2017 Annual Report * Bank of Tianjin Co., Ltd
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(A joint stock company incorporated in the People's Republic of China with limited liability) (Stock code: 1578) 2017 Annual Report * Bank of Tianjin Co., Ltd. is not an authorized institution within the meaning of the Banking Ordinance (Chapter 155 of Laws of Hong Kong), not subject to the supervision of the Hong Kong Monetary Authority, and not authorized to carry on banking and/or deposit-taking business in Hong Kong. BANK OF TIANJIN CO., LTD. 1 ANNUAL REPORT 2017 Contents Definitions 2 Company Profile 4 Summary of Accounting Data and Financial Indicators 6 Chairman’s Statement 10 President’s Statement 12 Management Discussion and Analysis 14 Changes in Share Capital and Information on Shareholders 60 Directors, Supervisors, Senior Management and Employees 64 Corporate Governance Report 83 Report of the Board of Directors 106 Report of the Board of Supervisors 118 Important Events 123 Risk Management and Internal Control 126 Independent Auditor’s Report 129 Financial Statements 135 Unaudited Supplementary Financial Information 253 List of Branches 257 Appendix I 270 Appendix II 280 2 BANK OF TIANJIN CO., LTD. ANNUAL REPORT 2017 Definitions In this annual report, unless the context otherwise requires, the following items shall have the meanings set out below: “Articles of Association” the articles of association of the Bank as may be amended, supplemented or otherwise modified from time to time “Bank”, “our Bank”, “we” or “us” Bank of Tianjin Co., Ltd. (天津銀行股份有限公司), a joint stock company incorporated on November 6, 1996 in Tianjin, China with limited liability in accordance with PRC laws, and, if the context requires, includes its predecessors, subsidiaries, branches and sub-branches “Board” or “Board of Directors” the board of Directors of the Bank “Board of Supervisors” the board of Supervisors of the Bank “CBRC” the China Banking Regulatory Commission “CBRC Tianjin Office” Tianjin Regulatory Bureau of China Banking Regulatory Commission “China” or “PRC” the People’s Republic of China, excluding for the purposes of this annual report Hong Kong, Taiwan and Macau “Director(s)” the director(s) of the Bank “Domestic Shares” ordinary shares issued by our Bank, with a nominal value of RMB1.00 each, which are subscribed for or credited as paid up in Renminbi “Foreign Shares” ordinary shares issued by our Bank, with a nominal value of RMB1.00 each, which are subscribed for in a currency other than Renminbi, or the consideration for which is the injection of assets and are held by persons other than PRC nationals or PRC corporate entities, and are not listed on any stock exchange “H Shares” ordinary shares issued by our Bank, with a nominal value of RMB1.00 each, which are listed on the Hong Kong Stock Exchange “HK$” or “HKD” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited BANK OF TIANJIN CO., LTD. 3 ANNUAL REPORT 2017 Definitions “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited “PBoC” or “Central Bank” The People’s Bank of China (中國人民銀行) “Reporting Period” the year ended December 31, 2017 “RMB” or “Renminbi” Renminbi, the lawful currency of the PRC “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shareholder(s)” the shareholder(s) of the Bank “Supervisor(s)” the supervisor(s) of the Bank 4 BANK OF TIANJIN CO., LTD. ANNUAL REPORT 2017 Company Profile Legal Chinese Name 天津銀行股份有限公司 Abbreviation in Chinese 天津銀行 Legal English Name Bank of Tianjin Co., Ltd. Abbreviation in English Bank of Tianjin Legal Representative LI Zongtang Authorized Representatives ZHANG Furong, NGAI Wai Fung Board Secretary ZHANG Furong Joint Company Secretaries ZHANG Furong, NGAI Wai Fung Registered Address and Headquarter Address No. 15 Youyi Road, Hexi District, Tianjin, China Principal Place of Business in Hong Kong 18/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong Telephone 86-22-2840 5262 Facsimile 86-22-2840 5518 Email [email protected] Website www.bankoftianjin.com Website of Hong Kong Stock Exchange for www.hkexnews.hk Publishing H Share Annual Report Date of Initial Registration November 6, 1996 Business License No. of Corporation 120000000007636 Uniform Social Credit Code 911200001030702984 Finance Permit Institution Number B0108H212000001 BANK OF TIANJIN CO., LTD. 5 ANNUAL REPORT 2017 Company Profile Listing Place of Stock The Stock Exchange of Hong Kong Limited Stock Name Bank of Tianjin Stock Code 1578 H Share Registrar Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong Legal Advisor as to PRC Laws GRANDALL LAW FIRM (TIANJIN) Legal Advisor as to Hong Kong Laws Paul Hastings 21-22/F, Bank of China Tower 1 Garden Road Hong Kong Auditor Domestic Auditor: Deloitte Touche Tohmatsu Certified Public Accountants LLP 30/F, Bund Center No.222 East Yanan Road Shanghai, PRC International Auditor: Deloitte Touche Tohmatsu 35/F One Pacific Place 88 Queensway Hong Kong Compliance Advisor First Shanghai Capital Limited 19/F, Wing On House, 71 Des Voeux Road Central Hong Kong 6 BANK OF TIANJIN CO., LTD. ANNUAL REPORT 2017 Summary of Accounting Data and Financial Indicators For the year ended December 31, Year-on- year change between 2017 2017 2016 and 2016 2015 2014 2013 (Amounts in thousands of RMB, unless otherwise stated) Rate of change (%) OPERATING RESULTS Interest income 27,894,735 25,202,576 10.7 26,656,584 24,769,304 19,632,392 Interest expense (19,493,523) (14,843,351) 31.3 (15,977,161) (15,620,494) (11,801,613) NET INTEREST INCOME 8,401,212 10,359,225 (18.9) 10,679,423 9,148,810 7,830,779 Fee and commission income 2,112,839 1,442,473 46.5 1,026,900 560,684 443,277 Fee and commission expense (79,374) (40,421) 96.4 (31,171) (36,481) (25,977) NET FEE AND COMMISSION INCOME 2,033,465 1,402,052 45.0 995,729 524,203 417,300 Net trading (losses)/gains (172,619) (120,090) 43.7 101,680 180,540 (164,934) Net gains/(losses) arising from investment securities 15,601 63,342 (75.4) 52,182 2,354 (3,913) Other income, gains or losses (134,343) 110,207 (221.9) 92,730 84,639 124,901 OPERATING INCOME 10,143,316 11,814,736 (14.1) 11,921,744 9,940,546 8,204,133 Operating expenses (3,102,593) (3,767,642) (17.7) (3,817,123) (3,261,328) (2,906,067) Impairment losses (2,131,853) (2,352,964) (9.4) (1,757,695) (975,286) (912,780) Share of results of associates (25,932) 16,244 (259.6) – – – PROFIT BEFORE TAX 4,882,938 5,710,374 (14.5) 6,346,926 5,703,932 4,385,286 Income tax expense (939,874) (1,192,470) (21.2) (1,414,543) (1,274,971) (950,337) PROFIT FOR THE YEAR 3,943,064 4,517,904 (12.7) 4,932,383 4,428,961 3,434,949 Attributable to: Equity holders of the Bank 3,916,386 4,522,053 (13.4) 4,916,440 4,417,231 3,418,026 Non-controlling interests 26,678 (4,149) (743.0) 15,943 11,730 16,923 Earnings per share (Expressed in RMB Yuan per share) – Basic 0.65 0.77 (15.6) 0.96 0.88 0.83 – Diluted 0.65 0.77 (15.6) – – – BANK OF TIANJIN CO., LTD. 7 ANNUAL REPORT 2017 Summary of Accounting Data and Financial Indicators For the year ended December 31, Year-on- year change between 2017 2017 2016 and 2016 2015 2014 2013 (Amounts in thousands of RMB, unless otherwise stated) Rate of change (%) MAJOR INDICATORS OF ASSETS/ LIABILITIES Total assets 701,913,589 657,310,107 6.8 565,667,731 478,859,079 405,687,013 Of which: loans and advances to customers 241,637,249 207,854,530 16.3 179,570,910 166,461,335 144,139,041 Total liabilities 657,157,727 615,555,327 6.8 532,420,027 449,969,138 386,237,537 Of which: due to customers 357,857,635 365,470,957 (2.1) 334,691,026 289,467,447 247,207,751 Share capital 6,070,552 6,070,552 – 5,126,048 5,126,048 4,123,268 Equity attributable to equity holders of the Bank 44,083,453 41,709,929 5.7 33,023,651 28,672,168 19,232,563 Total equity 44,755,862 41,754,780 7.2 33,247,704 28,889,941 19,449,476 For the year ended December 31, Year-on- year change between 2017 2017 2016 and 2016 2015 2014 2013 PROFITABILITY INDICATORS (%) Return on average total assets(1) 0.58 0.74 (0.16) 0.94 1.00 0.97 Return on average equity(2) 9.12 12.05 (2.93) 15.88 18.32 18.97 Net interest spread(3) 0.81 1.43 (0.62) 1.74 1.73 1.88 Net interest margin(4) 1.25 1.76 (0.51) 2.08 2.06 2.12 Net fee and commission income to operating income 20.05 11.87 8.18 8.35 5.27 5.09 Cost-to-income ratio(5) 29.42 27.52 1.90 22.49 23.63 25.63 8 BANK OF TIANJIN CO., LTD. ANNUAL REPORT 2017 Summary of Accounting Data and Financial Indicators For the year ended December 31, Year-on- year change between 2017 2017 2016 and 2016 2015 2014 2013 ASSET QUALITY INDICATORS (%) Non-performing loan ratio(6) 1.50 1.48 0.02 1.34 1.09 1.03 Allowance coverage ratio(7) 193.81 193.56 0.25 202.84 238.15 269.08 Allowance to gross loan ratio(8) 2.91 2.87 0.04 2.73 2.61 2.76 For the year ended December 31, Year-on- year change between 2017 2017 2016 and 2016 2015 2014 2013 CAPITAL ADEQUACY RATIO INDICATORS (%) Calculated based on Capital Adequacy Measures Core capital adequacy ratio(9) N/A N/A N/A N/A N/A N/A Capital adequacy ratio(10) N/A N/A N/A N/A N/A N/A Calculated based on Capital Administrative Measures Core tier-one capital adequacy Ratio(11) 8.64 9.48 (0.84) 9.33 10.64 8.30 Tier-one capital adequacy ratio(12) 8.65 9.48 (0.83) 9.33 10.64 8.31 Capital adequacy ratio(13) 10.74 11.88 (1.14) 12.23 12.61 11.05 Total equity to total assets 6.38 6.35 0.03 5.88 6.03 4.79 BANK OF TIANJIN CO., LTD.