Annual Report 2019 Contents Chapter 1 Important Notes 01 Chapter 2 Chairman’s Statement 02 Chapter 3 Company Profile 06 Chapter 4 Summary of Accounting Data and Financial Indicators 16 Chapter 5 Discussion and Analysis of Operations 24 Chapter 6 Other Significant Items 80 Chapter 7 Changes in Shares and Shareholders 94 Chapter 8 Preference Shares 102 Chapter 9 Information about Directors, Supervisors, Senior Management, 106 Employees and Organisations Chapter 10 Corporate Governance 126 Chapter 11 Corporate Bonds 133 Chapter 12 Financial Report 134 Chapter 13 Documents Available for Inspection Catalogue 268 2 Annual Report 2019 PING AN BANK CO., LTD. Important Notes 1.The board of directors (hereinafter referred to as the “Board”), the supervisory committee, the directors, the supervisors and senior management of the Bank guarantee the authenticity, accuracy and completeness of the contents of the Annual Report, in which there are no false representations, misleading statements or material omissions, and are severally and jointly liable for its contents. 2.The 5th meeting of the 11th session of the Board of the Bank deliberated the 2019 Annual Report together with its summary. The meeting required 15 directors to attend, and 15 directors attended the meeting. This Annual Report was approved unanimously at the meeting. 3.The 2019 annual financial report prepared by the Bank was audited by PricewaterhouseCoopers Zhong Tian LLP (hereinafter referred to as “PwC”) according to the China Standards on Auditing and PwC issued a standard unqualified auditors’ report. 4.Xie Yonglin (the Bank’s Chairman), Hu Yuefei (the President), Xiang Youzhi (the CFO) and Zhu Peiqing (the head of the Accounting Department) guarantee the authenticity, accuracy and completeness of the financial report contained in the 2019 Annual Report. 5.The forward-looking statements such as plans for the future involved in the Report do not constitute a substantial commitment for investors. Investors and stakeholders shall be aware of risks therein and understand the differences among plans, forecasts and commitments. 6.The Bank advises investors to read the full text of this Annual Report with particular attention to the following risk factors: the Bank is faced with all kinds of risks during operation, mainly including credit risks, market risks, liquidity risks, operational risks, country risks, bank account interest rate risks, reputation risks, strategic risks, information technology risks and legal and compliance risks, and has taken various measures to effectively manage and control all kinds of the business risks. See Risk Management in Section III Session 3.7 for details. 7.The Bank’s proposal for profit distribution of ordinary shares deliberated by the Board: cash dividend distribution of RMB2.18 per 10 shares (tax inclusive) to all shareholders based on the total share capital of the Bank of 19,405,918,198 shares as at 31 December 2019. There was no proposal to issue bonus shares or to convert public reserve to share capital. Interpretations Item refer(s) to Contents Shenzhen Development Bank Co., Ltd. (“Shenzhen Development Bank” or “Shenzhen Development”), which is Ping An Bank, the Bank and the Company refer to a renamed Bank completing the integration by absorption and merger of the former Ping An Bank Co., Ltd. (“former Ping An Bank”) in 2012 a national joint-stock commercial bank established on 22 Shenzhen Development Bank or Shenzhen refers to December 1987, with its name changed to Ping An Bank Development after absorption and merger of the former Ping An Bank a joint-stock commercial bank established in June 1995 and Former Ping An Bank refers to registered on 12 June 2012 China Ping An, Ping An Group and the Group refer to Ping An Insurance (Group) Company of China, Ltd. Ping An Life Insurance refers to Ping An Life Insurance Company of China, Ltd. PBoC refers to The People's Bank of China CSRC and Securities Regulatory Commission refer to China Securities Regulatory Commission CBIRC and Banking and Insurance Regulatory refer to China Banking and Insurance Regulatory Commission Commission Annual Report 2019 PING AN BANK CO., LTD. 1 Chairman’s Statement Deliver Financial Services for the Common Good and the Future During the Spring Festival that was only over a couple of weeks ago, people in the vast land of China have been deeply affected. In order to win this epidemic battle against the Coronavirus, every organisation and individual are doing the best of what can be done. Ping An Bank is also actively making its own contributions. We firmly believe that with the concerted efforts across the country, the final success will be ours and soon. In this battle, we feel a sense of mission and responsibility. This is derived from the traditional Chinese belief in the Great Love to help each other. In addition, we are also deeply aware that no home can safely withstand the crisis without the country, and we, both organisations and individuals, stand together and fight together for the common good. Ping An Bank, established at the forefront of China’s reform and opening up, has achieved rapid growth thanks to the sustained development of the nation and the dedication of the people to pursue a better life, as well as the opportunities of the times. As a listed company, a corporate citizen, as well as a social citizen, we are striving to fulfil all of our responsibilities to contribute to the country and the society, and rise to the challenges of our times. Accountability to the shareholders: Create value, stabilise operation As the first joint-stock commercial bank to make public offering of its shares in the People’s Republic of China, our main missions at Ping An are to deliver good performance in our operations and management and create value for the shareholders. In 2019, we delivered our missions. The share price of Ping An Bank rose by 77% in the whole year. The operating income of the Bank was RMB137,958 million, representing a year-on-year increase of 18.2%; the net profit was RMB28,195 million, representing a year-on-year increase of 13.6%. The data reflect a continuous fortified fundamental for development and a constant driving force for progress. Our business structure is undergoing constant optimisation and becoming more balanced. The retail business has further consolidated its position as the pillar in our income structure, while our corporate banking and interbank treasury operations, with clarified action plans and objectives, are further gaining speed in their development. And we have found a good balance in our overall business structure where the retail business and corporate business represent roughly sixty and forty percent of the whole. Profit growth has found its momentum, with risks controllable. The growth rates of both operating income and net profit in 2019 reached record highs since the Bank’s business transformation, demonstrating that the transformational driving forces have translated into concrete results. Moreover, these achievements are based on solid asset quality, with decreases in the proportion and deviation ratio of loans overdue for more than 60 days and increase in the provision coverage ratio. We are confident that these achievements are solid and also sustainable. Data-based business capabilities continue to improve with promising results. Through the intelligent management platform, we have built our own AI-enabled central processing units for our decision-making, risk control and services to transform experience into data; and meanwhile, we continue to improve our online operation capabilities to improve business efficiency and further reduce costs. The balanced structure will play a big role in promoting profit growth, as with strong asset quality to boost our rear line of defence and data-based capabilities facilitate innovations in business models and solutions, we can not only focus on the present, but also prepare for the future development. Thanks to this approach that drive synergies between the front, middle and back offices, Ping An Bank has earned wide recognition of the market. In September 2019, the Bank successfully completed the conversion of RMB26 billion convertible bonds at a conversion rate of nearly 100%, and created a new record to complete the process in only 19 trading days from the start of the conversion to the day when conditional redemption was triggered. Accountability to the customers: support the real economy and contribute to the improvement of the people’s livelihood President Xi points out: the economy prospers, and the financial sector benefits; the economy becomes stronger, and the financial sector follows the lead. To serve the real economy and help the people in their pursuit of a better life through financial services is what defines us in everything we do. In terms of serving the real economy, we focus on removing financing barriers and lowering the financing costs private enterprises. The development of private enterprises have always been a top priority at the Bank, especially with regard to removing the financing barriers and lowering financing costs for private enterprises, to which the Bank has devoted huge resources in identifying solutions over the years. Along the upstream and downstream of the core companies, for example, 2 Annual Report 2019 PING AN BANK CO., LTD. Xie Yonglin PING AN BANK Chairman Chairman’s Statement leveraging new technologies such as the Internet of Things and blockchain, and by ensuring that relevant risks are properly managed, we provide to small and micro enterprises with tailored financing services that require no collateral or guarantees and can be obtained through online application and online approval, a solution that delivers financing efficiency as well as reduction in financing costs. In 2019, private enterprise borrowers accounted for more than 70% of all corporate borrowers of new loans, the small enterprise digital financial service customers increased by 142.2% over the end of the previous year, and the balance of loans to key industries and strategic emerging industries rose by 53% as compared with the end of last year.