Creating Value Together

China Banking Review 2020 Welcome to the Banking Newsletter 2020

The 38 banks analyzed in this period represent 75% of the total Foreword assets and 84% of the net profits of commercial banks in China. There are three main categories: In 2020, the coronavirus pandemic had a huge impact on the economy in China as well as overseas. China’s banking sector Industrial and Commercial Bank Bank of China (BOC) Large of China (ICBC) responded to regulatory calls and actively Commercial Postal Savings Bank of China “ China Construction Bank (CCB) (PSBC) expanded credit, reduced fees and granted Banks (6) Agricultural Bank of China (ABC) Bank of Communications concessions, thus becoming a pillar of the (BOCOM) real economic recovery.

This issue of the Banking Newsletter China Merchants Bank (CMB) China Everbright Bank (CEB) Shanghai Pudong Development Ping An Bank (PAB) analyzes 38 A- and H-share listed banks Joint-Stock Bank (SPDB) Commercial China Zheshang Bank (CZB) that had disclosed their 2020 annual Industrial Bank (IB) Banks (9) China Bohai Bank (CBHB) reports as of April 10. Although the China CITIC Bank (CITIC) China Minsheng Bank (CBMC) pandemic has had a clear impact on the banking sector, operations on the whole remain sound.

Bank of Ningbo Bank of Gansu Wuxi Rural Unless otherwise indicated, the banks Commercial Bank Huishang Bank Jinshang Bank listed in this issue are ranked according to Shengjing Bank Weihai City Jiangyin Rural Commercial Bank Commercial Bank their audited assets as of 31 December, Bank of Jinzhou City and Rural Zhongyuan Bank Luzhou Bank 2020. Unless otherwise stated, all Commercial Banks* Bank of Tianjin information is derived from public (23) Harbin Bank Chongqing Rural Commercial Bank disclosure and the unit of currency for Bank of Chongqing Guangzhou Rural sums of money is CNY. Bank of Zhengzhou Commercial Bank Bank of Qingdao Changshu Rural Jiangxi Bank Commercial Bank For more information or to discuss the Bank of Guizhou JiLin JiuTai Rural Commercial Bank development of the banking industry in Bank of Jiujiang China, please contact the banking and capital markets team listed in the appendix

* Due to significant regional differences, the analysis of City and Rural commercial banks is classified as follows: to this newsletter.

• Northeast (4): Harbin Bank, Shengjing Bank, Bank of Jinzhou, JiLin JiuTai Rural Commercial Bank;

• Bohai Economic Rim (3): Bank of Tianjin, Weihai City Commercial Bank, Bank of Qingdao;

• Central Region (6): Zhongyuan Bank, Bank of Jiujiang, Jiangxi Bank, Luzhou Bank, Bank of Zhengzhou, Jinshang Bank;

• West (4): Bank of Gansu, Bank of Guizhou, Bank of Chongqing, Chongqing Rural Commercial Bank;

• Southeast Coast (6): Bank of Ningbo, Huishang Bank, Changshu Rural Commercial Bank, Wuxi Rural Commercial Bank, Guangzhou Rural Commercial Bank, Jiangyin Rural Commercial Bank. Contents

Overview 06 An Overview of Banks’ Performance in 2020 09 I. Operating Performance 12 II. Business Analysis 17 III. Asset Quality 29 IV. Capital Management 33 V. Appendix 37

4 PwC Overview: Creating Value Together

A V-shaped recovery in economic growth

China's gross domestic product (GDP) shrank in the first two Figure 1: Net Profits vs GDP Growth quarters of 2020, but growth returned in the second half of the year. This V-shaped recovery meant that the economy grew to CNY 101.6 trillion for a year-on-year increase of 2.3%. China was the only major economy in the world to 6.00% 5.06% grow in 2020, further highlighting the country's resilience. In 2.30% 0.70% line with this, banks’ quarterly earnings shrank in the second -1.60% and third quarters but stabilized in Q4. -0.11% -6.80% -7.65% Social financing has grown rapidly; banks expand -9.05% lending

In 2020, China's broad money supply (M2) and social 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 financing continued to rise, with growth reaching a four-year Net profit growth year-on-year high. The banking sector played a key role in the fight against GDP growth year-on-year the pandemic and in supporting the recovery of the real economy. RMB loans grew by CNY 19.6 trillion, with a year- on-year increase of CNY 2.8 trillion. Lending to the real economy increased by 35.2%, which is 20.3 percentage Figure 2: Broad Money Supply (M2) Vs. Social Financing Growth points higher than last year.

Improved transmission of monetary policy and banks 13.30% benefit the real economy 12.00% Transmission of monetary policy continues to be improved 10.70% 10.08% with the deepening reform of the Loan Prime Rate (LPR). 9.80% The cumulative downward trend in LPR led to a 50 basis 9.04% points year-on-year decline in lending rates in 2020, thus 8.74% 8.08% easing financing costs in the real economy. Since 2020, the banking sector has granted CNY 1.5 trillion in concessions to the real economy through measures such as lowering 2017 2018 2019 2020 interest rates, reducing service fees, and postponing the repayment of principal and interest. Growth社融增速 Rate of M2 Growth增速 Social Financing

Figure 3: LPR Changes

4.80% 4.65%

4.15% 3.85%

五年期Five-Year LPR One一年期-Year LPR

6 PwC New regulatory requirements support development of the Standards Related to New Financial Tools". The latter banking sector suggests that enterprises should disclose relevant information such as estimation techniques, key assumptions, and Extension of the transition period for new regulation of parameters used to determine expected credit losses in asset management. In July 2020, the PBOC released its new accordance with the requirements of the accounting regulations for asset management and announced that the standards. transition period would be extended to the end of 2021.

New regulations for online banking. In order to maintain an orderly market, guard against financial risks, and protect the rights of consumers, a series of new regulations regarding online banking were introduced in 2020 and the first quarter of 2021. These include: "Interim Measures for the Administration of Online Lending by Commercial Banks" (July 2020); "Implementation Measures of the People's Bank of China for Protecting Financial Consumers' Rights and Interests" (September 2020); "Interim Measures for the Administration of Online Small Loan Business (Draft for Comments)" (November 2020); "Notice on Matters Related to Regulating Commercial Banks' Personal Deposit Business via the Internet" (January 2021); "Notice on Further Regulating Commercial Banks’ Online Lending Business" (February 2021). These will help banks to operate in compliance and with stability.

Credit policy on real estate. The regulators are exploring macroprudential tools to establish a long-term mechanism for real estate financing. The "Notice on the Establishment of a System for the Centralized Management of Real Estate Loans of Banking Financial Institutions" has been issued to implement quota control over banks. This aims to enhance the ability of banks to withstand fluctuations in the real estate market.

Improving the quality of accounting information and information disclosure. The State Council issued the "Opinions on Further Improving the Quality of Listed Companies" in 2020, with the aim of improving the quality of information disclosure. This was followed by the "Notice on Strict Implementation of Enterprise Accounting Standards to Effectively Improve Enterprises' Annual Reports for 2020" and the "Notice on Further Implementation of Accounting

Banking Newsletter | 7 Overall bank performance was characterised by the following Figure 4: Changes in Profitability Metrics factors:

Net profit growth and earnings indicators have declined 14.76% 14.33% 13.66% 13.05% The 38 banks analysed in this report saw net profits fall 11.80% 0.11% in 2020. This has affected profitability indicators. The weighted average return on equity (ROE) and return on assets (ROA) were downward. Net interest margin (NIM) and 1.01% 0.96% net interest spread (NIS) also narrowed overall. 0.94% 0.93%

Asset quality remains stable 0.85%

The NPL ratio increased by four basis points to 1.51%. The gap between the NPL and overdue ratios further narrowed. 2016 2017 2018 2019 2020

This is mainly due to the further tightening of asset risk Weighted average return on equity Return on average assets classification standards, the implementation of the policy of deferring repayment of principal and interest, and increased efforts for the disposal of non-performing assets.

The expected credit impairment losses for 2020 of the banks analysed in this issue increased by CNY 185 billion, or 14%, Table 1: Asset Quality Indicators year-on-year. However, the provision coverage ratio and provision-to-loan ratio decreased compared with 2019. 2017 2018 2019 2020 Broader access to capital replenishment NPL Ratio 1.56% 1.53% 1.47% 1.51%

In 2020, capital replenishment channels became more Overdue 1.99% 1.86% 1.69% 1.49% diversified. In addition to more traditional methods, such as Ratio issuing tier 2 capital bonds, perpetual bonds and private Provision placements have become preferred options for Coverage 180.15% 203.89% 218.19% 209.19% supplementing core capital. Ratio

Provision-to- Loan Ratio 2.80% 3.11% 3.21% 3.16%

8 PwC An Overview of Banks' Performance in 2020: Large Commercial Banks

Net Profit Trends

• Net profit growth slowed 1,156.611,566 1,136.511,365 1,076.010,760 • Net interest income continued to 1,027.610,276 increase, boosting operating 5.63% 987.19,871 income 968.59,685 4.10% 4.71% 1.92% 1.77% 0.90% • Net interest spread and net interest margin have narrowed

2015 2016 2017 2018 2019 2020 Net Profit (CNY billion) 15 • NPL balance and ratio have risen Growth

Net Interest Income Net Income From Handling Fees and Commissions CNY 2,590.39 billion CNY 457.45 billion

CNY 143.41 billion CNY 10.99 billion

Net Interest Spread Net Interest Margin

1.94% 2.09%

0.09 percentage points 0.09 percentage points

NPL Balance Change in NPL Ratio

CNY 1,147.16 billion 1.66% 1.51% 1.45% 1.50% CNY 208.17 billion 1.36%

2016 2017 2018 2019 2020

Banking Newsletter | 9 An Overview of Banks' Performance in 2020: Joint- Stock Commercial Banks

Net Profit Trends

• Net profit declined 410.74,107 349.73,497 3,720 397.13,971 372.0 10.40% 312.63,126 330.63,306 • Income from fees and commissions 6.38% 5.32% 5.76% 5.78% increased, stimulating revenue growth

-3.30% • Net interest spread and margins continued to narrow 2015 2016 2017 2018 2019 2020 Net Profit (CNY billion) Growth 15 • The NPL balance increased but the ratio has continued to decline

Net Interest Income Net Income From Handling Fees and Commissions CNY 1,028.79 billion CNY 282.60 billion

CNY 70.36 billion CNY 33.20 billion

Net Interest Spread Net Interest Margin

2.16% 2.23%

0.06 percentage points 0.08 percentage points

NPL Balance Change in NPL Ratio

1.77% 1.71% CNY 431.05 billion 1.66% 1.58% 1.46% CNY 16.66 billion

2016 2017 2018 2019 2020

10 PwC An Overview of Banks' Performance in 2020: City and Rural Commercial Banks

Net Profit MovementNet Profit Trend Trends Over the Past Five Years

• Net profit growth was negative, with regional performance diverging 16.94% 12.73% 10.76% 8.72% 90.3 903 84.6 81081.0 846 • Non-interest income has decreased 76376.3 76376.3 69469.4 -9.85% -20.05% • Net interest spread and margins have narrowed

2015 2016 2017 2018 2019 2020

Net Profit (CNY billion) Growth • Asset quality pressure continued 15

Net Interest Income Net Income From Handling Fees and Commissions CNY 252.88 billion CNY 28.22 billion

CNY 3.77 billion CNY 2.59 billion

Net Interest Spread Net Interest Margin

2.11% 2.17%

0.13 percentage points 0.14 percentage points

NPL Balance Change in NPL Ratio

CNY 121.76 billion 2.11% 1.81% 1.83% CNY 1.69 billion 1.38% 1.38%

2016 2017 2018 2019 2020

Banking Newsletter | 11 I. Operating Performance 1. Net profits recovered; small and medium- sized banks show a marked decline

Net profit growth reached its lowest point in the second Figure 5: Net Profit Growth (Unit: CNY billion) quarter, shrinking by 9%. The decline in the third and fourth quarters eased somewhat, with an annual net profit of CNY 1.63 trillion, a slight decrease of 0.11% year-on-year. Large Commercial Banks 1% ICBC 317.7 5% Large commercial banks are the only group to sustain growth. 2% The six banks achieved a net profit of CNY 1.16 trillion, up CCB 273.6 5% 1.77% year-on-year. 2% ABC 216.4 5% Joint-stock commercial banks achieved a net profit of 2% BOC 205.1 5% CNY 397.1 billion, a decrease of 3.30% from the previous 5% year. PSBC 64.3 16% 2% BOCOM 79.6 5% The 23 city and rural banks declined by 9.85% overall to reach CNY 76.3 billion compared to the same period last year. Joint-Stock Commercial Banks

CMB 98.0 5% Overall profitability declined in 2020. Demand for capital 16% 1% replenishment meant overall ROE and ROA declined IB 67.7 9% compared with 2019. The ROA of large banks, joint-stock -1% SPDB 59.0 4% commercial banks, and city and rural banks decreased by 6, -36% 11 and 12 basis points respectively; ROE decreased by 78, CBMC 35.1 9% 193 and 1,000 basis points respectively. 1% CITIC 49.5 8% 1% CEB 37.9 11% 3% PAB 29.0 13% -4% CZB 12.6 13% 1% CBHB 8.4 17%

City and Rural Commercial Banks*

Bohai Economic Rim 8.4 0% 16% Central Region 12.4 -2% 6% West 17.4 -6% -5% Northeast 3.4 -63% -4% Southeast Coast 34.7 18%

2020 vs. 2019 2019 vs. 2018

* Due to significant regional differences, the analysis of city and rural commercial banks will be classified by region: Northeast (4): Harbin Bank, Shengjing Bank, Bank of Jinzhou, JiLin JiuTai Rural Commercial Bank; Bohai Economic Rim (3): Bank of Tianjin, Weihai City Commercial Bank, Bank of Qingdao; Central Region (6): Zhongyuan Bank, Bank of Jiujiang, Jiangxi Bank, Luzhou Bank, Bank of Zhengzhou, Jinshang Bank; West (4): Bank of Gansu, Bank of Guizhou, Bank of Chongqing, Chongqing Rural Commercial Bank; Southeast Coast (6): Bank of Ningbo, Huishang Bank, Changshu Rural Commercial Bank, Wuxi Rural Commercial Bank, Guangzhou Rural Commercial Bank, Jiangyin Rural Commercial Bank.

Banking Newsletter | 13 2. Lower non-interest income and increased expenditure drive profits down

Growth in operating income was mainly boosted by net Figure 6: Analysis of Net Profits interest income. Intermediary income was affected by policies Large Commercial Banks of reducing fees and granting concessions, resulting in a limited contribution to profits. Fluctuations in exchange rates, interest rates, and asset prices also led to a decline in other non-interest income.

The cost of credit in the banking sector rose significantly in 2020. The total credit impairment losses of the banks analysed increased by 14% year-on-year. At the same time, the banking sector has stepped up its digital transformation, strengthened its retail presence, and continued to increase investment in technology and staff. Due to the combined effect of the above factors, net profits decreased year-on- year.

The increase in the net interest income of large commercial Joint-Stock Commercial Banks banks was sufficient to cover the rise in credit costs and result in positive net profit growth throughout the year.

The increase in net interest income of joint-stock commercial banks was not sufficient to cover the increase in credit costs. Also, due to a further increase in operating costs, their net profits fell.

Although the growth in net interest income of city and rural commercial banks was enough to cover the rise in credit costs, the net profit for the whole year fell substantially due to the decrease in other non-interest income and increases in operating costs.

City and Rural Commercial Banks

* As the net profit performance of Bank of Jinzhou is significantly different from that of other city and rural commercial banks, it is not included in the above chart.

** The above DuPont analysis chart was calculated using a two-year comparison of the relevant items.

14 PwC 3. Net interest spread and margins continue to narrow

Figure 7: Trends in Net Interest Spread and In 2020, there was an overall decline in interest rates and, Margins with banks' concessions in the real economy, the net interest spread and margin narrowed.

Large commercial banks have continued to decline. The net Large Commercial Banks interest spread and margins of joint-stock banks and city and rural commercial banks fell from their high points of 2019, 2.20% 2.18% with the largest decline in the latter category. 2.10% 2.11% 2.09% While rates on interest-bearing assets and liabilities have both declined, the reduction was greater on the asset side. 2.08% This is mainly due to the rigidity of the cost of customer 2.03% 2.00% deposits and increasing competition for deposits. 1.98% 1.94%

2016 2017 2018 2019 2020

Joint-Stock Commercial Banks

2.31% 2.23% 2.16% 2.03% 2.22% 2.16% 1.91% 2.03% 2.00% Table 2: Yield Changes and Composition of Interest- Bearing Assets and Liabilities 1.75% Year-on-year change in yields and key 2020 component contributions 2016 2017 2018 2019 2020 (change in percentage points)

Interbank Yield Changes Loans * Investments and Others City and Rural Commercial Banks Large Commercial 3.68% -0.20 -0.08 -0.05 -0.07 Banks 2.32% 2.31% Joint-Stock Commercial 4.44% -0.29 -0.10 -0.12 -0.07 Banks 2.17% City and Rural 4.72% -0.27 +0.05 -0.26 -0.06 Commercial Banks 2.06% 2.24% 2.17% 1.93% 2.11%

Year-on-year change in interest rates and key 1.92% 2020 component contributions 1.90% (change in percentage points)

Interest Bond Issuance Changes Deposits Interbank Rate and Other 2016 2017 2018 2019 2020 Large Commercial 1.74% -0.11 -0.05 -0.06 - Banks

Joint-Stock Commercial 2.28% -0.23 -0.01 -0.13 -0.09 Banks Net Interest Net Interest

City and Rural Margin Spread 2.61% -0.14 +0.09 -0.07 -0.16 Commercial Banks * The above data for 2019 is from each bank's 2020 annual report

Banking Newsletter | 15 4. Growth in intermediary business has slowed

Figure 8: Composition of Fee and In 2020, the banking sector implemented policies to reduce Commission Income fees and concessions. The growth rate of overall fee and commission income slowed, structures changed, and the share of bank cards decreased. 24% 27% Bank card Growth in fee and commission income for large banks 17% Agency entrusted 15% declined significantly. Revenue structure remained stable, commission with growth mainly driven by the increase in agency 13% Custody & fiduciary 12% entrusted commission and wealth management income. 13% Settlement & clearing 13% The growth rate in fee and commission income for joint-stock 8% Financial advisory 9% banks in 2020 was still higher than in 2019, mainly driven by 8% Wealth management 8% Guarantee fee the growth in agency entrusted commission income. 6% 6% 11% Other 11% Growth for city and rural commercial banks slowed. The 2020 2019 contribution of bank cards and agency commission fell sharply, but the share of wealth management income Figure 9: Growth in Fee and Commission Income increased. 13.31% In accordance with new regulations, some banks have made 12.48% adjustments to change the income generated from credit card 11.07% 10.10% instalments from fee and commission income to interest income. After this adjustment, not only did banks reduce their 7.69% percentage of bank card income in total fee and commission, but the proportion of net fee and commission income to operating income also decreased. This will have a direct 2.46% impact on banks' intermediary business planning and setting of business objectives. Large Commercial Joint-Stock City and Rural Banks Commercial Banks Commercial Banks

Growth Rate in 2020 Growth Rate in 2019

Figure 10: Change in the Share of Fee and Commission Income

28%

20% 19% 18% 13% 14% 9% 11% 8%

Large大型商业银行 Commercial 股份制商业银行Joint-Stock City城农商行 and Rural Banks Commercial Banks Commercial Banks

2020 2019 重述后 2019 Forecast重述前

16 PwC II. Business Analysis 1. Lending has led asset growth

In 2020, banks continued to play a key role in supporting The above measures have led to the growth in assets mainly businesses to resume work and production. Key initiatives through lending. By the end of 2020, the total assets of the 38 include: banks amounted to CNY 200.6 trillion, an increase of 10.09% year-on-year. • Giving priority to supporting the construction of basic infrastructure and key national transportation and water As the reserve ratio of the PBOC has decreased, the conservancy projects; proportion of cash and deposits in total assets has also fallen year-on-year. The regulatory requirements for the elimination • Substantially increasing medium- and long-term loans for of shadow banking have continued to intensify. Banks have manufacturing and the development of new and emerging further compressed non-standard investment and the industries; proportion of financial investment has also continued to decrease. • Increasing financial support such as credit facilities and first loans for small businesses. Large commercial banks have reached their target for the growth of inclusive loans for small and micro enterprises;

• Assisting market entities with easing difficulties so they can develop and implement policies for extending the repayment of principal and interest for medium and small businesses, and extending inclusive loans.

Figure 11: Changes in Asset Structure

3% 3% 3% 2% 3% 3% 4% 3% 3% 4% 3% 4% 6% 6% 6% 6% 5% 5% 6% 5% 4% 5% 5% 7% Other 8% 7% 6% 8% 8% 13% 12% 10% 9% 9% 10% 9%

Interbank 30% 29% 27% 27% 31% Financing 26% 27% 33% 39% 36% 41% 44% Cash and Deposits with Central Bank Financial Investment 53% 54% 55% 53% 55% 56% 52% 49% 48% 41% 45% 36% Loans and Advances

2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020 Large Commercial Banks Joint-Stock Commercial Banks City and Rural Commercial Banks

18 PwC 2. Corporate lending has increased rapidly

As of the end of 2020, the loan balance of these banks was • In the context of epidemic prevention and control, helping CNY 112 trillion, an increase of CNY 12 trillion, or 12.19%, enterprises get back to work by providing comprehensive from the end of 2019. Loan structure remained stable, with benefits and continuing to support small businesses. personal loans accounting for 41%, corporate loans at 55%, Wholesale and retail loans in the service sector have and the rest being discounted notes. increased substantially;

Personal loans did not continue the high growth seen during • The growth rate of loans in the real estate sector has the transformation of the retail sector over recent years, with slowed. In 2020, the regulators introduced further real growth slowing from 2018 to 2020, at 16.92%, 14.66%, and estate loan regulation and control and issued the "Notice 13.27% respectively. Corporate loans have accelerated from on the Establishment of a System for the Centralized 5.30%, 8.24%, and 11.97% respectively between 2018 and Management of Real Estate Loans of Banking Financial 2020. This has been driven by: Institutions" to implement quotas over banking and financial institutions, enhance the resilience of the banking • Increased support for manufacturing transformation and sector to real estate market volatility and improve risk upgrading, inclining toward strategic emerging industries, protection. and making loans for manufacturing industries significantly higher than for the same period last year;

• Continuing to increase credit investment in the fields of infrastructure and the construction of major projects such as infrastructure, urbanization, transportation, and water conservation;

Table 3: Growth in Corporate Loans

2019 balance 2020 balance 2019 2020 (CNY trillion) (CNY trillion) Growth Growth Manufacturing 8.58 9.54 1% 11% Infrastructure-Focused Industries 24.36 28.26 12% 16% -Transportation, Storage and Postal 8.52 9.76 13% 15% Services -Electricity, Gas and Water 4.17 4.57 2% 10% Production and Supply -Water, Environment and Public 3.83 4.61 14% 20% Facilities Management -Leasing and Business Services 7.84 9.32 14% 19% Real Estate 5.63 6.29 15% 12% Wholesale and Retail Business 3.41 3.89 1% 14% Other 8.47 9.49 8% 12% Total Domestic Corporate Loans 50.45 57.47 9% 14%

Banking Newsletter | 19 3. Large banks benefit from inclusive loans

In 2020, banks continued to implement the national strategic Table 4: Level of Interest Rates on New Inclusive Loans plan for the development of inclusive finance and increased Disclosed by Large Commercial Banks credit support for small enterprises. In the context of the COVID-19 pandemic, the regulators issued several policies Change requiring that inclusive loans be extended and credit 2019 2020 (Basis Points) increased to support the resumption of work and production by small businesses. In the government work report, it was ICBC 4.52% 4.13% -39 proposed that the annual growth rate of inclusive loans from CCB 4.95% 4.31% -64 large commercial banks should be higher than 40%. At the ABC 4.66% 4.18% -48 same time, in early 2020 the China Banking and Insurance BOC 4.30% 3.93% -37 Regulatory Commission (CBIRC) proposed that the overall financing cost for new and inclusive small and micro BOCOM 4.58% 4.08% -50 enterprise loans should be reduced by another 0.5 Note: Among large commercial banks, PSBC did not disclose percentage points. the relevant data.

By the end of 2020, the balance of inclusive loans from large Table 5: Inclusive Loans From Large Commercial Banks and commercial banks reached CNY 4.38 trillion, up 48% and Joint-Stock Commercial Banks in 2020 higher than the overall growth rate of 29% for joint-stock Inclusive Inclusive banks. Loan Overall Loan Loan Balance Growth Growth In terms of the level of profit, compared with 2019, for the (CNY Billion) five large commercial banks that disclosed interest rates for ICBC 745.2 58% 11% newly issued inclusive loans, the annual average interest CCB 1,452.4 51% 12% rate level fell by more than 45 basis points in 2020, up to a maximum of 64 basis points. ABC 961.5 62% 14% BOC 611.7 48% 9% In order to maintain the level of financial support for small PSBC 801.2 23% 15% businesses, policies for extending the repayment of principal and interest on inclusive loans have been extended until 31 BOCOM 260.8 59% 10% December 2021. CMB 530.7 17% 12% SPDB 271.0 33% 13% CITIC 302.5 48% 12% IB 203.3 61% 16% CBMC 452.8 12% 10% CEB 201.3 30% 11% PAB 282.8 39% 16% CZB 203.5 19% 17% CBHB 43.2 195% 26%

20 PwC 4. Personal lending has slowed

In recent years, banks have embraced retail transformation rural banks are prohibited from taking non-local deposits via and personal lending has grown rapidly. However, this trend the Internet. This constrains some of the banks' online slowed in 2020. business in terms of both assets and liabilities. The impact of the new regulations was most pronounced on city and rural Residential mortgages still dominate. However, due to new banks, with the proportion of consumer loans dropping from regulations on the concentration of real estate loans, their 31% to 26% in 2020. share has declined. Compared with other consumer credit products, the risk of residential mortgages is lower and joint- In 2020, banks also responded to policies such as financial stock banks and city and rural banks have increased their inclusion services, assistance for returning to work and investment. resuming production, and increased their support for small business owners and individual industrial and commercial In 2020, the growth rate in consumer credit (consumer loans customers. The proportion of operating/support loans and credit cards) was lower. Income and consumption have increased in various banks. been affected by the pandemic, consumer credit demand has been weak and credit risk has been exposed. At the same time, the rapid growth of online lending has been slowed due to the introduction of new regulations.

These regulations make provisions on the concentration risk of partnering organizations, on partners’ level of leverage and on the geographical distribution of loans. At the same time, third-party deposit drainage is also prohibited, and the city and

Figure 12: Changes in Personal Lending

Large Commercial Banks Joint-Stock Commercial Banks City and Rural Commercial Banks

4% 4% 6% 7% 5% 8% 15% 16% 3% 3% 11% 22% 10% 25% 15% 16%

29% 26% 31% 26%

3% 77% 75% 3%

41% 42% 38% 39%

0% 0% 2019 2020 2019 2020 2019 2020 Housing Credit Card Consumer Operations/Support Other Banking Newsletter | 21 5. Bond investments continue to grow

The financial sector has continued to de-leverage and de- Figure 13: Changes in the Structure of the Portfolio channel in recent years. Against this background, commercial banks have adjusted their asset structure, 3% dissolved existing non-standard investment, and increased 4% 4% 4% 6% 4% 2% 2% their purchases of plain vanilla financial assets. 2% 3% 10% 8% 13% 11% 其他Other The scale of banks’ bond investments continued to grow in 16% 20% 2020, while non-standard investments dropped further. 34% 45% For joint-stock banks, it decreased from 20% to 16%, Funds基金 while for city and rural banks it decreased from 45% to 34%. 92% 91% Non非标资产-Standard 67% 63% Assets Bonds still account for a relatively large proportion among 53% the various types of financial investments. The balance for 43% large commercial banks was CNY 33.4 trillion, up 9% 债券Bonds year-on-year. The balance of joint-stock commercial bank bond investments was CNY 10.09 trillion, up 14% from the 2020 2019 2020 2019 2020 2019 previous year. The balance for city and rural banks 大型商业银行Large 股份制商业银行Joint-Stock City城农商行 and Rural reached CNY 2.44 trillion, a year-on-year increase of 20%. Commercial Commercial Banks Commercial Banks Banks Government and policy bank bonds are characterised by * Others Include: Asset-backed securities, wealth management products, equity instruments, certificates of deposit and interbank certificates of deposit, and other low risks, low tax burdens, light capital, and stable returns. types of financial investments. They have been favored by various commercial banks to make up about 70% of total bond investments. Figure 14: Changes in the Structure of Bonds Held by Banks

More specifically, biases exist in the bond investment 5% 7% 企业债Corporate Debt 15% 15% strategies of different types of banks. Large commercial 20% 17% 16% banks and joint-stock banks continued to increase 18% 9% government bond holdings in 2020, while city and rural 6% 17% 17% 9% banks preferred to invest in higher-yielding corporate 6% 金融机Financial 构债Institution bonds. 10% 12% 22% 25% Debt

Policy政策性 Bank 73% Bonds银行债 69% 58% 56% 49% 49%

政府、Government, 公共实Public Entities 体及准and Quasi- 政府债Government 2020 2019 2020 2019 2020 2019 Debt 大型商业银行Large 股份制商业银行Joint-Stock City城农商行 and Rural Commercial Commercial Banks Commercial Banks Banks

* Non-standard assets include credit assets, trust loans, entrusted claims, acceptance bills, letters of credit, receivables, various kinds of beneficiary (income) rights, equity financing with repurchase terms, etc.)

24 PwC 6. Debt structure is stable

In 2020, the increase in bank debt was still driven by Figure 15: Changes in Interest-Bearing Liability deposits. These rose by 8.14% for large banks, 13.47% for Structure joint-stock banks, and 13.40% for city and rural banks. 1% 3% 3% 3% 2% 5% 5% 12% 12% In 2020, there was a marked decrease in the interest rate of 12% 11% 14% 17% 其他Other interbank liabilities brought about by monetary injection from 13% the Central Bank. This played a role in fueling the scale of 19% 20% 13% interbank liabilities. However, different types of banks adopt Bond 应付债券 different policies. Obligations

Interbank liabilities for large banks increased by 12.25% to 82% 84% CNY 13.06 trillion. Large bank customers have a strong 70% 66% 65% 68% Interbank deposit base, interest expense costs have been at the lower 同业负债Liabilities level of the industry for a long time, and there was a clear intention to allocate more interbank liabilities in 2020.

Although the average interest rate of interbank liabilities in 存款Deposits 2020 2019 2020 2019 2020 2019 2020 was lower than that of deposits, the role of deposits as 大型商业银行Large 股份制商业银行Joint-Stock City城农商行 and Rural a stabilising factor in the source of funds cannot be replaced. Commercial Commercial Banks Commercial Banks Therefore, the average growth rate of interbank liabilities was Banks lower than that of deposits.

In 2020, the average interest rate of interbank debt was still higher than the deposit interest rate. In addition, the stability Table 7: Changes in the Average Interest Rate of of sources of funds for interbank investment was insufficient, Deposits and Interbank Liabilities and banks were more willing to increase interest rates to Deposit Interest Variance compete in the deposit market. 2020 2019 Rate (Percentage)

On March 23, 2021, the "Measures for the Quality Large Commercial 1.68% 1.74% -0.06 Management of Liabilities of Commercial Banks" were issued Banks and implemented, which put forward higher management Joint-Stock Banks 2.24% 2.27% -0.03 requirements for banks’ debt quality. Banks need to build City and Rural comprehensive and systematic liability management and risk 2.54% 2.45% 0.09 Commercial Banks control systems. The core elements of liability quality management focus on source stability, structural diversity, reasonableness of asset matching, proactive acquisition, cost Interbank Debt Variance appropriateness, and project authenticity. Asset structure and 2020 2019 Coverage Ratio (Percentage) liquidity management are to be fully integrated to further Large Commercial optimise the liability structure and set up different liability 1.92% 2.45% -0.53 Banks management indicators and internal limits. Joint-Stock Banks 2.13% 2.70% -0.57

City and Rural 3.16% 4.69% -1.53 Commercial Banks

Banking Newsletter | 25 7. Wealth management is being transformed

In 2020, the balance of bank wealth management products Table 8: Non-Guaranteed Wealth Management Products in the steadily increased. By the end of the year, it stood at Banking Sector at the End of 2020 CNY 25.86 trillion, up 10.51% year-on-year. The existing 2020 2019 Change balance of net asset value (NAV) products was in Product CNY 17.4 trillion, for a year-on-year increase of 71.77%. Balance Amount Type Balance Percentage (CNY Percentage (CNY (CNY trillion) Bonds remained the main holding. Non-standard investments trillion) trillion) and equity assets fell to 10.89% and 4.75%, respectively. NAV 17.40 67.29% 10.13 42.37% 7.27 A countdown has begun on the formal implementation of new Expected 8.46 32.71% 13.27 57.63% -4.81 asset management regulations. Many banks have mentioned Return the implementation of work plans, or work already carried out, in their 2020 annual reports, such as financial asset Total 25.86 100% 23.40 100% 2.46 return, provision, and orderly disposal of existing assets. Table 9: Asset Allocation of Banking Wealth Management In 2021, in addition to the end of the transition period for new Products at the End of 2020 regulations, the banking and wealth management business Change in will face new challenges: 1) The implementation of the new Asset Type 2020 2019 Proportion financial instrument standards, which put higher demands on (Percentage) the calculation of NAV of financial products and the Bonds 64.26% 59.72% 4.54 transformation and management of net worth; 2) Proactive preparation and quick response to the release of regulatory Non-Standard Debts 10.89% 15.63% -4.74 documents for cash management products; 3) Improving Cash and Bank Deposits 9.05% 5.46% 3.59 internal mechanisms and effectively managing connected transactions and liquidity. Cashing in from Interbank 6.62% 6.57% 0.05 Loans and Buy-Backs In order to diversify the main players in the financial Equity Assets 4.75% 7.56% -2.81 management market, commercial banks and financial management subsidiaries should also continue to strengthen Other* 4.43% 5.06% -0.63 their talent pool and team building, as well as continuously improve their investment and research capabilities. This will * Others Include: Publicly-offered funds, direct financing instruments for wealth create differentiated competitive advantages on the management, QDII for investment in overseas wealth management for clients, new investable assets, financial derivatives, alternative assets, etc. investment side. Strategies and implementation paths are to Table 10: Approved and Established Wealth Management be defined, to transition from assets to products and Subsidiaries at the End of 2020 coordinate with the bank's overall strategy. Year of Year of Name of Financial Subsidiary Approval Establishment

CCB Wealth Management and BOC Wealth 2018 2019 Management

ICBC Wealth Management, BOCOM Wealth Management, ABC Wealth Management, CEB Wealth Management, CMB Wealth Management, IB Wealth 2019 2019 Management, China Post Wealth Management, Bank of Hangzhou Wealth Management, Bank of Ningbo Wealth Management

Huishang Bank Wealth Management, Bank of Nanjing 2019 2020 Wealth Management, Bank of Suzhou Wealth Management, Huihua Wealth Management

CITIC Wealth Management, Ping An Wealth Management, Bank of Qingdao Wealth Management, 2020 2020 Huaxia Wealth Management, Chongqing Rural Commercial Wealth Management

Bank of Guangzhou Wealth Management, SPDB Wealth 2020 Not Yet Open Management, CBMC Wealth Management, 26 PwC BlackRock CCB Wealth Management III. Asset Quality 1. NPL balance and ratio both rose; Overdue ratio fell

As of the end of 2020, the 38 banks in this publication had a Figure 17: Changes in the NPL and Overdue Ratios non-performing loan balance of CNY 1.7 trillion, an increase of 15.37% over the end of 2019. The NPL ratio increased Large Commercial Banks slightly by 0.04 percentage points to 1.51%. 1.78% NPL balances and ratios both rose, but the overdue loan ratio 1.61% 1.50% fell by 0.20 percentage points to 1.49%. This was mainly due 1.37% to the increasing capacity of banks to identify risks. Risk 1.51% 1.45% classification standards have been further tightened and 1.36% 1.26% efforts to deal with NPL problems have increased.

NPLs for large banks amounted to CNY 1.15 trillion, an increase of 22.17% from the end of 2019. The NPL ratio increased by 0.13 percentage points. At the same time, the balance of overdue loans increased by 3.43% compared with 2017 2018 2019 2020 2019 and the overdue ratio decreased by 0.10 percentage points. Joint-Stock Commercial Banks NPLs for joint-stock banks amounted to CNY 431.05 billion, representing an increase of 4.02% from the end of 2019. The 2.49% NPL ratio decreased slightly by 0.12 percentage points. At 2.28% the same time, the total of overdue loans decreased by 2.09% 3.14% compared to 2019. The overdue ratio decreased by 1.79% 0.30 percentage points. 1.71% 1.66% 1.58% Both the NPL and overdue ratios decreased, mainly due to 1.46% joint-stock banks' efforts to dispose of non-performing assets in 2020.

The balance of non-performing loans for city and rural 2017 2018 2019 2020 commercial banks was CNY 121.76 billion, a slight increase of 1.41% from the end of 2019. The NPL ratio decreased by 0.28 percentage points. Overdue loans decreased by 17.26% compared with 2019. The overdue ratio decreased by 1.13 City and Rural Commercial Banks percentage points. 3.86%

3.07% 2.61% 2.73% 2.11% 1.81% 1.83% 1.38%

2017 2018 2019 2020

不良率NPL Ratio 逾期率Overdue Ratio

30 PwC 2. Continuing efforts to dispose of non- performing assets

Asset quality remained basically stable in 2020, largely due to Figure 18: Banks' Loan Write-Offs and Scale of Transfers the continued increase in the disposal of non-performing Out of NPL Balance (Unit: CNY billion) assets. Large Commercial Banks Write-offs continue to be the most significant disposal of non- performing assets. The 38 banks' loan write-offs and transfers out amounted to CNY 1.15 trillion, an increase of 16.27% 11,472 2020 1,147.2 over 2019. The credit impairment loss of the 38 banks grew 6,239623.9 by CNY 185 billion year-on-year, an increase of 14%. 9,390939 2019 Loan write-offs and transfers out by large commercial banks 593.85,938 amounted to CNY 623.9 billion, representing an increase of 5.08% over 2019 and accounting for 66.45% of total non- 9,023 performing loans at the end of 2019. 2018 902.3 552.55,525 Joint-stock commercial banks' loan write-offs and transfers out amounted to CNY 435.7 billion, representing an increase of 27.09% over 2019. This is equivalent to 105.14% of total NPLs as of the end of 2019. The scale of write-offs exceeded Joint-Stock Commercial Banks the previous year's non-performing balance. 4,310431 2020 Loan write-offs and transfers out from city and rural 4,357435.7 commercial banks amounted to CNY 85.8 billion, an increase of 76.61% over 2019. This is equivalent to 71.44% of total 4,144 NPLs at the end of 2019. 2019 414.4 342.83,428

3,799 2018 379.9 298.32,983

City and Rural Commercial Banks

1,218121.8 2020 85.8858

120.11,201 2019 48648.6

860 2018 86 31310

Non-Performing Loans Written-Off Loans and Transfers Out

Banking Newsletter | 31 3. Asset quality should be actively addressed

Provisions increased in 2020 in order to cope with the Figure 19: Bank Provisions adverse effects of the pandemic in a forward-looking manner. By the end of 2020, the overall provision coverage ratio was 209.19% and the provision-to-loan ratio remained Provision Coverage Ratio high at 3.16%.

241.28% 240.76% However, as non-performing loans continued to grow, the 237.88% provision coverage ratio and provision-to-loan ratio 228.17% decreased compared with the end of 2019. 215.27% 207.87% The provision coverage ratio of large banks decreased 212.17% significantly, and was 16 percentage points lower than at the end of 2019. Joint-stock commercial banks showed a slight 203.07% 205.07% 181.04% growth of 2 percentage points from the end of 2019. City and 193.75% rural commercial banks dropped by 25 percentage points compared with the end of 2019. 176.49%

In terms of the provision-to-loan ratio, large commercial banks edged up by 0.06 percentage points from the end of 2017 2018 2019 2020 2019. Joint-stock banks and city and rural banks fell by 0.24 and 0.16 percentage points respectively.

In 2020, due to the COVID-19 pandemic, the State Council issued its policy of "Relief for Inclusive Loan Repayment Provision-to-Loan Ratio Schedules for Small and Micro Enterprises and Credit Loan Support." In 2021, the State Council extended the deadline 3.70% to December 31, 2021. Banks will remain the backbone of 3.61% financial support for the real economy and inclusive loans. 3.54% To this end, the banking sector needs to continue to pay 3.29% close attention to changes in asset quality and respond to 3.21% 3.22% 3.19% any adverse pressure that may occur in the medium to long term. 3.13% 3.10% 3.02% 2.98%

2.67%

2017 2018 2019 2020 Large Commercial Banks Joint-Stock Commercial Banks City and Rural Commercial Banks

* Since Bank of Jinzhou introduced strategic investor reform and restructuring, its loan structure has changed considerably from previous years. Hence, data from Bank of Jinzhou are excluded from this analysis.

32 PwC IV. Capital Management 1. The capital adequacy ratio was stable overall

In 2020, capital adequacy ratios were generally stable. Table 11: Changes in Capital Adequacy Ratio

Large commercial banks have increased their capital Large adequacy ratios due to positive profit growth and normal Commercial 2016 2017 2018 2019 2020 issuance of various capital instruments. Banks ICBC 14.61% 15.14% 15.39% 16.77% 16.88% The ratio for the joint-stock banks diverged, rising for six CCB 14.94% 15.50% 17.19% 17.52% 17.06% banks and declining for three. Insufficient internally-generated capital has led to pressure on medium- and long-term capital ABC 13.04% 13.74% 15.12% 16.13% 16.59% adequacy ratios. BOC 14.28% 14.19% 14.97% 15.59% 16.22% PSBC 11.13% 12.51% 13.76% 13.52% 13.88% The overall profit of city and rural commercial banks has been negative. Credit risk exposure and foreign capital BOCOM 14.02% 14.00% 14.37% 14.83% 15.25% replenishment channels have been limited, leading to a Joint-Stock general decline in capital adequacy ratios. Commercial 2016 2017 2018 2019 2020 Banks Relative capital adequacy ratios and the core tier 1 capital CMB 13.33% 15.48% 15.68% 15.54% 16.54% adequacy ratios were under greater pressure. This is mainly CITIC 11.98% 11.65% 12.47% 12.44% 13.01% due to these banks’ slowdown in profit growth, which has led CBMC 11.73% 11.85% 11.75% 13.17% 13.04% to insufficient accumulation of internally-generated capital and the expansion of assets, which has continued to increase CEB 10.80% 13.49% 13.01% 13.47% 13.90% capital consumption. The means to supplement core capital PAB 11.53% 11.20% 11.50% 13.22% 13.29% are limited and there are strict conditions for capital CZB 11.79% 12.21% 13.38% 14.24% 12.93% replenishment. SPDB 11.65% 12.02% 13.67% 13.86% 14.64% IB 12.02% 12.19% 12.20% 13.36% 13.47% CBHB 11.44% 11.45% 11.77% 13.07% 12.08%

City and Rural Figure 20: Changes in the Core Tier 1 Capital Adequacy Commercial 2016 2017 2018 2019 2020 Ratio Banks Northeast 12.17% 12.54% 11.96% 13.51% 12.09% 12.21% 12.19% Bohai 12.03% 11.91% 12.41% 14.90% 15.07% 14.51% 11.65% 11.64% Economic Rim Central Region 12.31% 12.43% 12.70% 12.84% 12.56% West 12.41% 12.88% 13.42% 13.92% 13.63% 9.58% 9.63% 9.76% Southeast 9.36% 9.47% 12.17% 12.77% 13.31% 13.66% 13.45% Coast 9.63% 9.30% 9.27% 9.43% 8.98%

2016 2017 2018 2019 2020 Large Commercial 大型商业银行Banks 股份制商业银行Joint-Stock Commercial City城农商行 and Rural Commercial Banks Banks

34 PwC 2. Multiple paths for capital replenishment relieved pressure

Since 2020, large and joint-stock banks have Table 12: Financing Related to Capital Replenishment (Unit: CNY billion) continued to replenish tier 1 and tier 2 capital by Large Commercial Fundraising Size (Including Proposed issuing preferred stock, perpetual bonds, and tier 2 Type of Financing Banks Issuance, Same Below) capital bonds. ICBC Preferred stock, tier 2 capital bonds 200

ABC Perpetual bonds, tier 2 capital bonds 160 The capital replenishment channels of city and rural 68 (including USD 2 billion in foreign currency CCB Tier 2 capital bonds banks are becoming more diversified. In addition to instruments)

instruments such as perpetual bonds, convertible Preferred stock, perpetual bonds, tier 167.8 (including USD 2.8 billion in foreign BOC bonds, and secondary capital bonds, they also 2 capital bonds currency instruments) Perpetual bonds, non-public PSBC 170 replenish core tier 1 capital through equity financing offerings

instruments such as public issuance and private 88.3 (including USD 2.8 billion in foreign BOCOM Perpetual bonds, tier 2 capital bonds placement. currency instruments)

Joint-Stock The executive meeting of the State Council held in Type of Financing Fundraising Size Commercial Banks July 2020 permitted local government bonds to CMB Perpetual bonds 50 support small and medium-sized banks in CITIC Tier 2 capital bonds 40 replenishing their capital. Several city banks Tier 2 capital bonds, convertible CBMC 100 responded to the call by successfully issuing private bonds shares to local enterprises and raising funds to PAB Perpetual bonds 30 supplement core tier 1 capital. IB Perpetual bonds 30 SPDB Perpetual bonds, tier 2 capital bonds 130

Judging from public data, the price-to-book ratio of CEB Perpetual bonds 40 banks is low and the issue price of non-public CZB Perpetual bonds 25

22.5 (IPO including H-shares HKD 13.47 offerings is higher than the share price of the open CBHB H-share IPO, tier 2 capital bonds billion) market. This means that it is still necessary to continue to strengthen core competitiveness and enhance value creation.

City and Rural Commercial Type of Financing Fundraising Size Banks

Ningbo Non-public offerings, tier 2 capital bonds 180

Huishang Non-public offerings, tier 2 capital bonds 299

Shengjing Tier 2 capital bonds 150

Jinzhou Non-public offerings 62

Gansu Non-public offerings, tier 2 capital bonds 100

Jiujiang Non-public offerings 100

Luzhou Non-public offerings, perpetual bonds 20

Jinshang Tier 2 capital bonds 40

Weihai H-share IPO HKD 3.27 billion

Luzhou Perpetual bonds, tier 2 capital bonds 32

Harbin Perpetual bonds 150

Chongqing Rural Perpetual bonds 80 Commercial

Wuxi Rural Perpetual bonds 15 Commercial

Note: Except as otherwise stated, the remaining amount of fundraising is in CNY and is undiscounted in all other currencies.

普华永道 Banking Newsletter | 35 3. There is still a long way to go for capital planning

The Basel Committee on Banking Supervision (BCBS) Bank and Insurance Institutions (Draft for Comments)" in published "Basel III: Finalising Post-Crisis Reforms," which is January 2021, in order to promote quality and effectiveness in to be implemented in phases in various countries in 2022. the corporate governance of banking and insurance institutions. The specific requirements for capital In 2018, China also issued the "Guiding Opinions on management, particularly for the liability of shareholders of Improving the Regulation of Systemically Important Financial commercial banks and prudent profit distribution, are as Institutions," which put forward special regulatory follows: requirements for domestic systemically important financial institutions (D-SIFIs). These requirements include reserve • Articles of Association shall provide that major capital and countercyclical capital requirements, in addition to shareholders make a long-term commitment to the bank in minimum capital requirements and additional capital writing to supplement capital and as part of capital requirements for systemically important financial institutions. planning;

At the end of 2020, the People's Bank of China and the • Capital planning should be a major consideration in the CBIRC jointly issued the "Measures for Assessing formulation of prudent profit distribution schemes. Systemically Important Banks”. Under this assessment, large commercial banks and most joint-stock commercial banks will If the above requirements end up becoming formally meet or approach the criteria of systemically important banks. implemented, commercial banks will need to continuously strengthen their capital planning from top-level design. On April 2, 2021, the "Additional Regulatory Requirements for Systemically Important Banks (Trial) (Draft for Comments)" were issued, making it clear that domestic systemically important banks will be separated into different groups with different additional capital requirements.

The introduction of a series of new capital regulations has provided guidelines for the implementation and realization of the capital management of China's commercial banks. At the same time, the new regulations have also put forward higher requirements.

CBIRC issued the "Guidelines on Corporate Governance of

Table 13: Additional Capital Requirements for Domestic Systemically Important Banks

Additional Core Tier 1 Scoring Grouping Capital Capital Adequacy Threshold Requirements* Ratio

Group 1 100–299 0.25% 7.75%

Group 2 300–499 0.50% 8.00%

Group 3 450–749 0.75% 8.25%

Group 4 750–1399 1% 8.50%

Group 5 1400+ 1.50% 9.00%

* Requirements are from "Additional Regulatory Requirements for Systemically Important Banks (Trial) (Draft for Comments)"

36 PwC Appendix

• Summary of Financial Data • PwC Banking and Capital Markets Contact Information Summary of Financial Data (I): Large Commercial Banks

2020 (CNY Million) ICBC CCB ABC BOC PSBC BOCOM Business Performance (Jan–Dec) Operating Income 882,665 755,858 657,961 565,531 286,202 246,200 Net Interest Income 646,765 575,909 545,079 415,918 253,378 153,336 Net Fee and Commission Income 131,215 114,582 74,545 75,522 16,495 45,086 Other Non-Interest Income 104,685 65,367 38,337 74,091 16,329 47,778 Operating Expenses (491,283) (418,612) (391,990) (320,407) (218,445) (159,987) Taxes and Surcharges (8,524) (7,325) (5,813) (5,465) (2,187) (2,823) Business and Management Fees (196,848) (179,308) (192,348) (151,149) (165,649) (66,004) Impairment Losses on Credit Assets (202,668) (193,491) (164,699) (118,381) (50,398) (62,059) Impairment Losses on Other Assets 0 3,562 (204) (635) (19) (484) Other Operating Costs (83,243) (42,050) (28,926) (44,777) (192) (28,617) Operating Profit 391,382 337,246 265,971 245,124 67,757 86,213 Profit Before Tax / Total Profit 392,126 336,616 265,050 246,378 68,136 86,425 Income Tax Expense (74,441) (63,037) (48,650) (41,282) (3,818) (6,855) Net Profit 317,685 273,579 216,400 205,096 64,318 79,570 Minority Shareholder Gains and Losses 1,779 2,529 475 12,226 119 1,296 Net Profit Attributable to Parent 315,906 271,050 215,925 192,870 64,199 78,274 Financial Position (As of December 31) Total Assets 33,345,058 28,132,254 27,205,047 24,402,659 11,353,263 10,697,616 Customer Loans and Advances 18,136,328 16,231,369 14,552,433 13,848,304 5,512,361 5,720,568 Financial Investments 1 8,591,139 6,950,653 7,822,659 5,591,117 3,914,650 3,237,337 Interbank Assets 2 1,821,185 1,423,876 1,797,339 1,663,640 552,034 571,130 Cash and Deposits with Central Bank 3,537,795 2,816,164 2,437,275 2,155,665 1,219,862 817,561 Other Assets 1,258,611 710,192 595,341 1,143,933 154,356 351,020 Total Liabilities 30,435,543 25,742,901 24,994,301 22,239,822 10,680,333 9,818,988 Customer Deposits 25,134,726 20,614,976 20,372,901 16,673,025 10,358,029 6,607,330 Interbank Liabilities 3 3,077,693 2,349,997 1,894,371 2,328,952 141,789 1,308,746 Debt Securities Issued 4 1,133,803 940,197 1,371,845 1,450,549 57,974 1,132,052 Borrowing From Central Bank 54,974 781,170 737,161 887,811 25,288 478,745 Other Liabilities 1,034,347 1,056,561 618,023 899,485 97,253 292,115 Total Equity 2,909,515 2,389,353 2,210,746 2,162,837 672,930 878,628 Minority Shareholders’ Equity 16,013 24,545 5,957 124,418 1,131 12,021 Total Equity Attributable to Parent 2,893,502 2,364,808 2,204,789 2,038,419 671,799 866,607 Primary Financial Indicators Profitability (Jan–Dec) Ave. ROA 1.00% 1.02% 0.83% 0.87% 0.60% 0.77% Weighted Ave. ROE 11.95% 12.12% 11.35% 10.61% 11.84% 10.35% Net Interest Spread 1.97% 2.04% 2.04% 1.72% 2.36% 1.48% Net Interest Margin 2.15% 2.19% 2.20% 1.85% 2.42% 1.57% Cost-to-Income Ratio 22.30% 25.12% 29.23% 26.73% 57.88% 28.29% Asset Quality (As of December 31) NPL Ratio 1.58% 1.56% 1.56% 1.46% 0.88% 1.67% Special-Mention Loans Ratio 2.21% 2.95% 2.01% 1.87% 0.54% 1.41% Overdue Loan Ratio 1.44% 1.09% 1.29% 1.26% 0.80% 1.54% Provision Coverage 180.68% 213.59% 260.64% 177.84% 408.06% 143.87% Provision-to-Loan Ratio 2.85% 3.33% 4.16% 2.60% 3.61% 2.40% Capital Adequacy (As of December 31) Core Tier 1 Capital Adequacy Ratio 13.18% 13.62% 11.04% 11.28% 9.60% 10.87% Tier 1 Capital Adequacy Ratio 14.28% 14.22% 12.92% 13.19% 11.86% 12.88% Capital Adequacy Ratio 16.88% 17.06% 16.59% 16.22% 13.88% 15.25%

Note: 1. Financial investments include: Financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, and financial assets at amortized cost. 2. Interbank assets include: Amounts deposited with banks and other financial institutions, funds disbursed, and financial assets purchased under resale agreements. 3. Interbank liabilities include: Funds deposited by banks and other financial institutions, funds borrowed, and financial assets sold for repurchase. 4. Issued debt securities include: Subordinated debt, tier 2 capital debt, convertible corporate debt, green bonds, financial bonds, and debt instruments such as hybrid capital bonds, certificates of deposit, and certificates of interbank deposit. 5. There may be minor differences between the sum of the sub-items and the total due to rounding.

38 PwC Summary Financial Data (II): Joint-Stock Commercial Banks

2020 (CNY Million) CMB SPDB IB CITIC CBMC CEB PAB CZB CBHB Business Performance (Jan– Dec) Operating Income 290,482 196,384 203,137 194,731 184,951 142,479 153,542 47,703 32,492 Net Interest Income 185,031 138,581 143,515 150,515 135,224 110,697 99,650 37,095 28,477 Net Fee and Commission Income 79,486 33,946 37,710 28,836 27,664 24,323 43,481 4,250 2,902 Other Non-Interest Income 25,965 23,857 21,912 15,380 22,063 7,459 10,411 6,358 1,113 Operating Expenses (167,839) (129,648) (126,590) (136,915) (147,760) (96,792) (116,633) (33,232) (22,407) Taxes and Surcharges (2,478) (2,117) (2,086) (2,024) (2,051) (1,483) (1,525) (620) (438) Business and Management Fees (96,745) (46,702) (48,262) (51,902) (48,434) (37,589) (44,690) (12,385) (8,745) Impairment Losses on Credit Assets (64,871) (79,547) (75,301) (82,477) (92,988) (56,733) (69,611) (20,166) (13,224) Impairment Losses on Other Assets (154) (6) (126) (512) (1,628) (199) (807) 0 0 Other Operating Costs (3,591) (1,276) (815) 0 (2,659) (788) 0 (61) 0 Operating Profit 122,643 66,736 76,547 57,816 37,191 45,687 36,909 14,471 10,085 Profit Before Tax / Total Profit 122,440 66,682 76,637 57,857 36,706 45,497 36,754 14,363 10,085 Income Tax Expense (24,481) (7,689) (8,956) (8,325) (1,604) (7,592) (7,826) (1,804) (1,641) Net Profit 97,959 58,993 67,681 49,532 35,102 37,905 28,928 12,559 8,445 Minority Shareholder Gains and Losses 617 668 1,055 552 793 81 0 250 0 Net Profit Attributable to Parent 97,342 58,325 66,626 48,980 34,309 37,824 28,928 12,309 8,445 Financial Position (As of December 31) Total Assets 8,361,448 7,950,218 7,894,000 7,511,161 6,950,233 5,368,110 4,468,514 2,048,225 1,393,523 Customer Loans and Advances 4,804,361 4,430,228 3,867,321 4,360,196 3,782,297 2,942,435 2,610,841 1,165,875 867,120 Financial Investments 1 2,068,695 2,302,547 2,892,814 2,092,732 2,120,650 1,670,415 1,143,611 528,385 375,927 Interbank Assets 2 616,516 422,453 410,496 412,882 295,456 158,941 272,484 101,531 33,869 Cash and Deposits with Central Bank 538,446 489,088 411,147 435,169 401,525 360,287 283,982 137,441 96,548 Other Assets 333,430 305,902 312,222 210,182 350,305 236,032 157,596 114,993 20,059 Total Liabilities 7,631,094 7,304,401 7,269,197 6,951,123 6,408,985 4,913,112 4,104,383 1,915,682 1,290,277 Customer Deposits 5,664,135 4,122,407 4,084,242 4,572,286 3,765,222 3,480,667 2,695,935 1,335,636 758,236 Interbank Liabilities 3 1,009,846 1,597,918 1,790,817 1,296,668 1,135,039 645,406 545,871 197,716 214,600 Debt Securities Issued 4 346,141 1,140,653 947,393 732,958 960,809 440,870 611,865 236,682 225,154 Borrowing From Central Bank 331,622 274,346 290,398 224,391 292,352 241,110 124,587 84,768 71,592 Other Liabilities 279,350 169,077 156,347 124,820 255,563 105,059 126,125 60,880 20,695 Total Equity 730,354 645,817 624,803 560,038 541,248 454,998 364,131 132,543 103,246 Minority Shareholders’ Equity 6,604 7,620 9,217 15,465 11,711 1,549 0 2,031 0 Total Equity Attributable to Parent 723,750 638,197 615,586 544,573 529,537 453,449 364,131 130,512 103,246 Primary Financial Indicators Profitability (Jan–Dec) Ave. ROA 1.23% 0.79% 0.90% 0.69% 0.51% 0.75% 0.69% 0.65% 0.60% Weighted Ave. ROE 15.73% 10.81% 12.62% 10.11% 6.81% 10.71% 9.58% 10.03% 10.68% Net Interest Spread 2.40% 1.97% 2.11% 2.18% 2.12% 2.20% 2.43% 1.99% 2.18% Net Interest Margin 2.49% 2.02% 2.36% 2.26% 2.14% 2.29% 2.53% 2.19% 2.35% Cost-to-Income Ratio 33.30% 23.78% 24.16% 26.65% 26.19% 26.38% 29.11% 25.96% 26.52% Asset Quality (As of December 31) NPL Ratio 1.07% 1.73% 1.25% 1.64% 1.82% 1.38% 1.18% 1.42% 1.77% Special-Mention Loans Ratio 0.81% 2.58% 1.37% 2.01% 2.98% 2.15% 1.11% 1.74% 2.89% Overdue Loan Ratio 1.12% 2.14% 1.32% 2.03% 2.03% 2.16% 1.61% 1.81% 2.78% Provision Coverage 437.68% 152.77% 218.83% 171.68% 139.38% 182.71% 201.40% 191.01% 158.80% Provision-to-Loan Ratio 4.67% 2.64% 2.74% 2.82% 2.53% 2.53% 2.37% 2.72% 2.81% Capital Adequacy (As of December 31) Core Tier 1 Capital Adequacy Ratio 12.29% 9.51% 9.33% 8.74% 8.51% 9.02% 8.69% 8.75% 8.88% Tier 1 Capital Adequacy Ratio 13.98% 11.54% 10.85% 10.18% 9.81% 11.75% 10.91% 9.88% 11.01% Capital Adequacy Ratio 16.54% 14.64% 13.47% 13.01% 13.04% 13.90% 13.29% 12.93% 12.08%

Banking Newsletter | 39 Summary of Financial Data (III): City & Rural Commercial Banks

2020 (CNY Million) Ningbo Huishang Shengjing Jinzhou Zhongyuan Tianjin Harbin Chongqing Business Performance (Jan–Dec) Operating Income 41,111 32,290 16,267 9,309 19,428 17,197 14,606 13,048 Net Interest Income 27,859 25,752 14,558 9,299 16,565 13,646 12,309 11,061 Net Fee and Commission Income 6,342 3,617 689 175 1,786 2,311 880 1,037 Other Non-Interest Income 6,910 2,922 1,020 (165) 1,076 1,240 1,417 951 Operating Expenses (24,611) (19,851) (15,675) (8,981) (14,967) (12,184) (13,197) (7,298) Taxes and Surcharges (332) (325) (210) (307) (200) (204) (214) (156) Business and Management Fees (15,609) (7,329) (4,840) (3,011) (6,919) (3,749) (4,682) (2,694) Impairment Losses on Credit Assets (8,667) (12,259) (10,625) (5,663) (7,849) (8,231) (8,301) (4,317) Impairment Losses on Other Assets 0 62 0 0 0 0 0 (119) Other Operating Costs (3) 0 0 0 0 0 (12) Operating Profit 16,500 12,439 591 328 4,461 5,013 1,409 5,751 Profit Before Tax / Total Profit 16,455 12,083 591 328 4,449 5,035 1,409 5,734 Income Tax Expense (1,319) (2,161) 641 (175) (1,094) (692) (613) (1,168) Net Profit 15,136 9,921 1,232 154 3,355 4,343 796 4,566 Minority Shareholder Gains and 86 0 28 (251) 54 36 50 142 Losses Net Profit Attributable to Parent 15,050 9,921 1,204 405 3,301 4,308 746 4,424 Financial Position (As of December 31) Total Assets 1,626,749 1,271,701 1,037,958 777,992 757,482 687,760 598,604 561,641 Customer Loans and Advances 663,447 553,399 534,687 495,464 347,657 295,752 272,351 272,259 Financial Investments 1 758,852 510,527 358,045 180,701 239,398 312,323 216,849 190,790 Interbank Assets 2 23,966 16,824 41,664 15,085 54,593 19,125 6,206 52,659 Cash and Deposits with Central Bank 102,498 98,384 78,506 55,827 65,336 47,831 62,771 35,305 Other Assets 77,986 92,566 25,057 30,915 50,498 12,729 40,426 10,627 Total Liabilities 1,507,756 1,166,028 957,912 706,750 698,127 633,812 547,494 519,647 Customer Deposits 933,164 726,743 697,364 439,224 431,341 355,982 476,333 314,500 Interbank Liabilities 3 206,431 169,284 185,449 192,793 136,744 133,794 17,421 69,688 Debt Securities Issued 4 187,443 180,636 45,263 71,270 76,055 108,712 33,575 101,040 Borrowing From Central Bank 83,623 69,583 2,815 106 44,067 25,319 3,639 27,724 Other Liabilities 97,095 19,782 27,020 3,358 9,920 10,005 16,526 6,695 Total Equity 118,993 105,673 80,047 71,242 59,355 53,948 49,620 41,994 Minority Shareholders’ Equity 513 2,632 595 3,583 1,094 818 372 1,819 Total Equity Attributable to Parent 118,480 103,041 79,452 67,659 58,262 53,130 49,247 40,175 Primary Financial Indicators Profitability (Jan–Dec) Ave. ROA 1.02% 0.83% 0.12% 0.02% 0.46% 0.64% 0.13% 0.86% Weighted Ave. ROE 14.90% 12.94% Not disclosed Not disclosed Not disclosed Not disclosed Not disclosed 12.20% Net Interest Spread 2.54% 2.17% 1.55% 1.68% 2.36% 1.98% 2.18% 2.18% Net Interest Margin 2.30% 2.42% 1.62% 1.42% 2.48% 2.26% 2.20% 2.27% Cost-to-Income Ratio 37.96% 23.71% 29.76% 32.35% 35.61% 21.80% 32.06% 20.64% Asset Quality (As of December 31) NPL Ratio 0.79% 1.98% 3.33% 2.07% 2.21% 2.14% 2.97% 1.27% Special-Mention Loans Ratio 0.50% 1.20% 3.20% 10.32% 2.63% 4.64% 4.36% 2.96% Overdue Loan Ratio 0.80% 2.22% 4.91% 3.15% 3.14% 3.99% 9.10% 2.37% Provision Coverage 505.59% 181.90% 114.05% 198.67% 153.31% 183.45% 133.26% 309.13% Provision-to-Loan Ratio 4.01% 3.61% 3.75% 4.11% 3.39% 3.92% 3.96% 3.92% Capital Adequacy (As of December 31) Core Tier 1 Capital Adequacy Ratio 9.52% 8.04% 11.07% 8.23% 8.59% 11.12% 10.18% 8.39% Tier 1 Capital Adequacy Ratio 10.88% 9.89% 11.07% 9.65% 10.35% 11.12% 10.20% 9.57% Capital Adequacy Ratio 14.84% 12.12% 12.23% 11.76% 13.20% 14.48% 12.59% 12.54%

40 PwC Summary of Financial Data (III): City & Rural Commercial Banks

2020 (CNY Million) Zhengzhou Qingdao Jiangxi Guizhou Jiujiang Gansu Jinshang Weihai Luzhou Business Performance (Jan– Dec) Operating Income 14,607 10,541 10,285 11,248 10,192 6,493 4,868 6,034 3,155 Net Interest Income 11,239 8,147 9,054 10,121 7,861 5,750 3,441 4,658 2,756 Net Fee and Commission Income 1,730 1,692 579 363 624 329 713 464 5 Other Non-Interest Income 1,637 703 653 764 1,706 414 715 912 393 Operating Expenses (10,589) (7,820) (7,808) (6,788) (8,064) (6,074) (3,277) (4,083) (2,419) Taxes and Surcharges (133) (133) (134) (149) (106) (93) (71) (64) (38) Business and Management Fees (3,271) (3,543) (3,390) (3,407) (2,780) (2,227) (1,753) (1,514) (1,139) Impairment Losses on Credit Assets (7,184) (4,144) (4,284) (3,232) (5,178) (3,755) (1,453) (2,505) (1,242) Impairment Losses on Other Assets 0 0 0 0 0 0 0 0 0 Other Operating Costs 0 (1) 0 0 0 0 0 0 Operating Profit 4,018 2,720 2,477 4,460 2,127 419 1,591 1,951 736 Profit Before Tax / Total Profit 4,012 2,728 2,485 4,355 2,138 421 1,612 1,951 740 Income Tax Expense (692) (275) (580) (685) (428) 142 (41) (303) (164) Net Profit 3,321 2,453 1,905 3,671 1,709 562 1,571 1,648 576 Minority Shareholder Gains and Losses 153 59 46 0 37 0 4 139 0 Net Profit Attributable to Parent 3,168 2,394 1,859 3,671 1,673 562 1,567 1,510 576 Financial Position (As of December 31) Total Assets 547,813 459,828 458,693 456,401 415,794 342,364 270,944 267,602 118,886 Customer Loans and Advances 231,250 202,358 217,449 206,153 205,658 176,387 131,837 117,749 57,585 1 Financial Investments 232,677 178,236 176,093 192,309 145,947 105,983 91,660 101,221 43,965 2 Interbank Assets 14,027 12,295 13,971 1,208 15,462 22,866 22,260 5,722 4,962 Cash and Deposits with Central Bank 36,492 47,219 40,762 48,150 38,741 26,667 20,536 23,500 10,490 Other Assets 33,367 19,718 10,419 8,582 9,985 10,461 4,652 19,409 1,884 Total Liabilities 501,842 428,921 422,750 420,373 389,165 300,205 249,902 245,928 109,937 Customer Deposits 316,513 275,751 315,771 289,043 313,805 249,678 176,782 179,589 85,223 3 Interbank Liabilities 61,981 63,072 35,793 45,063 31,239 20,356 16,137 24,866 4,830 4 Debt Securities Issued 93,164 72,835 42,440 55,836 26,634 23,552 52,177 30,873 16,598 Borrowing From Central Bank 25,967 11,207 15,832 26,642 13,763 6,620 1,893 7,241 2,371 Other Liabilities 4,217 6,057 12,914 3,790 3,724 0 2,913 3,360 914 Total Equity 45,972 30,907 35,942 36,028 26,630 31,465 21,041 21,674 8,949 Minority Shareholders’ Equity 1,477 622 675 0 653 36 28 768 0 Total Equity Attributable to Parent 44,495 30,285 35,268 36,028 25,976 31,429 21,014 20,906 8,949 Primary Financial Indicators Profitability (Jan–Dec) Ave. ROA 0.63% 0.59% 0.42% 0.85% 0.44% 0.17% 0.61% 0.67% 0.55% Weighted Ave. ROE 8.37% 8.56% Not disclosed Not disclosed Not disclosed Not disclosed Not disclosed 8.42% Not disclosed Net Interest Spread 2.46% 2.14% 2.07% 2.44% 2.22% 1.72% 1.59% 1.88% 2.75% Net Interest Margin 2.40% 2.13% 2.10% 2.55% 2.18% 1.97% 1.54% 1.99% 2.78% Cost-to-Income Ratio 22.40% 33.61% 32.96% 30.29% 27.28% 34.30% 36.01% 25.08% 36.09% Asset Quality (As of December 31) NPL Ratio 2.08% 1.51% 1.73% 1.15% 1.55% 2.28% 1.84% 1.47% 1.83% Special-Mention Loans Ratio 2.03% 1.47% 2.08% 0.87% 1.34% 3.79% 2.12% 4.21% 1.34% Overdue Loan Ratio 3.04% 1.23% 1.92% 0.83% 1.98% 5.91% 1.97% 3.04% 1.93% Provision Coverage 160.44% 169.62% 171.56% 334.36% 165.97% 131.23% 194.06% 173.39% 194.07% Provision-to-Loan Ratio 3.33% 2.56% 2.97% 3.85% 2.58% 2.99% 3.58% 2.56% 3.56% Capital Adequacy (As of December 31) Core Tier 1 Capital Adequacy Ratio 8.92% 8.35% 10.29% 11.63% 9.02% 12.85% 10.72% 9.88% 8.11% Tier 1 Capital Adequacy Ratio 10.87% 11.31% 10.30% 11.63% 9.02% 12.85% 10.72% 11.53% 10.01% Capital Adequacy Ratio 12.86% 14.11% 12.89% 13.67% 10.71% 13.39% 11.72% 15.18% 13.87%

Banking Newsletter | 41 Summary of Financial Data (IV): City & Rural Commercial Banks

Chongqing Rural Guangzhou Rural Changshu Rural JiuTai Rural Wuxi Rural Jiangyin Rural 2020 (CNY Million) Commercial Commercial Commercial Commercial Commercial Commercial Business Performance (Jan–Dec) Operating Income 28,186 21,218 6,582 5,547 3,896 3,351 Net Interest Income 24,249 17,647 5,966 5,098 3,277 2,559 Net Fee and Commission Income 2,903 1,327 148 231 176 100 Other Non-Interest Income 1,034 2,244 468 218 443 692 Operating Expenses (18,119) (14,931) (4,351) (4,050) (2,401) (2,234) Taxes and Surcharges (274) (259) (40) (84) (32) (27) Business and Management Fees (7,636) (6,779) (2,815) (2,660) (1,056) (1,055) Impairment Losses on Credit Assets (10,209) (7,852) (1,491) (1,307) (1,311) (1,141) Impairment Losses on Other Assets (1) (42) (4) 0 0 0 Other Operating Costs 0 0 0 0 (2) (11) Operating Profit 10,067 6,288 2,231 1,496 1,496 1,117 Profit Before Tax / Total Profit 10,063 6,288 2,228 1,541 1,495 1,107 Income Tax Expense (1,498) (1,011) (292) (341) (173) (37) Net Profit 8,565 5,277 1,936 1,200 1,322 1,070 Minority Shareholder Gains and Losses 164 195 133 0 10 13 Net Profit Attributable to Parent 8,401 5,081 1,803 1,200 1,312 1,057 Financial Position (As of December 31) Total Assets 1,135,926 1,027,872 208,685 200,363 180,018 142,766 Customer Loans and Advances 486,963 553,168 125,984 126,575 95,943 77,210 Financial Investments 1 429,954 262,524 58,849 30,499 63,475 50,890 Interbank Assets 2 138,690 93,172 2,270 10,228 3,761 1,574 Cash and Deposits with Central Bank 65,369 103,785 16,331 25,155 12,783 9,903 Other Assets 14,950 15,223 5,251 7,907 4,056 3,189 Total Liabilities 1,041,294 951,986 189,578 184,112 165,948 130,506 Customer Deposits 725,000 778,425 162,485 149,763 145,293 105,759 Interbank Liabilities 3 68,513 53,119 9,258 18,092 1,519 9,898 Debt Securities Issued 4 173,178 76,644 10,048 7,505 9,515 8,738 Borrowing From Central Bank 62,314 20,303 5,745 4,011 7,976 5,105 Other Liabilities 12,290 23,496 2,042 4,741 1,646 1,006 Total Equity 94,632 75,885 19,107 16,251 14,070 12,260 Minority Shareholders’ Equity 1,403 6,398 1,147 2,580 91 129 Total Equity Attributable to Parent 93,229 69,487 17,960 13,672 13,979 12,131 Primary Financial Indicators Profitability (Jan–Dec) Ave. ROA 0.79% 0.55% 0.98% 0.64% 0.77% 0.80% Weighted Ave. ROE 9.28% Not disclosed 10.34% Not disclosed 10.84% 8.85% Net Interest Spread 2.08% 1.98% 3.01% 2.58% 1.90% 1.94% Net Interest Margin 2.25% 2.01% 3.18% 2.75% 2.07% 2.19% Cost-to-Income Ratio 27.09% 31.95% 42.77% 47.96% 27.15% 31.47% Asset Quality (As of December 31) NPL Ratio 1.31% 1.81% 0.96% 1.63% 1.10% 1.79% Special-Mention Loans Ratio 2.36% 4.41% 1.17% 3.11% 0.40% 1.02% Overdue Loan Ratio 1.10% 2.20% 0.97% 3.98% 0.90% 1.50% Provision Coverage 314.95% 154.85% 485.33% 164.82% 355.88% 224.27% Provision-to-Loan Ratio 4.12% 2.85% 4.66% 2.69% 3.92% 4.02% Capital Adequacy (As of December 31) Core Tier 1 Capital Adequacy Ratio 11.96% 9.20% 11.08% 9.05% 9.03% 13.34% Tier 1 Capital Adequacy Ratio 11.97% 10.74% 11.13% 9.15% 10.20% 13.36% Capital Adequacy Ratio 14.28% 12.56% 13.53% 11.37% 15.21% 14.48%

42 PwC Banking and capital market contacts

Assurance Consulting Tax

Jimmy Leung - Shanghai James Chang - Shenzhen Oliver Kang - Beijing +86 (21) 2323 3355 +86 (755) 8261 8882 +86 (10) 6533 3012 [email protected] [email protected] [email protected]

Margarita Ho - Beijing Ying Zhou - Beijing Matthew Wong - Shanghai +86 (10) 6533 2368 +86 (10) 6533 2860 +86 (21) 2323 3052 [email protected] [email protected] [email protected]

Richard Zhu - Beijing Jeff Hao - Beijing Rex Ho - Hong Kong +86 (10) 6533 2236 +86 (10) 6533 7942 +852 2289 3026 [email protected] [email protected] [email protected]

Linda Yip - Beijing Jianping Wang - Shanghai +86 (10) 6533 2300 +86 (21) 2323 5682 [email protected] [email protected]

Annie Zou - Beijing Qian Wu - Beijing +86 (10) 6533 7691 +86 (10) 6533 7987 [email protected] [email protected]

Michael Hu - Shanghai Matthew Phillips - Hong Kong +86 (21) 2323 2718 +852 2289 2303 [email protected] [email protected]

Anthony Chen -Shenzhen Chris Chan - Hong Kong +86 (755) 8261 8264 +852 2289 2824 [email protected] [email protected]

Olivia Xie - Guangzhou +86 (20) 3819 2605 [email protected]

Peter Li - Hong Kong +852 2289 2982 [email protected]

James Tam - Hong Kong +852 2289 2706 [email protected]

Benson Cheng - Hong Kong +852 2289 3128 [email protected]

银行业快讯 | 43 pwccn.com

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