ANNUAL REPORT 2020 Vision To build a first-class commercial bank among peers, with full functionality, diversified businesses and salient features Mission Serving customers Rewarding shareholders Fulfilling the value of employees Making contributions to the society Core values Faithfulness Responsibility Innovation Conscientiousness Introduction of the Bank Established in 1988, China Guangfa Bank is one of the earliest incorporated joint-stock commercial banks in China. The Bank upholds the core values of “faithfulness, responsibility, innovation and conscientiousness”, bears in mind the historic mission of “serving customers, rewarding shareholders, fulfilling the value of employees and making contributions to the society”, practices the service concept of “know each other for you” and strives towards its strategic vision of being “one of the first-class commercial banks in China”. The Bank aims to provide customers with high-quality, efficient and comprehensive financial services. The Bank’s network has expanded to include 46 Tier-1 branches and 882 business outlets in 104 cities at and above the prefecture level in 25 provinces (municipalities and autonomous regions) including Beijing, Tianjin, Hebei, Shanxi, Liaoning, Jilin, Heilongjiang, Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangdong, Guangxi, Chongqing, Sichuan, Yunnan, Guizhou, Shaanxi, Xinjiang and the Hong Kong and Macau Special Administrative Regions. The Bank has established correspondent SWIFT authentication partnerships with over 1,174 banking institutions in nearly 100 countries and regions. The Bank’s quality and comprehensive financial services have covered more than 360,000 corporate customers, 48.00 million individual customers, 89.00 million credit card customers and 51.00 million mobile banking customers. 004 024 023 115 Overview Discussions and Analysis of 004 Important Notice Business Operations 005 Definitions 024 Economic, Financial and Macroeconomic Environment 006 Chairman’s Statement 026 Review of Operations 008 President’s Statement 030 Financial Statement Analysis 010 Top 10 Events in Operation and 052 Business Overview Management in 2020 081 Risk Management 014 Corporate Profile 101 Capital Management 018 Accounting Data and 103 Strategic Cooperation with Financial Indicators Major Shareholders 104 Outlook on the Future Development of the Bank 107 Corporate Social Responsibility 112 List of Honors 116 170 169 316 Corporate Governance Financial Statements 116 Material Events and Others 120 Changes in Shareholding 170 Audit Report and Shareholders’ Profile 173 Financial Statements 124 Directors, Supervisors, 312 Directory of Organizations Senior Executives and Staff 142 Corporate Governance 166 Confirmation of the Bank’s Annual Report 2020 by Directors and Senior Executives 167 Documents Available for Inspection 004 China Guangfa Bank Co., Ltd. Overview Discussions and Analysis of Business Operations Corporate Governance Financial Statements and Others Important Notice • The Board of Directors, the Board of Supervisors, Directors, Supervisors and Senior Executives of the Bank warrant that the information contained in this report is authentic, accurate and complete and that there are no false representations or misleading statements contained in or any material omissions from this report, and they assume several and joint legal liabilities for the report. • The Annual Report 2020 of China Guangfa Bank Co., Ltd. was reviewed and approved by the 8th meeting of the ninth Board of Directors of the Bank. Director Cai Chengwei entrusted Director Guo Yunzhao in writing to exercise the right of voting on his behalf, and the rest of the Directors attended the meeting and exercised their right of voting in person. • The Annual Report 2020 of China Guangfa Bank Co., Ltd. was reviewed and approved by the 6th meeting of the eighth Board of Supervisors of the Bank with written review opinions. Supervisor Yang Fuming entrusted Supervisor Li Weiyi in writing to exercise the right of voting on his behalf, Supervisor Wu Dahao entrusted Supervisor Fan Junxiong in writing to exercise the right of voting on his behalf, and the rest of the Supervisors attended the meeting and exercised their right of voting in person. • Ernst & Young Hua Ming (LLP) audited the Bank’s financial statements of Year 2020 prepared in accordance with the PRC Accounting Standards, and issued a standard auditor report with unqualified opinions. • Among the net profit of RMB13.812 billion as stated in the Bank’s audited financial statements of Year 2020, 10% or RMB1.381billion will be appropriated to the statutory surplus reserve; RMB4.955 billion equivalent to 1.5% of the balance of risk assets will be appropriated to the general reserve. A cash dividend of RMB0.77 (tax inclusive) per every 10 shares will be paid to all shareholders, amounting to RMB1.516 billion. The above profit distribution plan is subject to review and approval at 2020 annual general meeting of the Bank. • This report is prepared in both Chinese and English. In the case of any discrepancies, the Chinese version shall prevail. • Forward-looking statements relating to the Bank’s future financial position, operating results, business development and business plan in this report do not constitute any substantive commitments. The Bank’s future performance and development may vary due to various factors and uncertainties. • The risks faced by the Bank in the course of business mainly include credit risk, market risk, bank account interest rate risk, liquidity risk, operational risk, country risk, reputation risk, strategic risk, compliance risk and information technology risk. The Bank has taken various measures to effectively manage and control various business risks. For details, please refer to the disclosure in “Discussions and Analysis of Business Operations”. Legal Representative Yin Zhaojun, Executive Vice President in charge of finance Yin Yi and Head of Finance Department Qiu Gang warrant that the financial statements in the Bank’s Annual Report 2020 are authentic, accurate and complete. Annual Report 2020 005 Overview Discussions and Analysis of Business Operations Corporate Governance Financial Statements Definitions and Others In this report, unless the context otherwise requires, the following terms have the meaning set forth below: The Bank or CGB refers to China Guangfa Bank Co., Ltd. Articles of Association or Articles of refers to Articles of Association of China Guangfa Bank Co., Ltd. Association of the Bank China Life Group refers to China Life Insurance (Group) Company China Life refers to China Life Insurance Company Central Bank refers to The People’s Bank of China CBIRC refers to China Banking and Insurance Regulatory Commission CSRC refers to China Securities Regulatory Commission RMB refers to Renminbi 006 China Guangfa Bank Co., Ltd. Overview Discussions and Analysis of Business Operations Corporate Governance Financial Statements and Others Chairman’s Statement Annual Report 2020 007 Overview Discussions and Analysis of Business Operations Corporate Governance Financial Statements Chairman’s Statement and Others Despite the tough and bumpy journey ahead, achievements deployment. The construction of the new Head Office Building can be made by every effort. started. The evaluation by government, regulators and customers 2020 marks an extraordinary year. In the face of the impact of on CGB’s work has improved significantly, which has laid a solid COVID-19, the Communist Party of China (hereafter CPC) led foundation for CGB to develop itself into a first-class commercial the people of all ethnic groups to forge ahead and surmount bank. difficulties, and made impressive achievement both in epidemic prevention and control and economic development. The Bank The journey ahead is long, striving is the only way forward. has earnestly implemented the CPC Central Committee’s At a historic juncture when the time-frames of the “Two decisions and deployment on promoting epidemic prevention Centenary” goals converge, the 19th CPC Central Committee and control and economic and social development as a whole, convened the fifth plenary session to draw up a blueprint for made progress while maintaining stability, pursued high-quality China’s future development, plan the direction and goals and development, responded to changes, sought new possibilities, make strategic arrangements for the journey ahead, and inject and further consolidated the upward momentum of development. powerful ideological and operational forces to secure the victory Party building was deepened, the governance system consisting of building a modern socialist country in an all-round way. The of the general meeting of shareholders, Board of Directors, Board Bank will follow the distinct logic of new development stage, new of Supervisors, Party committee and senior management was development concept and serving the new development pattern, further improved, the Party committee work system and decision- and identify what to adhere to, change and develop, draw a new making system of “Three Importance and One Greatness” were blueprint scientifically and strive to open up new prospect. The made more standardized, Party committee played an enhanced Bank will strengthen the Party’s overall leadership, carry out the leading role and the effect of development driven by Party two “Persistence All the Way”, resolutely uphold the core and building became more noticeable. CGB has done well in serving leading position