NEWS RELEASE

Sep 15, 2020 R&I Affirms A-, Stable: CITIC Group Corp.

Rating and Investment Information, Inc. (R&I) has announced the following: ISSUER: CITIC Group Corp. Issuer Rating: A-, Affirmed Rating Outlook: Stable

RATIONALE: CITIC Group Corp. (CITIC Group) is one of the major conglomerates in . The Chinese government holds a majority stake in it. CITIC Group runs a wide variety of businesses through its subsidiaries, primarily handling banking and other , resources & energy and engineering contracting, as well as real estate and manufacturing. The commercial banking business, provided mainly through China CITIC Corp. Ltd. (CNCB), is the largest source of earnings. The rating for CITIC Group is based on the evaluation of the entire group's earnings and financial bases, and factors in CITIC Group's strong relationship with the government to a certain degree. Interest rate cuts in response to the novel coronavirus and other factors will highly likely squeeze CNCB's net interest margin in 2020. To prop up the domestic economy, the Chinese government is calling on financial institutions to lower lending rates and commissions, among other supports. A rigorous expense management is essential for CNCB to secure profits. A rise in CNCB's ratio of non-performing loans (NPLs) has been restrained due mainly to the enforcement of stimulus packages by the government and an accelerated effort on NPL disposal. The coronavirus pandemic and trade friction could increase NPLs for a while, and R&I will keep track of the trends. Risks associated with the group's non-finance business such as a magnetite ore project in also warrant attention. CNCB has a relatively stable financing base. Its loan-deposit ratio was at the 90% level (R&I's estimate) as of end-June 2020. The liquidity coverage ratio, at 125.95%, needs to be kept above the regulatory requirement of 100%. The group as a whole has also been able to raise funds for investments and loans relatively stably, in R&I's view.

The primary rating methodologies applied to this rating are provided at "R&I's Basic Methodology for Corporate Credit Ratings", "Shared Rating Approach for Financial Institutions, etc." and "Depository Financial Institutions". The methodologies are available at the web site listed below, together with other rating methodologies that are taken into consideration when assigning the rating. https://www.r-i.co.jp/en/rating/about/rating_method.html

R&I RATINGS: ISSUER: CITIC Group Corp. Issuer Rating RATING: A-, Affirmed RATING OUTLOOK: Stable

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