2019 Annual Report Company Profile

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2019 Annual Report Company Profile withwith 2019 ANNUAL REPORT COMPANY PROFILE Bank of Communications is a comprehensive financial services group taking banking as its principal business. Its business scope covers areas including commercial banking, offshore finance, fund, trust, financial leasing, insurance, overseas securities, debt-to-equity swap and asset management. Its wholly-owned non-bank subsidiaries mainly include Bank of Communications Financial Leasing Co., Ltd., China BoCom Insurance Co., Ltd., BoCom Financial Asset Investment Co., Ltd. and BoCom Wealth Management Co., Ltd. Its controlled non-bank subsidiaries included Bank of Communications Schroder Fund Management Co., Ltd., Bank of Communications International Trust Co., Ltd., BoCommLife Insurance Company Limited and BoCom International Holdings Company Limited. In addition, BoCom is the largest shareholder of Jiangsu Changshu Rural Commercial Bank Co., Ltd. and Bank of Tibet Co., Ltd. and it has a strategic investment in Bank of Hainan Co., Ltd. with 4 holding rural banbanks. Listed among FORTUNE 500 for 11 Consecutive Years and RANKED NO.150 in terms of Revenue, up by 18 POSITIONS over the Previous Year. Ranked NO. 11 among the Global TOP 1000 BANKS IN TERMS OF TIER-1 CAPITAL for 3 Consecutive Years Rated by THE BANKER. A LEVEL and No.1 BANK in 244 CONSUMER PROTECTION 3,079 OUTLETS DOMESTIC BRANCHES RATING AWARDED by PBOC and CBIRC Creating Shared Value and Providing Best Services NO.1 IN THE INDUSTRY FOR 22 OVERSEAS BRANCHES (SUBSIDIARY THE SIXTH TIME 68 OVERSEAS BANKING in Assessment of OUTLETS (Excluding the BANKS) AND “TOP 1,000” and “TOP 100” Representative Offices) REPRESENTATIVE OFFICES OUTLETS by China In 17COUNTRIES Banking Association OR REGIONS Century-Old Financial Brand The year of 2019 The focus was on building strong wealth management capabilities, accelerating the transformation and upgrading of outlets, the new intelligence transformation and the reform of credit risk management. The The year of 2015 positive effect of reforms, stimulation of The State Council approved BoCom’s transformation forces and the enhancement Plan to Deepened Reformation. The of core development indicator are deepened reformation concentrates anticipated. on three key areas including refining corporate governance mechanism as a large commercial bank, reinforcing operational improvements and promoting transformation and innovating operating model. Bank of Communications steadily implemented reform programs. May 2007 BoCom was listed on the June 2005 Shanghai Stock Exchange BoCom was listed on the Hong Kong Stock Exchange. 1 April 1987 BoCom reopened after reorganization Founded in 1908 and became the first nationwide state- BoCom is one of the note- owned joint-stock commercial bank issuing banks with the in China, with Head Office located in longest history in modern Shanghai. China. Bank of Communications Co., Ltd. Contents Annual Report 2019 H Share Definitions 4 IMPORTANT REMINDERS Corporate Information 5 I. The Board of Directors, the Board of Supervisors and Financial Highlights 6 Directors, Supervisors, Senior Management of the Bank are responsible for the authenticity, accuracy Statement from Chairman of the Board of Directors 8 and completeness of the Annual Report, free of false Business Profile 14 records, misleading statements or material omissions Ranking and Rewards 18 and assume individual and joint and several legal responsibilities. Management Discussion and Analysis 20 II. Mr. Ren Deqi, Chairman of the Bank, Mr. Guo Mang, – Macroeconomic and Financial Environment 21 Principal in charge of accounting and Mr. Chen Yu, – Implementation of Development Strategy 21 Head of Accounting Department represent that they – Business Review 25 are responsible for the authenticity, accuracy and completeness of the financial statements in Annual – Financial Statement Analysis 42 Report. – Business Innovation and New Products 61 III. The Group’s financial statements that were prepared – Risk Management 67 in accordance with China Accounting Standards were audited by PricewaterhouseCoopers Zhong Tian LLP. – Overview of Major Subsidiaries 78 Those prepared in accordance with International – Outlook 82 Financial Reporting Standards were audited by BoCom-HSBC Strategic Cooperation 84 PricewaterhouseCoopers, both with unqualified auditor’s reports issued. Changes in Ordinary Shares and IV. The proposal on profit distribution for the year of 2019 Shareholdings of Substantial was reviewed by the Board of Directors: based on the Shareholders 86 total issued ordinary shares of 74.263 billion of the Information of Preference Shares 92 Bank as at the end of the Reporting Period, a cash dividend of RMB0.315 (including tax) per share would Directors, Supervisors, be distributed to registered shareholders of A share Senior Management and and H share, totalling RMB23.393 billion. There is no Human Resource Management 95 proposal on bonus share or proposal on conversion of capital reserve into share capital for the current year. Report of the Board of Directors 117 V. Prospective statements involved in the report, such as Report of the Board of Supervisors 124 future plans, development strategies do not constitute Corporate Governance Report 129 a substantive commitment of the Group to investors. Investors and stakeholders are required to keep Corporate Social Responsibilities 150 sufficient risk awareness and understand the differences Significant Events 159 among the plan, forecasting and commitment. Organization Chart 162 VI. The Group’s operation is mainly exposed to risks List of Domestic and Overseas Branches including credit risk, market risk, operational risk and compliance risk. The Group took and will continue and Major Subsidiaries 164 to take various steps to effectively manage risks. For Independent Auditor’s Report 170 more details, please refer to section of “Management Consolidated Financial Statements 176 Discussion and Analysis on Operations – Risk Management”. Notes to the Consolidated Financial Statements 182 Unaudited Supplementary Financial Information 319 Supplementary Information on Leverage Ratio, Liquidity Coverage and Net Stable Funding Ratio 325 The report is prepared in Chinese and English, respectively. Should there be any inconsistency between the Chinese and English versions, the Chinese version will prevail. DEFINITIONS The following terms will have the following meanings in this Report unless otherwise stated: “Articles of Associations” The Articles of Association of Bank of Communications Co., Ltd. as approved by the CBIRC “Bank”, “BoCom” Bank of Communications Co., Ltd. “Basis point” One in ten thousand “CBIRC” China Banking and Insurance Regulatory Commission “Central and Southern China” Including Henan Province, Hunan Province, Hubei Province, Guangdong Province, Hainan Province and Guangxi Zhuang Autonomous Region “Company Law” The Company Law of the People’s Republic of China “CSRC” China Securities Regulatory Commission “Eastern China” Including Shanghai (excluding Head Office), Jiangsu Province, Zhejiang Province, Anhui Province, Fujian Province, Jiangxi Province and Shandong Province “Group” The Bank and its subsidiaries “Head Office” The Group’s Head Office “Hong Kong Listing Rules” The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “HSBC” The Hong Kong and Shanghai Banking Corporation Limited “HSBC Group” The HSBC and its subsidiaries and contacts “Ministry of Finance” Ministry of Finance of the People’s Republic of China “Model Code” Model Code for Securities Transactions by Directors of Listed Issuers as set out in the Appendix 10 of the Hong Kong Listing Rules “North Eastern China” Including Liaoning Province, Jilin Province and Heilongjiang Province “Northern China” Including Beijing, Tianjin, Hebei Province, Shanxi Province and Inner Mongolia Autonomous Region “Overseas” Including Hong Kong Branch/Bank of Communications (Hong Kong) Co., Limited, New York Branch, Tokyo Branch, Singapore Branch, Seoul Branch, Frankfurt Branch, Macao Branch, Ho Chi Minh City Branch, San Francisco Branch, Sydney Branch, Taipei Branch, London Branch, Bank of Communications (Luxembourg) S.A./Luxembourg Branch, Brisbane Branch, Bank of Communications (Luxembourg) S.A. Paris Branch, Bank of Communications (Luxembourg) S.A. Rome Branch, Bank of Communications (Brazil) Co., Ltd., Toronto representative office, Prague Branch, Melbourne Branch and other overseas subsidiaries “PBOC” The People’s Bank of China “Reporting Period” The period from 1 January 2019 to 31 December 2019 “Securities Law” Securities Law of the People’s Republic of China “SSE” The Shanghai Stock Exchange “SSF” The National Council for Social Security Fund “Western China” Including Chongqing, Sichuan Province, Guizhou Province, Yunnan Province, Shaanxi Province, Gansu Province, Qinghai Province, Ningxia Autonomous Region, Xinjiang Uyghur Autonomous Region and Tibet Autonomous Region 4 Bank of Communications Co., Ltd. CORPORATE INFORMATION CORPORATE INFORMATION INFORMATION OF ORDINARY AND Chinese name: 交通銀行股份有限公司 PREFERENCE SHARES Chinese abbreviation: 交通銀行 Classes Stock exchange Stock name Stock code English name: Bank of Communications Co., Ltd. A share SSE Bank of 601328 Legal representative: Ren Deqi Communications H share Hong Kong Stock BANKCOMM 03328 CONTACT PERSON AND CONTACT Exchange INFOMATION Domestic SSE BOCOM PREF1 360021 Gu Sheng (Secretary of the Board of Directors and Preference Company Secretary) Share
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