2018 Annual Report Bank of Kunlun Corporation Limited Key Performance Indicators
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2018 Annual Report Bank of Kunlun Corporation Limited Key Performance Indicators Total Assets Total Profits Total Deposits Total Loans in RMB 108 in RMB 108 in RMB 108 in RMB 108 38 1,558 3,511 35 1,268 1,510 30 1,111 1,040 1,486 3,175 2,932 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 ROA ROE NPL ratio 1.71% 11.21% 0.98% 0.97% 10.98% 1.57% 10.38% 1.36% 0.87% 2016 2017 2018 2016 2017 2018 2016 2017 2018 Business Site Business Department of Head Office No.7, Century Avenue, Karamay City, Xinjiang Daqing Branch No. 172 and 136, Xibin Road, Ranghulu District, Daqing, Heilongjiang Karamay Branch No.7, Century Avenue, Karamay City, Xinjiang Tacheng Kunlun Rural Bank No. 208, Youhao Road, Emin County, Xinjiang Tuha Branch Fossil Oil Base, Hami, Xinjiang International Business Settlement Center Tower B, No.1, Financial Street, Xicheng District, Beijing Xi’an Branch Changqing Sulige Building B, No. 73 Fengchengsi Road, Xi’an Kashgar Branch No. 34, Banchao Road, Kashgar City, Kashgar, Xinjiang Korla Branch Huayu Business Building, Renmin East Road, Korla, Xinjiang Urumqi Branch No. 8, Minzhu Road, Urumqi, Xinjiang Ili Branch No.23, Stalin Street, Yining City, Ili, Xinjiang Leshan Kunlun Rural Bank No.1, Wangshuijing Street, Jiajiang County, Leshan, Sichuan Bank of Kunlun Corporation Limited Company Profile Bank of Kunlun is a state-owned financial backbone enterprise held by China National Petroleum Corporation (CNPC) Capital Limited Company. As a specialized bank that integrates industry and finance, it shoulders important responsibilities in safeguarding national energy security, serving the real economy and promoting social economy and energy development. Its predecessor, the Karamay City Commercial Bank, was restructured from the Karamay Urban Credit Cooperative in 2006. In April 2009, CNPC took control of the Bank through sizable capital increase. In April 2010, the Bank was officially renamed Bank of Kunlun (KLB). Upon the restructuring, Bank of Kunlun has pursued a business strategy featuring integration of industry and finance, differentiated operation and characteristic development. With the support and care of regulatory authorities, local governments, shareholders, and all sectors of society, the Bank has focused on the development strategy of integrating industry with finance since restructuring and has upheld the operational guideline of quality-priority, profit-oriented, and characteristic services, as well as coordinated development. With a constantly renewed track record of strong performance and consolidated comprehensive strength, the Bank has rapidly grown from a regional commercial bank into a national commercial bank with distinctive characteristics and nationwide influence. The assets grew from RMB 3.8 billion in 2008 to RMB 351.1 billion at the end of 2018, reflecting a compound annual growth rate (CAGR) of 57.24%. Total profits increased from RMB 45 million to RMB 3.822 billion, a CAGR of 55.92%. The Bank has established nine branch-level institutions in Xinjiang, Beijing, Shaanxi, Heilongjiang and other municipalities and provinces, and initiated and held shares of two rural banks in Leshan and Tacheng. The Bank has 83 branches and 3,034 employees. In 2018, the Bank’s long-term corporate credit rating was upgraded to AAA by Lianhe Ratings, while the regulatory rating remained 2C. The honor of “2018 Gold Medal Award of Chinese Financial Institutions-Top Ten City Commercial Banks of the Year”, as well as other honors and awards, were granted to the Bank, fully demonstrating the recognition by regulatory agencies, market intermediaries, and customers. Annual Report 2018 Contents 2 I. Definitions 3 II. Important Notice 4 III. General Information 5 IV. Financial Highlights 8 V. Chair’s Statement 11 VI. President’s Statement 14 VII Rankings and Awards 16 VIII. Management Discussion & Analysis 57 IX. Changes in Share Capital and Shareholders 60 X. Directors, Supervisors, Senior Management, Employees and Institutions 73 XI. Corporate Governance Report 86 XII. Report of the Board of Directors 88 XIII. Report of the Board of Supervisors 93 XIV. Significant Events 95 XV. Auditors’ Report and Financial Statements 96 XVI. Documents Available for Inspection 97 XVII. Acknowledging Opinions of Directors and Senior Management on the 2018 Annual Report 98 Appendix: Auditors’ Report and Financial Statements for 2018 Bank of Kunlun Corporation Limited Definitions I. Definitions In this report, the following terms have the following meanings unless otherwise indicated: The Company means Bank of Kunlun Co., Ltd. and its subsidiaries The Bank/Bank of Kunlun means Bank of Kunlun Co., Ltd. Ministry of Finance means Ministry of Finance of the People’s Republic of China Reorganization means Reorganization of Karamay City Commercial Bank through capital increased by CNPC in April 2009 Company Law means Company Law of the People’s Republic of China Articles of Association of the Bank means Articles of Association of Bank of Kunlun Co., Ltd. Karamay City Commercial Bank means Karamay City Commercial Bank Co., Ltd. PBOC means The People’s Bank of China CBRC1 means China Banking Regulatory Commission CBIRC means China Banking and Insurance Regulatory Commission CSRC means China Securities Regulatory Commission CNPC means China National Petroleum Corporation CNPC Capital means CNPC Capital Limited Company 1. In March 2018, the duties of the China Banking Regulatory Commission and the China Insurance Regulatory Commission were integrated in order to establish the China Banking and Insurance Regulatory Commission in accordance with the State Council's institutional reform plan approved at the first meeting of the 13th National People's Congress. 2 Important Notice ANNUAL REPORT 2018 II. Important Notice The Board of Directors, the Board of Supervisors, Directors, Supervisors and Senior Management of Bank of Kunlun Co., Ltd. undertake that the information in this report contains no false records, misleading statements, or material omissions. On 28 March 2019, the 2018 Annual Report of Bank of Kunlun Co, Ltd. and its abstract were reviewed and approved at the second meeting of Bank of Kunlun’s fifth Board of Directors. The 2018 Annual Financial Statements prepared by the Bank in accordance with PRC GAAP have been audited by BDO China Shu Lun Pan CPAs, which has issued a standard and unqualified auditors’ report. The Board of Directors of Bank of Kunlun Co., Ltd. Mr. Jiang Shangjun, Legal Representative and Board Chair of the Bank; Mr. Zuo Wei, President of the Bank; Mr. Tang Zongheng, General Manager of Planing and Financial Department of the Bank, represent and warrant that the financial statements in the 2018 Annual Report are authentic and complete. Primary Risk Disclosure During the reporting period, the Bank did not identify any material risks that could adversely affect its future development strategy or business objectives. The Bank has actively adopted measures to effectively manage various risks. For details, please refer to the “Management Discussion and Analysis-Risk Management” section of this report. This report can only be used to help the public better their understanding of Bank of Kunlun. It does not constitute a suggestion for any investment or trading activities, or other business activities of any kind. Risks from its application for those purposes shall be borne by the user. 3 Bank of Kunlun Corporation Limited General Information III. General Information 1 . Legal Chinese Name: 昆仑银行股份有限公司 7 . Other Relevant Information: Legal English Name: BANK OF KUNLUN Date of Incorporation: 9 December 2002 CORPORATION LIMITED Date of Registration Change: 12 October 2018 Abbreviation in Chinese: 昆仑银行 Registration Authority: Karamay Marketing Abbreviation in English: Bank of Kunlun (KLB) Surveillance & Administration Bureau 2 . Legal Representative: Jiang Shangjun Unified Social Credit Code: 91650200745209781T Financial Institution License Code: B0226H265020001 3 . Registered Capital: RMB 10,287,879,258.43 Registered Address: No. 7 Century Avenue, 8 . Name of the Certified Public Accountant Engaged: Karamay City, Xinjiang BDO China Shu Lun Pan CPAs (LLP) Postal Code: 834000 Office Address: Floor 4, New Huangpu Finance For customer services and complaints, please call: Building, No. 61, Nanjing East Road, Huangpu District, 95379 Shanghai, China Website: http://www.klb.cn/ 9 . Business Scope: Acquiring public deposits; granting 4. Board Secretary: He Fang short-term loans, medium-term loans and long-term Tel: 0990-6230689 loans; handling domestic and international settlements; Fax: 0990-6230689 handling bill acceptance and discounting; issuing Email: [email protected] financial debts and debt securities; issuing, redeeming and underwriting government debts as an agent; 5 . Information Disclosed at: The Financial News buying and selling government debts and financial Designated Website for Publication of the Annual debts; inter-bank borrowing; trading and agent trading Report: http://www.klb.cn/ of foreign exchange; bank card business; issuing letters Copies of this Annual Report are kept at: The office of credit and offering guarantees; offering collection of the Board of Directors of the Bank agency and insurance agency services; providing safe deposit services; other businesses approved by 6 . Legal Adviser: Beijing Jingda Law Firm CBRC. (Service[s] subject to approval according to Office Address: A1706, Wuhua Building, No. A4 the law shall be carried out only after approval by the Chegongzhuang Avenue, Xicheng District, Beijing