济宁银行股份有限公司
BANK OF JINING CO., LTD.
Annual Report 2014 Bank of Jining Co., Ltd. Annual Report 2014
I. Important Statement
(I) The Board of Directors of Bank of Jining Co., Ltd. hereby assures that all information included in this report does not contain any false information, misleading statement or material omission, and undertakes the responsibility that the contents of the report are true, accurate and integrate.
(II) Shandong Tian Heng Xin Certified Public Accountants Co., Ltd. audited the Bank’s Annual Financial Statements in accordance with the Independent Auditing Standard for Chinese Certified Public Accountants and issued a standard unqualified auditor’s report.
(III) The Chairman, Li Min, the President, Li Yinxi and the General Manager of the Accounting and Finance Department, Wang Baoxia, hereby assure that the financial reporting of the annual report is true and integrate.
II. General Introduction
(I) Registered Corporate Name in Chinese: 济宁银行股份有限公司 (Shortened Form: 济宁银行); Registered Corporate Name in English: Bank of Jining Co., Ltd. (Shortened Form: Bank of Jining).
(II) Legal Representative: Li Min
(III) Secretary of the Board of Directors: Jiao Chunhua Address: NO.6 Jinyu Road, Jining City, Shandong Province Tel: 0537-2885876 Fax: 0537-2885876 Email: [email protected]
Page1 of 36 Bank of Jining Co., Ltd. Annual Report 2014
(IV)Registered Address: NO.6 Jinyu Road, Jining City, Shandong Province Business Address: NO.6 Jinyu Road, Jining City, Shandong Province Postcode: 272000
(V)Website for Information Disclosure: the website of the Bank Website: http://www.jn-bank.com Copies of the annual report are available at: the Board of Directors’ Office of the Bank
(VI) Other Relevant Information Initial Registration Date: 26 August, 2006 Initial Registration Address: Jining Municipal Industrial and Commercial Administration Bureau Business Entity Registration Number: 370800018013188 Tax Registration Number: Lu Shui Ji Zi 370802723876735 Auditors: Shandong Tian Heng Xin Certified Public Accountants Co., Ltd.
III. Financial Highlights
(I) Main Profit Indicators for the Reporting Period Items Amount
Gross profit 61,580
Net profit 46,509
Operating profit 59,682
Investment income 7,626
Net non-operating income 1,898
Net cash flows from operating activities 76,111 Net cash flows from operating activities per
share（RMB/ share） 0.76
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(II) Main Financial Data of 3 Years as at the End of the Reporting Period
Unit: RMB Ten Thousand, %
Items 2012 2013 2014
Main operating revenue 298,921 290,161 266,823
Total assets 2,463,282 3,033,613 3,419,808
Balance of deposits 2,016,612 2,616,439 2,852,921
Balance of loans 1,493,306 1,835,838 2,121,448
Shareholders’ equity 254,412 285,965 335,345
Cost-income ratio 23.68 30.24 27.81
Note: Main operating revenue includes interest revenue, inter-transfer interest revenue among financial institutions, commissions, other business income and investment gain.
(III) Capital Structure and its Change for the Reporting Period 1. Measurement range and method of capital adequacy ratio Measurement range. The bank's capital adequacy ratio is calculated, including the core capital, capital and tier two capital. Risk weighted assets include credit risk, market risk, operational risk. Measurement method. The bank's measurement of credit risk by using the weight method, the measurement of market risk Using standard method, the basic index method is used to measure the operational risk. 2. END of the reporting period, the capital adequacy ratio index
Unit: % Standard As at the Key Indicators value (%) End of 2014 Tier 1 capital － 13.46
Capital adequacy ratio ≥10.5 14.57
3. Capital Structure and its Change for the Reporting Period Unit: RMB Ten Thousand
Items End of 2013 End of 2014 Increase in this
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period
Paid-in Capital 86,358 7,250 13,818 capital reserves 88,460 88,388 -72 Other Comprehensive 0 3,822 3,822 Income General Risk 46,094 53,594 7,500 Preparation Surplus reserve 29,170 42,152 12,982 Undistributed profits 32,750 40,411 7,661 Net Tier 1 capital 285,475 333,767 48,292 Net capital 309,650 361,511 51,861
IV. Risk Management
(I) Supplementary Financial Data as at the End of the Reporting Period
Unit: RMB Ten Thousand,% Key Indicators Criteria(%) End of 2014 Bad Loan Ratio ≤5 1.93 Loan-deposit Ratio ≤75 73.48 Liquidity ratio ≥25 53.22 Interest collection rate ≥95 98.39 Ratio of single largest customer’s loan against net capital ≤10 5.52 Ratio of single largest group customer’s loanagainst net capital ≤15 11.23
(II) Distribution of Loans by Main Industry
Unit: RMB Ten Thousand, %
Category of Industry Balance Percentage (%)
Retail and Wholesale 748,019 36.13
Manufacturing 570,015 27.35
Mining 107,451 5.19
Building and Construction 91,597 4.42
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(III) Loans Granted to Top 10 Borrowers
Unit: RMB Ten Thousand, % As a Percentage As a Outstanding of Total Percentage of No. Name of Borrower Loan Outstanding Net Capital Loan (%) (%) 1 Customer 1 20,000 0.94 5.52
2 Customer 2 19,900 0.94 5.49
3 Customer 3 18,900 0.89 5.21
4 Customer 4 17,913.59 0.84 4.94
5 Customer 5 15,000 0.71 4.14
6 Customer 6 15,000 0.71 4.14
7 Customer 7 12,999.88 0.61 3.59 8 Customer 8 12,300 0.58 3.39 9 Customer 9 12,000 0.57 3.31
10 Customer 10 12,000 0.57 3.31
(IV) The Classification Method of Loan Risks and the Structure of Various Non-performing Loans (NPLs)
1. Classification Method of Loan Risks The Bank has formulated the 5-tier classification method of credit assets based on the China Banking Regulatory Commission’s ‘Guide to Classification of Loan Risks’ in order to measure and manage loan risks. It divides credit assets into 5 classes: Normal, Special-mention, Substandard, Doubtful and Loss and the last three classes are considered as non-performing credit assets. 2. Five-tier Classification of Loans
Unit: RMB Ten Thousand, %
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Increase or Increase or As a As a Decrease Decrease Percentage Percentage Current Opening for the Items for the of the of the Balance Balance Current Current Current Opening Period Period Balance Balance （%）
Total Loans 2,121,447.56 1,835,837.04 285,610.52 - - - Among: Normal loans 2,028,088.47 1,812,260.46 215,828.01 95.60 98.72 -3.12 Special- mention loans 52,455.85 8,877.18 43,578.67 2.47 0.48 1.99 Substandard loans 15,342.10 11,635.90 3,706.20 0.73 0.63 0.10
Doubtful loans 24,642.65 3,058.32 21,584.33 1.16 0.17 0.99
Loss loans 918.49 5.18 913.31 0.04 0.00 0.04
Total NPLs 40,903.24 14,699.40 26,203.84 1.93 0.8 1.13
(V) Change of Provision for Loans
Unit: RMB Ten Thousand Opening Current Current Current Current Closing Item Balance Provision Turn out Collection Write-off Balance
Total Loan 123,553 39,588 - 1021 66,327 97,835 Provision
(VI) Provision for Impairment of Investment, Foreclosed Assets and Other Assets
Unit: RMB Ten Thousand
Item Opening Balance Closing Balance
Foreclosed Assets Depreciation Reserve 0 0
(VII) Foreclosed Assets
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Unit: RMB Ten Thousand, % Percentage Classification Balance (%) company's debt equity 1193.26 81% company's debt equity 278.12 19% Total 1471.38 100%
(VIII) Main Investments 1. Outbound investment
Unit: RMB Ten Thousand, % Closing Investment Main Investments Shareholding (%) Amount Shandong City Commercial Banks 3,000 6.74 Cooperation Alliance Co., Ltd Total 3,000 6.74
2. Subsidiary
Unit: RMB Ten Thousand, %
Proportion Registered Registered Actual Shareholding Consolidated minority Name Type of voting address capital investment ratio statement equity rights
Jining Confucius direct Rencheng Commercial Rural 10,000 4,784 47.84 47.84 yes 6,802 control District Bank
(IX) Risk Management of Credits Granted to Group Clients As at the end of the reported period, among the Bank’s group clients, After deducting the margin, the line of credit granted to Customer 1 was CNY 407,000 thousand, which accounted for 11.23% of the net capital of the Bank. After deducting the margin, the line of credit granted to Customer 2 was CNY 346,335.90 thousand, which occupied 9.56% of the net capital of the Bank; After deducting the margin, the line of credit granted to Customer 3 was CNY 289,438.70 thousand, which accounted for 7.99% of the net capital of the Bank. After deducting the margin, the line of credit
Page7 of 36 Bank of Jining Co., Ltd. Annual Report 2014 granted to Customer 4 was CNY 254,805.00 thousand, which took up 7.03% of the net capital of the Bank; After deducting the margin, the line of credit granted to Customer 5 was CNY 250,000 thousand, which took up 6.90% of the net capital of the Bank. (X) Main Policies, Measures and Effects of Non-performing Assets Management At the end of the report period, a total recovery and disposal of bad assets of CNY 709.69 million, increased of 596.26 million last year. Of which: cash recovered CNY33.79 million, to write off bad assets of CNY 663.27 milllion, Repossessed assets by goods CNY126.30 million. This year, the non-performing assets collection and disposal work was handled with the principle of ‘working with clear goals, having focus objectives, solving easy problems first, dealing with issues one by one and proceeding work gradually in proper sequence’. To improve the efficiency of the proceedings of the loan contract disputes cases, the litigation cases and other disputes cases, and strive to win all the cases; Strictly in accordance with the relevant requirements of the government and the Banking Regulatory Commission to deal with the situation. (XI) Off-balance Sheet Interest Receivable, Letters of Guarantee, Assurance, Loans Commitment, Letters of Credit, Bank Acceptance Bills and Other Main Off-balance Sheet Items (i) Off-balance Sheet Interest Receivables As at the end of reporting period, the balance of off-balance sheet interest receivables was CNY 40.53 million.
(ii) Bank Acceptance Bills Issued As at the end of reporting period, the balance of bank acceptance bills issued was CNY 75.11 billion.
(iii) Letters of Guarantee, Letters of Credit, Assurance and Loans Commitment Issued As at the end of reporting period, the balance of Letters of Guarantee issued was CNY
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103.57 million, the balance of Letters of Credit issued was CNY397.93 million, there were no Assurance and Loans Commitment business.
(XII) Risk Management 1. Credit Risk With the continuous improvement of the level of economic development in our country and accelerating the integration of the global economy, the bank is facing important opportunities for development, but also faces new situations and challenges. How to pay more attention to meet the needs of the real economy, to ensure that the bank credit approval management more standardized, scientific, to prevent credit risk, improve the quality of loan decision-making has important practical significance. (i) Optimize the organizational structure, improve the credit risk management structure. August 2014, we hired DDT China permanent accounting firm to carry out a comprehensive risk management assessment, in accordance with feedback results, The credit business and risk management department for restructuring and let the approval authority to separate out, then set up a new credit approval department and a model of the expert approval team, responsible for approval of the credit business which exceed sub-branch’s authority, in the premise of the principle of efficiency priority, and effectively improve the ability of credit risk management. (ii) To strengthen the credit management in different cities and to prevent the credit risk they might have. First, formulated the implementation of the "Jining bank credit business in different cities of temporary measures", determined the access conditions, internal control and risk management measures, and the supervision and inspection methods of the credit business in different cities, which laid a foundation for the development of the credit business. Second, Strengthen authorization management. Four of the newly opened Heze, Zaozhuang, Shandong, Taian Branch respectively was authorized, in the power of attorney in the clear provisions of the branch shall not handle the branch where city administrative area and foreign customers credit business ", to further standardize the credit business in places. Third, To speed up the original remote credit business to the branch management. branches have setten up in the local area, the existing business managers, should handed over
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the business gradually to the local branch, Gradually realizing the management of the credit business in different places. (iii) Positive pressure on dropping the Ratio of notes and loans, first of all, reasonable adjustment of the credit structure. Plan to decrease the ratio, our bank issued a notice: to decrease the ratio of notes and loans, the notice requires sub-branches in Jining to adjust the credit structure in a timely manner; branches in other cities in accordance with the requirements of the Local Banking Bureau, to develop the decrease target, to ensure that the end of the year is not higher than 40% of the vote. Second, continue to strengthen risk prevention and control, to guard against risk transfer. Supervise the branch closely concerned with his line in the process of the pressure drop in the credit risk of credit risk passed to our bank. (iv) The positive pressure drop of the vote, the reasonable adjustment of the credit structure. One is to develop pressure drop plan, I issued the "on a good job in the work of the loan ratio of pressure drop work," the request of Jining Municipality in a timely manner to adjust the credit structure; branch in accordance with the requirements of territorial supervision bureau, to develop the pressure drop target, to ensure that the end of the year is not higher than 40%. Two is to continue to strengthen risk prevention and control, to guard against risk transfer. Supervise the branch closely concerned with his line in the process of the pressure drop in the credit risk of credit risk passed to our bank. (v) Control of international business risk. In support of import and export enterprises, in the mean time, to strict control trade finance business risks, for different customers in the margin, security, credit risk control measures to take a different approach. The main risk of trade finance is the trading background, for this, our bank in the "notice: confirmation of international trade financing business related issues" to strengthen the international trade finance and settlement business matching principle, strengthen the International Trade Finance Settlement records under the assessment, strengthen the transfer of trade financing documents audit, strengthen the import letter of credit business risk management. At the same time, in the export business, due to the exchange fund is the first source of repayment of trade financing, international business department in the credit approval process, adhere to the matching
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principle of trade financing and settlement, the settlement amount is not up to the requirements of the enterprise risk prompts. 2. Market Risk Management Market risks are risks of losses suffered by the Bank arising from changes in exchange rates, interest rates and commodity prices etc., which would result in fluctuations of fair value and future cash flows of the Bank’s financial instruments.
The market risk of foreign exchange business is mainly derived from the impact of exchange rate fluctuations on the exposure of foreign exchange exposure. In order to effectively evade the market risk of the exchange rate, bank the Bank of Jining spot node exchange management approach ", the regulations of bank nodes settlement and position concentrated in the head office of the Department of international business management, branch to implement management inch fraction. International business daily in the morning and afternoon respectively on synthetic position in foreign exchange settlement and sale of flat summary; for large transactions and business immediately flat; strictly control the position overnight. Through the above measures, the bank will control the exposure position to the lowest level, so as to effectively reduce the exchange rate risk.
2014, the bank in the premise of ensuring liquidity, security, and gradually open the local currency market transactions, holdings of treasury bonds, financial bonds, the purchase of financial products, long-term storage industry, etc.. Interbank financial and interbank deposits are short-term fixed income assets, not with market fluctuations. Bond assets are bank accounts, to hold due mainly to adjust the fair value per half year. In order to effectively control the business risks, we have to strengthen the management of business process management, has formulated the "internal control system of capital management," "the fund payment approval management approach", "inter agency business internal control system", "the national interbank lending business accounting operation procedures," the domestic financial institutions to customers integrated credit management, and other rules and regulations.
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3. Interest rate market risk The bank's interest rate risk mainly includes from the current central bank interest rate policy under the deposit loan business basis risk and asset liability of bank re pricing of risk. At present, we have set up a flexible interest rate risk pricing mechanism, strengthen the research and judgment of the interest rate trend, adjust the internal funds rate, and guide the reasonable flow of capital to the higher income. According to enterprise funds retained in the preparation of the loan interest rate, the higher the rate of corporate loans, loan interest rates lower, while considering the industry, industry policy, market prospects, comprehensive consideration of the bargaining power of enterprises, the level of interest rates in his line, the overall contribution of the loan to the different price, gradually establish a benefit as the center, scientific and reasonable deposit and loan pricing mechanism, effectively avoid the risk control interest rates.
From 2014, we have established a scientific deposit and loan pricing model and the corresponding management measures, such as: for the regular deposits, general loans and other fixed term matching method for business varieties, and the non fixed term of the business varieties such as demand deposits, cash, overdue loans and so on. Different types of sub branches, different products, different terms of the deposit and loan set the difference, the internal transfer pricing of fine. At the same time, according to the FTP internal funds transfer price assessment of the economic value of each branch, through the different security methods, risk factors, product and customer differential pricing, and gradually establish a benefit as the center, scientific and reasonable deposit and loan pricing, assessment mechanism, and set up a differentiated, fine deposit and loan internal transfer pricing method, effectively avoid controlling interest rate risk.
4. Liquidity Risk Management Operational risks are risks of direct or indirect losses suffered by the Bank arising from some event or activity which would result in inefficiency or failure of
Page12of 36 Bank of Jining Co., Ltd. Annual Report 2014 technology, process, infrastructure and personnel, as well as other risks that could have adverse impact on the operation.
A liquidity risk management framework, which is composed of the board of directors, senior management and Asset Liability Management Committee, is responsible for formulating the strategies for improving the liquidity risk management and establishing internal control mechanisms to support the implementation and supervision of the liquidity risk management strategies. The board of directors is responsible for reviewing and approving the basic policies and management framework of the full line liquidity risk, in order to ensure the coordination of the whole line of credit risk and liquidity risk management, senior management is responsible for the implementation of the organization of liquidity risk management, responsible for the selection of senior management personnel, to ensure the liquidity risk management policies and procedures are implemented in our internal plan; financial department head office is the liquidity management of the lead department, responsible for the formulation and monitoring and management of liquidity risk management system, the bank liquidity risk analysis, put forward the structure of assets and liabilities the adjustment scheme, to ensure the liquidity risk tolerance range; and responsible for daily liquidity management, timely and reasonable adjustments in the fund position, ensure all daily business effective operation, the effective use of surplus funds, maximize revenue; coordination of financial market department, international business department, business department, credit risk management department and the clearing operation Department and other related capital operation Department, the use of funds and the return of scheduling. Timely adjust the structure of the flow of assets, monitoring the proportion of liquidity indicators and gap indicators, monitoring structural liquidity indicators, for close to or beyond the warning value, identify the reasons, and put forward a timely manner to adjust the structure of assets and liabilities.
To strengthen liquidity risk management, according to the new regulatory
Page13of 36 Bank of Jining Co., Ltd. Annual Report 2014 requirements, combined with our business management practice, in 2014, the Interim Measures for the Jining banking liquidity risk management system, Jining bank liquidity risk and liquidity risk management system, and a liquidity risk management and emergency response plan simulation exercises, so that the bank's management and regulatory agencies to understand and grasp the liquidity risk and emergency response requirements, improve the bank's response to liquidity risk.
5. Operational risk analysis 1)To strengthen the management of accounting supervisor, strengthen the executive power and supervision function.
To prevent operational risks, improve work efficiency, strengthen accounting management, strengthen the implementation and supervision functions, our bank has held 5 meetings of the operational risk analysis, establish a risk prevention, management, marketing, with team management concept, to determine the responsibilities of the chief accountant, to establish compliance, service, marketing, responsibility and global awareness, improve the level of fine management. Through the assessment of the value of the accounting section of the quantitative assessment mechanism to improve the implementation of the force, the operation of the construction of a significant change in the identification, defense against the risk of a more solid foundation.
2) Expand the background of centralized operations, improve working efficiency
Actively carry out business process reengineering, first of all, in the realization of the " Banks and enterprises to focus on checking accounts", "Important document Centralized distribution" to achieve the "bill business centralized operation", the implementation of the "three concentration", not only contribute to standardized operation, evade the risk, but also greatly improve the work efficiency, saving foreground of human resources. Second, under the premise of risk control, The
Page14of 36 Bank of Jining Co., Ltd. Annual Report 2014 business process of issuing bank acceptance bill is optimized. Will be the transfer of silver to the ticket office to the front, the cancellation of the credit staff to participate in the collar, the votes, the more conducive to the management of the weight control certificate, improve the quality and efficiency of the issue, to avoid operational risks.
3) Inspection and supervision system, normalization, standardization of business operations
Complete branch and a new agency business counselling in 2014, Special inspection of account management, Sub branch comprehensive business inspection, the end of day checkout and system logout, the prescription of the important documents in the process of delivery to put in the Safe Deposit Box, Situation of wrong account adjustment, such as on-site or off-site inspection service. Check method for random or full coverage. Timely specification for the discovery of irregularities. By strengthening internal management, standardize the business, and effectively prevent operational risks.
4) Strengthen the service consciousness, strengthen professional training, improve the quality of counter services
Organization for the second generation payment system, new staff business and other 12 business training, to participate in a total of more than 3900 staff. Through training, Wenshang branch, clearing centre successfully intercepted one forged certificates of deposit, and one forged bank acceptance draft. head office liquidation center intercept altering bank acceptances 3 times (involving an amount of 540 million), Yanzhou branch successfully intercepted a telecommunications fraud, effective way to avoid the our bank capital loss.
5) Strengthen the system construction, strengthen the internal control
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The bank has set up a revision of the "customer service on the special consumer groups", "the Jining Bank branch from the bank acceptance draft business management approach" and other 14 Rules and regulations, to ensure that the business start-up Rules and regulations first, The business management has the rules and regulations to follow, and constantly strengthen the business foundation, improve the level of internal control management.
6. Reputation risk
Reputation risk refers to the risk of negative evaluation from the bank's operations, management and other acts or external events. The bank has established a special department and a post for the daily monitoring program, which is a special department and a position to conduct a reputation risk investigation. The bank set up daily monitoring procedures for the establishment of the reputation risk, the establishment of specialized departments and positions for the reputation risk investigation, a regular analysis of the risk of reputation and reputation of the event and the risk of transmission channels.
In order to enhance the reputation of the bank, the reputation risk management system of Bank of Jining was established, The detailed rules determine the reputation risk management responsibilities, procedures, methods, strengthen the assessment and supervision, through active and effective daily reputation risk management and proper disposal of reputation risk events, the greatest degree of reduction to the bank, the interests of stakeholders, the public caused by the loss and negative impact.
V. Shareholders and Related-party Transactions
(I) Ownership Structure At the end of December 2014, the Bank’s registered capital was CNY 1,001,755,752. There was one state-owned share with share capital of CNY 185,600,000, which held
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18.53% of total shares; one strategic investors share with share capital of CNY184,440,000, which held 18.41% of the total shares; 113 corporate shares with the share capital of CNY 604,569,650, which held 60.35% of total shares; and 10 natural person shares with the share capital of CNY 27,146,102, which held 2.71% of total shares.
(II) Shareholder Information (i) Top 10 Shareholders and their Shareholdings as at the End of the Reporting Period
Unit: Ten Thousand Shares, % No. of Share No. Shareholder Name Shares Proportion (%) 1 Jining Municipal Finance Bureau 194,880,000 18.53 2 Bank of Qi Lu Co.,LTD 193,662,000 18.41 Huang Huai Hai Investment Holding Group 3 40,924,800 3.89 Co., Ltd. 4 Shandong Ke Qi Business Trade Co., Ltd. 32,124,309 3.05 5 Shandong Huayue Investment Co. Ltd. 31,500,000 2.99 Shandong Ying Te Li Optical Communication 6 27,292,067 2.59 Development Co., Ltd. 7 Jining Heng Wang Coal Co., Ltd. 26,793,075 2.55 Shandong Lan Xiang Technology Vocational 8 25,970,185 2.46 College 9 Jining Shen De Tai He Investment Co., Ltd. 23,093,385 2.18 10 Jining Century Tang Ren Investment Co., Ltd. 19,938,185 1.86 Total 616,178,006 63.49
(ii) Share Transfer of the Top 10 Shareholders During the reporting period, the shares held by top 10 shareholders were not transferred.
(iii) The Pledge, Depository and Freeze of Shares held by the Bank’s Top 10 Shareholders
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By the end of the reporting period, Huan Huai Hai Investment Holding Group Co., Ltd. pledged 40,924,800 shares, which accounted for 100% of its shareholdings at the Bank. Shandong Ke Qi Business Trade Co., Ltd. pledged 32,124,309 shares, which accounted for 100% of its shareholdings at the Bank. Jining Heng Wang Coal Co., Ltd. pledged 26,793,075 shares, which accounted for 100% of its shareholdings at the Bank. Shandong Lan Xiang Technology Vocational College pledged 25,970,185 shares, which accounted for 100% of its shareholdings at the Bank. Jining Shen De Tai He Investment Co., Ltd. pledged 23,093,385 shares, which accounted for 100% of its shareholdings at the Bank.
VI. Corporate Governance
(I) The Structures of General Meeting of Shareholders, Board of Directors, Board of Supervisors, Operational Management Level, Functional Departments, Branches and Special Committees (i) General Meeting of Shareholders The Bank strictly complied with the requirements of ‘the Company Law of the People's Republic of China’ and the Bank’s Constitution to call in and hold the General Meeting of Shareholders. Furthermore, the Bank actively prepared and precisely planned the meeting to ensure that the shareholders attend the meeting and fully wield their power.
(ii) Directors, Board of Directors and Special Committees
As at the end of reporting period, there were 10Directors in the Board of
Directors, including 3 Executive Directors, 5Shareholder Directors and 2 non-executive Directors. All Directors conscientiously performed their duties, actively participated in the discussion and decision-making process of the Bank’s important issues, safeguarding the interest of the
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Bank and all shareholders. The Board of Directors comprised 6 specialized committees: Strategic Planning Committee, Capital
Management Committee, Risk Management Committee, Related-party
Transaction Control Committee, Nomination and Remuneration
Committee and Social Responsibility Committee. Each specialized committee positively carried out its work, further improved corporate governance of the Bank. Specifically, the Risk Management Committee reviewed and passed the Board of directors’ Authorization Plan, Liquidity
Risk Management Report, Information Technology Management Report,
Bank-card Information Security Work Report, Comprehensive Risk
Management Outline and Risk Management Policy. It conscientiously implemented legal cases prevention and control duty and revised its rules of procedure; The Related-party Transaction Control Committee conducted compliance review on major related party transactions. It examined and agreed ‘Related Party Transaction Management Method of
Bank of Jining’; The Capital Management Committee attentively debrived ‘Capital Management Auditing Report of Bank of Jining’. It considered and approved ‘Capital Management Method of Bank of Jining
(Trial)’, which improved the capital management mechanism of the Bank.
(iii) Supervisors, the Board of Supervisors and Specialized
Committees
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As at the end of the reporting period, there were 6 Supervisors in the
Board of Supervisors, including 2 Employee Supervisors, 3 Shareholder
Supervisors and 1 External Supervisor. All Supervisors conscientiously performed their duties, supervising whether the Bank’s Finance, Board of
Directors, senior management and their members legitimately executed duties and complied with relevant requirements. Furthermore, it formulated and submitted comprehensive performance evaluation report to the regulatory authority. The Board of Supervisors established 2 specialized committees: Nomination Committee and Supervision
Committee. During the reporting period, according to the Bank’s Article of Association, relevant regulatory requirements, the spirit of supervision conference and the Board of Supervisors’ annual working program, the
Board of Supervisors positively carried out the work, further normalized the operation, and effectively performed the function.
(iv) The Senior Management
The Bank’s senior management was formed by the President, the
Vice-president and the Chief Finance Officer. By the end of the reporting period, there were 1 President, 5 Vice-presidents and 1 General Manager of the Financial Planning Division. The President was responsible for overall management and operation, Vice-presidents and the Chief Finance
Officer had precise division of work and clear responsibilities.
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(v) Information Disclosure and Transparency
During the reporting period, in accordance with ‘Information Disclosure
Method of the Commercial Bank’ and relevant regulations released by the
China Banking Regulatory Commission, the Bank published its 2013
Annual Report on its Website. Meanwhile, the original 2013 Annual
Report was available in the Bank’s Board of Directors’ Office for reference.
(II) The Organizational Structure and the Branch
(i)The Organizational Structure
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board of directors office
Audit Committee Administration Dept
Related- Party Human Resources Dept. Transaction Committee Enterprise Business Dept Risk Management Committee International Business Dept.
Remuneration Committee Financial market Dept
Small micro loan Dept. Social Responsibility Committee
Risk management Dept. Board of Directors’ Office Credit Approval Dept. Executive The The Planning & Financial Affairs Directors
Board Dept. General
Management Clearing operations Dept of Meeting Legal compliance Dept.
IT Dept. of Loan Approval Committee Shareholders The
Supervisors Security Dept
Board ALCO Network Construction Dept.
of Board of Supervisors Labour Union
Nomation Committee Sub-Branches
Audit and Supervision Dept
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(ii) The Table of Branches and Sub-branches No Institution Name Institution Address . 1 Headquarters 6 Jin Yu Road, Jining City
Jining Business Office of 6 Jin Yu Road, Jining City Urban Headquarters
Institu- *Ying Hua 67 Tai Bai Dong Road, Jining City tions Sub-branch
*Tai Bai Sub-branch 54-22 Tai Bai Dong Road, Jining City
（19） *Huo Ju Road Xin Ya Fu Building, Huo Ju Zhong Road,
2 Sub-branch Jining City
*Jie Fang Road 12 Jian She Nan Road, Jining City Sub-branch
*Hong Xing 37 Hong Xing Dong Road, Jining City Sub-branch
*Hai Guan Petroleum Company Building, Pi Pa Shan
Sub-branch Road, Jining City
Gong Qing Tuan 20 Hong Xing Zhong Road, Jining City Sub-branch
*Ren Cheng 3 22 Yun He Road, Jining City Sub-branch
*Wu Tai Zha 145 Wu Tai Zha Road, Jining City Sub-branch
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*Guang He Zhong 158 Guang He Road, Jining City Road Sub-branch
Kai Fa Qu 43 Wu Tai Zha Road, Jining City Sub-branch
4 *Shi Bei Sub-branch 84-18 Guang He Road, Jining City
*Guang He 99 Jin Yu Dong Road， Jining City Sub-branch
Shi Zhong 33 Ren Cheng Road, Jining City Sub-branch
Commercial House Along the Street, Yang
*Yun He Sub-branch Guang Hua Yuan Block A, 105 Hong Xing
Road, Jining City
5 The eleventh line to the east to two *Che Zhan Xi Road layers,S3 Building, Che Zhan Xi Road, Sub-branch Jining City
*Xi Cheng 157 Tai Bai Xi Raod, Jining City Sub-branch
*Long Xing Road 212 Long Xing Road, Jining City Sub-branch
Jining Zou Cheng Jian Ye Yuan District, Zoucheng City,
County 6 Sub-branch Shandong Province
- Level *Zou Cheng Hong 366 Hong He Road, Zoucheng City,
Page24of 36 Bank of Jining Co., Ltd. Annual Report 2014
Institu- He Sub-branch Shandong Province
tions B Section Xin Yuan Guo Ji Cheng, 1869 *Zou Cheng Gang （16） Dong Tan Road, Zoucheng City, Shandong Shan Sub-branch Province
36 Hong Dao Road, Qufu City, Shandong Qu Fu Sub-branch Province 7 *Qu Fu Jing Xuan 39 Jing Xuan Xi Road, Qufu City,
Road Sub-branch Shandong Province
Yan Zhou 72 Bei Hu Cheng He Road, Yanzhou City,
Sub-branch Shandong Province
8 36 Hua Qin Zi Jin Cheng Hua Jin Centre, *Yan Zhou Zi Jin Jian She Zhong Road, Yanzhou City, Cheng Sub-branch Shandong Province
Wei Shan 52 Kui Wen Dong Road, Xia Town,
Sub-branch Weishan County, Shandong Province
9 Industrial and Commercial Office to the *Wei Shan Huan south, Wei Huan Road, Huan Cheng Town, Cheng Sub-branch Weishan County, Shandong Province
Liang Shan 117 Shui Po Zhong Road, Liangshan
Sub-branch County, Shandong Province 10 *Liang Shan Quan Jin Yu Shang Mao Company Building, 220
Pu Sub-branch National Road Eastside, Gong Ye Yuan
Page25of 36 Bank of Jining Co., Ltd. Annual Report 2014
District，Quan Pu Town，Liangshan
County， Shandong Province
Wen Shang 68 Bao Xiang Road, Wenshang County, 11 Sub-branch Shandong Province
Jia Xiang 113 Cheng Xiang Road, Jiaxiang County, 12 Sub-branch Shandong Province
Jin Xiang 11 Kui Xing Road, Jinxiang County, 13 Sub-branch Shandong Province
13 Guang Ming Road, Sishui County, 14 Si Shui Sub-branch Shandong Province
401 Hu Ling Er Road, Yutai County, 15 Yu Tai Sub-branch Shandong Province
778 Chang Jiang Road, Heze City, He Ze Branch Cross-r Shandong Province egional West Block of Human Resources and
Institut 16 Social Security Bureau building, He Ze Yun Cheng -ional Interchange of Jin He Road and Jin Li Sub-branch Institut Street, Yuncheng County, Heze City,
-ions Shandong Province
（7） 2 Qing Tan Zhong Road, Shi Zhong 17 Zao Zhuang Branch District, Zaozhuang City, Shandong
Province
Page26of 36 Bank of Jining Co., Ltd. Annual Report 2014
Zao Zhuang Teng 99 Xue Yuan Zhong Road, Tengzhou City,
Zhou Sub-branch Shandong Province
* Teng Zhou Jin He 108 Jin He Zhong Road, Tengzhou City, Zhong Road Shandong Province Sub-branch
42 Bo Jin Commercial Mansion, Xin Cun
18 Zi Bo Branch Xi Road, Zhang Dian District, Zibo City,
Shandong Province
3168 Tai Shan Street, Taian City, 19 Tai An Branch Shandong Province
Note: Above institutions marked ‘*’ are the second - level branches.
(III) Directors, Supervisors, Senior Executives and Staff (i) The Profile of Directors, Supervisors and Senior Managers Work Place and Position Position Name Gender Bank of Jining: Secretary of Party Chairman Li Min Female Committee, Chairman Bank of Jining: Vice-secretary of Executive Li Yin Xi Male Party Director Committee, President Executive Chen Zhen Bank of Jining: Vice-president Male Director Yong Jining Municipal Finance Bureau: Sharehold Zhang Mao Male Secretary er Director Ru of Party Committee, Minister Sharehold Zhao Xue Jin Male Bank of Qilu: Vice-president er Director Shandong Ying Te Li Optical Sharehold Communication Development Co., Li Feng Yun Female er Director Ltd.: Chief Finance Officer
Page27of 36 Bank of Jining Co., Ltd. Annual Report 2014
Jining Shen De Tai He Investment Sharehold Co., Ltd.: Wang Peng Male er Director Chairman
Jining Shi Tong Chemical Fiber Sharehold Song Zhi Fu Male Textile Co., er Director Ltd.: Chairman, General Manager Shandong University of Finance Independe Chen Hua Male and Economics: Professor, Director nt Director of Economic Research Center University of Shanghai for Science and Technology: Vice-professor of Finance Department of Independe Xu Xue Jun Male Management School, Vice-director nt Director of Small and Medium Bank Research Center, Vice-director of MBA Centre Bank of Jining: Vice-secretary of Chief Li Wei Shui Male Party Supervisor Committee, Chief Supervisor Employee Bank of Jining: Vice-president of Li Xin Fang Male Supervisor Shi Zhong Sub-branch Jining Lu Xing Real Estates Sharehold Wang Lu Development and Investment er Male Sheng Co., Ltd.: Chairman, General Supervisor Manager Sharehold Zheng Ke Shandong Yu Long Mining Group er Male Duan Corporation: Chief Finance Officer Supervisor Sharehold Educational Books Management Jiang Yong er Male and Supply Centre of Jining City: Le Supervisor Principal External Association for Quality Evaluation Wei Yu Dong Male Supervisor of Jining City: President Vice- Liang Ru Male Bank of Jining: Vice-president president Liang Vice- Zhang Yan Male Bank of Jining: Vice-president president Zhen Vice- Jiao Chun Bank of Jining: Vice-president and Male president Hua Secretary of the Board of Directors Vice- Gong Zhen Male Bank of Jining: Vice-president president
Page28of 36 Bank of Jining Co., Ltd. Annual Report 2014
Chief Han Ji Wei Male Bank of Jining: Chief Auditor Auditor
(ii) Staff Profile
As at the end of the reporting period, the Bank had 1335 employees, of which, 277 employees with professional and technical qualifications
(21%), 160 employees with intermediate and senior professional technical qualifications (12%), 1019 employees with bachelor’s degree or above
(76%), 221 employees with diploma (17%), and 95 employees with vocational and technical education (7%). Furthermore, there were 136 middle-and-top-level managers, accounting for 10% of all staff.
(IV) Annual Remuneration Management The Bank established a comprehensive, scientific and reasonable remuneration management structure. The Board of Directors established the Remuneration Committee, which had 1 chief member and 2 members. The chief member was a non-executive director, with following main responsibilities: (1) be responsible for the Bank’s remuneration policy, system and specific issues, (2) reviewing compensation scheme for directors and senior management members, (3) proposing remuneration scheme advice to the Board of Directors, (4) and supervising the implementation of relevant remuneration scheme. Moreover, the remuneration structure contained three parts: basic salary, variable income and welfares, which was scientific and reasonable.
Page29of 36 Bank of Jining Co., Ltd. Annual Report 2014
The Bank’s Board of Directors issues the business plan to the management team every year. Based on annual performance appraisal methods, the management team evaluated performance and gave bonus to relevant personnel of branches, sub-branches and headquarters in the Bank. The Bank established a scientific performance evaluation mechanism which perceived basic economic capital and risk adjusted returns as the core, value creation as the basis and business transformation promotion as the target. At the end of the reporting period, the Bank smoothly achieved 2014 annual business assessment objectives. The Board of Directors remunerated directors, supervisors and senior managers according to the Bank’s Articles of Association and 2014 annual business assessment objectives. It followed ‘Prudent Compensation Regulatory Guidelines of Commercial Banks’ published by the China Banking Regulatory Commission, implementing deferred compensation based on performance evaluation system and long-term incentive constraint mechanism that perceived the return on capital as the main evaluation index.
(V)The General Meeting of Shareholders During the reporting period, the Bank held 1 General Meeting of Shareholders and 2 Extraordinary General Meeting (EGM), and formulated 10 resolutions. Main resolutions were as following: i. On 29 April, 2014, the Bank held 2013 Annual General Meeting of Shareholders. 85 shareholders and shareholders’ representatives attended the meeting, representing 770,917,635 shares and 89.27% of the total
Page30of 36 Bank of Jining Co., Ltd. Annual Report 2014 shareholding. The meeting was conformed to provisions of both ‘The Company Law of the People’s Republic of China’ and the Bank’s Articles of Association. It reviewed and passed 7 resolutions, including ‘2013 Annual Work Report and 2014 Annual Work Plan of Board of Directors of Bank of Jining’, ‘2013 Annual Work Report and 2014 Annual Work Plan of Board of Supervisors of Bank of Jining’, ‘2013 Annual Financial Statements and Profit Distribution Plan of Bank of Jining’, ‘2014 Annual Financial Budgeting Plan of Bank of Jining’, ‘The Proposal of Changing Registered Capital of Bank of Jining’, ‘The Proposal of Revising Articles of Association of Bank of Jining’ etc. ii. On 26 September, 2014, the Bank held the 1st Extraordinary General Meeting. 70 shareholders and shareholders’ representatives attended the meeting, representing 875,638,033 shares and 87.41% of the total shareholding. The meeting was conformed to provisions of both ‘The Company Law of the People’s Republic of China’ and the Bank’s Constitution. It reviewed and passed 3 resolutions, including ‘2014 The First Half Year Work Report And the Second Half Year Work Plan of Bank of Jining’, ‘The Proposal of Revising Articles of Association of Bank of Jining’ etc.
(VI) The Work of Board of Supervisors i. The Meetings of Board of Directors and Resolutions During the reporting period, the Board of Directors held 3 meetings and 4 temporary meetings. It discussed and passed 26 resolutions, mainly related to profit distribution, annual budget, authorization of the Board of
Page31of 36 Bank of Jining Co., Ltd. Annual Report 2014
Directors, registered capital alteration, Articles of Association revision, capital increase of Village Bank etc. According to supervision regulatory, the Board of Directors positively performed 2013 annual comprehensive performance evaluation of directors, further enhanced Board of Directors’ supervision and restraint system, effectively performed the decision-making function of Board of Directors.
(i) On 21 March, 2014, the First Interim Meeting of the Third Board of Directors in 2014 was held in communication mode, which examined and passed the resolution of ‘Regarding Major Related Party Transactions of Shandong Plastic Industry Co., Ltd’ .
(ii) On 2 April 2014, the Third Meeting of the Third Board of Directors was held, examined and passed 11 resolutions, including ‘2013 Annual Work Report and 2014 Annual Work Plan of Bank of Jining’, ‘2013 Annual Financial Report and Profit Distribution Proposal of Bank of Jining’, ‘2014 Annual Financial Budgeting Proposal’, ‘Regarding Authorization of Board of Directors To Headquarters’ Senior Management of Bank of Jining (2014)’, ‘The Proposal of Revising Rules of Procedure Risk Management Committee’, ‘Regarding 2013 Annual Information Technology Management Report of Bank of Jining’, ‘Regarding Related Party Transaction Management Method of Bank of Jining’, ‘Regarding Capital Management Method of Bank of Jining (Trial)’ , ‘The Proposal of Comprehensive Risk Outline and Risk Management Policy’, and ‘The Proposal of 2013 General Meeting of
Page32of 36 Bank of Jining Co., Ltd. Annual Report 2014
Shareholders’ etc. The Conference evaluated 2013 Annual Board of Directors’ performance and reported to Board of Supervisors.
(iii) On 8 April, 2014, the Second Interim Meeting of the Third Board of Directors in 2014 was held in communication mode, which examined and passed 2 resolutions, including ‘The Proposal of Plan to Change Registered Capital of Bank of Jining’ and ‘The Proposal of Revising Articles of Association of Bank of Jining’.
(iv) On 12 June, 2014, the Third Interim Meeting of the Third Board of Directors was held in communication mode, examined and passed ‘The Proposal of Investment Increase Towards Jining Rushang Village Bank’.
(v) On August 22, 2014, the Forth Meeting of the Third Board of Directors was held, examined and passed 7 resolutions, including ‘2014 The First Half Year Work Report And the Second Half Year Work Plan of Bank of Jining’, ‘The Proposal of Revising Articles of Association of Bank of Jining’, ‘The Proposal Regarding ‘4050’ Difficult Groups Loan’, ‘The Proposal of Nominating Mr. Yinyong As the Vice General Manager of Auditing Department of Bank of Jining’, ‘The Proposal Regarding Adjusting the Department Setting of the Headquarters of Bank of Jining’, ‘The Proposal of Holding the First Extraordinary General Meeting of 2014’.
(vi)On 28 September, 2014, the Forth Interim Meeting of the Third Board of Directors was held in communication mode, which examined and
Page33of 36 Bank of Jining Co., Ltd. Annual Report 2014 passed ‘The Motion of Changing the Address of Bank of Jining’.
(vii)On 21 November, 2014, the Fifth Meeting of the Third Board of Directors was held, which discussed and passed 3 resolutions, including ‘2014 Third Quarter Work Report of Bank of Jinng’, ‘The Proposal Regarding Bank Card Information Security of Bank of Jinig’, and ‘The Motion Regarding Hiring an Accounting Firm to Audit 2014 Financial Reports of Bank of Jining’. Furthermore, the Board of Directors debriefed ‘The Audit Report on Capital Management of Bank of Jining’. ii. The Implementation of Resolutions Passed by the General Meeting During the reporting period, the Board of Directors followed the resolutions of the Shareholders’ Meeting, earnestly organized the management team to implement 2014 annual work plan and financial budgeting scheme, executed shareholders’ dividends distribution plan, accomplished all business tasks and achieved good economic and social benefits. The Board of Directors enhanced the implementation of the following aspects:
(i) The Board of Directors timely revised Articles of Association, adjusted the Headquarters’ department setting, and continuously improved the corporate governance system. At first, based on the unified deployment of CBRC Shandong Bureau, combined with the work practice, the Board of Directors actively implemented the revision of Articles of Association and the proposal was passed by the General Meeting. The regulator issued an official reply then. The content of revision included the
Page34of 36 Bank of Jining Co., Ltd. Annual Report 2014 nominating procedure of the Board of Directors and the Board of Supervisors, the frequency of holding the Board of Directors meetings and the Board of Supervisors meetings, the qualification of the representative, long term capital replenishment commitment of main shareholder, enhancing the management of shareholders’ stock pledge, and the voting formula of major decision-making etc. It formulated specific rule of procedure of the General Meeting, the Board of Directors and the Board of Supervisors.
Secondly, for adapting to risk control and business development, the Board of Directors adjusted some management departments of the Headquarters in 2014. On the basis of maintaining the organizational structure of the Headquarters, which was the business development (foreground), business management (middle office), and support (background). The Risk Management Department was separated into Risk Management Department and Credit Approval Department; The Credit Operation Department and Institutional Service Department merged into Corporate Business Department, and the credit approval function belonged to Credit Approval Department. From the operation situation after the adjustment, by integrating department resources, credit marketing, credit approval, risk prevention and control functions of the Bank were effectively separated.
(ii) The Bank steadily implemented regional-cross development strategy and actively explored new service mode, such as community sub-branches. At the end of 2014, the number of branches and
Page35of 36 Bank of Jining Co., Ltd. Annual Report 2014 sub-branches of the whole bank achieved 43, including 1 Headquarters business office, 4 branches (Heze City, Zaozhuang City, Taian City, Zibo City), 37 sub-branches and 1 micro business loan center. The layout of regional commercial banks began to take shape. In 2014, China Banking Regulatory Commission agreed the Bank to establish Linyi City Branch and Rizhao City Branch, and the Bank planned to increase 23 sub-branches in Jining City and Cross-regional branches.
(iii)The Bank persisted in the market positioning of serving for small and medium-sized enterprises, accelerated the differentiation strategy transformation. Based on the geographical advantage close to small and medium-sized enterprises as a ‘local bank’, constantly improved the mechanism of financial services, strengthened business innovation, strove to providing professional, excellent and efficient financial service for small and medium entities. The comprehensive competition ability of the Bank had been constantly improved. iii. Main Objectives in Year 2015 The Bank aims to achieve the following objectives: both the growth rate of total assets and deposits is over 7%, the growth rate of the loan is dependent upon the credit control of the Peoples’ Bank of China; the non-performing loan ratio is less than 4%; the decline of the net profit is less than 25%; the return on net assets is over 11%; the provision coverage ratio is more than 150%, the leverage ratio is more than 4% and capital adequacy ratio is over 10.5%, and the other major prudent operation indicators are in accordance with regulatory requirements.
Page36of 36 Bank of Jining Co., Ltd. Annual Report 2014
(VII) The Work of Board of Supervisors i. The Meetings of Board of Supervisors During the Reporting Period In 2014, according to Articles of Association of the Bank and regulatory requirements, the Third Board of Supervisors held 4 meetings (including 1 teleconference), and passed 11 resolution as follows:
(i) On 6 January, 2014, the First Interim Meeting of the Third Board of Supervisors was held, which examined and passed resolutions of ‘The Proposal Regarding Planning to Hire Shandong Hexin Accounting Firm to Audit 2013 Final Financial Statements of the Bank’.
(ii) On 2 April, 2014, the Third Meeting of the Third Board of Supervisors was held, which examined and passed 4 resolutions, including ‘2013 Annual Work Report and 2014 Annual Work Plan of Bank of Jining’, ‘Changing the Member of the Supervision Committee of the Board of Supervisors of Bank of Jining’, ‘2013 Annual Work Report and 2014 Annual Work Plan of the Board of Supervisors of Bank of Jining’, and ‘2013 Annual Profit Distribution Plan of the Board of Directors of Bank of Jining’ etc.
(iii) On 22 August 2014, the Forth Meeting of the Third Board of Supervisors was held, which examined and passed 3 resolutions, including ‘2014 First Half Year Work Report and Second Half Year Work Plan of Bank of Jining’, ‘2014 First Half Year of Work Report and the Second Half Year Work Plan of Board of Supervisors of Bank of Jining’
Page37of 36 Bank of Jining Co., Ltd. Annual Report 2014 and ‘The Supervision System Construction Outline of the Board of Supervisors of Bank of Jining’ etc.
(iv) On 21 November, 2014, the Fifth meeting of the Third Board of Supervisors was held, which discussed and passed 3 motions, including ‘2014 Third Quarter Work Report of Bank of Jining’, ‘2014 Third Quarter Work Report of Board of Supervisors of Bank of Jining’ and ‘Mr. Li Xin Fang Requesting to Resign the Employee Supervisor of the 3rd Board of Supervisors’.
Meanwhile, according to regulatory requirement, the Board of Supervisors assigned members to attend the Board of Directors’ meetings as non-voting delegates, and performed compliance supervision function towards conference procedures.
The Board of Supervisors’ opinions on the Performance and Due Diligence of Members of Board of Directors and Executive Management (i) The Opinion Regarding Performance and Due Diligence of the Board of Directors and its members In accordance with ‘Senior Management Performance Evaluation System’ and regulatory requirements, the comprehensive evaluation on annual performance of the Board of Directors and its members as follows:
The Board of Directors were able to conscientiously implement resolutions passed by the Shareholders’ Meeting, the organizational structure were complete, all committees implemented their duties in good faith, disclosed
Page38of 36 Bank of Jining Co., Ltd. Annual Report 2014 information within the normative document prescribed, established and implemented authorization to the president system. In regular meeting of Board of Directors, comprehensive inspection results conducted by the CBRC Shandong Bureau were informed. The Board of Directors was able to accept the supervision from the Board of Supervisors, inviting the Board of Supervisors to attend the Board meetings as non-voting delegates. In 2014, the Board of Directors held 7 Board meetings, including 3 regular meetings, 4 teleconferences, and formulated 26 resolutions. All meeting procedures were in accordance with relevant rules of Articles of Association of Bank of Jining.
(ii) The Evaluation on the Performance of the Senior Management and Its Members The Board of Directors implemented necessary qualitative and quantitative evaluation towards the senior management and its members. Combined annual personal performance reports and daily supervision results etc., the comprehensive evaluation as follows:
In 2014, the organizational structure of the senior management was complete, the division of labor of members was clear. The senior management was able to earnestly implement resolutions of Board meetings in accordance with the management line, consciously accepted the oversight of the Board of Supervisors. It established and improved all conference systems and formulated corresponding rules of procedure. Risk mechanism was further strengthened, basically covering all areas of business and segments. The Bank established corresponding responsibility
Page39of 36 Bank of Jining Co., Ltd. Annual Report 2014 and accountability mechanism and clarified senior management members’ responsibilities. Confronting complicated and rigorous domestic economic situation, the senior management was able to abide by regulations and normative documents, attached great importance to the business philosophy of compliance by law, prudent management and steady development, single group client credit concentration, single customer loan concentration and correlation, and all of indicators were conform to regulations of ‘Core Indicators of Risk Supervision of Commercial Banks’. Furthermore, it continuously developed and improved the system construction mechanism, according to the result of the supervisory inspection, timely formed rectifications report and actively implemented rectification measures, which ensured sustained and healthy development of all businesses.
As at the end of 2014, the Bank had 43 branches and sub-branches, of which, 4 cross-regional branches located in Heze Ctiy, Zaozhuang City, Zibo City, and Taian City. Furthermore, Rizhao Branch and Linyi Branch were allowed to establish, successfully completed the development plan formulated by the Board of Directors. The Bank conscientiously followed recommendations by the regulatory authority, implemented term-by-term rectification according to results of inspection. Furthermore, it ensured that the business operation was secure throughout the year, successfully completed business indicators and development goals formulated by the Board of Directors.
Senior executives of the Headquarters were able to perform their duties
Page40of 36 Bank of Jining Co., Ltd. Annual Report 2014 following the principle of good faith, prudence and diligence throughout the year. They could accept supervision of the Board of Supervisors without disturbing their inspection or supervision activities in accordance with rules; According to their respective responsibilities, duties and corresponding requirements, senior executives of the Headquarters were able to formulate and improve management system and risk prevention measures, and actively organized the grass-roots level to study and carry out; regarding regulator’s opinions and rectification requirements, senior executives could seriously organized rectification and implementation. Senior executives achieved satisfactory results in respective responsibilities of management line, business management and indexes were excellent without major economic cases, and the objectives of the year were accomplished. iii. The Board of Supervisors’ Introduction regarding Special Inspection Conclusion, Audit on Departure of Senior Executives, and Non-Performing Loans Responsibility Identification etc. (i) Effectively implement business audit work. In 2014, the Audit Department carried out 17 business audit projects and 6 economic departure audits, and assisted the Board of Supervisors Office in 23 departure audits. From the perspective of the audit object, it covered all branches, sub-branches and main business management departments, including credit, accounting, human resources, and clearing operation department etc. From the perspective of audit scope, it involved in ‘high pollution, high energy consumption and excess production capacity industry’ loans, operational property mortgages, including internal
Page41of 36 Bank of Jining Co., Ltd. Annual Report 2014 management line, such as performance assessment and capital management etc. Annual audit found 254 problems, proposing 81 recommendations and 237 problems were rectified, rectification rate reached 93.31%. It further improved the implementation capacity of the management system, and effectively performed supervision and service function of internal audit. Meanwhile, the Audit Department assisted the external engineering entities in 17 engineering program audits. By implementing whole process supervision and strengthening audit supervision, it gave full play to the function of internal audit.
(ii) Strengthen non-performing loans identification work. Following the principle of objective and fair, seeking truth from facts, adopting the method of on-site and off-site combination, the Bank seriously found out reasons of non-performing assets. In 2014, it completed 69 non-performing assets responsibility identifications with 294.52 million yuan, of which, 1 identification for gross neglect of duty, 11 identifications for primary responsibility, 51 identifications for secondary responsibility, and 6 identifications for exemption. Objectively analyzing reasons of non-performing loan was not only providing objective basis for non-performing assets responsibility identification but also concluding the experience of guarding against and defusing financial risks.
(iii)Pay attention to coordinating with eternal audit, sorting out and implementing rectification work. In 2014, the Audit Department actively cooperated with Shandong Hexin Accounting Firm to audit 2013 annual
Page42of 36 Bank of Jining Co., Ltd. Annual Report 2014 report of the Bank; it coordinated with Ernst &Young Huaming accounting firm twice for extended audit of Qilu Bank; it cooperated with regulatory authorities to complete 2013 annual regulatory rating and risk self-evaluation work, and site inspection to the Bank.
(VIII) Honors Rewarded and Performance Ranking The supervisory rating of Bank of Jining has achieved ‘Level 2+’ of
China Banking Regulatory Commission for four consecutive years. The
Bank was awarded as ‘The Civilized and Standard Service Demonstration
Unit’ at national level by China Banking Association. It won the prize of
‘civilized unit’ at provincial level by Commission of civilization of
Shandong Province. Furthermore, it has achieved ‘AAA Excellence’ at local financial enterprise performance evaluation activity organized by
Finance Department of Shandong Province for five consecutive years.
VII. Material Matters
(I) During the reporting period, the Bank was not involved in any litigation and arbitration events which had material impacts on the operating activities, and no significant criminal cases occurred.
(II) During the reporting period, no major acquisition, merger or sale of assets events occurred.
(III) During the reporting period, the Bank was not involved in any
Page43of 36 Bank of Jining Co., Ltd. Annual Report 2014 significant custody, guarantee, commitment, and management of entrustment assets.
(IV) During the reporting period, the Board of Directors and senior executives were not subject to any punishment by the relevant regulatory authorities and judicial authorities.
VIII. Financial Statements The Bank’s 2014 Annual Audit Report had been audited by Shandong Hexin Accountanting Firm (Specialized General Partnership), CPA Li Hui and Li Zhi Ping signed and issued standard unqualified auditor’s report.
Balance Sheet
Unit: RMB
Page44of 36 Liabilities and Owners’ Assets No. 2014 2013 Equity No. 2014 2013 Bank of Jining Co., Ltd. Annual Report 2014 (Shareholder s’ Equity)
Assets： Liabilities:
Cash and Borrowing bank 1 449,815,079.87 246,968,515.59 from central 28 394,917,346.20 467,637,994.48 deposits bank Deposits Deposits from with central 2 5,618,063,322.81 6,244,512,976.78 associated 29 54,438,202.20 61,626,439.36 bank banks Deposits from banks and Precious 3 - - other 30 714,584.03 1,458,072.60 metals financial institutions Takings from Deposits banks and with 4 - - other 31 - 151,621,364.60 associated financial banks institutions Financial Deposits in liabilities held 5 1,811,229,250.99 1,788,013,921.95 32 - - other banks for trading
Placements Derivative with banks financial and other 6 - - 33 - - liabilities financial institutions Financial Financial assets sold assets held 7 - - under 34 1,054,094,386.53 for trading repurchase agreements Derivative Deposits from financial 8 - - 35 28,529,210,882.22 26,164,386,157.96 customers assets Financial Employee assets held benefits under 9 1,602,262,087.56 2,716,863,099.12 36 31,993,856.49 39,848,748.86 payable resale agreements Accounts receivable 10 - - Taxes payable 37 105,858,744.48 93,479,012.14 financial assets Interest Interest 11 109,507,083.38 60,786,547.02 38 601,446,972.97 385,888,368.58 receivable Pagep45ayableof 36 Other accounts 12 186,623,386.23 809,485,606.77 Provisions 39 - - receivable Bank of Jining Co., Ltd. Annual Report 2014
Income Statement and Profit Distribution Statement
Unit: RMB Items No. 2014 2013
1. Operating income 1 1,551,895,069.41 1,340,617,785.86
Net interest income 2 1,460,827,973.33 1,288,606,688.74
Interest income 3 2,536,697,341.50 2,820,604,351.04
Interest expense 4 1,075,869,368.17 1,531,997,682.30
Net fee and commission income 5 -2,613,563.90 32,659,411.75
Fee and commission income 6 37,845,720.63 61,651,253.92
Fee and commission expense 7 28,991,842.17 40,459,284.53 Investment income (‘-’expresses the 8 7,047,714.91 losses) 76,256,111.77 Among which: Investment income from affiliated 9 - - businesses and joint ventures Net gain/loss on fair value changes 10 - - (‘-’expresses the losses) Foreign exchange gains and losses 11 5,477,621.13 (‘-’expresses the losses) 6,931,653.98 Other operating income 12 10,492,894.23 6,826,369.33
2. Operating expense 13 955,078,497.69 765,925,951.85
Business taxes and surcharges 14 127,622,892.94 147,735,746.50
Operating and administrative expenses 15 431,568,432.84 405,446,247.49
Provisions for impairment losses 16 212,743,957.86 395,887,171.91 Other operating expenses 17 - - 3. Operating profit 18 596,816,571.72 574,691,834.01 (‘-’expresses the losses) Add: Non-operating income 19 20,010,674.10 15,804,394.66
Less: Non-operating expense 20 596,976.12 1,025,940.46 4. Profit before tax 21 615,801,305.36 589,899,252.55 (‘-’expresses the losses)
Page46of 36 Bank of Jining Co., Ltd. Annual Report 2014
Less: Income tax 22 150,706,715.97 148,197,986.24
5. Net profit (‘-’expresses the net loss) 23 465,094,589.39 441,701,266.31
Add: Opening retained profit
Recover losses by surplus reserve - -
Other adjustments - -
6. Profit available for distribution 38,223,535.93 Less: Profit appropriation- Surplus reserve Profit appropriation-General reserve
7. Retained earnings 503,318,125.32 441,701,266.31
Cash Flow Statement
Unit: RMB Items 2014 2013 1. Cash flows from operating activities Net increase in deposits from customers, 2,145,986,262.72 5,973,288,878.20 banks and other financial institutions Net increase in borrowing from central -72,720,648.28 268,510,500.00 bank Net increase in placements from banks and 902,473,021.93 -980,207,898.56 other financial institutions Interest, fee and commission received 2,518,825,641.72 2,876,780,229.94 Other cash received related to 781,395,149.41 78,367,550.79 operating activities Sub-total of cash inflows 6,275,959,427.50 8,216,739,260.37 Net increase in loans and advances to 3,502,314,658.11 3,482,389,062.41 customers Net increase in deposits with the central 326,892,847.14 785,886,491.05 bank, banks and other financial institutions Interest, fee and commission paid 902,965,728.80 1,374,781,982.07 Cash paid to and on behalf of employees 236,146,890.94 207,636,771.09 Payment for all types of taxes 352,859,155.90 410,239,819.80 Other cash paid related to operating 193,665,434.81 329,204,924.32 activities Sub-total of cash outflows 5,514,844,715.70 6,590,139,050.74 Net cash inflow from operating activities 761,114,711.80 1,626,600,209.63 2. Cash flows from investing activities
Page47of 36 Bank of Jining Co., Ltd. Annual Report 2014
Proceeds from disposal and redemption of 3,505,851,160.00 - investments Cash received from return on investments 41,995,402.71 3,940,000.00 Cash received from other investment 379,109.80 805,660.06 activities Sub-total of cash inflows 3,548,225,672.51 4,745,660.06 Cash paid for investments 6,186,446,594.11 394,355,200.00 Cash paid for acquisition of fixed assets 184,160,571.21 167,126,031.47 intangible assets and other long-term assets Cash paid for other investing activities - - Sub-total of cash outflows 6,370,607,165.32 561,481,231.47 Net cash inflow from investing activities -2,822,381,492.81 -556,735,571.41 3. Cash flows from financing activities Cash received from investments 41,000,000.00 Include: Sub companies absorb the cash received 25,020,000.00 - by minority shareholders Cash received from other financing - - activities Sub-total of cash inflows 41,000,000.00 Cash paid for debts repayment - - Cash paid for dividends, profits 39,709,811.31 132,861,390.97 distribution or interest Other cash paid related to financing - - activities Sub-total of cash outflows 39,709,811.31 132,861,390.97 Net cash inflow from financing activities 1,290,188.69 -132,861,390.97 4. Effect of foreign exchange rate changes on cash and cash equivalents 5. Net increase in cash and cash -2,059,976,592.32 937,003,247.25 equivalents Add: Cash and cash equivalents at the 6,593,015,521.92 5,656,012,274.67 beginning of the year 6. Cash and cash equivalents at the end 4,533,038,929.60 6,593,015,521.92 of the year
Important notice: The annual report is prepared in Chinese and English, English translation is purely for reference only. Should there be any inconsistencies between them: the report in Chinese shall prevail.
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