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Annual Report Contents 2020 Annual Report Contents 1. Company Information 2 8. Directors, Supervisors, Senior 70 2. Financial Highlights 4 Management and Employees 3. Chairman’s Statement 7 9. Corporate Governance Report 89 4. Honours and Awards 9 10. Report of the Board of Directors 116 5. Management Discussion and 10 11. Report of the Board of Supervisors 122 Analysis 12. Social Responsibility Report 125 5.1 Analysis of Overall 10 13. Internal Control 129 Operations 14. Independent Auditor’s Report 130 5.2 Financial Review 12 15. Financial Statements 140 5.3 Business Overview 44 16. Notes to the Financial Statements 148 5.4 Risk Management 53 17. Unaudited Supplementary 283 5.5 Future Outlook and 59 Financial Information Development Strategy 18. Organisational Chart 287 6. Significant Events 60 19. The Statistical Statements of All 288 7. Change in Share Capital and 62 Operating Institution of Shengjing Shareholders Bank 20. Definition 307 * Shengjing Bank Co., Ltd. is not an authorised institution within the meaning of the Banking Ordinance (Chapter 155 of the Laws of Hong Kong), not subject to the supervision of the Hong Kong Monetary Authority, and not authorised to carry on banking and/or deposit-taking business in Hong Kong. Chapter 1 Company Information COMPANY INFORMATION Legal Name in Chinese 盛京銀行股份有限公司 Abbreviation in Chinese 盛京銀行 Legal Name in English Shengjing Bank Co., Ltd. Abbreviation in English SHENGJING BANK Legal Representative QIU Huofa Authorised Representatives QIU Huofa and ZHOU Zhi Secretary to the Board of Directors ZHOU Zhi Joint Company Secretaries ZHOU Zhi and KWONG Yin Ping, Yvonne Registered and Business Address No. 109 Beizhan Road, Shenhe District, Shenyang, Liaoning Province, the PRC Contact Number 86–24–22535633 Website www.shengjingbank.com.cn Principal Place of Business in Hong Kong Unit 4105, 41/F, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong Website of the Hong Kong Stock Exchange http://www.hkexnews.hk/ on which the H Share Annual Report is Published Place of Maintenance of the Annual Report Office of the Board of Directors of Shengjing Bank Short Name Shengjing Bank Stock Code 02066 2 Shengjing Bank Co., Ltd. Chapter 1 Company Information H Share Registrar and its Business Address Computershare Hong Kong Investor Services Limited Shops 1712–1716, 17th Floor, Hopewell Centre 183 Queen’s Road East, Wanchai, Hong Kong Legal Advisor as to PRC Laws and its Tian Yuan Law Firm Business Address 10/F, China Pacific Insurance Plaza 28 Fengsheng Hutong Xicheng District Beijing, the PRC Legal Advisor as to Hong Kong Law and its Freshfields Bruckhaus Deringer Business Address 55th Floor, One Island East, Taikoo Place Quarry Bay, Hong Kong Auditor and its Business Address KPMG 8th Floor, Prince’s Building 10 Chater Road Hong Kong Annual Report 2020 3 Chapter 2 Financial Highlights FINANCIAL HIGHLIGHTS Year-on- year change (Expressed in thousands of between 2020 Renminbi, unless otherwise stated) 2020 2019 and 2019 2018 2017 2016 Rate of change (%) Operating Results Interest income 42,533,959 44,944,020 (5.4) 42,805,495 42,277,528 36,055,533 Interest expense (27,975,598) (28,594,168) (2.2) (30,387,931) (30,201,911) (22,837,867) Net interest income 14,558,361 16,349,852 (11.0) 12,417,564 12,075,617 13,217,666 Net non-interest income 1,708,452 4,657,415 (63.3) 3,467,902 1,174,066 2,896,210 Operating income 16,266,813 21,007,267 (22.6) 15,885,466 13,249,683 16,113,876 Operating expenses (5,050,086) (4,631,365) 9.0 (3,945,215) (3,617,442) (3,730,598) Impairment losses on assets (10,625,363) (10,233,200) 3.8 (6,401,249) (1,403,284) (3,675,411) Operating profit 591,364 6,142,702 (90.4) 5,539,002 8,228,957 8,707,867 Share of profits of associates – – – – – – Profit before taxation 591,364 6,142,702 (90.4) 5,539,002 8,228,957 8,707,867 Income tax expense 640,577 (704,641) N/A (412,854) (654,818) (1,829,575) Net profit 1,231,941 5,438,061 (77.3) 5,126,148 7,574,139 6,878,292 Net profit attributable to equity shareholders of the Bank 1,203,777 5,443,224 (77.9) 5,128,717 7,580,055 6,864,520 4 Shengjing Bank Co., Ltd. Chapter 2 Financial Highlights Year-on- year change (Expressed in thousands of between 2020 Renminbi, unless otherwise stated) 2020 2019 and 2019 2018 2017 2016 Change Calculated on a per share basis (RMB) Basic and diluted earnings per share 0.14 0.90 (0.76) 0.88 1.31 1.18 Rate of change (%) Major indicators of assets/ liabilities Total assets 1,037,958,375 1,021,480,796 1.6 985,432,940 1,030,617,431 905,482,647 Of which: total loans and advances to customer(1) 547,062,557 457,202,375 19.7 376,597,360 279,513,418 235,416,650 Total liabilities 957,911,826 942,358,811 1.7 928,403,456 978,361,775 859,108,021 Of which: total deposits from customers(1) 681,404,747 641,428,191 6.2 514,166,997 473,580,808 415,246,159 Share capital 8,796,680 8,796,680 0.0 5,796,680 5,796,680 5,796,680 Equity attributable to equity shareholders of the Bank 79,451,932 78,555,532 1.1 56,457,868 51,681,375 45,794,429 Total equity 80,046,549 79,121,985 1.2 57,029,484 52,255,656 46,374,626 Change Profitability Indicators (%) Return on average total assets(2) 0.12 0.54 (0.42) 0.51 0.78 0.86 Return on average equity(3) 1.55 7.99 (6.44) 9.38 15.36 15.62 Net interest spread(4) 1.55 1.59 (0.04) 1.33 1.36 1.65 Net interest margin(5) 1.62 1.76 (0.14) 1.43 1.50 1.75 Net fee and commission income to operating income 4.23 5.50 (1.27) 3.95 12.17 11.88 Cost-to-income ratio(6) 29.76 21.31 8.45 24.13 26.22 19.31 Change Asset quality indicators (%) Non-performing loan ratio(7) 3.26 1.75 1.51 1.71 1.49 1.74 Allowance to non-performing loans(8) 114.05 160.90 (46.85) 160.81 186.02 159.17 Allowance to total loans(9) 3.72 2.82 0.90 2.75 2.77 2.78 Annual Report 2020 5 Chapter 2 Financial Highlights FINANCIAL HIGHLIGHTS Year-on- year change (Expressed in thousands of between 2020 Renminbi, unless otherwise stated) 2020 2019 and 2019 2018 2017 2016 Change Capital adequacy indicators (%) Core Tier-one capital adequacy ratio(10) 11.07 11.48 (0.41) 8.52 9.04 9.10 Tier-one capital adequacy ratio(10) 11.07 11.48 (0.41) 8.52 9.04 9.10 Capital adequacy ratio(10) 12.23 14.54 (2.31) 11.86 12.85 11.99 Total equity to total assets ratio 7.71 7.75 (0.04) 5.79 5.07 5.12 Change Other indicators (%) Loan-to-deposit ratio(11) 80.28 71.28 9.00 73.24 59.02 56.69 Notes: (1) Total balance of loans and advances to customers excludes interest receivables, total deposits from customers excludes interest payables. (2) Calculated by dividing the net profit by the average of total assets at the beginning and at the end of the period. (3) Representing the net profit during the period as a percentage of the average balance of total equity at the beginning and the end of the period. (4) Calculated by deducting the average interest rate of interest-bearing liabilities from the average return rate of interest-earning assets. (5) Calculated by dividing net interest income by the average interest-earning assets. (6) Calculated by dividing operating expenses (less tax and surcharges) by operating income. (7) Calculated by dividing the balance of non-performing loans by total balance of loans and advances to customers. (8) Calculated by dividing the balance of provision for impairment on loans by the balance of non-performing loans. (9) Calculated by dividing the balance of the provision for impairment on loans by the total balance of loans and advances to customers. (10) Core Tier-one capital adequacy ratio, Tier-one capital adequacy ratio and capital adequacy ratio were calculated in accordance with the latest guidance promulgated by the CBIRC (effective from 1 January 2013). (11) The deposit-to-loan ratio is calculated by dividing the total balance of loans and advances to customers by total deposits from customers. 6 Shengjing Bank Co., Ltd. Chapter 3 Chairman’s Statement CHAIRMAN’S STATEMENT 2020 was an extraordinary year in the development history of Shengjing Bank. Facing the external impact of COVID-19 pandemic and the arduous tasks of reform and development, Shengjing Bank, by focusing on the strategic vision of “building a sound bank”, strengthened its confidence, overcame difficulties, and comprehensively promoted its strategic transformation and reform and development, creating a new situation in various aspects of its operations and management. As of 31 December 2020, the total asset of Shengjing Bank amounted to RMB1,037.958 billion, with a total amount of loans and advances issued of RMB547.063 billion, and a total amount of deposits received of RMB681.405 billion, achieving an operating income of RMB16.267 billion.
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