of exchange held
Report all acceptances and bills of exchange held (i.e. excluding those held as collateral for a loan and advance) by the reporting institution. Bills under own acceptances which have been discounted by the reporting institution itself should be reported as loans to customers on whose behalf the acceptances have been committed.
19.3 - - 20.3 Commercial papers held
Commercial paper is defined as a general debt obligation in the form of a promissory bearer note issued at a discount or interest-bearing basis by non-bank institutions. Its term to maturity is usually very short ranging from 30 to 90 days.
19.4 - - 20.4 Government bills, notes and bonds
Report all net long positions of individual issues in bills, notes and bonds issued by central and local governments including the Exchange Fund, i.e. netting between long and short position in different issues is not required.
19.5 - - 20.5 Other debt instruments held
Report all holdings of negotiable debt instruments not included elsewhere, e.g. corporate bonds, convertible loan stocks etc.
20.1 16.1 19.1 21.1 Investments in shareholdings
Report all holdings of share capital of any other company owned (i.e. excluding those held as collateral for a loan or advance) by the reporting institution. This also includes the holdings of capital instruments (e.g. perpetual subordinated debts) and unit trusts which are established specifically for investments in shares.

• • • 21.2 Investments in associates and joint ventures

MA(BS)1/P. 14 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H
Report all investments in associates and joint ventures which are accounted for using equity method.
20.2 16.2 19.2 21.3 Other investments
Report all other investments not included elsewhere. This includes gold, debentures and other securities.
21. 17. 20. 22. Interests in land and buildings
Report bank premises (including those for providing housing or amenities for staff of the reporting institution) and other interests in land and buildings, net of depreciation, owned by the reporting institution.

• • • 23. Goodwill and intangible assets
      Report goodwill arising from business combination and other intangible assets.

22. 18. 21. 24. Other assets
                Report all other assets of the reporting institution not included elsewhere.
                22.1 - - 24.1 Accrued interest receivable
                Report all accrued interest receivables. Exclude accrued interest which has not been recognised in the profit and loss account but credited as interest in suspense.
                22.2 - - 24.2 Fixed assets
                This comprises plant and equipment, vehicles, vessels, furniture and fixtures and other fixed assets. The fixed assets should be reported net of depreciation.
                22.3 - - 24.3 Suspense items
                This comprises all debit balances not in customers’ names but relating to customers’ funds, e.g. debit balances awaiting transfer to customers’ accounts.

MA(BS)1/P. 15 (12/2021)
Item
Reference Item
Form
MA(BS)1 MA(BS)1A MA(BS)1B Part I
MA(BS)1H
22.4 - - 24.4 Others
Report all other assets not included elsewhere.
Include also the amounts receivable on unmatured spot and forward sales of securities.
23. 19. 22. 25. Total assets
This is the total of all entries under items 12 to 22 of MA(BS)1, items 10 to 18 of MA(BS)1A, items 12 to 21 of MA(BS)1B and items 13 to 24 in Part I of MA(BS)1H.
24. 20. 23. 26. Less: Provisions
Report the provisions set aside for on- and off￾balance sheet exposures. Provisions for expenditures, such as provision for taxation, retirement benefits, etc should be reported as other liabilities. General provisions should be reported in the base currency of the reporting institution and other provisions should be reported in the currency of the underlying assets. For MA(BS)1, the amount reported should agree with the amount reported in
Part II – item 3 of the Return of Current Year’s
Profit & Loss Account [MA(BS)1C].
25. 21. 24. 27. Total assets less provisions
This is the net amount of total assets less provisions and should equal to the amount of total liabilities reported under item 11 of MA(BS)1 and MA(BS)1B, item 9 of MA(BS)1A and Part I item 12 of MA(BS)1H.

MA(BS)1/P. 16 (12/2021)
For MA(BS)1 only
Item
Reference Item
III – X Memorandum items
III. Foreign currency swap and HK$ customer deposits
(a) Foreign currency swap deposits from customers For the purpose of this return, a foreign currency swap deposit is defined as any deposit from a customer involving the customer buying at spot a foreign currency against Hong Kong dollars, placing the foreign currency proceeds on deposit and at the same time entering into a forward contract to sell on the maturity of the deposit such foreign currency (principal plus interest) for Hong Kong dollars. (a)1 Includes foreign currency swap deposits booked locally which have been reported as foreign currency deposits in item 6 of Part I. (a)2 Includes foreign currency swap deposits booked offshore which have not been reported under item (a)1 above and item 6 of Part I of the Return. (b) Hong Kong dollar customer deposits booked offshore It refers to Hong Kong dollar customer deposits arranged by the institution for offshore booking. (These deposits are not reported in item 6 of Part I)
IV. Changes in liability and holding of NCDs
(these changes are to be reported in nominal values) (b)1 Purchases by the institution in the primary market Primary market refers to the market for the initial placing of NCDs with banks or authorized institutions by the group organised to handle the issue. (b)2/(b)3 Purchases/sales by the institution in the secondary market Secondary market refers to the market for the sale and purchase of NCDs after the initial issue in the primary market. Purchases/sales should be reported by reference to the place where the deal is traded and not to where the NCDs are issued. Item

MA(BS)1/P. 17 (12/2021)
Reference Item
V. Value of securities
NCDs are to be reported in nominal value while other securities are to be reported at book value. (a) Securities sold under repo agreements Report the value of securities sold under repo agreements that have been reported under the relevant items in Part II. This does not include repo transactions where all the risks and rewards of ownership are substantially transferred to the buyer and which are regarded as outright sales (see Annex 1 (iii) for the reporting treatment of such transactions). (b) Unmatured purchases of securities Report the value of unmatured spot and forward purchases of securities that have been reported under the relevant items in Part II. (c) Securities acquired under reverse repo agreements Report the value of securities acquired under reverse repo agreements. This does not include reverse repo transactions where the reporting institution has substantially taken up all the risks and rewards of ownership from the seller and which are regarded as outright purchases (see Annex 1(iv) for the reporting treatment of such transactions). (d) Unmatured sales of securities Report the value of unmatured spot and forward sales of securities that have been excluded from the relevant items in Part II.
VI. Market makers’ short position
Only authorized institutions that are Market Makers of Exchange Fund Bills/Notes need to report this part. Report the value of net short positions in individual issues of Exchange Fund Bills & Notes, i.e. no netting between long and short position in different issues is required. The short positions in MTRC notes should be excluded.

MA(BS)1/P. 18 (12/2021)
(Parts VII and VIII are for completion by institutions incorporated overseas only. Definitions for individual items in these Parts can be found in section 2 of the Banking (Capital) Rules (“BCR”).) Item Reference Item Exposures in both the banking book and the trading book should be reported in Parts VII and VIII.
VII. Residential mortgages
(a) Residential mortgage loans
Please refer to the definition of “residential mortgage loan” in section 2(1) of BCR. (b) Securities backed by, or participations in, residential mortgages Report all residential mortgage-backed securities and participation in a pool of residential mortgages.
VIII. Off-balance sheet exposures
(a) Direct credit substitutes
Please refer to the definition of “direct credit substitute” in section 2(1) of BCR. (b) Transaction-related contingent items Please refer to the definition of “transaction-related contingency” in section 2(1) of BCR. (c) Trade-related contingent items Please refer to the definition of “trade-related contingency” in section 2(1) of BCR. (d) Sale and repurchase agreements; asset sales or other transactions with recourse; forward asset purchases; amount owing on partly paid shares and securities; and forward forward deposits placed Please refer to the definitions of “repo-style transaction”, “asset sale with recourse”, “forward asset purchase”, “partly paid-up shares and securities” and “forward forward deposits placed” in section 2(1) of BCR. Repo agreements involving securities should be reported by adopting “economic substance approach” as set out in Annex 1.

MA(BS)1/P. 19 (12/2021)
Item
Reference Item
(e) Note issuance and revolving underwriting facilities Please refer to the definition of “note issuance and revolving underwriting facilities” in section 2(1) of BCR. (f) Other commitments Other commitments include the undrawn portion of any binding arrangements which obligate the reporting institution to provide funds at some future date. Commitments with an original maturity of less than 1 year, or which can be unconditionally cancelled at any time - other than where the only reason for cancellation is “force majeure” – should be reported under item (f)1. This also includes any revolving or undated / open-ended commitments, e.g. overdrafts or unused credit card lines, providing that they can be unconditionally cancelled at any time and subject to credit review at least annually. Commitments with an original maturity of 1 year and over should be reported in item (f)2. Original maturity is defined as the period between the date on which the reporting institution enters into the commitment and the earliest date on which the institution can, at its option, unconditionally cancel the commitment. For the following items (g) to (k), report the notional principal of each contract. (g) Exchange rate and gold contracts Please refer to the definition of “exchange rate contract” in section 2(1) of BCR. (h) Interest rate contracts Please refer to the definition of “interest rate contract” in section 2(1) of BCR. The commitment to accept forward forward deposits should be included in this item. (i) Equity contracts Please refer to the definition of “equity contract” in section 2(1) of BCR. For items (j) and (k) Please refer to the definition of “commodity” in section 2(1) of BCR when reporting items (j) and (k). (j) Precious metal other than gold contracts Please refer to definition of “precious metal contract” in section 2(1) of BCR.

MA(BS)1/P. 20 (12/2021)
Item
Reference Item
(k) Commodities other than precious metals and gold contracts Please refer to the definition of “other commodity contract” in section 2(1) of BCR.
IX. Breakdown of liabilities to and claims on banks and non-banks outside
Hong Kong
Report the liabilities to and claims on banks and non-banks to Mainland China, Japan, the United States, the United Kingdom and all other countries (including international organisations) in accordance with the completion instructions of the Return of International Banking Statistics – Locational Banking Statistics (MA(BS)21A Part I). Other currencies refer to currencies other than Hong Kong dollar and US dollar. International organisations listed in Annex 2 of the completion instructions of MA(BS)21 are classified under “non-bank customers” in Part IX. The list of international organisations may be updated from time to time. Please refer to the BIS website (www.bis.org) for an updated list. This classification is only for purposes of Part IX. Reporting institutions do not need to submit the information under Part IX for positions as at the end of March, June, September and December as the information will be included in MA(BS)21A Part I.
X. Breakdown of liability and asset items by residency
The sum of Hong Kong residents and non-Hong Kong residents of each item should reconcile with the amount reported under the relevant item in Part I or II of this return. Hong Kong Monetary Authority [12/2021]

MA(BS)1/P. 21 (12/2021)
Annex 1
Reporting treatments of repo/reverse repo (i) Securities that have been sold under a repo agreement with a commitment to repurchase at a pre-determined price On-balance sheet item Off-balance sheet item Repo/ stock lending The relevant asset which has been sold/lent should remain as an asset item. Cash received on the transaction is regarded as collateralised deposit and should be reported under items 7, 5, 7 and 8 of Part I of MA(BS)1, MA(BS)1A, MA(BS)1B and Part I of MA(BS)1H respectively. If the collateral received is not cash, it should not be reported on the balance sheet. No liability to the counterparty should be reported. No need to report (ii) Securities that have been purchased under a reverse repo agreement with a commitment to sell back at a pre-determined price On-balance sheet item Off-balance sheet item Reverse repo/ stock borrowing The relevant asset which has been purchased/borrowed should not be reported as an asset item. Cash given on the transaction is regarded as a collateralised loan to the counterparty and should be reported under items 16, 13, 16 and 17 of Part II of MA(BS)1, MA(BS)1A, MA(BS)1B and Part I of MA(BS)1H respectively. If the collateral given is not cash, it should continue be reported on the balance sheet. No exposure to the counterparty should be reported. No need to report

MA(BS)1/P. 22 (12/2021)
(iii) Securities that have been sold under a repo agreement under which all the risks and rewards of ownership have been transferred substantially to the buyer On-balance sheet item Off-balance sheet item Repo (regarded as outright sales) The relevant asset that has been sold should no longer be treated as an asset item. Where the commitment to repurchase has no pre-determined price, it should be reported at fair value (i.e. current market value) on the reporting date. For institutions incorporated outside Hong Kong, such a transaction should be reported in item (d) of Part VIII of MA(BS)1. For locally incorporated institutions, such a transaction should be reported in item 4 under Division B of Part III(a) or III(b) of MA(BS)3 for AIs adopting Basic or Standardized approach; and item 4 under Division D of Part III(c) of MA(BS)3 for AIs adopting IRB approach. (iv) Securities that have been purchased under a reverse repo agreement under which the reporting institution has substantially taken up all the risks and rewards of ownership from the seller On-balance sheet item Off-balance sheet item Reverse Repo (regarded as outright purchases) The relevant asset that has been purchased should be reported as an asset item. No need to report

MA(BS)1/P. 23 (12/2021)
Annex 2
Reporting treatments of unmatured securities transactions On-balance sheet item Off-balance sheet item Unmatured purchases of securities Unmatured spot and forward purchases of securities are included on the balance sheet from the day of trade. The corresponding liability to the counterparty should be reported under items 10.3, 8, 10 and 11.4 of
Part I of MA(BS)1, MA(BS)1A,
MA(BS)1B and Part I of MA(BS)1H respectively.
No need to report
Unmatured sales of securities
Unmatured spot and forward sales of securities are excluded from the balance sheet from the day of trade. The corresponding receivable due from the counterparty should be reported under items 22.4, 18, 21 and
24.4 of Part II of MA(BS)1,
MA(BS)1A, MA(BS)1B and Part I of
MA(BS)1H respectively.
No need to report

MA(BS)1 P. 24 (12/2021)
Annex 3
Reporting
Date Money at call
Repayable or callable within 7 days
Repayable or callable within 1 month
Between 8 days and 1 month
Between 1 and 3 months
Later than 3 months
Maturity dates
31 January 1 February
1 - 7
February
1 - 28
(29*)
February
8 - 28
(29*)
February
1 March -
30 April 1 May onwards
28 (29*)
February 1 March
1 – 7
March
1 - 28 (29*)
March
8 - 28 (29*)
March
29 (30*)
March -
28(29)
May
29 (30*) May onward
30 April 1 May 1 - 7 May 1 – 30 May 8 - 30 May 31 May - 30 July 31 July onwards (* where February has 29 days)

---

MA(BS)1C/P.1 (12/2021)
Completion Instructions
Return of Current Year’s Profit and Loss Account Form MA(BS)1C and Part II of Form MA(BS)1H Introduction

1. This return collects information on the profit and loss account and provisions of
   authorized institutions.
   Section A: General Instructions
2. The general reporting requirements for authorized institutions incorporated
   locally and overseas are asfollows:
   To be reported by Coverage Reporting frequency and submission deadline MA(BS)1C Institutions incorporated in HK without overseas branches / institutions incorporated outside HK  1 return on the position of HK offices  Quarterly; not later than 21 days after 31 March, 30 June, 30 September and 31 December Institutions incorporated in HK with overseas branches  Same as above  1 return each for the position of overseas branches in each overseas country  1 return on the combined position of Hong Kong and overseas offices  Same as above  Half yearly, not later than 1 month after 30 June and 31 December  Quarterly, not later than 1 month after the end of each quarter.
   Part II of MA(BS)1H
   Licensed banks incorporated in Hong Kong that have one or more subsidiaries which are banks.  1 return on consolidated position of the HK offices, overseas branches and ALL subsidiaries consolidated in published accounts  Quarterly, not later than 1 month after the end of each quarter.

MA(BS)1C/P.2 (12/2021)
3. This return covers the position of a reporting institution from the first calendar day
of its financial year to the last calendar day of the current quarter. Institutions whose financial year ends on a date other than 31 March, 30 June, 30 September and 31 December should submit an additional return for the whole financial year not later than 21 days after the end of each financial year, unless otherwise specified by the Monetary Authority. If the submission deadline falls on a public holiday, it will be deferred to the next working day.
4. All entries in this return should be reported on an accrual basis except those
relating to assets which must be carried in non-accrual status. To avoid large fluctuation of profit/loss during a financial year, institutions are expected to set aside provisions for major expenditure items such as bad and doubtful debts, tax, depreciation and audit fees at least on a quarterlybasis.
5. Institutions should apply consistent accounting policies in compiling this return.
Any change in accounting policies (i.e. different to those used for previous returns or the institutions' most recent statutory accounts) should be notified to the Monetary Authority in writing.
6. Amounts should be shown to the nearest thousand, in HK$ or HK$ equivalents
in the case of foreign currency items. The closing middle market T/T rates prevailing at the end of the current quartershould be used for conversion purpose.
7. As stipulated in our guidance note “Review on Impact of the New Hong Kong
Accounting Standards on Authorized Institutions’ Capital Base and Regulatory Reporting” issued to all AIs on 12 April 2005, locally incorporated AIs and overseas-incorporated AIs whose head offices have chosen to adopt IFRS or comparable standards shall neglect any reference made thereto in this return on “interest in suspense’ and “country risk provision”.
8. Specific provisions or general provisions mentioned in this completion instruction
should follow the definitions of specific provisions and collective provisions defined in section 2(1) of the Banking (Capital) Rules respectively. The categorisation of accounting provisions into specific provisions or general provisions follows the treatment adopted in MA(BS)3.
9. Report the amount of income and expenses attributable to insurance related
subsidiaries after adjusting intercompany eliminationsin the last column of section I in Part II of MA(BS)1H.
10. Insurance related subsidiaries referred to those subsidiaries engaging in insurance
related business either as insurer, insurance agent or insurance broker.
11. In reporting Part II of MA(BS)1H, authorized institutions should use the same
scope of reporting as their published consolidated accounts.

MA(BS)1C/P.3 (12/2021)
Section B : Specific Instructions
Item Reference
MA(BS)1C
Part II
MA(BS)1H
Part I Profit & Loss Account
Income
1.1 1.1 Interest income
Report interest received and accrued interest receivable attributable to the reporting period, including those arising from trading securities held. Amortisation of discounts and premiums of securities held by the reporting institution should also be reported under this item Where interest rate related derivatives are used to hedge banking book assets, the net interest arising from the combination of the asset and the hedge should be included. Income from interest rate related derivatives held for purposes other than hedging should be reported under item 2.2.
1.2 1.2 Interest expenses
Report interest paid and accrued interest payable attributable to the reporting period, including those arising from securities short positions held for trading purposes. Amortisation of discounts and premiums of securities issued by the reporting institution should also be reported under this item. Where interest rate related derivatives are used to hedge banking book liabilities, the net interest arising from the combination of the liability and the hedge should be included. Costs arising from interest rate related derivatives held for purposes other than hedging should be reported under item 2.2.

1. 1. Net interest income
      Report the net amount of items 1.1 and 1.2. Where interest expenses exceed interest income, the net figure should be shown in brackets.
      2.1 - 2.3 2.1 - 2.3 "Trading transactions" for the purposes of items 2.1 - 2.3 of this
      return mean an institution's proprietary positions in financial instruments which are intentionally held for short term resale and/or which are taken on by the institution with the intention of

MA(BS)1C/P.4 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H benefiting in the short term from actual and/or expected differences between buying and selling prices, or from other price or interest rate variations, and positions in financial instruments arising from matched principal brokering and market making, or positions taken in order to hedge other elements of the trading book 2.1A 2.1A Gains less losses arising from trading in foreign currencies Report the realised and unrealised gains less losses for the current financial year from the reporting institution's trading transactions in foreign currencies (which includes dealings in gold) including those from foreign exchange derivatives. Include also all fees and commissions derived from such activities. Where the losses exceed the gains, the net figure should be shown in brackets. 2.1B 2.1B Gains less losses arising from non-trading activities in foreign currencies Report the realised and unrealised gains less losses arising from non-trading activities in foreign currencies including fees and commissions derived from such activities. Where the institution is engaged in interest arbitrage dealing (for example, the institution takes a HK dollar deposit and makes a US dollar loan and simultaneously enters into a HK dollar/US dollar forward contract in order to hedge the currency exposure) and does not distinguish between exchange and interest gains or losses on such dealing, the entire amount of the profits or losses concerned should be shown under items 1.1 or 1.2; a profit arising from the transaction should be treated as interest income and a loss as interest expense.
2.2 2.2 Gains less losses arising from trading in interest rate derivatives
Report the realised and unrealised gains less losses for the current financial year from the reporting institution's trading transactions in interest rate derivatives. Where the losses exceed the gains, the net figure should be shown in brackets.
2.3 2.3 Gains less losses arising from trading in other derivatives
Report the realised and unrealised gains less losses for the current financial year from the reporting institution's trading transactions in all other derivatives excluding interest rate and foreign exchange derivatives. Where the losses exceed the gains, the net

MA(BS)1C/P.5 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H
figure should be shown in brackets.
2. 2. Gains less losses arising from foreign exchange operations and
trading in derivatives
Report the net amount of items 2.1A, 2.1B, 2.2 and 2.3. Where the total losses exceed the total gains, the net figure should be shown in brackets.
3.1 3.1 Income from investments held for trading 1
Report all profit or loss from investments held for trading or dealing purposes. Where derivatives are used to hedge investments held for trading, the net profit or loss arising from the combination of the investment and the hedge should be included.
3.2 3.2 MA(BS)1C
Dividend from subsidiary and associated companies and other equity investments Report the dividends from group companies, associated companies and other equity investments recognised during the reporting period.
Part II of MA(BS)1H
Dividend income
Report the dividend income recognised during the reporting period.
3.3 3.3 Income from non-trading investments 2
Report all profit or loss (including any remaining unamortised premiums or discounts) from derecognition (e.g. sale, early redemption, modifications that result in derecognition) of all investments other than those which qualify for reporting under item 3.1 above.

1 The term “investments held for trading” refers to investments and loans and advances measured at fair value through profit or loss under HKFRS 9 or equivalent accounting standard. Financial assets designated at fair value through profit or loss shall also be included." 2 The term “non-trading investments” refers to investments measured at "amortised cost" or "fair value through other comprehensive income" under HKFRS 9 or equivalent accounting standard.

MA(BS)1C/P.6 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H
Where derivatives are used to hedge investments other than those which qualify for items 3.1 and 3.2, the net profit or loss arising from the combination of the investment and the hedge should be included.
3. 3. Income from investments
Report the sum of items 3.1 to 3.3.
4. 4. Income from fees and commissions
This includes charges, fees and commissions received by the reporting institution in respect of services such as credit lines, corporate advice, investment management and trustee services, guarantees and indemnities etc. provided by it to customers. Report the net income from fees and commissions. Where fee and commission expenses exceed fee and commission income, the net figure should be shown in brackets.
5. 5. Profit/(loss) on sale of fixed assets
Report the profit or loss on the sale of fixed assets of the reporting institution, e.g. premises and equipment. Gains and losses arising from disposal of leasehold land for own use should be reported under this item. Gains and losses arising from disposal of investment properties should be reported under item 6.
6. 6. Other income
Report all other income but which are not elsewhere included. This should include any income or expenses arising from derivatives positions which do not qualify for inclusion within items 1, 2 or 3 above. Where the expenses exceed income, the net figure should be shown in brackets. For securities issued by the reporting institution, net gains or losses (including those arising from the remaining unamortised premiums or discounts) on early redemption of such securities shall be reported under this item. In Part II of MA(BS)1H Report the net insurance premium income from insurance subsidiary in item 6.1 and share of profit in associates and joint ventures in item 6.2

MA(BS)1C/P.7 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H
7. 7 Total income
Report the sum of items 1 to 6.
Expenses and other charges
8.1 8.1 Staff expenses
This includes all employee benefits (including short-term employee benefits such as wages and salaries, post employment benefits such as pensions and other retirement benefits, other long-term employee benefits and termination benefits etc.) and directors’ emoluments.
8.2 8.2 Rental expenses
This includes expenses on occupancy such as rents, rates, insurance of premises, depreciation cost of premises, lighting, heating and maintenance costs etc. Expenses for staff housing benefit schemes should be included under item 8.1.
9. 9. Other expenses
This includes depreciation cost of equipment, audit fees and all other expenses which are not elsewhere included. In Part II of MA(BS)1H, report the net insurance claims and benefits paid and movement in liabilities to policyholders in item 9.1.
10. 10. Net charge/(credit) for debt provision 3
Report net amount charged or credited to the profit and loss account during the reporting period in respect of provisions for bad and doubtful debts and bad debt recoveries. The amount reported for this item should be the same as the net amount of items 1.4, 1.6 and 1.7 of Part II, save for any exchange differences.
11. 11. Net charge for other provisions
Report amount provided less amount recovered for other provisions in the reporting period.

3
Item 10 includes net charge/(credit) in both general provisions and specific provisions.

MA(BS)1C/P.8 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H
11A. 11A. Deficit/(surplus) on revaluation of land and buildings Report the net deficit/(surplus) on revaluation of bank premises and investment properties. A deficit arising on revaluation of bank premises should be charged to the profit and loss account if and to the extent that it exceeds the amount held in the bank premises revaluation reserve in respect of that same asset immediately prior to the revaluation. Where there is a surplus arising on revaluation, it should be credited to the profit and loss account to the extent of the deficit previously charged to the profit and loss account in respect of that same asset. Deficits and surpluses arising on revaluation of investment properties should be recognised on a portfolio basis. A net deficit should be first set off against the investment property revaluation reserve 4 and thereafter charged to the profit and loss account. Where a deficit has previously been charged to the profit and loss account and a revaluation surplus subsequently arises, this surplus should be credited to the profit and loss account to the extent of the deficit previously charged. 11B. 11B. Impairment loss/(reversal of impairment loss) on assets Report the net amount of impairment loss/(reversal of impairment loss) 5 on bank premises, investment properties and other assets (such as equipment, fixtures and fittings). An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Such impairment losses are recognised in the profit and loss account except where the asset is carried at valuation and the impairment loss does not exceed the revaluation surplus for that same asset, in which case it is treated as a revaluation decrease. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount of the asset. A reversal of impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment

4 Locally incorporated authorized institutions shall neglect the reporting treatment in relation to investment property revaluation reserve. Instead, the fair value gains and losses arising from investment properties should be report under item 11A. Overseas incorporated authorized institutions which adopt accounting standards relevant to their home country and record investment property revaluation reserve in their books should report the movement in investment property revaluation reserve according to the completion instructions for item 11A. 5 Please refer to HKAS 36 for the accounting treatment of impairment loss.

MA(BS)1C/P.9 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H loss been recognised in prior years.
12. 12. Total expenses and other charges
Report the sum of items 8 to 11B.
Current profit/(loss)
13. 13. Profit/(loss) before tax
Report the net amount of items 7 and 12. Where total expenses exceed total income, the net figure should be shown in brackets.
14. 14. Net charge for tax provision
Report the net charge for tax provision in the reporting period.
15. 15. Profit/(loss) after tax
Report the difference between items 13 and 14.
16. 16. Extraordinary profit/(loss) net of tax
Report all extraordinary profit or loss that arise from events or transactions that are clearly distinct from the ordinary activities of the institution and therefore are not expected to recur frequently or regularly. Include for example any loss on the expropriation of assets or arising from a natural catastrophe.
17. 17. Profit/(loss) for the period
Report the total of items 15 and 16.
Other information

• 18. Report profit/(Loss) attributable to non-controlling interests
  reported in item 17 in Part II of MA(BS)1H

18. 19 Dividend declared
    Report all dividends declared by the institution during the reporting period. Dividends attributable to profits earned in previous years should be included if these were declared during the reporting period.

MA(BS)1C/P.10 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H
19.1 - Dividend from licensed bank subsidiaries/associated companies
Report all dividends from subsidiaries and associated companies which are licensed banks recognised during the reporting period.
19.2 - Dividend from RLB/DTC subsidiaries/associated companies
Report all dividends from subsidiaries and associated companies which are restricted licence banks or deposit-taking companies recognised during the reporting period.
19. - Total dividend from authorized institution
subsidiaries/associated companies
Report the total of items 19.1 and 19.2 and the sum should be equal to or smaller than item 3.2.
20. 20. Unrealised and deferred losses in derivatives
Report any unrealised losses on derivatives which have not been taken to the profit and loss account and any amount of realised losses on derivatives contracts that have been deferred as at the end of the reporting period. Any unrealised or deferred gains on derivatives should not be netted off unless a legally enforceable bilateral netting agreement exists.
Part II Provisions

1. 1. Changes in provision for bad and doubtfuldebts
      Any provisions charged/credited to the profit and loss account including recoveries and write-offs should be reported in this
      part. Institutions which have the practice of crediting recoveries
      and debiting write-offs directly to the profit and loss account without going through the provision for bad and doubtful debts account should take note of the reporting instructions for items
      1.3 and 1.5 below. For the purposes of this part, "bad and
      doubtful debts" include loans and advances, claims on banks (other than holdings of debt securities issued by them), bills receivable, bills discounted and purchased. They include also accrued interest on these items. Country risk provisions generally refer to provisions set aside by authorized institutions to absorb potential losses arising from their

MA(BS)1C/P.11 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H country risk exposures. If institutions reflect country risk in provisions earmarked against their aggregate exposure to a particular country after accounting for risk transfer and specific provision made against credit risk (i.e. on a country basis), such provision should be reported under the column of “Country risk (c)”. If institutions do not separately set aside country risk provisions but factor in an element of provision for country risk into specific provisioning for each individual exposure (i.e. on an individual obligor basis), such provision should be reported under the column of “Specific (a)”. Additional reporting guidance on Part II.1 of this return is provided in Appendix 1.
1.1 1.1 Previous balance
The date to be inserted in the space provided should be the last day of the previous financial year. Report the balance outstanding in the specific, general and country risk provisions accounts as at the last day of the previous financial year. The amounts should be the same as those reported under items 1.9(a), (b) and (c) of this part as at the end of the previous financial year. It is recognised that institutions often have the need to make adjustments to these reported figures, typically upon the finalisation of annual financial statements. In such case, the amounts to be reported should be the revised amounts instead of the amounts shown in the earlier return(s). Institutions which have made the adjustments should provide the Monetary Authority with amendments to the earlier return(s) at or before the time of submitting the return for the current quarter.
1.2 1.2 Adjustments for exchange difference
Report any increase or decrease in the opening balances resulting from the conversion into HK$ of any portion of the balances which is denominated in a foreign currency.
1.3 1.3 Recoveries
Report recoveries of amounts previously written off against which a provision has been made or where a provision has been reinstated for an amount that has been previously written off. The release of the amounts to the profit and loss account should pass through item 1.6 below.

MA(BS)1C/P.12 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H
1.4 1.4 New provisions
Report the amount charged to the profit and loss account during the reporting period in respect of new provisions. 1.4A 1.4A Net provisions arising from new financial assets originated or acquired This includes the amount charged to the profit or loss arising from new financial assets originated or purchased (net of repayments made on these financial assets during the reporting period). Increases or decreases in provisions due to changes in credit risk subsequent to initial recognition shall be reported under item 1.4B or item 1.6A. 1.4B 1.4B Increase in provisions arising from changes in credit risk Report the increase in provisions arising from change in credit risk of existing financial assets, e.g., transfer from 12-month to lifetime expected credit loss stage, updates of risk parameters (such as probability of default, loss given default), modifications of contractual cash flows of financial assets without derecognition, changes in forward looking economic data and the weighting for respective forward looking scenarios. 1.4C 1.4C Others Report new provisions arising from any other factor not included in 1.4A, 1.4B or 1.7.
1.5 1.5 Amount written off
Report the amount of debts which were written off in the reporting period. Where no provision had been established for the debts in question, an entry equal to the amount that has been written off should be reported as new provisions under item 1.4B at the sametime.
1.6 1.6 Amount released
Report any amount which is no longer required as provisions and which has been released back to the profit and loss account during the reporting period.

MA(BS)1C/P.13 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H
1.6A 1.6A Release of provisions arising from changes in credit risk Report the provisions released which arise from change of credit risk of existing financial assets, e.g., transfer from lifetime to 12-month expected credit loss stage, updates of risk parameters (such as probability of default, loss given default), repayments of financial assets, modifications of contractual cash flows of financial assets without derecognition, changes in forward looking economic data and the weighting for respective forward looking scenarios. 1.6B 1.6B Others Report the provisions released which arise from derecognition of financial assets other than amounts written off (e.g. full repayments of financial assets except for partial repayments reported under item 1.6A) and any other factor not included in item 1.6A or item 1.7. This item also includes recoveries of amounts previously written off against which a provision has been made.
1.7 1.7 Net charge / release due to changes in estimation methodology
Report any net charge/release to the profit and loss account during the reporting period which arises from changes in the methodology for estimation of provisions. This shall include changes in the existing methodology (e.g. model assumptions) or the use of new methodology. However, changes arising from updates of risk parameters (such as probability of default, loss given default) and changes in forward looking economic data and the weighting for respective forward looking scenarios shall be reported under item 1.4 or item 1.6.
1.8 1.8 Other movements
Report all other movements of provisions not included in items
1.3 to 1.7, for example, unwinding of discounts.
1.9 1.9 Current balance
Report in items 1.9(a), (b) and (c) the current balances of specific, general and country risk provisions respectively.
2. 2. Provisions against value of other claims and investment

MA(BS)1C/P.14 (12/2021)
Item Reference
MA(BS)1C
Part II
MA(BS)1H
Report all provisions other than those reported in item 1.9.
3. 3. Total provisions
This is the total of items 1.9(a), (b), (c) and 2. The amount reported should agree with the sum of amount reported in item 24 of Form MA(BS)1 (or, item 20 of Form MA(BS)1A and item 23 of Form MA(BS)1B, as the case may be.)
4. 4. Gross value of loans against which specific provisions have been
made
Report the gross book value as at the end of the reporting quarter of all exposures against which specific provisions have been made. The gross value of loans should not include accrued interest which has been capitalised but credited to interest in suspense account.
5. Provisions made by head office/other overseas branches or by the
parent company of the reporting institution against the exposures of the reporting institution Report provisions made in the books of the overseas head office or other overseas branches or by the parent company of the reporting institution in respect of the bad and doubtful debts of the reporting institution. Those institutions which do not presently establish provisions in their own books are expected to maintain the provisions on their own as far as possible. Hong Kong Monetary Authority December 2021

MA(BS)1C/P.15 (12/2021)
Appendix 1
Additional reporting guidance on
Part II.1 “Changes in provision for bad and doubtful debts”

1. Item 1.4A “Net provisions arising from new financial assets originated or acquired”
   should capture the increase in provisions due to the following:
    Initial drawdown of credit facilities granted to customers;  Subsequent increase in outstanding loan balance by comparing the ending balance of the reporting period to the beginning balance of the reporting period;  Loans purchased from other entities during the reporting period;  In the situation where an increase in outstanding loan balance is coupled with a change in the underlying credit risk 1 , the portion of changes in provisions contributed by the increase in loan balance is separately reported in this item (Appendix 2).
2. Item 1.4B “Increase in provisions arising from changes in credit risk” should
   capture the increase in provisions arising from the following changes:
    Increase in the underlying credit risk regardless of whether there is any change in staging of the loan under IFRS/HKFRS 9;  In the situation where an increase in the underlying credit risk is coupled with an increase in outstanding loan balance, the portion of increase in provisions contributed by the increase in underlying credit risk of existing loan balance is separately reported in this item (Appendix 2);  In the situation where an increase in the underlying credit risk coupled with partial repayment of loan results in a net increase in provisions (Appendix 2).
3. Item 1.6A “Release of provisions arising from changes in credit risk” should capture
   the decrease in provisions arising from the following changes:
    Partial repayment of loan except for the situations described in paragraph 4 below and in the last bullet point of paragraph 2 above;  Decrease in the underlying credit risk regardless of whether there is any change in staging of the loan under IFRS/HKFRS 9;  In the situation where a decrease in the underlying credit risk is coupled with an increase in outstanding loan balance, the portion of decrease in

1
“Change in the underlying credit risk” refers not only the change among the three stages under IFRS/HKFRS 9 but also the factors described in Part II.1.4B and 1.6A of this completion instruction.

MA(BS)1C/P.16 (12/2021) provisions contributed by the decrease in underlying credit risk of existing loan balance is separately reported in this item (Appendix 2).
4. If any partial or full repayments are made to a loan originated or purchased in the
same financial year, they are netted in item 1.4A.
5. In the case of revolving credit facilities, repayment is reported in item 1.6B if the
loan is fully repaid and the facility is cancelled upon its expiry because the AI has decided (as evidenced in the AI’s credit records) that the facility will not be renewed.
6. If the measurement of impairment of the financial asset changes from general
provisions to specific provisions (e.g. from stage 2 to stage 3 under IFRS/HKFRS 9, or vice versa), the release of general provisions for stage 2 should be reported in item 1.6A and the new specific provisions for stage 3 should be reported in item 1.4B (or vice versa).
7. Reporting of unwinding of discounts depends on its impact on profit or loss under
the applicable accounting requirements. For unwinding of discounts which is recognised as interest income (e.g. discounts unwind on stage 3 loans under IFRS/HKFRS 9), it should be reported in item 1.8. For other unwinding of discounts which results in changes in impairment charged to profit or loss, it should be reported under item 1.4B/1.6A.
8. If any newly granted loans are subsequently written off in the same financial year,
they should be reported in item 1.4A as well as item 1.5.
9. For AIs which adopt IFRS/HKFRS 9 or equivalent standard and have financial
years ending on 31 December, they should report in item 1.1 the opening provision balance based on IFRS/HKFRS 9 upon transition to the new standard on 1 January 2018 for the 2018 MA(BS)1C returns. Similar principle applies to AIs with other year-end dates, i.e., report the opening balance of the provision movement based on IFRS/HKFRS 9 or equivalent standard upon transition to the standard.

MA(BS)1C/P.17 (12/2021)
Appendix 2
Illustration of the reporting of changes in provisions arising from a combination of changes in loan balance and underlying credit risk (Part II.1 “Changes in provision for bad and doubtful debts”) 1.4A – Report the portion of increase in provisions contributed by the increase in loan balance 1.6A – Report the portion of decrease in provisions contributed by the decrease in underlying credit risk of existing loan balance 1.4A – Report the portion of increase in provisions contributed by the increase in loan balance 1.4B – Report the portion of increase in provisions contributed by the increase in underlying credit risk of existing loan balance 1.6A – Report the total change in provisions arising from the combination of a decrease in loan balance and a decrease in underlying credit risk 1.6B – Report in this item if the decrease in provisions is due to full derecognition of loans other than write-offs 1.4B – Report in this item if the combination of a decrease in loan balance and an increase in the underlying credit risk results in a net increase in provisions 1.6A –Report in this item if the combination of a decrease in loan balance and an increase in the underlying credit risk results in a net decrease in provisions Note: The above diagram is for illustrative purpose only. For details of reporting requirements, please refer to the main text and Appendix 1 of this completion instruction. decreasing Credit risk increasing decreasing Loan balance increasing

---

MA(BS)2A/P.1(12/2021)
Completion Instructions
Quarterly Analysis of Loans and Advances and Provisions Form MA(BS)2A and Part III of Form MA(BS)1H Introduction

1. This return analyses, by economic sector, an authorized institution's loans and advances
   for use in Hong Kong. It also analyses the performance of an institution's selected assets (mainly loans and advances) and off-balance sheet exposures according to the classification methods defined in these instructions. Information on provisions set aside for each category of classified assets isalso included.
   Section A : General Instructions
2. Quarterly Analysis of Loans and Advances and Provisions (Form MA(BS)2A)
   This return consists of 2 parts and 3 supplementary items. It should be completed by authorized institutions in the following manner:
   For Part I andNotes
   (1) & (2)
   For Part II and Notes
   (3), (4), (5), (6) & (7)
   Institutions incorporated in
   HK without overseas branches / institutions incorporated outside HK Report the aggregate positions of HK offices Report the aggregate positions of HK offices Institutions incorporated in HK with overseas branches Same as above Report the combined position of HK offices and overseas branches unless otherwise indicated

MA(BS)2A/P.2(12/2021)
2.1 The return, showing the positions as at the last calendar day of each quarter, should be
submitted no later than 14 days after the end of each quarter. In the case of an institution incorporated in Hong Kong with overseas branches, the information required under Part II and Notes (3), (4), (5), (6) & (7) of the return may be separately submitted within a period to be agreed with the Monetary Authority if that institution has difficulties in complying with the time limit. However, in no case should the information be submitted later than 1 month after the end of each quarter. If the submission deadline falls on a public holiday, it will be deferred to the next working day.
2.2 Certain items reported under Parts I and II of this return should be reconciled with the
amounts reported in relevant items in the Return of Assets and Liabilities (Form MA(BS)1 or MA(BS)1B) and the Return of Current Year's Profit & Loss Account (Form MA(BS)1C). Details are given in the specific instructions below and are summarised in Appendix 1.
3. Part III MA(BS)1H
Licensed banks incorporated in Hong that have one or more banking subsidiaries which are banks should report the consolidated position of the HK offices, overseas branches and ALL subsidiaries consolidated in published accounts of the institution in this part. This return should be submitted no later than 1 month after the end of each quarter. If the submission deadline falls on a public holiday, it will be deferred to the next working day.
4. Amounts should be shown to the nearest thousands, in HK$ or HK$ equivalent in the
case of foreign currency items. The closing middle market T/T rates prevailing at the reporting date should be used for conversion purposes.
5. As stipulated in our guidance note “Review on Impact of the New Hong Kong
Accounting Standards on Authorized Institutions’ Capital Base and Regulatory Reporting” issued to all AIs on 12 April 2005, locally incorporated AIs and overseas￾incorporated AIs whose head offices have chosen to adopt IFRS or comparable standards shall neglect any reference made thereto in this return on “interest in suspense’ and “country risk provision”.
6. Specific provisions or general provisions mentioned in this completion instruction
should follow the definitions of specific provisions and collective provisions defined in section 2(1) of the Banking (Capital) Rules respectively. The categorisation of accounting provisions into specific provisions or general provisions follows the treatment adopted in MA(BS)3.
7. In reporting Part III of MA(BS)1H, authorized institutions should use the same scope
of reporting as their published consolidated accounts.

MA(BS)2A/P.3(12/2021)
Section B: Specific Instructions

1. Classification of Loans and Advances by Economic Sectors
   Item reference
   Item Description
   Part I
   MA(BS)2A
   Part III (1)
   MA(BS)1H
   1.1 Section 1 Report loans and advances by economic sectors of borrowers
   based on internal classification used by individual institutions in section 1. Total loans and advances reported in section 1 should equal to item 16.3 in part I and column (6) of item A5 in
   part III(2) of MA(BS)1H.
   1.2 A to I - Report loans and advances for use in Hong Kong, according to
   each economic sector, under items A to H. A loan is regarded as for use in Hong Kong if it finances or has a direct impact on the level of economic activity in Hong Kong. For most of the cases, this can be determined by whether the loan is made available or disbursed in Hong Kong and by the principal place of business of the customer. A loan should be classified according to its usage. For example, if a loan is granted to a textile manufacturer to purchase a factory building for enhancing productive capacity, it should be allocated to "textiles" (item A1) rather than to "property investment" (item B2). But if the loan is granted to the manufacturer to purchase a commercial complex for investment purpose, it should be classified under "investment in commercial properties" (item B2c). Similarly, if a loan is granted to a property developer for purposes which are clearly unrelated to its principal activities, such as the running of a hotel, such loan should not be reported under "property development" (item B1) or "property investment" (item B2). In cases where the usage of a loan cannot be identified with reasonable certainty, it should be classified according to the principal business activity of the borrower. For example, a loan to a property developer for general working capital purposes should be reported under the relevant sub-item of item B1 - Property development. In cases where it may not be possible to categorise a loan, including a finance lease and a hire purchase loan, by reference to the use of the loan proceeds or the use of the asset financed by the loan, it may be categorised by reference to the asset financed. For example, a mechanical digger can be categorised under the construction industry (item B3). Lorries and vans, where the principal activity of the end-user is uncertain may be classified under item G5 - Other transport and transport equipment.

MA(BS)2A/P.4(12/2021)
Item reference
Item Description
Part I
MA(BS)2A
Part III (1)
MA(BS)1H
The classification of loans by economic sectors should be made irrespective of whether the borrower is a corporate, firm or individual except for item H5. For example, a loan granted to an individual for purchasing a taxi should be reported under “taxis” (item G3) while a loan granted to an individual for purchasing residential property should be reported under “individuals - for the purchase of other residential properties” (item H5b). Where a loan is known to be raised by an immediate borrower to finance another party (the ultimate beneficiary), it should be classified according to the usage of the loan deployed by the ultimate beneficiary. An exception to this rule is where the principal business activity of the immediate borrower is that of lending money and it has financed the ultimate beneficiary in the ordinary course of business.
1.3 B1 - Propertydevelopment
Report loans to finance property development, including those for building and construction, according to the type of properties being developed. In cases where a loan cannot be readily classified by type of properties, e.g. where a loan is extended to a property developer not specifically tied to a particular project or property or where the borrower is involved in more than one sector, such loans may be reported under item B1d - Other properties.
1.4 B2 - Propertyinvestment
Report loans to finance investments in properties, including uncompleted properties, according to the type of properties being invested in. These include loans to finance corporate customers purchasing residential properties for the use of their directors, shareholders or employees and also loans to shell companies through which individuals acquired properties. Loans to finance the purchase of residential properties by professional & private individuals should be reported under item H5a or H5b, as the case may be. Loans to finance the acquisition of properties, e.g. factories, for a borrower's own use should be classified according to the principal activities of that borrower rather than as a property investment in general.
1.5 D - Recreational activities
Report loans to companies engaging in motion picture, radio, television and other entertainment activities. The manufacturing of

MA(BS)2A/P.5(12/2021)
Item reference
Item Description
Part I
MA(BS)2A
Part III (1)
MA(BS)1H radios and televisions should, however, be reported under item A5 “Electrical & electronic”.
1.6 E1 - Telecommunications
Report loans to companies that provide telecommunication services, such as residential or commercial telephone lines, mobile phone lines, pager, IDD, fax, data lines for data transmission and communication via satellite. Include loans to internet service providers and companies setting up networks/platforms for the provision of services as internet service providers. Loans to companies engaging in the manufacture of telecommunication equipment and other related accessories should be reported under item A5a “Telecommunication equipment”.
1.7 E2 - Information technology – Others
These include loans to companies that engage in software or application development, data processing, system administration or maintenance and the provision of IT-related consultancy services. Loans to companies engaging in the manufacture of computer hardware and other peripherals should be reported under item A5 “Electrical and electronic”. Loans to companies engaging in the wholesale or retail business of IT- related products should be reported under item F “Wholesale and Retail Trade”.
1.8 H2 - Financial concerns
These include loans to investment companies, insurance companies, futures brokers, finance companies and any other persons in the financial sector not being authorized institutions or overseas banks. Investment companies include companies in the business of investment in commodity futures, foreign currencies, gold bullion, shares, funds and securities. They include also unit trusts, retirement funds and investment holding companies. Finance companies and others include companies in the business of leasing, factoring, bills discounting, hire purchase, mortgage, commercial and industrial finance. They include also gold bullion brokers, money-lenders, pawnshops and credit card companies.
1.9 H3a/H4a - Margin lending for stockbrokers and non-stockbroking
companies and individuals
Margin lending is defined as lending for the purchase of shares against the market value of shares pledged, typically, the borrower of such lending is obliged to ensure, and the lending institution to monitor, that the amount of the loan would not exceed a

MA(BS)2A/P.6(12/2021)
Item reference
Item Description
Part I
MA(BS)2A
Part III (1)
MA(BS)1H predetermined ratio of the market value of the collateral pledged. In cases where a margin loan is secured partly by shares and partly by other securities, then only that part of the loan in excess of the value of the other securities should be reported as margin lending. For example, in respect of a loan of 10 which is secured by shares and other securities valued at 10 and 6 respectively, 4 being the part of the loan in excess of the value of other securities should be reported as margin lending. The remaining loan of 6 should be reported under item H3b or H4b, as the case may be. Loans for subscribing for new shares in initial public offerings (IPOs) should be included under items H3a and/or H4a, as the case may be. In addition, a breakdown of the amount of such loans included in items H3a and/or H4a should be reported under Note (2)(a). Non-stockbroking companies refer to companies other than investment companies.
1.10 H5b - Purchase of residential properties by professional and private
individuals
Report loans to professional and private individuals for the purchase of residential properties, other than the purchase of flats under the Home Ownership Scheme (HOS), Private Sector Participation Scheme (PSPS) and Tenants Purchase Scheme (TPS), regardless of whether the properties are intended for occupation by the borrowers or for other purposes. As long as the loans for the purchase of flats under HOS, PSPS and TPS are covered by the guarantee issued by the Housing Authority, they should be reported under item H5a; otherwise, they should be reported under itemH5b. This item includes refinancing loans and residential mortgage loans which have been transferred from other banks or companies.
1.11 H6 - Allothers
Report all loans and advances for use in Hong Kong that cannot be classified in the above economic sectors. Examples include “agriculture and fisheries” and “mining and quarrying”.
1.12 I - Loans and advances for use in Hong Kong
Report the sum of entries under items A to H under columns (1) to (6).
1.13 J - Trade financing
These are loans reported under items 15.1 and 15.2 of Form MA(BS)1 covering finance of imports to Hong Kong, exports and re-exports from Hong Kong and merchandising trade.

MA(BS)2A/P.7(12/2021)
Item reference
Item Description
Part I
MA(BS)2A
Part III (1)
MA(BS)1H
1.14 K - Other loans andadvances
These are loans reported under items 15.4, 15.5 and 15.6 of Form MA(BS)1.
1.15 L - Total loans andadvances
Report the sum of entries under items I, J, and K, columns (1) to (5). Entries under columns (1) to (4) should correspond to those reported under item 15.7g of Form MA(BS)1. The entry under column (4) should also correspond to that reported under item A1, column (6) in Part II.
1.16 A to L - Columns 1 to 3
Report the principal amount of all loans which are outstanding as at the reporting date in the appropriate columns according to the currency in which they are denominated. Accrued interest which has been capitalised as loans should be included net of any interest in suspense. Accrued interest which has not been capitalised should be reported net of any interest in suspense under E1 in Part
II. Interest in suspense refers to the interest that has been accrued
to a suspense account instead of the profit and loss account.
1.17 A to L - Column (5)
Report the amount of specific provisions, other than country risk provisions, that have been set aside for each item. In the case of institutions incorporated in Hong Kong without overseas branches or institutions incorporated overseas, the total of this column as reported under item L should correspond to the entry under item A6, column (6) in PartII.
1.18 A to I - Column (6)
Report the amount of general provisions, if any, that have been set aside for the various economic sectors under items A to H.

MA(BS)2A/P.8(12/2021)
2. Asset Quality andProvisions
Item reference
Part II Item Description
MA(BS)2A
Part III (2)
MA(BS)1H
2.1 A1, A2,
A4, B1,
C1, C2,
D1, D2,
F1, F2
A1, A2,
A3, A4,
B1, C1,
C2, D1,
D2, F1, F2
Classify and report loans and advances, balances due from banks, acceptances and bills of exchange held, investment debt securities and commitments and contingent liabilities of similar nature into the categories as listed out in this part according to the guidelines on Loan Classification System in Appendix 2. In MA(BS)2A Licensed banks incorporated in Hong Kong should report the position of loans and advances of their banking subsidiary incorporated in Mainland China in item A4. In MA(BS)1H Reporting institutions should report the position of loans and advances of their banking subsidiary and non-bank subsidiary according to their county of incorporation in item A3 and A4 respectively. If a banking subsidiary holds other non-bank subsidiary, its consolidated position of loans and advances should be reported in item A3. Any financial assets which are classified as fair value through profit or loss under HKFRS9 or equivalent accounting standards should NOT be included in this part except Item A.
2.2 B1 B1 Balances due frombanks
This item refers to placements with authorized institutions in Hong Kong and other banks abroad (excluding overseas head office and branches of the reporting institution).
2.3 C1 and C2 C1 and C2 Acceptances and bills of exchangeheld
This item refers to acceptances and bills of exchange held (i.e. excluding those held as collateral for a loan or advance) by the institution.
2.4 D1 and D2 D1 and D2 Investment debtsecurities
Report the holding of debt securities in items D1 to D2 according to the type of issuer and the category of classification.
2.5 E1 E1 Accruedinterest
Report interest that has been accrued but not capitalised for those

MA(BS)2A/P.9(12/2021)
Item reference
Part II Item Description
MA(BS)2A
Part III (2)
MA(BS)1H exposures classified as either substandard, doubtful or loss under items A3, B1, C3 and D3 (in the case of Part II of MA(BS)2A) and items A5, B1, C3 and D3 (in the case of Part III (2) of MA(BS)1H). Accrued interest should be reported net of any interest in suspense (i.e. any interest which has been accrued to a suspense account instead of the profit and loss account).
2.6 F1 and F2 F1 and F2 Commitments and contingentliabilities
Report commitments and contingent liabilities which subject the reporting institution to credit risk. These include direct credit substitutes (such as guarantees and standby letters of credit), trade￾related contingent items (such as letters of credit and liabilities under acceptances) and irrevocable loan commitments. Guarantees and standby letters of credit are usually converted into on-balance sheet exposures if the counterparty they are supporting fails but there may be circumstances when the bank is reasonably certain that such instruments will be called upon at a future date because of uncertainty about the client. Loan commitments which are irrevocable should also be classified as impaired assets if the creditworthiness of the client has deteriorated to an extent that makes repayment of any loan drawdown (or associated interest payments) doubtful. The definitions of direct credit substitutes and trade-related contingent items are the same as those defined in section 2 of the Banking (Capital) Rules. Commitments and contingent liabilities to overseas head office and branches of the reporting institution are excluded for the purposes of thisitem.
2.7 A5 to A7,
B2 to B4,
C4 to C6,
D4 to D5,
E2, F4 to
F6
A6, A7,
B2, B3,
C4, C5,
D4, D5,
E2, F4, F5
Provisions
Provisions should be reported and classified according to their nature, i.e. for general, specific or country risk (in case of Part II of MA(BS)2A) and for general or specific (in case of Part III (2) of MA(BS)1H), and the categories of exposures (where appropriate) for which the provisions are set aside.
2.8 G1 and
G2
G1 and
G2
Value ofsecurity
Report in item G1 the value of security held by the reporting institution to support those exposures classified as either substandard, doubtful or loss under item A3 (in the case of Part II of MA(BS)2A) and item A5 (in the case of Part III (2) of MA(BS)1H), and in item G2 the value of security for those

MA(BS)2A/P.10(12/2021)
Item reference
Part II Item Description
MA(BS)2A
Part III (2)
MA(BS)1H classified exposures under items B1, C3, D3, E1 and F3 . However, for each counterparty, the aggregate value of the security reported here should not exceed the aggregate of all relevant principals and accrued interest (i.e. for each counterparty, the lower of the value of the total exposure and the value of the total security should be reported here.) If a security is held in support of different types of exposures to the same counterparty, the value should first apply to loans and advances. The following illustrates how value of security should be reported by institutions. HK$’000 Counterparty Net realisable value of security Exposures Value of security to be reported under Loans Others Item G(1) Item G(2) A 1,000 700 0 700 0 B 1,000 1,500 0 1,000 0 C 1,000 500 200 500 200 D 1,000 900 500 900 100 E 1,000 1,300 500 1,000 0
2.9 H H Assets acquired through security enforcement
Report in column (6) the net book value of any asset (e.g. shares, debt securities or real properties) the ownership of which has been transferred to the institution in settlement of all or part of a claim (e.g. by way of foreclosure). Such assets usually indicate a lack of demand which contributes to uncertainty about their actual value. They should therefore be closely monitored until sold. This item does not include those assets, such as mortgaged properties, which have been taken possession of by the reporting institution but the ownership of which has yet to be transferred to the institution.

MA(BS)2A/P.11(12/2021)
3. Notes:
Item reference
Item Description Notes
MA(BS)2A
Notes
MA(BS)1H
3.1 (Note 1) - Loans to group companies ofproperty developers
Indicate the amount of loans reported under items H2a (to investment companies) and H2d (to finance companies) in Part I the borrowers of which are connected with property developers (where the use of such loans is known to be related to property development or property investment activities, it should be reported under item B in accordance with the purpose explained above). A borrower is regarded as property- developer-connected if it is the holding company, sister company, subsidiary or associate of any property developer.
3.2 (Note 2) - Margin lending
Provide the breakdown of margin lending reported under items H3a and H4a in Part I as follows:
(a) loans for subscribing new shares in IPOs; and (b) other margin lending. The breakdown relating to item H4a is required to be split further into loans to non- stockbroking companies and loans to individuals. For other margin lending reported under Note (2)(b), provide the following supplementary information:
(i) closing market value of the shares which are pledged with the institution to support these loans; and (ii) aggregate amount of any individual loans which are in excess of 50% of the closing market value of the underlying shares pledged assecurity.
3.3 (Note 3) (Note 1) Overdue and rescheduledassets
Report the book value (net of accrued interest that has been capitalised but accrued to a suspense account) of overdue or rescheduled assets under items (a) to (d) and (f). “Loans” include loans and advances to customers, and “other assets” include balances due from banks, acceptances & bills of exchange held and debt securities. Institutions incorporated in Hong Kong with

MA(BS)2A/P.12(12/2021)
Item reference
Item Description Notes
MA(BS)2A
Notes
MA(BS)1H overseas branches should report separately the aggregate positions of the Hong Kong Offices and overseas branches. Information on each individual country of the overseas branches should also be provided by completing pages 14 (for overdue and rescheduled loans) and 15 (for other overdue and rescheduled assets) of MA(BS)2A. Supplementary sheets are to be used when necessary.
3.4 Sub-items
(a) to (d)
Sub-items
(a) to (d)
The criteria for determining the overdue status of an asset are included in a separate guideline in Appendix 2.1. All assets should be reported as and when they have been overdue for more than 1 month. However, consumer loans repayable by regular monthly instalments should be treated differently and should not be reported unless they have been overdue for more than three months. When such consumer loans qualify for reporting as overdue, the period overdue should be determined by reference to the earliest due date of any of the instalments. Similarly, demand loans (including overdrafts) which have exceeded the approved limit advised to the customer should not be reported unless they have remained continuously above the limit for more than three months. When such demand loans qualify for reporting as overdue, the overdue period should be determined by reference to the whole of the period that the limits were exceeded.
3.5 Sub-item
(f)
Sub-item
(f)
All rescheduled assets (including those which have been reported under (a) - (d) above should be reported in item (f), except those specified under paragraph 9 of the “Guidelines on overdue and rescheduled assets” in Appendix 2.1. The amount of those rescheduled assets which have also been reported as overdue under item (a) should be reported in item (f)(i) and those rescheduled assets which have been reported as overdue in items (b) to (d) should be reported in item (f)(ii). The reporting treatment of a rescheduled asset taken up by a new obligor and the circumstances under which a rescheduled asset may be upgraded to “special mention” are provided under paragraphs 10 and 11 of Appendix 2.1.
3.6 (Note 4) - Assets on which interest no longer accrues to profit and loss
Assets on which interest no longer accrues to the profit and loss refer to those assets in respect of which the interest has not been taken to the profit and loss account but credited to a suspense account or where the interest has ceased to be accrued. Report

MA(BS)2A/P.13(12/2021)
Item reference
Item Description Notes
MA(BS)2A
Notes
MA(BS)1H under item (a) the amount of loans and advances reported in Part
II. Report under item(b) all those assets not included under item
(a) above. The criteria on which institutions should cease to accrue interest on an asset to the profit and loss account are set out in CR￾G-6 “Interest Recognition” of the Supervisory PolicyManual.
3.7 (Note 5) - Interest in suspense
Interest in suspense refers to the accrued interest that has not been taken to the profit & loss account but credited to a suspense account. Report under (a) the amount that has been capitalised as the principal exposure and under (b) the amount that accrued to the interest receivable account. Accrued interest is deemed to be “capitalised” if it is treated indistinguishably from the principal exposure, rather than included within a suspense accrued interest account.
3.8 (Note 6) - Non-bank China exposures
Note (6) has been replaced by Return of Mainland Activities MA(BS)20.
3.9 (Note 7) - Ten largest criticised assets
Criticised assets refer to those that have been reported by the institution in Part II of this return as “special mention”, “substandard”, “doubtful” or “loss”. For the purpose of reporting under this Note, assets include on-balance sheet exposures such as loans and advances to non-bank customers, balances due from banks, acceptances and bills of exchange held, investment debt securities and accrued interest as reported under Items A3, B1, C3, D3 and E1 of Part II respectively. They also include commitments and contingent liabilities as reported under Item F3 of the same part of the return. Criticised assets should be reported on a gross basis before provisions and in descending order by size. Specific provisions made against these assets, which include those made for country risk, should be reported under a separate column of the return. Each reported item should be the aggregate of exposures to an individual counterparty or a group of linked counterparties. In the latter case, the aggregate should be reported as one exposure and shown in the name(s) of the principal counterparty(ies). For the definition of “group of linked counterparties”, reference should be

MA(BS)2A/P.14(12/2021)
Item reference
Item Description Notes
MA(BS)2A
Notes
MA(BS)1H made to the completion instructions of the Return of Large Exposures (MA(BS)28). The full name of each counterparty or the principal counterparty in the case of a group of linked counterparties should be reported. Hong Kong Monetary Authority December 2021

MA(BS)2A/P.15(12/2021)
Appendix 1
Reconciliation of MA(BS)2A with other returns Return of Assets and Liabilities Return of Profit and Loss Item in this return Form MA(BS)1 Form MA(BS)1B Form MA(BS)1C (For position of HK offices) (For combined position) (For both cases)
Part I,
columns (1),(2),(3) and (4)
I Part II 15.3 N.A. N.A.
J Part II 15.1 + 15.2 N.A. N.A.
K Part II 15.4 + 15.5 + 15.6 N.A. N.A.
L Part II 15.7g N.A. N.A.
Part II, column (6)
A1 Part II 15.7g N.A. N.A.
A3 N.A. Part II 15 N.A.
A5+B2+C4 N.A. N.A.  Part II 1.9 (b)
A6+B3+C5 N.A. N.A.  Part II 1.9 (a)
A7+B4+C6 N.A. N.A.  Part II 1.9 (c)
B1 Part II 17.1 +17.2 + 17.4 Part II 17.3 N.A.
C1 Part II 19.2b(1+2) )
)  Part II 18.2 N.A.
C2 Part II 19.2a(1+2) )
F3  Part VIII(a) + (c) + (f) @ N.A. N.A.
A8+B5+C7+D6  Part II 24  PartII 23  Part II 3 +E2 (col.3+4+5)

• F7
  Notes:
  @ apply to institutions incorporated outside HK only. For institutions incorporated in Hong Kong, the amount reported should be equal to or less than the sum of the principal amounts for items 1, 3, and 9 in Table 10 (Standardized), Table 14 (BSC) and Table 20 (IRB) of the Banking (Capital) Rules.

MA(BS)2A/P.16(12/2021)
Reconciliation of Part III (2) with Part I and II in MA(BS)1H Items in Part III (2) Part I Assets and Liabilities
Part II
Profit and Loss Account
A5 16.3 N.A.
A6+B2+C4 N.A.  section II 1.9 (b)
A7+B3+C5 N.A.  section II 1.9 (a)
B1  18 N.A.
C1  20.2 b. N.A.
C2  20.2 a. N.A.
A8+B4+C6+D6+E2
(col.3+4+5)+F6  26.  section II 3.

MA(BS)2A/Appendix 2/P.1 (12/2021)
Appendix 2
Guideline on loan classification system

1. This guideline sets out the loan classification framework adopted by the Hong Kong
   Monetary Authority (“HKMA”) for monitoring the asset quality and provisioning adequacy of authorized institutions. Background
2. The purpose of a loan classification system is to enable institutions to prudently value
   loans and to act as a guide to appropriate provisions. The HKMA’s 5-grade loan classification framework was first introduced in 1994 and has been regularly updated since the first issue. The framework covers loans and advances and other types of on- and off-balance sheet exposures, including balances due from banks, investment debt securities, acceptances and bills of exchange held, accrued interest receivable and commitments and contingent liabilities. The loan classification framework
3. Under the HKMA’s loan classification system, loans and advances are to be classified
   into the following categories: Pass, Special Mention, Substandard, Doubtful, and Loss. Loans in the substandard, doubtful and loss categories are collectively known as “classified loans”. Classified loans together with loans in the special mention category are collectively referred to as “criticised loans”. The definition and characteristics of each of the categories are given below. In general, the decision to classify loans should be largely judgmental based on assessment of the borrower’s capacity to repay and on the degree of doubt about the collectibility of the principal or interest of a loan. An important indicator of collectibility is the period that payments of interest and principal are overdue. Thus, loans on which payments of interest and/or principal are overdue for more than three months and six months should generally be classified at least as substandard and doubtful respectively, unless there are good reasons for a better classification (such as the fact that the loan is fully secured by good quality collateral). However, the existence of payment arrears is only one of a number of factors to be considered in classifying problem loans and even a loan which is current or overdue for less than three months may justify a rating of substandard or doubtful if there are reasons to doubt the borrower’s ability to continue to service the loan.

MA(BS)2A/Appendix 2/P.2 (12/2021)
 Pass
This refers to loans where borrowers are current in meeting commitments and full repayment of interest and principal is not in doubt.  Special Mention This refers to loans where borrowers are experiencing difficulties which may threaten the institution's position. Ultimate loss is not identified at this stage but could occur if adverse conditions persist. These loans exhibit one or more of the following characteristics:
a) early signs of liquidity problems such as delay in servicingloans; b) inadequate loan information such as annual audited financial statements not obtained or available; c) the condition of and control over collateral is questionable; d) failure to obtain proper documentation or non-cooperation by the borrower or difficulty in keeping contact with him; e) slowdown in business or adverse trend in the borrower's operations that signals a potential weakness in the financial strength of the borrower but which has not reached a point where servicing of the loan isjeopardised; f) volatility in economic or market conditions which may in the future affect the borrower negatively; g) poor performance in the industry in which the borroweroperates; h) the borrower or in the case of corporate borrowers, a key executive, is in ill health; i) borrower is the subject of litigation which may have a significant impact on his financial position; and/or j) even if the loan in question is current, the borrower is having difficulty in servicing other loans (either from the institution concerned or from other institutions).

MA(BS)2A/Appendix 2/P.3 (12/2021)
 Substandard
This refers to loans where borrowers are displaying a definable weakness that is likely to jeopardise repayment. The institution is relying heavily on available security. This would include loans where some loss of principal or interest is possible after taking account of the “net realisable value” of security, and rescheduled loans  where concessions have been made to a customer on interest or principal such as to render the loan "non-commercial" to the bank. These loans exhibit one or more of the following characteristics:
a) repayment of principal and/or interest has been overdue * for more than three months and the net realisable value of security is insufficient to cover the payment of principal and accrued interest; b) even where principal and accrued interest are fully secured, a "substandard" classification will usually be justified where repayment of principal and/or interest is overdue * for more than 12months; c) in the case of unsecured or partially secured loans, a “substandard” classification may also be justified, even if the overdue period is less than three months, where other significant deficiencies are present which threaten the borrower’s business, cash flow and payment capability. These include:
 credit history or performance record is notsatisfactory;  labour disputes or unresolved management problems which may affect the business, production or profitability of the borrower;  increased borrowings not in proportion with the borrower's business;  the borrower experiencing difficulties in repaying obligations to other creditors;  construction delays or other unplanned adverse events resulting in cost overruns that may require loan restructuring; and/ or  unemployment of an individual borrower.  Guidelines in relation to overdue and rescheduled loans are set out in Appendix 2.1.

MA(BS)2A/Appendix 2/P.4 (12/2021)
 Doubtful
This refers to loans where collection in full is improbable and the institution expects to sustain a loss of principal and/or interest after taking account of the net realisable value of security. Doubtful loans exhibit one or more of the following characteristics:
a) repayment of principal and/or interest has been overdue for more than six months and the net realisable value of security is insufficient to cover the payment of principal and accrued interest; and/or b) in the case of unsecured or partially secured loans, a shorter overdue period may also justify a “doubtful” classification if other serious deficiencies, such as default, death, bankruptcy or liquidation of the borrower, are detected or if the borrower’s whereabouts are unknown.  Loss This refers to loans which are considered uncollectible after exhausting all collection efforts such as realisation of collateral, institution of legal proceedings, etc.
4. Individual loans should not be split between categories. This means, where only part
of a loan has become overdue, the total loan outstanding should be considered as overdue and classified under the most appropriate category.
5. Although references are made to “loans” in this guideline, the classification criteria
are also applicable to exposures arising from:
 balances due from banks;
 investment debt securities;
 acceptances and bills of exchange held; and  credit commitments and contingent liabilities.
6. Debt securities include certificates of deposit, floating rate notes, commercial paper
and other negotiable debt instruments. These securities carry credit risk and should be included in the institution’s loan classification system. A decline in the market value of a security simply due to interest rate fluctuations is not a basis for adverse classification. Classification of investment debt securities is based on credit risk. However, debt securities which are measured at fair value through profit or loss under HKFRS 9 or equivalent accounting standards are not required to be included in the loan classification system.
7. The ultimate and conclusive test of investment quality is the actual credit soundness
of the issuers. The principles underlying analysis of the credit soundness of issuers are essentially the same as those applicable to loan analysis. However, debt securities

MA(BS)2A/Appendix 2/P.5 (12/2021) for which payments are in default should generally be classified as “doubtful”. Institutions should maintain adequate records in support of their investment decisions and current credit information relating to the securities.
8. Many debt securities are rated by credit rating agencies (e.g. S&P’s and Moody’s). In
such cases, the ratings assigned by the agencies will be useful guides for institutions to classify debt securities. This, however, should not replace the institution’s own judgement on the credit soundness of the issuers.
9. In classifying acceptances and bills of exchange held, references to "borrower" as in
the case of loans and advances should normally apply to the party who is expected to pay the bill (i.e. the acceptor or the drawee). However, they may also apply to the customer of the institution from whom the institution has purchased the bill on a recourse basis. The classification should generally be based on whether or not the bill is current except where the institution has doubt about the relevant payment or the financial condition of the parties involved. Accordingly, a bill which is overdue should at least be classified as “special mention”. A bill which has been overdue for more than 3 months should at least be classified as “substandard”. Multiple extensions of credit to one borrower and loans to related companies
10. The classification of individual loans should be based in the first instance on an
assessment of the repayment capacity of the borrower. However, even if one or more loans to the same borrower have been classified in a particular category, this does not necessarily mean that all other outstanding loans to that borrower or to other related companies should be treated in the same manner. In particular, whether individual loans should be treated separately or collectively for classification purposes will depend on how they are collateralised or guaranteed. If it is clear that there is sufficient security dedicated to a particular loan to cover payments of principal and interest on that loan, it need not be classified in the same way as other loans to the same borrower which are not similarly secured. It will however usually be appropriate to classify the loan as at least “special mention” to reflect the known financial difficulties of the borrower. Where a number of loans are supported by a pool of collateral or are cross￾collateralised, they should all be classified in the same category. Value of security
11. For the purposes of the HKMA’s loan classification system, security refers to (i)
tangible assets such as cash, properties and securities and (ii) guarantees issued by a central government or central bank of a country without payment difficulties, an authorized institution or an overseas bank which is under adequate supervision. The value of tangible security means its net realisable value, being the current market value of the security less any realisation costs. Market value should be measured on the basis of up-to-date valuation and is defined in terms of the price at which an asset might be sold at the valuation date assuming:

MA(BS)2A/Appendix 2/P.6 (12/2021) a) a willing buyer and seller; b) transaction is at arm’slength; c) a reasonable period has been allowed for the sale; and d) the asset is freely exposed to the market. Loan loss provisioning 1
12. Loan loss provisions should be established and maintained at a level that is adequate
to absorb estimated inherent losses in the institution’s loan portfolio, binding commitments and contingent liabilities. In general, provisions established to absorb unidentified losses inherent in an institution’s loan portfolio are referred to as general provisions, and provisions established to absorb losses identified for specific loans are referred to as specific provisions. Country risk provisions generally refer to provisions set aside by authorized institutions to absorb potential losses arising from their country risk exposures. If institutions reflect country risk in provisions earmarked against their aggregate exposures to a particular country after accounting for risk transfers and specific provision made against credit risk (i.e. on a country basis), such provision should be referred to as country risk provisions. If institutions do not separately set aside country risk provisions but factor in an element of provision for country risk into specific provisioning for each individual exposure (i.e. on an individual obligor basis), such provision should be referred to as “specific provisions”.
13. Every authorized institution should have a system for the establishment of adequate
provisions. There is not a single method that is suitable for all institutions. However, provisioning decisions should be based primarily on an assessment of the recoverability of individual loans or portfolios of loans with similar characteristics (such as credit card receivables). Therefore, recognising problem loans is a necessary step and an effective loan classification system is essential for the establishment of an adequate level of provisions. The level of specific provisions in respect of a particular loan should normally be related to its loan classification, with higher provisions being required when loans are downgraded into a lower category (e.g. from substandard to doubtful). Specific provisions should normally be made

1 The recommendations in this section also apply to other assets to which the loan classification framework applies (see paragraph 5 above).

MA(BS)2A/Appendix 2/P.7 (12/2021) as soon as a loan is classified as substandard, unless there are good reasons to the contrary. Provisions against substandard loans may not be necessary where the policy of the institution is to classify loans promptly as doubtful and to provision accordingly. Implementation
14. The HKMA expects every institution to have a formal loan classification system in
place for internal monitoring of its asset quality. Institutions whose internal systems are different from that of the HKMA are required to agree with the HKMA the methodology for mapping their system onto the HKMA’s system for the purposes of reporting the Quarterly Analysis of Loans and Advances and Provisions (MA(BS)2A) and Part III of MA(BS)1H. Hong Kong Monetary Authority December 2021

MA(BS)2A/Appendix 2.1/P.1 (12/2021)
Appendix 2.1
Guidelines on overdue and rescheduled assets

1. This paper sets out the criteria which are to be applied in determining overdue and
   rescheduled assets for the purposes of classification under the loan classification framework and for reporting in the Quarterly Analysis of Loans and Advances and Provisions (MA(BS)2A) and Part III(2) of MA(BS)1H. Overdue assets
2. The overdue status of the following assets are to be determined asfollows:-
   a) Loans with a specific expiry date (e.g. a term loan, inward bill loan, advance against trust receipt, packing loan and other loans of similar nature) - these loans should be treated as overdue where the principal or interest is overdue and remains unpaid as at the reporting date. (For multiple loans to a single borrower, e.g. where there are more than one trust receipt loans, report only the one overdue according to its overdue period.) b) Consumer loans repayable by regular instalments (e.g. residential mortgage loans, hire purchase loans and personal loans) - these loans should be treated as overdue when an instalment payment is overdue and remains unpaid as at the reporting date. c) Loans repayable on demand (e.g. demand loans and overdrafts) - these loans should be treated as overdue where one or both of the following conditions are met:
   i) a demand for repayment has been served on the borrower but repayment has not been made in accordance with the instruction; or ii) the loan has remained continuously outside the approved limit that was advised to the borrower for more than the period in question (e.g. three months or six months). d) Bankers acceptances are to be treated as overdue where either the principal or interest of the instruments are still in arrears after the due dates or maturity dates. e) A bill payable at a determinable date (i.e. usance bill) should be treated as overdue if it remains in arrears after the maturity date. Sight bills/drafts in respect of goods exported from Hong Kong should normally be paid within

MA(BS)2A/Appendix 2.1/P.2 (12/2021) one week from the date of presentation (or the arrival of carrying vessel if the buyer is not obliged to pay before the arrival of goods). However, to allow for unforeseeable delays in processing the documents or effecting payments, a grace period of one month will be allowed. These bills should therefore be regarded as overdue if payment is not made within one month after presentation or the arrival of carrying vessel, as the case may be.
3. The period of overdue of a loan which has a determinable due date should commence
from the date following such due date. The whole amount of a loan is regarded as overdue even if part of it is not yet due and assessment should be made by reference to the earliest due date of such a loan. For example, if the longest overdue instalment of a loan repayable by monthly instalments has been overdue for six months as at the reporting date, the entire amount of the loan should be considered as overdue for six months.
4. Where partial repayment of an overdue loan repayable by monthly instalments is
made, to the extent that it is not financed by a new loan extended by the reporting institution for the purpose of repaying the overdue loan, the repayment should be offset against the earliest instalments due. In the previous example, if the borrower makes a partial repayment reducing the longest overdue instalment to five months, the entire loan may be considered as overdue for five months.
5. If an overdue loan is scheduled to be repaid by a lump sum payment, a partial
repayment will not change the overdue status of the remaining loan balance, i.e.the outstanding balance should continue to be treated as overdue with reference to the original due date.
6. An institution should not extend a new loan to a borrower solely for the purpose of
repaying an existing overdue loan with the institution. Where the repayment whether partial or whole is financed by a new loan extended by the institution, the overdue status of the initial loan should be considered as unchanged, i.e. as if the new loan and partial repayment had never been made.
7. It is recognised that institutions may decide to increase overdraft limits (or limits of
similar facilities) to accommodate the increased financing needs of sound customers. In such cases, the loan would not be regarded as overdue under paragraph 2(c)(ii) above. However, this should only be done on the basis of a well- documented credit evaluation and after the appropriate internal approval have been obtained. An increase in the overdraft limit should not be sanctioned simply to avoid classifying the loan as overdue.

MA(BS)2A/Appendix 2.1/P.3 (12/2021)
Rescheduled assets
8. Rescheduled assets refer to loans and other assets that have been restructured and
renegotiated between the reporting institution and the borrower because of a deterioration in the financial position of the borrower or of the inability of the borrower to meet the original repayment schedule and for which the revised repayment terms, either of interest or of repayment period, are 'non-commercial' to the bank. A rescheduled asset will normally require an adverse classification under the loan classification system (i.e. substandard or doubtful).
9. The following assets are not regarded as rescheduled even if their repayment terms
have been revised:
a) Assets rescheduled in response to the changes in market conditions provided that at the time of rescheduling, the assets have been serviced normally, the ability of borrowers to service the assets according to the revised repayment terms is not in doubt and the rescheduled assets are priced at interest rates equal to the current market interest rates for new assets with similar risks. b) Rescheduled assets whose revised repayment terms are, or become, commercial to the institution and where there is reasonable assurance that the borrowers will be able to service all future principal and interest payments on the assets in accordance with the revised repayment terms and the borrowers have serviced all principal and interest payments on the assets in accordance with the revised repayment terms continuously for a reasonable period. The reasonable period of continuing repayments for rescheduled assets with monthly payments (including both interest and principal) is 6 months. For other rescheduled assets, a period of continuing repayment of 12 months would be considered as reasonable.
10. If a rescheduled asset is taken up by a new obligor, the reporting institution may
regard it as a new asset (i.e. no longer a rescheduled asset) and classify it according to the creditworthiness of the new obligor provided that:
a) it is restructured with the new obligor on commercial terms; b) the agreed haircut, if any, has been fully written off upon completion of restructuring; and c) it is a genuine restructuring and not merely a transfer of an overdue loan among the borrower’s group companies. The reporting institution must be satisfied with the creditworthiness and repayment ability of the new obligor (e.g. the new obligor must have sufficient assets that can generate adequate funds to repay the outstanding debt) before entering into the restructuring.

MA(BS)2A/Appendix 2.1/P.4 (12/2021)
11. A rescheduled asset may be upgraded to “special mention” if : i) the agreed haircut
has been fully written off and all the potential losses have been fully provided upon completion of restructuring; and ii) the reporting institution is satisfied that the borrower will be able to service all future principal and interest payments in accordance with the revised repayment terms. Such asset will however continue to be regarded as rescheduled until the borrowers have serviced all principal and interest payments on the assets in accordance with the revised repayment terms continuously for a reasonable period (see paragraph 9 above). Hong Kong Monetary Authority December 2021

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Annex 5
Revised submission deadlines for selected returns Form Coverage of authorized institutions (AIs) Reporting basis Existing submission deadline New submission deadline Return of Assets and Liabilities MA(BS)1B Local AIs Combined 6 weeks after quarter end 1 month after quarter end Return of Current Year's Profit and Loss Account MA(BS)1C Local AIs Combined 6 weeks after quarter end 1 month after quarter end Quarterly Analysis of Loans and Advances and Provisions MA(BS)2A For Part II and Notes (3),(4),(5), (6)&(7) Local AIs Solo or Combined where the reporting AI has overseas branches Solo: 14 days after quarter end Unchanged Combined: 6 weeks after quarter end 1 month after quarter end Return of Mainland Activities MA(BS)20 Local AIs HK offices and Mainland branches and Mainland subsidiary banks 6 weeks after quarter end 1 month after quarter end Foreign AIs Solo Return of Capital Adequacy Ratio MA(BS)3 Local AIs Combined return

• without overseas branches
• all other cases
• 1 month
• 6 weeks
  after quarter end
• Unchanged
• 1 month
  after quarter end
  Consolidated return 6 weeks after quarter end 1 month after quarter end Return of Liquidity Monitoring Tools MA(BS)23 Local AIs Hong Kong Office, Part 4 & 5: 6 1 month after

Form Coverage of authorized institutions
(AIs)
Reporting basis Existing submission deadline New submission deadline Unconsolidated and Consolidated weeks after quarter end quarter end Foreign AIs Hong Kong Office Return of Stable Funding Position MA(BS)26 Local AIs Unconsolidated and Consolidated 6 weeks after quarter end 1 month after quarter end Return of Large Exposures MA(BS)28 Local AIs Combined / Consolidated 6 weeks after quarter end 1 month after quarter end Foreign AIs Solo 6 weeks after quarter end 1 month after quarter end