C h i n a C I T I C B a n k C o r p o r a t i o n L i m 2011 Annual Report i t e d 2 0 1 1 A n n Block C, Fuhua Mansion, No. 8 Chaoyangmen Beidajie, u a l Dongcheng District, Beijing, China R e Postal Code : 100027 p o r t bank.ecitic.com Table of Contents 2 Corporate Introduction 4 Financial Highlights 6 Chairman’s Statement 10 President’s Statement 14 Honors 18 Management Discussion and Analysis 18 Economic, Financial and Regulatory Environments 19 Analysis of the Financial Statements 38 Business Overview 58 Risk Management 80 Outlook Corporate Introduction 82 Management of Corporate Social Responsibility 86 Changes in Share Capital and Shareholdings of Substantial Shareholders Founded in 1987, CITIC Bank is among the earliest emerging commercial banks established during China’s reform and 94 Directors, Supervisors, Senior Management and Staff opening up and China’s first commercial bank participating in financing at both domestic and international markets. It 112 Report on Corporate Governance is renowned at home and abroad for brushing numerous track records in the contemporary financial history in China. In 2007, CITIC Bank introduced BBVA as its strategic investor and got listed on both the Shanghai Stock Exchange 130 Report of the Board of Directors and The Stock Exchange of Hong Kong Limited, rising as a bank with international public float. In 2009, CITIC 134 Report of the Board of Supervisors Bank acquired CIFH, deepened the cooperation with BBVA, thereby initially establishing a “triparty” internationalized 138 Significant Events operation platform, a unique one among other domestic medium banks. In 2011, the Bank successfully completed its equity refinancing through A and H shares rights issue, laying a solid foundation for the further development. 145 Independent Auditor’s Report and Financial Report 271 Unaudited Supplementary Financial Information CITIC Bank has grown into one of the strongest domestic commercial banks in terms of capital base and a fast growing national commercial bank with strong comprehensive competitive edges. 276 Documents Available for Inspection 277 Reference for Shareholders CITIC Bank has set up 35 tier-one branches, 54 tier-two branches and 684 sub-branches throughout China, which are mainly located in coastal areas in Eastern China and economically developed cities in Central and Western China. With 279 Corporate Structure premium service quality, over 37,000 employees of the Bank provide corporate customers with integrated financial 280 List of Domestic and Overseas Affiliates solutions in corporate banking business, international business, treasury and capital market business and investment 284 Definition banking business, and provide individual customers with extensive financial products covering personal wealth management, credit card, consumer credit, private banking and going abroad financial services. Table of Contents 2 Corporate Introduction 4 Financial Highlights 6 Chairman’s Statement 10 President’s Statement 14 Honors 18 Management Discussion and Analysis 18 Economic, Financial and Regulatory Environments 19 Analysis of the Financial Statements 38 Business Overview 58 Risk Management 80 Outlook 82 Management of Corporate Social Responsibility 86 Changes in Share Capital and Shareholdings of Substantial Shareholders 94 Directors, Supervisors, Senior Management and Staff 112 Report on Corporate Governance 130 Report of the Board of Directors 134 Report of the Board of Supervisors 138 Significant Events 145 Independent Auditor’s Report and Financial Report 271 Unaudited Supplementary Financial Information 276 Documents Available for Inspection 277 Reference for Shareholders 279 Corporate Structure 280 List of Domestic and Overseas Affiliates 284 Definition Corporate Introduction Registered Name in Chinese: 中信銀行股份有限公司 Registered Name in English: CHINA CITIC BANK CORPORATION LIMITED (abbreviated as “CNCB”) Legal Representative: Tian Guoli Authorized Representatives: Chen Xiaoxian, Lin Zhengyue Secretary to the Board of Directors: Lin Zhengyue Joint Company Secretary: Lin Zhengyue, Wendy KAM Mei Ha (ACS, ACIS) Securities Representative of Company: Wang Junwei Qualified Accountant: Lu Wei (MPA, CPA) Registered Address and Office Address: Block C, Fuhua Mansion, No. 8 Chaoyangmen Beidajie, Dongcheng District, Beijing Postal Code: 100027 Official Website: bank.ecitic.com Telephone Number: +86-10-65558000 Fax Number: +86-10-65550809 Email Address: [email protected] Principal Place of Business in Hong Kong: 28th floor, Three Pacific Place, 1 Queen’s Road East Hong Kong Newspapers for Information Disclosure: China Securities Journal, Shanghai Securities News, Securities Times Websites for Information Disclosure: Website designated by the CSRC to publish A-share annual report: www.sse.com.cn Website designated by the SEHK to publish H-share annual report: www.hkexnews.hk Place Where Annual Report is Kept: Board Office, CITIC Bank Legal Advisor as to PRC Laws: Jun He Law Offices Legal Advisor as to Hong Kong Laws: Freshfields Bruckhaus Deringer 2 China CITIC Bank Corporation Limited Corporate Introduction PRC Auditor: KPMG Huazhen Accounting Firm 8th Floor, Office Building Tower 2, Oriental Plaza East, No. 1 East Chang’an Avenue, Beijing, China (Postal code: 100738) International Auditor: KPMG 8th Floor, Prince’s Building, No. 10 Chater Road, Central, Hong Kong A-share Registrar: Shanghai Branch of China Securities Depository and Clearing Corporation Limited 36th Floor, China Insurance Building, No. 166 East Lujiazui Road, Pudong New District, Shanghai H-share Registrar: Computershare Hong Kong Investor Services Limited 46th Floor, Hopewell Centre, No. 183 Queen’s Road East, Wan Chai, Hong Kong Listing Venues, A-share Stock Name and Stock Code: Shanghai Stock Exchange CNCB 601998 H-share The Stock Exchange of Hong Kong Limited CITIC Bank 0998 Date of First Registration: 20 April 1987 Place of First Registration: CITIC Building, No.19 Jianguomenwai Street, Beijing Date of Registration Change: 4 August 2011 Authority of First Registration State Administration for Industry & Commerce, PRC and Registration Change: Registration Number of Business License: 100000000006002 Institution Number of Finance License: B0006H111000001 Tax Registration Number: 110105101690725 Certificate of Organization Code: 10169072-5 This annual report is available in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese shall prevail. 2011 Annual Report 3 Financial Highlights Operating Performance Unit: RMB million Item 2011 2010 Growth rate (%) Operating income 77,092 56,356 36.79 Total profit 41,590 28,695 44.94 Net profit attributable to shareholders of the Bank 30,819 21,509 43.28 Net operating cash flow 300,104 37,325 704.03 Per share Basic earnings per share (RMB) 0.71 0.53 33.96 Diluted earnings per share (RMB) 0.71 0.53 33.96 Net operating cash flow per share (RMB) 6.41 0.96 567.71 Note: In 2011, the Bank completed equity financing through rights issue. As a result, the price discount in rights shares subscription was considered when calculating basic earnings per share, and earnings per share in comparative period were recalculated based on the number of shares adjusted. Profitability Indicators Item 2011 2010 Increase/(decrease) Return on average assets (ROAA) 1.27% 1.13% 0.14 Return on average equity (ROAE) (excluding minority interests) 20.92% 19.29% 1.63 Cost-to-income ratio 29.88% 33.63% (3.75 ) Credit cost 0.43% 0.36% 0.07 Net interest spread 2.85% 2.54% 0.31 Net interest margin 3.00% 2.63% 0.37 Scale Indicators Unit: RMB million Item 2011 2010 Growth rate (%) Total assets 2,765,881 2,081,314 32.89 Total loans and advances to customers 1,434,037 1,264,245 13.43 Total liabilities 2,587,100 1,956,776 32.21 Total deposits from customers 1,968,051 1,730,816 13.71 Total equity attributable to the Bank’s shareholders 174,496 120,175 45.20 Net asset per share attributable to the Bank’s shareholders (RMB) 3.73 3.08 21.10 Asset Quality Indicators Unit: RMB million Growth rate(%)/ Item 2011 2010 increase/(decrease) Performing loans 1,425,496 1,255,712 13.52 Non-performing loans (NPLs) 8,541 8,533 0.09 Allowance for impairment of loans 23,258 18,219 27.66 NPL ratio 0.60% 0.67% (0.07 ) Provision coverage ratio 272.31% 213.51% 58.80 Allowance for impairment of loans to total loans ratio 1.62% 1.44% 0.18 Note: Performing loans include normal and special-mention loans. NPLs include substandard, doubtful and loss loans. 4 China CITIC Bank Corporation Limited Financial Highlights Capital Adequacy Indicators Item 2011 2010 Increase/(decrease) Capital adequacy ratio 12.27% 11.31% 0.96 Core capital adequacy ratio 9.91% 8.45% 1.46 Total equity to total assets ratio 6.46% 5.98% 0.48 Five-Year Financial Summary Unit: RMB million Item 2011 2010 2009 2008 2007 (restated) Operating performance Operating income 77,092 56,356 40,983 41,963 27,955 Total profit 41,590 28,695 19,265 17,713 13,172 Net profit attributable to the Bank’s shareholders 30,819 21,509 14,320 13,296 8,322 Net operating cash flow 300,104 37,325 (7,697 ) 140,459 29,519 Per share Basic earnings per share (RMB) 0.71 0.53 0.35 0.38 0.22 Diluted earnings per share (RMB) 0.71 0.53 0.35 0.38 0.22 Net operating cash flow per share (RMB) 6.41 0.96 (0.20 ) 4.23 0.76 Scale indicators Total assets 2,765,881 2,081,314 1,775,031 1,319,570 1,011,186 Total loans and advances to customers 1,434,037 1,264,245 1,065,649 730,386 575,208 Total liabilities 2,587,100 1,956,776 1,668,023 1,190,196 927,095 Total deposits from