Summary of Annual Report 2019 of CHINA BOHAI BANK CO., LTD.

1. Important Notice

1.1 The Board of Directors, the Board of Supervisors, directors, supervisors and senior executives of the Bank guarantee that the Annual Report 2019 contains no false records, misleading statements or material omissions, and agree to be jointly and severally responsible for the authenticity, accuracy and completeness of the report. The summary is abstracted from the Annual Report 2019 of the Bank, please refer to the full text of the report for further details.

1.2 The full text and summary of Annual Report 2019 of the Bank was reviewed and approved at the 5th Meeting of the Fifth Board of Directors and the 2nd Meeting of the Fifth Board of Supervisors on 27 March 2020. On the same date, the 2019 Annual General Meeting of the Bank reviewed and approved the Bank's profit distribution plan proposing not paying dividends for 2019. Please refer to "Report of the Board of Directors: 2019 Profit distribution plan" herein for details.

1.3 Mr. Li Fuan, Legal Representative and Chairman of the Bank, Mr. Qu Hongzhi, President of the Bank, Mr. Wu Siqi, executive in charge of finance and accounting, and Ms. Zhang Hui, Head of Finance Department guarantee the authenticity, accuracy and completeness of the financial report disclosed in the Annual Report 2019.

1.4 The 2019 Financial Statements of the Bank prepared under the CAS have been audited by KPMG Huazhen LLP in accordance with the China Standards on Auditing, and standard unqualified auditor's report has been issued.

1.5 Unless otherwise specified, financial data and indicators in the Annual Report 2019 are denominated in Renminbi (RMB).

01 2. Corporate Information

2.1 Basic information

Legal name and abbreviation in Chinese: 渤海银行股份有限公司（渤海银行）

Legal name and abbreviation in English: CHINA BOHAI BANK CO., LTD. (CBHB)

Legal Representative: Li Fuan

Registered & office address: 218 Haihe East Road, Hedong District, Tianjin, PRC

Postcode: 300012

Unified credit code: 911200007109339563

Website: http://www.cbhb.com.cn

Service & complaint hotline: (86) 95541, (86) 400 888 8811

2.2 Contact information

Secretary to the Board of Directors: Zhao Zhihong

Address: 218 Haihe East Road, Hedong District, Tianjin, PRC

Telephone: (86) 22-5855 5931

Fax: (86) 22-5831 6358

Postcode: 300012

2.3 Locations where copies of the annual report are kept

The Office of the Board of Directors and main outlets of the Bank

Summary of Annual Report 2019 is published on the Bank's website.

2.4 Accounting firm for the annual audit

Auditor: KPMG Huazhen LLP

Address: 8th Floor, KPMG Tower, Oriental Plaza, 1 East Chang An Avenue, Dongcheng District, Beijing 100738, PRC

CPAs signing the Auditor's Report: Shi Jian, Zhang Zexu

02 3. Financial Summary

3.1 Major accounting data and financial indicators

(Unit: RMB1,000)

Item 2019 2018 % change 2017 Operating results: Operating income 28,282,235 23,174,826 22.04 25,203,908 Operating profit 10,031,097 8,028,682 24.94 8,389,936 Profit before income tax 10,044,631 8,027,462 25.13 8,425,428 Net profit 8,335,537 7,080,155 17.73 6,753,820 Net profit attributable to shareholders 8,335,537 7,080,155 17.73 6,753,820 Net profit attributable to shareholders after extraordinary items 8,306,997 7,023,202 18.28 6,689,304 Net cash inflow from operating activities -42,370,235 -167,616,433 N/A -25,917,585

Per share data (in RMB yuan): Basic earnings per share attributable to shareholders 0.58 0.49 18.37 0.49 Diluted earnings per share attributable to shareholders 0.58 0.49 18.37 0.49 Basic earnings per share attributable to shareholders after extraordinary items 0.57 0.49 16.33 0.48 Diluted earnings per share attributable to shareholders after extraordinary items 0.57 0.49 16.33 0.48 Net cash inflow per share from operating activities -2.93 -11.60 N/A -1.86

Financial ratios (%): Return on average total assets Up 0.08 attributable to shareholders 0.78 0.70 percentage point 0.73 Fully diluted ROE attributable Up 0.59 to shareholders 13.27 12.68 percentage point 13.94 Return on weighted average equity Up 0.34 attributable to shareholders 13.93 13.59 percentage point 15.12 Fully diluted ROE attributable to Up 0.65 shareholders after extraordinary items 13.22 12.57 percentage point 13.80 Return on weighted average equity attributable to shareholders after Up 0.40 extraordinary items 13.88 13.48 percentage point 14.98

03 (Unit: RMB1,000)

Item 31 December 2019 31 December 2018 % change 31 December 2017 Scale indicators: Total assets 1,113,116,510 1,034,451,332 7.60 1,002,567,049 Total loans and advances 710,879,969 567,472,266 25.27 464,889,833 -Corporate loans 465,224,102 384,402,554 21.03 343,350,958 -Discounted bills 9,413,518 13,211,434 -28.75 2,737,536 -Personal loans 233,419,910 167,839,721 39.07 118,801,339 -Interest accrued 2,822,439 2,018,557 39.82 N/A Allowance for impairment losses on loans 23,600,871 19,449,834 21.34 15,076,125 Total liabilities 1,030,335,132 978,592,211 5.29 954,101,747 Deposits from customers 647,764,551 606,701,396 6.77 582,103,318 -Demand deposits 189,759,586 185,984,306 2.03 259,549,662 -Time deposits 277,336,576 249,329,792 11.23 236,436,955 -Pledged deposits 170,526,417 162,510,553 4.93 85,639,126 -Others 312,320 342,039 -8.69 477,575 -Interest accrued 9,829,652 8,534,706 15.17 N/A Placements from banks and other financial institutions 21,500,177 19,534,990 10.06 37,837,151 Total shareholders' equity 82,781,378 55,859,121 48.20 48,465,302 Net assets per share attributable to shareholders (in RMB yuan) 4.35 3.87 12.40 3.35 Total share capital 14,450,000 14,450,000 - 14,450,000

Notes: 1. Fully diluted ROE attributable to shareholders is the result of dividing the net profit in the reporting period by the equity attributable to shareholders after deduction of other equity instruments. 2. Return on weighted average equity attributable to shareholders is calculated in accordance with the Rules for the Compilation of Information Disclosure by the Companies Offering Securities to the Public No.9 – Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revision 2010) issued by CSRC. 3. Net assets per share attributable to shareholders is the result of dividing the equity attributable to shareholders after deduction of other equity instruments by the total share capital at the year end.

04 3.2 Supplementary financial indicators

(In %)

Item 2019 2018 2017 Profitability indicators: Net interest spread 2.03 1.46 1.60 Net interest margin 2.21 1.54 1.77 Cost-to-income ratio 29.09 35.46 34.28

Item 31 December 2019 31 December 2018 31 December 2017 Asset quality indicators: NPL ratio 1.78 1.84 1.74 Provision coverage ratio 187.73 186.96 185.89 Loan loss reserve ratio 3.34 3.44 3.24

Capital adequacy indicators: Capital adequacy ratio 13.07 11.77 11.43 Tier 1 capital adequacy ratio 10.63 8.61 8.12 Core tier 1 capital adequacy ratio 8.06 8.61 8.12 Leverage ratio 6.22 4.52 4.24

Other indicators: Liquidity ratio RMB 59.98 55.39 40.77 Foreign currencies equivalent to RMB 214.20 293.44 226.38 RMB and foreign currencies 63.85 56.37 42.62 Percentage of loans to the largest borrower 6.37 9.09 7.90 Percentage of loans to top 10 borrowers 48.13 55.24 47.59 Percentage of Percentage of interbank interbank borrowing 0.42 1.07 0.22 borrowing and lending (RMB) Percentage of interbank lending 0.32 0.17 0.14

05 Notes: 1. NPL ratio is the result of dividing the balance of non-performing loans (NPLs) by the total loans and advances (excluding interest accrued); provision coverage ratio is dividing the sum of the allowance for impairment losses on loans measured at amortized cost and the allowance for impairment losses on loans measured at fair value through other comprehensive income (FVOCI) by the balance of NPLs; loan loss reserve ratio is dividing the sum of the allowance for impairment losses on loans measured at amortized cost and the allowance for impairment losses on loans measured at FVOCI by the total loans and advances (excluding interest accrued). 2. Capital adequacy ratios are calculated according to the Capital Rules for Commercial Banks (Provisional). 3. Leverage ratio is calculated according to the Capital Rules for Commercial Banks (Provisional) and the Leverage Ratio Rules for Commercial Banks (Revised) as well as the CAS. 4. The Bank discloses the capital information including capital composition and leverage ratio during the reporting period at the portal website (www.cbhb.com.cn) according to related requirements of the Regulatory Requirements on Disclosure of Capital Composition Information by Commercial Banks and the Leverage Ratio Rules for Commercial Banks (Revised). 5. Percentage of loans to the largest borrower and percentage of loans to top 10 borrowers are proportions of the respective loan amount to net capital.

3.3 Extraordinary items and corresponding amount

(Unit: RMB1,000)

Extraordinary item 2019 2018 2017 Government grants 16,608 76,791 44,100 Other P/L items qualified as extraordinary item 28,604 9,767 45,337 Less: Income tax on extraordinary items 16,672 29,605 24,921

Total 28,540 56,953 64,516

06 4. Changes in Share Capital and Particulars of Shareholders

4.1 Number of shareholders and particulars of shareholding

As at the end of 2019, the Bank had 12 shareholders. Changes in the shareholdings in 2019 are as follows.

31 December 2018 31 December 2019 +/- shares Name of shareholder % of % of In shares registered in 2019 In shares registered capital capital TEDA Investment Holding Co., Ltd. 2,125,000,000 25.00 1,487,500,000 3,612,500,000 25.00 Standard Chartered Bank (Hong Kong) Limited 1,699,150,000 19.99 1,189,405,000 2,888,555,000 19.99 China Shipping Investment Co., Ltd. 1,161,950,000 13.67 813,365,000 1,975,315,000 13.67 State Development & Investment Corp., Ltd. 991,950,000 11.67 694,365,000 1,686,315,000 11.67 China Baowu Steel Group Corporation Limited 991,950,000 1 1 . 6 7 694,365,000 1,686,315,000 1 1 . 6 7 Oceanwide Industry Co., Ltd. 806,298,082 9.49 564,408,657 1,370,706,739 9.49 Tianjin Shanghui Investment Holding Company Limited 680,000,000 8.00 476,000,000 1,156,000,000 8.00 Shine Enterprises (Tianjin) Co., Ltd. 17,308,430 0.20 12,115,901 29,424,331 0.20 Tianjin Xianghe Enterprise Management Consulting Co., Ltd. 8,654,215 0.10 6,057,951 14,712,166 0.10 Tianjin Firstwood Co., Ltd. 8,654,215 0.10 6,057,951 14,712,166 0.10 Tianjin Shuaishan Enterprise Management Consulting Co., Ltd. 5,623,372 0.07 3,936,360 9,559,732 0.07 Tianjin Shanren Enterprise Management Consulting Co., Ltd. 3,461,686 0.04 2,423,180 5,884,866 0.04

Total 8,500,000,000 100.00 5,950,000,000 14,450,000,000 100.00

Note: The Bank launched its second capital increase in 2011. The shareholders made additional contributions on 10 May 2011 and 24 November 2017, respectively. On 10 September 2019, the 54th General Meeting of the Bank resolved to approve the Bank's registered capital change from RMB8.5 billion to RMB14.45 billion. On 24 October 2019, CBIRC approved the Bank's registered capital change by the Reply of China Banking and Insurance Regulatory Commission on the Change of Registered Capital of China Bohai Bank (Y.B.J.F. [2019] No.962). On 1 November 2019, the Bank completed the registration formalities for its registered capital change and obtained the new Business License from the Tianjin Administration for Market Regulation.

07 4.2 Changes in shares

Changes in shares of the Bank in 2019 are as follows.

31 December 2018 +/- shares in 2019 31 December 2019 % of % of In shares registered New shares Others Subtotal In shares registered capital capital State-owned shares 5,270,850,000 62.01 3,689,595,000 - 3,689,595,000 8,960,445,000 62.01 Shares held by other domestic investors 1,530,000,000 18.00 1,071,000,000 - 1,071,000,000 2,601,000,000 18.00 Shares held by foreign investors 1,699,150,000 19.99 1,189,405,000 - 1,189,405,000 2,888,555,000 19.99

Total 8,500,000,000 100.00 5,950,000,000 - 5,950,000,000 14,450,000,000 100.00

4.3 Association between shareholders as well as share transfer, share pledge, custody of shares and locked-up shares

In 2019, there was no association among the shareholders of the Bank, and none of their shareholdings in the Bank were pledged, under custody or locked up, except for the 1 billion shares in the Bank pledged by TEDA Investment Holding Co., Ltd.

4.4 The Bank's substantial shareholders and their controlling shareholders, de facto controllers, related parties, persons acting in concert and ultimate beneficiaries at the end of 2019

Name of shareholder Controlling shareholder De facto controller TEDA Investment Holding Co., Ltd. SASAC of Tianjin SASAC of Tianjin Standard Chartered Bank (Hong Kong) Limited Standard Chartered PLC Standard Chartered PLC China Shipping Investment Co., Ltd. COSCO SHIPPING SASAC of the State Council Development Co., Ltd. State Development & Investment Corp., Ltd. SASAC of the State Council SASAC of the State Council China Baowu Steel Group Corporation Limited SASAC of the State Council SASAC of the State Council Oceanwide Industry Co., Ltd. China Oceanwide Lu Zhiqiang Holdings Group Co., Ltd. Tianjin Shanghui Investment Holding - - Company Limited

Note: The Bank's substantial shareholders did not hold any shares through or on behalf of others and there were no other ultimate beneficiaries. Please see Appendix III of the Annual Report 2019 for information on related parties of substantial shareholders.

08 4.5 Related party transactions between the Bank and its substantial shareholders and their controlling shareholders, de facto controllers, related parties, persons acting in concert and ultimate beneficiaries

For the related party transactions between the Bank and its substantial shareholders and their controlling shareholders, de facto controllers, related parties, persons acting in concert and ultimate beneficiaries in 2019, please refer to Appendix III of the Annual Report 2019 of the Bank.

4.6 Controlling shareholder, de facto controller and employee shares

In 2019, the Bank had no controlling shareholder, de facto controller or employee share.

4.7 Undated capital bond issue in 2019

Upon approval by the Reply of CBIRC on Issuance of Undated Capital Bonds by China Bohai Bank (Y.B.J.F. [2019] No.692) and the PBC Decision to Grant Administrative Permit (Y.S.C.X.Z.Y.Z. [2019] No.149), the Bank issued RMB20 billion of undated capital bonds in the national interbank bond market on 11 September 2019. With the approval of regulatory authorities, the Bank has the option to redeem the bond in part or in whole on the interest payment date in the fifth or subsequent year following issuance of the undated capital bonds. The bonds were issued by book building, with an annual coupon rate of 4.75%.

09 5. Directors, Supervisors and Senior Executives

5.1 Basic information of directors, supervisors and senior executives as at the release date of the annual report

Name Position Gender Date of birth Term of office Li Fuan Chairman of the Male Dec. 1962 Jun. 2015 to reelection date Board of Directors Fung Joi Lun Alan Vice Chairman of the Male Apr. 1948 Aug. 2010 to reelection date Board of Directors Zhang Bingjun Director Male Aug. 1963 Apr. 2013 to reelection date Cui Xuesong Director Male Nov. 1978 Jan. 2020 to reelection date Yuan Wei Director Female Feb. 1974 Dec. 2019 to reelection date Ye Baishou Director Male Jun. 1962 Jun. 2014 to reelection date Hu Aimin Director Male Dec. 1973 Sept. 2018 to reelection date Zhang Xifang Director Male Dec. 1972 Jan. 2020 to reelection date Zhang Yunji Director Male Aug. 1954 Feb. 2009 to reelection date Qu Hongzhi Director Male Aug. 1969 Jan. 2020 to reelection date President Jan. 2020 to reelection date Li Yi Director Male Dec. 1967 Jun. 2016 to reelection date Vice President Mar. 2010 to reelection date Du Gang Director Male Nov. 1970 Jan. 2020 to reelection date Vice President Apr. 2019 to reelection date Mao Zhenhua Independent Director Male Jan. 1964 Jun. 2016 to reelection date Chi Guotai Independent Director Male Jul. 1955 Jun. 2016 to reelection date Mu Binrui Independent Director Male Sept. 1956 Sept. 2018 to reelection date Tse Yat Hong Proposed Male Oct. 1969 From the date CBIRC Independent Director approves the directorship to reelection date Wang Ren Proposed Male Sept. 1972 From the date CBIRC Independent Director approves the directorship to reelection date Zhu Ning Proposed Male Sept. 1973 From the date CBIRC Independent Director approves the directorship to reelection date

10 Name Position Gender Date of birth Term of office Wang Chunfeng Chairman of the Male Feb. 1966 Nov. 2019 to reelection date Board of Supervisors Employee Supervisor Jul. 2019 to reelection date Feng Jiankuan Vice Chairman of the Male Oct. 1960 Dec. 2019 to reelection date Board of Supervisors Employee Supervisor Nov. 2019 to reelection date Secretary of May 2015 to Sept. 2019 Discipline Inspection Commission Qi Ershi External Supervisor Male Feb. 1953 Apr. 2016 to reelection date Diao Qinyi External Supervisor Male Mar. 1955 Apr. 2016 to reelection date Hui Yung Chris External Supervisor Male Nov. 1968 Dec. 2019 to reelection date Fan Zhigui Employee Supervisor Male Mar. 1961 Dec. 2019 to reelection date Wu Siqi Vice President Male Feb. 1965 Mar. 2016 to reelection date Zhao Zhihong Secretary to the Male Jan. 1966 Jun. 2016 to reelection date Board of Directors Chief Risk Officer Feb. 2020 to reelection date Shen Xiaolin Director Male Jul. 1967 May 2012 to Dec. 2019 Wan Min Director Male Jun. 1968 May 2016 to Mar. 2019 Fu Gang Director Male Mar. 1959 Jun. 2015 to Apr. 2019 President Apr. 2015 to Mar. 2019 Wang Jinhong Director Male Dec. 1971 Jun. 2016 to Dec. 2019 Zhang Junxi Independent Director Male Aug. 1963 Apr. 2013 to Dec. 2019 Bai Jie Supervisor Female Mar. 1978 Sept. 2014 to Dec. 2019 Representing Shareholder Wang Wei Employee Supervisor Female Jul. 1970 Apr. 2016 to Nov. 2019 Xia Renjiang Chief Risk Officer Male Feb. 1965 May 2018 to Sept. 2019

Note: Among the incumbent directors of the Bank, Mr. Li Fuan, Mr. Zhang Bingjun and Mr. Cui Xuesong were nominated by shareholder TEDA Investment Holding Co., Ltd., Mr. Fung Joi Lun Alan was nominated by shareholder Standard Chartered Bank (Hong Kong) Limited, Ms. Yuan Wei was nominated by shareholder China Shipping Investment Co., Ltd., Mr. Ye Baishou was nominated by shareholder State Development & Investment Corp., Ltd., Mr. Hu Aimin was nominated by shareholder China Baowu Steel Group Corporation Limited, Mr. Zhang Xifang was nominated by shareholder Oceanwide Industry Co., Ltd. and Mr. Zhang Yunji was nominated by shareholder Tianjin Shanghui Investment Holding Company Limited.

11 5.2 Remuneration of directors, supervisors and senior executives

The remuneration and compensation for directors, supervisors representing shareholders and external supervisors are determined by the General Meeting of Shareholders. The remuneration and compensation for the Senior Management are determined by the Board of Directors. The Bank's remuneration policy is reviewed by the Nomination & Remuneration Committee of the Board of Directors. Apart from Secretary to the Board of Directors and Chief Risk Officer, the Bank's remuneration plan for senior executives and Vice Chairman of the Board of Supervisors includes basic annual salary, performance pay and incentive pay. The remuneration plan for the Secretary to the Board of Directors, Chief Risk Officer and other employees includes fixed annual salary, performance pay and benefits. Directors other than Chairman and executive directors, supervisors representing shareholders and external supervisors receive allowances from the Bank. In examining and determining the remuneration plan, the General Meeting of Shareholders and the Board of Directors consider work experience, education background, skills and salaries paid by comparable companies. The Bank also has participated in a number of defined contribution plans and employee benefits plans sponsored by relevant government agencies, including basic endowment insurance, medical insurance, unemployment insurance, work-related injury insurance, maternity insurance, housing provident fund and enterprise annuity.

In 2019, directors, supervisors and senior executives received a total pre-tax remuneration of RMB23,351.6 thousand from the Bank. The final pre-tax remuneration of the Chairman, the President, and other senior management members for 2018 approved by competent authority was RMB3,530.7 thousand (excluding benefits), and the pre-tax incentive pay for 2015-2017 of them totaled 1,242.3 thousand.

12 6. Report of the Board of Directors

6.1 Discussion and analysis of business performance

6.1.1 Business performance

In 2019, the Bank actively implemented the central government's requirements on "Six Stabilities" in an overall stable situation with changes and concerns at home and abroad. With a focus on serving the real economy, forestalling financial risks and deepening financial reform, the Bank comprehensively enhanced service efficiency and level, made solid progress on all business fronts and delivered good overall results, evidenced by stable expansion in scale, stronger profitability, better income structure, sound credit allocation, marked cost reduction and efficiency improvement, and stable asset quality. It made notable contributions in terms of deepening strategic transformation, serving private enterprises and MSEs and developing the consumer finance platform and FinTech development.

The assets and liabilities expanded steadily with an increasingly better structure. As at the end of 2019, the Bank's assets totaled RMB1,113,117 million, up by 7.60% over the end of the previous year. In compliance with the regulatory guidance of returning to origin, on-balance sheet loan business saw a rapid growth. By the end of 2019, the total loans and advances amounted to RMB687,279 million, an increase of 25.41% from the end of the previous year. Total liabilities stood at RMB1,030,335 million, representing an increase of 5.29% from the end of the previous year, of which deposits from customers increased by 6.77% from the end of last year to RMB647,765 million.

The strategic positioning of retail transformation was highly valued, with FinTech rising as a remarkable enabler. In 2019, continual innovations were made on new consumer finance for retail business and big data-driven channel development was advanced on all fronts. As at the end of 2019, year-end retail loans of the Bank totaled RMB233,420 million, with the growth rate as high as 39.07%, compared with the growth of 25.27% in total loans, and accounted for 32.84% of outstanding loans, up 3.27 percentage points from the beginning of the year. Steady progress was made in the strategic transformation of retail banking.

Asset quality remained stable. As at the end of 2019, the Bank's NPLs stood at RMB12,591 million, an increase of RMB2,175 million over the beginning of the year. The NPL ratio stood at 1.78%, a decrease of 0.06 percentage point from the beginning of the year. Provisions for impairment losses on loans were sufficient. The Bank's loan impairment provisions totaled RMB23,638 million, increased by RMB4,163 million over the beginning of the year, as witnessed by loan loss reserve ratio of 3.34% and provision coverage ratio of 187.73%. Asset quality and provisioning remained sound.

Profitability improved significantly on cost reduction and efficiency enhancement efforts. As at the end of 2019, the Bank's net profit was RMB8,336 million, up by 17.73% over the previous year and growing rapidly. Cost-to-income ratio was 29.09%, down 6.37 percentage points from the previous year. Return on weighted average equity was 13.93%, up 0.34 percentage point from the previous year, indicating stronger profitability.

13 6.1.2 Items of income statement

6.1.2.1 Changes in items of income statement

In 2019, the Bank realized a net profit of RMB8,336 million, representing a stable growth of 17.73% from the previous year.

The table below sets forth the changes in major items of the Bank's income statement for the periods indicated.

(Unit: RMB1,000)

Item 2019 2018 % change Operating income 28,282,235 23,174,826 22.04 Incl.: Net interest income 22,910,405 15,227,932 50.45 Net fee and commission income 4,225,749 6,357,336 -33.53 Investment gain 437,065 1,973,522 -77.85 Gains/losses on changes in fair value 547,347 -147,405 N/A Exchange gains/losses 107,508 -337,529 N/A Other operating income 38,101 25,278 50.73 Other income 16,608 76,791 -78.37 Losses from disposal of assets -548 -1,099 N/A

Operating expenses 18,251,138 15,146,144 20.50 Incl.: Taxes and surcharges 354,167 293,235 20.78 General and administrative expenses 8,227,550 8,216,775 0.13 Credit impairment losses 9,566,913 6,507,885 47.00 Other operating expenses 102,508 128,249 -20.07

Net non-operating income 13,534 -1,220 N/A Profit before income tax 10,044,631 8,027,462 25.13 Less: Income tax expense 1,709,094 947,307 80.42

Net profit 8,335,537 7,080,155 17.73

14 6.1.2.2 Net interest income

In 2019, the Bank reaped a net interest income of RMB22,910 million, a year-on-year increase of 50.45%.

6.1.2.2.1 Interest income

In 2019, the Bank reaped an interest income of RMB51,487 million, a year-on-year increase of 15.13%. Specifically, interest income from loans and advances stood at RMB36,659 million, a rise of 33.40% over the previous year; interest income from deposits with the central bank and deposits and placements with banks and other financial institutions totaled RMB2,306 million, an increase of 25.39% over 2018. Interest income from financial assets held under resale agreements stood at RMB236 million, down 34.04% from the previous year. Interest income from financial investments at amortized cost and interest income from financial investments at FVOCI stood at RMB12,286 million in total, down 18.34% from 2018.

The table below sets forth the composition of the Bank's interest income for the periods indicated.

(Unit: RMB1,000)

Item 2019 2018 % change Interest income from loans and advances 36,658,748 27,479,536 33.40 Incl.: Interest income from corporate loans and advances 23,679,813 18,946,404 24.98 Interest income from personal loans 12,529,040 8,402,102 49.12 Interest income from discounted bills 449,895 131,030 243.35 Interest income from financial investments at amortized cost 10,275,532 13,488,708 -23.82 Interest income from financial investments at FVOCI 2,011,198 1,556,970 29.17 Interest income from deposits with the central bank 1,152,852 1,264,608 -8.84 Interest income from financial assets held under resale agreements 235,512 357,047 -34.04 Interest income from deposits with banks and other financial institutions 822,305 311,875 163.66 Interest income from placements with banks and other financial institutions 331,144 262,780 26.02

Total interest income 51,487,291 44,721,524 15.13

Interest income from loans and advances In 2019, the Bank achieved an interest income of RMB36,659 million from loans and advances, a year-on- year increase of 33.40%. The increase was mainly attributed to the expansion of the average balance and interest rate of loans (including discounted bills) compared with that of the previous year.

15 The table below sets forth the average balance, interest income and average yield of the Bank's loans and advances for the periods indicated.

(Unit: RMB1,000)

2019 2018 Item Average Interest Average Average Interest Average balance income yield (%) balance income yield (%) Corporate loans and advances 430,815,864 23,679,813 5.50 379,638,887 18,946,404 4.99 Personal loans 195,427,118 12,529,040 6.41 151,280,202 8,402,102 5.55 Discounted bills 11,644,833 449,895 3.86 2,658,304 131,030 4.93

Total loans and advances 637,887,815 36,658,748 5.75 533,577,393 27,479,536 5.15

Interest income from deposits with the central bank, deposits and placements with banks and other financial institutions, and interest income from financial assets held under resale agreements In 2019, the Bank's interest income from deposits with the central bank and deposits and placements with banks and other financial institutions totaled RMB2,306 million, an increase of 25.39% over 2018. Interest income from financial assets held under resale agreements stood at RMB236 million, down 34.04% from 2018.

Interest income from financial investments In 2019, the Bank's interest income from financial investments at amortized cost and interest income from financial investments at FVOCI stood at RMB12,286 million in total, down 18.34% from 2018.

6.1.2.2.2 Interest expense

In 2019, the Bank's interest expense was RMB28,577 million, a decrease of 3.11% over 2018.

The table below sets forth the composition of the Bank's interest expense for the periods indicated.

(Unit: RMB1,000)

Item 2019 2018 % change Interest expense on deposits from customers 16,789,672 13,760,551 22.01 Interest expense on bonds payable 7,207,783 8,440,069 -14.60 Interest expense on deposits from banks and other financial institutions 2,302,108 5,045,367 -54.37 Interest expense on borrowing from the central bank 941,840 879,054 7.14 Interest expense on financial assets sold under repurchase agreements 682,957 588,706 16.01 Interest expense on placements from banks and other financial institutions 652,526 779,845 -16.33

Total interest expense 28,576,886 29,493,592 -3.11

16 Interest expense on deposits from customers In 2019, the Bank recorded interest expense on deposits from customers of RMB16,790 million, up 22.01% over the previous year.

The table below sets forth the average balance, interest expense and average cost ratio of the Bank's corporate deposits, deposits from individuals, pledged deposits and others for the periods indicated.

(Unit: RMB1,000)

2019 2018 Average Average Item Average Interest Average Interest cost ratio cost ratio balance expense balance expense (%) (%) Corporate deposits 418,149,808 10,345,060 2.47 452,476,259 10,498,051 2.32 Incl.: Demand 175,765,717 1,267,951 0.72 213,861,105 1,589,855 0.74 Time 242,384,091 9,077,109 3.74 238,615,154 8,908,196 3.73

Deposits from individuals 46,660,701 1,059,007 2.27 28,661,862 602,350 2.10 Incl.: Demand 21,341,432 76,176 0.36 14,186,242 50,958 0.36 Time 25,319,269 982,831 3.88 14,475,620 551,392 3.81 Pledged deposits and others 164,798,094 5,385,605 3.27 93,614,828 2,660,150 2.84

Total deposits 629,608,603 16,789,672 2.67 574,752,949 13,760,551 2.39

Interest expense on borrowing from the central bank, deposits and placements from banks and other financial institutions, and on financial assets sold under repurchase agreements In 2019, the Bank's interest expense on borrowing from the central bank, and deposits and placements from banks and other financial institutions declined by 41.88% from the previous year to RMB3,896 million, and interest expense on financial assets sold under repurchase agreements rose by 16.01% to RMB683 million.

Interest expense on bonds payable In 2019, the Bank recorded interest expense of RMB7,208 million on bonds payable, a decrease of 14.60% over the previous year.

6.1.2.2.3 Net interest spread and net interest margin

In 2019, the Bank's net interest spread was 2.03%, an increase of 0.57 percentage point from the previous year. The net interest margin rose by 0.67 percentage point to 2.21%.

17 The table below sets forth the Bank's interest-generating assets and interest-bearing liabilities for the periods indicated.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Item Average Interest Average Average Interest Average balance income yield (%) balance income yield (%) Assets Loans and advances 637,887,815 36,658,748 5.75 533,577,393 27,479,536 5.15 Financial investments 268,466,459 12,286,730 4.58 320,616,883 15,045,678 4.69 Deposits with the central bank 79,069,481 1,152,852 1.46 87,118,582 1,264,608 1.45 Deposits with banks and other financial institutions 32,133,827 822,305 2.56 19,893,954 311,875 1.57 Placements with banks and other financial institutions 9,292,034 331,144 3.56 10,064,354 262,780 2.61 Financial assets held under resale agreements 11,078,584 235,512 2.13 14,787,107 357,047 2.41

Total interest-generating assets 1,037,928,200 51,487,291 4.96 986,058,273 44,721,524 4.54 31 December 2019 31 December 2018 Average Average Item Average Interest Average Interest cost ratio cost ratio balance expense balance expense (%) (%) Liabilities Deposits from customers 629,608,603 16,789,672 2.67 574,752,949 13,760,551 2.39 Deposits from banks and other financial institutions 75,744,377 2,302,108 3.04 121,082,898 5,045,367 4.17 Placements from banks and other financial institutions 21,021,980 652,526 3.10 29,831,770 779,845 2.61 Financial assets sold under repurchase agreements 26,401,305 682,957 2.59 20,108,570 588,706 2.93 Bonds payable 194,448,380 7,207,783 3.71 186,480,607 8,440,069 4.53 Borrowing from the central bank and others 28,657,534 941,840 3.29 26,716,438 879,054 3.29

Total interest-bearing liabilities 975,882,179 28,576,886 2.93 958,973,232 29,493,592 3.08 Net interest income - 22,910,405 - - 15,227,932 - Net interest spread - - 2.03 - - 1.46 Net interest margin - - 2.21 - - 1.54 Notes: 1. Net interest spread is the average yield on total interest-generating assets minus the average cost ratio of total interest-bearing liabilities. 2. Net interest margin is the result of dividing net interest income by average balance of total interest- generating assets.

18 6.1.2.3 Net fee and commission income

In 2019, the Bank recorded a net fee and commission income of RMB4,226 million, a drop of 33.53% from the previous year. It was mainly attributed to the considerable decrease in the agency service and consulting service fee income on the one hand, and to the substantial increase in information service fee expense driven by thriving retail consumer loans on the other hand.

The table below sets forth the major components of the Bank's net fee and commission income for the periods indicated.

(Unit: RMB1,000)

Item 2019 2018 % change Fee and commission income 5,434,275 7,128,699 -23.77 Incl.: Agency service fees 2,455,269 2,933,795 -16.31 Custodian service fees 1,090,351 1,331,503 -18.11 Consulting service fees 678,372 1,673,350 -59.46 Settlement and clearing fees 486,237 381,248 27.54 Credit commitments and asset management fees 279,897 330,098 -15.21 Bank card fees 153,875 86,475 77.94 Others 290,274 392,230 -25.99 Fee and commission expense 1,208,526 771,363 56.67 Incl.: Information service fees 936,113 420,886 122.41 Bank card fees 115,467 143,954 -19.79 Agency service fees 72,591 124,061 -41.49 Settlement and clearing fees 37,272 52,904 -29.55 Consulting service fees 32,916 19,306 70.50 Others 14,167 10,252 38.19 Net fee and commission income 4,225,749 6,357,336 -33.53

6.1.2.4 Investment gain

In 2019, the Bank's investment gain totaled RMB437 million, down 77.85% from 2018.

The table below sets forth the major components of the Bank's investment gain for the periods indicated.

(Unit: RMB1,000)

Item 2019 2018 % change Financial investments at fair value through profit or loss (FVTPL) 366,735 2,571,350 -85.74 Financial investments at amortized cost 73,184 8,896 722.66 Financial investments at FVOCI 48,140 57,774 -16.68 Derivative financial instruments 1,766 -30,450 N/A Precious metals 11 -635,093 N/A Long-term equity investments -52,771 1,045 N/A Total 437,065 1,973,522 -77.85

19 6.1.2.5 General and administrative expenses

In 2019, the Bank's general and administrative expenses totaled RMB8,228 million, up by 0.13% over 2018.

The table below sets forth the major components of the Bank's general and administrative expenses for the periods indicated.

(Unit: RMB1,000)

Item 2019 2018 % change Staff costs 5,350,863 5,243,259 2.05 Business expenses 1,410,800 1,569,372 -10.10 Operating lease expenses 886,993 856,964 3.50 Depreciation and amortization 578,894 547,180 5.80

Total 8,227,550 8,216,775 0.13

6.1.2.6 Credit impairment losses

The Bank prudently sets aside impairment losses on credit in strict compliance with regulatory requirements. In 2019, RMB9,567 million was recognized as credit impairment losses, up by 47.00% over the credit impairment losses recognized in the same period of the previous year. Specifically, RMB8,789 million was recognized as credit impairment losses on loans and advances, RMB807 million was recognized as credit impairment losses on investments, and RMB29 million of other credit impairment losses were reversed.

6.1.2.7 Income tax expense

In 2019, the Bank's income tax expense was RMB1,709 million, with an effective tax rate of 17.02%. The income tax expense increased due to the rise in profit before income tax in the reporting period on the one hand, and the removal of adjustments arising from the shift of standards in previous years on the other hand.

6.1.3 Items of balance sheet

6.1.3.1 Asset items

As at the end of 2019, the Bank's total assets were RMB1,113,117 million, an increase of 7.60% over the beginning of the year. The growth of assets was primarily attributed to the rapid increase of loans and advances to customers.

6.1.3.1.1 Loans and advances

As at the end of 2019, the Bank's loans and advances (including discounted bills) amounted to RMB710,880 million, an increase of 25.27% over the beginning of the year.

20 The table below sets forth the Bank's loans and advances by product type on the dates indicated.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Item % change Amount % Amount % Corporate loans and advances 465,224,102 65.44 384,402,554 67.74 21.03 Discounted bills 9,413,518 1.32 13,211,434 2.33 -28.75 Personal loans 233,419,910 32.84 167,839,721 29.58 39.07 Interest accrued 2,822,439 0.40 2,018,557 0.35 39.82

Total loans and advances 710,879,969 100.00 567,472,266 100.00 25.27

6.1.3.1.2 Placements with banks and other financial institutions and financial assets held under resale agreements

As at the end of 2019, the Bank's placements with banks and other financial institutions reported RMB4,411 million, increased by 114.21% from the beginning of the year, and financial assets held under resale agreements amounted to RMB1,850 million, down 82.50% from the beginning of the year.

The table below sets forth the composition of the Bank's placements with banks and other financial institutions on the dates indicated.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Item % change Amount % Amount % Placements with domestic banks 4,400,725 99.57 1,994,102 96.64 120.69 Interest accrued 18,952 0.43 69,241 3.36 -72.63

Total 4,419,677 100.00 2,063,343 100.00 114.20 Less: Allowance for impairment losses -8,868 N/A -4,208 N/A 110.74

Net book value 4,410,809 N/A 2,059,135 N/A 114.21

The table below sets forth the particulars about the Bank's financial assets held under resale agreements on the dates indicated.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Item % change Amount % Amount % Financial bonds 1,850,000 99.96 9,827,712 92.95 -81.18 Government bonds - - 737,400 6.97 -100.00 Interest accrued 664 0.04 8,186 0.08 -91.89

Total 1,850,664 100.00 10,573,298 100.00 -82.50 Less: Allowance for impairment losses -406 N/A -2,282 N/A -82.21

Net book value 1,850,258 N/A 10,571,016 N/A -82.50

21 6.1.3.1.3 Investments and other financial assets

As at the end of 2019, the Bank's investments and other financial assets totaled RMB296,847 million, down by 4.20% over the beginning of the year. The table below sets forth the composition of the Bank's investments and other financial assets (excluding interest accrued) on the dates indicated. (Unit: RMB1,000)

31 December 2019 31 December 2018 Item % change Amount % Amount % Financial investments at FVTPL 36,238,313 12.21 23,193,080 7.48 56.25 Financial investments at FVOCI 64,054,635 21.58 44,672,245 14.42 43.39 Financial investments at amortized cost 196,395,136 66.16 241,554,267 77.95 -18.70 Derivative financial assets 158,709 0.05 393,405 0.13 -59.66 Long-term equity investments - - 52,771 0.02 -100.00 Total 296,846,793 100.00 309,865,768 100.00 -4.20

6.1.3.1.4 Top 10 government bonds held by the Bank as at the end of 2019 (Unit: RMB1,000)

Bond Amount Rate of return (%) Maturity date Government Bond A 3,280,000 2.6900 7 March 2022 Government Bond B 3,000,000 2.8600 1 June 2021 Government Bond C 2,620,000 3.1400 8 September 2020 Government Bond D 2,530,000 3.1000 28 May 2020 Government Bond E 2,500,000 3.3100 5 February 2020 Government Bond F 2,260,000 2.4400 21 February 2021 Government Bond G 2,230,000 3.2200 6 December 2025 Government Bond H 2,110,000 3.2900 18 October 2023 Government Bond I 1,980,000 2.3100 17 January 2020 Government Bond J 1,950,000 3.1900 11 April 2024

6.1.3.1.5 Top 10 financial bonds held by the Bank as at the end of 2019 (Unit: RMB1,000)

Bond Amount Rate of return (%) Maturity date Financial Bond A 4,760,000 3.3000 21 November 2021 Financial Bond B 3,890,000 3.9800 19 April 2020 Financial Bond C 3,100,000 3.1200 17 July 2022 Financial Bond D 2,500,000 4.2400 1 June 2021 Financial Bond E 2,460,000 3.8800 19 April 2020 Financial Bond F 2,170,000 4.0700 27 April 2021 Financial Bond G 2,150,000 4.8200 24 January 2021 Financial Bond H 2,050,000 3.4200 2 July 2024 Financial Bond I 1,850,000 3.3000 1 February 2024 Financial Bond J 1,600,000 3.2000 3 April 2022

22 6.1.3.1.6 Financial derivatives trading

The Bank's financial derivatives trading mainly includes interest rate swaps, exchange rate swaps and exchange rate forwards. The Bank flexibly used a wide variety of derivative financial instruments to hedge exchange rate and interest rate risks and to facilitate bank-wide liquidity management, vigorously leveraged derivative financial instruments to hedge against risk exposure of transactions and to manage liability portfolio.

The contractual amount and fair value of outstanding derivative financial instruments held by the Bank as at the end of 2019 are as follows.

(Unit: RMB1,000)

31 December 2019 31 December 2018

Derivative financial instruments Contractual/ Fair value Contractual/ Fair value nominal nominal amount Assets Liabilities amount Assets Liabilities Exchange rate derivatives 16,354,888 58,805 (84,773) 10,399,515 330,232 (69,242) Incl.: Exchange rate swaps 15,694,803 47,843 (75,839) 7,042,660 261,465 (5,987) Exchange rate forwards 660,085 10,962 (8,934) 3,356,855 68,767 (63,255)

Interest rate derivatives 149,834,098 79,267 (68,938) 131,872,911 63,173 (71,359) Incl.: Interest rate swaps 149,834,098 79,267 (68,938) 131,872,911 63,173 (71,359) Option contracts 1,837,080 20,637 (18,047) - - -

Total 168,026,066 158,709 (171,758) 142,272,426 393,405 (140,601)

6.1.3.1.7 Items related to fair value measurement

The table below sets forth items related to fair value measurement of the Bank.

(Unit: RMB1,000)

Cumulative Gain/loss on Impairment 31 December changes in fair 31 December Item changes in fair made in 2018 value recognized 2019 value in 2019 2019 in equity Financial assets 82,454,463 294,135 73,247 817,111 110,623,840 Incl.: 1. Financial assets at FVTPL 24,177,380 528,831 N/A - 36,996,978 2. Derivative financial assets 393,405 -234,696 N/A - 158,709 3. Financial assets at FVOCI 57,883,678 N/A 73,247 817,111 73,468,153

Financial liabilities 140,601 31,157 N/A - 171,758 Incl.: Derivative financial liabilities 140,601 31,157 N/A - 171,758

Note: No items in the table above are necessarily interrelated in calculations. The assets and liabilities mentioned above exclude interest accrued.

23 6.1.3.2 Liability items

As at the end of 2019, the Bank's total liabilities reached RMB1,030,335 million, an increase of 5.29% over the beginning of the year. The growth was primarily driven by the increase of amounts borrowing from the central bank and deposits from customers.

6.1.3.2.1 Deposits from customers

As at the end of 2019, the Bank's deposits from customers stood at RMB647,765 million, an increase of 6.77% over the beginning of the year.

The table below sets forth the Bank's deposits from customers by product type and customer type on the dates indicated.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Item % change Amount % Amount % Corporate deposits 585,788,237 90.43 563,387,883 92.86 3.98 Incl.: Demand 184,648,402 28.51 195,809,829 32.27 -5.70 Time 401,139,835 61.92 367,578,054 60.59 9.13 Deposits from individuals 52,146,661 8.05 34,778,807 5.73 49.94 Incl.: Demand 18,912,350 2.92 17,583,058 2.90 7.56 Time 33,234,311 5.13 17,195,749 2.83 93.27 Interest accrued 9,829,652 1.52 8,534,706 1.41 15.17 Total 647,764,551 100.00 606,701,396 100.00 6.77

The table below sets forth the Bank's deposits from customers by currency on the dates indicated.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Item % change Amount % Amount % RMB 607,404,401 93.77 583,118,544 96.11 4.16 Foreign currencies equivalent to RMB 40,360,150 6.23 23,582,852 3.89 71.14 Total 647,764,551 100.00 606,701,396 100.00 6.77

The table below sets forth the Bank's deposits from customers by residual maturity on the dates indicated.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Item Amount % Amount % Undated 258,777 0.04 245,501 0.04 Demand (spot) 185,303,287 28.61 180,734,528 29.79 Less than 1 month 62,388,941 9.63 77,647,970 12.80 1 to 3 months 52,474,341 8.10 63,493,887 10.46 3 to 12 months 181,369,406 28.00 188,224,194 31.02 1 to 5 years 159,719,112 24.66 92,684,944 15.28 Over 5 years 6,250,687 0.96 3,670,372 0.61 Total 647,764,551 100.00 606,701,396 100.00

24 6.1.3.2.2 Financial assets sold under repurchase agreements

As at the end of 2019, the Bank's financial assets sold under repurchase agreements totaled RMB23,069 million, up 3.15% over the beginning of the year.

The table below sets forth the particulars about the Bank's financial assets sold under repurchase agreements on the dates indicated.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Item % change Amount % Amount % Bills 2,257,310 9.78 5,978,744 26.73 -62.24

Bonds 20,789,270 90.12 16,362,680 73.17 27.05 Incl.: Financial bonds 12,028,190 52.14 7,049,840 31.52 70.62 Government bonds 8,761,080 37.98 9,312,840 41.65 -5.92 Interest accrued 22,513 0.10 22,330 0.10 0.82

Total 23,069,093 100.00 22,363,754 100.00 3.15

6.1.3.3 Shareholders' equity

As at the end of 2019, the shareholders' equity of the Bank was RMB82,781 million, up RMB26,922 million or 48.20% over the end of 2018, which was mainly due to the issuance of undated capital bonds and increase in net profit in 2019.

The table below sets forth the composition of the shareholders' equity of the Bank on the dates indicated.

(Unit: RMB1,000)

Item 31 December 2019 31 December 2018 31 December 2017 Share capital 14,450,000 14,450,000 14,450,000 Other equity instruments 19,961,604 - - Capital surplus 20,000 20,000 20,000 Other comprehensive income 969,493 283,412 -469,122 Surplus reserve 5,009,612 4,176,059 3,468,043 General reserve for risk assets 14,081,733 12,641,306 12,562,941 Retained earnings 28,288,936 24,288,344 18,433,440

Total 82,781,378 55,859,121 48,465,302

25 6.1.3.4 Off-balance sheet items that might exert material impact on financial position and business performance of the Bank

The table below sets forth the balance of the Bank's major off-balance sheet items as at the end of 2019.

(Unit: RMB1,000)

Item 31 December 2019 31 December 2018 Bank acceptances 167,506,456 155,296,893 Letters of credit 67,528,818 68,464,136 Letters of guarantee 21,315,136 25,619,242 Credit card overdraft commitment 5,069,857 5,290,947 Irrevocable loan commitments - 830,300 Operating lease commitments 4,727,080 4,626,139 Capital commitments 142,458 222,050

6.1.3.5 Market share of major products and services

According to the Summary of Sources & Uses of Credit Funds of December 2019 issued by PBC, the Bank's market share among 12 national joint-stock commercial banks in the Chinese mainland in terms of deposits and loans as at the end of 2019 is shown below.

Item Market share (%) Total deposits 2.14 Incl.: Total savings deposits 0.78 Total loans 2.38

6.1.4 Items of cash flow statement

In 2019, the Bank's net cash outflow from operating activities, net cash inflow from investing activities and net cash outflow from financing activities were RMB42,370 million, RMB27,207 million and RMB11,382 million, respectively. The year-end balance of cash and cash equivalents was RMB42,695 million.

6.1.5 Other financial information

6.1.5.1 Change in interest accrued off the balance sheet and bad debt provisions for other receivables

6.1.5.1.1 Change in off-balance sheet interest accrued (Unit: RMB1,000)

Item Opening balance Increase Collection Closing balance Off-balance sheet interest accrued 3,107,285 1,955,531 841,181 4,221,635

6.1.5.1.2 Bad debt provisions

The Bank did not set aside any bad debt provisions for other receivables.

26 6.1.5.2 Foreclosed assets

The Bank had no foreclosed assets in 2019.

6.1.5.3 Credit impairment losses

In 2019, the Bank set aside provisions for credit impairment losses on loans and advances, financial investments and others.

6.1.5.4 Overdue debts

The Bank had no overdue debts as at the end of 2019.

6.1.6 Analysis of capital adequacy ratio

The Bank calculates its capital adequacy ratios according to Capital Rules for Commercial Banks (Provisional) and other pertinent regulations. As at the end of 2019, core tier 1 CAR, tier 1 CAR and CAR of the Bank stood at 8.06%, 10.63% and 13.07% respectively, with CAR at all levels meeting regulatory requirements.

The calculation of capital adequacy ratios covers the Bank and financial institutions directly or indirectly invested by the Bank as specified in the Capital Rules for Commercial Banks (Provisional). The table below sets forth the items concerning CAR calculation at all tiers in accordance with the aforementioned capital rules.

(Unit: RMB1,000)

Item 31 December 2019 31 December 2018 Core tier 1 capital 62,819,774 55,859,121 Core tier 1 capital regulatory deductions -232,140 -123,054

Net core tier 1 capital 62,587,634 55,736,067 Other tier 1 capital 19,961,604 -

Net tier 1 capital 82,549,238 55,736,067 Tier 2 capital 18,914,482 20,468,492 Incl.: Recognizable part of tier 2 capital entitled to preferential policy in the transitional period 946,747 946,376 Tier 2 capital regulatory deductions - -

Net capital 101,463,720 76,204,559 Capital adequacy ratio (%) 13.07 11.77 Tier 1 capital adequacy ratio (%) 10.63 8.61 Core tier 1 capital adequacy ratio (%) 8.06 8.61

The table below sets forth the risk-weighted assets measured according to the same capital rules. To be specific, credit risk weighted assets, market risk weighted assets and operational risk weighted assets are measured by method of weighting, the standardized approach and the basic indicator approach, respectively.

27 (Unit: RMB1,000)

Item 31 December 2019 31 December 2018 Credit risk weighted assets 727,158,613 602,509,350 Incl.: On-balance sheet credit risk 664,964,981 541,451,888 Off-balance sheet credit risk 61,677,273 60,992,984 Credit risk of counterparties 516,359 64,478 Market risk weighted assets 1,454,974 698,635 Operational risk weighted assets 47,739,953 44,014,352 Total 776,353,540 647,222,337 Under the information disclosure requirements regarding asset securitization in Appendix 15 of the Capital Rules for Commercial Banks (Provisional), as at the end of 2019, the Bank's on-balance sheet credit risk exposures included RMB35,271 million of on-balance sheet securitization risk exposures and RMB7,054 million of risk-weighted assets.

6.1.7 Leverage ratio

In 2019, the Bank measured the leverage ratio according to the Leverage Ratio Rules for Commercial Banks (Revised) and other applicable regulations, detailed as follows. (Unit: RMB1,000)

Item 31 December 2019 31 December 2018 Tier 1 capital 82,781,378 55,859,121 Deductions from tier 1 capital -232,140 -123,054 Total on- and off-balance sheet assets after adjustments 1,327,961,659 1,233,974,837 Incl.: Total on-balance sheet assets after adjustments 1,110,875,661 1,023,369,760 Total off-balance sheet assets after adjustments 213,537,311 199,542,432 Others 3,548,687 11,062,645 Leverage ratio (%) 6.22 4.52 Note: "Others" include the balances of derivatives and securities margin trading assets.

6.1.8 Loan quality analysis (excluding interest accrued)

6.1.8.1 Distribution of loans by five-category classification (Unit: RMB1,000)

31 December 2019 31 December 2018 31 December 2017 Category Amount % Amount % Amount % Normal loans 674,702,232 95.29 538,732,182 95.28 441,782,884 95.03 Special mention loans 20,763,849 2.93 16,304,758 2.88 14,996,831 3.23 NPLs 12,591,449 1.78 10,416,769 1.84 8,110,118 1.74 Incl.: Substandard loans 4,010,263 0.57 3,241,038 0.57 4,070,660 0.87 Doubtful loans 6,365,517 0.90 5,864,920 1.04 3,537,884 0.76 Loss loans 2,215,669 0.31 1,310,811 0.23 501,574 0.11 Total loans 708,057,530 100.00 565,453,709 100.00 464,889,833 100.00 Note: The amount of loans above includes the amount of discounted bills.

28 6.1.8.2 Loan migration (In %)

Item 31 December 2019 31 December 2018 31 December 2017 Normal loan migration ratio 2.71 1.15 3.56 Special mention loan migration ratio 22.84 27.09 38.51 Substandard loan migration ratio 76.28 99.71 80.08 Doubtful loan migration ratio 13.98 38.48 27.45

6.1.8.3 Distribution of loans and NPLs by product type (Unit: RMB1,000)

31 December 2019 31 December 2018 Category NPL NPL Loans % NPLs Loans % NPLs ratio (%) ratio (%) Corporate loans 465,224,102 65.70 11,324,839 2.43 384,402,554 67.98 9,736,893 2.53 Incl.: Short-term corporate loans 155,725,026 21.99 9,199,181 5.91 113,921,447 20.15 7,536,269 6.62 Medium and long-term corporate loans 309,499,076 43.71 2,125,658 0.69 270,481,107 47.83 2,200,624 0.81

Discounted bills 9,413,518 1.33 - - 13,211,434 2.34 42,623 0.32 Incl.: Bank acceptances 7,111,743 1.00 - - 13,034,692 2.31 - - Commercial acceptances 2,301,775 0.33 - - 176,742 0.03 42,623 24.12

Personal loans 233,419,910 32.97 1,266,610 0.54 167,839,721 29.68 637,253 0.38 Incl.: Residential and commercial housing loans 127,816,279 18.05 311,538 0.24 113,806,986 20.12 194,201 0.17 Personal consumption loans 95,605,758 13.50 601,542 0.63 48,496,454 8.58 193,970 0.40 Personal business loans 6,711,807 0.95 277,019 4.13 3,751,685 0.66 223,968 5.97 Credit cards 3,286,066 0.47 76,511 2.33 1,784,594 0.32 25,114 1.41

Total loans 708,057,530 100.00 12,591,449 1.78 565,453,709 100.00 10,416,769 1.84

29 6.1.8.4 Distribution of corporate loans and NPLs by industry

(Unit: RMB1,000)

31 December 2019 31 December 2018 Category NPL NPL Loans % NPLs Loans % NPLs ratio (%) ratio (%) Lease, commerce and business services 137,274,963 19.39 647,630 0.47 114,971,882 20.33 597,291 0.52 Real estate 109,253,881 15.43 150,701 0.14 90,288,704 15.97 539,414 0.60 Manufacturing 60,302,305 8.52 6,680,759 11.08 48,896,489 8.65 5,228,577 10.69 Water conservancy, environment and public facilities management 50,870,045 7.18 30,000 0.06 48,193,295 8.52 30,000 0.06 Wholesale and retail 37,309,397 5.27 1,561,334 4.18 24,627,350 4.36 1,863,907 7.57 Construction 19,738,814 2.79 366,972 1.86 16,760,049 2.96 153,102 0.91 Transportations and communications, storage and post 14,567,757 2.06 45,172 0.31 10,885,750 1.93 44,646 0.41 Mining 7,737,664 1.09 411,164 5.31 4,444,473 0.79 411,164 9.25 Production and supply of electricity, gas and water 6,880,007 0.97 49,861 0.72 6,349,278 1.12 65,518 1.03 Financing 5,628,543 0.79 500,000 8.88 3,472,900 0.61 - - Public utilities, social security and social organizations 5,287,000 0.75 - - 5,848,000 1.03 - - Education 2,246,370 0.32 - - 2,636,450 0.47 - - Information transfer, software and IT services 1,235,844 0.17 30,000 2.43 1,015,865 0.18 - - Others 6,891,512 0.97 851,246 12.35 6,012,069 1.06 803,274 13.36

Total corporate loans 465,224,102 65.70 11,324,839 2.43 384,402,554 67.98 9,736,893 2.53

Note: The above percentage is proportion of loans to each industry in total loans of the Bank.

30 6.1.8.5 Distribution of loans and NPLs by geographical area

(Unit: RMB1,000)

31 December 2019 31 December 2018 Category NPL NPL Loans % NPLs Loans % NPLs ratio (%) ratio (%) Northern and Northeastern China 326,296,386 46.08 7,215,263 2.21 260,192,726 46.01 5,961,322 2.29 Eastern China 159,014,593 22.46 3,405,342 2.14 123,565,419 21.85 2,688,990 2.18 Central and Southern China 167,258,342 23.62 1,277,418 0.76 129,867,956 22.97 1,041,531 0.80 Western China 55,488,209 7.84 693,426 1.25 51,827,608 9.17 724,926 1.40

Total loans 708,057,530 100.00 12,591,449 1.78 565,453,709 100.00 10,416,769 1.84 Note: The regions are classified as follows: Northern and Northeastern China includes the Head Office, Beijing Branch, Tianjin Branch, Tianjin Binhai New Area Branch, Tianjin Pilot Free Trade Zone Branch, Dalian Branch, Hohhot Branch, Taiyuan Branch, Shijiazhuang Branch, Changchun Branch and Shenyang Branch. Eastern China includes Nanjing Branch, Hangzhou Branch, Ji'nan Branch, Shanghai Branch, Shanghai Pilot Free Trade Zone Branch, Hefei Branch, Suzhou Branch, Qingdao Branch, Ningbo Branch and Nanchang Branch. Central and Southern China includes Guangzhou Branch, Shenzhen Branch, Shenzhen Qianhai Branch, Hong Kong Representative Office, Changsha Branch, Wuhan Branch, Fuzhou Branch, Zhengzhou Branch, Xiamen Pilot Free Trade Zone Branch, Haikou Branch and Nanning Branch. Western China includes Chengdu Branch, Xi'an Branch and Chongqing Branch.

6.1.8.6 Distribution of loans and NPLs by guarantee type

(Unit: RMB1,000)

31 December 2019 31 December 2018 Category NPL NPL Loans % NPLs Loans % NPLs ratio (%) ratio (%) Collateralized loans 236,573,764 33.40 3,005,355 1.27 193,532,395 34.23 3,271,456 1.69 Pledged loans 71,142,981 10.05 48,531 0.07 48,596,635 8.59 77,250 0.16 Guaranteed loans 248,288,907 35.07 8,224,530 3.31 216,786,446 38.34 6,191,794 2.86 Unsecured loans 142,638,360 20.15 1,313,033 0.92 93,326,799 16.50 833,646 0.89 Discounted bills 9,413,518 1.33 - - 13,211,434 2.34 42,623 0.32

Total loans 708,057,530 100.00 12,591,449 1.78 565,453,709 100.00 10,416,769 1.84

31 6.1.8.7 Distribution of loans by overdue period

The overdue loans were RMB21,677.62 million at the year end, up RMB7,956.73 million over the beginning of 2019.

(Unit: RMB1,000)

31 December 2019 31 December 2018 Category Loans % Loans % Overdue for less than 3 months 10,653,312 1.50 3,405,769 0.60 Overdue for 3 to 12 months 2,815,404 0.40 2,872,211 0.51 Overdue for 1 to 3 years 4,645,943 0.66 6,156,863 1.09 Overdue for more than 3 years 3,562,961 0.50 1,286,049 0.23

Total overdue loans 21,677,620 3.06 13,720,892 2.43 Total loans 708,057,530 100.00 565,453,709 100.00

6.1.8.8 Loans to top 10 borrowers

(Unit: RMB1,000)

31 December 2019 Borrower Industry % of net % of total Loans NPLs capital loans Customer A Lease, commerce and business services 6,467,854 - 6.37 0.91 Customer B Manufacturing 6,337,472 - 6.25 0.89 Customer C Real estate 5,760,000 - 5.68 0.81 Customer D Manufacturing 5,012,714 - 4.94 0.71 Customer E Lease, commerce and business services 4,950,000 - 4.88 0.70 Customer F Lease, commerce and business services 4,670,000 - 4.60 0.66 Customer G Manufacturing 4,497,775 - 4.43 0.64 Customer H Public utilities, social security and social 4,241,000 - 4.18 0.60 organizations Customer I Lease, commerce and business services 3,458,998 - 3.41 0.49 Customer J Lease, commerce and business services 3,436,000 - 3.39 0.49

Total - 48,831,813 - 48.13 6.90

32 6.1.8.9 Restructured loans

Restructured loans are loans rescheduled to accommodate borrowers' deteriorating financial position or inability to repay loans. As at the end of 2019, the balance of restructured loans at the Bank totaled RMB6,510,659.6 thousand, up 104.72% over the beginning of the year.

6.1.8.10 Risk management of credit to group customers

The Bank attached great importance to risk management of credit to group customers. It put the relationships with such customers under online management and kept enhancing its management capabilities. The Bank improved risk identification and control in the investigation, review and approval of credit, and prudently dealt with uncertainties incurred from complex equity structure and diversified operations. It strictly reviewed the authenticity of borrowing background and the credibility of payment source to prevent enterprises from whitewashing financial statements or transferring funds through illegitimate related party transactions. It made better judgment on development prospect of group customers, extended credit to core companies and businesses of such groups, and prevented embezzlement, long-term utilization of short-term loans and credit repurposed for other projects or operations. In addition, the Bank made in-depth analysis of each group customer on its scale, growth potential, risk tolerance and credit from other banks, and rationally decided every credit line based on the capital position and risk tolerance of the Bank, to avoid risks arising from over-concentration of credit. It established an early warning mechanism for collecting and analyzing group customer information to issue alerts and take countermeasures in a timely manner.

6.1.8.11 Allowance for impairment losses on loans

The Bank has implemented new financial instrument standards during the reporting period, and set aside allowance for impairment losses on loans via "expected credit loss" model. Under this model, the Bank does not have to confirm the impairment losses after the loss event, but must confirm and measure the 12-month expected credit loss or the expected credit loss in the entire duration based on the relevant assets and facts and circumstances, so that credit losses will be confirmed earlier.

Based on whether the loan credit risk has increased significantly since the initial confirmation, the Bank divided each business into three risk stages and accrued expected credit losses. Stage 1: For financial instruments of which the credit risk has not significantly increased since initial confirmation, their expected credit losses in the next 12 months need to be confirmed. Stage 2: For financial instruments of which the credit risk has significantly increased since initial confirmation but there is no objective evidence for impairment, their expected credit losses in the entire duration need to be confirmed. Stage 3: For financial instruments with objective evidence for impairment on the balance sheet date, their expected credit losses in the entire duration need to be confirmed.

In the expected credit loss model, it is necessary to consider the impact of the macroeconomic situation and its future development trend on the probability of default (PD), that is, forward-looking adjustment of PD. The Bank established an appropriate statistical model to measure the impact of macroeconomic changes on PD. The calculation model of forward-looking adjustment factors will be regularly updated and maintained to ensure the validity of the model prediction, and the maintenance frequency is not lower than once a year.

33 6.1.8.11.1 Loans and advances at amortized cost (Unit: RMB1,000)

Item 2019 2018 2017 Opening balance 19,449,834 14,217,593 N/A Accrued in the year 8,777,247 7,225,606 N/A Transferred back in the year (3,677,460) (674,999) N/A Written-off in the year (1,040,889) (1,341,950) N/A Recovery of the transferred or written-off loans 89,534 11,360 N/A Movement due to exchange rate fluctuations 2,605 12,224 N/A

Closing balance 23,600,871 19,449,834 N/A

6.1.8.11.2 Loans and advances at FVOCI (Unit: RMB1,000)

Item 2019 2018 2017 Opening balance 25,233 5,060 N/A Accrued in the year 11,982 20,173 N/A Transferred back in the year - - N/A Written-off in the year - - N/A Recovery of the transferred or written-off loans - - N/A Movement due to exchange rate fluctuations - - N/A

Closing balance 37,215 25,233 N/A

6.1.8.12 Large-value risk exposure

The Bank strictly implemented the regulatory requirements set forth in the Management Measures for Large-value Risk Exposure of Commercial Banks to push forward with the management of large-value risk exposure. In 2019, the Bank gradually established a system of large-value risk exposure management, organized efforts to formulate relevant policies, maintained ongoing monitoring of large-value exposure changes and regularly submitted statistical reports to regulatory authority. Besides, the Bank kick-started the building of a large-value risk exposure system with the aim of enabling real-time monitoring and early warning of large-value exposures and effectively supporting large-value risk exposure management. Large- value risk exposures at the end of each quarter in 2019 met regulatory requirements.

6.2 Equity investment

As at the end of 2019, the Bank had shareholding in China UnionPay Co., Ltd., Nanyang Country Bank Co., Ltd. and Hawtai Motor Finance Co., Ltd.

6.2.1 Use of raised capital

The Bank did not use any raised capital for equity investment in 2019.

6.2.2 Use of non-raised capital

The Bank did not use any non-raised capital for equity investment in 2019.

34 6.2.3 Shareholding in listed companies and financial institutions

6.2.3.1 Shareholding in listed companies

The Bank obtained 44,022,400 shares of the listed company Fushun Special Steel Shares Co., Ltd. (stock code: 600399) through debt payment in stock. As at the end of 2019, the market value of the shares held by the Bank was RMB145,273,800.

6.2.3.2 Shareholding in financial institutions

(Unit: RMB1,000)

Shareholding as Shareholding as Change Book at 31 Dec. 2018 at 31 Dec. 2019 Gain/ in Initial value at Accounting Source Company loss in owner's investment In In the end item of shares 2019 equity 10,000 In % 10,000 In % of 2019 shares shares in 2019 China Equity UnionPay investments Co., Ltd. 150,000 6,000 2.05 6,000 2.05 150,000 9,000 - at FVOCI Investment Nanyang Equity Country Bank investments Co., Ltd. 50,000 5,000 10.00 5,000 10.00 50,000 - - at FVOCI Investment Hawtai Motor Long -term Finance equity Co., Ltd. 50,000 5,000 10.00 5,000 10.00 - -52,771 - investments Investment

6.3 2019 Profit distribution plan

On 27 March 2020, the 2019 Annual General Meeting passed a resolution on the appropriation of RMB833,553 thousand, 10% of the after-tax profit RMB8,335,537 thousand on the 2019 Financial Statements (audited, under the CAS) to the statutory surplus reserve, and the appropriation of RMB1,440,427 thousand to the general reserve for risk assets. No discretionary surplus reserve was provided and no dividend was distributed.

6.4 Cash dividends for the previous three years

(Unit: RMB1,000)

Item 2018 2017 2016 Cash dividends (pre-tax) 2,060,965 67,320 - Net profit 7,080,155 6,753,820 6,473,428 Ratio of cash dividends (pre-tax) to net profit (%) 29.11 1.00 -

6.5 Other issues requiring disclosure

The Bank had no other issues to disclose in 2019.

35 7. Significant Events

7.1 Material legal proceedings and arbitrations

The Bank was not involved in any major litigation or arbitration with significant impacts on its operation and management in 2019.

7.2 Increase or decrease of registered capital, acquisition & disposal of assets and merger

In 2019, the Bank's registered capital was changed from RMB8.5 billion to RMB14.45 billion with the approval of the General Meeting of Shareholders and the CBIRC. The Bank has completed the registration formalities for its registered capital change and obtained the new Business License reissued by the Tianjin Administration for Market Regulation.

The Bank did not have any material acquisition or disposal of assets or merger in 2019.

7.3 Implementation of equity incentive plan

The Bank did not implement any equity incentive plan in 2019.

7.4 Material related party transactions

7.4.1 Credit facilities

As at the end of 2019, the Bank's credit balance with related parties totaled RMB16,382,210.4 thousand (excluding the amount of margin deposits provided by the related parties and of pledged certificates of deposit and government bonds). Among which, there was a loan of RMB100 million classified as doubtful and there were 19 material related party transactions with a total balance of RMB16,008,682.3 thousand. The details are as follows.

(Unit: RMB1,000)

Opening Increase Decrease Closing Net closing Year-end form Terms of No. Related party balance in 2019 in 2019 balance balance of transaction guarantee 1 China Oceanwide 6,756,120 - - 6,756,120 6,756,120 Off-balance Pledge of Holdings Group sheet wealth shares Co., Ltd. management 2 TEDA Investment 2,314,750 4,062,000 2,740,750 3,636,000 3,636,000 Short- and Third-party Holding Co., Ltd. medium-term guarantee working capital loans, off-balance sheet wealth management 3 China Oceanwide 3,371,000 - 1,571,000 1,800,000 1,800,000 Medium-term Pledge of Group Limited working shares capital loan

36 (Unit: RMB1,000)

Opening Increase Decrease Closing Net closing Year-end form Terms of No. Related party balance in 2019 in 2019 balance balance of transaction guarantee 4 COSCO Shipyard 1,364,866 696,250 1,018,830 1,042,286 1,042,286 Medium-term Third-party Group Co., Ltd. working guarantee capital loan 5 Hwabao Finance 402,736 172,680 133,071 442,345 442,345 Medium-term Pledge & Leasing working of rents Co., Ltd. capital loan receivable 6 Nanjing Xincheng 500,000 440,000 500,000 440,000 440,000 Short-term Third-party Development working guarantee Co., Ltd. capital loan 7 Tianjin TEDA 387,300 740,000 687,300 440,000 440,000 Short-term Third-party Co., Ltd. working guarantee capital loan 8 Tianjin Jianda 1,000,000 - 600,000 400,000 400,000 Off-balance Third-party Property sheet wealth guarantee, Development management mortgage Co., Ltd. with project under construction 9 COSCO - 248,000 - 248,000 248,000 Medium-term Third-party Pacific (China) working guarantee Investment capital loan Co., Ltd. 10 Tianjin TEDA - 200,000 - 200,000 200,000 Short-term Third-party Energy Group working guarantee Co., Ltd. capital loan 11 COSCO Shipping - 199,860 - 199,860 159,888 Bank Third-party Leasing Co., Ltd. acceptance guarantee of electronic commercial drafts 12 Tianjin TEDA 205,320 - 51,310 154,010 154,010 Business Property Construction property mortgage, Group Co., Ltd. mortgage third-party loan guarantee 13 Tianjin Binhai 67,786 107,000 52,643 122,143 122,143 Real estate Land Rongtai Property development mortgage, Co., Ltd. loan third-party guarantee 14 Yangzhou TEDA 99,500 - 1,000 98,500 98,500 Medium-term Third-party Development & working guarantee Construction capital loan Co., Ltd. 15 UBS SDIC Fund 183,760 - 160,542 23,219 23,219 - - Management Co., Ltd.

37 (Unit: RMB1,000)

Opening Increase Decrease Closing Net closing Year-end form Terms of No. Related party balance in 2019 in 2019 balance balance of transaction guarantee 16 Tianjin TEDA - 20,000 - 20,000 20,000 Short-term Third-party Greening Group working guarantee Co., Ltd. capital loan 17 Tianjin TEDA - 10,000 - 10,000 10,000 Short-term Third-party Filters Co., Ltd. working guarantee capital loan 18 Tianjin Eco-City - 9,400 - 9,400 9,400 Fixed asset Third-party TEDA Marine loan guarantee Technology Development Co., Ltd. 19 Standard - 6,772 - 6,772 6,772 - - Chartered Bank (China) Limited Total 16,653,138 6,911,962 7,516,446 16,048,654 16,008,682 - - Notes: 1. The data above exclude the related party transactions that have been approved but not yet executed and exclude the amount of margin deposits provided by the related parties and of pledged certificates of deposit and government bonds. 2. The data above are collected based on CBIRC's definition for material related party transactions.

7.4.2 Additional information

As at the end of 2019, in all the loans to the Bank's customers, the loans guaranteed by related parties reported a balance at RMB8,196,813.5 thousand, and the balance of deposit from related parties with whom the Bank had material related party transactions was RMB747,304.4 thousand.

7.5 Major contracts and the enforcement thereof

7.5.1 Material custody, contracting and leasing

The Bank had no material trust, sub-contracting or lease for disclosure in 2019.

7.5.2 Material guarantees

The Bank had no material guarantee that needed to be disclosed except for guarantee services rendered within its business scope in 2019.

7.5.3 Other material contracts

The 15th Meeting of the Fourth Board of Directors approved the service center renovation project of the Head Office with a designed investment of RMB154,333.6 thousand. As at the end of 2019, a total of RMB4,724.9 thousand (including VAT of RMB280 thousand) had been spent on the project, of which, RMB332 thousand (including VAT of RMB18.8 thousand) was expended in 2019.

38 7.6 Capital tied up by controlling shareholder and other related parties

The Bank had no controlling shareholder. Neither had it any capital tied up by any related parties.

The Statement on Capital Tied up by Controlling Shareholder and Other Related Parties of CHINA BOHAI BANK CO., LTD. had been issued by the external auditor.

7.7 Appointment and dismissal of accounting firm

In 2019, the Bank appointed KPMG Huazhen LLP to audit its 2019 Financial Statements and Notes prepared in accordance with CAS pursuant to the resolution of the General Meeting.

7.8 Penalties imposed on the Bank and its directors, supervisors and senior executives

In 2019, no regulatory penalty with significant impacts on operation and management was imposed on the Bank. None of the directors, supervisors or senior executives was penalized.

7.9 Integrity information of the Bank

In 2019, there was no significant court judgment with which the Bank did not comply, neither was there any default on the Bank's debts of considerable amount.

7.10 Other major issues

7.10.1 Revising corporate governance policies

According to the requirements of the Interim Measures for Equity Management of Commercial Banks and other regulations on equity management as well as duty performance of the board of directors/supervisors of commercial banks, the Bank amended its Articles of Association, and approved it at the 50th General Meeting on 21 December 2018. In 2019, the Bank revised its Articles of Association to reflect the need for registered capital change, and the revision was approved at the 54th General Meeting on 10 September 2019. According to CBIRC's onsite examination, the guiding opinion given by the Inspection Group of the Tianjin Municipal Party Committee and the Bank's need to adjust the composition of the Board of Directors and Board of Supervisors, the Articles of Association was further revised, and the revision was approved at the 56th General Meeting on 14 November 2019. On 9 December 2019, CBIRC approved the revised Articles of Association of the Bank in the Reply to Revision of the Articles of Association by China Bohai Bank (Y.B.J.F. [2019] No.1100). According to the approved Articles of Association, the Bank revised the Procedural Rules for the General Meeting of Shareholders, the Procedural Rules for the Board of Directors, and the Procedural Rules for the Board of Supervisors and other policies, and had them approved at the 57th General Meeting on 16 December 2019.

7.10.2 Obtaining qualifications

On 13 November 2019, the Bank received the PBC's administrative permission for its eligibility as the central government's non-tax revenue collection agent.

39 7.10.3 Opening branches

7.10.3.1 Tier-1 branch

On 30 September 2019, in its Reply on the Opening of Nanning Branch of CHINA BOHAI BANK CO., LTD. (G.Y.B.J.F. [2019] No.536), CBIRC Guangxi Office approved the opening of Nanning Branch of the Bank, which is situated at the Podium 1-5/F, King's International Merchant Center, 59 Jinhu Road, Qingxiu District, Nanning City, Guangxi Zhuang Autonomous Region.

On 6 November 2019, in its Reply on the Opening of Nanchang Branch of CHINA BOHAI BANK CO., LTD. (G.Y.B.J.F. [2019] No.381), CBIRC Jiangxi Office approved the opening of Nanchang Branch of the Bank, which is situated at Flats 101, 102, 103, 201 and 210, Cuilin Building, 1266 Fenghezhong Avenue, Honggutan District, Nanchang City, Jiangxi Province.

7.10.3.2 Tier-2 branch

On 21 January 2019, in its Reply on the Opening of Yancheng Branch of CHINA BOHAI BANK CO., LTD. (Y.Y.B.J.F. [2019] No.4), CBIRC Yancheng Office approved the opening of Yancheng Branch affiliated to Nanjing Branch of the Bank, which is situated at 58-1 Kaifang Avenue, Tinghu District, Yancheng City, Jiangsu Province.

7.10.4 Dividend distribution in respect of special dividend payout

On 27 September 2019, according to the authorization granted to the Board of Directors by the General Meeting of Shareholders through the Resolution on Special Dividend Distribution regarding the Second Capital Increase of CHINA BOHAI BANK CO., LTD. adopted at its 47th meeting, and the Resolution on Distribution of Special Dividend Surplus regarding the Second Capital Increase of CHINA BOHAI BANK CO., LTD. adopted at the 44th Meeting of the Fourth Board of Directors, the Bank distributed RMB2,060,965,250 of special dividend surplus to non-trust shareholders that had fulfilled their contributions to the second capital increase in 2011, and handled dividend distribution matters in accordance with Article 224 of the Articles of Association of CHINA BOHAI BANK CO., LTD. (Revised in 2018). Distributions to shareholders are as follows: The Bank paid a dividend payable of RMB572,490,347.22 to TEDA Investment Holding Co., Ltd., a dividend payable of RMB457,763,281.64 to Standard Chartered Bank (Hong Kong) Limited (according to the relevant provisions of the national Enterprise Income Tax Law and the relevant content of the Hong Kong Tax Treaty, the Bank withheld an income tax of RMB45,776,328.16 for Standard Chartered Bank (Hong Kong) Limited), a dividend payable of RMB313,037,721.86 to China Shipping Investment Co., Ltd., a dividend payable of RMB267,238,494.08 to State Development & Investment Corp., Ltd., a dividend payable of RMB267,238,494.08 to China Baowu Steel Group Corporation Limited, and a dividend payable of RMB183,196,911.11 to Tianjin Shanghui Investment Holding Company Limited.

40 8. Financial Statements

8.1 Audit opinion

The 2019 Financial Statements of the Bank have been audited by KPMG Huazhen LLP in accordance with the China Standards on Auditing, and standard unqualified auditor's report has been issued.

8.2 The balance sheet, income statement, statement of changes in shareholders' equity and cash flow statement of the Bank

BALANCE SHEET AS AT 31 DECEMBER 2019

(Expressed in Renminbi '000 unless otherwise indicated)

Assets 31 December 2019 31 December 2018 Cash and deposits with the central bank 93,013,699 123,250,042 Deposits with banks and other financial institutions 14,051,627 25,923,142 Placements with banks and other financial institutions 4,410,809 2,059,135 Derivative financial assets 158,709 393,405 Financial assets held under resale agreements 1,850,258 10,571,016 Loans and advances to customers 687,279,098 548,022,432 Financial investments: -Financial investments at fair value through profit or loss 36,238,313 23,193,080 -Financial investments at fair value through other comprehensive income 64,967,327 45,569,455 -Financial investment measured at amortized cost 199,101,251 244,195,336 Long-term equity investments - 52,771 Fixed assets 3,649,388 3,693,378 Intangible assets 579,640 581,941 Deferred tax assets 6,365,091 5,065,922 Other assets 1,451,300 1,880,277

Total assets 1,113,116,510 1,034,451,332

41 BALANCE SHEET AS AT 31 DECEMBER 2019 (Continued)

(Expressed in Renminbi '000 unless otherwise indicated)

Liabilities and Shareholders' Equity 31 December 2019 31 December 2018 Liabilities Borrowing from the central bank 46,905,557 28,595,785 Deposits from banks and other financial institutions 78,547,430 69,587,853 Placements from banks and other financial institutions 21,500,177 19,534,990 Derivative financial liabilities 171,758 140,601 Financial assets sold under repurchase agreements 23,069,093 22,363,754 Deposits from customers 647,764,551 606,701,396 Tax payable 2,634,439 994,790 Provisions 810,624 982,081 Bonds payable 196,603,843 218,678,993 Other liabilities 12,327,660 11,011,968

Total liabilities 1,030,335,132 978,592,211 Shareholders' equity Share capital 14,450,000 14,450,000 Other equity instruments 19,961,604 - Capital surplus 20,000 20,000 Other comprehensive income 969,493 283,412 Surplus reserve 5,009,612 4,176,059 General reserve for risk assets 14,081,733 12,641,306 Retained earnings 28,288,936 24,288,344

Total shareholders' equity 82,781,378 55,859,121 Total liabilities and shareholders' equity 1,113,116,510 1,034,451,332

42 INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019 (Expressed in Renminbi '000 unless otherwise indicated)

2019 2018 Operating income Interest income 51,487,291 44,721,524 Interest expense (28,576,886) (29,493,592)

Net interest income 22,910,405 15,227,932 Fee and commission income 5,434,275 7,128,699 Fee and commission expense (1,208,526) (771,363)

Net fee and commission income 4,225,749 6,357,336 Investment gain 437,065 1,973,522 Including: (Losses)/gains from investments in associates and joint ventures (52,771) 1,045 Gains from the derecognition of financial assets measured at amortized cost 73,184 8,896 Other income 16,608 76,791 Gains/(losses) on changes in fair value 547,347 (147,405) Exchange gains/(losses) 107,508 (337,529) Other operating income 38,101 25,278 Losses from disposal of assets (548) (1,099)

Sub-total 28,282,235 23,174,826 Operating expenses Taxes and surcharges (354,167) (293,235) General and administrative expenses (8,227,550) (8,216,775) Credit impairment losses (9,566,913) (6,507,885) Other operating expenses (102,508) (128,249)

Sub-total (18,251,138) (15,146,144) Operating profit 10,031,097 8,028,682 Non-operating income 42,645 34,808 Non-operating expenses (29,111) (36,028)

Profit before income tax 10,044,631 8,027,462 Income tax expense (1,709,094) (947,307)

Net profit 8,335,537 7,080,155 Net profit of continuing operation 8,335,537 7,080,155 Net profit of discontinued operation - -

43 INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued) (Expressed in Renminbi '000 unless otherwise indicated)

2019 2018 Other comprehensive income 686,081 748,011 Other comprehensive income that may be reclassified to profit or loss Changes in fair value of financial investment at fair value through other comprehensive income 50,130 762,662 Provisions for credit losses on financial investments at fair value through other comprehensive income 603,847 (19,953) Changes in fair value of loans and advances to customers at fair value through other comprehensive income 23,117 (9,828) Provisions for credit losses on loans and advances to customers at fair value through other comprehensive income 8,987 15,130

Total comprehensive income for the year 9,021,618 7,828,166 Earnings per share (expressed in RMB per share) Basic earnings per share 0.58 0.49 Diluted earnings per share 0.58 0.49

44 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2019 (Expressed in Renminbi '000 unless otherwise indicated)

Other Other General Share Capital Surplus Retained equity comprehensive reserve for Total capital reserve reserve earnings instruments income risk assets At 1 January 2019 14,450,000 - 20,000 283,412 4,176,059 12,641,306 24,288,344 55,859,121 Net profit ------8,335,537 8,335,537 Other comprehensive income - - - 686,081 - - - 686,081

Total comprehensive income for the year - - - 686,081 - - 8,335,537 9,021,618 Other equity holders put in capital - 19,961,604 - - - - - 19,961,604 Profit appropriation: Appropriation for statutory surplus reserve - - - - 833,553 - (833,553) - Appropriation for general reserve for risk assets - - - - - 1,440,427 (1,440,427) - Dividend appropriation ------(2,060,965) (2,060,965)

At 31 December 2019 14,450,000 19,961,604 20,000 969,493 5,009,612 14,081,733 28,288,936 82,781,378

Other General Share Capital Surplus Retained comprehensive reserve for Total capital reserve reserve earnings income risk assets At 1 January 2018 14,450,000 20,000 (464,599) 3,468,043 12,562,941 18,061,890 48,098,275 Net profit - - - - - 7,080,155 7,080,155 Other comprehensive income - - 748,011 - - - 748,011

Total comprehensive income for the year - - 748,011 - - 7,080,155 7,828,166 Profit appropriation: Appropriation for statutory surplus reserve - - - 708,016 - (708,016) - Appropriation for general reserve for risk assets - - - - 78,365 (78,365) - Dividend appropriation - - - - - (67,320) (67,320)

At 31 December 2018 14,450,000 20,000 283,412 4,176,059 12,641,306 24,288,344 55,859,121

45 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019 (Expressed in Renminbi '000 unless otherwise indicated)

2019 2018 Cash flows from operating activities Net increase in deposits from customers 39,768,208 16,063,372 Net increase in amounts due to the central bank 18,300,000 4,000,000 Cash relating to interest, fee and commission received 46,777,894 41,447,497 Net decrease in deposits with the central bank and due from banks 33,781,806 - Net increase in placements from banks and other financial institutions 1,905,478 - Net increase in financial assets sold under repurchase agreements 705,156 20,127,620 Net decrease in financial assets held for trading 319,211 - Cash received relating to other operating activities 461,887 6,619,265

Sub-total of cash inflows 142,019,640 88,257,754 Net increase in loans and advances to customers (148,709,951) (102,978,262) Net increase in deposits with the central bank and due from banks - (13,146,218) Net decrease in balances deposits with banks and other financial institutions - (82,832,486) Net increase in financial assets held for trading - (560,487) Net increase in placements with banks and other financial institutions (2,750,725) (1,400,000) Net decrease in placements from banks and other financial institutions - (18,522,433) Cash paid on interest, fee and commission (21,331,056) (20,960,835) Cash paid to and on behalf of employees (4,626,516) (4,693,734) Taxes and surcharges paid (4,370,855) (5,427,948) Cash paid relating to other operating activities (2,600,772) (5,351,784)

Sub-total of cash outflows (184,389,875) (255,874,187) Net cash inflows from operating activities (42,370,235) (167,616,433)

46 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued) (Expressed in Renminbi '000 unless otherwise indicated)

2019 2018 Cash flows from investing activities Proceeds from disposal of investment 248,534,220 147,477,573 Investment income received 12,319,374 13,973,100 Proceeds from disposal of fixed assets, intangible assets and other long-term assets 195 499

Sub-total of cash inflows 260,853,789 161,451,172 Cash paid for investments (233,337,060) (41,934,803) Cash paid to acquire fixed assets, intangible assets and other long-term assets (309,240) (463,165)

Sub-total of cash outflows (233,646,300) (42,397,968) Net cash inflows from investing activities 27,207,489 119,053,204 Cash flows from financing activities Proceeds from investors 19,961,604 - Proceeds from issuance of debentures and certificate of deposit of banks 370,681,993 411,810,647

Sub-total of cash inflows 390,643,597 411,810,647 Repayments of debentures and certificate of deposit of banks (392,380,779) (332,617,051) Payment for interest of debentures and certificate of deposits of banks (7,584,147) (7,875,178) Payments for distribution of dividends and profits (2,060,965) (67,320)

Sub-total of cash outflows (402,025,891) (340,559,549) Net cash inflows from financing activities (11,382,294) 71,251,098 Effect of exchange rate changes on cash and cash equivalents 387,554 501,665 Net (decrease)/increase in cash and cash equivalents (26,157,486) 23,189,534 Add: Cash and cash equivalents at the beginning of the year 68,852,350 45,662,816

Cash and cash equivalents at the end of the year 42,694,864 68,852,350

47