Fitch Ratings-Hong Kong/Singapore-06 September 2004: Fitch Ratings, the international rating agency, today upgraded Korea-based Busan Bank’s (“PB”) Individual rating to ‘B/C’ from ‘C’. At the same time, the agency affirmed the bank’s Support rating of ‘3’. The upgrade of BS’s Individual rating reflects its improving financial profile with a sustained robust operating performance despite recent credit card problems, as well as its strong franchise in the economy of Korea’s second-largest city of Busan. Since the 1997/98 crisis, the bank has continuously demonstrated improved performance. In 1H05, the bank’s net income amounted to KRW107.1 billion thanks to lower provision charges, resulting in a 20.3% ROE and 1.21% ROA, a 72.5% increase from KRW62.1bn of net income in 1H04. Owing to its strong franchise in its home area, the bank enjoys strong net interest margins (3.07% in 1H05), also thanks in part to its low cost deposits accounting for c.40% of total deposits. As at June 2005, the bank’s loans had grown just 4.4% year-on-year amid concern over the SME sector on which the bank focuses; like other regional banks, c.61% of its loans (denominated in KRW) were extended to SMEs followed by retail (33% of total KRW loans), large corporates (3%) and public sector & others (3%). The bank has a relatively larger size of investment portfolio, amounting to KRW5.2 trillion (30% of total assets), consisting mostly of government and financial institution bonds. The bank maintains good asset quality; at 1H05 its NPL ratio continued to decline to 1.12% with a 114.7% coverage ratio. BS’s SME delinquency ratio also stabilised at 1.2% at June 2005. Thanks to the robust operating performance, its Tier 1 capital ratio rose to 9.51% from 8.99% at end-2004.