Annual Report 2014
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Shengjing Bank Co., Ltd.* (A joint stock company incorporated in the People's Republic of China with limited liability) Stock Code:02066 Shengjing Bank Co., Ltd.* 2014 Annual Report 2014 Annual Report * Shengjing Bank Co., Ltd. is not an authorised institution within the meaning of the Banking Ordinance (Chapter 155 of the Laws of Hong Kong), not subject to the supervision of the Hong Kong Monetary Authority, and not authorised to carry on banking and/or deposit-taking business in Hong Kong. Contents 1. Company Information 2 2. Financial Highlights 4 3. Chairman’s Statement 8 4. President’s Statement 10 5. Honours and Awards 11 6. Management Discussion and Analysis 12 6.1 Environment and Prospects 12 6.2 Development Strategies 12 6.3 Business Review 13 6.4 Financial Review 15 6.5 Business Overview 52 6.6 Risk Management 69 6.7 Analysis on Capital Adequacy Ratio 77 7. Significant Events 78 8. Change in Share Capital and Shareholders 81 9. Directors, Supervisors, Senior Management and Employees 87 10. Corporate Governance Report 107 11. Report of the Board of Directors 135 12. Report of the Board of Supervisors 143 13. Social Responsibility Report 147 14. Internal Control 154 15. Independent Auditor’s Report 157 16. Financial Statements 158 17. Notes to the Financial Statements 168 18. Organisational Chart 300 19. List of Branches 301 20. Definition 307 Shengjing Bank Co., Ltd. 1 COMPANY INFORMATION Legal Name in Chinese 盛京銀行股份有限公司 Abbreviation in Chinese 盛京銀行 Legal Name in English Shengjing Bank Co., Ltd. Abbreviation in English SHENGJING BANK Legal Representative ZHANG Yukun Authorised Representatives ZHANG Yukun and ZHOU Zhi Secretary to the Board of Directors ZHOU Zhi Joint Company Secretaries ZHOU Zhi and KWONG Yin Ping Yvonne Registered and Business Address No. 109 Beizhan Road, Shenhe District, Shenyang, Liaoning Province, the PRC Contact Number 86-24-22535633 Website www.shengjingbank.com.cn Principal Place of Business in Units 08–09, 18/F, Office Tower, Hong Kong Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong Website of the Hong Kong Stock www.hkexnews.hk Exchange on which the H Share Annual Report is Published Place of Maintenance of the Annual Office of the Board of Directors of the Bank Report 2 Annual Report 2014 COMPANY INFORMATION (Continued) Stock Name Shengjing Bank Stock Code 02066 H Share Registrar and Computershare Hong Kong Investor Services Limited its Business Address Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong Legal Advisor as to PRC Laws and its Tian Yuan Law Firm Business Address 10/F, China Pacific Insurance Plaza 28 Fengsheng Hutong Xicheng District Beijing, the PRC Legal Advisor as to Hong Kong Law and Freshfields Bruckhaus Deringer its Business Address 11th Floor, Two Exchange Square Central Hong Kong Auditor and its Business Address KPMG 8th Floor Prince’s Building 10 Chater Road Hong Kong Compliance Advisor and its Business CMB International Capital Limited Address Room 1803-4, 18/F, Bank of America Tower 12 Harcourt Road Central Hong Kong Shengjing Bank Co., Ltd. 3 FINANCIAL HIGHLIGHTS For the year ended 31 December Year-on-year change (Expressed in thousands of between 2014 Renminbi, unless otherwise stated) 2014 2013 and 2013 2012 2011 Rate of change (%) Operating Results Interest income 25,415,004 18,038,013 40.9 13,835,459 10,176,750 Interest expense (15,513,832) (10,193,830) 52.2 (7,050,533) (4,832,439) Net interest income 9,901,172 7,844,183 26.2 6,784,926 5,344,311 Net fee and commission income 1,368,431 770,141 77.7 112,246 65,079 Net trading gains/(losses), net gains/ (losses) arising from financial investments, other operating income (64,840) 291,470 (122.2) 11,119 3,920 Operating income 11,204,763 8,905,794 25.8 6,908,291 5,413,310 Operating expenses (3,211,887) (2,445,727) 31.3 (2,017,380) (1,726,605) Impairment losses on assets (934,151) (171,860) 443.6 (431,714) (445,643) Operating profit 7,058,725 6,288,207 12.3 4,459,197 3,241,062 Share of profits of associates 2,338 19,719 (88.1) 23,795 34,411 Profit before taxation 7,061,063 6,307,926 11.9 4,482,992 3,275,473 Income tax expense (1,637,225) (1,419,125) 15.4 (973,653) (663,147) Net profit 5,423,838 4,888,801 10.9 3,509,339 2,612,326 Net profit attributable to equity shareholders of the Bank 5,404,933 4,865,531 11.1 3,496,626 2,612,326 4 Annual Report 2014 FINANCIAL HIGHLIGHTS (Continued) For the year ended 31 December Year-on-year change (Expressed in thousands of between 2014 Renminbi, unless otherwise stated) 2014 2013 and 2013 2012 2011 Change Calculated on a per share basis (RMB) Basic earnings per share 1.25 1.31 (0.06) 0.95 0.77 Dividend per share 0.275 0.10 0.175 — 0.10 Major indicators of assets/ Rate of change (%) liabilities Total assets 503,370,514 355,432,167 41.6 313,241,579 221,206,792 Of which: loans and advances to customers 155,946,864 131,557,892 18.5 112,271,202 96,762,453 Total liabilities 467,237,029 333,961,729 39.9 298,583,755 209,849,112 Of which: deposits from customers 315,943,789 262,912,728 20.2 207,987,227 171,474,491 Share capital 5,646,005 4,096,005 37.8 3,696,005 3,696,005 Equity attributable to equity shareholders of the Bank 35,699,553 21,055,411 69.6 14,266,067 11,357,680 Total equity 36,133,485 21,470,438 68.3 14,657,824 11,357,680 Shengjing Bank Co., Ltd. 5 FINANCIAL HIGHLIGHTS (Continued) For the year ended 31 December Year-on-year (Expressed in thousands of change Renminbi, unless otherwise between 2014 stated) 2014 2013 and 2013 2012 2011 Change Profitability Indicators (%) Return on average total assets(1) 1.26 1.46 (0.20) 1.31 1.24 Return on average equity(2) 18.83 27.06 (8.23) 26.98 23.00 Net interest spread(3) 2.07 2.17 (0.10) 2.51 2.58 Net interest margin(4) 2.32 2.39 (0.07) 2.68 2.70 Net fee and commission income to operating income 12.21 8.65 3.56 1.62 1.20 Cost-to-income ratio(5) 19.06 19.01 0.05 20.80 23.97 For the year ended 31 December Year-on-year change (Expressed in thousands of between 2014 Renminbi, unless otherwise stated) 2014 2013 and 2013 2012 2011 Change Asset quality indicators (%) Non-performing loan ratio(6) 0.44 0.46 (0.02) 0.54 0.63 Allowance to non-performing loans(7) 387.42 306.12 81.30 302.58 260.78 (8) Allowance to total loans 1.70 1.41 0.29 1.63 1.64 Change Capital adequacy ratio indicators (%) Calculated based on Capital Adequacy Ratio Core capital adequacy ratio(9) N/A N/A N/A 9.39 8.92 Capital adequacy ratio(9) N/A N/A N/A 11.92 12.02 Capital adequacy indicators (%) Calculated based on Capital Administrative Measures Core Tier-one capital adequacy ratio(9) 11.04 10.07 0.97 N/A N/A 6 Annual Report 2014 FINANCIAL HIGHLIGHTS (Continued) For the year ended 31 December Year-on-year change (Expressed in thousands of between 2014 Renminbi, unless otherwise stated) 2014 2013 and 2013 2012 2011 Change Tier-one capital adequacy ratio(9) 11.04 10.07 0.97 N/A N/A (9) Capital adequacy ratio 12.65 11.17 1.48 N/A N/A Total equity to total assets ratio 7.18 6.04 1.14 4.68 5.13 Change Other indicators (%) Loan-to-deposit ratio(10) 50.21 50.75 (0.54) 54.87 57.37 (1) Calculated by dividing the net profit by the average of total assets at the beginning and at the end of the period. (2) Representing the net profit during the period as a percentage of the average balance of total equity at the beginning and the end of the period. (3) Calculated by deducting the average interest rate of interest-bearing liabilities from the average return rate of interest-earning assets. (4) Calculated by dividing net interest income by the average interest-earning assets. (5) Calculated by dividing operating expenses (less business tax and surcharges) by operating income. (6) Calculated by dividing the balance of non-performing loans by total balance of loans and advances to customers. (7) Calculated by dividing the balance of provision for impairment on loans by the balance of non-performing loans. (8) Calculated by dividing the balance of the provision for impairment on loans by the total balance of loans and advances to customers. (9) Core Tier-one capital adequacy ratio, Tier-one capital adequacy ratio and capital adequacy ratio for 2014 and 2013 were calculated in accordance with the latest guidance promulgated by China Banking Regulatory Commission (the “CBRC”) (effective from 1 January 2013), while the core capital adequacy ratio and capital adequacy ratio for 2012 and 2011 were calculated in accordance with the Measures for the Management of Capital Adequacy Ratios of Commercial Banks (amended in 2007) (invalid from 1 January 2013). (10) The loan-to-deposit ratio is calculated by dividing the total balance of loans and advances to customers by total deposits from customers.