CHONGQING THREE GORGES BANK COMPANY LIMITED
2017 Annual Report
April 2018
2017 Annual Report
Contents
Definitions ...... 3
Chairman’s Statement ...... 4
Important Notice ...... 8
1. Bank Profile ...... 9
2. Accounting and Business Data Summary ...... 11
3. Business Summary ...... 16
4. Management Discussion and Analysis ...... 29
5. Changes in Shares and Shareholders ...... 77
6. Directors, Supervisors, Senior Management Members and Staff ...... 84
7. Corporate Governance ...... 103
8. Significant Events ...... 128
9. Financial Report ...... 132
10. Inspection Documents Catalog ...... 133
Appendix ...... 134
2017 Annual Report Definitions
Unless otherwise specified, definitions of following terms are as
follows:
In the text Definitions
The Bank, Company, the Company and Three CHONGQING THREE GORGES BANK CO.,
Gorges Bank LTD.
Articles of Association of the Bank, Articles of Articles of Association of Chongqing Three
Association of the Company Gorges Bank Co., Ltd.
Our country The People's Republic of China
Central Bank, People's Bank of China The People's Bank of China
BRC, CBRC China Banking Regulatory Commission
CQITI Chongqing International Trust Inc.
Amount of currency Amount is in RMB unless otherwise specified
3 2017 Annual Report Chairman’s Statement
2017 is a year of historic significance. Ten years ago, the Three Gorges Bank successfully completed the reorganization on December 27 and established a development strategy of taking root in Chongqing, serving the reservoir region and covering the whole country. After ten years of efforts, the Bank has presented a new chapter of steady development with the mission of serving real economy, preventing and controlling financial risks and deepening financial reform.
Operation performance grows steadily and comprehensive strength is continuously enhanced. At the end of 2017, the Bank's total assets reached RMB
202.36 billion, the balance of various deposits was RMB 123.8 billion, the total loans were RMB 44.347 billion, and the total profits were RMB 2.35 billion, respectively 37 times, 37 times, 37 times and 52 times higher than those at the beginning of reorganization and with an annual growth of 49.88%, 49.99%, 49.99% and 55.34%.
The Bank's ROA and ROE are both higher than the average level of peers. The total assets and the balance of deposits respectively accounted for 4.29% and 3.53% in those of banking financial institutions and ranked the 8th in the whole city. The ten-year average growth of assets, deposits, loans and profits is respectively 2.18 times, 2.45 times, 2.38 times and 3.30 times of the average growth of banking financial institutions in the city. The Bank has been listed in the "Top 1,000 Global Banks" of the British magazine
Association, it was ranked 75th, up 7 places from 2016. In the 2017 Chinese City
4 2017 Annual Report
Commercial Bank Competitiveness Ranking listed by
(with assets ranging from RMB 100 billion to 200 billion), up 1 place from 2016.
Service capacity is continuously strengthened and social responsibility is earnestly fulfilled. Over the past ten years, the Bank has paid taxes of RMB 4.48 billion, providing about RMB 500 billion in financing for the society. It has been actively supporting the development of agriculture, rural areas and farmers and in 2017 it successfully issued RMB 3 billion financial debts for "agriculture, rural areas and farmers", with a balance of RMB 9.61 billion agricultural loans at the end of the year.
By making efforts to build the micro-finance brand of "petty mortgage loan" and giving priority to supporting small and micro enterprises that conform to the national policies and guidelines, it realized a loan balance of RMB 25.53 billion for small and micro enterprises at the end of 2017. While vigorously promoting the targeted poverty alleviation, it achieved the balance of various credit lines of RMB 30.44 billion in 14+4 poverty-stricken districts and counties of Chongqing at the end of 2017, of which the balance of targeted poverty alleviation loans was RMB 2.55 billion and also established fifty-two financial poverty alleviation demonstration sites established. In which 38 were approved and 11 were awarded municipal financial poverty alleviation demonstration sites by the PBOC Chongqing Operation Office and the Municipal
Poverty Alleviation Office of Chongqing It has been helping the development of public welfare undertakings and has donated more than RMB 20 million over the past ten years and established the first charity foundation among Chongqing Banks-the Charity
Foundation of Chongqing Three Gorges Bank.
Shareholders' returns are improved continuously and capital strength is
5 2017 Annual Report enhanced constantly. At the end of 2017, the Bank's net assets per share were RMB
2.70 and earnings per share were RMB 0.37, respectively 1.7 times and 36 times higher than those at the beginning of reorganization. At the end of 2017, the registered capital of the Bank reached RMB 4.847 billion, 33.1 times higher than that at the beginning of reorganization.
Corporate governance is strictly regulated and internal control is continuously strengthened. Since the reorganization, the Bank has established a modern corporate governance structure and has always adhered to the rule of law to ensure the checks and balances and standardized operation of the "three boards and one layer". Focusing on strategic planning, capital management, equity management, internal control, risk prevention, connected transactions, review and decision-making, system and mechanism building, reform and development, etc., the Bank has continuously strengthened corporate governance. On December 27, 2017, it successfully completed the re-election of Board of Directors and Board of Supervisors and appointed the new senior management.
Although obstacles ahead on the road of development, we will strive to overcome all difficulties and achieve the success. To build a first-class city commercial bank in the west in the new era, it is an honored mission and we undertake a great responsibility. Standing at a new starting point in the next decade, we will fully implement the spirits of the 19th National Congress of CPC. With the strong support of our customers and all sectors of society, we will recognize the new situation, deal with new challenges, set up new ideas and create new actions. By staying true to the mission, keeping duty in mind, seizing opportunities and forging ahead, we will vigorously
6 2017 Annual Report enhance our ability to serve the real economy, prevent all kinds of financial risks in an all-round way, persist in deepening reform and development, improve the quality of development in the new journey of building a socialist financial industry with Chinese characteristics in the new era, and continue to strive for the realization of our objectives in the strategic planning of "13th Five-Year Plan".
Chairman: Ding Shilu
7 2017 Annual Report Important Notice
Board of Directors and directors of Chongqing Three Gorges Bank Co., Ltd. undertake that there are no false records, misleading statements or major omissions in the report. The Bank bears joint and several liabilities for their authenticity, accuracy and integrity.
The 2017 Annual Report and Summary has been deliberated and approved at the
2nd Meeting of the Bank's Second Board of Directors.
Financial statements in the report are prepared according to Accounting Standards for Business Enterprises - Basic Standards, various specific accounting standards,
Application Guide of Accounting Standards for Business Enterprises, Explanation on
Accounting Standards for Business Enterprises and other provisions issued by the
Ministry of Finance.
2017 Annual Financial Report has been audited by ShineWing International
Accounting Firm in accordance with PRC Independent Standards on Audit for
Certified Accountants, and standard 2017 Annual Audit Report with standard unqualified auditor's reports being issued as well.
Ding Shilu, Chairman & (Acting) President of the Bank and Wang Liangpin,
Financial Administrator hereby declare and guarantee authenticity and integrity of financial data in this annual report.
Board of Directors of Chongqing Three Gorges Bank Co., Ltd. April 27, 2018
8 2017 Annual Report 1. Bank Profile
1.1 Legal Chinese name: 重庆三峡银行股份有限公司(hereinafter referred to as:
重庆三峡银行)
1.2 Legal English name: Chongqing Three Gorges Bank Co., Ltd.
1.3 Legal representative: Ding Shilu
1.4 Board Secretary: Yao Jiangjun
1.5 Registered and office address: No.3, Baiyan Road, Wanzhou District, Chongqing,
and No.99, Huichuanmen Road, Jiangbeicheng,
Jiangbei District, Chongqing
Zip: 404000
Website: www.ccqtgb.com
Customer services tel: 96968
1.6 Information disclosed on: Shanghai Securities Journal
Annual report published at: www.ccqtgb.com
Annual report prepared at: Office of the Board of Directors, Head Business Office,
business hall of branch and subbranch
1.7 Address: 28F, Tower B, Oriental International Square, No.99, Huichuanmen
Road, Jiangbeicheng, Jiangbei District, Chongqing
Tel.: 023-88890985
Fax: 023-88890022
1.8 Registration information
Initial Registration: February 16, 1998
9 2017 Annual Report
Unified social credit code: 915001017116939742
1.9 Accounting firm
Name: ShineWing International Accounting Firm
Office address: 9F, Tower A, Fuhua Building, No.8, Chaoyangmen North Street,
Dongcheng District, Chongqing
10 2017 Annual Report 2. Accounting and Business Data Summary
2.1 Major operating profit data and indicators during reporting period
2.1.1 Overall profit data
(unit: ten thousand yuan) Item Reporting period Operating income 391,900.46 Operating expense 157,935.33 Operating profit 233,965.12 Net nonoperating income and expense 1,094.40 Total profit 235,059.52 Net cash flow provided by operating activities 879,007.25
2.1.2 Deducted amount involving non-recurring profit and loss item
(unit: ten thousand yuan) Non-recurring profit and loss Reporting period Revenue from disposal of assets 1,314.47 Government grant 1,228.55 Donation expenses 151.78 Net non-operating income and expenditure other than the above 17.63 Sub-total of non-recurring gain and loss items 2,408.87 Income tax affected by non-recurring profit and loss 602.22 Total 1,806.65
11 2017 Annual Report
2.2 Main accounting data and financial indicators for the past three years by the end of reporting period
(unit: ten thousand yuan) Item 2017 2016 2015 Operating income 391,900.46 426,612.38 355,191.66 Total profit 235,059.52 260,508.69 168,293.72 Net profit 181,188.24 198,476.93 126,804.34 Total assets 20,236,085.25 18,150,364.06 13,246,802.48 Total liabilities 18,928,463.64 16,924,100.72 12,360,738.48 Basic earning per share (RMB) 0.37 0.48 0.37 Diluted earnings per share (RMB) 0.37 0.48 0.37 Weighted average return on equity (%) 14.38 21.13 20.71 Shareholders' equity 1,307,621.61 1,226,263.34 886,064.00 Net asset value per share (yuan) 2.70 2.78 2.90
2.3 Principal activity information and data for the past three years by the end of reporting period
(unit: ten thousand yuan)
Item 2017 2016 2015
Total deposits 12,380,016.69 12,216,387.22 9,357,768.97 Including: Personal savings deposits 494,614.01 461,963.30 383,638.24 Personal fixed deposits 2,052,262.65 1,789,114.81 1,030,275.57 Corporate savings deposits 4,059,536.58 3,812,602.31 3,060,554.42 Corporate fixed deposits 4,852,916.12 5,270,156.13 3,263,921.95 Pledged deposits 636,242.20 657,173.93 960,291.34 Financial deposits 177,562.07 215,804.17 322,981.52 Other deposits 106,883.07 9,572.57 336,105.93 Total loan 4,434,704.24 3,845,442.17 3,241,496.67 Including: company loan 3,187,644.15 2,939,907.49 2,361,362.77 Personal loan 1,247,060.09 905,534.68 880,133.91 Loan loss reserves 112,422.61 97,667.31 88,839.55
12 2017 Annual Report
2.4 Supplementary financial indicators for the past three years by the end of reporting period
(unit: %)
Item 2017 2016 2015
Return on assets 0.94 1.26 1.09 Return on capital 14.30 18.79 17.67 NPL ratio 1.40 0.93 0.98 Provision coverage 180.48 274.24 279.38 Loan appropriation ratio 2.54 2.54 2.74 Cost-income ratio 31.40 29.26 31.90 Lending ratio for single top 3.66 3.53 3.28 Lending ratio for top 10 28.11 31.24 25.22 Normal loan migration ratio 5.01 14.95 6.95 Special-mentioned loan migration ratio 9.62 37.09 25.04 Substandard loan migration ratio 82.54 4.08 0.42 Doubtful loan migration ratio 0 29.49 - Liquidity ratio 60.57 73.96 71.80
13 2017 Annual Report
2.5 Capital composition and changes for the past three years by the
end of reporting period
(unit: ten thousand yuan, %)
Item 2017 2016 2015
Net capital 1,741,066.74 1,426,736.89 1,089,829.16 Core tier I capital 1,307,621.61 1,226,263.34 886,064.01 Deduction items of core tier I capital 6,685.66 5,579.71 6,275.88 Net core tier I capital 1,300,935.95 1,220,683.63 879,788.13 Other tier I capitals 0 0 0 Deduction items of other tier I capitals 0 0 0 Net tier I capital 1,300,935.95 1,220,683.63 879,788.13 Tier II capital 440,130.79 206,053.26 210,041.03 Deduction items of tier II capital 0 0 0 Credit risk weighted asset 11,704,808.95 10,244,970.76 7,213,425.01 Market risk weighted asset 1,017,005.78 1,036,083.24 776,271.42 Operational risk weighted asset 732,577.54 658,791.83 528,874.29 Total of risk weighted assets 13,454,392.27 11,939,845.83 8,518,570.72 Core tier I capital adequacy ratio 9.67 10.22 10.33 Tier I capital adequacy ratio 9.67 10.22 10.33 Capital adequacy ratio 12.94 11.95 12.79
2.6 Leverage ratio for the past three years by the end of reporting
period
(unit: ten thousand yuan)
Item 2017 2016 2015
Leverage ratio (%) 5.98 6.26 5.92 Net tier I capital 1,300,935.95 1,220,683.63 879,788.13 Adjusted asset balance on and off-balance 21,745,665.63 19,507,995.77 14,871,450.82 sheet
14 2017 Annual Report
2.7 Liquidity coverage ratio at the end of reporting period
(unit: ten thousand yuan)
Item At the end of reporting period
Liquidity coverage ratio (%) 93.36 Qualified high-quality current assets 3,687,107.04 Ending value of cash outflow in next 30 days 3,949,513.91
2.8 Changes in shareholders' equity during the reporting period
(unit: ten thousand yuan) Increase of Decrease of Item Opening balance Ending balance current period current period Capital 440,630.44 44,329.98 266.94 484,693.48 Capital reserve 296,902.65 0 0 296,902.65 Other -18,385.82 -55,766.92 0 -74,152.74 comprehensive income Surplus reserve 71,008.92 18,118.82 0 89,127.74 Generic risk 231,973.19 24,312.35 0 256,285.54 reserve Undistributed 204,133.96 181,188.24 130,557.26 254,764.94 profits Minority 0 0 0 0 shareholders' equity Total 1,226,263.34 267,949.39 186,591.12 1,307,621.61
15 2017 Annual Report 3. Business Overview
3.1 Business scope of the Bank
Absorption of public deposit, issue of short-term, medium-term and long-term loan; handling of domestic settlement; handling of bill discounting; issue of financial bond; issue, cashing and underwriting of government bond as agent; dealing of inter-bank lending; foreign exchange deposits, foreign exchange loans, international settlements, inter-bank foreign exchange lending, foreign exchange bill acceptance and discounting, foreign exchange borrowing, foreign exchange guarantee, FX proprietary trading and FX trading on behalf of customers ( FX proprietary trading is limited to handling of spot exchange deals), credit investigation, consultation and attestation; offering for guarantee; agency of collection and payment as well as agency for insurance business; providing safe service; other business approved by banking regulatory authorities and national foreign currency authority (above scope is subject to laws and regulations; business required to be approved shall not be operated before being approved).
3.2 Principal activities of the Bank
3.2.1 Corporate Banking
Corporate liability business. The Bank's corporate deposit size increased steadily.
As at the end of the reporting period, the balance of various deposits amounted to RMB
98.33 billion, representing a decrease of RMB 1.32 billion or 1.33% over the beginning of the period. The balance of daily average deposit amounted to RMB 92.19 billion,
16 2017 Annual Report representing an increase of RMB 10.97 billion or 13.51% over 2016. The liability structure was optimized continuously, with the balance and share of insurance agreement deposits both showing a double downward trend at the beginning of the year compared with that at the beginning of the year. The share of general enterprise deposits increased by 7 percentage points compared with that at the beginning of the year.
Corporate asset business. The Bank's asset size expanded steadily and continuously. As at the end of the reporting period, the balance of corporate asset business amounted to RMB 82.46 billion, representing an increase of RMB 15.52 billion or 23.18% over the beginning of the period. By further developing the financing channels, the Bank has not only obtained the underwriting license of the inter-bank bond market and the qualification of the lead underwriter of Beijing Financial Assets
Exchange, but also carried out direct financing business with Chongqing Financial
Assets Exchange and Sichuan Financial Assets Exchange. In addition, it has opened up overseas financing channels and guaranteed direct loans within the territory. With the gradually strengthened comprehensive financial service capability, the Bank has established an integrated management system of on-balance-sheet and off-balance-sheet business, domestic and foreign currencies, offshore and onshore trading of RMB to focus on trade finance and transaction banking.
Construction of corporate customer base and channel The Bank actively expands fundamental customer base. As at the end of the reporting period, accounts opened by customers at the Bank amounted to 25,452, representing an increase of 5,087 accounts
(including 23 increased strategic customers) or 24.98% over the beginning of the period.
17 2017 Annual Report
In addition, the Company has established favorable business partnership with public companies, municipal key national enterprises, major enterprises established by central enterprises in Chongqing, major public investment groups in all districts and counties as well as famous private enterprises, thus forming a group of stable customer base.
3.2.2 Retail banking business
During the reporting period, the Bank's retail business adhered to the overall objective of meeting the five major needs of retail customers in investment management, financing, life, health and social interaction, and implemented the business service concept of "Just for you", to the diversified financial needs of different customer groups with market-leading superior products and high-quality services. Thus, the base customer group and business scale in retail business maintained rapid growth.
As at the end of the reporting period, balance of savings deposit amounted to RMB
25.46 billion, representing an increase of 13.14% over the beginning of the period; balance of retail loan amounted to RMB 10.91 billion, representing an increase of
63.1% over the beginning of the period; retail customers amounted to 1.73 million representing an increase of 23.2% over the beginning of the period; and electronic bank customers amounted to 436,900, representing an increase of 70% over the beginning of the period.
Payment and settlement business. As at the end of the reporting period, bank cards issued amounted to 1.59 million, representing an increase of 23.94% over the beginning of the period. It jointly issued the Employee Preferential Card with Chongqing
Municipal Federation of Trade Unions and Chongqing Office of Chinese Workers
18 2017 Annual Report
Mutual Insurance Association. This card was issued to members of Chongqing Mutual
Association in a targeted manner and had both the membership card function of
Chongqing Mutual Association and the standard debit card function of the Bank, thus providing many exclusive value-added services and reaching an issuance volume of
112,700. It kept promoting the "Global Free" service of Wealth Life Card, and extended the deadline of the activity to 2020, so as to earnestly implement the service concept of
"Just for you". It also launched QR-code payment service of Unionpay, increased the issuance of financial IC cards supporting the State Security Algorithm, and carried out various preferential activities to provide cardholders with more considerate service.
Personal loan business. During the reporting period, the Bank's personal consumption loans grew rapidly, with the mortgage loan business increasing significantly and the total amount of personal consumption loans exceeded RMB 10 billion. The first is to optimize housing mortgage loan products and actively support the rigid and improved demands for housing; the second is to cooperate with real estate financing guarantee companies to add a new business model of "issuing loans after receiving guarantee" to improve the timeliness of mortgage products; the third is to discuss the cooperation of retail asset products with Internet companies many times and explore joint loan products and business models; and the fourth is to carry out interactive cooperation with local tax bureaus of Chongqing and innovate and develop pure online credit self-service loan products of "Tax E-Loan".
Electronic banking business. The Bank actively promoted the development of electronic channels to intellectualization, mobilization and Internetiolization, comprehensively improved the marketing capability of electronic channels, and
19 2017 Annual Report stepped up all work to a new level. As at the end of the reporting period, the Bank owned 349 automatic teller machines (ATM), completed 2,.61 million transactions and realized transaction amount of RMB 5.611 billion. During the reporting period, the number of mobile banking customers continued to grow at a high rate, representing an increase of 122,871 new customers or 80.06% over the beginning of the year. The number and amount of transactions in the full year reached 1.47 million and RMB
23.03 billion respectively, representing a year-on-year growth of 39% and 53% over the last year. The total number of personal online banking customers reached 112,149, with 47,206 new customers increased this year and the transactions occurring in the full year were 352,600. The Bank completed the promotion and operation of mobile operations throughout the bank, realized the mobile operations by ipad, provided platform support for marketing scenes, promoted the landing of businesses including
Employee Preferential Card, and facilitated the mobile and intelligent transformation of the Bank's basic financial services.
3.2.3 Small and micro enterprises banking
During the reporting period, the Bank's business involving small and micro enterprises maintained coordinated, steady and sustainable development, and "three no-less-than" indicator for fully met the standard continuously, so the petty mortgage loan business became the advantage of the Bank's assets business. As at the end of the reporting period, the balance of loans for small and micro enterprises was RMB 25.53 billion, representing an increase of RMB 3.49 billion over the beginning of the year and exceeding the loan increment in the first half year. The number of customers to whom
20 2017 Annual Report the loan for small and micro enterprises was issued reached 4,295, exceeding the level of the same period last year. The passing rate of loan application for small and micro enterprises was 96.35% and the average interest rate for new loans to small and micro enterprises was 6.91%.
Deepen system and mechanism reform and improve comprehensive service ability.
During the reporting period, the Bank continued to strengthen the construction of outlets, improved the efficiency and level of small and micro financial services provided by operating institutions, and focused on building the comprehensive financial services capabilities of specialized sub-branches for small and micro enterprises. By implementing flat reform of 10 specialized sub-branches for small and micro enterprises, it further liberated productivity. Through the integration of the resources, the Bank mobilized the enthusiasm and initiative of business teams in serving small and medium-sized enterprises, and established a customer-centered, product-based and professional service-guaranteed service concept to promote fine management, improve customer experience and expand brand impact.
Build featured product system and enrich connotation of financial service. In combination with market demand, the Bank continuously combed and optimized product system and constructed a product system framework of "Three Gorges Petty
Loan, Three Gorges Micro Loan, Three Gorges Rapid Loan, Three Gorges Chain Loan and Three Gorges Discount". It actively promoted the infrastructure construction of bill business for small and micro enterprises, took the lead in declaring the "Chongqing Bill
Discount Center for Small and Micro Enterprises" and passed the examination, and launched the construction of the centralized issuance center of bills for small and micro
21 2017 Annual Report enterprise; Starting from the petty mortgage loan business, the Bank promoted the construction of a credit factory model, realized specialization in division of work, process of operation and intensification of business model, and continued to facilitate the promotion and application of "continuous loan", "circular loan" and other products.
Set up comprehensive service platform and implement inclusive finance concept.
The Bank made every effort to promote the interconnection between "Three Gorges
Payment" and internal systems such as credit system, risk control platform, big data platform, etc. It added the entry of loan documents through online channels, improved the loan issuance, entrusted payment, repayment and other functions of Class II customers, and provided process support and system guarantee for online loans. It spared no effort to build an Internet supply chain finance platform. Based on the
"four-in-one" of commodity flow, information flow, capital flow and material flow, it explored and built a scenario-based integrated supply chain finance service with the two development models of "supply chain+investment and financing coordination platform" and "supply chain+industrial e-commerce platform" as clues and the projects of "Yijiupi", "Weijiudai" and "Chongqing Supply and Marketing Group" as examples.
It strove to promote the research & development and optimization of featured credit products for agriculture, rural areas and farmers. In addition, it revised agricultural credit products through market research and innovatively introduced petty credit products for poverty alleviation to provide quality services for more "agriculture, rural areas and farmers" customer groups, solve the problem of fund shortage in the development of "agriculture, rural areas and farmers" and effectively implement the policy requirements of inclusive finance.
22 2017 Annual Report
3.2.4 Fund operation business
During the reporting period, the fund operation business of the Bank developed steadily. As at the end of the reporting period, interbank assets amounted to RMB
136.18 billion, with a year-on-year growth of 17.92% and the interbank liabilities amounted to RMB 39.23 billion, with a year-on-year growth of 19.33%. 382 financial products were issued and established, with a scale of RMB 45.87 billion and a year-on-year growth of 36.48%.
Financial market business. The Bank continued to carry out real financial market business, kept optimizing the asset and liability structure, and consolidated the interbank customer base, thus strengthening its influence increasingly. As at the end of the reporting period, the comprehensive transaction volume in the financial market amounted to RMB 3,627 billion, with a year-on-year growth of 40.37% and ranked
94th in the comprehensive transaction volume of interbank bond market, up 23 places from the previous year. It also ranked 72nd in China Central Depository & Clearing Co.,
Ltd. (CCDC), up 38 places from the previous year, and entered the National Top 100
Transaction Institutions for the first time.
Wealth management. The Bank's financial products were continuously innovated, with more flexible product operation modes and issuance modes and more reasonable product structure, thus effectively enhancing market affinity, and providing more convenient, fast and safe services for the preservation and appreciation of customers' assets. By continuously enriching product range and creating unique products, the Bank won the "Best Wealth Management Bank of 2017" in the "2017 China Financial
Development Forum and the 8th Golden Tripod Award ".
23 2017 Annual Report
Investment banking business. The Bank's investment banking business insists on building the brand of Three Gorges Bank as the core, taking project landing and product innovation as the orientation, regarding direct financing of debt issuance, creditor's rights financing plan, stock pledge financing and other business types as the starting points, seizing the opportunity of obtaining the "bond underwriter" license, consolidating the bond distribution foundation and promoting the investment banking of the corporate business. In August 2017, the Bank successfully obtained the qualification of underwriter of debt financing instruments for non-financial enterprises of the National Association of Financial Market Institutional Investors, thus achieving an effective breakthrough in the bond distribution business. In September, it obtained the qualification as the lead underwriter and listing manager of creditor's rights financing plan in Beijing Financial Assets Exchange.
3.2.5 International business
During the reporting period, the Bank raised US$ 447 million for on-balance-sheet and off-balance-sheet trade and handled US$ 614 million for foreign exchange settlement and sale on behalf of customers. Following the construction pace of inland open highland in Chongqing, the Bank made full use of the free trade zone policy to provide financial support for the construction of "The Belt and Road Initiative" and the
Yangtze River Economic Zone, implemented trade facilitation policies, served the real economy, vigorously carried out trade financing, and was committed to supporting the optimization and upgrading of regional industries.
Meanwhile, it actively opened cross-border financing channels for enterprise
24 2017 Annual Report operation and development. By directly issuing financing guarantee to overseas, the
Bank financed the enterprises from overseas through the direct loan by domestic guarantee, thus effectively reducing the financing cost. The Bank's cross-border financing service provided active financing support for the enterprises to integrate into the global financial market and obtained full recognition from market and customers.
3.2.6 Platform financing and information technology
Promote Internet+finance and accelerate transformation step. As the Bank's comprehensive financial service platform, "Three Gorges Payment" has built up six basic platforms, including account, payment, product, marketing, customer service and risk control, focusing on customers' demands on finance, payment, life, etc. Individual users can open electronic accounts remotely through the "Three Gorges Payment" client, bind multiple bank cards, and realize the functions of payment and settlement, online financing, wealth management, life services, etc. At the same time, "Three
Gorges Payment" can provide customized services for enterprise users in online bill collection, capital settlement, financing loans, cash management and marketing, etc.
Continually enhance IT support and promote information system construction.
During the reporting period, the Bank carried out 136 information technology projects, quickly launched the issuance review system of "Employee Preferential Card", optimized the "wealth deposit" and "optional deposit" functions, completed the launch of 382 various information systems, deepened the application of advanced technologies such as Internet finance and big data, and supported the rapid development of various businesses across the bank.
25 2017 Annual Report
Accelerate infrastructure construction and improve emergency management level.
The Bank has made every effort to promote the construction of "two highlands and three centers" and ensured that Xiyong Data Center entered the crucial stage. It has completed the construction of application-level backup of disaster recovery in the same city for four systems, including bank guarantee, electronic financial payment, etc., and further improve the disaster recovery backup system. It has also completed the real takeover switching and cutback exercise of disaster recovery for 14 systems in the same city, including second-generation payment, mobile banking, telephone banking, etc.
The coverage rate of real takeover exercise of important information systems reaches
100%, effectively ensuring the business continuity of the whole bank.
Plan IT structure upgrading and explore strategic transformation path. Centering on the overall development strategy of the business operation, the Bank breaks down and implements the information technology development strategic plan of "13th
Five-Year Plan", continuously enhances the ability of informatization to support business development, accelerates the integration of IT strategy and business strategy, and strengthens the guiding role of strategic planning. It also launches consulting and planning projects for new core program groups to explore the strategic transformation path of IT under the new situation. It improves the information technology risk monitoring system, completes the information security management system, strengthens information technology outsourcing risk management, and increases the level of scientific and technological control.
3.3 Core competence
26 2017 Annual Report
By adhering to the service concept of "Just for you", the Bank makes every effort to create a working atmosphere in which the front line is for customers, the second line is for the front line, and the back end is for the front end. It optimizes the business processes from inside to outside, improves service quality and efficiency, and adheres to the strategic positioning of small and medium-sized enterprise banks, retail banks, financial management banks and reservoir region banks, thus winning wide recognition from all sectors of society.
Complete and effective corporate governance mechanism. Through the complete governance structure of "three boards and one layer", the Bank successfully carried out the general election in December 2017 during which a management mechanism with responsibilities, duties, coordinated operation and effective checks and balances was formed and each governance body had clear responsibilities, independent operation, mutual coordination and standardized operation.
Perfect layout of business network. At present, the Bank has 86 business units covering all districts and counties in Chongqing. It can effectively grasp the customer needs of the districts and counties, deeply cultivate the local market, and build accurate and efficient marketing channel network.
Better risk management level. Since establishment, the Bank has withstood the ever-changing test of the domestic economic and financial environment. It has always taken risk prevention and control as the fundamental guarantee for the high-quality development. It has focused on strengthening the management of credit risk, liquidity risk, operation risk and reputation risk. No major risk events have occurred in many years, and all core regulatory indicators have met regulatory requirements. The Bank is
27 2017 Annual Report also constantly alert to case risks and has achieved the objective of zero case year after year.
Experienced senior management team and fully functional personnel training system. The senior management team has rich experience in fundamental work of bank and strategic management. It always adheres to the "people-oriented" core concept, takes common values as a link, respects and protects the legitimate rights and interests of employees, provides the career development channels for employees, improves the employee training system, and establishes a high-quality staff.
28 2017 Annual Report 4. Management Discussion and Analysis
4.1 Operation overview
During the reporting period, the Bank strictly implemented the decisions and arrangements made by the Board of Directors, actively responded to macro-control, timely adjusted work measures, comprehensively promoted various businesses, focused on promoting transformation and development, comprehensively prevented and eliminated risks, and achieved stable and healthy development.
As at the end of the reporting period, various operation indicators were as follows: total assets amounted to RMB 202.36 billion, representing an increase of RMB 20.85 billion or 11.49% over the beginning of the year; time-point balance of various deposits amounted to RMB 123.8 billion, representing an increase of RMB 1.63 billion or
1.34% over the beginning of the year; daily balance of various deposits amounted to
RMB 116.45 billion, representing an increase of 16.09 billion or 16.04% over the last year; total of various time-point loans amounted to RMB 44.34 billion, representing an increase of RMB 5.89 billion over the beginning of the year or 15.32%; total profits amounted to RMB 2.35 billion, with a decrease of RMB 254 million; return on assets and capital was respectively 0.94% and 14.30%, higher than average level of city commercial banks; paid taxes amounted to RMB 1191.27 million, representing an increase of RMB 7.06 million; and capital adequacy ratio, withdrawal coverage rate, loan allocation ratio, cost-income ratio and core debt dependence were respectively
12.94%, 180.48%, 2.54%, 31.34% and 62.00%. All indicators met the prudential regulatory requirements. The non-performing loan ratio was 1.40% and controlled
29 2017 Annual Report within reasonable range. The objective of zero cases in the full year was realized.
I. Make every effort to promote business development and improve comprehensive strength continuously
The corporate banking business has been growing steadily. The Bank's average daily deposit balance is RMB 66.1 billion, representing an increase of RMB 4.1 billion.
The company has realized RMB 469 million in intermediate business income through various lines and completed 117% of the annual plan. The number of customers has increased by 21% from the beginning of the year, completing 108% of the annual plan.
The number of Company's effective customers has increased by 23% over the previous year, completing 115% of the annual plan.
Retail banking business develops well. The Bank's daily average of newly added saving deposits amounts to RMB 5.8 billion, completing 114% of the annual plan; The newly added personal consumption loans reaches RMB 4.2 billion, completing 128% of the annual plan. The intermediate business income realized through various lines reaches RMB 10.35 million, completing 148% of the annual plan. The number of newly added individual customers reaches 327,000, completing 109% of the annual plan; the number of newly added customers in electronic channels reaches 192,000, completing 192% of the annual plan; saving deposits accounts for 20.7% and interest collection ratio of retail business loans is 99.8%, both of which meet the objectives established at the beginning of the year.
SMEs’ banking business steadily recovers. The bank has 6,479 credit customers from small enterprises, representing an increase of 2,036 or 45.82%; the balance of loans for small businesses is RMB 7.08 billion, representing an increase of RMB 522
30 2017 Annual Report million yuan or 7.96%; the balance of bank acceptance bill exposure for small enterprises is RMB 661 million, representing an increase of RMB 264 million or 66.5%; the balance of petty mortgage loans is RMB 3.883 billion, representing an increase
RMB 2.36 billion or 156%; and the number of petty mortgage loan customers is 5,557, representing an increase of 3,385 or 155.8%.
Funds operation business develops steadily. Fund operation businesses like financial management, financial markets, investment banking, etc. have accumulated operating income of RMB 2.66 billion, representing an increase of RMB 112 million or
4.4% over the previous year. The issuance scale of financial products is RMB 45.87 billion, with an increase of 36.5%; the payment scale of financial products reaches
RMB 44 billion, representing an increase of 90% and achieving a payment rate of 100%.
The Bank has successively obtained the qualification for trading interest rate swap derivatives, the qualification for principal underwriting of Beijing Financial Assets
Exchange, and the qualification for underwriter of debt financing instruments for non-financial enterprises of the National Association of Financial Market Institutional
Investors. The comprehensive transaction volume in the financial market reaches RMB
3,62 billion, representing an increase of 40% and ranks 94th in the comprehensive transaction volume of interbank bond market, up 23 places from the previous year. It also ranks 72nd in China Central Depository & Clearing Co., Ltd. (CCDC), up 38 places from the previous year, and enters the National Top 100 Transaction Institutions for the first time.
International business develops rapidly. The international settlement completed in the full year reaches US$ 1.34 billion, with an increase of 62%; the foreign exchange
31 2017 Annual Report settlement and sale on behalf of customers reaches US$ 610 million, with an increase of
55%; and inter-bank foreign exchange settlement and sale reaches US$ 570 million, with an increase of 58%. The international trade finance amounts to US$ 350 million, with an increase of 37%. The direct loan business by domestic guarantee has made a breakthrough, raising HK$ 1.17 billion for enterprises overseas.
II. Keep deepening reform and strive to promote transformation development.
The Bank has carefully carried out the thematic year activity. In combination with the transformation development, it has launched the thematic year activity of "good team, good business, good risk control, good management and rapid transformation".
All departments and sub-branches have carried out in-depth internal diagnosis, found out the prominent problems hindering the transformation and development, put forward
1,152 optimization measures, and urged rectification.
Organize the special reform working group. The Bank has set up the office of the reform leading group and seven special reform working groups, namely, the organizational structure, the company division, the fund operation division, the central management in the middle and back offices, risk management, cadres and personnel, and performance appraisal, to promote all reforms as a whole.
III. Comprehensively prevent and eliminate risk to control the overall risk
Overall risk management system has been increasingly improved. According to changes in the external regulatory environment and internal management requirements, the existing overall risk management policy and special credit risk management policy
32 2017 Annual Report have been optimized and improved, and special management policies for bank account interest rate risk and strategic risk have been formulated. The Bank will continue to promote risk preference management and formulate, transmit and monitor risk preference indicators in a timely manner, issue quota management measures, and establish and improve the risk preference system. In addition, it also issues special product management systems to strengthen the process and systematic management of financial products, especially the compliance and internal control management in the process of design, development and operation.
The Bank keeps strengthening the control of key risks and continuously enhances the credit risk management. It also sets up Credit Monitoring Department to strengthen the quality management of credit assets, including collecting RMB 292 million of non-performing assets and writing off RMB 7.47 million of bad and doubtful debts for the first time. In addition, it improves authenticity of asset classification and controls the ratio of loans overdue for more than 90 days to non-performing loans within 130%, thereby meeting regulatory requirements. Liquidity risk management has been improved continuously. The Bank has set a liquidity risk limit of 2017, strengthened market liquidity forecasting, and regularly conducted liquidity stress tests. By issuing
RMB 3 billion of financial bonds for agriculture, rural areas and farmers, RMB 3 billion of tier II capital bonds and certificates of interbank deposit, the Bank has increased the proportion of stable liabilities and adjusted the structure of liabilities.
Operational risk management is standardized and orderly. The Bank regularly inspects counter business compliance operation management, authorization management, credit business management, seal management, etc., eliminates risks in a timely manner, and
33 2017 Annual Report effectively carries out prevention and rectification.
IV. Strengthen financial technology support and promote online and offline integration
Financial technology level has been improved constantly. The Bank promotes the construction of information technology, deepens the application of Internet finance, big data and other technologies, implements 94 projects and completes 64 projects throughout the year. It also launches 382 core systems, "Three Gorges Payment", etc. to strongly support the business development. In addition, it strives to accelerate the construction of Xiyong Data Center, launch the consultation and planning project for the new core system group, and promote the construction of operation and maintenance system and the upgrading and transformation of system infrastructure. It also improves the information security management system and disaster recovery backup system, organizes and completes the actual takeover and cutback exercise for disaster recovery backup of 14 systems, including second-generation payment and mobile banking, to ensure the business continuity.
Financial construction of platform has achieved actual results. The "Three Gorges
Payment" has been put into trial operation and the system can operate steadily. The number of registered users has reached 145,000, and 43,000 transactions have been completed successfully. The Bank has made every effort to promote the interconnection between "Three Gorges Payment" and credit system, risk control platform, big data platform, etc., so as to provide process support and system guarantee for online loans.
The basic capability of big data technology has been built comprehensively. The
34 2017 Annual Report big data construction plan with the Bank's characteristics, as well as the path map and direction objectives has been formulated; at the same time of integrating internal customer data, the Bank introduces external data such as industry and commerce, justice and taxation to enrich data accumulation. It also builds big data technology platform, data analysis platform and decision management platform to fully support the interpretation, storage, analysis, mining of data and the development and deployment of rules, models and strategies. For new load products in the Internet, it creates big data risk control system to help the innovation and transformation of Internet finance.
V. Implement regulatory compliance requirements and lead the
Bank's steady development
The Bank completes the macro-prudential assessment and management perfectly and incorporates various indicators of MPA into the annual asset and liability management plan and then decomposes these indicators carefully. According to the results of macro-prudential assessment, it proactively finds out the shortcomings and formulates improvement measures.
It also makes every effort to complete all the governance work of the regulatory authorities, earnestly carries out self-examination and rectification such as "three violations, three arbitrages, four improprieties and ten problems existing in banking", and seriously deals with accountability for violations of internal rules and regulations and regulatory requirements.
In addition, the Bank earnestly works well in anti-money laundering, revises the management measures for large-sum transactions and suspicious transaction reports and other systems, conscientiously fulfills its obligation to submit large-sum and
35 2017 Annual Report
suspicious transactions, conducts anti-money laundering investigations on 98
customers, and blocks 69 abnormal accounts.
4.2 Main business analysis
4.2.1 Main items of income statement
During the reporting period, the Bank has created operating income of RMB 3.91
billion and net profit of RMB 1.81 billion, representing a decrease of 8.14% and 8.71%
over the same period of last year. Main items of the Bank's income statement are as
follows: (unit: ten thousand yuan) Year-on-year Item 2017 2016 growth/decrease (%) I. Operating income 391,900.46 426,612.38 -8.14% Including: net interest income 350,142.97 382,567.82 -8.48% Net fee and commission income 40,179.09 37,840.94 6.18% II. Operating expenses 157,935.33 166,901.00 -5.37% Including: operation and administrative 122,826.41 124,752.50 -1.54% expense III. Operating profit 233,965.12 259,711.38 -9.91% IV. Total profit 235,059.52 260,508.69 -9.77% V. Net profit 181,188.24 198,476.93 -8.71%
4.2.2 Business income composition during reporting period
During the reporting period, the Company's business income mainly came from
interest income of loans and advances, interest income from investment in receivables,
interest income from bond investment, etc. Full-year business income amounted to
RMB 8.76 billion, representing an increase of 8.18% over the same period of last year.
Business income composition and changes of the Company during the reporting period
36 2017 Annual Report
are as follows:
(unit: ten thousand yuan) Year-on-year Proportion Item Amount growth/decrease (%) (%) Deposits with banks and other financial 9,830.28 1.12 -15.06 institutions Cash and balances with central bank 26,420.41 3.01 9.40 Lending fund 3,628.84 0.41 297.62 Loans and advance payments 254,818.11 29.08 7.35 Financial assets held under resale 38,497.32 4.39 30.72 agreements Financial assets at fair valuethrough 7,879.03 0.90 110.47 current profit and loss Available-for-sale financial assets 114,070.28 13.02 19.30 Held-to-maturity investment 56,332.31 6.43 24.49 Investments classified as accounts 317,787.96 36.26 1.83 receivable Income from service charges 45,487.61 5.19 4.17 Other incomes 1,578.40 0.18 -74.56 Total 876,330.55 100.00 8.18
4.2.3 Net interest income
As the largest component of the Bank's operating income, the net interest income
was RMB 3.50 billion during the reporting period, representing a year-on-year decrease
of 8.48%. The main factors for the decline in net interest income are that the rising
interest rate on deposits has led to a substantial increase in the cost of deposits, and the
rising market interest rate has led to a substantial increase in the cost of interbank
liabilities such as issuing interbank certificates of deposit and absorbing inter-bank
deposits. Net interest income composition and growth of the Company during the
reporting period are as follows:
37 2017 Annual Report
(unit: ten thousand yuan) 2017 2016 Year-on- year Propo Propo Item increase/ Amount rtion Amount rtion decrease (%) (%) (%) Interest income Cash and balances with central bank 26,420.41 3.19 24,150.72 3.18 9.40 Deposits with banks and other 9,830.28 1.19 11,573.30 1.52 -15.06 financial institutions Lending fund 3,628.84 0.44 912.64 0.12 297.62 Loans and advance payments 254,818.11 30.73 237,377.16 31.23 7.35 Financial assets held under resale 38,497.32 4.64 29,451.31 3.87 30.72 agreements Financial assets at fair valuethrough 7,879.03 0.95 3,743.49 0.49 110.47 current profit and loss Available-for-sale financial assets 114,070.28 13.76 95,619.29 12.58 19.30 Held-to-maturity investment 56,332.31 6.79 45,251.31 5.95 24.49 Investments classified as accounts 317,787.96 38.32 312,090.09 41.06 1.83 receivable Sub-total of income 829,264.55 100.00 760,169.32 100.00 9.09 Interest expenses Borrowing from the central bank 1,492.51 0.31 2,482.22 0.66 -39.87 Deposits from banks and other 52,072.12 10.87 30,708.22 8.13 69.57 financial institutions Loans from other banks and other 882.14 0.18 1,688.06 0.45 -47.74 financial institutions Deposits from customers 320,453.09 66.88 258,960.78 68.58 23.75 Financial assets sold under 40,549.83 8.46 48,331.12 12.80 -16.10 repurchase agreements Bonds payable 63,598.07 13.27 35,394.27 9.37 79.68 Rediscount 73.81 0.02 36.83 0.01 100.39 Sub-total of expenditure 479,121.58 100.00 377,601.50 100.00 26.89 Net interest income 350,142.97 382,567.82 -8.48
4.2.4 Net income from service charges and commission
The Company continued promoting strategic transformation, further optimized
income structure and diversified income source. During the reporting period, net
38 2017 Annual Report
income from service charges and commission amounted to RMB 402 million,
representing a year-on-year growth of 6.18%. Composition of net income from service
charges and commission during the reporting period is listed as follows:
(unit: ten thousand yuan)
Item 2017 2016
Income for service charges and commissions —Agent service 27,220.94 9,664.31 —Wealth management service 12,138.79 24,886.39 —Letter of guarantee and commitment service 1,675.89 2,563.68 —Settlement and clearing services 3,433.26 4,697.89 —Others 1,018.74 1,853.70 Sub-total 45,487.61 43,665.96 Expenses for fees and commissions 5,308.52 5,825.02 Net income from service charges and commissions 40,179.09 37,840.94
4.2.5 Operation and administrative expense
During the reporting period, the Company's business and management cost
amounted to RMB 1.22 billion, with a year-on-year decline of 1.54% and the
cost-income ratio was 31.40%. Composition of operation and administrative expense
was as follows:
(unit: ten thousand yuan)
Item 2017 2016
Labor cost 80,574.30 82,722.60 Depreciation of fixed assets 4,577.39 4,404.77 Amortization of intangible assets 1,033.14 930.27 Taxes 0 566.77 Business operation and administrative expenses 36,641.58 36,128.09 Total 122,826.41 124,752.50
4.3 Assets and liabilities analysis
39 2017 Annual Report
4.3.1 Overview
As at the end of the reporting period, the Company's total assets amounted to RMB
202.36 billion, with an increase of RMB 20.85 billion or 11.49% over the beginning of
the period; the total liabilities amounted to RMB 189.28 billion, with an increase of
RMB 20.04 billion or 11.84% over the beginning the period; the shareholders' equity
amounted to RMB 13.07 billion, with an increase of RMB 814 million or 6.63% over
the beginning the period; and the business scale grew steadily. Major assets and
liabilities are as shown in the table below: (unit: ten thousand yuan) Increase or decrease Item 2017 2016 amplitude (%) Deposit with central bank 1,949,902.19 2,567,678.66 -24.06% and cash Interbank and monetary 3,251,587.80 2,221,862.83 46.35% market application Net loans and advance 4,322,281.63 3,747,774.86 15.33% payments Bonds and other 10,366,895.37 9,326,796.26 11.15% investments Total assets 20,236,085.25 18,150,364.06 11.49% Deposits from customers 12,380,016.69 12,216,387.22 1.34% -Corporate deposit 9,833,140.04 9,965,309.11 -1.33% -Savings deposit 2,546,876.65 2,251,078.11 13.14% Funding from Interbank 3,923,160.87 3,287,630.01 19.33% and monetary market Bonds payable 2,244,038.31 1,162,810.23 92.98% Total liabilities 18,928,463.64 16,924,100.72 11.84% Total shareholders' equity 1,307,621.61 1,226,263.34 6.63% Total liabilities and 20,236,085.25 18,150,364.06 11.49% shareholders' equity
4.3.2 Main asset items
I. Loan
40 2017 Annual Report
As at the end of the reporting period, total loans of the Bank amounted to RMB
44.34 billion, representing an increase of 15.32% over the beginning of the period.
(I) Industry distribution of consolidation loan (including discount) on a consolidated basis as of end of reporting period:
(unit: ten thousand yuan)
Industry Book balance Proportion (%)
Agriculture, forestry, animal husbandry 146,743.00 3.31 and fishery Mining industry 1,437.31 0.03 Manufacturing 699,714.46 15.78 Electricity, gas & water production and 78,960.91 1.78 supply industry Construction 460,753.15 10.39 Transportation, warehousing and post 135,615.10 3.06 industry Information transmission, computer 24,004.55 0.54 service and software industry Wholesale and retail 333,845.52 7.53 Accommodation and catering industry 13,468.33 0.30 Financial industry 48,964.00 1.10 Real estate industry 446,049.61 10.06 Rental and commercial service industry 242,787.71 5.47 Scientific research, technical service 15,998.77 0.36 and geological survey industry Water conservancy, environment and 223,007.54 5.03 public facility management Resident service and other service 53,215.00 1.20 industries Education 47,695.00 1.08 Health, social security and social 21,565.00 0.49 welfare Culture, sports and entertainment 17,728.00 0.40 industry Public management and social 431.20 0.01 organization Discount 175,660.00 3.96
41 2017 Annual Report
Industry Book balance Proportion (%)
Personal loan 1,247,060.09 28.12 Total 4,434,704.24 100.00
(II) Distribution of consolidation loan (including discount) based on guranty calagory
(unit: ten thousand yuan)
Guaranty type Book balance Proportion (%)
Credit loans 248,509.21 5.60 Guaranteed Loans 1,818,679.78 41.01 Mortgage loans 2,017,899.51 45.50 Pledge loans 173,955.75 3.92 Discounts 175,660.00 3.96 Total 4,434,704.24 100.00
(III) Top 10 customers of loan
(unit: ten thousand yuan) Customer Ending balance Proportion (%)
A 64,500.00 1.45 B 50,825.00 1.15 C 50,000.00 1.13 D 50,000.00 1.13 E 49,500.00 1.12 F 49,345.00 1.11 G 49,000.00 1.10 H 43,500.00 0.98 I 41,423.00 0.93 J 40,000.00 0.90 Total 488,093.00 11.01
II. Redemptory financial assets for sale
42 2017 Annual Report
As at the end of the reporting period, balance of redemptory financial assets for sale amounted to RMB 28.30 billion, representing an increase of 85.13% over the beginning of the period. See the form below:
(unit: ten thousand yuan)
Item 2017 2016
Bond, as per issuer Government 658830.52 188096.97 Policy bank 2171600.01 745237.42 Financial institution - - Enterprise - - Note - 595542.90 Loan - - Sub-total 2830430.53 1528877.28 Decrease: asset impairment - - Net value 2830430.53 1528877.28
III. Available-for-sale financial assets
As at the end of the reporting period, balance of available-for-sale financial assets held by the Company amounted to RMB 23.13 billion, representing decrease of 17.21% over the beginning of the period. See the form below: (unit: ten thousand yuan)
Item 2017 2016
Bond, as per issuer Government 1848.97 1988.55 Policy bank 651907.88 699652.41 Financial institution - 98436.45 Enterprise 739297.21 1038030.46 Equity instrument 920810.11 956913.00 Total 2313864.17 2795020.86
43 2017 Annual Report
IV. Held-to-maturity investment
During the reporting period, the Company expanded scale of held-to-maturity investments properly to obtain stable interest income. As at the end of the reporting period, balance of held-to-maturity investments amounted to RMB 16.98 billion, representing an increase of 36.60% over the beginning of the period. See the form below: (unit: ten thousand yuan)
Item 2017 2016
Bond, as per issuer Government 670479.91 544380.27 Policy bank 637255.13 506160.38 Financial institution 79837.49 - Enterprise 311375.53 193163.63 Total 1698948.06 1243704.29
4.3.3 Main liability items
I. Deposits
As of the end of the reporting period, the deposit balance of the Bank was RMB
123.8 billion, representing an increase of 1.34% over the beginning of the period; and the saving deposits amounted to RMB 25.46 billion, representing an increase of
13.14% over the beginning of the period and accounted for 20.57% of total saving deposits. Details areas are shown follows:
(unit: ten thousand yuan)
Item 2017 2016
Current corporate deposit 4,343,981.73 4,037,979.05 Current savings deposit 494,614.01 461,963.30 Fixed corporate deposit 4,852,916.12 5,270,156.13
44 2017 Annual Report
Item 2017 2016
Fixed savings deposit 2,052,262.65 1,789,114.80 Margin deposit 636,242.20 657,173.93 Total 12,380,016.69 12,216,387.22
II. Deposits from banks and other financial institutions
During the reporting period, the Bank paid attention to matching of interbank liability and kept optimizing structure of interbank business while maintaining steady growth of business scale. As at the end of the reporting period, balance of deposits from banks and other financial institutions amounted to RMB 9.39 billion, representing a decrease of 35.77% over the beginning of the period. See the form below:
(unit: ten thousand yuan)
Item 2017 2016
Deposit from domestic banks 807,801.07 1,105,171.37 Deposit from domestic non-bank 131,297.27 356,826.78 financial institutions Total 939,098.34 1,461,998.15
4.4 Financial instruments measured at fair value
4.4.1 Relevant internal control system regarding fair value measurement
The Bank has developed rules and regulations including Market Risk Management
Policy, Market Risk Management Method and Method for Transaction Account and
Bank Account Division of Chongqing Three Gorges Bank, so as to designate functional department to collect, sort and verify fair value data source and results, and carry out accounting treatment after verification.
45 2017 Annual Report
4.4.2 Fair value calculation basis and policy
Fair value calculation of the Bank is in strict accordance with relevant rules in
Accounting Standards for Business Enterprises issued by Ministry of Finance.
The Bank measures fair value of relevant financial assets and financial liabilities at price in leading market; for those without leading market, at price in the most advantageous market, and by adopting applicable valuation technique at that time supported by sufficient available data and other information. The Bank classifies inputs used to measure fair value of the financial assets and financial liabilities in to three levels. Level 1: unadjusted quoted prices available in an active market for identical assets or liabilities; Level 2: inputs other than quoted prices included in Level 1 that are observable for relevant assets or liabilities, either directly or indirectly; and Level 3: inputs not based on observable market data for relevant assets or liabilities. The Bank gives priority in use of Level 1 inputs and then Level 3 inputs. The level of fair value measurements depends on minimum level of inputs of great significance to overall fair value measurement.
As for financial instruments tradable in an active market, quoted prices in the active market shall be used to determine the fair value thereof; as for those not tradable in an active market, valuation technique shall be used to determine the fair value thereof.
Financial instruments classified as Level 2 by the Bank mainly include bond investment. Fair value of RMB bonds is recognized based upon valuation results provided by China Central Depository & Clearing Co., Ltd. All significant valuation parameters are defined by adopting valuation technique concerning observable market information.
46 2017 Annual Report
4.4.3 Items related to fair value measurement
(unit: ten thousand yuan) Current Accumulated Current loss and change in accrual Beginning Ending Item profit from fair value asset amount amount fair value included in impair change equity ment Financial assets Tradable financial 92,551.59 222.00 - - 1,155,176.47 assets Available-for-sale 1,838,107.86 - -82,692.50 1,415,787.60 financial assets Derivative financial - - - - - assets Total financial assets 1,930,659.45 222.00 -82,692.50 2,570,964.07 Financial liabilities Derivative financial - - - - - liabilities Others - - - - - Total financial - - - - - liabilities
4.5 Equity investment
(unit: ten thousand yuan) Change in Ending Profit and Ending owner's Name of held shares held loss during Accounting book equity during object (10,000 reporting subject value reporting shares) period period Equity Investment in Clearing Center Available-for-sale for City 25 25 0 0 Financial assets Commercial Banks Equity Investment in Sichuan Available-for-sale Oriental 5 0 0 0 Financial assets Pharmaceutical Banks Co., Ltd.
47 2017 Annual Report
Change in Ending Profit and Ending owner's Name of held shares held loss during Accounting book equity during object (10,000 reporting subject value reporting shares) period period Chongqing Iron & Available-for-sale 10,573.74 22,733.54 0 -16,177.82 Steel Co., Ltd. Financial assets
4.6 General information of branch
As at the end of the reporting period, the Bank has established 86 branches, including 1 branch and 85 sub-branches. Name of specific branch is as follows:
Name of operating S.N. Address agency Head Business No.99, Huichuanmen Road, Jiangbeicheng, Jiangbei District, 1 Office Chongqing Jiangbei 2 No.8, Yanghe East Road, Jiangbei District, Chongqing Sub-branch No.2, Hongjin Street, Yubei District, Chongqing (1F, Chongqing 3 Yubei Sub-branch General Chamber of Commerce Mansion) Shapingba Zone E, Jinyang Yicheng International Style street, No.29, Fengtian 4 Sub-branch Road, Shapingba District, Chongqing Jiulongpo 5 No.1, Xijiao 3rd Village, Yangjiaping, Jiulongpo District, Chongqing Sub-branch Jiefangbei Tower B, Hejing Mansion, No.108, Minzu Road, Yuzhong District, 6 Sub-branch Chongqing Podiums, Zones A and B, Shanghai City Phase II, No.58, Nanping 7 Nan'an Sub-branch West Road, Nan'an District, Chongqing Dadukou B1, Glory City Phase II, No.1011, Songqing Road, Dadukou District, 8 Sub-branch Chongqing North New Zone No.33, 35, 81, 83, Qingfeng South Road, New North Zone, 9 Sub-branch Chongqing Changshou 10 No.8, Taoyuan Avenue, Changshou District, Chongqing Sub-branch 11 Fuling Sub-branch No.1, Tiyu South Road, Fuling District, Chongqing No.173, 175, 177 (1F) and 163-1 (2F), Yunqing Road, Jialing Style 12 Beibei Sub-branch Pedestrian Street, South New Zone, Beibei District, Chongqing
48 2017 Annual Report
Name of operating S.N. Address agency Shops 1-2, 1-4 and 1-5, 8#, Haolibihaiwan, No.1 Babin Road, Banan 13 Banan Sub-branch District, Chongqing 1-19, No.137, Keyuan 2rd Road, Shiqiaopu, Jiulongpo District, 14 Hi-tech Sub-branch Chongqing Liangjiang No.1-09, 2-09, 3-09, (Tower B) Skirt Building Store, Hanguo Center, 15 Sub-branch No.85, Jinyu Avenue, New North Zone, Chongqing No.190-2, Shengli Road, Shuanglonghu Street, Yubei District, 16 Airport Sub-branch Chongqing Jinjiang No.18 (Shangfeng Shangzuo), Honghu West Road, New North Zone, 17 Sub-branch Chongqing Fengcheng 18 No.1, Xiangyang Road, Chongqing Sub-branch Baguocheng No.11-2-1, 11-2-2, 11-2-3, 11-2-4, Chuangxin Avenue, Jiulongpo 19 Sub-branch District, Chongqing 20 Xiyong Sub-branch F1 and F2, 2#, Xiyong Micro-electronics Industrial Park, Chongqing Chenjiawan Wenxing Mansion, No.119, Yubei Road, Shapingba District, 21 Sub-branch Chongqing No.88, Changjiang 2rd Road, Yuzhong District, Chongqing (Daping 22 Daping Sub-branch Communication Trade Market) 5F, Tower A (No.5-E, 5-6, 5-7 and 5-8, Tower A), No.45, Nanping 23 Fulishe Sub-branch East Road, Nanping Sub-district, Nan'an District, Chongqing Liangjiangmingju 24 No.76, Caishun Road, Caijia, Beibei District, Chongqing Sub-branch Lijiatuo Shop 1-1-10, 11, No.169, Lijiatuo Center Street, Banan District, 25 Sub-branch Chongqing Aoyuan 1F, 1#, No.116, Jintong Road, North District, Economic and 26 Sub-branch Technological Development Zone, Chongqing Tongnan No.96, Xingtong Avenue, Guilin Sub-district Office, Tongnan 27 Sub-branch County, Chongqing Yongchuan No.259, 261, 263, 265 and 229-20 and 21, Renmin Avenue, 28 Sub-branch Yongchuan District, Chongqing 1F-1, Dianjinyuan Bicheng Mansion, No.266, Jinjian Road, Bishan 29 Bishan Sub-branch County, Chongqing Jiangjin No.1-1, 2-1, E#, Riverside Garden, No.718-5, Dingshan Avenue, 30 Sub-branch Jijiang Sub-district, Jiangjin District, Chongqing No.280, 282, 284, 286, and No.2-4, Skirt Building Unit, 1#, 31 Dazu Sub-branch Dongcheng Bus Station, No.268, Wuxing Avenue, Tangxiang Sub-district Office, Dazu District, Chongqing
49 2017 Annual Report
Name of operating S.N. Address agency No.37, Jiulong Avenue, Wenlong Sub-district Development Zone, 32 QijiangSub-branch Qijiang District, Chongqing Nanchuan No.1-1, 1-2, 2-1, C#, Bojin Niaochao, No.2, Nanyuan Road, 33 Sub-branch Xicheng Sub-district Office, Nanchuan District, Chongqing Tongliang 1-2F, No.30, Heping Road, Bachuan Sub-district, Tongliang County, 34 Sub-branch Chongqing 1#， Zone A, "Wishful World" Bayu Style Street, No.4, Binhu Road, 35 Baisha Sub-branch Baisha Town, Jiangjin District, Chongqing Rongchang 36 No.170-2, 3, 4, 5, Xiangyang Road, Rongchang County, Chongqing Sub-branch Hechuan 37 No.523, Nanjin Street, Hechuan District, Chongqing Sub-branch Liangping 29#, Minghao Business District, Liangshan Town, Liangping 38 Sub-branch County, Chongqing Kaixian County 39 No.1250, Kaizhou Avenue (East), Kaixian County, Chongqing Sub-branch Yunyang No.1132, Yunjiang Avenue, Shuangjiang Town, Yunyang County, 40 Sub-branch Chongqing Zhongxian No.1-6, Hongxing Stairway, Zhongzhou Town, Zhong County, 41 Sub-branch Chongqing Wushan No.427, Guangdong Middle Road, Wuxia Town, Wushan County, 42 Sub-branch Chongqing 43 Fengdu Sub-branch No.180, Pingdu Avenue West Section, Fengdu County, Chongqing 44 Fengjie Sub-branch No.466, Kuizhou Road, Yong'an Town, Fengjie County, Chongqing Dianjiang 1- 2F, Jiuzhongliyuan, Fengshan West Road, Guixi Town, Dianjiang 45 Sub-branch County, Chongqing No.184, Fengyi Road, Boyang Sub-district, Wuxi County, 46 Wuxi Sub-branch Chongqing Chengkou 47 No.16, East Avenue, Chengkou County, Chongqing Sub-branch Qianjiang No.1248, Xinhua Avenue West Section, Qianjiang District, 48 Sub-branch Chongqing Wulong 49 1- 2F, No.44, Furong West Road, Wulong County, Chongqing Sub-branch 1&2F, No.99, Wanshou Avenue, Nanbin Town, Shizhu County, 50 Shizhu Sub-branch Chongqing
50 2017 Annual Report
Name of operating S.N. Address agency Xiushan No.130, Yuxiu Avenue, Zhonghe Sub-district, Xiushan County, 51 Sub-branch Chongqing Youyang 1F & 2F, 4#, Longtengshengshi Ecodistrict, Taohuayuan Avenue, 52 Sub-branch Youyang County, Chongqing Pengshui 10#-1, -2, -3 &10# 2-1, 2-2, 2-3, No.58, Wenmiao Street, Hanjia 53 Sub-branch Sub-district, Pengshui County, Chongqing Wansheng No.1-4, 1-5, 1-6, 2-1, 4#, No.21, Wansheng Avenue, Economic 54 Sub-branch Development Zone, Wansheng, Chongqing Huangyang 1-5, 1-6, 1-14, 24# , No.58, Gongnong 4th Village, Xiejiawan, 55 RoadSub-branch Jiulongpo District Yuanyang 1F, 11#, No.1115, Jinkai Avenue, Economic Development Park, New 56 Sub-branch North Zone, Chongqing Ranjiaba Shop 1, 1F, 5#， Xingmao·Shengshibeichen, No.6, Bailing Road, 57 Sub-branch Longshan Sub-district, Yubei District, Chongqing Beibin Road 58 No.47, Jinyuan Road, Jiangbei District, Chongqing Sub-branch Yuzhong 59 No.107, Minquan Road, Yuzhong District, Chongqing Sub-branch Longtousi No.62-96, Taishan Avenue East Section, New North Zone, 60 Sub-branch Chongqing No.51-2, -3, Yonghe Road, Yuzui Town, Jiangbei District, 61 Yufu Sub-branch Chongqing Shuangfu Economic No.572, Nanbei Avenue, Shuangfu Sub-district, Jiangjin District, 62 Development Chongqing Sub-branch Huilongwan 94-1, 2 and 3, No.94 Qinglong Road, Economic and Technological 63 Sub-branch Development Zone, Chongqing Chayuan 64 No.89-27, 89-26-2-1, Tongjiang Avenue, Nan'an District, Chongqing Sub-branch No.519-20 and 21, 519-1, 517 and 521, Shimei Avenue, Jieshi Town, 65 Jieshi Sub-branch Banan District, Chongqing 66 ErlangSub-branch No.99-1, -2, -3, - -1, Huoju Avenue, Jiulongpo District, Chongqing Huixing No.9-1, -2, -3, -4 (1F), No.9 house (2F), Shuanghu Road, Yubei 67 Sub-branch District, Chongqing 68 Jinkai Sub-branch No.66, Jinzhou Avenue, Yubei District, Chongqing
51 2017 Annual Report
Name of operating S.N. Address agency Danzishi 69 Sub-branch No.56, Tenglong Avenue, Nan'an District, Chongqing (planning) Wanzhou 70 No.1999, Nanbin Road, Jiangnan New Area, Wanzhou District Sub-branch Wangpai Road 71 No.409, Wangpai Road, Wanzhou District, Chongqing Sub-branch Longbao 72 No.133, Longdu Avenue, Wanzhou District, Chongqing Sub-branch Tiancheng 73 No.79, Fujian Street, Zhoujiaba, Wanzhou District, Chongqing Sub-branch Baiyan Road 74 No.216, Baiyan Road, Wanzhou District, Chongqing Sub-branch 75 Jinshi Sub-branch No.265, Baiyan Road, Wanzhou District, Chongqing Taibai Road 76 No.123, Taibai Road, Wanzhou District, Chongqing Sub-branch Xincheng Road 77 No.112, Xincheng Road, Wanzhou District, Chongqing Sub-branch Gaosuntang 78 No.84, Gaosuntang, Wanzhou District, Chongqing Sub-branch Dianbao Road 79 No.134, Dianbao Road, Wanzhou District, Chongqing Sub-branch Beishan 80 No.339, Beishan Avenue, Wanzhou District, Chongqing Sub-branch 81 Wuqiao Sub-branch No.189, Shanghai Avenue, Wuqiao, Wanzhou District, Chongqing Ground Floor, Logistics Service Center, Wanzhou District Jiangnan 82 Administrative Center, Jiangnan Avenue, Wanzhou District, Sub-branch Chongqing Yimin Square 83 No.775 & 777, Jingyuan Road, Wanzhou District, Chongqing Sub-branch Qingyang Palace 84 No.3, Baiyan Road, Wanzhou District, Chongqing Sub-branch Nanqiaosi 85 Sub-branch Guanghua Kele Town, Panxi Road, Jiangbei District, Chongqing (planning)
52 2017 Annual Report
Name of operating S.N. Address agency Wanzhou Axis 7-12~Axis 7-33, F1, Podium A-7 of Housing Construction of High-speed Rail 86 Tiancheng Connection Road Project of Wanzhou District Sub-branch Expressway in Chongqing (planning)
4.7 Quality of loan assets
4.7.1 Five-category classification of loans
As at the end of the reporting period, non performing loan balance of the Bank amounted to RMB 616 million, representing an increase of RMB 260 million; and NPL ratio amounted to 1.40%, representing a decrease of 0.47 percentage point.
Five-category classification of loans of the Bank is as follows:
Unit: 10,000 yuan December 31, 2017 December 31, 2016 Current Asset category Proportion Proportion change Balance Balance (%) (%) （+, -） Normal 4,148,279.37 93.54 3634415.29 94.51 513,864.08 Special-mentioned 224,133.06 5.05 175412.82 4.56 48,720.24 Subordinated 36,067.70 0.81 29182.53 0.76 6,885.17 Doubtful 25,641.68 0.58 6357.23 0.17 19,284.45 Loss 582.44 0.01 74.29 0 508.15 Total 4,434,704.24 100.00 3845442.16 100 589,262.08
53 2017 Annual Report
4.7.2 Restructured and overdue loans
Unit: 10,000 yuan
Current Beginning Ending Proportion change Cause of change balance balance (%) （+, -）
Under the background of the new normal of economy and finance and the supply-side structural reform, Chinese macro-economy continues to run at a medium-high growth rate. Traditional enterprises with high energy consumption, high pollution and low technology content, especially small and micro enterprises, are facing great adjustment pressure, including gradually shrinking market, increasingly tight capital flow, continuous overdue phenomenon, etc.
Overdue loans The Bank has always adhered to the strategic position of "banks for small and medium-sized enterprises", actively 52928.96 181819.88 128890.92 4.1% supported the development of small and medium-sized enterprises and the real economy for many years, and
accumulated some customers of small and micro enterprises greatly affected by this round of economic adjustment. In recent years, the Bank has actively responded to the regulatory call, fulfilled its social responsibility, and "kept lending and never withdrew or held up loans" to enterprises with temporary difficulties, actively resolved credit risks and worked with small and micro enterprises to tide over the hard times. As at the end of the reporting period, the Bank's loan overdue rate was 4.1%.
54 2017 Annual Report
Current Beginning Ending Proportion change Cause of change balance balance (%) （+, -）
Influenced by the continuous downturn of the macro-economy, the Bank has tided over the difficult times together Restructured loans with some credit customers with liquidity and temporary operating difficulties. It has always stuck to 75078.21 79897.95 4819.74 1.8% maintaining the stability of the real economy and continued to support enterprises that meet the conditions for
restructuring and dissolution. Overall, the balance of restructured loans at the end of this year has not changed much from that at the end of last year.
4.7.3 Accrual and write-off of loan impairment reserve
I. Accrual basis and method of loan impairment reserve
The Bank recognizes objective evidence of impairment by performing individual evaluation to individually significant loans. If there is objective evidence proving the impairment, the Banks recognizes the difference between book value of the loans and present value of expected future cash flow as impairment loss. In calculating present value of estimated future cash flow, estimated future cash flow has allowed for value of relevant guaranties rather than future credit loss not incurred yet; discount rate shall be original effective interest rate of the loan. Original effective interest rate refers to effective interest rate of the loan determined through calculation upon initial recognition. For floating rate loans, current effective interest rate as specified in contract shall be applied.
The Bank recognizes objective evidence of impairment by performing individual
55 2017 Annual Report evaluation or combination evaluation to individually non-significant loans.
Combination evaluation shall be performed to individual loan subject to individual evaluation and for which no objective evidence of impairment is detected, whether significant or not, along with loans with similar credit risk features to determine impairment loss. Combination evaluation shall not be performed to loans subject to individual test and for which impairment loss is recognized.
In inspecting impairment of loan portfolio in the mode of combination assessment, estimation of future cash flow shall be determined by referring to historical loss empirical data of loans with similar credit risk features, including essential adjustment and revision of historical empirical data based upon current conditions.
Where loans are evaluated to have impairment, their book values shall be written down to the present value of estimated future cash flow. The written-down amount shall be recognized as provision for asset impairment and included in current profit and loss.
II. Changes in loan impairment reserve during the reporting period
During the reporting period, total impairment reserves accrued by the Bank reached RMB 177 million. Change in reserve is as follows: (unit: ten thousand yuan) Opening balance 97,667.31 Accrual in current period 17,674.83 Current write off 747.02 Current sale amount 1,038.54 Current return amount of assets price rising 1,133.97 Current written-off amount withdrawn - Current released discount interest on impairment reserve -
56 2017 Annual Report
Exchange rate changes and other adjustment - Ending balance 112,422.61 Note: above data is on a consolidated basis.
4.7.4 Measures against bad loan
Mass transfer, loan restructuring, verification and other means shall be used in combination to truly resolve credit risks and classify the credit risks according to different types of loans, different types of guarantees, etc. For the risk assets that have been overdue for a long time and cannot be resolved by various means, the real batch transfer shall be carried out in line with the principle of fairness and justice, so as to reduce the business constraints; For borrowers who have temporary capital turnover difficulties and are able to pay interest, the transformation process shall be actively speeded up through loan restructuring and other means. For the risk assets that have been settled by legal action, the Bank shall strengthen legal education of the customers’ contractual awareness, educate and help the customers to attach importance to their credit, speed up the litigation process, and strive to promote negotiation and acceptance through litigation. Through thorough investigation, the mortgage and pledge with excellent asset quality and clear ownership shall be timely disposed of for debt repayment. For projects in which financial creditor's rights committees have been established or will be established soon, it is necessary to establish a sense of solidarity, assume responsibility as a lead bank, obey as a member bank, strengthen communication among members of the creditor's rights committees, never blindly withdraw loans, actively implement collective resolutions, and steadily push forward the collection and conversion work. In addition, the risk assets that meet the verification
57 2017 Annual Report conditions shall be cancelled after verification in accordance with the verification management measures. Multiple measures and means shall be adopted at the same time to truly resolve the credit risks.
4.7.5 Major categories of interest-bearing assets, daily average size and average interest rate
(unit: ten thousand yuan)
Item Average size Interest income Average interest rate
Loans and advance payments 4,433,707.84 254,818.11 5.75% Cash and balances with central bank 1,649,248.83 26,420.41 1.60% Inter-bank transactions 1,630,916.71 51,956.43 3.19% Bonds and other investments 9,331,329.55 496,069.58 5.32% Total of interest-bearing assets 17,045,202.93 829,264.55 4.87%
4.7.6 Major categories of liability with interest, daily average size and average interest rate
(unit: ten thousand yuan) Average interest Item Average size Interest expense rate Customer's deposit 11,624,718.95 320,453.09 2.74% Inter-bank transactions 2,638,982.77 93,577.90 3.55% Bonds payable 1,397,728.91 63,598.07 4.66% Borrowing from the 46,191.78 1,492.51 3.23% central bank Total of liability with 15,707,622.41 479,121.58 3.05% interest
4.7.7 Financial bonds held as of the end of reporting period
I. Distribution of financial bonds held by the Bank by category as of the end of reporting period
58 2017 Annual Report
(unit: ten thousand yuan)
Bond category Amount (book amount)
Policy-based financial bond 1345000 Commercial bank financial bond 80000 Others 0 Total 1425000
II. Significant national bonds held by the Bank as of the end of reporting period (unit: ten thousand yuan)
National bond category Book value Annual interest rate (%) Maturity date
17TBGZ03 15000 3.59 2022/09/19 Total 15000 3.59 2022/09/19
III. Significant financial bonds held by the Bank as of the end of reporting period (unit: ten thousand yuan)
Financial bond category Book value Annual interest rate (%) Maturity date
05GK23 10,000 3.60 2020/11/29 10NF09 23,000 3.50 2020/08/23 10NF03 10,000 3.65 2020/03/26 09GK09 3,000 4.25 2019/08/19 08NF18 5,000 3.75 2018/10/31 08GK16 5,000 4.93 2018/09/23 12GK31 10,000 3.97 2019/07/9 12GK41 7,000 4.19 2019/09/17 12GK07 10,000 3.94 2019/02/16 12GK02 5,000 3.83 2019/02/01 11GK08 10,000 4.62 2021/02/22 13GK31 20,000 4.17 2023/07/18 13JC21 5,000 4.70 2023/08/26 14GK10 30,000 5.61 2021/04/08 14GK21 34,000 5.10 2021/08/07 13JC18 31,000 4.35 2020/08/13 13JC07 10,000 4.02 2020/04/24
59 2017 Annual Report
Financial bond category Book value Annual interest rate (%) Maturity date
13NF04 15,000 4.11 2020/03/26 12NF11 5,000 3.87 2019/06/28 13JC13 10,000 4.15 2023/06/21 12NF01 11,000 3.92 2019/02/28 14GK22 25,000 5.02 2024/08/21 14NF03 10,000 5.90 2021/01/20 14JC62 10,000 4.80 2021/09/23 15JC04 30,000 3.95 2022/01/26 15JC03 10,000 3.85 2020/01/16 15NF02 10,000 4.02 2020/01/16 15NF12 50,000 4.18 2022/05/04 15JC08 50,000 4.29 2025/04/07 15JC14 70,000 3.87 2025/9/14 15GK18 50,000 3.74 2025/9/10 16JC02 50,000 3.07 2021/02/22 16JC03 50,000 3.33 2026/02/22 16GK07 100,000 3.24 2023/02/25 16GK10 60,000 3.18 2026/04/05 16GK05 30,000 3.80 2036/01/25 16NF17 50,000 3.58 2026/04/22 16NF18 50,000 2.54 2023/04/22 16JC10 100,000 3.18 2026/09/05 16GK13 39,000 3.05 2026/08/24 16JC12 50,000 2.92 2021/11/01 17NF03 32,000 3.70 2022/01/06 16JC15 50,000 3.15 2019/12/5 17NF09 50,000 4.13 2022/04/21 17NF12 20,000 4.21 2022/08/23 17NF11 30,000 4.12 2020/08/23 17 Tier II of Shengjing Bank 50,000 4.90 2027/12/20 17 Level II of Bank of Dalian 20,000 5.00 2027/09/27 17 Tier II of Bank of Wenzhou 10,000 5.00 2027/12/28 Total 1,425,000
4.7.8 Accrual of interest receivable and bad-debt reserve for other accounts receivable
60 2017 Annual Report
I. Interest receivable as of the end of reporting period (unit: ten thousand yuan) Not overdue and Overdue but Depreciation Item Impaired Total not impaired not impaired reserves Interests 103,384.91 2,575.94 0 182.57 105,778.28 receivable
II. Other accounts receivable As of the end of reporting period (unit: ten thousand yuan) Beginning Increase of Decrease of Ending Item balance current period current period balance Depreciation reserves for 1,020.32 222.16 11.25 1,231.23 other accounts receivable
4.7.9 Repayment asset At the end of the reporting period, the Bank's debt-repaid assets were as follows: (unit: ten thousand yuan) Beginning balance Ending balance Impairment accrual Category (December 31, 2016) (December 31, 2017) balance (December 31, 2017) Houses and 38.55 38.55 23.13 buildings Title document 0 0 0 Others 0 0 0 Total 38.55 38.55 23.13
4.7.10 Wealth management, asset securitization and other business during reporting period
I. Wealth management
The Bank has launched RMB 45.87 billion financial products in total, representing a year-on-year growth of 36.48%, including raised individual finance of RMB 19.88 billion, representing a year-on-year growth of 36.07%; individual institutional finance of RMB 25.99 billion, representing a year-on-year growth of 36.8%. As at the end of
61 2017 Annual Report the reporting period, balance of the Bank's financial products reached RMB 22.78 billion, representing an increase of 2.83% over the beginning of the period; and the income from financial services reached RMB 705 million, representing an increase of
4.75% over 2016.
The Bank actively carried out innovation in wealth management business. On the basis of the existing financial management brand system, the Bank launched
"Caifubao" T+1 open financial products, which enriched product types and made the scope of financial management fund investment more extensive. By continuously enriching product range, creating unique products and improving brand image and market influence of financial management business, the Bank won the "Best Wealth
Management Bank of 2017" in the "2017 China Financial Development Forum and the
8th Golden Tripod Award ". The Bank ranked the 41st in terms of comprehensive financial capability among urban commercial banks in the 2017 bank financial capability ranking report published by PY Standard, up 14 places from the previous year.
II. Development of asset securitization
The Bank obtained the business qualification of handling assets securitization in
2016. As at the end of the reporting period, the Bank had not yet publicly issued asset-backed securities in the open market recognized by regulatory agencies such as the interbank market and exchanges.
4.7.11 Balance of off-balance sheet items possibly having significant impact on financial situation and operating results
62 2017 Annual Report
(unit: ten thousand yuan)
Off-balance sheet business item December 31, 2017 December 31, 2016
Credit commitment 1,427,536.84 1,326,569.03 Letter of credit 61,549.79 40,343.23 Letter of guarantee 142,470.00 45,134.25 Bank acceptance 1,223,517.05 1,221,091.55 Loan and other credit 0.00 20,000.00 Operating lease commitment 43,966.93 53,709.73 Pledged assets 851,373.72 1,932,400.19 Capital expenditure commitment 25,585.37 59,027.92 Commitment to purchase long-term 25,585.37 59,027.92 assets Securities underwriting 0 0 Short-term financing bonds and medium 0 0 term note
4.8 Overdue debt outstanding
None
4.9 Major risks and countermeasures
During the reporting period, aiming at "promoting business development and sticking to risk bottom line" and focusing on promoting risk preference transmission, the Bank continuously improved risk management methods, processes and tools, laid emphasis on risk system building, risk mechanism perfection and risk controlling capability improvement, and all supervision indicators have met the requirements of supervision, overall risk was controllable1.
4.9.1 Credit risk conditions and management countermeasures
1 Management effects of various risks can be classified into controllable, basically controllable and uncontrollable level in order from the most effective to the least.
63 2017 Annual Report
During the reporting period, credit risk supervision core indicators met supervision requirements and risk evaluation result was controllable.
I. Further improve credit risk management system. The first was to optimize the process and build a risk management check and balance mechanism; the second was to refine the standards and unify the standards for risk management; the third was to implement credit risk limit management; the fourth was to ensure the accuracy of risk classification; and the fifth was to explore the implementation of credit risk economic capital measurement.
II. Launch credit risk prevention steadily. The first was to strengthen entry review and improve the level of refinement of credit risk management; the second was to do post-lending management to improve the response speed of credit risk warning; the third was to fully collect and dispose of non-performing assets and actively and steadily transfer credit assets; and the fourth was to speed up the pace of risk disposal and focus on key risk areas such as local debts on the basis of strictly controlling the credit granting for new issues.
III. Vigorously strengthen credit risk management basis. The first was to strengthen the system construction; the second was to implement centralized loan issuance and further standardize collateral management. The third was to continuously improve the quality of customer credit rating; and the fourth was to keep strengthening the credit risk and credit business training across the bank.
4.9.2 Market risk conditions and management countermeasures
During the reporting period, the risk preference indicators of two market risk types,
64 2017 Annual Report i.e., interest rate risk sensitivity and trading bond duration, were qualified and the risk evaluation result was controllable.
I. Full coverage. In accordance with planned project and regulatory requirements regarding comprehensive risk management, the Bank introduced market risk management system. The Bank attached importance to comprehensive analysis of asset earnings, liabilities cost and market interest rate fluctuation, and optimized asset and liability structure by adopting pricing system for internal capital transfer.
II. Structure optimization. The Bank adjusted structure of credit asset term in a reasonable manner and avoided interest rate risk effectively.
III. Limit management. The Bank intensified risk control of investment business market strictly by controlling total quantity, category fraction and term fraction of investment business. The Bank implemented intensive management of foreign exchange fund position and large-sum position forecast system, and reduced and prevented exchange rate risk by setting foreign exchange exposure and cut-loss limit.
IV. Pressure test. The Bank launched market pressure test regularly, managed interest rate risk of trading account and bank account effectively in such methods as sensitivity limit, risk value limit and scenario analysis, and managed to improve effectiveness of pressure test.
4.9.3 Operational risk conditions and management countermeasures
During the reporting period, the Bank was free from any case or operation risk events leading to over RMB 1 million, risk evaluation result is controllable.
I. Further establish and perfect operational risk management system. I. The Bank
65 2017 Annual Report modified and improved operational risk management systems including Operational
Risk Management Methods of Chongqing Three Gorges Bank and Integral
Management Methods for Illegal Behavior of Chongqing Three Gorges Bank; secondly, the Bank arranged, integrated, cleared and modified current rules and regulations in the work idea of "abolishment, establishment and modification", and established post-evaluation mechanism for internal control system trends.
II. Intensify business process development, training, execution, examination and post-evaluation for vital operations, complicated operations and new operations including counter, credit and e-banking.
III. Deepen daily case checking. The Bank formed high pressure control trend of
"to sides horizontally, to bottom vertically" in which the head office organized specialized lines to clear and check daily cases, various sub-branches checked by themselves thoroughly, and Case Prevention Office of the head office combined supervision and inspection.
IV. Enhance staff conduct management. Firstly, the Bank launched theme activities of "year of deepening employee behavior management" in the whole Bank to carry out "8-hour internal and external" management; secondly, it enhanced management and supervision of key posts and staff involved in important links, and intensified work shift among tellers, accounting directors and major director of grassroot branch. Thirdly, it also implemented a level-by-level responsibility system to strengthen the management responsibilities of all levels.
4.9.4 Liquidity risk conditions and management countermeasures
66 2017 Annual Report
The Bank has established the liquidity risk management organizational structure composed of the Board of Directors and its Risk Management Committee, Board of
Supervisors, Senior Management and its Asset and Liability Management Committee,
Planning Financial Department, Risk Management Department, Audit Department,
Funds Operation Headquarter and other functional departments. Among them, the
Board of Directors is the supreme decision-making body for liquidity risk management and undertakes the final responsibility of liquidity risk management; the Asset and
Liability Management Committee is the supreme management body for liquidity risk management and the Planning Financial Department undertakes the specific management of the Bank's liquidity risk under the guidance of the Asset and Liability
Management Committee; the Board of Supervisors shall regularly supervise and evaluate the performance of the Board of Directors and the Senior Management in the liquidity risk management; the Audit Department is the internal audit department for liquidity risk management; the Risk Management Department is responsible for incorporating the liquidity risk management into the overall risk management system and formulating and maintaining the policy and preference of liquidity risk management to ensure the effective implementation of relevant requirements; the
Funds Operation Headquarter implements the liquidity management strategy in a timely manner through the money market operation according to the liquidity risk management needs of the whole bank, is responsible for monitoring and dispatching the daily capital positions, and regularly monitors and analyzes the changes in the size, structure, duration, market value, profitability, etc. of the liquidity reserve and investment portfolio.
67 2017 Annual Report
The Bank attached great importance to liquidity risk management, continuously optimized the liquidity risk management framework and management strategy, and established a relatively perfect liquidity risk management system. It regularly carried out liquidity risk pressure tests and carefully assessed future liquidity demand; continuously improved the liquidity risk contingency plan and formulated specific solutions for specific events; and then strengthened communication and collaborative work among relevant departments to improve liquidity risk response efficiency.
Therefore, all liquidity indicators during the reporting period were in conformity with the regulatory requirements or even better.
The Bank fully identified, accurately measured, continuously monitored and effectively controlled liquidity risks, and kept monitoring the Bank's liquidity risks by various methods such as cash flow calculation and analysis, liquidity risk limit management, fund source management, and high-quality liquidity asset management.
The Bank continuously optimized the structure of assets and liabilities and reasonably controlled the mismatch of asset and liability terms; it also constantly optimized the liquidity emergency management system, strengthened the analysis of macro-economic situation and market liquidity, improved the forward-looking and initiative of liquidity emergency management, and effectively dealt with market liquidity risks.
The liquidity risk pressure test is an important tool to analyze and evaluate the quantitative management of liquidity risk and also the prediction for the Bank's future liquidity. It can also provide decision-making basis for formulating and revising the
Bank's liquidity risk preference, liquidity risk management strategy and liquidity risk
68 2017 Annual Report limit. The Bank has been focusing on the structure of assets and liabilities, business scale, complexity and market situation according to the regulatory requirements and regularly carries out liquidity risk pressure test and then reports the results to the Asset and Liability Management Committee, the Senior Management and the Board of
Directors level by level. Based on different liquidity pressure scenes and liquidity emergency degree, the Bank has formulated emergency plans of various ratings, established liquidity emergency lead group, set up and monitored liquidity warning indicators and emergency plan triggering indicators and established the triggering mechanism in which the warning indicators can start the emergency plans for liquidity risks of different ratings. Therefore, during the reporting period, the Bank's asset and liability business developed steadily with good liquidity.
4.9.5 Information technology risk conditions and management countermeasures
During the reporting period, the Bank was free from any risk event involving information technology having significant impact, risk evaluation result is controllable.
I. Intensify operation and management of major information system steadily.
During the reporting period, major information systems, networks and infrastructures of the Bank operated steadily, the Bank was free from major failure or abnormality leading to long-term business interruption and affecting capital security. The disposal of all information technology risks and risk events were incorporated into the overall risk management system.
II. Intensify business continuity management. Firstly, the Bank has audited
69 2017 Annual Report operational effectiveness of business continuity management system comprehensively, and rectified and corrected detected deficiencies; secondly, the Bank has carried out business continuity training in the whole bank to raise staff's awareness of business continuity management; thirdly, the Bank has launched business continuity management drills in various forms, and verified effectiveness of emergency resources and mechanisms.
III. Intensify information security management strictly. Firstly, the Bank established Information Security Management Committee exclusively to establish and perfect information security management system of the Bank and guaranteed its effective operation; secondly, developed and issued Basic Rules for Customers'
Financial Information Protection Work of Chongqing Three Gorges Bank, defined and detailed assigned responsibilities of the Bank's various units, made explicit provisions for security management of links including collection and storage, use and transfer, destruction of customers' financial information, thirdly, the Bank constantly performed security vulnerability scanning and penetration test to official Internet website and e-banking information system, and repaired and perfected current security vulnerabilities.
4.9.6 Reputation risk conditions and management countermeasures
During the reporting period, the Bank was free from major petition events affecting the Bank's stability and reputation, or other petition visit events. Negative public opinions are controlled effectively, and risk evaluation result is controllable.
I. Public opinion monitoring. The Bank earnestly perfected public opinion
70 2017 Annual Report collection system and thoroughly arranged process of reputation risk prevention, treatment and cleanup. It enhanced reputation risk monitoring practically, detected and disposed negative public opinions as soon as possible, and monitored daily public opinions seriously.
II. Strengthen trace management. It established and perfected "reputation risk treatment ledger", guaranteed prompt and timely resolving of various problems, and avoided repeated emergence of similar negative public opinions.
III. Conduct active reporting. It enhanced the reporting to Municipal Party
Committee, municipal government and relevant departments, positively intensified communication and coordination with nation-wide and municipal media and strove to build an "integrated" management work system for detection, reporting, coordination and removal of reputation risk.
IV. Handle compliant letter and safeguard stability. It seriously checked reputation risk in the bank, and completed petition and routine stability maintenance practically.
4.10 Future development prospect
4.10.1 Analysis of future business environment
2018 is the beginning for the Bank to enter the second decade and it is of great significance for completing the tasks this year. The General Secretary Xi points out that the characteristic of the Chinese economic development under the new era is the transformation from high-speed growth to high-quality growth.
Firstly, the Central Economic Working Conference points out that the state will continuously adhere to the general tone of seeking improvement in stability. With
71 2017 Annual Report high-quality development as general requirements and supply-side structural reform as principal route, it will implement strategies including intelligence, innovative driving, green development, rural revitalization, etc. to fully promote the reform in quality, efficiency and power, so as to realize better macro economy situation in stability.
Secondly, the state strictly controls the governmental implicit debts and the issuance and implementation of series of measures to prevent and eliminate local debt risks significantly affect the platform financing.
Thirdly, the People's Bank of China implements macro-prudential policy and monetary policy to realize double backbone control, and strict financial supervision and strong supervision have become the norm.
Fourthly, the municipal "two sessions" point out that the economic growth rate is expected to be 8.5% this year and the new development concept will be thoroughly implemented. Focusing on the positioning of "two points" and "two places"2 and "four solids"3 put forward by General Secretary Xi Jinping to Chongqing, "three critical battles " and "eight action plans"4 will be pushed forward to more actively guide the expectations, enhance confidence, stimulate the vitality of the real economy and stimulate new financial demand.
Fifthly, the rapid development of financial technologies such as the Internet, big
2 General Secretary Xi Jinping emphasized when he visited Chongqing in 2016, Chongqing, the vital strategic support of China Western Development, is located at the junction of the "Belt and Road Initiative" and the Yangtze River Economic Zone. It is required to construct Chongqing into an inland opening highland, and a place with beautiful scenery, namely the position of "two points and two places". 3 "Four solids" mainly refers to the implementation of the new development concept, practical securing and improvement of people's livelihood, soundly execution of deepen reform, and solid implementation of the "Three-Strict and Three-True" requirements. 4 The State Council’s government work report in 2018 stated that in order to build a well-off society in an all-round way, it was necessary to grasp the three critical battles of “preventing and solving major risks”, “targeted poverty alleviation” and “pollution prevention”; the “eight action plans” included the actions plans of implementing innovation-driven development strategy leaded by big data intelligence, rural revitalization strategy, infrastructure construction improvement, military-civilian integration development strategy, developing the city through science and education city and talent-strengthening the city through talents, inland open highland construction, demand-driven safeguards and livelihood improvement, and eco-priority green development.
72 2017 Annual Report data, artificial intelligence, biometric technology, and block chains has continuously reshaped the business development and competition pattern of the banking industry, which has become an important manifestation of the core competitiveness of the banking industry. It not only provides the possibility for the rapid development of the banking industry, but also intensifies the competition in the field of financial science and technology.
Sixthly, customers have put forward new requirements for consultation, integration, convenience, mobilization and cash-less service of financial consumption and banking service awareness, service mode and service ability as well as product innovation.
4.10.2 Development measure
In 2018, operation and development of the Bank will focus on following items:
Strive to promote the high-quality development. The quality improvement is the requirement for high-quality development under the new era. The Bank decides to regard this year as the thematic year of "quality improvement". By focusing on customer quality, asset quality, profit quality, risk control quality, team quality, etc., analyze the problems existing in the work, define the work objectives, formulate work measures, and improve the quality of development.
Focus on highlighting the emphasis in business development. By centering on the
"three critical battles" and "eight action plans", focus on the key points, make up the shortcomings, and strengthen the weak items according to the three orientations of
"serving the local economy, serving small and medium-sized enterprises, and serving
73 2017 Annual Report urban and rural residents" and establish the thinking of comprehensive services, investment banking, securitization, and negotiable instruments, develop investment banking customers and securitized and negotiable assets, effectively realize coordinated cross-marketing, unblock asset circulation channels, and form the ability of sustainable profit creation.
Continuously improve the risk management level. Continuously optimize the overall risk management system; effectively strengthen the control of credit risk, liquidity risk, operation risk, reputation risk and other key risks; complete the overall planning of compliance and case prevention, security and internal control, strengthen compliance and case prevention and control training, and achieve the objective of zero cases.
Strengthen the construction of financial technology. The financial technology is the key to improve the core competitiveness of bank. The Bank will stick to the concept of "strengthening bank by technology" in a consistent way, and pay close attention to the construction of financial technology with the sense of urgency and responsibility.
Speed up the financial technology infrastructure, promote the construction of Xiyong
Data Center, explore the construction of "multi-activity and multi-standby" cloud data center, and rapidly promote the establishment of big data platform and application capacity; accelerate the development of smart finance, focus on the construction of smart marketing, build the "Three Gorges Payment" scenario application ability, achieve the marketing objectives of the scenario bank; make efforts to build intelligent management capabilities, with the focus on establishing intelligent risk management capabilities, including intelligent risk control and intelligent
74 2017 Annual Report reconciliation; strive to build intelligent services, including intelligent customer service, intelligent investment, etc.
Continuously deepen the various reform work. According to the established reform objectives and steps, the Bank will steadily implement and plan the seven reform tasks including organizational structure, the company division, the fund operation division, the central management in the middle and back offices, risk management, cadres and personnel, and performance appraisal to ensure that all reform objectives and tasks will be completed on schedule.
Strengthen the construction of cadre and talent teams. Enrich the introduction of all kinds of professional talents, broaden the channels of talents, introduce the professional and technical talents demanded by the Bank, strictly select and appoint cadres, strengthen the training of cadres and employees, gradually build a talent pool of
"high-end talents at the senior management, all-round competent middle-level managers for sub-branches, and professional talents with excellent quality", and form a cadre and employee team with excellent quality, reasonable structure and strong power.
Adhere to the combination of all-round and strict party and conduct management.
Thoroughly implement the spirit of the 19th National Congress of CPC, deeply learn and apply Xi Jinping's socialism with Chinese characteristics in the new era, continuously enhance the "consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment", stick to the "confidence in the path, theory, system, and culture of socialism with Chinese characteristics", firmly safeguard the Party Central Committee's centralized and unified leadership of financial work, and ensure the steady development of the whole bank
75 2017 Annual Report under the guidance of the party's principles and policies.
4.10.3 2018 business plan
Allowing for current economic and financial situation, market development trend and the Bank's ‘13th five-year plan’ strategic development plan, the Bank will adhere to robust development, control risks strictly and realize sustainable development. Its operation development objectives in 2018 are as follows: asset size growth of 5%, deposit growth of 12%, loan growth of 15%, profit growth of 7% and various core supervision indicators in conformity with the requirements of prudential supervision.
76 2017 Annual Report 5. Changes in Shares and Shareholders
5.1 Changes in shares during the reporting period
5.1.1 Total shares and structural changes during the reporting period
Unit: 10,000 shares Increase and decrease Item Before change After change （+, -）
Share allotment Total number of shares 440,630 44,063 484,693 Share 5,946 595 6,541 Financial share Proportion (%) 1.35 0 1.35
Share 434,388 43,438 477,826 Proportion (%) 98.58 0 98.58 Legal persons State-owned 49,279 4,928 54,207 shares shares Where, Proportion 11.18 0 11.18 (%)
Non-institutional Share 297 29 326 shares Proportion (%) 0.07 0 0.07
5.1.2 All previous changes in share in previous three years by the end of reporting period
Based upon reform and reorganization on December 27, 2007, total shares of the
Bank increased from 141,083,202 shares to 2,011,790,650 shares.
In 2014, the Bank converted capital reserve into share. By deliberating and approving Proposal for Converting Capital Reserve into Share of Chongqing Three
Gorges Bank Co., Ltd. on 2012 Annual Shareholders’ General Meeting, the Bank agreed to convert 10 shares of capital reserve into 1.7 shares (less than 1 share shall be
77 2017 Annual Report converted as 1 share after conversion) with 2,011,790,650 shares held by registered shareholders on December 31, 2012 as the base, and there were 342,004,411 converted shares in total. Total shares of the Bank increased to 2,353,795,061 after conversion.
In 2015, the Bank allotted shares for shareholders. By deliberating and approving
Proposal for Supplementing Capital by Allotting Shares for Shareholders of Chongqing
Three Gorges Bank Co., Ltd. on 2015 1st Extraordinary Shareholders Meeting, the
Bank agreed to allot 3 shares for every 10 shares (less than 1 share shall be calculated as
1 share) with 2,353,795,061 shares held by registered shareholders on December 31,
2014 as the base, and there were 706,138,521 allotted shares in total. Total shares of the
Bank increased to 3,059,933,582 after allotting.
In 2016, the Bank gave bonus shares and allotted shares for shareholders.
By deliberating and approving Proposal for 2015 Annual Profit Distribution of
Chongqing Three Gorges Bank Co., Ltd. on 2015 annual Extraordinary Shareholders
Meeting, the Bank agreed to allot 2 shares for every 10 shares (rounded off) with
3,059,933,582 shares of total stock in 2015 as the base, and has issued 611,986,719 new bonus shares. Total shares of the Bank increased to 3,671,920,301 after issuance of bonus share.
By deliberating and approving Proposal for Supplementing Capital by Shares
Allotment Scheme for Shareholders of Chongqing Three Gorges Bank Co., Ltd. on
2016 2nd Extraordinary Shareholders Meeting, the Bank agreed to allot 2 shares for every 10 shares (less than 1 share shall be calculated as 1 share) with 3,671,920,301 shares of share capital held by the Bank as the base, and there were 734,384,084 new allotted shares. Total shares of the Bank increased to 4,406,304,385 after allotment.
78 2017 Annual Report
During the reporting period, the Bank gave bonus shares. By deliberating and approving Proposal for 2016 Annual Profit Distribution of Chongqing Three Gorges
Bank Co., Ltd. on 2016 annual Extraordinary Shareholders Meeting, the Bank agreed to allot 1 shares for every 10 shares (rounded off) with 4,406,304,385 shares of total stock in 2016 as the base, and has issued 440,630,448.00 new bonus shares. After allotment of bonus shares, the Bank's total shares reached 4,846,934,833.
5.2 shareholders during the reporting period
5.2 shareholders during the reporting period
As at the end of the reporting period, there were 445 shareholders, including 42 institutional shareholders, 1 financial shareholder and 402 individual shareholders.
5.2.2 Top 10 shareholders at the end of reporting period
Increase or decrease Amount of Nature of Share during Name of shareholder holding shares shareholder proportion reporting (shares) period (shares) Chongqing International Trust State 1,405,404,000 28.996% 127,764,000 Inc. joint stock Jiabao Holding Group Co., Ltd. Private 481,852,800 9.941% 43,804,800 China Sigma Co., Ltd. Private 301,158,000 6.213% 27,378,000 Chongqing Donghua Investment Private 240,926,400 4.971% 21,902,400 Co., Ltd. Chongqing Huide Investment Co., Private 240,926,400 4.971% 21,902,400 Ltd. Bank of Chongqing Co., Ltd. State 240,926,400 4.971% 21,902,400 Chongqing State Development Equity Investment Management Private 231,418,341 4.775% 21,038,031 Co., Ltd.
79 2017 Annual Report
Increase or decrease Amount of Nature of Share during Name of shareholder holding shares shareholder proportion reporting (shares) period (shares) Chongqing Yongrui Equity Private 223,945,920 4.620% 20,358,720 Investment Co., Ltd. Shaoxing Far East Private 185,328,000 3.824% 16,848,000 Thermoelectricity Co., Ltd. China Sigma Investment Co., Ltd. Private 180,362,160 3.721% 16,396,560
5.2.3 Bank's principal shareholders and controlling shareholders, actual controllers, related parties, consortium offer and ultimate beneficiaries at the end of the reporting period
Information related to principal shareholders Principal Persons Controlling Actual Related Ultimate shareholders acting shareholders controller parties Beneficiary in concert Tongfang Co., Ltd. and Tsinghua Chongqing Shenzhen Chongqing Tongfang Guoxin International None Warranty None International Investment Trust Inc. Assets Trust Inc. Holding Co., Ltd. Management Co., Ltd. Jinggong Jiabao Jiabao Holding Holdings Group Jin Holding Group Co., None None (Zhejiang) Co., Liangshun Group Co., Ltd. Ltd. Ltd. China Sigma China Sigma Wang China Sigma None None Investment Co., Ltd. Xiaoyan Co., Ltd. Co., Ltd.
80 2017 Annual Report
Information related to principal shareholders Principal Persons Controlling Actual Related Ultimate shareholders acting shareholders controller parties Beneficiary in concert Shanghai Shanghai Chongqing Chongqing Shizhao Yinxin Donghua Donghua Investment Jia Yuxia None Industrial Investment Investment Management Development Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Chongqing State-owned Assets Bank of Bank of Supervision Chongqing None None None Chongqing and Co., Ltd. Co., Ltd. Administrati on Commission Chongqing Chongqing State State Tianjin Chongxin Development Development Asset Equity Sun Jinglong None None Equity Management Investment Investment Co., Ltd. Management Management Co., Ltd. Co., Ltd. Chongqing China Sigma Xigema Haiyuan China Sigma China Sigma China Sigma Investment Industry None Investment Co., Ltd. Co., Ltd. Co., Ltd. Development Co., Ltd. Co., Ltd. Shanghai Shanghai Shanghai Chongqing Yinxin Shizhao Yinxin Donghua Industrial Investment Jia Yuxia None Industrial Investment Development Management Development Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Shanghai Shanghai Cangqiao Real Cangqiao Estate Tang Jufang Tang Jufang None None Real Estate Management Management Co., Ltd. Co., Ltd.
81 2017 Annual Report
Information related to principal shareholders Principal Persons Controlling Actual Related Ultimate shareholders acting shareholders controller parties Beneficiary in concert Tongfang Shenzhen Shenzhen Shenzhen Co., Ltd. and Warranty Aorongxin Warranty Chongqing Assets Investment Huang Yu None Assets International Management Development Management Trust Co., Co., Ltd. Co., Ltd. Co., Ltd. Ltd. Shenzhen Warranty Assets Tongfang Management Tongfang Ministry of Holdings Co., None Co., Ltd. and None Holdings Education Ltd. Chongqing Co., Ltd. International Trust Co., Ltd.
5.3 Pledge and freezing of shares held by shareholders
Share state Pledged shares Principal shareholders (pledged or frozen) (10,000 shares) Chongqing International Trust Inc. - - Jiabao Holding Group Co., Ltd. Pledged 23480 China Sigma Co., Ltd. Pledged 11000 Chongqing Donghua Investment Co., Ltd. Pledged 20200 Bank of Chongqing Co., Ltd. - Chongqing State Development Equity Investment - - Management Co., Ltd. China Sigma Investment Co., Ltd. Pledged 11000 Shanghai Yinxin Industrial Development Co., Ltd. - - Shanghai Cangqiao Real Estate Management Co., Ltd. - - Shenzhen Warranty Assets Management Co., Ltd. - - Tongfang Holdings Co., Ltd. - -
82 2017 Annual Report
5.4 Shareholders holding over 10% of the Bank's shares
Enterprise Legal Date of Registered Business scope name representative establishment capital Money trust; chattel trust; real estate trust; negotiable securities trust; other property or property right trusts; engage in investment fund operation as initiator of investment fund or fund management company; manage operations including corporate assets reorganization, merger & acquisition and project financing, corporate finance, financial adviser; entrusted to manage securities underwriting operation approved by Chongqing relevant department of State of Council; RMB 15 International Weng Zhenjie 1984.10.22 handle operations including brokerage, billion Trust Inc. consultation, credit inquiry; custody and safety-deposit box operations; use inherent assets in the mode of deposits with banks, loans at call to other banks, loans, lease and investment; provide guarantee for others with inherent assets; engage in inter-bank borrowing; other operations approved by laws and regulations or China Banking Regulatory Commission. Above business scope covers RMB and foreign currency businesses.
As at the end of the reporting period, relying on its powerful development advantage, tight internal control and excellent business performance, CQITI is in the leading position among all banks nationwide (see details in 2017 Annual Report of
Chongqing International Trust Inc.).
83 2017 Annual Report 6. Directors, Supervisors, Senior Management Members and Staff
6.1 General information of directors, supervisors, senior management members
6.1.1 Directors
As at the end of the reporting period, the Bank has completed the election of the
Board of Directors. The second Board of Directors consists of 12 directors. Holds DOB Appointment Name Gender Job title Term of office share Year state or not December 2017 to Ding Shilu Male 1968 Chairman appointment None Present expiration December 2017 to Weng Male 1962 Director appointment None Present Zhenjie expiration December 2017 to Tang Independent Male 1956 appointment None Present Shisheng director expiration December 2017 to Chen Independent Male 1956 appointment None Present Zhong director expiration December 2017 to Independent Ma Yun Male 1971 appointment None Present director expiration December 2017 to Liu Male 1956 Director appointment None Present Qinqin expiration December 2017 to Sun Male 1976 Director appointment None Present Guojun expiration December 2017 to Wang Male 1960 Director appointment None Present Xiaoyan expiration
84 2017 Annual Report
Holds DOB Appointment Name Gender Job title Term of office share Year state or not Appointment to be Dou approved by China Male 1969 Director None Present Renzheng Banking Regulatory Commission Appointment to be Peng approved by China Female 1976 Director None Present Yanxi Banking Regulatory Commission Appointment to be approved by China Huang Yu Male 1968 Director None Present Banking Regulatory Commission Appointment to be Independent approved by China Lyu Yimin Male 1962 None Present director Banking Regulatory Commission Tong From January 2010 to Male 1958 Director None Relieved Haiyang December 2017 Zhao Independent From October 2015 to Male 1956 None Relieved Pinzhang director December 2017 Zhang From August 2017 to Male 1977 Director None Relieved Song December 2017 Huang From February 2008 Male 1954 Director None Relieved Qingsheng to April 2017 From February 2008 Sun Lu Male 1966 Director None Relieved to December 2017
During the reporting period, the Bank had 17 present and relieved directors, of whom 9 claimed allowance and total allowance claimed amounted to (pre-tax) RMB
2,536,700 and per capita allowance amounted to (pre-tax) RMB 281,900.
6.1.2 Supervisor
As at the end of the reporting period, the Bank has completed the election of the
Board of Supervisors. The second Board of Supervisors consists of 5 supervisors of whom the appointment qualification has been approved by relevant procedures.
85 2017 Annual Report
Holds DOB Appointment Name Gender Job title Term of office share Year state or not December 2017 to Zhang Chief Female 1966 appointment No Present Juan supervisor expiration Chairman of December 2017 to Xu Male 1964 Supervisory appointment No Present Junhua Committee expiration December 2017 to Shareholder Xu Wei Male 1973 appointment No Present supervisor expiration December 2017 to Wang Employee Male 1963 appointment No Present Qi supervisor expiration December 2017 to Wang Employee Male 1966 appointment Yes Present Xianjun supervisor expiration
During the reporting period, the Bank had 5 supervisors, of whom 1 claimed allowance and total allowance claimed amounted to (pre-tax) RMB 216,000 and per capita allowance amounted to (pre-tax) RMB 216,000.
6.1.3 Senior management
As at the end of the reporting period, the Bank has completed the election of senior management. The senior management of the Bank is composed of the following personnel: Ding Shilu (President of the Bank (acting)), Wang Liangping (Vice
President), Wan Fujian, Xu Ling and Yao Jiangjun (secretary general of the Board of
Directors).
Upon approval, Zuo Qi is the Secretary of Discipline Inspection Committee of the
Bank, and Fu Zaiying is the Deputy Secretary of CPC. Tian Hui is appointed as the chief technology officer (CFO) by the Board of Directors.
86 2017 Annual Report
Holds DOB Appointment Name Gender Job title Term of office share Year state or not Chairman, December 2017 to Ding Male 1968 President appointment None Present Shilu (acting) expiration December 2017 to Wang Male 1963 Vice President appointment None Present Laingping expiration December 2017 to Wan Male 1963 Vice President appointment Yes Present Fujian expiration December 2017 to Xu Ling Female 1969 Vice President appointment None Present expiration December 2017 to Yao Secretary of Male 1971 appointment None Present Jiangjun the Board expiration Wang February 2008 to Male 1957 Vice President None Relieved Zhijian October 2017
During the reporting period, 11 senior management members (including the outgoing officers) of the Bank claimed emolument. The total (pre-tax) payroll claimed amounted to RMB 16,663,700 and the (pre-tax) per capita payroll amounted to RMB
1,514,900, which was reduced by 22.3% compared to that of the previous year. In accordance with Robust Payroll Regulatory Guideline of Commercial Banks and assessment method of risk liability management for the Bank's senior management, the
Bank constantly followed the principle of matching performance payroll delayed payment with risk release. Performance-related wage (RMB 3,272,600) payment of above-mentioned senior management members was delayed at 40%-50% performance-related wage in the reporting period.
The Bank strictly evaluated, assessed and supervised major principle of Head
Office departments, branches and sub-branches as vital posts of the Bank's operation
87 2017 Annual Report and development, and as personnel of great significance to risk. As at the end of the reporting period, 95 principals of Head Office departments as well as branches and sub-branches (level I sub-branch) of the Bank claimed emolument, total payroll claimed amounted to (pre-tax) RMB 58,654,400 and per capita payroll amounted to
(pre-tax) RMB 617,400. In accordance with Robust Payroll Regulatory Guideline of
Commercial Banks and Interim Administration Provisions for Delayed Payment,
Deduction and Repayment Demand of Performance-related Wage of Chongqing Three
Gorges Bank (YSXYF [2015] No.70), the Bank constantly followed the principle of matching performance payroll delayed payment with risk release. Performance-related wage (RMB 18,469,300) payment of above 95 key positions in Head Office departments, branches and sub-branches as well as personnel of great significance to risk was delayed at 20%-40% performance-related wage in 2017.
6.1.4 Main work experience of directors, supervisors, senior management members
Mr. Ding Shilu, Director, President (acting), Chairman of Strategic
Development Committee, Member of Risk Management Committee, Connected
Transaction Control Committee and Remuneration & Nomination Committee of
Board of Directors. Got EMBA of Chongqing University in December 2006, economist.
Mr. Ding Shilu has served successively as Senior Staff Member of Planning
Office, Principal Staff Member of Monetary Credit Office of PBOC Chongqing Branch,
Vice President of PBOC Chongqing Wanzhou Central Sub-branch, Deputy Chief of
88 2017 Annual Report
Exchange Control Office and Cooperative Financial Institutions Supervision
Department of PBOC Chongqing Operation Office, Deputy Director of Chongqing
Rural Credit Cooperatives Association, Vice President of Chongqing Commercial
Bank, Vice General Manager of ICBC International Business Department (put on field practice), Vice President & Director of Bank of Chongqing Co., Ltd., etc.
Mr. Weng Zhenjie, Director, Chairman of Risk Management Committee,
Member of Remuneration & Nomination Committee of Board of Directors. He obtained the master degree of engineering of PLA Military Institute of Engineering in
August 1986, and he is a senior economist and expert receiving special government allowance from the State Council.
Mr. Weng Zhenjie has served successively as the deputy general manager of
Beijing Centergate Technologies (Holding) Co., Ltd., Chairman of Chongqing Three
Gorges Bank Co., Ltd., Chairman of Southwest Securities Co., Ltd., and Chairman and
CEO of Chongqing International Trust Inc. He is now the Chairman of Chongqing
International Trust Inc. Chairman of Mutual Benefits, Director of China Trust
Protection Fund Co., Ltd., Director of China Trust Registration Co., Ltd., Director of
Hefei Science & Technology Technological Rural Commercial Bank Co., Ltd., and
Director of Guodu Securities Co., Ltd., etc.
Mr. Tang Shisheng, Independent Director, Chairman of Remuneration &
Nomination Committee, Member of Strategic Development Committee and
Connected Transaction Control Committee of Board of Directors Got Ph.D in
Applied Econometrics of Chinese Academy of Social Sciences in June 2004, senior
89 2017 Annual Report economist.
Mr. Tang Shisheng has served successively as Vice General Manager of
International Business Department, CCB Hainan Branch, President of Hainan Yangpu
Sub-branch, Principal of Preparatory Group & Vice President of China International
Capital Corporation Limited, Vice President of China Cinda Trust Investment Co., Ltd.,
Vice President of China Galaxy Securities Co., Ltd., Chairman of Hongyuan Securities
Holding Co., Ltd., and Senior Vice President of Beijing Founder Group Co., Ltd.
Currently he serves as Chairman of Hodojou Technology Co., Ltd., Chairman of
Beijing Zhongke Software Co., Ltd., and Independent Director of CITII Bank
(International) Co., Ltd., Geo-Jade Petroleum Corporation and Wison Engineering
Services Co., Ltd.
Mr. Chen Zhong is an Independent Director, Chairman of Connected
Transaction Control Committee, and Member of Strategic Development
Committee of Board of Directors. Got Ph.D in Finance of Guanghua School of
Management of Peking University in July 2000, a researcher and an expert receiving special government allowance from the State Council.
Mr. Chen Zhong has served successively as Director and Executive
Vice-chairman of China Enterprise Confederation, and Deputy Secretary General of
Chongqing Municipal People's Government (take a temporary post). He now serves as
Chairman of New China Fund Management Co., Ltd. and independent director of
Beijing Lanxum Technology Co., Ltd.
Mr. Ma Yun is an Independent Director, Chairman of Audit Committee, and
90 2017 Annual Report
Member of Connected Transaction Control Committee and Remuneration &
Nomination Committee of Board of Directors. Bachelor degree in law of Northwest
University of Political Science and Law and lawyer.
Mr. Ma Yun has served successively as Deputy Chief of Division of Regulation of
General Changshou Chemical Factory, Lawyer of Guangxian Law Offices Chongqing, and Senior Partner Lawyer of Chongqing Solton & Partners. He is now the General
Manager of Chongqing Yuxincai Equity Investment Fund Management Co., Ltd. and
Yescapital (Chongqing) Investment Fund Management Co., Ltd., and Independent
Director of Fuan Pharmaceutical (Group) Co., Ltd. and China Jialing Industrial Co.,
Ltd.
Mr. Liu Qinqin is a Director, and Member of Audit Committee of Board of
Directors. Postgraduate majoring in Investment Management of Chinese Academy of
Social Sciences Postgraduate School, lecturer and editor.
Mr. Liu Qinqin has served successively as Intelligence Company, Command
Clerk, Administration Platoon Leader and Logistics Assistant of Force 36123,
Instructor of Institute of Military Economy, Journalist, Editor and Associate
Editor-in-Chief of Military Finance, Director of Financial Theory Teaching and
Research Section of Institute of Military Economy, Deputy Director of Financial
Settlement Center of General Logistics Department, and Chairman of Beijing
Zhongtian Shipping Investment Co., Ltd. Currently he serves as General Manager of
Tsinghua Tongfang Guoxin Investment Holding Co., Ltd.
Mr. Sun Guojun is a Director, and Member of Risk Management Committee
91 2017 Annual Report and Audit Committee of Board of Directors. Got EMBA of Tsinghua University in
July 2008, and is a senior economist.
Mr. Sun Guojun has served successively as Deputy Chief of Shaoxing County
No.6 Construction Co., Ltd., Department Manager of Zhejiang Huaneng Light
Construction Engineering Co., Ltd., General Manager Assistant of Zhejiang Jinggong
Steel Structure Co., Ltd., General Manager of Shaoxing Wuzhou Building Erection
Engineering Co., Ltd., General Manager of Zhejiang Jinggong Century Construction
Engineering Co., Ltd., Chairman of Zhejiang Jinggong Construction Group Co., Ltd., and Chairman and General Manager of Zhejiang Jiabao New Fiber Group Co., Ltd.
Currently he serves as Chairman of Zhejiang Jinggong Real Estate Development Co.,
Ltd., Co-president of Jinggong Holdings Group Co., Ltd., President of Jiabao Holdings
Group Co., Ltd., and Chairman & President of Zhejiang Jinggong Energy Technology
Group Co., Ltd.
Mr. Wang Xiaoyan is a Director, and Member of Strategic Development
Committee and Audit Committee of Board of Directors. Got MEcons of PBOC
Head Office Financial Institute and senior economist.
Mr. Wang Xiaoyan has served successively as Assistant Engineer of State-owned
Northeast Optical Instrument Factory, economist of Fund Department of People's Bank of China, and Chief Economic Manager, and is now the Chairman and President of
China Sigma Co., Ltd. and Director of Chongqing International Trust Inc.
Mr. LYU Yiming is a Director, and Member of Risk Management
Committee and Connected Transaction Control Committee of Board of Directors.
92 2017 Annual Report
Doctoral candidate majoring in political economy of Renmin University of China and senior engineer.
Mr. LYU Yiming has served successively as a teacher of the Department of
Political Education of Shanxi Normal University, Manager of Department of Assets
Management of Lenovo Group, Cadre of Beijing Jinghua Trust and Investment
Corporation, Director (and General Manager of ) of the Department of Financial Assets
Management of State Development & Investment Corp., Ltd., Guorong Assets
Management Co., Ltd., Deputy General Manager of Financial Investment Department,
Deputy Director of Strategic Development Department and Director of Research
Center, General Manager of SDIC, and President and Deputy Chairman of China
Financial Leasing Co., Ltd. He is now the CEO of China Overseas Holding Group Co.,
Ltd.
Mr. Dou Renzheng is a Director, and Member of Strategic Development
Committee of Board of Directors. Got M.A. in Economics of Renmin University of
China in July 1997, is an accountant and senior economist.
Mr. Dou Renzheng has served successively as the Deputy Chief of the Second
Regulatory Division of the First Banking Regulatory Department of People's Bank of
China, Deputy Director of Financial and Accounting Department of China Banking
Regulatory Commission, Deputy Director of Personnel Department and Deputy
Director of Organization Department of China Banking Regulatory Commission, and
Deputy General Manager (Vice President) of Chongqing International Trust Inc. He is now the General Manager (President) and Director of Chongqing International Trust
93 2017 Annual Report
Inc.
Ms. Peng Yanxi is a Director, and Member of Audit Committee of Board of
Directors. Got bachelor's degree of Economics Southwest Normal University in July
1998, and is a senior economist.
Ms. Peng Yanxi has served successively as an Accountant of Business
Department of Rural Credit Union in Nan'an District, Chongqing, office worker, employee of Personnel and Education Division, Deputy Chief of Personal Business
Division, Deputy Director of General Office, Deputy General Manager (presider) of
Human Resources Department of Chongqing Rural Commercial Bank, General
Manager of Human Resources Department, Listing Office Director, Office Director,
Director (Supervisor) Office Director and Secretary of the Board. She is now the Vice
President of Bank of Chongqing Co., Ltd.
Mr. Huang Yu is a Director, and Member of Risk Management Committee and Remuneration & Nomination Committee of Board of Directors. Obtained
Master in Project Management of University of Greenwich in the UK in July 2009.
Mr. Huang Yu has served successively as the Manager of CADTIC, Deputy
General Manager of Hebei Representative Office, Deputy General Manager of
Zhengda Financial (Hebei) Company, Chairman of Jiangxi Ziguang Pharmaceutical
Co., Ltd., and Director and Deputy Chairman of the Sixth Board of Directors of
Tongfang Co., Ltd. He is now the Deputy Chairman and President of Tongfang Co.,
Ltd., Chairman of Shenzhen Warranty Assets Management Co., Ltd., Chairman of
Shenzhen Huakong Seg Co., Ltd., Chairman and Executive Director of Tongfang
94 2017 Annual Report
Kontafarma Holdings Limited and Chairman of Board of Supervisors of Penghua Fund
Management Co., Ltd.
Mrs. Zhang Juan, Chief Supervisor, Member of Nominations & Supervision
Committee of Board of Supervisors. Got EMBA of Chongqing University in
December 2012, economist.
Ms. Zhang Juan has served successively as Clerk, Accountant, Loan Officer and
Suboffice Deputy Director of ICBC Chongqing Branch, Vice President, President of
Chongqing Rural Commercial Bank Co., Ltd.'s Renmin Road Sub-branch & President of Zhongshan Road Sub-branch, President & Deputy General Manager of Business
Department of Chongqing Rural Commercial Bank Co., Ltd.'s Renmin Road
Sub-branch, Assistant & General Manager of Business Department of Chongqing
Rural Commercial Bank Co., Ltd., Committee Member of CPC Chongqing Rural
Commercial Bank Co., Ltd., Vice President & General Manager of Business
Department of Chongqing Rural Commercial Bank Co., Ltd., Committee Member of
CPC Chongqing Three Gorges Bank Co., Ltd., and Vice President of Chongqing Three
Gorges Bank Co., Ltd. Currently she serves as the Chairman of the Board of
Supervisors of Chongqing Three Gorges Bank Co., Ltd.
Mr. Xu Junhua, Exterior Supervisor, Supervisor of Board of Supervisors,
Chairman of Nominations & Supervision Committee of Board of Supervisors. Got
Ph.D in Economics of Chinese Academy of Social Sciences Postgraduate School in
December 1990, and is a senior economist.
Mr. Xu Junhua has served successively as Cadre of Industrial Credit Department
95 2017 Annual Report of ABC Head Office, Deputy-director-general-level Cadre of Research Office of ABC
Head Office, General Manager and Office Director of Research and Consultation
Department, General Manager of Nanjing Subsidiary of Nanfang Securities Co., Ltd.,
General Manager, Institute Director, President Assistant and Vice President of
Investment Banking Head Office, Chief Economist of China Credit Trust Co., Ltd., and
President of National Modern Financial Holdings Co., Ltd. Currently he serves as
President of Hongru Financial Education Foundation.
Mr. Xu Wei is the Supervisor of shareholders. Obtained Bachelor of Law of
Fudan University in July 1997.
Mr. Xu Wei has served successively as full-time lawyer of Shanghai Xiaoxin Law
Firm. He is now the full-time lawyer, senior partner and deputy director of Shanghai
Zhendan Law Firm.
Mr. Wang Qi, supervisor. Bachelor's degree of Foreign-related Business of
Correspondence School of Party School of the Central Committee of C.P.C., economist.
Mr. Wang Qi has served successively as Chief of Credit Section of Bank of China
Yuzhong Sub-branch, Director of Railway Station Suboffice, Director of Personal
Finance Center, Director of Jiefangbei Suboffice, Director of Eling Suboffice, Director of Jiaochangkou Suboffice; Vice General Manager (and General Manager of Trust
Administration Department), General Manager of Compliance Department of
Chongqing International Trust Co., Ltd., Vice General Manager of Credit Management
Department (and Deputy General Manager of Wanzhou Sub-branch Administration
96 2017 Annual Report
Department), General Manager of Risk Management Department and President
Sub-branch of Chongqing Three Gorges Bank Co., Ltd. Currently he serves as Office
Director of Board of Supervisors of Chongqing Three Gorges Bank Co., Ltd.
Mr. Wang Xianjun, Supervisor, Supervisor of Board of Supervisors,
Member of Nominations & Supervision Committee of Board of Supervisors.
Bachelor's degree of Education of Physics in Chengdu Normal University, senior economist.
Mr. Wang Xianjun has served successively as teacher of Yun'an Middle School of
Yunyang County, Loan Officer of original First City Credit Union in Wan County,
Loan Officer, Deputy Section Chief of Credit Section, Deputy Director of Special
Assets Department, and Deputy General Manager of Legal Affairs Department of
Gaosuntang Sub-branch of original Wanzhou Commercial Bank, Deputy General
Manager of Legal Compliance Department of Chongqing Three Gorges Bank Co., Ltd.
Currently he serves as Vice General Manager of Risk Management Department of
Chongqing Three Gorges Bank Co., Ltd.
Mr. Zuo Qi is the Secretary of Discipline Inspection Committee. Postgraduate majoring in Political Economy of Party School of the Central Committee of C.P.C.
Mr. Zuo Qi has served successively as the Cadre of Nantong Kuangqu Branch of
Sichuan Chongqing Tax Bureau, Clerk and Section Member (took a temporary post of
Deputy Township Head of Pufu Township, Jiangbei County, Chongqing at the same time) of Sichuan Chongqing Supervisory Bureau, Deputy Director Officer, Chief
Officer and Principal Staff Member of Chongqing Discipline Inspection Commission,
97 2017 Annual Report
Deputy Director of the First Office of Discipline Inspection and Supervision, Deputy
Director of General Office, Director of General Office (took a temporary post of
Deputy Head of Fuling District, Chongqing at the same time), Secretary General,
Member of the Standing Committee, Secretary of the Party Committee of departments, and Deputy Director of Chongqing Supervisory Bureau and Deputy Director of
Committee for Handling Proposals of CPPCC.
Ms. Fu Zaiying is the Deputy Secretary of CPC. Bachelor's degree of
Economic Management of Correspondence School of Party School of Sichuan
Committee of CPC, senior administration engineer and economist.
Ms. Fu Zaiying has served successively as Deputy Secretary of Youth League
Committee of Chengnan Township, Dazu County, Sichuan Province, Director of
Women’s Federation, Deputy Township Head and Township Head of Tianshan
Township, Dazu County, Sichuan, Head Officer of Publicity Department, Director of
Spiritual Civilization Office of Duzu County CPC Committee of Sichuan Province,
Deputy Party Secretary and District (Town) Chief of Youting District (Town), Dazu
County, Sichuan Province, President of Women’s Federation of Dazu County, Sichuan
Province (Chongqing City), Standing Committee Member and Secretary of Discipline
Inspection Committee of Dazu County CPC Committee, Chongqing, Deputy Party
Secretary and Secretary of Discipline Inspection Committee of Bishan County CPC
Committee of Chongqing, Standing Committee Member and Secretary of Discipline
Inspection Committee of Beibei District CPC Committee of Chongqing.
Mr. Wang Liangping, Vice President & Financial Administrator. Got EMBA
98 2017 Annual Report of Chongqing University in 2010, senior accountant.
Mr. Wang Liangping has served successively as Accountant of PLA Unit 57318,
Registered Accountant and Certified Public Accountant of Beijing Hongda Accounting
Firm, Assistant of General Logistics Department and Financial Department of PLA,
Financial Director and General Manager of Finance Department of Chongqing
International Trust Inc.
Mr. Wan Fujian, Vice President. Got MEcons of Xiamen University in July
1994, senior economist.
Mr. Wan Fujian has served successively as Clerk of PBOC Wanxian Region
Central Sub-branch, Clerk of ICBC Wanxian Region Branch, President Assistant of
ICBC Yunyang County Sub-branch, Deputy Chief of Technology Reformation &
Credit Section of ICBC Wanxian Region Branch, Deputy Director and Director of
Planned Credit Department of ICBC Wanzhou Branch, President Assistant of ICBC
Chongqing Yuzhong Sub-branch, Vice President of ICBC Wanzhou Branch, General
Manager of Huaxi Securities Wanzhou Business Office, President of Wanzhou
Commercial Bank Co., Ltd., and General Manager of Chongqing Three Gorges Bank
Co., Ltd. Wanzhou Administration Office.
Ms. Xu Ling, Vice President. Got BA degree of Shanghai International Studies
University in August 1991, translator.
Ms. Xu Ling has served successively as Salesman, Business Manager, Deputy
Manager of International Finance Department, Deputy Manager of Capital Planning
Department, Vice General Manager of Financial Planning Department, Vice General
99 2017 Annual Report
Manager of Capital Management Department (take the charge), General Manager of
Capital Management Department, General Manager of Compliance Management
Department, General Manager of Trust Management Department of Chongqing
International Trust Inc., and Chief Supervisor of Hefei Science & Technology
Technological Rural Commercial Bank Co., Ltd.
Mr. Tian Hui is a Technical Director (vice administrative level). Bachelor's degree of Economic Information of Shaanxi Business College, economist.
Mr. Tian Hui has served successively as Loan Officer of 1st Credit Section of
BOC Shaanxi Province Branch, Principal Staff Member and Principal of Credit Section of BOC Xi'an City Sub-branch, President of BOC Lintong Sub-branch, President of
CMBC Xi'an Branch Chengnan Sub-branch, President Assistant of CMBC Xi'an
Branch, Principal of Preparatory Group of CMBC Taiyuan Branch, High
Commissioner of CMBC Xi'an Branch (Vice administrative level), and Principal of
Preparatory Group of China Unionpay Inner Mongolia Branch.
Mr. Yao Jiangjun, Board Secretary (vice administrative level). Got BEc of
Southwestern University of Finance and Economics in July 1992, economist, part-time professor of School of Management, Southwest University of Political Science and
Law.
Mr. Yao Jiangjun has served successively as Clerk and Senior Staff Member of
Chongqing Operation Management Department of People's Bank of China, Manager of
Office Secretary Department of Southwest Securities, General Manager of Risk
Management Department & Vice General Manager of General Management
100 2017 Annual Report
Department of Chongqing International Trust Inc.
6.2 Change in directors, supervisors and senior management members during reporting period
During the reporting period, Mr. Huang Qingsheng (former Director) resigned in
April 2017, former Directors Mr. Tong Haiyang, Mr. Zhao Pinzhang, Mr. Zhang Song and Mr. Sun Lu resigned in December 2017. Mr. Ma Yun (Independent Director) took office in August 2017. Mr. Dou Renzheng, Ms. Hu Yanxi, Mr. Huang Yu and Mr. LYU
Yiming were elected as the directors in the Second Board of Supervisors in December
2017, whose qualification was yet to be approved by bank regulators. Mr. Xu Wei was elected as the Supervisor of the Second Board of Supervisors of the Bank in December
2017. Mr. Zhou Zhiqiang (former Business Director) resigned in March 2017. Mr.
Wang Zhijian (former Vice President) retired in October 2017. Mr. Zuo Qi took office in April 2017.
6.3 Nomination of directors and supervisors by principal shareholders
Nominee Principal shareholders Nominee Director Remarks Supervisor Chongqing International Trust Weng Zhenjie, Liu Qinqin, - Inc. Dou Renzheng Sun Guojun, Weng Jiabao Holding Group Co., Ltd. - Zhenjie, Ding Shilu China Sigma Co., Ltd. Wang Xiaoyan, Ding Shilu - Chongqing Donghua Investment - - Co., Ltd. Bank of Chongqing Co., Ltd. Peng Yanxi - Chongqing State Development Co-nominated with Equity Investment Management Huang Yu - Tongfang Co., Ltd. Co., Ltd.
101 2017 Annual Report
Nominee Principal shareholders Nominee Director Remarks Supervisor China Sigma Investment Co., - - Ltd. Co-nominated with Shanghai Yinxin Industrial Shanghai Cangqiao - Xu Wei Development Co., Ltd. Real Estate Management Co., Ltd. Co-nominated with Shanghai Cangqiao Real Estate Shanghai Yinxin - Xu Wei Management Co., Ltd. Industrial Development Co., Ltd. Shenzhen Warranty Assets - - Management Co., Ltd. Co-nominated with Chongqing State Tongfang Holdings Co., Ltd. Huang Yu - Development Equity Investment Management Co., Ltd.
6.4 Staff conditions during the reporting period
As at the end of the reporting period, the Bank had 2,156 on-post employees, representing an increase of 83 employees or 4% over 2016. There are 938 male and
1,218 female employees among all on-post staff, accounting for 43.51% and 56.49%%, respectively; 1,874 of them have bachelor degree or above, accounting for 86.92% of the total; average age of all on-post staff is 33.2 years old.
102 2017 Annual Report 7. Corporate Governance
7.1 Organization chart
Shareholders' General 股股股股股股股股 Meeting
Board董 董 董 of Board董 董 董 of Strategic Development 董 董 董 董 董 董 Nominations & 战战略略发发展展委委员员会会 Directors Supervisors 监监督督及及提提名名委委员员会会 Committee Supervision Committee
Risk Management 风风险险管管理理委委员员会会 Information Technology Office of the Office of the Board 信信息息科科技技委委员员会会 Committee 董事会办公室 监事会办公室 Committee Board of Directors of Supervisors Consumer Protection 消消费费者者权权益益保保护护委委员员会会 风Risk风险险与 与&内 内Internal部部控控制制 Control委委员员会会 Committee Committee
Credit授授 Review信信审审查查委 委Committee员员会会 Connected Transaction 关关联联交交易易控控制制委委员员会会 Control Committee Senior高高 高Management高高高高高高高 Financial财财务务管管 Management理理委委员员会会 Committee Audit审审计 计Committee委委员员会会 Asset and Liability 资资产产负负债债管管理理委委员员会会 Management Committee Remuneration薪薪酬酬提提名名委委员员会 会& Nomination Committee Marketing营营销销委委 Committee员员会会
General办公 Office室 Planning计划财 Financ务部 ial Department
Corporate公司金融 Banking总部 Accounting & 会计结算部 Headquarter及下属 and事 subordinated业部 Business Division Settlement Department
Retail零售银 Banking行总部 Risk Management Headquarter 风险管理部 Department
Small Business Finance 小企业金融总部 Legal Compliance Headquarter 法律合规部 Department
Funds资金运 Operation营总部 Headquarters Party-党Mass群工 Work作部 Group
International Business 国际业务部 Department Discipline纪检 监Inspection察部 and Supervision Department
Platform平台金 Finance融部 Department HR人 力Department资源部
信息科技部 Institution Management IT Department 机构管理部 Department
Credit信 贷Management管理部 Department Security保 Department卫部
Audit稽核 Department审计部 Listing上市工 Affairs作办公 Office室
Head Business Office, 信Credit贷监 控Monitoring部（筹） 总行营业部、万州 Department (planning) Wanzhou分行、 Branch各直 and管支 Directly行 Managed Branches
103 2017 Annual Report
7.2 Shareholders and Shareholder's General Meeting
During the reporting period, the Bank has held 2016 Annual Shareholder's
General Meeting and 2017 Extraordinary General Meeting (for two times). Notification, convening, holding and voting procedures of the meetings conformed to Company Law and Articles of Association of the Bank.
2016 Annual Shareholder's General Meeting deliberated and approved major proposals including Work Report of Board of Directors, Work Report of Board of
Supervisors, 2016 Annual Report and Summary and 2016 Annual Final Financial
Report.
The first extraordinary general meeting in 2017 deliberated and approved three proposals, such as change of registered capital, amendment to the Articles of
Association, and public issue of green financial bond and entrepreneurship and innovation financial bonds. The second extraordinary general meeting in 2017 deliberated and approved the election of the shareholder directors and independent directors of the second Board of Directors, and the election of shareholder supervisors and exterior supervisors of the second Board of Supervisors.
Solton & Partners has witnessed annual Shareholder's General Meeting and
Extraordinary Shareholders Meeting of the Bank on the spot, and issued legal opinion.
The convening of Shareholder's General Meeting by the Bank guaranteed shareholders' right to know, right to participate and right to vote concerning major issues of the Bank.
7.3 Directors, Board of Directors and special committee
7.3.1 Work of Board of Directors
104 2017 Annual Report
During the reporting period, all directors of the Bank have been working earnestly and responsibly, fulfilling their duties diligently, and exercising rights granted in
Articles of Association of the Bank, treating all shareholders fairly, keeping up with operations business management of the Bank, ensuring that information disclosed is real, correct and complete, strictly abiding by national laws and regulations, noting not to prevent Board of Supervisors or supervisors from exercising authorities, and protecting interests of all parties involved. During the reporting period, all directors of the Bank have attended meetings and deliberated various proposals, played authority of making decisions, and maintained overall interests of all shareholders and the
Company. During the reporting period, all directors of the Bank have attended meetings and deliberated various proposals, played the authority role of making decisions, and maintained overall interests of all shareholders and the Company.
During the reporting period, the Bank has held 5 regular meetings of Board of Directors,
11 extraordinary meetings, and has deliberated and approved 78 proposals including the business development plan in 2017 and proposal for authorizing Bank President by
Board of Directors, and listened to report on operational management and resumption of senior management on a regular basis.
7.3.2 Resumption of independent directors
I. Attendance of independent directors on Board Meeting and
Shareholder's General Meeting
105 2017 Annual Report
Required times of Present Present Present Independent attending Attending in under under Appointment director Board shareholders person entrustment entrustment state Name Meeting Meetings (times) (times) (times) in the year Tang 16 15 1 0 3 Present Shisheng Chen Zhong 16 14 2 0 3 Present Ma Yun 9 9 0 0 2 Present Zhao 14 6 4 4 2 Relieved Pinzhang Lyu Yimin Not officially on duty Present
II. Objections raised by Independent Director regarding relevant issues
☐ Applicable ☑ N/A
7.3.3 Performance of special committees of Board of Directors
I. Performance of Strategic Development Committee
During the reporting period, the Strategic Development Committee has held 2 meetings, and has deliberated 6 proposals covering 2016 operation development plan,
2016 annual profit distribution of the Bank.
II. Performance of Connected Transactions Committee
During the reporting period, the Connected Transaction Control Committee has held a total of 11 meetings, and deliberated and approved 20 proposals including reports on connected transaction management work in 2016 and all kinds of major connected transactions.
106 2017 Annual Report
III. Performance of Risk Management Committee
During the reporting period, Risk Management Committee has held 4 meetings, and deliberated and approved 18 proposals covering 2016 work summary, 2017 work plan report, 2016 comprehensive risk management report, 2016 credit risk report, and
2017 risk preference statement.
IV. Performance of Remuneration & Nomination Committee
During the reporting period, Remuneration & Nomination Committee has held 6 meetings, and deliberated and approved 16 proposals regarding 2016 payroll of each senior management, 2016 performance evaluation of directors and senior management,
2016 payroll execution, 2017 employee payroll budget, nominated director candidates and director candidate qualification, nominated Chairman, nominated Bank Head
(acting) and deliberation and approval of senior management qualification.
V. Performance of Audit Committee
During the reporting period, Audit Committee has held 4 meetings, and deliberated and approved 14 proposals in terms of 2016 financial audit report, internal audit charter of Chongqing Three Gorges Bank, 2016 report and abstract of Chongqing
Three Gorges Bank Co., Ltd., and 2016 final account report.
7.4 About supervisors, Board of supervisors and special committee
7.4.1 Work of Board of Supervisors
I. Convening of meetings of Board of Supervisors
(I) Organizing the meetings of the Board of Supervisors. During the
107 2017 Annual Report reporting period, the Bank has held 5 meetings of the Board of Supervisors, and deliberated and approved 16 proposals. Among them, there are 7 election proposals, 4 report proposals, 2 inspection proposals, 2 evaluation opinion proposals and 1 system proposal.
(II) Organizing the meetings of Nominations & Supervision Committee.
During the reporting period, the Bank has held 2 meetings of the Nominations &
Supervision Committee, and deliberated and approved 6 proposals.
(III) Organizing the learning work meetings of the Board of Supervisors.
During the reporting period, the Board of Supervisors has held 5 learning work meetings to learn the reports of the 19th National Congress of the Communist
Party of China, the spirit of the Central and regional economic work conferences and financial work conferences, and all kinds of supervisory laws and regulations, and to research and improve the work of the Board of Supervisors, etc.
II. Implementation of supervision and inspection of the Board of
Supervisors
During the reporting period, the Board of Supervisors upholds the four key supervision points including due diligence, financial operation, internal control and risk management as well the topic of "transformation development" of the Bank, and adheres to the supervision principles of "integrating the supervision resources, constantly intensifying the process supervision, actively exploring the multi-level supervision mode, and achieving the forward supervision of the Board of Supervisors".
The Board of Supervisors keeps exploring the effective supervision methods based on the features of supervision and inspection work and the actual situations of the Bank to
108 2017 Annual Report transfer the post supervision to the real-time supervision, and continually improve its work efficiency of supervision and inspection, in a bid to fully support and safeguard the sound and stable development of various kinds of businesses and operating activities of the Bank.
The Board of Supervisors, based on the work arrangement and requirements of the regulator, carried out the intensive annual supervision and inspection on such aspects as the Bank's financial activities and operating results, completion of principal activity indicators, major decisions and execution, work performance of the Board of Directors and senior management as well as the designated members; and took the lead to organize the Audit Department, Risk Management Department, Legal Compliance
Department and Business Line Department to conduct several special inspections.
In the routine supervision work, it constantly explored and advanced the process supervision to achieve the forward supervision. In the work, the Board of Supervisors timely organized to convene special meetings regarding the problems or phenomena discovered to analyze the existing risks and put forward the risk prevention and control measures; and timely sent the work prompt letter to the Board of Supervisors and senior management with respect to the problems and potential risks existing in the operating management of the Bank.
During the reporting period, Board of Supervisors has supervised and evaluated performance of directors and senior management members in 2016 based upon routine supervision as well as intensive supervision and inspection.
In the meantime, the Board of Supervisors always focuses on the problems, fully fulfills the supervision duties, adheres to the continuous tracking supervision and
109 2017 Annual Report follow-up evaluation of the problem rectification, and carries out the post evaluation on the rectification of problems revealed by 2016 intensive supervision and inspection, special inspections and current supervision.
III. Other important work
(I) Grasping the supervision emphases and carrying out the financial supervision.
To ensure the objectivity and accuracy of the Bank's annual reports, in recent years, the Board of Directors has sent out special letters to accounting firm responsible for the annual report audit, proposed the key financial indicators and work requirements that draw attention of the Board of Supervisors, ensured the authenticity, comprehensiveness and accuracy of the annual reports, and collaborated with the
Office of the Board of Directors to complete the work related to disclosure of annual report information.
(II) Enhancing the self-building of the Board of Supervisors and regularly carrying out the performance evaluation.
The Board of Supervisors timely organizes the convening of learning work meetings to learn the spirit of the 19th CPC National Congress and the 5th National
Financial Work Conference as well as important addresses on the conferences by the
General Secretary Xi Jinping, and proposes the opinions on the specific implementation of the Board of Supervisors.
During the reporting period, the Board of Supervisors successively organizes 12 supervisors to participate in all kinds of training and learning on the economic and financial situation and policies, as well as professional work of supervisors, which
110 2017 Annual Report improves the comprehensive capacity and performance capacity of the supervisors and safeguards the efficiency of routine supervision work. Meanwhile, the Board of
Supervisors also attaches great importance to the supervision on the performance of the supervisors, and evaluates and reviews the performance of the supervisors and exterior supervisors according to the regulatory requirements, which promotes the supervisors to work with due diligence in their work.
7.4.2 Objections raised by Board of Supervisors regarding relevant issues
☐ Applicable ☑ N/A
7.4.3 Work of exterior supervisor during the reporting period
Mr. Xu Junhua, Exterior Supervisor, is also the Chairman of Nominations &
Supervision Committee of Board of Supervisors. During the period, Xu Junhua performed duties of Exterior Supervisor, completed relevant work of Board of
Supervisors, attended important working conference upon invitation or notification by the Bank, and no exterior supervisor has never being absent from a meeting for no reason.
Supervisor Xu Junhua is good at educing his specialty, pays attention to the economic and financial situation and policies at home and abroad, is concerned about the Bank's long-term stable and sound development, actively shares the economic and financial information and learning materials, and exchange the understanding and study experience of the spirit of the Central Economic Working Conference at the meetings of the Board of Supervisors, which improves the understanding and grasp of meeting
111 2017 Annual Report spirit of the supervisors and intensifies the Bank's supervision level.
The Board of Supervisors thinks that, Xu Junhua (Exterior Director) has earnestly participated in the relevant meetings held by the Board of Directors, the Board of
Shareholders and the Board of Supervisors based on the relevant provisions and the functions and powers endowed by Articles of Association of the Bank in the process of performing his duties during the reporting period, actively taken part in the supervision and inspection work organized by the Board of Supervisors, and completed all kinds of work deployed by the Board of Supervisors to enable the Bank's work time to reach over 15 working days, which conforms to the regulatory provisions and approves the performance is qualified.
7.5 Evaluation, motivation and restriction mechanism for senior management during the reporting period
During the reporting period, in strict accordance with payroll management guideline for senior management as well as motivation and restriction management system rules for senior management published by Chongqing State-owned Assets
Supervision and Administration Commission, in the evaluation principle of
"combining overall situation and shared administration, quantitative indicator first, qualitative indicator supplemented", the Bank determined annual performance evaluation indicator scientifically, established direct link between annual performance payroll and assessment results. In accordance with rules and requirements in connection with offering, business risk dilution and deferred payment of performance bonus for senior management, deferred payment proportion of President's annual
112 2017 Annual Report performance payroll was determined to be 50%, for other senior management, 40%.
The Bank's Board of Directors and Board of Supervisors insisted on application of performance evaluation to directors, supervisors and business management each year, the evaluation covered the Bank's operating results, meeting attendance as well as deliberation and decision making, business objective & task of departments, individual working performance, deficiency and problems, future improvement measures and methods of each supervisor, director and senior management. As a result, the two boards have developed performance evaluation report for directors, supervisors, exterior supervisors and senior management in each year, notified the report on meetings of Board of Directors and Board of Supervisors as well as annual shareholder's meetings organized by the Bank.
7.6 Outward information disclosure and transparency
In strict accordance with relevant regulations in connection with information disclosure issued by People's Bank of China and China Banking Regulatory
Commission, and the Bank's interim procedures for outward information disclosure management, the Bank did outward information disclosure well, adhered to the principle of "truth, reliability, accuracy, timeliness and completeness", and disclosed its annual report to the society in various channels.
The Bank took letters, calls and visits of shareholders seriously, and enhanced exchange and communication with shareholders by paying visit, making call and intensifying shareholder's information file construction, so as to ensure that all shareholders knew the Bank's operation and development information equally.
113 2017 Annual Report
7.7 Independent operation
The Bank was an independent legal entity making its own management decisions and assuming sole responsibility for its profits or losses, had independent and complete business and independent management capability.
7.8 Internal control construction
The Banks' Board of Directors takes charge of establishing and implementing fully effective internal control systems, ensuring that the senior management takes necessary internal control measures, supervising senior management's supervision and evaluation on adequacy and effectiveness of internal control system; the Board of
Supervisors takes charge of supervising improvement of internal control system and performance of internal control by the Board of Directors, senior management and senior management members; the senior management takes charge of executing decisions made by the Board of Directors, developing internal control policies, monitoring and evaluating adequacy and effectiveness of internal control system, and guaranteeing effective implementation of internal control policies. During the reporting period, in the principle of "full coverage, balance, prudentialness and match", and in accordance with Guideline on Internal Control of Commercial Banks issued by China
Banking Regulatory Commission, the Bank continuously perfected and optimized, and built an internal control system covering various business processes, operation steps, all departments and all posts.
Promote construction of internal control mechanism. The Bank constantly gave
114 2017 Annual Report priority to internal control, revised Basic Rules for Internal Control of Chongqing
Three Gorges Bank. During the reporting period, the Bank has developed and perfected
122 systems, and accomplished planned target; enhanced business process management, promoted preparation of business flow chart; completed post-evaluation of internal control system, established dynamic post-evaluation of internal control system, and formed complete and effective internal control system. The Bank makes proper adjustment to the members of the Risk & Internal Control Committee of the
Head Office, improves the meeting attendance system and enhances the quality and efficiency of attending meetings and discussing official business. During the reporting period, the Bank has held 22 meetings, and deliberated 75 proposals to provide powerful guarantee for sustainable development of the Bank's businesses.
Implement internal control measures. During the reporting period, the Bank has launched 25 risk investigations, and prosecuted violators; carried out business continuity work and pressure test, and ensured that the Bank's risk management work was based on past experience, and was practicable; resolved credit risks by adopting multiple measures, endeavored to reduce credit pressure; executed active authorization management, and improved effectiveness of internal control management; intensified inspection and supervision of counter services, continued staff conduct control; improved liquidity risk management level; executed regular monitoring, established long-term risk control mechanism; intensified internal audit, launched 64 internal audit projects during the reporting period, and guaranteed orderly proceeding of internal audit; established employee compliance achieves to record all internal and exterior irregularities and penalties of the crew in current year; and improved compliance
115 2017 Annual Report awareness of internal control, and promoted compliance culture construction.
Enhance internal control supervision and evaluation. The Bank perfected the case prevention working mechanism of which grass-root branch "top leader" serves as main principal of case prevention, and launched non-site and site inspection continuously; launched internal control evaluation and assessment in multiple dimensions; completed preliminary gap analysis in 5 steps including organizational structure, responsibilities, measures, guarantee and evaluation, intensified dynamic evaluation of internal control construction, boosted internal control management; set qualitative and quantitative proportion in a scientific manner, improved internal control evaluation standard, and guaranteed evaluation adequacy and effectiveness.
During the reporting period, the Bank has not detected material weakness in internal control, and major error in information disclosure, the Bank's internal control was effective. The Bank will further promote internal control construction, promote continuous improvement of internal control system, and promote robust development and compliance management.
7.9 Awards during reporting period
Name of award Appraisal institution
2016 "Excellent Organization Unit for Submission of Standardized Supervision Data" in the EAST System China Banking Regulatory Application Labor Competition themed by "Improvement of Commission Supervision Efficiency and Management Capacity" Outstanding Contribution Award of 2016 Targeted Poverty People.cn Alleviation Excellent Innovation Project of Anti-money Laundering in Chongqing Business Management 2016 Department of People's Bank of China
116 2017 Annual Report
Name of award Appraisal institution
2016 Advanced Collective for Chongqing Payment System Chongqing Business Management Operation and Maintenance Department of People's Bank of China 2016 Advanced Unit in Financial Services Among Banking CBRC Chongqing Office Financial Institutes and Small and Micro Business Ranking the third among the competitiveness evaluation on urban commercial banks with assets scale of RMB 100-200 The Chinese Banker billion in 2016 Chongqing Local Finance Forum 2016 Top Ten Competitive Banks for Chinese Regional Office, Financial Times Office, China Finance Local Finance Institute
Chongqing Ribao, Chongqing Finance Financial impact events in 20 years of Chongqing by Dianjin Association
Livehood Service Award in Social Responsibilities Banking Association
Targeted Poverty Alleviation in Social Responsibilities Banking Association
Livehood Service Award in Social Responsibilities (Wanzhou Banking Association Branch)
Excellent Participation Award of Final Knowledge Contest of CBRC Chongqing Office Chongqing Banking Consumer Rights Protection in 2017
Excellence in Operation Evaluation on Administrative Systems of Chongqing Banks and Financial Institutions in the First Half CBRC Chongqing Office of 2017 Enterprise Confederation of 2017 Top 100 Chongqing Enterprises Chongqing, Chongqing Enterprise Directors Association Enterprise Confederation of Top 100 Chongqing Service Enterprises in 2017 Chongqing, Chongqing Enterprise Directors Association
7.10 Performance of social responsibilities
Since its founding, the Bank always adheres to the operation philosophy of
"everything for you", serving the society, balancing the well-being, and reflection of
117 2017 Annual Report responsibilities, which is widely accepted and praised by all sectors of the society.
Chongqing Ribao and other media have successively reported the meritorious deeds of the Bank's fulfillment of its social responsibilities for 6 times. During the reporting period, the Bank has been successively granted the "Award of Well-being Service in
Social Responsibilities", "Targeted Poverty Alleviation Award in Social
Responsibilities" and "Special Contribution Award in Social Responsibilities", etc.
I. Strengthening organizational leadership and promoting responsibility implementation
The Bank adheres to the Party's leadership of fulfilling the social responsibility.
During the reporting period, the Bank earnestly studies and implements the spirit of the
19th CPC National Congress, important addresses of the General Secretary Xi Jinping, and relevant work requirements of the Central Party and municipal Party committee, unswervingly establishes "consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment", sticks to
"confidence in the path, theory, system, and culture of socialism with Chinese characteristics", upholds the centralized and unified leadership of the CPC, upholds the principle of serving the real economy, prevents and controls financial risks, deepens the financial reform, gives full play to the key role of the financial sector in serving the real economy, coordinates the progress of all work, and properly performs the social responsibilities of local banks as legal persons.
Enhancing the implementation of managing the social responsibilities. One is to advocate the concept of social responsibilities. The Bank adheres to the strategy of
"banks for the reservoir area, wealth management, retail industry and middle and
118 2017 Annual Report small-sized enterprises", holds fast to the social responsibility concept of "everything for you", bases on the reservoir area, upholds serving the social and economic development of Chongqing as its mission, gives all-out support to the economic construction of Chongqing, and integrates its own development into the big-picture development of Chongqing in a better way. The other is to enhance the management of social responsibilities and information disclosure. The Bank always sticks to the principles of authenticity, reliability, accuracy, timeliness and integrity, and makes public the Bank's operation and performance of social responsibilities to consciously accept the supervision by the public by means of the Shareholders' General Meeting, meetings held by the Board of Directors, internal and external websites, placing the printed annual reports in the business halls of the branches and sub-branches and having the same published on related media, as well as presenting the same to the regulatory authorities, Municipal State-owned Assets Supervision and Administration
Commission, finance office, people's bank and key corporate clients, etc.
II. Serving Chongqing's construction and advancing economic development
Supporting the lead in intelligence and contributing to the innovation-driven strategy. Intensifying the coordinated guidance for businesses, and deepening the support for the innovation-driven development strategy led by intelligence. Promoting the implementation of business marketing, closely following the development trend of national industries, taking Chongqing's emphatic promotion of intellectualized upgrade of traditional industries and so on as the opportunities, enhancing the intellectual property pledge loan and other financial products in terms of such emerging industries as big data industry, and attaching great importance and promoting the intelligent
119 2017 Annual Report innovation of Chongqing. Exploring the comprehensive financial services, and strengthening cooperation with funds and other institutions based on the needs at different stages of the enterprise's life cycle, so as to provide clients with diversified and comprehensive financial service schemes. In the meantime, the Bank explores the
"equity + creditor's rights" pattern to provide continuous fund support for technology innovation enterprises.
It supports the infrastructure construction to advance the upgrade. During the reporting period, the Bank follows the deployment of national economic strategy, rigorously supports the infrastructure construction and livelihood projects by local governments. The newly increased credit extension that supports the infrastructure construction projects is worth RMB 5.19 billion, with the balance up to RMB 11.33 billion. Most of the credit extension is oriented to such areas with poor infrastructure and backward social and economic development as the Three Gorges Reservoir Area and suburban districts and counties, which powerfully motivates the local social and economic development and effectively improves the living standard of local people.
The Bank follows major national strategies and serves the construction of inland open highlands. The Bank pays high attention to and takes a series of measures to support the national "Belt and Road Initiative" strategy, the construction of Yangtze
River Economic Zone, Chongqing Pilot Free Trade Zone, and Sino-Singapore
(Chongqing) demonstration project, intensify the role of
"Chongqing-Xinjiang-Europe" Pathway and support such major strategies as enterprise
"going global". During the reporting period, the Bank has successfully established the department of Sannong (agriculture, rural areas and farmers) and green financial
120 2017 Annual Report business, department of big health financial business, department of science, education, culture and finance, and department of public financial business to provide all-round refined financial services for the national strategic projects. As at the end of the reporting period, the loan balance that supports the construction of inland open highland is RMB 0.45 billion, registering nearly a double compared with the beginning balance; the credit financing balance that supports the functional upgrade of golden waterway of the Yangtze River is RMB 0.16 billion; the credit financing balance that supports the construction of multimodal transport corridor is RMB 0.50 billion; the wealth management/trust financing balance that supports the construction of logistics hub is RMB 1.5 billion; and the credit financing balance that supports the construction of advantageous riverside industrial clusters is RMB 3.92 billion, with a substantial increase compared with the beginning balance.
The Bank supports the construction of green and ecological civilization and advances the pollution prevention and control. The Bank actively builds green financial system, channels plenty of resources to support the development of green industries, establishes the department of Sannong (agriculture, rural areas and farmers) and green financial business and builds the perfect working mechanism of "green credit".
III. Implementing inclusive finance and ensuring to improve livelihood
The Bank supports the development of small and micro enterprises to stimulate the economic vitality. During the reporting period, the Bank makes further progress in implementing the economic development strategies of Chongqing, grasps the current situation of the market development, always adheres to the strategic positioning of
"small and medium-sized enterprise banks" in accordance with all kinds of policy
121 2017 Annual Report requirements of the regulatory authorities, properly serves the small and micro client groups in the key regions and major industries of Chongqing by optimizing the product systems and innovating the systems and mechanisms.
The Banks deepens the "Sannong (agriculture, rural areas and farmers)" services and advances the rural revitalization. The Bank earnestly implements the strategic decisions of Chongqing Municipal Party Committee and Municipal Government on speeding up the agricultural modernization of Chongqing, gives full play to the advantages of local people's banks as legal persons, and proactively supports the modernization drive of "Sannong (agriculture, rural areas and farmers)", so as to provide financial services for the rural revitalization. As at the end of the reporting period, the Bank has issued two "Sannong" financial bonds totally worth RMB 3 billion, and granted agriculture-related loans of RMB 9.61 billion, with a year-on-year growth of 23%, in which the agriculture-related enterprise loans are worth a total of RMB 8.15 billion, and the agriculture-related loans for personal purpose is totally worth RMB
1.46 billion.
The Bank actively implements the targeted poverty alleviation and fights against the critical battles. The Bank makes further progress in carrying out the relevant poverty alleviation work deployed by Chongqing Municipal Party Committee and
Municipal Government, Chongqing Business Management Department of People's
Bank of China, CBRC Chongqing Office, and Municipal Poverty Alleviation Office, fully enforces the poverty alleviation work, intensifies the leadership of the targeted poverty alleviation in terms of financial services, and increases support for the poverty-stricken districts and counties, through which to better perform its
122 2017 Annual Report responsibilities for poverty alleviation.
The Bank supports the livelihood projects and improves people's living standard.
In addition to giving full play to the basic functions of serving clients and the entire bank, the Bank still actively seeks for the integrating point between the business of financial institutions and the society, between the business of financial institutions and the times, makes endeavors to fulfill the social responsibilities to be assumed by the local banks as legal persons, and helps to improve the livelihood, in order to create greater values for the society.
For the purpose of supporting the military-civilian integration, reinvigorating the city through science and education and making Chongqing a powerhouse in terms of talents, the Bank takes the business department of science, education and culture as the focus of efforts, and supports such military-civilian integration enterprises as
Southwest Ordnance Industry Co., Ltd. and Chongqing Yihong Engineering Plastic
Products Co., Ltd. in terms of the support for the military-civilian integration development. As at the end of the reporting period, the credit extension amount is RMB
0.21 billion. As respect to the support for reinvigorating the city through science and education and making Chongqing a powerhouse in terms of talents, the Bank attaches great importance to the support for the financial needs of Chongqing Nanfang
Translators College (CNTC) of SISU, City College of Science and Technology,
Chongqing University and Chongqing Vocational College of Culture and Arts. As at the end of the reporting period, the credit extension balance of education industry is
RMB 0.48 billion.
To improve people's living conditions, the Bank increases support for
123 2017 Annual Report indemnificatory housing. As at the end of the reporting period, the Bank has invested
RMB 0.96 billion loan balance that supports the indemnificatory housing in such places as Wuxi, Yunyang and Nanchuan, with an increase of RMB 0.11 billion compared with previous year. The indemnificatory housing projects with financial support have been built, with an area of 459,200 square meters and a quantity of 4,474 sets, which makes contributions to improving the living conditions of low-income groups.
The Bank reduces the fees and surrenders part of the profits, and cares for the workers, so as to improve the quality and efficiency of financial services. The Bank has been promoting free service of "global free Treasure Life Card", waived various charges including cross-bank withdrawal and transfer service charges via Unionpay
ATMs at home and abroad, annual fee, administrative expense for petty account, card fee, service charge for messenger, loss reporting fee, card replacement fee and deposit certificate issue fee. It remains a good interaction with Chongqing Municipal
Federation of Trade Unions, fully enforces the card distribution of Employee
Preferential Card, issues 112,727 Employee Preferential Cards during the reporting period, and helps improve the convenience and sense of gain of financial services for ordinary residents.
IV. Enhancing the service quality and efficiency and protecting the rights and interests of clients
The Bank innovates the provision of financial services. On one hand, it follows the transformation trend to popularize the mobile operation system; on the other hand, it actively explores online service innovation, and introduces online category II account opening, ATM cash withdrawal by QR code scanning and face swiping, QR code
124 2017 Annual Report payment and other functions.
It intensifies the protection of consumer rights and interests and safeguards the property safety of residents. The Bank pulls together multiples measures to continuously provide education on financial knowledge. During the reporting period,
82 operation institutions of the Bank have participated in six promotion campaigns including “March 15 International Day for Consumers' Rights and Interests”,
"Financial Knowledge Goes Everywhere", "Fintech promotion", "Financial
Knowledge Popularizing Month", "Financial Knowledge to be Known by Thousands of Families" and "Financial Knowledge to be Known by Campus". 178 financial knowledge promotion stands are set up in such crowded areas as plaza, school, countryside, shopping mall, residential community and open fair. More than 600 employees participate in the promotion activities. A total of more than 300 public education and publicity activities are held and over 45,000 publicity leaflets are distributed. In order to protect the legitimate rights and interests of financial consumers and improve the service capability and efficiency of business outlets in receiving special groups such as the elderly, the weak, the sick and the disabled, the Bank has formulated service procedures and standards for receiving special financial consumer groups, requiring business organizations to uphold the service principles and requirements of "sincere service, proper handling and first-time responsibility" in carrying out relevant work, establish a business training mechanism, ensure that employees are skilled in various business skills, and effectively create a convenient and efficient service acceptance environment for special financial consumer groups.
V. Supporting public charity and offering to give back to the society
125 2017 Annual Report
The Bank actively makes donations to support the poor people. During the reporting period, the Bank makes donations worth RMB 2,122,400 to the poverty-stricken districts and counties, in which RMB 2,025,900 is in cash and RMB
96,500 in kind. The Bank also mobilizes its employees to actively participate in poverty alleviation and donation activities. In the "Three Gorges Giving Love" poverty alleviation and donation activities, the Bank's employees contribute a total of RMB
301,000 yuan.
The Bank supports public welfare establishments and carries forward the fashion of mutual assistance. To promote the social mutual assistance fashion, build a harmonious and happy Chongqing, develop Chongqing's charity and public welfare undertakings, and fulfill its social responsibilities, the Bank affiliated to Chongqing
Charity Federation establishes the "Chongqing Three Gorges Bank's Charity and Public
Welfare Fund". Currently, the Bank has given RMB 500,000 to 100 impoverished college students and RMB 500,000 for the development of Wanzhou public cultural undertakings through "Chongqing Three Gorges Bank's Charity and Public Welfare
Fund".
VI. Caring for the growth of its employees and manifesting the corporate responsibilities
The Bank safeguards its employees' legitimate rights and interests and builds harmonious labor relations. One is to build and improve the human resources management system to provide institutional guarantee for building harmonious labor relations. The other is to strictly carry out relevant laws and regulations as well as all kinds of rules and regulations to ensure that the legitimate rights and interests of
126 2017 Annual Report employees are implemented.
The Bank strengthens the construction of the staff team and achieves wonderful career life. The first is to smooth the career path and build development platform. The second is to improve the training system to promote employees' growth; the third is to advocate healthy life of the employees, so as to improve their happiness index.
The Bank advocates healthy life of the employees, so as to improve their happiness index. The first is to constantly improve the payroll and welfare system to ravel out its staff's concerns. The second is to care for the physical and psychological health of its employees and enrich their cultural and recreational activities. The third is to actively give full play of the labor union to help employees.
127 2017 Annual Report 8. Significant Events
8.1 Delivery of 2016 profit distribution program
The Bank held 2016 Annual Shareholder's General Meeting on April 27, 2017 to deliberate Proposal on 2016 Annual Profit Distribution of Chongqing Three Gorges
Bank Co., Ltd. According to the resolution of 2016 Annual Shareholders’ General
Meeting, as at December 31, 2016, total distributive profits of the Bank amounted to
RMB 2,041,339,562.54. The Bank issued 1 bonus share for every 10 shares (rounded) with 4,406,304,385 shares held by the end of 2016 as the base, and has issued
440,630,448 (yuan/share) bonus shares in total; issued RMB 1.00 yuan (tax-inclusive) bonus in cash for every 10 shares, and has issued RMB 440,630,438.50 yuan cash bonus in total. After issuing bonus share and cash bonus, undistributed profit RMB
1,160,078,676.04 of the Bank was carried forward to subsequent years for distribution.
8.2 2017 annual profit distribution scheme
According to 2017 Annual Auditor's Report, as at the end of the reporting period, after-tax profit of the Bank amounted to RMB 1,811,882,361.14. In order to ensure that operational development is endurable currently and sustainable in the future, while allowing for return on investment of shareholders, the Bank has developed the 2017 annual profit distribution scheme as follows.
I. Statutory surplus reserve RMB 1,811,882,361.14 was accrued in the proportion of 10% with after-tax profit RMB 181,188,236.11 in 2017 as the base.
128 2017 Annual Report
II. 2017 ending balance of risk assets of the Bank was RMB 170,857,025,555.60, increased by RMB 16,208,230,009.30 compared with the beginning balance, with general risk reserve in RMB 243,123,450.14 accrued in the proportion of 1.50%.
III. Distributive profit of the Bank in 2017 reached RMB 1,387,570,674.89; undistributed profit at the beginning of 2017 reached RMB 2,041,339,562.54, 2016 annual shareholders' cash dividends distributed in 2017 reached RMB 440,630,438.50, issued bonus shares reached RMB 440,630,448.00. As at December 31, 2017, total distributive profits of the Bank amounted to RMB 2,547,649,350.93.
IV. 2017 annual profit distribution plan of the Bank was: to issue RMB 0.5
(including individual income tax) in cash for every 10 shares with 4,846,934,833 shares in total at the end of 2017 as the base, and issue cash bonus RMB 242,346,741.65 in total. The Bank issued 1.5 bonus shares for every 10 shares (rounded) and has issued
727,040,127 (1 yuan/share) bonus shares in total. After issuing bonus share and cash bonus, undistributed profit RMB 1,578,262,482.28 of the Bank was carried forward to subsequent years for distribution.
8.3 Major litigation and arbitration matters
As at the end of the reporting period, the Bank was free from pending major litigation and arbitration cases in which the Bank was the defendant and Res litigiosa was over RMB 10 million.
8.4 Increase or decrease registered capital, division and merger matters
129 2017 Annual Report
During the reporting period, the Bank has increased registered capital by presenting bonus share. By the end of reporting period, registered capital of the Bank has increased from RMB 4,406,304,385.00 at the beginning of the period to RMB
4,846,934,833.00.
8.5 Assets acquisition and consolidation by merger
None
8.6 Major connected transaction matters
According to the relevant provisions of China Banking Regulatory Commission, and connected transaction management of Accounting Standards for Business
Enterprises, the Bank updates and determines the list of related parties on a regular basis.
The connected transactions between the Bank and the related parties are all required for normal business activities and in line with the principles of honesty, credibility and fairness. They have been conducted in accordance with commercial principles and under conditions no better than those for similar transactions with non-related parties. The business procedures also comply with the relevant regulations of the regulatory authority and the Bank's connected transaction management.
During the reporting period, the specific contents of major connected transactions have been disclosed one by one in the Bank's 2017 notes to financial audit reports.
8.7 Significant security conditions
130 2017 Annual Report
At present, the Bank has two external guarantees: One is to provide financing guarantee on behalf of Changrong International Financial Leasing Co., Ltd. to Luso
International Banking Limited with a guarantee amount of HK$ 481,000,000.00 from
December 13, 2017 to January 13, 2019. The counter-guarantee is fixed deposit. The pledgor is Jinlong City Construction Investment (Group) Co., Ltd., Tongliang District,
Chongqing, with a pledge amount of ¥426,000,000.00. The second is to provide financing guarantee on behalf of Chongqing Runcheng Financial Leasing Co., Ltd. to
Luso International Banking Limited with the guarantee amount of
HK$ 714,285,715.00 from November 3, 2017 to December 3, 2018. The counter-guarantee is fixed deposit. The pledgor is Jinlong City Construction
Investment (Group) Co., Ltd., Tongliang District, Chongqing, with the pledged amount of ¥606,943,400.00.
8.8 During the reporting period, no director, supervisor or senior management member of the Bank was punished by supervision authorities
None
131 2017 Annual Report 9. Financial Report
See annex for details.
132 2017 Annual Report 10. Inspection Documents Catalog
10.1 Accounting statement bearing signature and stamp of legal representative and financial administrator
10.2 Original auditor's report bearing stamp of accounting firm, signature and stamp of certified public accountant
Chairman:
April 27, 2018
133 2017 Annual Report
Appendix
134 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
ShineWing 9F, Tower A, Fuhua Tel: +86(010)6554 2288 Fax: +86(010)6554 7190 International Building, No.8, Accounting Firm Chaoyangmen North Street, Dongcheng District, Beijing
Audit Report
XYZH/2018CQA10029 All shareholders of Chongqing Three Gorges Bank Co., Ltd.:
I. Audit Opinion
We have audited the accompanying financial statements of Chongqing Three Gorges Bank Co., Ltd. (Hereinafter referred to as Chongqing Three Gorges Bank), which comprise the Company’s balance sheet as of December 31, 2017, and the Company's income statements, the cash flow statements and the statements of changes in stockholders' equity for the year then ended and notes to the financial statements.
In our opinion, the attached financial statements present fairly, in all material respects, and the company’s financial position of Chongqing Three Gorges Bank as of December 31, 2017, and their financial performance and cash flows for the year then ended in accordance with the Accounting Standards for Business Enterprises.
II. Audit Basis
We conducted our audit in accordance with the Chinese Standards on Auditing. The section "Certified Public Accountant's Responsibilities for Audit of Financial Statements" in the auditor's report further sets forth our responsibilities under these Standards. According to the Code Ethical for Chinese Certified Public Accountants, we are independent of Chongqing Three Gorges Bank, and we have fulfilled other responsibilities regarding the ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Other Information
The management of Chongqing Three Gorges Bank (hereinafter referred to as the Management) is responsible for other information. Other information includes the information covered by 2017 Annual Report of Chongqing Three Gorges Bank, excluding the financial statements and our auditor's report.
135 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Our opinion on the financial statements does not cover other information. We do not make expert conclusions on other information in any form, either.
In combination with our audit on the financial statements, we are responsible for reading other information. In this process, we consider whether other information is materially inconsistent with or seems to be subject to material misstatement of financial statements or the situations we know about in the audit process.
If, based on the work we have performed, we conclude that there is a material misstatement of this Other Information, we are required to report that fact. In this aspect, we have no other matters to report.
IV. Responsibility of Management and Governance Layer for Financial Statements
The Company's management is responsible for the preparation and fair presentation of the financial statements in accordance with the Accounting Standards for Business Enterprises and implementation, and the designing, execution and maintenance of internal controls are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to error or fraud.
During the preparation of financial statements, the Management is responsible for evaluating the going concern capacity of Chongqing Three Gorges Bank, disclosing the matters related to going concern (if applicable) and applying assumptions of going concern, unless the Management plans to liquidate Chongqing Three Gorges Bank, terminate operation or has no other realistic choices.
The governance layer is liable for supervising the financial report process of Chongqing Three Gorges Bank.
V. Certified Public Accountant's Responsibilities for Audit of Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements might be caused by fraud or error. If the reasonably predicted misstatements, individually or collectively, might affect the economic decisions made by the user according to the financial statements, such misstatements are generally deemed material.
136 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
In the process of performing audit in accordance with the Standards for Auditing, we make professional judgments and have professional skepticism. Meanwhile, we perform the following work:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. As fraud might be involved with collusion, forgery, deliberate omission, false statement or above the internal control, the risk of failing to discover the material misstatement caused by fraud is higher than that caused by error.
(2) Have an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
(4) Make conclusions on the appropriateness of the Management' use of the going concern assumption. In the meantime, based on the audit evidence obtained, we might conclude whether a material uncertainty exists related to events or conditions that may cast significant doubt on Chongqing Three Gorges Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the information obtained as of the date of our auditor's report. However, the events or situations in the future may cause Chongqing Three Gorges Bank unable to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and evaluate whether the financial statements fairly present the connected transactions and events.
We communicate with the Management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any noteworthy deficiencies in internal control that we identify during our audit.
137 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
ShineWing International Accounting Firm PRC Certified Public Accountant (special general partnership)
ShineWing Certified Public Accountants (Special General Partner) 1101010059573 (seal)
PRC Certified Public Accountant:
China Beijing April 13, 2018
138 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Balance Sheet Compiled by: Chongqing Three Gorges Bank Co., Ltd. Unit: RMB yuan
Assets Note December 31, 2017 December 31, 2016
Assets
Cash and deposits with central bank VII.1 19,499,021,920.33 25,676,786,609.79
Deposits with banks and other financial institutions VII.2 951,962,475.81 5,288,233,482.27
Precious metal - -
Lending fund VII.3 3,259,610,280.00 1,641,622,000.00 Financial assets at fair valuethrough current profit VII.4 11,551,764,690.00 925,515,900.00 and loss Derivative financial assets - -
Financial assets held under resale agreements VII.5 28,304,305,258.60 15,288,772,833.22
Interests receivable VII.6 1,057,782,799.43 950,261,244.80
Loans and advance payments VII.7 43,222,816,325.45 37,477,748,560.21
Available-for-sale financial assets VII.8 23,138,419,739.64 27,942,658,619.56
Held-to-maturity investment VII.9 16,989,480,633.07 12,437,042,862.56
Investments classified as accounts receivable VII.10 51,989,288,648.22 51,962,745,219.21
Long-term equity investment - -
Investment property - -
Fixed assets VII.11 334,130,648.30 398,969,131.61
Construction in process VII.12 165,135,731.54 151,750,288.65
Intangible assets VII.13 85,044,963.16 74,529,343.39
Goodwill - -
Deferred income tax assets VII.14 650,268,694.58 403,685,773.76
Other assets VII.15 1,161,819,735.20 883,318,735.80
Total of assets 202,360,852,543.33 181,503,640,604.83
Legal representative, President: Financial administrator:
139 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Balance sheet (continued) Compiled by: Chongqing Three Gorges Bank Co., Ltd. Unit: RMB yuan Liabilities and shareholders' equity Note December 31, 2017 December 31, 2016 Liabilities Borrowing from the central bank VII.17 1,398,200,000.00 500,000,000.00 Deposits from banks and other financial institutions VII.18 9,390,983,356.57 14,619,981,461.54 Loans from other banks and other financial institutions VII.19 342,857,379.83 77,657,327.66 Financial liabilities at fair value through current profit - - and loss Derivative financial liabilities - - Financial assets sold under repurchase agreements VII.20 29,497,767,947.53 18,178,661,300.69 Deposits from customers VII.21 123,800,166,899.77 122,163,872,186.83 Payroll payable VII.22 292,277,123.66 316,034,584.81 Tax payable VII.23 313,677,831.23 322,107,611.64 Interests payable VII.24 1,131,570,276.82 847,264,596.34 Estimated liabilities - - Bonds payable VII.25 22,440,383,061.05 11,628,102,295.19 Deferred income tax liabilities 26,149,195.00 38,797,192.50 Other liabilities VII.26 650,603,350.19 548,528,655.27
Total liabilities 189,284,636,421.65 169,241,007,212.47 Shareholders' equity Capital stock VII.27 4,846,934,833.00 4,406,304,385.00 Other equity instruments Capital reserve VII.28 2,969,026,526.26 2,969,026,526.26 Minus: treasury stock Other comprehensive income VII.29 -741,527,409.94 -183,858,216.62 Surplus reserve VII.30 891,277,438.10 710,089,201.99 Generic risk reserve VII.31 2,562,855,383.33 2,319,731,933.19 Undistributed profits VII.32 2,547,649,350.93 2,041,339,562.54 Total shareholders' equity 13,076,216,121.68 12,262,633,392.36 Total of liabilities and shareholders' equity 202,360,852,543.33 181,503,640,604.83
Legal representative, President: Financial administrator:
140 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Income Statement Compiled by: Chongqing Three Gorges Bank Co., Ltd. Unit: RMB yuan Item Note 2017 2016 I. Operating income 3,919,004,557.07 4,266,123,843.94 Net interest income VII.33 3,501,429,673.27 3,825,678,165.24 Interest income VII.33 8,292,645,451.44 7,601,693,158.22 Interest expense VII.33 4,791,215,778.17 3,776,014,992.98 Net fee and commission income VII.34 401,790,924.47 378,409,396.82 Fee and commission income VII.34 454,876,089.87 436,659,604.62 Fee and commission expense VII.34 53,085,165.40 58,250,207.80 Income from investment (loss expressed with "-") VII.35 1,301,421.17 59,280,906.60 Including: income from investment on associate and joint venture - - Losses and profits from change in fair value (loss express with "-") VII.36 2,220,010.00 -11,768,570.00 Gains in Foreign Exchange (loss expressed with "-") VII.37 -1,667,273.14 10,624,827.50 Other business income VII.38 785,078.24 1,239,476.28 Income from assets disposal (loss expressed with "-") VII.39 13,144,723.06 2,659,641.50 Other income - - II. Operating expenses 1,579,353,310.61 1,669,010,004.11 Tax and surcharges VII.40 61,969,794.64 166,939,556.32 Operation and administrative expense VII.41 1,228,264,097.92 1,247,525,027.95 Loss from asset impairment VII.42 286,860,991.58 252,195,542.24 Other operating expneses VII.38 2,258,426.47 2,349,877.60 III. Operating profit (loss expressed with "-") 2,339,651,246.46 2,597,113,839.83 Plus: non-operating income VII.43 12,810,711.41 12,973,649.57 Minus: non-operating expenses VII.43 1,866,747.81 5,000,572.92 IV. Total profit (total loss expressed with "-") 2,350,595,210.06 2,605,086,916.48 Minus: income tax expense VII.44 538,712,848.92 620,317,584.62 V. Net profit (net loss expressed with "-") 1,811,882,361.14 1,984,769,331.86 (1) Net profit from continuous operations (net loss expressed with "-") 1,811,882,361.14 1,984,769,331.86 (2) Net profit from discontinued operations (net loss expressed with - - "-") VI. Net amount of other comprehensive income after tax VII.45 -557,669,193.32 -388,136,791.09 (I) Other comprehensive income that cannot be reclassified into profit
and loss in future 1. Changes in net liabilities or net assets from re-measuring defined
benefit plans 2. Share in other comprehensive income not reclassified into profit and
loss in the invested organization in equity method (II) Other comprehensive income that will be reclassified into profit -557,669,193.32 -388,136,791.09 and loss in future 1. Share in other comprehensive income reclassified into profit and
loss in the invested organization by the equity method 2. Loss and profit from changes in fair value of available-for-sale -557,669,193.32 -388,136,791.09 financial assets 3. The held-to-maturity investment reclassified into loss and profit of
available-for-sale financial assets 4. Effective part of the cash flow hedging gains and losses 5. Translation differences of foreign currency financial statement 6. Others VII. Total comprehensive income 1,254,213,167.82 1,596,632,540.77 VIII. Earning per share - - (I) Basic earnings per share 0.37 0.48 (II) Diluted earnings per share 0.37 0.48
Legal representative, President: Financial administrator:
141 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Statement of Cash Flow Compiled by: Chongqing Three Gorges Bank Co., Ltd. Unit: RMB yuan
Item Note 2017 2016 I. Cash flow from operating activities: Net increase in client deposit and deposit in other banks -3,592,703,392.03 34,367,870,772.59 Net increase in borrowing from the central bank 898,200,000.00 -200,000,000.00 Net increase in loans from other financial institutions 265,200,052.17 -1,029,487,072.34 Net increase in financial assets sold under repurchase agreements 11,319,106,646.84 6,222,838,772.15 Cash received for interest, fees and commission 8,634,566,680.11 7,542,773,847.40 Cash received relating to other operating activities 40,867,443.21 116,604,213.22 Sub-total of cash inflows from operating activities 17,565,237,430.30 47,020,600,533.02 Net increase in loans and advances to customers 6,207,090,933.80 6,039,454,923.73 Net increase in deposits in the central bank and other financial -2,425,344,840.73 6,373,571,736.68 institutions Net increase in lending funds -79,850,940.00 500,000,000.00 Net increase in financial assets held under repurchase agreements -644,783,622.81 -1,527,759,315.78 Cash paid for interest, fees and commission 3,492,402,442.99 3,313,697,914.64 Payment to and for employees 829,500,412.51 743,127,687.17 Payment of various taxes 1,030,518,491.44 998,984,875.77 Cash paid relating to other operating activities 365,632,077.83 355,577,297.26 Sub-total of cash outflows from operating activities 8,775,164,955.03 16,796,655,119.47 Net cash flow provided by operating activities VII.47 8,790,072,475.27 30,223,945,413.55 II. Cash flow from financing activities: Cash received from disposal of investment 80,574,178,864.50 95,494,330,202.93 Cash received from return of investment 1,301,421.17 59,280,906.60 Net proceeds from disposal of fixed assets, intangible assets and 88,858,190.44 17,527,451.34 other long term assets Cash received relating to other investment activities Sub-total of cash inflows from investment activities 80,664,338,476.11 95,571,138,560.87 Cash paid for investment 91,465,465,668.75 135,948,519,330.50 Payment for acquisition of fixed assets, intangible assets and other 384,395,468.35 377,799,455.08 long term assets Payment for acquisition of subsidiaries and other business entities Cash paid relating to other investment activities Sub-total of cash outflows from investment activities 91,849,861,137.10 136,326,318,785.58 Net cash flow from investment activities -11,185,522,660.99 -40,755,180,224.71 III. Cash flow from financing activities: Cash received from abtaining investment 2,203,152,252.00 Including: Cash received from subsidiaries’s investors Cash received from bond issuance 22,602,053,250.00 8,797,953,330.00 Cash received relating to other financing activities Sub-total of cash inflows from financing activities 22,602,053,250.00 11,001,105,582.00 Cash paid for debt repayment 12,170,000,000.00 2,500,000,000.00 Cash paid for dividend and profit distribution or interest payment 760,386,245.53 717,900,565.99 Including: Dividend and profit paid by subsidiaries to minority
shareholders Cash paid relating to other financing activities 5,150,000.00 Sub-total of cash outflows from financing activities 12,935,536,245.53 3,217,900,565.99 Net cash flow from financing activities 9,666,517,004.47 7,783,205,016.01 IV. Effect of exchange rate fluctuation on cash and cash -1,602,405.75 9,908,252.78 equivalent V. Net increase in cash and cash equivalents 7,269,454,413.00 -2,738,121,542.37 Plus: Balance of beginning cash and cash equivalents 28,222,646,010.42 30,960,767,552.79 VI. Balance of closing cash and cash equivalents VII.46 35,492,110,423.42 28,222,646,010.42
Legal representative, President: Financial administrator:
142 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Statement of changes in equity of shareholders Compiled by: Chongqing Three Gorges Bank Co., Ltd. Unit: RMB yuan 2017 Minus: Other Item Other equity Undistributed Total shareholders' Capital stock Capital reserve treasury comprehensive Surplus reserve Generic risk reserve instruments profits equity stock income I. Ending balance of previous year 4,406,304,385.00 2,969,026,526.26 - -183,858,216.62 710,089,201.99 2,319,731,933.19 2,041,339,562.54 12,262,633,392.36 Plus: Change of accounting policies - Early error correction Others - II. Beginning balance of current 4,406,304,385.00 2,969,026,526.26 - -183,858,216.62 710,089,201.99 2,319,731,933.19 2,041,339,562.54 12,262,633,392.36 year III. Changes during the year ("-" 440,630,448.00 - - -557,669,193.32 181,188,236.11 243,123,450.14 506,309,788.39 813,582,729.32 for decrease) (I) Total comprehensive income -557,669,193.32 1,811,882,361.14 1,254,213,167.82 (II) Invested and decreased capital ------of owner 1. Common stocks invested from - shareholders 2. The other equity instruments
recorded in owners' equity 3. The amount paid by the shareholders and recorded in - shareholders' equity 4. Others - (III) Profit distribution - - - - 181,188,236.11 243,123,450.14 -864,942,124.75 -440,630,438.50 1. Withdrawal of surplus reserve 181,188,236.11 -181,188,236.11 - 2. Withdrawal of provision for general 243,123,450.14 -243,123,450.14 - risk 3. Distribution to shareholders -440,630,438.50 -440,630,438.50 4. Others - (IV) Transfers within the owners' 440,630,448.00 ------440,630,448.00 - equity 1. Capital reserve transfer to share - capital 2. Surplus reserve transfer to share - capital 3. Supplement to loss of surplus - reserve 4. Others 440,630,448.00 -440,630,448.00 - IV. Ending balance of current year 4,846,934,833.00 2,969,026,526.26 - -741,527,409.94 891,277,438.10 2,562,855,383.33 2,547,649,350.93 13,076,216,121.68 Legal representative, President: Financial administrator:
143 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Statement of changes in equity of shareholders Compiled by: Chongqing Three Gorges Bank Co., Ltd. Unit: RMB yuan 2016 Other Minus: Other Item Undistributed Total shareholders' Capital stock equity Capital reserve treasury comprehensive Surplus reserve Generic risk reserve profits equity instruments stock income I. Ending balance of previous year 3,059,933,582.00 1,500,258,358.26 - 204,278,574.47 511,612,268.81 1,676,185,964.31 1,908,371,217.40 8,860,639,965.25 Plus: Change of accounting policies - Early error correction Others - II. Beginning balance of current 3,059,933,582.00 1,500,258,358.26 - 204,278,574.47 511,612,268.81 1,676,185,964.31 1,908,371,217.40 8,860,639,965.25 year III. Changes during the year ("-" 1,346,370,803.00 1,468,768,168.00 - -388,136,791.09 198,476,933.18 643,545,968.88 132,968,345.14 3,401,993,427.11 for decrease) (I) Total comprehensive income -388,136,791.09 1,984,769,331.86 1,596,632,540.77 (II) Invested and decreased capital 734,384,084.00 1,468,768,168.00 - - - - - 2,203,152,252.00 of owner 1. Common stocks invested from 734,384,084.00 1,468,768,168.00 2,203,152,252.00 shareholders 2. The other equity instruments
recorded in owners' equity 3. The amount paid by the shareholders and recorded in - shareholders' equity 4. Others - (III) Profit distribution - - - - 198,476,933.18 643,545,968.88 -1,239,814,267.72 -397,791,365.66 1. Withdrawal of surplus reserve 198,476,933.18 -198,476,933.18 - 2. Withdrawal of provision for general 643,545,968.88 -643,545,968.88 - risk 3. Distribution to shareholders -397,791,365.66 -397,791,365.66 4. Others - (IV) Internal carry-over of owner's 611,986,719.00 ------611,986,719.00 - equity 1. Capital reserve transfer to share - capital 2. Surplus reserve transfer to share - capital 3. Supplement to loss of surplus - reserve 4. Others 611,986,719.00 -611,986,719.00 - IV. Ending balance of current year 4,406,304,385.00 2,969,026,526.26 - -183,858,216.62 710,089,201.99 2,319,731,933.19 2,041,339,562.54 12,262,633,392.36 Legal representative, President: Financial administrator:
144 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
CHONGQING THREE GORGES BANK COMPANY CO., LTD. 2017 notes to the financial statements
I. General information on the Bank
Chongqing Three Gorges Bank Co., Ltd. (hereinafter referred to as "Three Gorges
Bank" or “the Bank”) was established on February 16, 1998, it held No.B0205H250000001
Financial License issued by Chongqing Supervision Bureau of China Banking Regulatory
Commission, No.915001017116939742 Business License for Legal Person issued by
Chongqing Administration for Industry &Commerce Wanzhou District Branch Office; legal representative: Ding Shilu; domicile: No.3, Baiyan Road, Wanzhou District, Chongqing; registered capital: RMB 4,846,934,833.00.
Main business scope of the Bank: absorption of public deposit, issue of short-term, medium-term and long-term loan; handling of domestic settlement; handling of bill discounting; issue of financial bond; issue, cashing and underwriting of government bond as agent; working on inter-bank borrowing; foreign exchange proceeds depositing, foreign exchange loan, international settlement, inter-bank foreign currency lending, foreign exchange bill acceptance and discounting, foreign exchange borrowing, foreign exchange guarantee, proprietary and agency foreign exchange trading (proprietary foreign exchange trading is limited to handling of spot exchange deals), credit standing investigation, consultation and attestation; offering for security; agency collection and payment as well as
145 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
agency insurance business; provision of safe deposit box service; other business approved by banking regulatory authorities and national foreign currency authority (above scope is subject to laws and regulations; business required to be approved shall not be operated before being approved).
Chongqing Three Gorges Bank Co., Ltd. grew out of Wanzhou Commercial Bank Co.,
Ltd., which was renamed as "Chongqing Three Gorges Bank Co., Ltd." upon approval by
YJF [2008] No.71 Document Reply on Renaming of Wanzhou Commercial Bank by CBRC issued by China Banking Regulatory Commission on February 4, 2008. Its share capital was
RMB 2,011,790,650.00 during reorganization.
In April 2013, in accordance with resolution made on 2012 annual Shareholder's
General Meeting, the Bank converted 342,004,411.00 shares in total by converting 1.7 shares for every 10 shares based upon capital reserve, and altered registered capital to be
RMB 2,353,795,061.00. DAXIN Certified Public Accountants LLP (Special Ordinary
Partnership) (Chongqing Branch) has already issued DXYYZ [2014] No.00005 Capital
Verification Report.
In August 2015, in accordance with resolution made on extraordinary Shareholder's
General Meeting, the Bank increased 706,138,521.00 shares in total by allotting 3 shares for every 10 shares, and altered registered capital to be RMB 3,059,933,582.00. ShineWing
International Accounting Firm (Special Ordinary Partnership) (Chongqing Branch) has already issued NO. XYZH/2015CQA10019 Capital Verification Report.
In April 2016, in accordance with resolution made on 2015 annual Shareholder's
146 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
General Meeting, the Bank increased undistributed profit-transferred-to share capital RMB
611,986,719.00 in total by issuing 2 shares for every 10 shares, and altered registered capital to be RMB 3,671,920,301.00. ShineWing International Accounting Firm (Special Ordinary
Partnership) (Chongqing Branch) has already issued XYZH/2016CQA10354 Capital
Verification Report.
In December 2016, in accordance with resolution made on 2016 2nd Extraordinary
Shareholder's General Meeting, the Bank increased 734,384,084.00 shares by allotting 2 shares for every 10 shares, and altered registered capital to be RMB 4,406,304,385.00.
ShineWing International Accounting Firm (Special Ordinary Partnership) (Chongqing
Branch) has already issued XYZH/2016CQA10402 Capital Verification Report.
In April 2017, in accordance with resolution made on 2016 annual Shareholder's
General Meeting, the Bank increased undistributed profit-transferred-to share capital RMB
440,630,448.00 in total by issuing 1 share for every 10 shares, and altered registered capital to be RMB 4,846,934,833.00. ShineWing International Accounting Firm (special general partnership) (Chongqing Branch) has already issued XYZH/2017CQA10326 Capital
Verification Report.
As at December 31, 2017, the Bank had 86 business institutions in Chongqing, including 1 branch in Wanzhou, 82 sub-branches open for business, and 3 sub-branches having been prepared but no opening approval.
II. Basis for preparation of financial statements
147 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
1. Preparation basis
The Bank's financial statements are compiled according to Accounting Standards for
Business Enterprises - Basic Standard issued by the Ministry of Finance, all specific accounting principles, application guide and explanation of Accounting Standards for
Business Enterprises as well as other relevant regulations (collectively called "Accounting
Standards for Business Enterprises").
2. Going concern
The financial statement is compiled based on the going concern.
The Bank prepares the financial statements based on going concern on a reasonable basis provided with recent continuous profitable operation and financial resource support.
III. Statement of abiding by the accounting standards for business enterprises
The financial statements conform to the requirements of Accounting Standards for
Business Enterprises, and present fairly, in all material respects, its financial position of the
Bank on December 31, 2017, and its operation results and cash flows for the year 2017.
IV. Important accounting policies and accounting estimation
1. Accounting period
The Bank has adopted calendar year as its accounting year, i.e. from January 1 to
December 31.
148 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
2. Operating cycle
The Bank's operating cycle is 12 months.
3. Recording currency
The Bank's recording currency is RMB. RMB is the currency under the main economic environment where the Bank's operation is conducted, and the Bank uses RMB as its recording currency. The currency adopted by the Bank in preparation of financial statements is RMB.
4. Accrual basis and pricing principle
The accounting of the Bank is based on accrual basis. Except that financial assets/liabilities held for trading purposes, financial assets/liabilities designated to be measured at fair value and whose changes are included in current profits and losses, and available-for-sale financial assets are measured at fair value, all other items take historical cost or amortized cost as the valuation principle. If any impairment occurs in assets, make provisions for corresponding impairment preparation according to related regulations.
5. Cash and cash equivalents
Cash of the Bank refers to cash on hand and cash with central bank available for payment; cash equivalents refer to the short-term and highly liquid investments that are held by the Bank and readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Short holding term refers to short-term bond expires in
3 months after date of acquisition.
149 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
6. Foreign currency translation
At the initial recognition, the monetary items denominated in foreign currencies during transactions are translated into the recording currency at spot exchange rate on that date.
At the balance sheet date, monetary assets/liabilities denominated in foreign currencies are translated into the functional currency at spot exchange rate at that date. The balance of exchange arising from the difference between the spot exchange rate at the balance sheet date and that upon initial recognition, or spot exchange rate at the previous balance sheet date are included in current profit and loss statement, except the following circumstances: (1) balance of exchange arising from hedging instruments that are used to avoid foreign exchange risks will be treated by the accounting treatment to hedging; (2) balance of exchange arising from changes in book balance other than the amortized cost of available-for-sale monetary items is recognized as other comprehensive income.
Foreign exchange gain or loss includes exchange difference earnings in connection to proprietary foreign exchange business, profit and loss on exchange in connection with the translation of foreign currency denominated monetary assets and liabilities, realized profit and loss arising from foreign exchange derivatives, and unrealized gains and losses on foreign exchange derivatives, and changes in fair value recognized in profit or loss.
The foreign currency non-monetary items measured at fair value are translated at the spot exchange rate on the adoption date of fair value, the exchange difference is included in current profit and loss or other comprehensive income.
7. Financial assets
150 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
(1) Classification of financial assets
Upon initial recognition and as per investment purpose as well as economic nature, financial assets of the Bank are classified into: ① financial assets measured at fair value whose change is included in current profit and loss; ② held-to-maturity investment; ③ loan and accounts receivable, and ④ available-for-sale financial assets.
① Financial assets measured at fair value through current profit and loss
Financial assets measured at fair value through current profit and loss include trading financial assets and financial assets assigned to be measured at fair value through current profit and loss upon initial recognition.
Trading financial assets refer to the financial assets that meet one of the following conditions: a) Acquisition of such financial assets is mainly for selling or repurchase of them in the near future; b) Forming a part of the identifiable combination of financial instruments which are managed in a centralized way and for which there are objective evidences proving that the Bank may manage the combination by way of short-term profit making in the near future; c) Being a derivative instrument, excluding the designated derivative instruments which are effective hedging instruments, or derivative instruments to financial guarantee contracts, and the derivative instruments which are connected with the equity instrument investments for which there is no quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said equity instruments.
In one of the following conditions, the Bank may designate them as financial assets measured at fair value through current profit or loss during initial recognition of financial
151 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
assets: a) This designation may eliminate or significantly reduce the inconsistency in the recognition or measurement of related gains or losses due to differences in the measurement basis of the financial assets; b) Formal written document on risk management or investment strategy states that the financial asset portfolio is managed, evaluated and reported to key management personnel on a fair value basis; c) A hybrid instrument that includes one or more embedded derivatives, unless the embedded derivative does not significantly change the cash flow of the hybrid instrument, or the embedded derivative shall obviously not be split from the relevant hybrid instrument.
② Held-to-maturity investment
Held-to-maturity investments refer to financial assets with fixed or determinable payments and fixed maturity that the Bank has the positive intention and ability to hold to maturity, and not designated by the Bank as at fair value through profit or loss or as available-for-sale upon initial recognition; and non-derivative financial assets not classified as loans and accounts receivable.
If the Bank has sold or reclassified held-to-maturity investments of large amount relative to the total amount of held-to-maturity, the remaining parts of such investment of the
Bank shall be reclassified as available-for-sale financial assets and it shall not be classified as held-to-maturity investment in the current accounting year and following up two accounting years, but sale or re-classification meeting one of the following situations shall be excepted: a) the date of sale or re-classification is quite near the maturity date or the report date of the said investment (e.g., within 3 months prior to maturity) that any change of the
152 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
market interest rate will produce little impact upon the fair value of the said investment; b) after almost all the initial principal of the investment has been drawn back by way of repayment at fixed intervals or repayment ahead of schedule according to the provisions of the contract, the remaining part of the investment will be sold or re-classified; c) the sale or re-classification is caused by any independent event that the Bank cannot control, is predicted not to occur again and is hard to be reasonably predicted.
③ Loans and accounts receivable
Loans and receivables refer to the non-derivative financial assets have no quoted market price in an active market, have fixed or determinable recovery amount and have no intention of selling immediately or in the short term. These financial assets are measured at amortized cost (deduct depreciation reserves) in effective interest method, and a gain or loss is included in current profit and loss when the financial asset or liability is derecognized, impaired and amortized.
④ Available-for-sale financial assets
Available-for-sale financial assets refer to non-derivative financial assets having been designated for sale upon initial recognition, and other financial assets not classified into the three categories of financial assets above.
(2) Initial recognition of financial assets
The Bank recognizes a financial asset as it becomes one party of financial instrument contract. The financial assets at fair valueat initial recognition. For financial assets measured at fair value through current profit and loss, relevant transaction costs are directly
153 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
included in current profit and loss; for other types of financial assets, relevant transaction costs are included in initial recognition amount.
(3) Subsequent measurement of financial assets
① Financial assets measured at fair value through current profit and loss
Fair value is applied by the Bank to subsequent measurement of such financial assets, change in fair value is included in current profit and loss, and interest calculated according to the Contract during holding period is included in interest income.
② Held-to-maturity investment
These financial assets are measured at amortized cost by the Bank in effective interest method, interest income calculated and verified in and a gain or loss is included in effective interest method is included in interest income, gain or loss, produced as the financial asset or liability is derecognized, impaired and amortized, is included in current profits and losses statement.
③ Loans and accounts receivable
These financial assets are measured at amortized cost by the Bank in effective interest method, interest income calculated and verified in and a gain or loss is included in effective interest method is included in interest income, gain or loss, produced as the financial asset or liability is derecognized, impaired and amortized, is included in current profits and losses statement.
④ Available-for-sale financial assets
154 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Among such assets, the equity instrument investment without quotation on active market and whose fair value cannot be reliably measured and the derivative financial assets linked to such equity instrument and settled through delivering is measured at costs; if the market price or the active market price is not quoted but the fair value can be measured reliably, it is measured at fair value, and changes in fair value are included in other comprehensive income. Such financial assets are measured subsequently at fair value, and changes in fair value of financial assets are recognized as other comprehensive income, which will be transferred out and recorded through current profit and loss when such financial assets are derecognized, except that impairment losses and exchange difference of foreign currency monetary financial assets relating with the amortized cost are recognized through current profit and loss. Available-for-sale debt instrument investments are included in current interest income at interest calculated in effective interest method. Cash dividends in connection with available-for-sale equity instrument investments declared to be issued by the invested organization are included in current profit and loss as investment income.
(4) Recognition basis and measurement method of financial assets transferring
Where a financial asset meets any of the following conditions, it will be derecognized:
① where the contractual rights for collecting cash flows of the said financial asset are terminated; ② where right to collect cash flows has been transferred and nearly all of the risks and returns in connection with the ownership of the financial asset have been shifted to the a third party other than financial asset issuer; or where the financial asset has been transferred and the Bank has given up control over the financial asset, though it does not
155 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
transfer or retain almost all of the risks and returns in connection with the ownership of the financial asset.
(5) Impairment of financial assets
At the balance sheet date, the Bank checks if there is objective evidence indicating impairment financial assets of other than those measured at fair value through current profit and loss. In case of any objective evidence indicating impairment financial assets, the Bank maintains that the financial assets have been impaired and will accrue impairment reserve.
Objective evidence that a financial asset is impaired is evidence that, arising from one or more events that occurred after the initial recognition of the asset, the estimated future cash flows of the financial asset, which can be reliably measured, have been affected.
Objective evidence includes the following evidence: significant financial difficulty of the debtor, a breach of contract, failure in paying principal money and interest as agreed in contract or timely, probable bankruptcy or other financial restructuring, and recognized reduction and accountability of estimated future cash flow of financial assets indicated by observable data.
① Financial assets measured at amortized cost
The Bank recognizes objective evidence of impairment by performing individual evaluation to individually significant loans and receivables or held-to-maturity investments.
If there is objective evidence proving the impairment, the Bank recognizes the difference between book value of the financial asset and present value of expected future cash flow as impairment loss. In calculating present value of estimated future cash flow, estimated future
156 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
cash flow has allowed for value of relevant guaranties rather than future credit loss not incurred yet; discount rate shall be original effective interest rate of the financial asset.
Original effective interest rate refers to effective interest rate of the financial asset determined through calculation upon initial recognition. For floating rate loans, receivables and held-to-maturity investments, current effective interest rate as specified in contract shall be applied.
The Bank recognizes objective evidence of impairment by performing individual evaluation or combination evaluation to individually non-significant financial asset.
Combination evaluation shall be performed to individual financial asset subject to individual evaluation and for which no objective evidence of impairment is detected, whether significant or not, along with financial assets with similar credit risk features to determine impairment loss. Combination evaluation shall not be performed to financial assets subject to individual test and for which impairment loss is recognized.
In inspecting impairment of financial asset portfolio in the mode of combination assessment, estimation of future cash flow shall be determined by referring to historical loss empirical data of financial assets with similar credit risk features, including essential adjustment and revision of historical empirical data based upon current conditions.
Where financial assets are measured at amortized cost, their book values shall be written down to the present value of estimated future cash flow. The written-down amount shall be recognized as provision for asset impairment and included in current profit and loss.
If any objective evidence indicates the financial assets value has recovered, and relates to
157 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
issues occurring after recognizing original impairment loss, the originally confirmed impairment loss shall be reverted, and included in the current profit and loss. The reversal shall not result in a book value that exceeds the amortized cost at the date the impairment is reversed had the impairment not been recognized.
In case that loans and receivables, or held-to-maturity investments cannot be recovered, the Bank will write off corresponding impairment reserves and charge off the financial asset after executing all necessary procedures and recognizing loss amount. Written off but recovered amount of financial assets are included in current profit and loss.
② Available-for-sale financial assets
If there is an objective evidence of impairment, accumulated loss included in other comprehensive incomes caused by fair value reduction shall be transferred out and included in current profit and loss. The amount of the cumulative loss that is recognized is the difference between the acquisition cost (net of any principal repayment and amortization) and current fair value, less any impairment loss on that asset previously recognized in consolidated income statement.
Objective evidences demonstrating impairment of the available-for-sale equity instrument investment include a significant or non-temporary decline in the fair value.
"Significant" shall be judged according to the extent to which the fair value is lower than the cost, and “non-temporary” shall be judged based on the length of the period in which the fair value is lower than the cost. In case of objective evidences demonstrating impairment, the amount of the cumulative loss that is recognized is the difference between the cost net of
158 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
current fair value, and less any impairment loss on that asset previously recognized in consolidated income statement. If impairment occurs to available-for-sale equity instrument investments, the impairment losses that have been recognized in the consolidated income statement shall not be reversed though profit or loss, the fair value after impairment shall be recognized in other comprehensive incomes. It needs judgment when defining
"significant" or "non-temporary". The Bank judges based on the extent to which the fair value is lower than the cost or the length of the period, in combination with other factors.
For available-for-sale debt instrument investments, the impairment is appraised in the same way as financial assets measured at amortized cost. However, the amount of the cumulative loss that is recognized is the difference between the amortized cost net of current fair value and less any impairment loss on that asset previously recognized in consolidated income statement. The interest income after impairment is recognized as the interest rate based on the discount rate used to discount the future cash flow when determining the impairment loss. If, after an impairment loss has been recognized on an available-for-sale financial asset, the fair value of the debt instrument increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss is recognized, the impairment loss is reversed through profit and loss.
Financial assets measured at cost. If there is an objective evidence of impairment, the difference between the book value of the financial asset and the current value of similar financial assets recognized according to the current market return to future current flow is recognized as the impairment loss and included in current profit and loss. Once recognized,
159 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
the impairment loss shall not be reversed.
8. Financial liabilities
(1) Classification of financial liabilities
upon initial recognition, Financial liabilities of the Bank are classified into two categories according to the economic nature:
① Financial liabilities at fair value and whose change is included in current profit and loss
Financial liabilities measured at fair value through current profit and loss include financial liabilities held for trading and financial liabilities designated to be measured at fair value through current profit and loss.
② Other financial liabilities
Other financial liabilities refer to financial liabilities other than those classified as financial liabilities measured at fair value through current profit and loss.
Financial statements presentation for other financial liabilities is done by the Bank as per nature of business, including central bank loans, interbank borrowing funds, customer's deposits and accrued interest payable.
(2) Initial recognition of financial liabilities
The Bank recognizes a financial liability as it becomes one party of financial instrument contract. The financial liabilities at fair value upon initial recognition. For financial liabilities measured at fair value through current profit and loss, relevant transaction costs
160 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
are directly included in current profit and loss; for other financial liabilities, relevant transaction costs are included in initial recognition amount.
(3) Follow-up measurement of financial liabilities
① Financial liabilities are measured at fair value through current profit and loss
Fair value is applied by the Bank to subsequent measurement of such financial liabilities, change in fair value is included in current profit and loss, and interest calculated according to the Contract is included in interest expenses.
② Other financial liabilities
Other financial liabilities are measured at amortized cost by the Bank, interest calculated and verified in effective interest method is included in interest expenses, gain or loss, produced as the financial liability is derecognized or amortized, is included in current profit and loss.
(4) Derecognition of financial liabilities
For obligation of a financial liability has performed, relieved or expired, the financial liability shall be derecognized. In case that current financial liability is substituted with another financial liability based upon substantially completely different clauses, or current liability clauses are nearly all modified substantially, then the substitution or modification shall be handled as derecognition of original liability and recognition of new liability, the balance shall be included in current profit and loss.
9. Determination of fair value of financial assets and financial liabilities
161 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
The Bank measures fair value of relevant financial assets and financial liabilities at price in leading market; for those without leading market, at price in the most advantageous market, and by adopting applicable valuation technique at that time supported by sufficient available data and other information. The Bank classifies inputs used to measure fair value of the financial assets and financial liabilities into three levels. Level 1: unadjusted quoted prices available in an active market for identical assets or liabilities; Level 2: inputs other than quoted prices included in Level 1 that are observable for relevant assets or liabilities, either directly or indirectly; and Level 3: inputs not based on observable market data for relevant assets or liabilities. The Bank gives priority in use of Level 1 inputs and then Level
3 inputs. The level of fair value measurements depends on minimum level of inputs of great significance to overall fair value measurement.
10. Redemptory assets for sale and assets sold under repurchase agreements
In case that the Bank sells assets based upon agreement and promises to buy back at certain date in the future at fixed amount or sales amount + fixed return, and sold assets are recognized in balance sheet. Proceeds from sale of assets are presented as "financial assets sold under repurchase agreements" in balance sheet.
In case that the Bank purchases assets based upon agreement and agrees to resale at certain date in the future at fixed amount or purchase amount + fixed return, and sold assets are not recognized in balance sheet. Funds paid to purchase assets are presented as
"redemptory financial assets for sale" in balance sheet.
11. Held-for-sale assets
162 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
(1) The Bank classifies non-current assets and disposal groups meeting the following conditions as available-for-sale assets: (1) those can be sold immediately under current conditions according to the practice of selling such assets or disposal groups in similar transactions; (2) those highly probable of being sold, that is, a resolution has been made on a sale plan and a confirmed purchase commitment is obtained, and the sale is expected to be completed within one year. Relevant approval shall be obtained for those requiring for approval of relevant authority or supervision department according to relevant provisions.
Before classifying non-current assets and disposal group as held-for-sale assets, the Bank measures the book value of each asset and liability in the non-current assets and disposal group according to relevant accounting principles. When initial measurement or re-measurement of the non-current assets or disposal groups held-for-sale on the balance sheet date, if the book value is higher than the fair value less the sales proceeds, the book value is written by the net amount of fair value less sales proceeds, the written down amount is recognized as asset impairment loss and is included in the current profit and loss, and the provision for impairment of held-for-sale assets is made.
(2) The non-current assets or disposal groups obtained by reselling, meeting the requirements of “sales is expected to be completed within one year” on the acquisition date, and are likely to meet the classification condition of held-for-sale assets in the short-term
(usually 3 months), shall be classified into held-for-sale assets on the acquisition date.
During initial measurement, initial measurement amount under the assumption that it is not classified as held-for-sale assets and the net amount of fair value less the sale expense shall be compared, and the lower shall be subject to measurement. Except for the non-current
163 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
assets or disposal groups obtained in the business merger, the net amount of fair value of the non-current assets or the disposal groups less sale expense shall be taken as the difference of initial measurement amount and included in the current profit and loss.
(3) If the net amount of fair value of the non-current held-for-sale assets less the sale expense on the subsequent balance sheet date increases, the previously written down amount shall be recovered and reversed to the impairment loss on asset recognized after it is classified as held-for-sale assets. The reversed amount shall be included into current profit and loss. Impairment losses on assets recognized before being classified as held-for-sale assets shall not be reversed.
(4) For the amount of impairment loss on assets recognized by the held-for-sale disposal group, the book value of the goodwill in the disposal group shall be firstly written down, and then the book value shall written down according to the proportion of the book value of each non-current asset.
If the net amount of fair value of the held-for-sale disposal group less the sale expense on the subsequent balance sheet date increases, the amount previously written down shall be restored, and the relevant measurement provisions shall be applied after being classified as held-for-sale assets. The amount of impairment loss on assets recognized in current assets shall be reversed and the reversed amount shall be included in the current profit and loss. The book value of the goodwill that has been deducted and the impairment loss on assets recognized before the non-current assets are classified as non-current assets shall not be reversed.
164 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
For the subsequent reversal of the impairment loss on assets recognized by the held-for-sale disposal group, according to the proportion of the non-current assets in addition to the goodwill of the disposal group, the book value of the non-current assets shall be increased proportionally.
(5) Non-current assets in held-for-sale assets non-current assets or disposal groups shall not be depreciated or amortized, the interest and other expenses on liabilities in held-for-sale disposal groups shall be recognized continuously.
(6) If held-for-sale non-current assets or disposal groups are no longer eligible to be classified held-for-sale assets and are removed from held-for-sale disposal groups because that they no longer meet the conditions for held-for-sale non-current assets, they shall be measured at the lower of the following: 1) the book value before they are classified as held-for-sale assets, namely the amount adjusted according to the depreciation, amortization or impairment that shall be recognized if they are not classified as held-for-sale assets; 2) the recoverable amount.
(7) When the non-current assets or disposal groups held-for-sale are derecognized, the unrecognized gains or losses are included in current profit or loss.
12. Fixed assets
Fixed assets of the Bank refer to non-monetary tangible assets held for operating management, having been used for over one year and of higher unit value, including: house buildings, machinery equipment, transportation facilities, etc.
A fixed asset shall be recognized only if it is probable that economic benefits associated
165 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
with the asset will flow to the Bank and the relevant cost can be measured reliably.
Subsequent expenditures incurred for fixed assets are included in the cost of the fixed assets, only if they meet above recognition conditions; meanwhile the book value of the replaced part is derecognized; those failing to meet above recognition conditions are included in current profit and loss when they are incurred.
Fixed assets of the Bank shall be measured at historical cost, which includes acquisition price, relevant taxes and dues, transportation fees, handling charges, installation cost and service charge of professionals attributable to such assets that bring the asset to the expected conditions for use. Fixed assets are presented in net value of cost less accrued depreciation and impairment reserve.
Depreciation of fixed assets shall be recognized based upon expected service life in straight-line-method, and included in current profit and loss. The estimated service life period, estimated net salvage ratio and depreciation of various kinds of fixed assets are as follows:
Estimated service Estimated net Yearly S.N. Category life period residual value rate depreciation 1 House buildings 20 years, 35 years 5% 4.75%, 2.71% Machinery and 2 5 years 5% 19.00% equipment Transportation 3 8 years 5% 11.875% equipment Other 4 5years 5% 19.00% equipment
The Bank reviews the estimated service life, estimated net residual and depreciation method of the fixed assets at least at the end of each year. Adjustment will be made
166 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
accordingly if necessary. The Bank does not accrue depreciation for the fixed assets that have been fully depreciated but are still in use and the land that is separately measured and included.
In disposing fixed assets, the balance between the disposition income less relevant taxes and the book value shall be included in the current profit and loss.
13. Construction in progress
The cost of construction-in-process shall be determined based on actual cost, which includes various project expenditures and other relevant expenses incurred during the construction period. Construction-in-process is converted into fixed asset, intangible asset or long-term deferred expense when it reaches scheduled usable condition.
14. Intangible assets
The intangible assets refer to the identifiable non-monetary assets without physical form owned or controlled by the Bank. It mainly includes land use right and use right of computer software systems.
Intangible assets shall be recognized only if it is probable that economic benefits associated with the asset will flow to the Bank and the relevant cost can be measured reliably, such assets shall be measured at actual cost initially. The purchased intangible assets shall be regarded as the actual costs according to the actually paid price and relevant expenditure.
The actual costs of the intangible assets invested by the investor shall be recognized according to the value as agreed by the investment contract or agreement. Where the value as agreed by the contract or agreement is not fairly presented, such recognition shall be done at the fair value. For intangible assets acquired in a business merger, and their fair value can be
167 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
reliably measured, that is, they are separately recognized as intangible assets, and the actual cost shall be determined at fair value.
The Bank defines service life based upon the period in which intangible assets can bring economic interests. The land use right of the Bank shall be amortized in average according to the transferred years from the transfer day; service life of software and other intangible assets shall be defined according to estimated service life, the beneficial years specified in the contract or the valid years specified by laws, whichever is the shortest.
Intangible assets of which term of realizing economic interests is unforeseeable shall be deemed as intangible assets with uncertain service life. Intangible assets with limited service life are amortized over their estimated useful lives using the straight-line method.
The Bank reviews the service life and amortization method of the intangible assets with limited service life each year. Adjustment shall be made accordingly if necessary. It reviews the service life of intangible assets with uncertain service life annually. In case that any evidence indicates that service life is limited, accounting treatment shall be in accordance with policies regarding above intangible assets with limited service life.
15. Long-term unamortized expense
Long-term unamortized expenses of the Bank refer to various expenses which have been incurred with period of benefit of over (excluding) 1 year, mainly including rents and improvement expense incurred by leasing fixed asset in operating lease mode.
Amortization period of long-term unamortized expenses shall be determined based upon contract period or benefit period, whichever is shorter, and the expenses shall be unamortized in average. If the long-term unamortized expense items do not benefit the future
168 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
accounting period, amortized value of the item which has not been amortized shall be transferred to current profit and loss.
16. Asset impairment
Except for financial assets and debt-repaid assets, asset impairment of the Bank is determined in following methods:
The Bank judges whether any sign indicates potential impairment on the asset or not at the balance sheet date. If there is any sign of impairment on the asset, the recoverable amount shall be estimated and the asset shall be tested for impairment. Reputation, intangible assets with uncertain service life caused by business merger shall be tested for impairment at least at the end of every year regardless of whether the sign of impairment exists. Signs used by the Bank to judge asset impairment include: (1) market price of the asset currently declines in a ranger sharper that estimated decline due to time lapse or normal use. (2) economic, technical or legal environment in which the Bank operates and asset market currently change or will change significantly in near future, thus having adverse effects on assets. (3) interest rate in the market or return on investment in other markets has improved in the period, leading to sharp decline of recoverable amount of asset. (4) there is an evidence proving that the asset has been obsolesced or its entity has been damaged. (5) the asset has been or will be left unused, terminated or is to be disposed in advance. (6) there is an evidence proving that economic performance of the asset has been fallen below or will fall below estimated level. (7) Other evidences showing impairment of the asset.
The recoverable amount shall be the higher one between the net amount obtained from the fair value of assets minus disposal cost and the present value of estimated future cash
169 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
flow of the assets. Recoverable amount of an asset shall be estimated based on single asset. If the recoverable amount of a single asset is difficult to be estimated, the recoverable amount shall depend on asset group or asset group combination of the assets.
If the recoverable amount of an asset is less than its book value, book value of the asset is reduced to its recoverable amount. That reduction is included in current profit and loss, and corresponding asset impairment provisions are accrued simultaneously.
Above assets impairment loss will not be returned in subsequent accounting periods as soon as they have been recognized.
17. Debt-repaid assets
Debt-repaid assets shall be recognized at fair value upon initial recognition, different between fair value and principal, recognized interest and impairment reserve of relevant loans shall be included in current profit and loss. On the balance sheet day, the debt-repaid assets shall be measured according to book value or net realizable value, whichever is lower.
In case that book value exceeds net realizable value, the difference shall be included in current profit and loss, and falling price reserves of debt-repaid assets shall be accrued simultaneously.
18. Payroll
Payroll refers to the remuneration in various forms and other relevant expenses given to the employees for their services or labor relation termination.
Payroll of the Bank includes short-term remuneration, post-employment benefit, dimission welfare and other long-term employee's emolument.
Short-term payroll mainly includes: staff salaries, bonus, welfare expense of employee,
170 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
medical insurance premiums, maternity insurance premium, endowment insurance premium, employment injury insurance, housing accumulation fund, labor union expenditure and education expenses, actual short-term payroll is recognized as liability, and included in
"operation and administrative expense".
Post-employment welfare mainly includes: basic endowment insurance, unemployment insurance, corporation pension plan, supplementary retirement benefits paid to specific personnel, is classified as defined contribution plan and defined benefit plan based upon risks and obligations undertaken by the Bank. Defined contribution plan refers to post-employment welfare plan under which the Bank will not assume further payment obligations after contributing fixed expenses to independent funds.
Where the Bank terminates the labor relationship with its employees before the expiry of labor contract or the Bank puts forward the suggestions on compensating the employees for their voluntary acceptance of downsizing encouraged by the Bank; when the Bank has formally formulated the plan to relieve the labor relationship (or put forward the suggestion on voluntary acceptance of downsizing) and will have it implemented, and the Bank is unable to unilaterally withdraw the plan on termination of labor relationship or the downsizing suggestions, the estimated liabilities incurred due to the compensation for the termination of labor relationship with the employees shall be recognized and included in the current profit and loss.
The internal retirement plan of employees shall be carried out based on the principle same as the dimission welfare. The Bank shall include the salary and social insurance premium paid for early retired personnel during the period from stopping providing service
171 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
to the normal retirement date into the current loss and profit (dimission welfare) if estimated liability recognition conditions are met.
Other long-term payroll refers to staff risk reserve accrued by the Bank but not issued to employees.
19. Estimated liabilities
For current obligations assumed by the Bank due to pending litigation, reorganization, loss contract, etc., and the fulfillment of such obligations is likely to cause outflow of economic interests, and the amount can be reliably measured, such obligations shall be recognized as estimated liabilities. For future operating loss, estimated liabilities shall not be recognized. The initial measurement of estimated liabilities shall be conducted based on the optimum estimated amount required to perform relevant current obligations. Consider the relevant risks of contingencies, uncertainty and currency time value. For time value of money of great influence, best estimate shall be determined by discounting relevant future cash outflow. The Bank reviews book value of estimated liabilities at the balance sheet date and judges book value to reflect current best estimate.
20. Recognition of income and expense
(1) Interest income and expense
Interest income and expense are calculated in effective interest rate method and included in current profit and loss.
The effective interest method refers to the method used to calculate the amortized cost, interest income or premium or interest expense in each phase according to effective interest rate of financial assets or financial liability. The effective interest rate is the future cash flow
172 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
of financial assets or financial liabilities during the expected period of existence or appropriate shorter period, discounted as the interest rate used by the current book value of the financial assets or financial liabilities. In determining effective interest rate, the Bank shall predict future cash flow based on all contract clauses regarding financial assets or financial liabilities in spite of future credit loss.
(2) Income from service charges and commission
Income from service charges and commission of the Bank are recognized provided that relevant services have been provided and charged amount can be reasonably estimated. The service charges and commission charged by providing services during a certain period are recognized on accrual basis during service period; other service charges and commissions are recognized when relevant services have been provided or completed.
21. Governmental subsidies
(1) Judgment basis and accounting treatment method of governmental subsidies related to the assets
Government subsidies shall be measured according to the amount received or receivable; for subsidies paid according to fixed quota standards, or when there is conclusive evidence at the end of the year that it can meet the relevant conditions of the financial support policy and is expected to receive financial support funds, it shall be measured according to the amount receivable. In the case of non-monetary assets, it shall be measured at the fair value. In case that the fair value can't be obtained reliably, it shall be measured at nominal amount (1 yuan).
Governmental subsidy related to assets shall be offset for book value of underlying
173 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
assets or recognized as deferred income. Government subsidy recognized as deferred income shall be included into profit and loss by stages properly and systematically in the service life of the underlying assets. If the relevant assets are sold, transferred, scrapped or damaged before the end of their useful life, the relevant deferred income balances that have not been allocated shall be transferred to the current profit and loss of assets disposed.
(2) Judgment basis and accounting treatment method of governmental subsidies related to the yields
For governmental subsidies relating to earnings, those used for compensating relevant costs or losses incurred by the Enterprise during following periods shall be recognized as deferred income, and included in current profit and loss or offset for related cost during recognition of relevant costs or losses. Government grants used for compensating relevant costs or losses incurred by the Enterprise shall be included in current profit and loss directly or offset for related cost. The governmental subsidy related to daily activities of the enterprise shall be included in other incomes according to the essence of economic business or offset for related cost. The governmental subsidy unrelated to daily activities of the enterprise shall be included in non-operating income.
22. Income tax
The income tax of the Bank shall include current income tax and deferred income tax.
Transactions or events directly recognized in owner's equity, or income tax involving events shall be included in other comprehensive income and owner's equity, other income taxes are included in current profit and loss as income tax expense or profit.
(1) Current income tax
174 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Current income tax is the expected tax payable defined based on the taxable income for the period and applicable tax rate, taxable income refers to the amount defined after any adjustment is made to current pre-tax accounting profit.
(2) Deferred tax assets and deferred tax liabilities
At the balance sheet date, the Bank analyzes tax base of asset and liability items
(including items that are not recognized as assets or liabilities but have a tax base that can be determined according to tax laws), and recognizes deferred tax assets and deferred tax liabilities at applicable tax rate during estimated return period of temporary difference based upon temporary differences arising from the difference between the book value of an asset or liability and its tax base.
The Bank may obtain the taxable income to deduct the deductible temporary difference and recognize the deferred income tax assets generated from other deductible temporary difference and deductible losses carrying forward in previous years. For recognized deferred tax asset, when it's estimated that probably sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be utilized, the book value of the deferred tax asset is reduced. Any such reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.
23. Leasing
(1) The Bank records operating lease business as lessee
The rental payment of operating lease shall be included in the relevant asset costs or current profit and loss in straight-line method during each period of the lease term. The initial direct cost shall be included in the current profit and loss. Contingent rental shall be
175 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
included in the current profit and loss when it occurs.
(2) The Bank records operating lease business as lessor
Rental income from operating leases shall be recognized as current profit and loss in the straight-line method during each period of the lease term. Direct initial costs in larger amount are capitalized when incurred and included into current profit and loss on the same basis of rental income recognition in stages; other direct initial costs in smaller amount are included in current profit and loss when incurred. Contingent rental shall be included in the current profit and loss when it occurs.
24. Entrusted business
As the Bank is engaging in activities including entrust loan and agent financial service as trustee or agent financial service, for assets from commissioning activities and liabilities to pay the assets to customers, if the Bank is verified not to receive return on assets, nor assume loss on corresponding assets, and relevant liability compensates obligation or guarantee obligation, the asset and liability are not included into balance sheet of the Bank.
25. Contingent liabilities
Contingent liabilities are potential obligations arising from past transactions or events, and their existence must be confirmed by the occurrence or non-occurrence of future uncertainties. Contingent liabilities may also be current obligation arising from past events, but the performance of the obligation is unlikely to result in an outflow of economic benefits or the outflow of economic benefits cannot be measured reliably.
The contingent liabilities shall not be recognized in the balance sheet, they are only disclosed in the notes, contingent liabilities and commitment. An item is recognized as
176 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
expected liability if it may cause outflow of economic interests, and the amount can be reliably measured as circumstance changes.
26. Important accounting estimate and judgment
Preparing financial statements requires the management to make judgments and estimations, which will have effects on reported amount of incomes, expenses, assets and liabilities as well as disclosure of contingent liabilities at balance sheet date. However, results attributable to uncertainty of these estimations may lead to major adjustment of book value of assets or liabilities to be affected in the future.
(1) The management has made following judgments which have significant impact on amount recognized in financial statements in implementing accounting policies of the Bank:
Classification of financial assets: the management shall make major judgments in respect of financial asset classification. different classifications will affect accounting method and the Bank's financial situation.
(2) Critical assumptions in connection with the future and other key sources of estimating uncertainty at the balance sheet date which may lead to major adjustment of book value of assets and liabilities in the next accounting year:
① Impairment of loans, receivables and held-to-maturity investments: except for recognized impaired loans, receivables and held-to-maturity investments which are subject to individual impairment loss evaluation, the Bank evaluates impairment loss status of financial asset combinations on a regular basis. In case that no present value of future cash flow of loans, receivables and held-to-maturity investments is found to be less than book value, they are subject to impairment test in financial asset combinations with similar credit
177 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
risk features. The Bank determines whether it is necessary to accrue loan impairment reserve by judging if there is any impairment sign indicating estimated decrease in present value of future cash flow among financial assets combination. Such signs include deterioration in the
Borrower's ability to repay loan in the financial asset combination, or any unfavorable change in economic environment in which the Borrower is in leading to breach of contract by the Borrower of the financial asset combination. The Bank estimates impairment of financial assets with impairment signs based upon historical experience in loss of financial asset combination with similar credit features. For methods and assumptions used to estimate occurrence time and incurred amount of future cash flow, the Bank will evaluate them on a regular basis to reduce difference between actual loss and estimated loss of loan impairment.
② Impairment of available-for-sale financial assets: the Bank judges whether an available-for-sale financial asset is impaired in accordance with Accounting Standards for
Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
Impairments depend on judgment made by the management to a large extent. During judgment, the Bank shall assess the extent and duration of the fair value of the investment below the cost, as well as the financial status and short-term business outlook of the investee, including industry conditions, technological changes, credit ratings, and default rates, loss coverage rate and the risk of the counterparty.
③ Fair value of financial instruments: for financial instruments without active trading market, its fair value is recognized by adopting valuation technologies. Valuation technologies adopted by the Bank include discount cash flow method. Application of
178 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
valuation technique requires the Bank to evaluate such factors as credit risk (including two trading parties), market interest rate variability and relevance. In case of any change in assumption made in terms of above factors, fair value evaluation of financial instruments will be affected. For equity instrument investment cannot be reliably measured in the method, the fair value is measured in cost method in accordance with Sub-clause (II), Article 32 of
Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of
Financial Instruments.
④ Income tax: for accrual of income tax expense, the bank shall make significant judgment. Uncertainty exists in final tax treatment of some transactions and matters during normal operation activities. By combining current tax laws as well as policies applied by governmental authority to the Bank in previous years, the Bank performs tax estimation to implementation of tax laws and uncertainty matters. During actual operations, tax treatment of these matters is finally determined by tax collection department. In case of any difference between final verification results and initial amount recorded of these tax matters, the difference may have effect on income tax expense and deferred income tax during above verification.
V. Main accounting policies, accounting estimation change and significant early error correction
(I) Change of accounting policy
1. The Ministry of Finance issued Accounting Standards for Business Enterprises No.
42-Held-for-Sale Non-Current Assets, Disposal Group and Discontinued Operations in 2017 and stipulated that this standard was to be implemented from May 28, 2017. The
179 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
held-for-sale non-current assets, disposal group and discontinued operations existing on the implementation date of this standard shall be dealt with by prospective application.
2. The Ministry of Finance modified Accounting Standards for Business Enterprises No.
16 - Governmental Subsidy in 2017. The modified standard was implemented from June 12,
2017. For government subsidies existing on January 1, 2017, they shall be dealt with by prospective application; for the new government subsidies from January 1, 2017 to the implementation date, adjustments are also required in accordance with the revised standards.
3. The Ministry of Finance issued the Notice of the Ministry of Finance on Revising and
Printing the Format of Ordinary Enterprise Financial Statements (CK [2017] No. 30) in
2017. The form of ordinary enterprise financial statement is modified. The adjustment might be carried out according to (CK [2017] No. 30) by comparing the data of the corresponding period.
Main influences of the above provisions executed by the Bank are:
Content of change in accounting policy change Name and amount of project with statements affected
Net profits of continuous operation of 2017: RMB 1,811,882,361.14 yuan; (1) "Net profits of continuous operation" and "Net Net profit from discontinued operations of 2017: RMB 0.00 profit from discontinued operations" are presented in yuan. the profit statement. The comparative data shall be Net profits of continuous operation of 2016: RMB adjusted accordingly. 1,984,769,331.86 yuan; Net profit from discontinued operations of 2016: RMB 0.00 yuan. (2) The governmental subsidy related to daily activities shall be included in other incomes, rather than Non-operating income of 2017: RMB 0.00 yuan; non-operating income. The comparative data shall not Other incomes of 2017: RMB 0.00 yuan. be adjusted. (3) Item of "Asset disposal income" is newly added to Asset disposal income of 2017: RMB 13,144,723.06 yuan; the profit statement. Asset disposal loss and profit Non-operating income of 2017: -13,170,833.82 yuan; previously presented as "Non-operating income" and Non-operating expense of 2017: RMB -26,110.76 yuan; "Non-operating expense" are reclassified into "Asset Asset disposal income of 2016: RMB 2,659,641.50 yuan; disposal income". The comparative data shall be Non-operating income of 2016: RMB -3,906,334.80 yuan; adjusted accordingly. Non-operating expense of 2016: RMB -1,246,693.30 yuan;
(II) Change of accounting estimation
180 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
There is no change of accounting estimation during the reporting period.
(III) Major prior-period adjustment matters
There is no significant early adjustment during the reporting period of the Bank.
VI. Taxation
Main taxes and tax rate applicable to the Bank are presented as follows:
Tax category Tax base Tax rate
Corporate income tax Taxable income 25% Value added tax Taxable operating income 6%, 5%, 3% City maintenance and construction tax Turnover tax actually paid 7%, 5% Educational surtax Turnover tax actually paid 3% Local educational surtax Turnover tax actually paid 2%
Note 1: Taxable operating income includes: income from loan interest, income from transfer of financial commodity, income from service charges and commission as well as other operating income, excluding income from transactions with financial institutions, and other tax-free incomes.
Note 2: On March 23, 2016, Notice on Comprehensively Promoting Pilot for Replacing
Business Tax with Value-added Tax (CS (2016) No. 36) published by State Administration of
Taxation of Ministry of Finance, specified that: from May 1, 2016, comprehensively promote pilot for replacing business tax with value-added tax all over the whole country, include finance industry in the pilot scope and replace the business tax with value-added tax.
On April 29, 2016, Notice on Financing Policies of Comprehensively Promoting Pilot for Replacing Business Tax with Value-added Tax (CS (2016) No. 46) published by State
Administration of Taxation of Ministry of Finance, specified that pledge-style financial
181 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
assets held under resale agreements, policy-based financial bonds held were free from VAT as income from interest of inter-bank transactions.
On June 30, 2016, Supplementary Notice on VAT Policies for Inter-bank Transactions of Financial Institutions (2016 No. 70) Document published by State Administration of
Taxation of Ministry of Finance, clearly provided that: due to banks, loans from banks, payment for banks, buying out type redemptory financial commodity for sale, financial bonds held and NCD are VAT-free; capital transactions with PBOC including purchase of central bank bills, currency swap and monetary mutual depositing with central bank are
VAT-free; transactions with affiliated banks as interest income from financial interbanking transactions are VAT-free.
On December 21, 2016, Notice on Defining Value-added Tax for Finance, Real Estate
Development and Educational Support Services (CS [2016] No. 140) published by State
Administration of Taxation of Ministry of Finance, specified that "guaranteed earnings, remuneration, fund possession cost and compensation" in Point 1, Item (V), Article I of
Notes to Sale of Services, Intangible Assets and Real Estates (CS [2016] No. 36) refers to investment earnings of which matured principal can be withdrawn in full as clearly promised in the contract. Above non-guaranteed earnings obtained during holding period (including due date) of financial commodities are not interest or income in interest nature, hence are free from VAT. Article 3 of CS [2016] No. 140 Document provides that: VAT shall be paid for interest receivable but not received arising within 90 days after expiry date for interest in accordance with current provisions; VAT shall not be paid for interests receivable but not received arising beyond 90 days after expiry date for interest until interests have been
182 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
received. Interests receivable but not received arising beyond 90 days after expiry date for interest are accounted off balance sheet instead, and VAT shall be paid temporarily.
VII. Notes on main items of financial statements
1. Cash and deposits with central bank
Item December 31, 2017 December 31, 2016
Custodian cash holding 245,735,802.55 213,053,617.51 Statutory deposit reserves with central bank 15,828,328,172.75 17,200,801,292.05 Surplus deposit reserves with central bank 3,422,522,945.03 8,258,747,700.23 Other deposits with central bank 2,435,000.00 4,184,000.00 Total 19,499,021,920.33 25,676,786,609.79
(1) Statutory deposit reserves with central bank refer to deposit reserves deposited with
PBOC by the Bank. These include RMB deposit reserves and foreign currency deposit reserves. These statutory deposit reserves are not available for daily operations, and shall not be drawn on without permission of PBOC.
(2) Surplus deposit reserve with central bank refers to the surplus deposit reserve for settlement deposited in the People's Bank of China.
(3) Other deposits with central bank primarily represent fiscal deposits deposited with
PBOC. Fiscal deposits deposited with PBOC refer to fiscal deposits deposited by the Bank with People's Bank of China as required, including income from budget of the central government and deposits with provincial treasury managed by the Bank for other institutions.
People's Bank of China does not pay interest for fiscal deposits deposited by domestic institutions.
183 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
2. Deposits with banks and other financial institutions
Item December 31, 2017 December 31, 2016
Deposit with domestic banks 581,504,130.28 5,247,407,539.66 Deposit with banks abroad 370,458,345.53 40,825,942.61
Decrease: asset impairment Total 951,962,475.81 5,288,233,482.27
3. Lending funds
Item December 31, 2017 December 31, 2016 loans to domestic banks 479,610,280.00 41,622,000.00 loans to other domestic financial institutions 2,780,000,000.00 1,600,000,000.00 Decrease: asset impairment Total 3,259,610,280.00 1,641,622,000.00
4. Financial assets measured at fair value through current profit and loss
Item December 31, 2017 December 31, 2016
Corporate bond 2,028,417,220.00 443,924,900.00 Negotiable certificate of deposit 9,523,347,470.00 481,591,000.00 Total 11,551,764,690.00 925,515,900.00
5. Repurchased financial assets for sale
Item December 31, 2017 December 31, 2016
Classified as follows by pledged goods Commercial bill 5,955,428,956.47 Bonds 28,304,305,258.60 9,333,343,876.75 —Government bond 6,588,305,139.61 1,880,969,667.28 —Corporate bond —Financial bond 21,716,000,118.99 7,452,374,209.47
Total 28,304,305,258.60 15,288,772,833.22 Classified as follows by counterparty Banking financial institutions 17,228,961,766.72 13,448,742,414.09 Other financial institutions 11,075,343,491.88 1,840,030,419.13 Total 28,304,305,258.60 15,288,772,833.22
184 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
6. Interests receivable
Item December 31, 2017 December 31, 2016
Bond interests receivable 699,558,797.35 641,708,260.49 Interest receivable on loans and advance payments 197,384,519.68 132,656,612.48 Interest receivable on repurchased financial assets for sale 43,353,928.28 9,762,372.10 Interest receivable on deposits with banks 5,770,748.41 33,842,941.46 Interest receivable on loan to other banks 7,862,909.74 868,183.33 Interest receivable on Investments classified as accounts 97,454,043.73 123,274,913.59 receivable Interest receivable on deposits with central bank 8,223,582.16 9,029,930.84 Total accrued interest receivable 1,059,608,529.35 951,143,214.29 Decrease: asset impairment 1,825,729.92 881,969.49 Net interest receivable 1,057,782,799.43 950,261,244.80
7. Loans and advance payments
(1) Loans and advance payments are presented as follows by enterprise and individual:
Item December 31, 2017 December 31, 2016
Corporate loans and advance payments 31,876,441,512.05 29,399,074,867.59 Including: ordinary loan 30,066,728,181.46 27,829,802,379.29 Advance payment 53,113,332.85 39,361,369.51 Discount 1,756,599,997.74 1,529,911,118.79 Individual loans and advance payments 12,470,600,936.55 9,055,346,805.60 Total of loan and advance payment 44,347,042,448.60 38,454,421,673.19 Minus: loan impairment reserves 1,124,226,123.15 976,673,112.98 Including: individual evaluation 304,919,127.95 132,999,030.60 Combination assessment 819,306,995.20 843,674,082.38 Net loans and advance payments 43,222,816,325.45 37,477,748,560.21
Including: total loans and advance payments issued by the Company are presented as follows by industrial distribution and classification:
Industry name December 31, 2017 December 31, 2016
Agriculture, forestry, animal husbandry and fishery 1,467,430,000.00 1,058,985,000.00 Mining industry 14,373,069.19 323,590,000.00 Manufacturing 6,997,144,634.76 5,276,477,143.20 Electricity, gas & water production and supply industry 789,609,110.26 289,183,528.62
185 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Industry name December 31, 2017 December 31, 2016
Building industry 4,607,531,486.02 3,800,066,659.91 Transportation, warehousing and post industry 1,356,150,980.96 1,424,721,897.24 Information transmission, computer service and software industry 240,045,465.49 228,537,073.84 Wholesale and retail trade 3,338,455,178.42 3,455,422,481.67 Accommodation and catering industry 134,683,274.00 189,242,415.86 Financial industry 489,640,000.00 1,352,000,000.00 Real estate industry 4,460,496,095.60 4,666,885,086.29 Rental and commercial service industry 2,427,877,062.95 2,645,473,754.21 Scientific research, technical service and geological survey industry 159,987,708.00 226,867,708.00 Water conservancy, environment and public facility management 2,230,075,448.74 1,831,970,000.00 Resident service and other service industries 532,150,000.00 484,040,000.00 Education 476,950,000.00 405,800,000.00 Health, social security and social welfare 215,650,000.00 131,300,000.00 Culture, sports and recreational industry 177,280,000.00 73,750,000.00 Public management and social organization 4,311,999.92 4,850,999.96 Discount 1,756,599,997.74 1,529,911,118.79 Total corporate loans and advance payments 31,876,441,512.05 29,399,074,867.59
Classification of personal loans of the Bank is presented as follows:
December 31, 2017 December 31, 2016 Item Amount Ratio (%) Amount Ratio (%) One-man business 2,693,929,432.84 21.60 2,366,471,724.50 26.13 Personal housing, second-hand housing 7,865,171,819.01 63.07 4,511,000,497.87 49.82 and commercial housing Consumption 1,911,499,684.70 15.33 2,177,874,583.23 24.05 Total 12,470,600,936.55 100.00 9,055,346,805.60 100.00
Discounts are presented as follows by notes:
Item December 31, 2017 December 31, 2016
Bank acceptance 1,756,599,997.74 1,529,911,118.79 Trade acceptance Total 1,756,599,997.74 1,529,911,118.79
(2) Total loans and advance payments issued by the Company are presented as follows by guarantee type:
186 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item December 31, 2017 December 31, 2016
Fiduciary loan 2,485,092,074.72 2,538,152,131.92 Guaranteed and secured Loan 18,186,797,804.22 16,229,941,325.59 Mortgage loan 20,178,995,053.02 16,938,802,507.07 Pledge loan 1,739,557,518.90 1,217,614,589.82 Discount 1,756,599,997.74 1,529,911,118.79 Total of loan and advance payment 44,347,042,448.60 38,454,421,673.19
(3) Guarantee type and overdue period distribution of overdue loans
December 31, 2017
Item Overdue for 1 to Overdue for 90 to Overdue for 360 days Overdue for over 3 Total 90 days (inclusive) 360 days (inclusive) to 3 years (inclusive) years
Fiduciary loan 712,960.90 630,066.86 113,379.09 1,456,406.85 Guaranteed and 866,743,377.23 222,617,631.41 235,749,920.25 735,918.69 1,325,846,847.58 secured Loan Mortgage loan 172,215,310.61 268,757,754.51 37,863,768.74 153,240.74 478,990,074.60 Pledge loan 9,915,500.00 1,990,000.00 11,905,500.00 Total 1,048,874,187.84 494,078,346.82 274,243,755.85 1,002,538.52 1,818,198,829.03
December 31, 2016 Overdue for 360 Item Overdue for 1 to 90 Overdue for 90 to Overdue for over 3 days to 3 years Total days (inclusive) 360 days(inclusive) years (inclusive) Fiduciary loan 430,066.86 313,379.09 743,445.95
Guaranteed and 192,198,758.05 141,333,540.54 78,419,197.35 742,918.69 412,694,414.63 secured Loan Mortgage loan 49,212,638.03 51,657,195.20 5,984,873.60 106,854,706.83 Pledge loan 8,997,073.84 8,997,073.84 Total 250,408,469.92 193,420,802.60 84,717,450.04 742,918.69 529,289,641.25
(4) Loan loss reserves
December 31, 2017 Item Single Item Combination Total Beginning balance 132,999,030.59 843,674,082.39 976,673,112.98 Accrual in this year 201,115,349.08 -24,367,087.19 176,748,261.89 Write-off in this year 7,470,158.39 7,470,158.39 Sale in this year 10,385,360.85 10,385,360.85 Return caused by recovering original write-off loan and advance payment Return caused by appreciation of loan and advance 11,339,732.48 11,339,732.48 payment
187 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
December 31, 2017 Item Single Item Combination Total Ending balance 304,919,127.95 819,306,995.20 1,124,226,123.15
December 31, 2016 Item Single Item Combination Total
Beginning balance 144,533,428.42 743,862,102.28 888,395,530.70 Accrual in this year 132,254,518.87 99,811,980.11 232,066,498.98 Write-off in this year Sale in this year 141,126,819.59 141,126,819.59 Return caused by recovering original write-off loan and advance payment Return caused by appreciation of loan and advance 2,662,097.11 2,662,097.11 payment Ending balance 132,999,030.59 843,674,082.39 976,673,112.98
8. Available-for-sale financial assets (1) Available-for-sale financial assets are presented as follows:
Item December 31, 2017 December 31, 2016
Debt instrument 13,930,540,662.00 18,381,078,619.56 Amortized cost of debt instrument 14,757,465,683.85 18,626,222,908.39 Government funds 19,999,508.45 19,999,797.67 Corporate bond 7,592,420,463.99 10,417,794,826.58 Financial bond 7,145,045,711.41 7,205,209,693.40 Peer certificates of deposit 983,218,590.74 Accumulated amount of change in fair value included in other -826,925,021.85 -245,144,288.83 comprehensive income Government funds -1,509,808.45 -114,297.67 Corporate bond -199,448,331.99 -37,490,257.02 Financial bond -625,966,881.41 -208,685,643.40 Peer certificates of deposit 1,145,909.26 Equity instrument 9,208,101,062.64 9,569,130,000.00 Finance products 500,000,000.00 5,517,280,000.00 Asset management plan 3,199,000,000.00 4,047,000,000.00 Trust products 5,281,465,695.64 4,550,000.00 Equities 227,335,367.00 Equity investment 300,000.00 300,000.00 Total of available-for-sale financial assets 23,138,641,724.64 27,950,208,619.56 Minus: assets impairment reserves 221,985.00 7,550,000.00
188 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item December 31, 2017 December 31, 2016
New amount of available-for-sale financial assets 23,138,419,739.64 27,942,658,619.56
Note: No held-to-maturity investment of the Bank was reclassified into available-for-sale financial assets in 2017. (2) Changes in impairment reserve of available-for-sale financial assets
Item 2017 2016
Year-beginning balance 7,550,000.00 12,050,000.00 Accrual in this year -7,328,015.00 -4,500,000.00 Reversal in this year Year-end balance 221,985.00 7,550,000.00
9. Held-to-maturity investment
Item December 31, 2017 December 31, 2016
Government funds 6,704,799,112.34 5,443,802,669.10 Corporate bond 3,113,755,301.62 1,931,636,346.11 Financial bond 7,170,926,219.11 5,061,603,847.35 Total of held-to-maturity investment 16,989,480,633.07 12,437,042,862.56
10. Investments classified as accounts receivable (1) Investments classified as accounts receivable are as follows:
Item December 31, 2017 December 31, 2016
Private placement bond 8,090,326,807.00 6,639,976,572.98 Asset management plan 19,550,146,016.71 41,253,031,445.49 Trust products 7,868,065,281.73 4,717,284,135.74 Non-public target debt investment instrument 10,035,699,912.72 Target debt financing instrument 7,215,598,730.85 Total of Investments classified as accounts receivable 52,759,836,749.01 52,610,292,154.21 Minus: assets impairment reserves 770,548,100.79 647,546,935.00 Net Investments classified as accounts receivable 51,989,288,648.22 51,962,745,219.21
(2) Changes in impairment reserve of Investments classified as accounts receivable are as follows:
189 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
December 31, 2017 Item Single Item Combination Total Beginning balance 647,546,935.00 647,546,935.00 Accrual in this year 129,000,000.00 -5,998,834.21 123,001,165.79 Sale in this year Reversal in this year Ending balance 129,000,000.00 641,548,100.79 770,548,100.79
December 31, 2016 Item Single Item Combination Total Beginning balance 10,500,000.00 480,080,884.57 490,580,884.57 Accrual in this year 60,000,000.00 167,466,050.43 227,466,050.43 Sale in this year 70,500,000.00 70,500,000.00 Reversal in this year Ending balance 647,546,935.00 647,546,935.00
11. Fixed assets (1) Net amount of fixed assets
December 31, 2017 Category Year-beginning Increase of current Decrease of current Year-end balance balance year year Original value of fixed assets 637,584,853.59 60,261,679.67 103,135,817.25 594,710,716.01 Including: housing and building 432,004,031.91 34,427,544.58 97,585,951.18 368,845,625.31 Machinery and equipment 151,945,775.07 23,162,079.86 1,964,330.00 173,143,524.93 Transportation equipment 6,981,274.54 265,435.00 1,891,782.00 5,354,927.54 Additional equipment 46,653,772.07 2,406,620.23 1,693,754.07 47,366,638.23 Accumulated depreciation 231,138,384.60 46,080,178.99 24,115,833.26 253,102,730.33 Including: housing and building 114,739,621.75 14,914,561.57 19,385,581.26 110,268,602.06 Machinery and equipment 82,995,209.66 24,260,835.76 1,605,876.54 105,650,168.88 Transportation equipment 5,373,842.23 427,895.39 1,525,670.32 4,276,067.30 Additional equipment 28,029,710.96 6,476,886.27 1,598,705.14 32,907,892.09 Depreciation reserves 7,477,337.38 7,477,337.38 Including: housing and building 7,403,489.68 7,403,489.68 Machinery and equipment Transportation equipment Additional equipment 73,847.70 73,847.70 Net value of fixed assets 398,969,131.61 334,130,648.30 Including: housing and building 309,860,920.48 251,173,533.57
190 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
December 31, 2017 Category Year-beginning Increase of current Decrease of current Year-end balance balance year year Machinery and equipment 68,950,565.41 67,493,356.05 Transportation equipment 1,607,432.31 1,078,860.24 Additional equipment 18,550,213.41 14,384,898.44
Depreciation amount of the Bank in 2017 was RMB 46,080,178.99 yuan.
(2) Fixed assets without completed warrant
As of December 31, 2017, all house buildings of the Bank are provided with property ownership certificate.
12. Construction in progress December 31, 2017 Item Year-beginning Increase of Fixed assets Other Year-end balance balance current year reversed in the year decrease Office Building of Wanzhou Fortune 36,871,660.97 2,998,394.07 32,778,141.45 7,091,913.59 Plaza Building of Xiyong Scientific and 114,878,627.68 43,165,190.27 158,043,817.95 Technical Information Center Total 151,750,288.65 46,163,584.34 32,778,141.45 165,135,731.54
Note 1: there is no capitalized expense from interest in construction in progress.
Note 2: impairment reserve of construction in progress is not accrued since construction in progress is not impaired.
13. Intangible assets
December 31, 2017 Item Year-beginning Increase of current Decrease of current Year-end balance balance year year Initial intangible asset value 112,476,866.56 21,592,834.16 745,820.94 133,323,879.78 Including: land use right 21,319,649.77 21,319,649.77 Software and others 91,157,216.79 21,592,834.16 745,820.94 112,004,230.01 Accumulated amortization 37,947,523.17 10,431,018.37 99,624.92 48,278,916.62 Including: land use right 2,587,447.76 543,859.35 3,131,307.11 Software and others 35,360,075.41 9,887,159.02 99,624.92 45,147,609.51 Net value of intangible assets 74,529,343.39 85,044,963.16
191 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
December 31, 2017 Item Year-beginning Increase of current Decrease of current Year-end balance balance year year Including: land use right 18,732,202.01 18,188,342.66 Software and others 55,797,141.38 66,856,620.50
Note: impairment reserve is not accrued since there is no evident sign indicating impairment of intangible assets at the end of the period.
14. Deferred tax assets and deferred tax liabilities
(1) Deferred income tax assets not offset
Deductible temporary December 31, 2017 Deferred income tax assets differences
Loans and advance payment loss provision 680,755,698.66 170,188,924.67 Bad-debt reserve for other accounts receivable 12,312,340.15 3,078,085.04 Bad-debt reserve for other interest receivable 1,825,729.92 456,432.48 Impairment reserve for debt-repaid assets 231,283.20 57,820.80 Payroll payable 138,999,089.91 34,749,772.48 Including: dimission welfare 514,633.85 128,658.46 Risk reserve 138,484,456.06 34,621,114.02 Fixed assets depreciation reserves 7,477,337.38 1,869,334.35 Available-for-sale financial assets impairment reserves 221,985.00 55,496.25 Changes in fair value of available-for-sale financial assets 988,703,213.25 247,175,803.31 Investment impairment reserve classified as receivables 770,548,100.79 192,637,025.20 Total 2,601,074,778.26 650,268,694.58
Deductible temporary December 31, 2016 Deferred income tax assets differences
Loans and advance payment loss provision 593,456,363.15 148,364,090.79 Bad-debt reserve for other accounts receivable 10,203,235.50 2,550,808.88 Bad-debt reserve for other interest receivable 881,969.49 220,492.37 Impairment reserve for debt-repaid assets 231,283.20 57,820.80 Payroll payable 102,251,682.49 25,562,920.62 Including: dimission welfare 950,000.00 237,500.00 Risk reserve 101,301,682.49 25,325,420.62 Fixed assets depreciation reserves 7,477,337.38 1,869,334.35 Available-for-sale financial assets impairment reserves 7,550,000.00 1,887,500.00 Changes in fair value of available-for-sale financial assets 245,144,288.83 61,286,072.21
192 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Deductible temporary December 31, 2016 Deferred income tax assets differences
Investment impairment reserve classified as receivables 647,546,935.00 161,886,733.74 Total 1,614,743,095.04 403,685,773.76
Note: On the balance sheet date when the Bank estimates that sufficient taxable income can be obtained to use the temporarily deductible difference in the future periods, hence it recognizes relevant deferred income tax assets.
(2) Deferred income tax liabilities not offset
Taxable temporary Deferred income tax December 31, 2017 differences liabilities Fair value change of financial assets measured at fair value through 22,182,180.00 5,545,545.00 current profit and loss Changes in fair value of available-for-sale financial assets Other temporary differences 82,414,600.00 20,603,650.00 Total 104,596,780.00 26,149,195.00
Taxable temporary Deferred income tax December 31, 2016 differences liabilities Fair value change of financial assets measured at fair value through 19,962,170.00 4,990,542.50 current profit and loss Changes in fair value of available-for-sale financial assets Other temporary differences 135,226,600.00 33,806,650.00 Total 155,188,770.00 38,797,192.50
15. Other assets (1) Itemized presentation
Item December 31, 2017 December 31, 2016
Other accounts receivable 37,279,644.37 16,469,999.45 Other current assets 4,520,548.56 16,051,153.46 Other non-current assets 1,042,121,339.84 762,424,150.33 Vicariously cashed securities 78.38 Unamortized expense 33,251,868.41 31,867,813.51 Long-term unamortized expense 42,928,038.34 55,351,351.87 Guaranteed deposits 1,000,000.00 1,000,000.00
Debt-repaid assets 154,188.80 154,188.80
193 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item December 31, 2017 December 31, 2016
Assets classified as held for sale 564,106.88 Total 1,161,819,735.20 883,318,735.80
(2) Other accounts payable 1. Presented by nature:
Item December 31, 2017 December 31, 2016
Reimbursed legal service charge and legal cost 19,375,134.34 10,859,483.81 Housing and maintenance funds 6,777,800.52 6,739,964.45 Service charges receivable for non-guaranteed financial products 12,973,556.23 2,183,750.14 Reserve, guarantee deposit 2,064,865.77 1,975,231.31 Others 8,400,627.66 4,914,805.24 Total of other accounts receivable 49,591,984.52 26,673,234.95 Minus: assets impairment reserves 12,312,340.15 10,203,235.50 Including: individual evaluation 12,134,609.36 10,202,197.50 Combination assessment 177,730.79 1,038.00 Net amount of other accounts receivable 37,279,644.37 16,469,999.45
(3) Other current assets 1. Presented by nature:
Item December 31, 2017 December 31, 2016
Turnover tax prepayment and surtax 4,520,548.56 16,051,153.46 Total 4,520,548.56 16,051,153.46
(4) Other non-current assets 1. Presented by nature:
Item December 31, 2017 December 31, 2016
House prepayment 1,019,195,718.00 736,085,818.00 Software, equipment and decoration prepayment 22,925,621.84 26,338,332.33 Total 1,042,121,339.84 762,424,150.33
194 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
(5) Unamortized expense
Increase of Amortization during Item December 31, 2016 current year the year December 31, 2017
Rental fee 27,927,917.08 65,261,919.45 65,275,372.01 27,914,464.52 Others 3,939,896.43 10,522,940.74 9,125,433.28 5,337,403.89 Total 31,867,813.51 75,784,860.19 74,400,805.29 33,251,868.41
(6) Long-term unamortized expense
Increase of Amortization during Item December 31, 2016 current year the year December 31, 2017
Decoration fee 55,351,351.87 9,705,949.79 22,129,263.32 42,928,038.34 Total 55,351,351.87 9,705,949.79 22,129,263.32 42,928,038.34
(7) Assets classified as held for sale
Item The end of the book value Contract disposal price
House building and disposal of tax and fee 564,106.88 3,419,000.00 Total 564,106.88 3,419,000.00
Note: On May 4, 2017, the 13th meeting of the Bank President in 2017 has reviewed and approved the proposal on disposing the second batch of idle property in Wanzhou, and decided to dispose the idle property in Wanzhou. The second batch of 20 idle properties has been handed over to the East Chongqing Branch of Chongqing Equity Exchange for public auction. As of December 31, 2017, the Bank has publicly listed 20 real estate projects in the
East Chongqing Branch of Chongqing Equity Exchange. Ten properties have been successfully signed through bidding or agreement. The Bank has signed 10 real estate sales contracts with the buyer with a total amount of RMB 3,419,000.00 yuan and book value of
RMB 145,129.38 yuan. The Bank has paid the disposal tax of RMB 418,977.50 yuan in
December 2017. The house building and disposal tax is RMB 564,106.88 yuan in total. The transfer procedures of the ten properties have been completed in January 2018 and the Bank
195 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
has received the disposal prices in January 2018.
(8) Debt-repaid assets
Item December 31, 2017 December 31, 2016
Initial value of debt-repaid assets 385,472.00 385,472.00 Minus: assets impairment reserves 231,283.20 231,283.20 Net value of debt-repaid assets 154,188.80 154,188.80
16. Asset impairment reserve
2017 Increase of Decrease of current period current period Beginning Reversed Item balance Accrual in amount of Current Current sale Ending balance current period assets price write off amount rising Impairment reserve for 881,969.49 943,760.43 1,825,729.92 interest receivable Loan loss reserves 976,673,112.98 176,748,261.89 11,339,732.48 7,470,158.39 10,385,360.85 1,124,226,123.15 Available-for-sale financial assets 7,550,000.00 -7,328,015.00 221,985.00 impairment reserves Fixed assets 7,477,337.38 7,477,337.38 depreciation reserves Depreciation reserves for other accounts 10,203,235.50 2,221,595.65 112,491.00 12,312,340.15 receivable Investment impairment reserve classified as 647,546,935.00 123,001,165.79 770,548,100.79 receivables Impairment reserve for 231,283.20 231,283.20 debt-repaid assets Total 1,650,563,873.55 295,586,768.76 11,339,732.48 7,582,649.39 10,385,360.85 1,916,842,899.59
17. Borrowing from the central bank
Item December 31, 2017 December 31, 2016
Borrowing from the central bank 1,200,000,000.00 500,000,000.00 Rediscount 198,200,000.00 Total 1,398,200,000.00 500,000,000.00
196 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
18. Deposits from banks and other financial institutions
Item December 31, 2017 December 31, 2016
Deposit from domestic banks 8,078,010,691.17 11,051,713,656.31 Deposits from other domestic financial institutions 1,312,972,665.40 3,568,267,805.23 Total 9,390,983,356.57 14,619,981,461.54
19. Borrowing funds
Item December 31, 2017 December 31, 2016
Borrowing funds from domestic banks 256,048,794.34 2,836,203.85 Borrowing funds from offshore banks 86,808,585.49 74,821,123.81 Total 342,857,379.83 77,657,327.66
20. Financial assets sold under repurchase agreements
Item December 31, 2017 December 31, 2016
Bonds 29,497,767,947.53 11,553,922,265.00 —Government bond 4,985,709,947.57 1,352,400,000.00 —Corporate bond —Financial bond 24,512,057,999.96 10,201,522,265.00 Commercial bill 6,624,739,035.69 Total 29,497,767,947.53 18,178,661,300.69
21. Deposits from customers
Item December 31, 2017 December 31, 2016
Current deposit 45,541,505,869.02 42,745,656,147.07 Including: corporate customer 40,595,365,816.93 38,126,023,099.10 Individual customer 4,946,140,052.09 4,619,633,047.97 Time deposit (including notice deposit) 69,051,787,623.44 70,592,709,297.83 Including: corporate customer 48,529,161,164.26 52,701,561,259.10 Individual customer 20,522,626,459.18 17,891,148,038.73 Margin deposit 6,362,421,956.44 6,571,739,338.70 Public deposit 1,775,620,737.59 2,158,041,718.89 Other deposits 1,068,830,713.28 95,725,684.34 Total 123,800,166,899.77 122,163,872,186.83
197 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Margin deposit details are presented as follows:
Item December 31, 2017 December 31, 2016
Deposit for bank acceptance 4,643,171,567.62 5,512,493,873.55 Deposit for letter of guarantee 107,974,456.77 151,915,099.32 Letter of credit guarantee deposit 426,878,828.59 80,705,580.00 Security deposit 1,150,851,307.92 786,044,837.89 Import bill advance and import pay the security deposit 15,790,000.00 24,323,000.00 Others 17,755,795.54 16,256,947.94 Total 6,362,421,956.44 6,571,739,338.70
22. Payroll payable
(1) Classification
December 31, Increase of Decrease of December 31, Item 2016 current year current year 2017
Short-term remuneration 213,782,902.32 670,615,924.49 731,120,793.06 153,278,033.75 Post-employment benefit --- defined 63,794,704.15 63,794,704.15 contribution plans Dimission welfare 950,000.00 435,366.15 514,633.85 Other long-term payrolls 101,301,682.49 71,594,532.10 34,411,758.53 138,484,456.06 Total 316,034,584.81 806,005,160.74 829,762,621.89 292,277,123.66
(2) Short-term payroll
December 31, Increase of Decrease of December 31, Item 2016 current year current year 2017
Wage, bonus, allowance and subsidy 213,782,902.32 545,242,444.41 605,747,312.98 153,278,033.75 Welfare expense of employee 36,848,512.27 36,848,512.27 Social insurance expense 35,218,900.13 35,218,900.13 Including: medical insurance premiums 32,621,964.57 32,621,964.57 Industrial injury insurance premium 1,502,924.55 1,502,924.55 Maternity insurance premium 1,094,011.01 1,094,011.01 Housing accumulation fund 38,898,737.00 38,898,737.00 Labor union expenditure 9,562,449.95 9,562,449.95 Employee education expenses 2,930,529.95 2,930,529.95 Other short-term remuneration 1,914,350.78 1,914,350.78 Total 213,782,902.32 670,615,924.49 731,120,793.06 153,278,033.75
(3) Post-employment benefit --- defined contribution plans
198 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
December 31, Increase of Decrease of December 31, Item 2016 current year current year 2017
Basic endowment insurance premiums 62,158,146.12 62,158,146.12 Unemployment insurance expense 1,636,558.03 1,636,558.03 Total 63,794,704.15 63,794,704.15
(4) Dimission welfare
December 31, Increase of Decrease of December 31, Item 2016 current year current year 2017
Welfare for early retirees 950,000.00 435,366.15 514,633.85 Total 950,000.00 435,366.15 514,633.85
(5) Other long-term payrolls
December 31, Increase of Decrease of December 31, Item 2016 current year current year 2017
Risk reserve 101,301,682.49 71,594,532.10 34,411,758.53 138,484,456.06 Total 101,301,682.49 71,594,532.10 34,411,758.53 138,484,456.06
In accordance with Robust Payroll Regulatory Guideline of Commercial Banks
(YJF[2010] No.14), the Bank has developed Notice on Applying All-staff Risk Reserve
Payment System (YSXYF[2009]No.14) and revised draft Interim Provisions for Delay in
Payment, Deduction and Claiming Administration of Chongqing Three Gorges Bank
(YSXYF[2015]No.70), executed administration of delay in payment of risk reserve since
2008, and adopted deferred scroll payment by reserving certain performance-related pay in certain proportion.
23. Tax payable
Item December 31, 2017 December 31, 2016
Value added tax 211,111,638.46 148,673,882.69 City maintenance and construction tax 14,723,144.76 10,323,276.91 Educational expense and surtax 6,886,063.28 4,997,799.71 Local education surtax 4,442,926.46 3,176,062.25 Corporate income tax 65,465,886.37 139,972,010.62
199 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item December 31, 2017 December 31, 2016
Stamp duty 43,000.00 Property tax 3,643,319.67 Individual income tax withheld and remitted 6,642,024.74 11,309,886.20
Other taxation payments withheld and remitted 4,363,147.16 11,373.59 Total 313,677,831.23 322,107,611.64
24. Interest payable
Item December 31, 2017 December 31, 2016
Interest on deposits from customers 858,976,807.51 543,467,576.33 Interest on borrowing from the central bank 665,000.00 489,194.44 Interest on deposit with banks 124,443,462.87 132,875,826.86 Interest on borrowing funds 1,596,020.47 36,864.15 Interest on financial assets sold under repurchase 41,059,891.50 9,833,635.09 agreements Bond interest payable 104,829,094.47 160,044,356.13
Others 517,143.34 Total 1,131,570,276.82 847,264,596.34
25. Bonds payable
Item December 31, 2017 December 31, 2016
12 Bonds of Three Gorges Bank 894,790,511.00 15 Tier II of Three Gorges Bank (note 1) 896,021,615.61 895,570,269.60
14 Bonds of Three Gorges Bank 1,998,920,736.78 14 Bonds of Three Gorges Bank 02 999,293,848.91 17 "Sannong" bonds of Three Gorges Bank 01 1,997,702,719.45 (note 2) 17 "Sannong" bonds of Three Gorges Bank 03 998,492,347.68 (note 3) 17 Level II of Three Gorges Bank 01 (note 4) 1,800,000,000.00 17 Tier II of Three Gorges Bank 02 (note 5) 1,200,000,000.00
Negotiable certificate of deposit (note 6) 15,548,166,378.31 6,839,526,928.90 Total 22,440,383,061.05 11,628,102,295.19
200 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Details of bond issuance are presented as follows:
Nominal First day of Date of Maturity Bond Abbreviation of bond interest Issue amount issuing value date period rate 15 Tier II of Three Gorges 4.99% 2015-12-22 2015-12-24 2025-12-24 10 years 900,000,000.00 Bank (note 1) 17 "Sannong" bonds of Three 4.75% 2017-3-2 2017-3-6 2020-3-6 3 years 2,000,000,000.00 Gorges Bank 01 (note 2) 17 "Sannong" bonds of Three 5.15% 2017-7-26 2017-7-28 2022-7-28 5 1,000,000,000.00 Gorges Bank 03 (note 3) 17 Level II of Three Gorges 5.00% 2017-12-19 2017-12-20 2027-12-20 10 1,800,000,000.00 Bank 01 (note 4) 17 Level II of Three Gorges 5.95% 2017-12-28 2017-12-29 2027-12-29 10 1,200,000,000.00 Bank 02 (note 5) Total 6,900,000,000.00
Note 1: On December 24, 2015, the Bank issued RMB 0.9 billion of tier II capital bond in total. The fixed coupon rate is 4.99%, and the interest rate is paid once a year. Maturity of the bond is 10 years. The Bank can choose to redeem the bond in full at face value on the last day of the 5th value year of the bond.
Note 2: On March 6, 2017, the Bank issued "Sannong" special financial bonds of RMB
2 billion yuan with a term of 3 years. The bonds are not guaranteed. The fixed coupon rate is
4.75%, and the interest rate is paid once a year.
Note 3: On July 28, 2017, the Bank issued "Sannong" special financial bonds of RMB 1 billion yuan with a term of 5 years. The bonds are not guaranteed. The fixed coupon rate is
5.15%, and the interest rate is paid once a year.
Note 4: On December 20, 2017, the Bank issued RMB 1.8 billion of tier II capital bond in total. The fixed coupon rate is 5.0%, and the interest rate is paid once a year. Maturity of the bond is 10 years. The Bank can choose to redeem the bond in full at face value on the last day of the 5th value year of the bond.
Note 5: On December 29, 2017, the Bank issued RMB 1.2 billion of tier II capital bond
201 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
in total. The fixed coupon rate is 5.95%, and the interest rate is paid once a year. Maturity of the bond is 10 years. The Bank can choose to redeem the bond in full at face value on the last day of the 5th value year of the bond.
Note 6: Negotiable certificate of deposit (NCD) issued by the Bank. Term of NCD issued by the Bank is 1 month to 1 year, and interest rate ranges from 3.00% to 5.41%.
26. Other liabilities
(1) Itemized presentation
Item December 31, 2017 December 31, 2016
Dividends payable 13,450,745.05 18,596,745.05 Other accounts payable 315,798,038.14 159,512,617.40 Long-term accounts payable 6,182,123.00 9,621,133.00 Liquidation of capital transaction 22,924,888.93 29,142,562.44 Deferred income 292,247,555.07 331,655,597.38 Total 650,603,350.19 548,528,655.27
(2) Other accounts payable
1. Presented by nature:
Item December 31, 2017 December 31, 2016
Accounts payable for engineering and equipment 18,182,382.41 15,241,565.68 Rent payable 4,742,417.60 5,051,868.47 Deposit insurance premium payable 7,699,626.23 7,230,100.50 Public maintenance funds 1,224,656.30 1,206,530.73 Pending accounts 8,247,627.39 6,591,559.19 Earnings from financial assets to be allocated 66,166,364.00 84,511,735.37 Funds collected or paid for another 73,516,537.73 24,438,148.23 Risk exposure amount for bank acceptance of Chongqing Iron & 133,000,000.00 Steel Limited by Share Others 3,018,426.48 15,241,109.23
202 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item December 31, 2017 December 31, 2016
Total of other accounts payable 315,798,038.14 159,512,617.40
(3) Deferred income
1. Presented by nature:
Item December 31, 2017 December 31, 2016
Service charges for entrusted loans 98,117,185.40 309,780,615.47 Commitment fee of financing 78,156,905.01 Service charges of sales and distribution 115,937,891.85 Sales service fee 7,411,040.15 Safe custody fee for trust plan 12,681,146.19 Service fee for credit enhancement 1,746,350.36 Others 35,572.81 36,445.21 Total of deferred income 292,247,555.07 331,655,597.38
27. Share capital
December 31, 2017 Item Year-beginning Increase of current Decrease of current Year-end amount amount year year Shares held by state 59,459,188.00 5,945,919.00 65,405,107.00 Shares held by domestic 4,343,877,141.00 437,057,070.00 2,669,356.00 4,778,264,855.00 institutional shareholders Shares held by domestic 2,968,056.00 296,815.00 3,264,871.00 natural person shareholders Total 4,406,304,385.00 443,299,804.00 2,669,356.00 4,846,934,833.00
Note 1: Net increase in share capital in 2017 was RMB 440,630,448.00 yuan. In April
2017, in accordance with Proposal on 2016 Annual Profit Distribution passed on the 36th
Meeting of the 1st Session of Board of Directors and 2016 annual Shareholder's General
Meeting, the Bank increased RMB 440,630,448.00 yuan as registered capital, converted into profit in 2016 share capital by giving 1 bonus share for every 10 shares based on the total shares of 4,406,304,385.00 on December 31, 2016, added 440,630,448.00 shares (face value
203 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
as RMB 1 per share), and altered share capital to be RMB 4,846,934,833.00 yuan.
ShineWing International Accounting Firm (Special Ordinary Partnership) (Chongqing
Branch) has already examined the items and issued XYZH/2017CQA10326 Capital
Verification Report on August 18, 2017.
Note 2: Others increase by RMB 2,669,356.00 yuan, and decreases by RMB
2,669,356.00 yuan, indicating occurrence of equity transfer. Transfer details:
Amount of S.N. Name of transferor Name of Transferee transferred share Chongqing Jiangnan Tourism Chongqing Xinbo Water Conservancy 1 2,669,356.00 Development Co., Ltd. Engineering Design Co., Ltd. Total 2,669,356.00
28. Capital reserve
December 31, 2017 Item Year-beginning Increase of current Decrease of current Year-end amount amount year year Capital stock premium 2,969,026,526.26 2,969,026,526.26 Total 2,969,026,526.26 2,969,026,526.26
29. Other Comprehensive Income
December 31, 2017 Item Year-beginning Increase of Decrease of Year-end amount current year current year amount Other comprehensive income that will be -183,858,216.62 -557,669,193.32 -741,527,409.94 reclassified into profit and loss in future Including: fair value change of -183,858,216.62 -557,669,193.32 -741,527,409.94 available-for-sale financial assets Total -183,858,216.62 -557,669,193.32 -741,527,409.94
30. Surplus reserves
December 31, 2017 Item Year-beginning Increase of current Decrease of Year-end amount amount year current year Statutory surplus reserve 710,089,201.99 181,188,236.11 891,277,438.10 Discretionary surplus reserve Total 710,089,201.99 181,188,236.11 891,277,438.10
204 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Note: In accordance with Company Law of the People’s Republic of China, Articles of Association of the Bank as well as resolution made by the Board of Directors, the Bank withdraws statutory surplus reserve at 10% of net profit after tax for statutory financial statements, and can no longer withdraw as statutory surplus reserve reaches over 50% of share capital cumulatively. Statutory surplus reserve can be used to cover the deficit upon approval, or increase share capital. Balance of statutory surplus reserve being converted into share capital shall be no less than 25% of converted share capital.
31. General risk reserve
December 31, 2017 Item Increase of current Decrease of Year-beginning amount Year-end amount year current year Generic risk reserve 2,319,731,933.19 243,123,450.14 2,562,855,383.33 Total 2,319,731,933.19 243,123,450.14 2,562,855,383.33
Note: Based upon withdrawal of asset impairment reserve in accordance with Notice on
Issuing Accrual Management Method for Financial Enterprise Reserve (CJ [2012] No.20), the Bank establishes generic risk reserve to cover potential loss unrecognized in connection with risk assets. The generic risk reserve is treated as profit distribution, and is a constituent part of owner's equity, no less than 1.5% of risk assets balance in principle, can be fully funded in years, and the duration shall be no more than 5 years in principle. As at December
31, 2017, accruing proportion of generic risk reserve is 1.50%.
32. Undistributed profits
Item December 31, 2017 December 31, 2016
Beginning balance 2,041,339,562.54 1,908,371,217.40 Plus: net profit in this period 1,811,882,361.14 1,984,769,331.86 Minus: withdrawal of statutory surplus reserve 181,188,236.11 198,476,933.18
205 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item December 31, 2017 December 31, 2016
Withdrawal of discretionary surplus reserve Withdrawal of statutory public welfare fund Withdrawal of provision for general risk 243,123,450.14 643,545,968.88 Distributed cash dividends 440,630,438.50 397,791,365.66 Transfer to paid-in capital 440,630,448.00 611,986,719.00 Ending balance 2,547,649,350.93 2,041,339,562.54
Note: By approving Proposal for 2016 Annual Profit Distribution of Chongqing Three
Gorges Bank Co., Ltd. on General Shareholders Meeting in April 2017, the Bank agreed to give 1 bonus share for every 10 shares with 4,406,304,385.00 shares of total stock by the end of 2016 as the base, and issue bonus RMB 1 yuan in cash, give 440,630,448.00 new bonus shares in total, and issue cash bonus RMB 440,630,438.50 yuan.
33. Net interest income
Item 2017 2016
Interest income 8,292,645,451.44 7,601,693,158.22 Including: deposits with banks and other financial institutions 98,302,815.54 115,732,995.23 Cash and balances with central bank 264,204,125.57 241,507,226.83 Lending fund 36,288,376.10 9,126,353.21 Loans and advance payments 2,548,181,146.62 2,373,771,642.87 Financial assets held under resale agreements 384,973,156.05 294,513,145.57 Financial assets at fair valuethrough current profit and loss 78,790,250.15 37,434,923.39 Available-for-sale financial assets 1,140,702,835.19 956,192,868.85 Held-to-maturity investment 563,323,101.57 452,513,077.44 Investments classified as accounts receivable 3,177,879,644.65 3,120,900,924.83 Interest expense 4,791,215,778.17 3,776,014,992.98 Including: deposits from banks and other financial institutions 520,721,206.98 307,082,245.89 Borrowing from the central bank 14,925,111.11 24,822,152.77 Loans from other banks and other financial institutions 8,821,397.71 16,880,570.16 Deposits from customers 3,204,530,920.68 2,589,607,788.00 Financial assets sold under repurchase agreements 405,498,315.73 483,311,227.66 Bonds payable 635,980,744.78 353,942,693.41
206 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item 2017 2016
Rediscount 738,081.18 368,315.09 Net interest income 3,501,429,673.27 3,825,678,165.24
34. Net income from service charges and commission
Item 2017 2016
Fee and commission income 454,876,089.87 436,659,604.62 Including: financial service 121,387,867.84 248,863,897.94 Agent service 272,209,420.96 96,643,098.74 Settlement and liquidation services 34,332,555.58 46,978,878.49 Letter of guarantee and commitment service 16,758,881.01 25,636,768.55 Others 10,187,364.48 18,536,960.90 Fee and commission expense 53,085,165.40 58,250,207.80 Including: service charges for settlement 48,171,900.42 51,793,076.66 Bank card service charge 1,674,253.21 3,899,196.32 Others 3,239,011.77 2,557,934.82 Net fee and commission income 401,790,924.47 378,409,396.82
The Bank's income from service charges of financial services refers to funds raised by issuing non-guaranteed financial products to investors in accordance with investment plan, the Bank manages the income in a reasonable manner and makes investment with financial assets. The Bank does not guarantee minimum earnings and promise to meet estimated yield rate, investment risks in connection with financial plan are assumed by investors on their own. The Bank charges financial administrative expense or earn income from price difference.
207 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
35. Income from investment
Item 2017 2016
Investment income from available-for-sale financial assets -515,094.65 52,365,010.80
Income from investment of financial assets measured at fair value through current profit 1,816,515.82 6,915,895.80 and loss Total 1,301,421.17 59,280,906.60
36. Losses and profits from change in fair value
Item 2017 2016
Loss and profit from changes in fair value of trading financial assets 2,220,010.00 -11,768,570.00 Total 2,220,010.00 -11,768,570.00
37. Exchange gain
Item 2017 2016
Profit and loss from foreign currency rate translation as well as -1,667,273.14 10,624,827.50 settlement and sale Total -1,667,273.14 10,624,827.50
38. Income cost of other operations
(1) Other business income
Item 2017 2016
Rental income 291,143.10 1,100,867.87 Others 493,935.14 138,608.41
Total 785,078.24 1,239,476.28
(2) Other operating expneses
Item 2017 2016
Mortgage registration fee 2,255,366.47 2,346,497.60 Others 3,060.00 3,380.00
Total 2,258,426.47 2,349,877.60
208 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
39. Asset disposal income
Item 2017 2016
Gain from non-current asset disposal 13,144,723.06 2,659,641.50 Including: incomes from disposal of non-current assets classified as held-or-sale Including: gains from disposal of fixed assets Gains from disposal of intangible assets Incomes from disposal of non-current assets not classified as held-for-sale 13,144,723.06 2,659,641.50 Including: gains from disposal of fixed assets 13,144,723.06 1,997,702.25 Gains from disposal of intangible assets 661,939.25 Total 13,144,723.06 2,659,641.50
40. Business tax and surcharges
Item 2017 2016
Business tax 10,295,182.95 123,996,698.30 Urban construction tax 25,442,707.21 23,818,188.62 Educational surtax 11,111,295.61 10,412,323.75 Local educational surtax 7,611,649.19 5,235,357.63 Property tax 4,534,538.36 2,667,557.72 Tenure tax 399,402.34 246,375.64 Stamp duty 2,563,344.38 557,834.66 Vehicle and vessel use tax 11,674.60 5,220.00 Total 61,969,794.64 166,939,556.32
41. Operation and administrative expense
Item 2017 2016
Labor cost 805,742,951.36 827,225,969.60 Depreciation of fixed assets 45,773,909.34 44,047,739.44 Amortization of intangible assets 10,331,393.45 9,302,676.25 Taxes 5,667,718.82 Business operation and administrative expenses 366,415,843.77 361,280,923.84 Total 1,228,264,097.92 1,247,525,027.95
42. Assets impairment loss
209 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item 2017 2016
Loans and advance payment loss provision 166,362,901.04 90,939,679.39 Bad-debt reserve for other accounts receivable 2,221,595.65 9,934,695.21 Investment impairment reserve classified as receivables 123,001,165.79 156,966,050.43
Impairment reserve for interest receivable 2,603,344.10 -1,144,882.79 Available-for-sale financial assets impairment reserves -7,328,015.00 -4,500,000.00 Total 286,860,991.58 252,195,542.24
43. Non-operating income/expenditure
(1) Non-operating income
Item 2017 2016
Income from penalties 204,335.00 394,657.00 Government grant 12,285,511.00 12,276,771.80 Others 320,865.41 302,220.77 Total 12,810,711.41 12,973,649.57
Type and amount details of government grants acquired by the Bank:
Item 2017 2016
Agriculture-related loan incremental reward 5,900,000.00 2,260,000.00 Agriculture-related support subsidy 10,000.00 Unemployment post subsidy 1,856,998.00 2,789,984.00 Industrial support fund 801,150.00 3,300,000.00 Reward for introducing financial institution 7,653.00 500,000.00 Special fund for financial industry development 1,609,800.00 703,400.00 Reward for annual assessment of financial institution 1,533,440.00 2,703,699.80 Others 576,470.00 9,688.00 Total 12,285,511.00 12,276,771.80
(2) Non-operating expenses
Item 2017 2016
Damage and scrapping loss of non-current assets 7,942.72 8,500.00 Donations made 1,517,829.83 836,063.20 Loss from compensation and penalty 208,439.76 Loss from credit asset transfer 4,048,908.38
210 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item 2017 2016
Others 132,535.50 107,101.34 Total 1,866,747.81 5,000,572.92
44. Income tax expense
Item 2017 2016
Current income tax expense 612,054,036.14 689,510,938.26 Deferred income tax expense -73,341,187.22 -69,193,353.64 Total 538,712,848.92 620,317,584.62
Adjustment details of accounting profit and income tax expense
Item 2017 2016
Total profit 2,350,595,210.06 2,605,086,916.48 Income tax accrued at applicable tax rate 587,648,802.52 651,271,729.12 The effects of non-taxable income -51,649,455.73 -33,887,014.72 The effects of non-deductible costs, expenses, losses and others 2,713,502.13 2,932,870.22 Income tax expense 538,712,848.92 620,317,584.62
45. Net amount of other comprehensive income after tax
Item 2017 2016
Net amount of other comprehensive income after tax attributable to parent company -557,669,193.32 -388,136,791.09
(I) Other comprehensive income that cannot be reclassified into profit and loss in future 1. Changes in net liabilities or net assets from re-measuring defined benefit plans
2. Share in other comprehensive income not reclassified into profit and loss in the invested organization by the equity method 3. Others (II) Other comprehensive income that will be reclassified into profit and loss in future -557,669,193.32 -388,136,791.09
1. Share in other comprehensive income reclassified into profit and loss in the invested organization by the equity method 2. Profit and loss from fair value change of available-for-sale financial assets -557,669,193.32 -388,136,791.09
3. The held-to-maturity investment reclassified into loss and profit from available-for-sale financial assets 4. Effective part of the cash flow hedging gains and losses 5. Translation reserve 6. Others
211 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item 2017 2016
Net amount of other comprehensive income after tax attributable to minority shareholders Total -557,669,193.32 -388,136,791.09
46. Cash and cash equivalents
Item December 31, 2017 December 31, 2016
I. Cash 4,348,343,944.82 8,838,034,800.01 Including: cash on hand 245,735,802.55 213,053,617.51 Deposit in the central bank available for payment 3,422,522,945.03 8,258,747,700.23 Current deposits with banks 680,085,197.24 366,233,482.27 II. Cash equivalents 31,143,766,478.60 19,384,611,210.41 Including: deposits with banks and non-bank financial institutions with 3,599,000,000.00 original maturity with or within three months Lending funds with original maturity with or within three months 2,839,461,220.00 1,141,622,000.00 Redemptory securities for sale with or within three months 28,304,305,258.60 14,643,989,210.41 III. Balance of ending cash and cash equivalents 35,492,110,423.42 28,222,646,010.42
212 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
47. Adjusting the net profits as the cash flow of operating activities
Item 2017 2016
Net profits 1,811,882,361.14 1,984,769,331.86 Plus: asset impairment provisions 286,860,991.58 252,195,542.24 Depreciation of fixed assets 45,773,909.34 44,047,739.44 Amortization of intangible assets 10,431,018.37 9,302,676.25 Amortization of long-term unamortized expense 22,129,263.32 26,274,477.60 Loss from disposal of fixed assets, intangible assets and other long term assets 13,152,665.78 -2,651,141.50 Loss on fair value change -2,220,010.00 11,768,570.00 Loss on investments -1,301,421.17 -59,280,906.60 Decrease of deferred income tax assets -246,582,920.82 -118,953,333.35 Increase of deferred income tax liabilities -12,647,997.50 -79,618,950.66 Reduce of loans and advance payments -6,207,090,933.80 -6,039,454,923.73 Increase of absorbed deposits 1,636,294,712.94 28,586,182,439.60 Increase in net liability from transactions with inter-bank and central bank -1,560,402,272.07 -2,321,370,476.03 Decrease in redemptory financial assets for sale 644,783,622.81 1,527,759,315.78 Increase in financial assets sold under repurchase agreements 11,319,106,646.84 6,222,838,772.15 Decrease in operating receivables -130,440,304.20 -302,764,776.11 Increase in operating payables 517,609,992.18 138,866,615.98 Service charges and interest expenses on bond issuance 641,130,744.78 353,942,693.41 Effects of exchange-rate variations 1,602,405.75 -9,908,252.78 Net cash flow provided by operating activities 8,790,072,475.27 30,223,945,413.55
213 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
VIII. Rights and interests in other entities
1. Equity of structural subject incorporated into consolidation scope
Structural subjects incorporated in the consolidation scope are mainly guaranteed financial products issued by the Bank. The Bank considers controlling such structural subjects or not as financial product manager, and judging if the Bank as financial product manager shall be principal person in charge based upon such factors including decision-making scope of the Bank as asset manager, power of financial product holder, remuneration obtained by providing management services and variable earnings risk exposure confronted. For guaranteed financial products provided by the Bank, though the
Bank does not hold any equity thereof, it is obliged to assume loss in accordance with guarantee agreements for relevant financial products in case of any loss on the products, and include the products in the consolidation scope.
Item December 31, 2017 December 31, 2016
Issuance of guaranteed financial products 8,159,000,000.00 9,052,370,000.00
Interests enjoyed by investors of on-balance guaranteed financial products are presented in deposits from customers or deposits from banks and other financial institutions.
2. Equity of structural subject incorporated into consolidated financial statements
(1) Financial products
Structural subjects not incorporated in the consolidation scope managed by the Bank are mainly non-guaranteed financial products issued and managed by the Bank. These structural subjects mainly aim to manage assets of investors and charge sales expenses or
214 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
administrative expense, and the Bank raises capital by issuing investment products to investors, then invests the raised financial capital in relevant financial markets or relevant financial products as agreed in product contract, and allocates investment income to investors as agreed in contract. The Bank regards variable return relevant to such structural subjects is not significant.
Item December 31, 2017 December 31, 2016
Issuance of non-guaranteed financial products 14,627,522,000.00 13,107,469,000.00
3. Equity enjoyed in structural subject initiated by third party financial institution
To invest in structural subjects not incorporated in the consolidation scope issued and managed by other institutions, the Bank will recognize investment income, income from interest and income from service charges from the subjects. These structural subjects mainly include financial products, special asset management plan and credit plan. In nature, these structural subjects aim to manage assets of investors and earn administrative expense, and the Bank raises capital by issuing investment products to investors. The Bank has not provided liquidity support for such structural subjects.
On December 31, 2017, book value and maximum loss risk exposure of assets generated by interest of structural subject not incorporated in the consolidation scope were as follows:
Available-for-sale Investments classified as December 31, 2017 Total financial assets accounts receivable
Investment and financial products 500,000,000.00 500,000,000.00 Investment asset management plan 3,199,000,000.00 19,550,146,016.71 22,749,146,016.71 Investment trust products 5,281,465,695.64 7,868,065,281.73 13,149,530,977.37
Total 8,980,465,695.64 27,418,211,298.44 36,398,676,994.08
215 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
On December 31, 2016, book value and maximum loss risk exposure of assets generated by interest of structural subject not incorporated in the consolidation scope were as follows:
Available-for-sale Investments classified as December 31, 2016 Total financial assets accounts receivable
Investment and financial products 5,517,280,000.00 5,517,280,000.00 Investment asset management plan 4,047,000,000.00 41,253,031,445.49 45,300,031,445.49 Investment trust products 4,550,000.00 4,717,284,135.74 4,721,834,135.74
Total 9,568,830,000.00 45,970,315,581.23 55,539,145,581.23
IX. Contingencies
1. Contentious matter
As of December 31, 2017, there is a total of 1 pending litigation case with the Bank as defendant. In this case, the litigation agent of this act is expected to have a high probability of winning the case. At the same time, the Bank does not bear the related risks and losses caused by the loss of the lawsuit, so there is no need to recognize the estimated liabilities.
2. Pledged assets
Item December 31, 2017 December 31, 2016
Repurchase agreement: National bonds—trading financial assets 1,332,975,150.00 Financial bond — available-for-sale financial assets 514,321,914.15 2,551,930,350.00 Financial bonds—held-to-maturity investments 4,351,235,706.48 1,472,926,343.73 Bond — redemptory financial assets for sale 23,247,125,349.00 8,000,000,000.00 Deposit of capital discounted —loans and advance payments 6,624,739,035.69 Commercial draft — redemptory financial assets for sale Borrowing from the central bank: Financial bonds—held-to-maturity investments 210,965,526.37 Deposit of capital discounted —loans and advance payments 192,513,430.56 Credit assets —loans and advance payments 2,191,040,000.00 463,440,692.00 Total 31,829,211,550.19 19,324,001,947.79
216 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
X. Commitments and major off-balance sheet matters
1. Capital commitment
Item December 31, 2017 December 31, 2016
Commitment to purchase long-term assets 255,853,712.77 590,279,194.88 Total 255,853,712.77 590,279,194.88
Note: Long-term assets purchased are mainly houses, software, equipment acquisition and decoration projects.
2. Operating lease commitment
Irrevocable operating lease contract signed by the Bank outward is as follows:
Item December 31, 2017 December 31, 2016
Minimum lease payment of irrevocable operating lease: The 1st year after balance sheet date (including the 1st year) 62,309,264.45 73,562,691.00 The 2nd year after balance sheet date (including the 2nd year) 75,199,995.69 88,788,615.51 The 3rd year after balance sheet date (including the 3rd year) 60,910,120.12 74,224,044.42 Future years 241,249,882.14 300,521,997.18 Total 439,669,262.40 537,097,348.11
3. Off-balance sheet commitments
December 31, 2017 Margins and deposits Amount Ratio of margins Item pledged amount Bank acceptance 12,235,170,544.27 6,866,870,111.23 56.12% Letter of guarantee 1,424,699,953.49 1,140,823,400.18 80.07% Letter of credit 615,497,895.13 356,362,069.66 57.90% Total 14,275,368,392.89 8,364,055,581.07 58.59%
December 31, 2016 Margins and deposits Item Amount Ratio of margins pledged amount Bank acceptance 12,210,915,464.75 8,010,802,366.79 65.60% Letter of guarantee 451,342,499.32 151,342,499.32 33.53% Letter of credit 403,432,340.85 80,705,580.00 20.00% Other credit commitments 200,000,000.00 Total 13,265,690,304.92 8,242,850,446.11 61.67%
217 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Banker's acceptance refers to commercial bill issued by payee or payer (or acceptance applicant), applied by the acceptance applicant to the Bank, and of which commercial bill is accepted upon review by the Bank.
Letter of guarantee refers to credit business provided by the Bank at request by applicant or consignor, the Bank promises by issuing letter of guarantee to perform liabilities or assume responsibilities as agreed in letter of guarantee when the applicant does not apply obligations agreed in contract or promised affairs.
Letter of credit refers to credit business in the form of written guarantee document carrying certain amount and requiring payment in designated place with required vouchers in certain period, the letter is issued to beneficiary by the Bank as required and instructed by the applicant.
Other credit promises mainly refer to credit enhance service provided by the Bank.
4. Entrusted business
(1) Entrusted loan
The Bank's commission loan services refer to loans funded by principals including organizations and individuals, and issued, monitored and assisted in recalling by the Bank on behalf of principals based upon prospective borrower and credit terms determined by principals. The Bank does not assume any credit risk for its commission loan services, and the services are not recognized in balance sheet. The Bank charges service charges on services provided.
Entrusted loans and entrusted capitals of the Bank are as shown below:
218 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item December 31, 2017 December 31, 2016
Entrusted loan 2,786,576,499.38 2,914,494,580.98 Entrusted funds 2,786,576,499.38 2,914,494,580.98
(2) Financial service
The Bank's financial service mainly means the Bank sells financial products to enterprises or individuals to raise funds to invest in bonds, bill assets, trust loans, trust beneficiary right, etc. All risks in connection with financial products are assumed by investors. The Bank charges service charges including financial administrative expense and trustee fee on the service.
Financial service of which risk is assumed by the Bank is presented on the balance sheet, products purchased with financial funds are presented in corresponding assets.
Off-balance sheet financial services of the Bank are as shown below:
Item December 31, 2017 December 31, 2016
Finance products 14,627,522,000.00 13,107,469,000.00
XI. Related parties and related-party transaction
1. Relationship with related party
Association relationship is regarded to be present if one party can control or exert joint control over financial and operation decisions of another party or exert major influence on another party and two or more parties controlled, jointly controlled or significantly influenced by a party constitute related parties. Individuals or enterprise may become an related party.
219 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
2. Cooperative enterprise and associated enterprise
As of December 31, 2017, the Bank has no cooperative enterprise and associated enterprise.
3. Other related parties
Other related parties of the Bank include key management (including directors, supervisors and senior management) and their closely related family members, enterprises can be controlled, jointly controlled or significantly affected by key management and their closely related family members, and main shareholders holding at least 5% shares of the
Company.
On December 31, 2017, main shareholders holding at least 5% shares of the Company include:
Share Name of shareholder Main business proportion (%) Money trust: chattel trust: real estate trust: negotiable securities trust; other property or property right trusts: engage in investment fund operation as initiator of investment fund or fund management company: manage operations including corporate assets reorganization, merger & acquisition and project financing, corporate finance, financial adviser; entrusted to manage securities Chongqing International Trust Inc. 28.996 underwriting operation approved by relevant department of State of Council; handle operations including brokerage, consultation, credit inquiry; custody and safety-deposit box operations; use inherent assets in the mode of deposits with banks, loans at call to other banks, loans, lease and investment; provide guarantee for others with inherent assets; engage in inter-bank borrowing. Above business scope covers RMB and foreign currency businesses. Industrial investment; production, processing: chemical & blended Jiabao Holding Group Co., Ltd. 9.941 fabric, cotton yarn products, deferential chemical fiber; dyeing; distribution: chemical products, nonferrous metals. Development, production, marketing of high and new technology, new process, new product ; development, production, sale of chemical raw materials (except for hazardous articles), building materials, computer software and hardware, electrical and electronic China Sigma Co., Ltd. 6.213 equipment, wire communication equipment, machinery and home appliances: decoration engineering: general merchandise sales: project contracting, technology consultation and information consultation in above scope.
220 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
List of other corporate related parties is as follows:
Business name Relationship to the Bank Social credit code
Hefei Science & Technology Technological Associate of principal shareholder Chongqing 91340100713926874L Rural Commercial Bank Co., Ltd. International Trust Co., Ltd. Enterprise under the control of principal shareholder YIMIN Asset Management Co., Ltd. 91500000781591914M Chongqing International Trust Co., Ltd. Chongqing Chongqing-Fuling Expressway Co., Other enterprises significantly affected by identical 9150000075307715XY Ltd. key management Other enterprises significantly affected by identical Chongqing Road & Bridge Co., Ltd. 9150000020285694X0 key management Tsinghua Tongfang Guoxin Investment Holding Other enterprises significantly affected by identical 91500000660887401L Co., Ltd. key management Other enterprises significantly affected by identical Tongfang Holdings Co., Ltd. 91110000100026793Y key management Tongfang Dingxin Technology Co., Ltd. Associate of Tongfang Co., Ltd. 911101086000159940 Shenzhen Warranty Assets Management Co., Other enterprises controlled by identical key 91440300691179395Y Ltd. management Other enterprises controlled by identical key Chongqing Huapu Investment Co., Ltd. 91500000671048937J management Other enterprises significantly affected by identical Zhejiang Jinggong Energy Technology Co., Ltd. 913301080888961461 key management Other enterprises significantly affected by identical Zhejiang Jiabao New Fiber Group Co., Ltd 913306006995003150 key management Chongqing Lvzhu Real Estate Development Other enterprises significantly affected by identical 9150010158016035X3 Co., Ltd. key management Shanghai Lvzhu Light Energy System Other enterprises significantly affected by identical 913101126972699572 Technology Co., Ltd. key management Other enterprises controlled by identical key Chongqing Jinguan Science (Group) Co., Ltd. 91500000202895076G management Chongqing Jinguan Automobile Manufacture Other enterprises controlled by identical key 915002276219753458 Co., Ltd. management Chongqing Jiulongpo District Zetong Petty Other enterprises significantly affected by identical 91500107091239470K Loan Co., Ltd. key management Other enterprises significantly affected by identical China Sigma Investment Co., Ltd. 91500000668934946C key management Zhejiang Phoenix International Real Estate Co., Other enterprises significantly affected by identical 91330523662878517W Ltd. key management Bank of Chongqing Co., Ltd. Shareholders of significant influences 91500000202869177Y
4. Transactions with related party
Transactions between the Bank and related parties are in accordance with general
commercial terms and normal service procedures, pricing principle is consistent transaction
with independent third party.
221 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
(1) Interest income
Name of related parties 2017 2016
1. Income from loan interest: Chongqing Lvzhu Real Estate Development Co., Ltd. 3,709,241.85 Chongqing Jiulongpo District Zetong Petty Loan Co., Ltd. 4,624,744.89 2,641,819.43 Chongqing Chongqing-Fuling Expressway Co., Ltd. 8,418,312.23
Chongqing Jinguan Automobile Manufacture Co., Ltd. 3,307,633.33 4,044,300.00 Total income loan interest 16,350,690.45 10,395,361.28 2. Income from loan interest of lending funds Chongqing International Trust Inc. 2,058,565.56 3,022,147.21
Total income from loan interest of lending funds 2,058,565.56 3,022,147.21 3. Interest income from available-for-sale financial assets: Chongqing International Trust Co., Ltd. --- trust products 137,546,526.71 55,485,863.28 Bank of Chongqing Co., Ltd.—procurement of financial products 6,170,547.95 Total of interest income from available-for-sale financial assets 143,717,074.66 55,485,863.28
4. Interest income from Investments classified as accounts receivable: Chongqing International Trust Co., Ltd. --- trust products 705,905,008.73 435,392,608.30 Bank of Chongqing Co., Ltd.—priority trust beneficiary right 272,222.22 Zhejiang Jiabao New Fiber Group Co., Ltd.—non-public target debt investment 1,993,333.33 instrument Chongqing Jiulongpo District Zetong Petty Loan Co., Ltd.—target debt 668,861.11 financing instrument Total of interest income from Investments classified as accounts receivable 708,839,425.39 435,392,608.30
1) Trading details on loan and advance payment issued to Chongqing
Chongqing-Fuling Expressway Co., Ltd. by the Bank are shown below:
Transaction Interest income Business name Starting date Maturity date amount of 2017
Chongqing Chongqing-Fuling Expressway Co., Ltd. 500,000,000.00 2017-3-3 2017-3-14 840,277.78 Chongqing Chongqing-Fuling Expressway Co., Ltd. 200,000,000.00 2017-5-3 2017-5-23 611,111.11 Chongqing Chongqing-Fuling Expressway Co., Ltd. 700,000,000.00 2017-7-24 2017-7-31 748,611.11 Chongqing Chongqing-Fuling Expressway Co., Ltd. 700,000,000.00 2017-8-8 2017-8-21 550,256.67 Chongqing Chongqing-Fuling Expressway Co., Ltd. 700,000,000.00 2017-11-1 2017-11-28 2,887,500.00 Chongqing Chongqing-Fuling Expressway Co., Ltd. 700,000,000.00 2017-12-1 2017-12-27 2,780,555.56
222 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
2) Trading details on lending funds of the Bank to Chongqing International Trust Co.,
Ltd. are shown below:
Business name Transaction amount Starting date Maturity date Interest income of 2017
Chongqing International Trust Inc. 1,100,000,000.00 2016-12-30 2017-1-6 260,608.33 Chongqing International Trust Inc. 500,000,000.00 2017-1-18 2017-1-19 38,194.44 Chongqing International Trust Inc. 100,000,000.00 2017-1-18 2017-1-20 16,666.67 Chongqing International Trust Inc. 300,000,000.00 2017-3-29 2017-4-5 192,500.00 Chongqing International Trust Inc. 560,000,000.00 2017-4-27 2017-4-28 47,584.44 Chongqing International Trust Inc. 200,000,000.00 2017-4-28 2017-5-5 121,345.00 Chongqing International Trust Inc. 500,000,000.00 2017-6-29 2017-7-6 379,166.67 Chongqing International Trust Inc. 1,100,000,000.00 2017-12-1 2017-12-4 302,500.00 Chongqing International Trust Inc. 450,000,000.00 2017-12-7 2017-12-14 350,000.00 Chongqing International Trust Inc. 700,000,000.00 2017-12-29 2018-1-3 175,000.00 Chongqing International Trust Inc. 700,000,000.00 2017-12-29 2018-1-3 175,000.00
3) Trading details on trust products included into available-for-sale financial assets issued by Chongqing International Trust Co., Ltd. invested by the Bank are shown below:
Transaction Starting Maturity Interest income Direct counterparty Transaction structure amount date date of 2017 Trust products issued by Hengfeng Bank Co., investment related party of 160,000,000.00 2016-10-17 2017-11-30 7,613,369.86 Ltd. bank financial products Trust products issued by Hengfeng Bank Co., investment related party of 1,100,000,000.00 2016-10-19 2017-12-5 53,125,479.45 Ltd. bank financial products Trust products issued by Hengfeng Bank Co., investment related party of 940,000,000.00 2016-10-19 2017-12-8 45,799,890.41 Ltd. bank financial products Trust products issued by Hengfeng Bank Co., investment related party of 1,000,000,000.00 2016-10-19 2017-12-6 30,630,136.99 Ltd. bank financial products Chongqing Trust products issued by International Trust direct investment related 4,550,000.00 2015-6-19 2017-6-19 377,650.00 Inc. party
4) Trading details on non-guaranteed financial products included into available-for-sale financial assets issued by Bank of Chongqing Co., Ltd. invested by the Bank are shown below:
223 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Product Name Transaction amount Starting date Maturity date Interest income of 2017
Changjiang Juli 2017 No. 37 500,000,000.00 2017-4-19 2017-7-19 6,170,547.95
5) Trading details of asset-backed securities included into investments classified as accounts receivable sponsored by Bank of Chongqing Co., Ltd. invested by the Bank are shown below:
Interest income of Product Name Transaction amount Starting date Maturity date 2017 "Bank of Chongqing-Ping'an Trust Juli No. 6 credit asset property right trust" 350,000,000.00 2017-12-27 2022-6-30 272,222.22 priority grade A beneficiary right
6) Trading details on trust products included into investments classified as accounts receivable issued Chongqing International Trust Co., Ltd. invested by the Bank are shown below:
Transaction Maturity Interest income Direct counterparty Transaction structure Starting date amount date of 2017 Chongqing Trust products issued by International Trust direct investment related 220,000,000.00 2014-8-4 2017-8-4 635,950.34 Inc. party Chongqing Trust products issued by International Trust direct investment related 500,000,000.00 2016-11-21 2019-11-20 27,500,000.00 Inc. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 25,000,000.00 2016-11-22 2017-11-10 1,073,487.44 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 25,000,000.00 2016-11-22 2018-5-10 1,325,000.00 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 290,000,000.00 2016-11-22 2021-9-19 15,950,000.00 Holding Co., Ltd. party Chongqing Trust products held by Chongqing-Fuling directly transferred related 240,500,000.00 2016-12-2 2017-10-29 3,718,854.79 Expressway Co., party Ltd. Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 300,000,000.00 2016-12-2 2018-9-18 15,901,191.07 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 158,370,000.00 2016-1-22 2017-6-19 9,277,923.81 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 58,000,000.00 2017-4-28 2017-10-29 8,739.73 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 1,063,000,000.00 2017-1-18 2018-12-20 53,835,044.44 Holding Co., Ltd. party
224 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Transaction Maturity Interest income Direct counterparty Transaction structure Starting date amount date of 2017 Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 13,060,000.00 2017-6-29 2019-6-2 363,140.56 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 1,500,000,000.00 2017-1-19 2018-2-10 76,805,041.20 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 110,000,000.00 2017-4-28 2018-6-15 4,083,750.00 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 150,000,000.00 2017-4-28 2019-4-29 5,568,750.00 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 12,000,000.00 2017-7-28 2019-6-13 282,333.33 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 200,000,000.00 2017-4-28 2019-1-3 7,436,176.79 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 10,000,000.00 2017-6-29 2018-6-15 278,055.56 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 100,000,000.00 2017-4-28 2017-11-22 3,134,246.58 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 72,000,000.00 2017-4-28 2018-3-30 2,673,000.00 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 249,000,000.00 2017-3-21 2018-12-1 10,300,991.67 Holding Co., Ltd. party Tsinghua Tongfang Trust products held by Guoxin Investment directly transferred related 200,000,000.00 2017-3-21 2017-11-26 4,588,493.14 Holding Co., Ltd. party Trust products issued by Southwest investment related party 400,000,000.00 2016-10-17 2017-9-28 12,819,222.38 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 390,000,000.00 2016-10-11 2021-9-19 21,312,700.65 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 1,500,000,000.00 2016-10-21 2019-10-21 80,976,019.40 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 1,497,000,000.00 2016-10-21 2019-10-21 81,439,972.84 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 1,283,000,000.00 2016-10-21 2019-10-21 69,797,919.28 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 858,800,000.00 2016-11-8 2019-10-21 20,444,562.89 Securities Co., Ltd. through assets management plan
225 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Transaction Maturity Interest income Direct counterparty Transaction structure Starting date amount date of 2017 Trust products issued by Southwest investment related party 1,200,000,000.00 2016-11-21 2017-4-28 17,139,342.46 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 150,000,000.00 2016-11-22 2019-6-13 8,160,000.00 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 30,000,000.00 2016-11-22 2018-6-13 1,572,000.00 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 1,240,000,000.00 2016-11-21 2017-4-20 19,656,651.76 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 260,000,000.00 2016-11-21 2017-4-20 4,121,556.01 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 450,000,000.00 2016-11-22 2024-4-25 24,480,000.00 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 30,000,000.00 2016-11-22 2017-12-13 1,406,451.38 Securities Co., Ltd. through assets management plan Trust products issued by Southwest investment related party 20,000,000.00 2016-11-22 2017-6-13 397,581.27 Securities Co., Ltd. through assets management plan Trust product issued by Tebon Securities related party held by third 1,000,000,000.00 2015-11-20 2017-6-12 21,304,634.70 Co., Ltd. parties through assets management plan Trust products held by Tebon Securities related party through 600,000,000.00 2015-12-18 2017-12-17 27,987,333.33 Co., Ltd. assets management plan Trust products held by Tebon Securities related party through 600,000,000.00 2015-12-14 2017-12-15 38,065,109.59 Co., Ltd. assets management plan Trust product issued by Hengfeng Bank Co., related party held by third 400,000,000.00 2015-1-15 2017-3-21 -14,700,000.00 Ltd. parties Trust product issued by Hengfeng Bank Co., related party held by third 230,000,000.00 2015-1-14 2018-1-14 24,783,780.34 Ltd. parties
7) Trading details on trust products transferred to the related party by the Bank are shown below:
226 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Transaction Assignment Name of Transferee Product Name amount date Transfer of part beneficiary right of "Chongqing Trust*Xinli Tsinghua Tongfang No. 16 single money trust plan" under "Southwest Guoxin Investment 30,000,000.00 2017-8-29 Securities Hulitong No.6 targeted capital management No. Holding Co., Ltd. 2016001" Chongqing Transfer of trust beneficiary right of "Chongqing Chongqing-Fuling 240,500,000.00 2017-10-29 Trust*Hengrui No. 2 collective capital trust plan" Expressway Co., Ltd. Tsinghua Tongfang Transfer of trust beneficiary right of "Chongqing Guoxin Investment 58,000,000.00 2017-10-29 Trust*Hengrui No. 2 collective capital trust plan" Holding Co., Ltd.
8) Trading details on trust product issued by Chongqing International Trust Co., Ltd. which is a direct procurement related party of the non-guaranteed financial product issued by the Bank:
Transaction Starting Maturity Transaction structure Product Name amount date date Trust products issued by Chongqing Trust * Huying No. 1 direct investment related 450,100,000.00 2016-4-6 2016-12-23 collective capital trust plan (No. 5 and 6) party of financial capital Trust products issued by Chongqing Trust * Yongquan Win-Win direct investment related 500,000,000.00 2017-3-31 2017-11-24 No. 3 collective trust plan party of financial capital
9) Trading details of tier II capital bonds issued by procurement related parties of non-guaranteed financial products issued by the Bank are shown below:
Transaction Starting Maturity Transaction structure Product Name amount date date Tier II capital bond issued by investment Tier II capital bond of Hefei related party through assets Science & Technology Rural 270,000,000.00 2016-11-15 2021-11-15 management plan of financial capital Commercial Bank in 2016
(2) Interest expense
Name of related parties 2017 2016
1. Interest expenses on deposits from customers Tsinghua Tongfang Guoxin Investment Holding Co., Ltd. 1,559,180.83 4,728,537.02 Chongqing Road & Bridge Co., Ltd. 413,317.94 1,380,623.82 Chongqing Chongqing-Fuling Expressway Co., Ltd. 684,724.39 1,559,238.29
Zhejiang Jinggong Energy Technology Co., Ltd. 680,269.14
Tongfang Holdings Co., Ltd. 203,377.97 26,808.66 Shanghai Lvzhu Light Energy System Technology Co., Ltd. 182,406.59
227 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Name of related parties 2017 2016
Other related parties 297,093.19 174,758.48 Total 4,020,370.05 7,869,966.27 2. Interest expenses on deposits with banks Chongqing International Trust Inc. 10,155,067.01 16,227,635.65 Hefei Science & Technology Technological Rural Commercial Bank Co., Ltd. 3,728,219.18 Bank of Chongqing Co., Ltd. 10.53
Total of interest expenses on deposits with banks 10,155,077.54 19,955,854.83
(3) Income from service charges and commission
Name of related parties Income type 2017 2016
Chongqing International Trust Inc. Carrying cost 12,681,146.19 999,269.94 Hefei Science & Technology Technological Service charges for non-guaranteed 8,106,415.10 3,647,937.06 Rural Commercial Bank Co., Ltd. financial products (note 1) Shanghai Lvzhu Light Energy System Service charges for non-guaranteed 329,354.79 Technology Co., Ltd. financial products (note 2) Zhejiang Jinggong Energy Technology Co., Ltd. Service charges for bank acceptance 16,805.47 Chongqing Jinguan Automobile Manufacture Service charges for bank acceptance 14,947.81 Co., Ltd. Shanghai Lvzhu Light Energy System Service charges for bank acceptance 23,506.70 Technology Co., Ltd. Tsinghua Tongfang Guoxin Investment Holding Service charges for entrusted loans 100,000.00 Co., Ltd. Total income from service charges and 21,155,370.59 4,764,012.47 commission
Note 1: The service charges for non-guaranteed financial products refer to funds raised by non-guaranteed financial products issued by the Bank, the funds come from Hefei
Science & Technology Technological Rural Commercial Bank Co., Ltd., details as below:
Starting Maturity Product Name Transaction amount Fee and commission income of 2017 date date Reservoir income creation 2015-7-24 2017-3-10 612,000,000.00 2,540,377.36 No.106 Phase I Reservoir income creation 2016-7-27 2017-7-27 500,000,000.00 5,566,037.74 No.133 Phase I Total 1,112,000,000.00 8,106,415.10
Note 2: The service charges for non-guaranteed financial products refer to funds raised by non-guaranteed financial products issued by the Bank, the funds come from Shanghai
Lvzhu Light Energy System Technology Co., Ltd.
228 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
(4) Related lease
Name of related parties 2017 2016
Chongqing International Trust Inc. 7,410,068.20 7,410,068.19 Total 7,410,068.20 7,410,068.19
During March 2008 to May 2015, office location of the Bank's head office was No.107,
Minquan Road, Yuzhong District, the office occupancy leased belonged to Chongqing
International Trust Co., Ltd., covering a leased area of 5,607.29 m2; in June 2015, the Bank's head office moved to No.99, Huichuanmen Road, Jiangbeicheng, Jiangbei District,
Chongqing, the business occupancy was still used by Yuzhong Sub-branch, the leased area decreased to 1,521.80 m2, lease term was from June 2015 to May 2018, the rent was paid quarterly.
(5) Goods purchased and labor services received
Name of related parties Content of connected transactions 2017 2016
Tongfang Co., Ltd. (note 1) Procurement of 200 desktop computers 545,500.00 Consultation services for consulting and planning Tongfang Co., Ltd. (note 2) 560,000.00 design project of Xiyong Cloud Data Center Labor outsource service of person month Tongfang Dingxin Technology procurement project of Three Gorges Payment 244,518.18 Co., Ltd. (note 3) Internet Financial Platform Total 1,350,018.18
Note 1: On September 15, 2017, the Bank signed a desktop computer purchase and sales contract with Tongfang Co., Ltd., with a contract amount of RMB 545,500.00 yuan, which shall be paid in two times. As of December 31, 2017, the Company has paid the amount in full, and the purchased assets have been included in the item of fixed assets.
Note 2: In September 2017, the Bank and Tongfang Co., Ltd. signed the Contract on
229 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
consultation services for consulting and planning design project of Xiyong Cloud Data
Center, agreeing that the main works and deliveries of the project shall be completed before
December 31, 2017. For the follow-up assistance to the Bank to complete the relocation of data center, the total price of service charges agreed in the Contract is RMB 2.8 million yuan.
As of December 31, 2017, the consulting planning design of the project has not been completed because of the change of schedule. It is estimated to be completed before June
2018. The service charges prepaid by the Bank shall be RMB 560,000 yuan, which shall be included in the current business and management fee.
Note 3: In July 2017, the Bank and Tongfang Dingxin Technology Co., Ltd. signed the
Contract on labor outsource service of person month procurement project of Three Gorges
Payment Internet Financial Platform.The period of the agreement is one year, this contract is a framework technology contract for settlement on a monthly basis, The amount of the contract is based on the amount of work finally confirmed by both parties. As of December
31, 2017, the Bank has paid service charges of RMB 244,518.18 yuan, which has been included in intangible assets computer software
(6) Other connected transaction
Instructions on entrusting to purchase Jiazhou headquarters building customized by
Zhongyu Real Estate from Tongfang Guoxin International Holdings Co., Ltd., other enterprise significantly affected by identical key management:
In December 2014, the 25th meeting of the 1st Board of Directors deliberated and approved Proposal on Purchasing Office Building at Head Office of Chongqing Three
230 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Gorges Bank Co., Ltd. In April 2015, 2014 Annual Shareholder's General Meeting deliberated and approved Proposal on Investing in and Purchasing Office Building at Head
Office of Chongqing Three Gorges Bank Co., Ltd.
On December 31, 2014, the Bank signed cooperative intention agreement of house purchase with Tongfang Guoxin International Holdings Co., Ltd., both parties agreed to purchase nearly 50% of 4# Building in 4# Parcel of Zhongyu International Metropolis in
Jiazhou Business District, which was entrusted to be built-to-suit by Zhongyu Real Estate from Tongfang Guoxin International Holdings Co., Ltd. Floor area of the houses purchased was nearly 86,479 m2, price per m2 was no more than RMB 13,000, and total purchase price was no more than RMB 1.125 billion.
On June 8, 2015, the Bank signed Entrusted Purchase Agreement of Custom-made
Office Building with Tongfang Guoxin International Holdings Co., Ltd., property area was
87,073 m2, the property was priced as per floor classification, the total price was nearly
RMB 1,132,439,720 yuan. The Bank entrusted Tongfang Guoxin International Holdings Co.,
Ltd. to handle payment of property cost and management of property project construction, including project functional demands, engineering quality, progress, organization and coordination and capital payment. As the project completed meets pre-sale and property certificate handling conditions of Zhongyu Real Estate, the Bank will sign housing purchase and sale contract with Zhongyu Real Estate additionally, and handle affairs in connection with housing property. Zhongyu Real Estate will issue house purchase invoice and handle housing-ownership certificate to the Bank within 90 workdays upon project completion
231 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
delivery and filing.
As of December 31, 2017, comprehensive acceptance (filing) of the house and delivery to the bank has not been completed. The Bank has already paid house payment RMB
1,019,195,718.00 yuan for another to Tongfang Guoxin International Holdings Co., Ltd., the payment was included in the account of other assets - other non-current assets.
(7) Connected transactions with key management
Key management of the Bank includes directors, supervisors and senior management.
The Bank conducts normal banking transactions with key management during day-to-day business. The Bank did not conduct any significant transaction or individually significant transaction with key management during 2017. Payroll of key management accrued by the
Bank in this year has no significant effect on 2017 annual financial statements of the Bank.
5. Outstanding amount of related-party transaction
(1) Loans and advance payments
Name of related parties December 31, 2017 December 31, 2016
Chongqing Jiulongpo District Zetong Petty Loan Co., Ltd. 60,000,000.00 Chongqing Jinguan Automobile Manufacture Co., Ltd. 40,000,000.00 60,000,000.00 Total 40,000,000.00 120,000,000.00
(2) Deposits from customers
Name of related parties December 31, 2017 December 31, 2016
Tsinghua Tongfang Guoxin Investment Holding Co., Ltd. 291,732,948.95 715,632,968.33 Chongqing Road & Bridge Co., Ltd. 251,381,074.20 1,000,347.36 Tongfang Holdings Co., Ltd. 200,205,223.03 847,200,000.00 Shanghai Lvzhu Light Energy System Technology Co., Ltd. 167,866,430.72
232 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Name of related parties December 31, 2017 December 31, 2016
Other related parties 99,544,142.79 77,188,035.72 Total 1,010,729,819.69 1,641,021,351.41
(3) Lending funds
Name of related parties December 31, 2017 December 31, 2016
Chongqing International Trust Inc. 1,400,000,000.00 1,100,000,000.00
(4) Deposits with banks
Name of related parties December 31, 2017 December 31, 2016
Chongqing International Trust Inc. 1,226,735,601.95 1,974,338,447.03 Bank of Chongqing Co., Ltd. 1,142.79 Total 1,226,736,744.74 1,974,338,447.03
(5) Available-for-sale financial assets
Types of Name of related parties December 31, 2017 December 31, 2016 investment
Chongqing International Trust Inc. Trust products 3,204,550,000.00
(6) Investments classified as accounts receivable
Name of related parties Types of investment December 31, 2017 December 31, 2016
Chongqing International Trust Inc. Trust products 8,951,336,000.00 13,896,090,000.00 Priority trust Bank of Chongqing Co., Ltd. 350,000,000.00 beneficiary right Non-public target Zhejiang Jiabao New Fiber Group Co., Ltd debt investment 120,000,000.00 instrument Target debt Chongqing Jiulongpo District Zetong Petty Loan Co., Ltd. 55,000,000.00 financing instrument Total 9,476,336,000.00 13,896,090,000.00
233 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
(7) The Bank's financial products invested by related party
Name of related parties December 31, 2017 December 31, 2016
Hefei Science & Technology Technological Rural Commercial Bank Co., Ltd. 1,112,000,000.00 Shanghai Lvzhu Light Energy System Technology Co., Ltd. 100,000,000.00 Total 100,000,000.00 1,112,000,000.00
Note: Hefei Science & Technology Technological Rural Commercial Bank Co., Ltd. and Shanghai Lvzhu Light Energy System Technology Co., Ltd. invest in the non-guaranteed financial products issued by the Bank.
(8) Banker's acceptance
Name of related parties December 31, 2017 December 31, 2016
Zhejiang Jinggong Energy Technology Co., Ltd. 25,000,000.00 Chongqing Jinguan Automobile Manufacture Co., Ltd. 29,895,610.00 Shanghai Lvzhu Light Energy System Technology Co., Ltd. 47,013,376.21 Total 76,908,986.21 25,000,000.00
XII. Financial risk management
The Bank's financial risk management aims to optimize capital allocation and maximize shareholders' interest in acceptable scope of risk while meeting requirements proposed by regulation department, depositor and other shareholders for robust operation of the Bank.
The Bank analyzes, verifies, monitors and reports risk conditions by developing risk management policies, setting proper risk quota and control procedure and applying relevant information system. In addition, the Bank checks its risk management policies and relevant systems, so as to reflect recent changes in market, product and the industry.
234 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Financial risks confronted by the Bank mainly include credit risk, market risks and liquidity risk. Market risks include exchange rate risk and interest rate risk.
1. Credit risk
Credit risk refers to risk of bearing financial loss as customer or counterparty fails to perform obligations. Credit risk is one of the most significant risks confronted by business operation of the Bank.
Credit risk is the risk of breach of contract by counterparty or debt default. Credit risk increases when all counterparties are intensively distributed in a single industry or area. This is because loan repayment capacity is finally affected as different counterparties may be affected by identical economic development since they are in the same area or industry.
When a certain number of customers are engaged in the same operating activity, or in the same geographic position, or their performance capabilities will be affected by the same economic change as corresponding industry has similar economic characteristics.
Concentration degree of credit risk reflects the Bank's sensitivity to a specific industry or geological location.
The Bank has established a credit quality evaluation system, it defines credit line as per risk level of the borrower or counterparty, and decides required collateral value or guarantee level. Relevant risk evaluation processes include links of customer investigation, risk rating, credit line approval, loan review and post-loan monitoring. Risk evaluation will be completed on a regular basis to ensure that the Bank can monitor potential risks timely and
235 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
adopt proper risk avoidance measures. In addition, the Bank provides guarantee for customers, and reduces risks by applying identical risk control procedures and policies.
(1) Regardless of available collaterals or other credit enhancement, typical amount of maximum credit risk exposure at the balance sheet date is presented as follows:
Item December 31, 2017 December 31, 2016
Credit risk exposure in connection with on-balance items is as follows: Cash and deposits with central bank 19,499,021,920.33 25,676,786,609.79 Deposits with banks and other financial institutions 951,962,475.81 5,288,233,482.27 Lending fund 3,259,610,280.00 1,641,622,000.00 Financial assets at fair valuethrough current profit and loss 11,551,764,690.00 925,515,900.00 Financial assets held under resale agreements 28,304,305,258.60 15,288,772,833.22 Interests receivable 1,057,782,799.43 950,261,244.80 Loans and advance payments 43,222,816,325.45 37,477,748,560.21 Available-for-sale financial assets 23,138,419,739.64 27,942,658,619.56 Held-to-maturity investment 16,989,480,633.07 12,437,042,862.56 Investments classified as accounts receivable 51,989,288,648.22 51,962,745,219.21 Other Assets 38,279,644.37 17,470,077.83 Sub-total of on-balance credit risk exposure 200,002,732,414.92 179,608,857,409.45 Credit risk exposure in connection with off-balance sheet items is as follows: Banker's acceptance, letter of guarantee and letter of credit 14,275,368,392.89 13,065,690,304.92 Other credit commitments 200,000,000.00 Sub-total of off-balance sheet credit risk exposure 14,275,368,392.89 13,265,690,304.92 Total of credit risk exposure 214,278,100,807.81 192,874,547,714.37
(2) Credit quality information of financial assets.
① Credit quality conditions of various assets with credit risks
Deposits with central bank, deposits with banks, lending funds, financial assets measured at fair value through current profit and loss, redemptory financial assets for sale and held-to-maturity investments are all neither overdue nor impaired.
236 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Impairment and expiration of interest receivable, loans and advance payments, available-for-sale financial assets, investment classified as receivables and other financial assets are presented as follows:
December 31, 2017
Financial assets Overdue but not Impaired Depreciation Item not overdue and impaired Total financial assets reserves not impaired financial assets Interests receivable 1,033,849,152.05 25,759,377.30 1,825,729.92 1,057,782,799.43 Loans and advance 42,516,110,396.32 1,208,013,873.44 622,918,178.84 1,124,226,123.15 43,222,816,325.45 payments Available-for-sale 23,138,591,724.64 50,000.00 221,985.00 23,138,419,739.64 financial assets Investments classified 52,329,836,749.01 430,000,000.00 770,548,100.79 51,989,288,648.22 as accounts receivable Other assets 31,216,850.18 6,118,373.52 13,256,760.82 12,312,340.15 38,279,644.37
Sub-total 119,049,604,872.20 1,239,891,624.26 1,066,224,939.66 1,909,134,279.01 119,446,587,157.11
December 31, 2016
Financial assets Overdue but not Impaired Depreciation Item not overdue and impaired Total financial assets reserves not impaired financial assets Interests receivable 949,904,971.01 1,238,243.28 881,969.49 950,261,244.80 Loans and advance 37,921,438,776.53 176,842,364.50 356,140,532.16 976,673,112.98 37,477,748,560.21 payments Available-for-sale 27,950,158,619.56 50,000.00 7,550,000.00 27,942,658,619.56 financial assets Investments classified 52,610,292,154.21 647,546,935.00 51,962,745,219.21 as accounts receivable Other assets 16,813,829.52 34,600.00 10,824,883.81 10,203,235.50 17,470,077.83
Sub-total 119,448,608,350.83 178,115,207.78 367,015,415.97 1,642,855,252.97 118,350,883,721.61
② Credit risk of loans and advance payments
Not overdue but not impaired
Item December 31, 2017 December 31, 2016
Corporate loan Including: normal 29,310,434,383.42 27,560,499,071.95 Special-mentioned 1,052,584,784.29 1,584,265,106.15 Sub-total 30,363,019,167.71 29,144,764,178.10 Personal loan
237 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item December 31, 2017 December 31, 2016
Including: normal 12,064,837,023.00 8,694,341,649.37 Special-mentioned 88,254,205.61 82,332,949.06 Sub-total 12,153,091,228.61 8,776,674,598.43 Total 42,516,110,396.32 37,921,438,776.53 Minus: loan impairment reserves 743,936,893.95 835,849,256.61 Net amount 41,772,173,502.37 37,085,589,519.92
a) Overdue but not impaired loans
Item December 31, 2017 December 31, 2016
Up to 3 months 986,717,722.77 170,642,364.50 3 months to 6 months 131,585,961.53 1,500,000.00 6 months to 1 year 79,710,189.14 4,700,000.00 Over 1 year 10,000,000.00 Total 1,208,013,873.44 176,842,364.50 Minus: loan impairment reserves 75,370,101.26 7,824,825.77 Net amount 1,132,643,772.18 169,017,538.73
b) Impaired loans
Item December 31, 2017 December 31, 2016
Fiduciary loan 1,456,406.85 743,445.95 Guaranteed loan 451,329,257.09 285,972,653.58 Mortgage loan 149,230,014.90 69,424,432.63 Pledge loan 20,902,500.00 Total 622,918,178.84 356,140,532.16 Minus: loan impairment reserves 304,919,127.94 132,999,030.60 Net amount 317,999,050.90 223,141,501.56
238 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
③ Securities investment
December 31, 2017
Financial assets at fair Investments Available-for-sale Held-to-maturity Item valuethrough current profit classified as financial assets investment and loss accounts receivable RMB bonds: Including: AAA- to AAA+ 4,037,651,450.00 7,501,602,182.00 13,307,349,365.24 AA- to AA+ 7,343,097,660.00 6,428,938,480.00 3,682,131,267.83 A- to A+ 171,015,580.00 Unrated 8,090,326,807.00 Finance products 500,000,000.00 Non-public target debt 10,035,699,912.72 investment instrument Target debt financing 7,215,598,730.85 instrument Trust products 5,281,465,695.64 7,868,065,281.73 Asset management plan 3,199,000,000.00 19,550,146,016.71 Equities 227,335,367.00 Total 11,551,764,690.00 23,138,341,724.64 16,989,480,633.07 52,759,836,749.01
December 31, 2016
Financial assets at fair Investments Available-for-sale Held-to-maturity Item valuethrough current profit classified as financial assets investment and loss accounts receivable RMB bonds: Including: AAA- to AAA+ 481,591,000.00 8,299,765,002.00 10,615,402,874.19 AA- to AA+ 443,924,900.00 7,358,450,450.00 1,821,639,988.37 A- to A+ 1,687,632,667.56 Unrated 1,035,230,500.00 6,639,976,572.98 Finance products 5,517,280,000.00 Trust products 4,550,000.00 4,717,284,135.74 Asset management plan 4,047,000,000.00 41,253,031,445.49 Total 925,515,900.00 27,949,908,619.56 12,437,042,862.56 52,610,292,154.21
2. Market risks (including exchange rate risk and interest rate risk)
The Bank assumes market risk of loss on the Bank's on-and off-balance sheet operations due to adverse change in market price (interest rate, exchange rate, creditors'
239 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
investment). As general market changes or specific changes have effects on interest rate and bank note transaction exposure cash, market risk may affects all financial products sensitive to market risk including loans, deposits, loans at call and bond investment.
(1) Exchange rate risk management
The Bank continuously improve risk management of its foreign exchange operations and enhance management capability by perfecting foreign exchange business operation, intensifying foreign exchange transaction authorization and approval system, and applying strict exposure cash management to foreign exchange transaction and loans at call quota in foreign currency. Currency mismatch is reduced to the maximum by arranging and applying sources of foreign currency funds in a reasonable manner.
Closing risk exposure distribution of rate in foreign money is summarized as follows.
Book value of assets and liabilities in original currency has been converted into amount in
RMB.
As of December 31, 2017:
USD converted Other currencies Item CNY Total into RMB converted into RMB
Assets: Cash and deposits with central bank 19,459,438,875.58 36,899,934.24 2,683,110.51 19,499,021,920.33 Deposits in other banks 485,712,454.56 382,310,302.82 83,939,718.43 951,962,475.81 Lending fund 2,780,000,000.00 479,610,280.00 3,259,610,280.00 Financial assets at fair valuethrough 11,551,764,690.00 11,551,764,690.00 current profit and loss Financial assets held under resale 28,304,305,258.60 28,304,305,258.60 agreements Interests receivable 1,047,043,205.55 10,548,858.22 190,735.66 1,057,782,799.43 Loans and advance payments 42,892,763,585.14 302,832,608.49 27,220,131.82 43,222,816,325.45 Available-for-sale financial assets 23,138,419,739.64 23,138,419,739.64 Held-to-maturity investment 16,989,480,633.07 16,989,480,633.07 Investments classified as accounts 51,989,288,648.22 51,989,288,648.22 receivable
240 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
USD converted Other currencies Item CNY Total into RMB converted into RMB
Other assets 38,279,644.37 38,279,644.37 Total of assets 198,676,496,734.73 1,212,201,983.77 114,033,696.42 200,002,732,414.92 Liabilities: Borrowing from the central bank 1,398,200,000.00 1,398,200,000.00 Deposits from banks and other 9,390,983,356.57 9,390,983,356.57 financial institutions Loans from other banks and other 0.00 330,123,119.83 12,734,260.00 342,857,379.83 financial institutions Financial assets sold under 29,497,767,947.53 29,497,767,947.53 repurchase agreements Deposits from customers 122,976,916,651.85 729,216,758.17 94,033,489.75 123,800,166,899.77 Interests payable 1,123,251,708.29 8,288,856.05 29,712.48 1,131,570,276.82 Bonds payable 22,440,383,061.05 22,440,383,061.05 Other liabilities 358,355,795.12 358,355,795.12 Total of liabilities 187,185,858,520.41 1,067,628,734.05 106,797,462.23 188,360,284,716.69 Net amount of asset-liability 11,490,638,214.32 144,573,249.72 7,236,234.19 11,642,447,698.23 exposure
As of December 31, 2016:
USD converted Other currencies Item CNY Total into RMB converted into RMB
Assets: Cash and deposits with central bank 25,671,467,907.34 4,640,103.80 678,598.65 25,676,786,609.79 Deposits in other banks 5,243,559,373.88 42,405,479.42 2,268,628.97 5,288,233,482.27 Lending fund 1,600,000,000.00 41,622,000.00 1,641,622,000.00 Financial assets at fair valuethrough 925,515,900.00 925,515,900.00 current profit and loss Financial assets held under resale 15,288,772,833.22 15,288,772,833.22 agreements Interests receivable 946,438,520.09 636,164.32 3,186,560.39 950,261,244.80 Loans and advance payments 37,256,691,898.40 188,901,358.21 32,155,303.60 37,477,748,560.21 Available-for-sale financial assets 27,942,658,619.56 27,942,658,619.56 Held-to-maturity investment 12,437,042,862.56 12,437,042,862.56 Investments classified as accounts 51,962,745,219.21 51,962,745,219.21 receivable Other assrts 17,470,077.83 17,470,077.83 Total of assets 179,292,363,212.09 278,205,105.75 38,289,091.61 179,608,857,409.45 Liabilities: Borrowing from the central bank 500,000,000.00 500,000,000.00 Deposits from banks and other 14,619,981,461.54 14,619,981,461.54 financial institutions
241 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
USD converted Other currencies Item CNY Total into RMB converted into RMB Loans from other banks and other 45,506,076.25 32,151,251.41 77,657,327.66 financial institutions Financial assets sold under 18,178,661,300.69 18,178,661,300.69 repurchase agreements Deposits from customers 122,087,198,249.83 75,794,088.28 879,848.72 122,163,872,186.83 Interests payable 846,886,854.83 373,396.51 4,345.00 847,264,596.34 Bonds payable 11,628,102,295.19 11,628,102,295.19 Other liabilities 216,873,057.89 216,873,057.89 Total of liabilities 168,077,703,219.97 121,673,561.04 33,035,445.13 168,232,412,226.14 Net amount of asset-liability 11,214,659,992.12 156,531,544.71 5,253,646.48 11,376,445,183.31 exposure
(2) Interest rate risk management
Interest rate risk refers to risk of financial situation being affected by adverse change in interest rate level. Interest rate risk of banking business is inherent risk of manage operations of the Bank, factors arising interest rate risk include time difference at contract expiry date, or reset interest rate of assets and liabilities. However, interest rate risk held for transaction purpose mainly comes from investment portfolio of capital business. The Bank's interest rate risk is subject to unified control by the head office.
Repricing or maturity date (the earlier) of the Bank's financial assets and financial liabilities at each balance sheet date is as follows:
242 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
December 31, 2017
Item up to 3 months 3 months to 1 year 1 year to 5 years Over 5 years Overdue/non-accrual Amount Asset items: Cash and deposits with central bank 19,250,851,117.78 248,170,802.55 19,499,021,920.33 Deposits in other banks 880,086,275.81 71,876,200.00 951,962,475.81 Lending fund 3,174,665,680.00 84,944,600.00 3,259,610,280.00 Financial assets at fair valuethrough 597,426,300.00 9,045,588,350.00 1,908,750,040.00 11,551,764,690.00 current profit and loss Financial assets held under resale 28,304,305,258.60 28,304,305,258.60 agreements Interests receivable 1,057,782,799.43 1,057,782,799.43 Loans and advance payments 16,938,285,994.16 6,415,131,216.36 16,654,820,548.93 1,772,108,436.71 1,442,470,129.29 43,222,816,325.45 Available-for-sale financial assets 1,846,798,642.00 8,404,611,620.00 5,996,602,710.00 6,651,527,690.00 238,879,077.64 23,138,419,739.64 Held-to-maturity financial assets 720,502,880.52 10,263,950,530.92 6,005,027,221.63 16,989,480,633.07 Investments classified as accounts 905,894,646.61 12,188,251,938.62 33,117,012,728.58 5,778,129,334.41 51,989,288,648.22 receivable Other assets 38,279,644.37 38,279,644.37 Total of assets 71,898,313,914.96 36,930,906,805.50 67,941,136,558.43 20,206,792,682.75 3,025,582,453.28 200,002,732,414.92 Liability items Borrowing from the central bank 1,398,200,000.00 1,398,200,000.00 Deposits with banks 1,881,983,356.57 1,175,000,000.00 6,334,000,000.00 9,390,983,356.57 Loans from other banks and other financial 257,912,779.83 84,944,600.00 342,857,379.83 institutions Financial assets sold under repurchase 29,497,767,947.53 29,497,767,947.53 agreements Deposits from customers 62,864,773,381.38 18,576,999,945.47 42,299,017,809.64 545,050.00 58,830,713.28 123,800,166,899.77 Interests payable 1,131,570,276.82 1,131,570,276.82 Bonds payable 4,454,234,498.82 11,093,931,879.49 2,996,195,067.13 3,896,021,615.61 22,440,383,061.05 Other liabilities 1,772,345.00 3,022,984.00 353,560,466.12 358,355,795.12 Total of liabilities 98,956,671,964.13 32,330,848,769.96 51,632,235,860.77 3,896,566,665.61 1,543,961,456.22 188,360,284,716.69 Total of interest rate sensitivity gap -27,058,358,049.17 4,600,058,035.54 16,308,900,697.66 16,310,226,017.14 1,481,620,997.06 11,642,447,698.23
243 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
December 31, 2016
Item up to 3 months 3 months to 1 year 1 year to 5 years Over 5 year Overdue/non-accrual Amount Asset items: Cash and deposits with central bank 25,459,548,992.28 217,237,617.51 25,676,786,609.79 Deposits in other banks 3,965,233,482.27 1,323,000,000.00 5,288,233,482.27 Lending fund 1,141,622,000.00 500,000,000.00 1,641,622,000.00 Financial assets at fair valuethrough 481,591,000.00 443,924,900.00 925,515,900.00 current profit and loss Financial assets held under resale 14,663,036,531.02 625,736,302.20 15,288,772,833.22 agreements Interests receivable 950,261,244.80 950,261,244.80 Loans and advance payments 12,345,130,218.26 8,572,702,122.79 15,528,138,645.30 706,179,847.77 325,597,726.09 37,477,748,560.21 Available-for-sale financial assets 3,246,657,502.47 6,704,790,045.09 11,117,285,272.00 6,873,675,800.00 250,000.00 27,942,658,619.56 Held-to-maturity financial assets 69,998,300.85 919,626,953.12 6,406,822,692.10 5,040,594,916.49 12,437,042,862.56 Investments classified as accounts 5,684,075,365.34 16,331,718,932.08 28,272,451,661.01 1,674,499,260.78 51,962,745,219.21 receivable Other assets 17,470,077.83 17,470,077.83 Total of assets 66,575,302,392.49 35,459,165,355.28 61,768,623,170.41 14,294,949,825.04 1,510,816,666.23 179,608,857,409.45 Liability items Borrowing from the central bank 500,000,000.00 500,000,000.00 Deposits with banks 3,241,981,461.54 11,378,000,000.00 14,619,981,461.54 Loans from other banks and other financial 45,506,076.25 32,151,251.41 77,657,327.66 institutions Financial assets sold under repurchase 17,553,802,685.34 624,858,615.35 18,178,661,300.69 agreements Deposits from customers 59,828,816,216.04 19,840,096,805.85 41,294,959,114.94 1,200,000,050.00 122,163,872,186.83 Interests payable 847,264,596.34 847,264,596.34 Bonds payable 2,993,553,512.85 6,844,188,001.74 1,790,360,780.60 11,628,102,295.19 Other liabilities 2,680,403.00 4,487,638.00 209,705,016.89 216,873,057.89 Total of liabilities 83,663,659,952.02 39,221,975,077.35 41,299,446,752.94 2,990,360,830.60 1,056,969,613.23 168,232,412,226.14 Total of interest rate sensitivity gap -17,088,357,559.53 -3,762,809,722.07 20,469,176,417.47 11,304,588,994.44 453,847,053.00 11,376,445,183.31
244 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
3. Liquidity risk management Liquidity risk refers to risk of failing to meet customers' demands of withdrawing matured liability and new bank loans as well as reasonable financing, or failing to meet these demands at normal cost. The Bank manages liquidity risk and aims to: optimize structure of assets and liabilities; maintain steady deposit basis; predict cash flow and evaluate level of current assets; and keep efficient internal capital allocation mechanism, and guarantee liquidity of the Bank. Analysis results at maturity date of the Bank's balance sheet are as follows: December 31, 2017
Item Instant repayment Up to 3 months 3 months to 1 year 1 year to 5 years Over 5 year Overdue/others Amount
Asset items: Cash and deposits with 3,668,258,747.58 15,830,763,172.75 19,499,021,920.33 central bank Deposits in other banks 680,085,197.24 210,400,000.00 74,276,200.00 964,761,397.24 Lending fund 3,184,355,346.56 86,134,154.74 3,270,489,501.30 Financial assets at fair valuethrough current profit 600,000,000.00 9,912,293,577.27 2,183,095,000.00 12,695,388,577.27 and loss Financial assets held under 28,357,851,353.70 28,357,851,353.70 resale agreements Interests receivable 1,059,608,529.35 1,059,608,529.35
Loans and advance payments 4,210,264,700.94 18,093,849,061.55 42,722,204,401.24 9,478,383,495.49 1,818,198,829.03 76,322,900,488.25 Available-for-sale financial 3,913,400,750.00 7,361,807,277.78 8,029,883,300.00 7,928,619,000.00 239,101,062.64 27,472,811,390.42 assets Held-to-maturity financial 92,375,700.00 1,346,734,940.00 12,347,390,740.00 6,902,519,500.00 20,689,020,880.00 assets Investments classified as 1,596,978,193.22 14,718,825,033.76 39,540,419,550.55 6,826,023,258.24 62,682,246,035.77 accounts receivable Other assrts 50,591,984.52 50,591,984.52
245 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item Instant repayment Up to 3 months 3 months to 1 year 1 year to 5 years Over 5 year Overdue/others Amount
104,822,992,991.7 Total of assets 4,348,343,944.82 42,165,626,044.42 51,593,920,245.10 31,135,545,253.73 18,998,263,578.29 253,064,692,058.15 9 Liability items Borrowing from the central 1,407,650,000.00 24,412,500.00 1,432,062,500.00 bank Deposits with banks 1,381,983,356.57 1,700,635,886.11 6,586,012,469.44 9,668,631,712.12 Loans from other banks and 259,992,735.46 86,082,621.68 346,075,357.14 other financial institutions Financial assets sold under 29,547,800,111.80 29,547,800,111.80 repurchase agreements Deposits from customers 63,240,169,885.54 19,202,346,224.79 49,734,834,208.44 857,934,837.31 133,035,285,156.08 Interests payable 1,131,570,276.82 1,131,570,276.82 Bonds payable 4,778,596,365.28 11,935,352,959.52 4,216,112,163.58 4,837,156,051.47 25,767,217,539.85
Other liabilities 1,386,794.00 1,772,345.00 3,022,984.00 352,173,672.12 358,355,795.12 Total of liabilities 64,622,153,242.11 56,898,408,117.44 68,368,467,104.08 5,077,069,984.89 4,837,156,051.47 1,483,743,948.94 201,286,998,448.93 Net liquidity -60,273,809,297.29 -14,732,782,073.02 -16,774,546,858.98 99,745,923,006.90 26,298,389,202.26 17,514,519,629.35 51,777,693,609.22
December 31, 2016
Item Instant repayment Up to 3 months 3 months to 1 year 1 year to 5 years Over 5 year Overdue/others Amount
Asset items: Cash and deposits with central 8,471,801,317.74 17,204,985,292.05 25,676,786,609.79 bank Deposits in other banks 366,232,471.46 3,617,051,855.56 1,365,527,569.44 5,348,811,896.46 Lending fund 1,148,487,369.96 518,750,000.00 1,667,237,369.96 Financial assets at fair valuethrough current profit and 541,295,000.00 494,390,000.00 1,035,685,000.00 loss
246 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Item Instant repayment Up to 3 months 3 months to 1 year 1 year to 5 years Over 5 year Overdue/others Amount
Financial assets held under resale 14,677,253,202.61 632,700,000.00 15,309,953,202.61 agreements Interests receivable 950,261,244.80 950,261,244.80 Loans and advance payments 6,367,983,645.40 17,975,818,136.91 35,033,210,739.26 6,007,815,325.79 529,289,641.25 65,914,117,488.61 Available-for-sale financial assets 3,427,258,852.78 7,564,639,586.11 13,613,857,444.44 7,879,128,000.00 250,000.00 32,485,133,883.33 Held-to-maturity financial assets 154,262,700.00 1,335,481,690.00 7,838,182,580.00 5,706,181,800.00 15,034,108,770.00 Investments classified as accounts 6,250,119,227.66 18,608,919,276.66 32,529,325,377.10 1,960,800,000.00 59,349,163,881.42 receivable Other assets 17,470,077.83 17,470,077.83 Total of assets 8,838,033,789.20 35,642,416,853.97 48,543,131,259.12 89,508,966,140.80 21,553,925,125.79 18,702,256,255.93 222,788,729,424.81 Liability items Borrowing from the central bank 504,002,500.00 8,005,000.00 512,007,500.00 Deposits with banks 2,233,611,461.54 1,017,641,098.22 11,825,237,741.67 15,076,490,301.43 Loans from other banks and other 45,750,020.67 32,190,421.68 77,940,442.35 financial institutions Financial assets sold under 17,569,747,329.49 632,700,000.00 18,202,447,329.49 repurchase agreements Deposits from customers 50,044,006,415.47 10,066,801,592.83 20,653,516,693.65 48,272,185,938.95 2,836,274,614.89 131,872,785,255.79 Interests payable 847,264,596.34 847,264,596.34 Bonds payable 3,143,072,477.78 7,306,181,686.67 421,200,000.00 2,037,600,000.00 12,908,054,164.45 Other liabilities 2,453,092.00 2,680,403.00 4,487,638.00 207,251,924.89 216,873,057.89 Total of liabilities 52,277,617,877.01 31,845,465,610.99 40,956,509,446.67 48,705,878,576.95 4,873,874,614.89 1,054,516,521.23 179,713,862,647.74 Net liquidity -43,439,584,087.81 3,796,951,242.98 7,586,621,812.45 40,803,087,563.85 16,680,050,510.90 17,647,739,734.70 43,074,866,777.07
247 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
XIII. Fair value
1. Financial assets and liabilities measured at fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction among market participants at the measurement date.
Fair value measured and disclosed in the financial statements shall be recognized on this basis regardless of whether that price is observable or estimated using valuation technique.
Financial assets and financial liabilities measured at fair value shall be classified into three levels in terms of valuation:
Level 1: unadjusted quoted prices available in an active market for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for relevant assets or liabilities, either directly or indirectly.
Level 3: inputs not based on observable market data for relevant assets or liabilities.
Financial assets and financial liabilities measured at fair value were presented in three levels above on December 31, 2017:
248 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
Valuation Valuation Continuous fair value Open market technique—observ technique—unobse Total measurement in 2017 price (Level 1) able market rvable market variable (Level 2) variable (Level 3) Measured at fair value 11,551,764,690.00 11,551,764,690.00 through current profit and loss Available-for-sale financial assets 227,335,367.00 13,930,540,662.00 14,157,876,029.00 Total financial assets 227,335,367.00 25,482,305,352.00 25,709,640,719.00
Financial assets and financial liabilities measured at fair value were presented in three levels above on December 31, 2016: Valuation Valuation Continuous fair value Open market technique—observ technique—unobse Total measurement in 2016 price (Level 1) able market rvable market variable (Level 2) variable (Level 3) Measured at fair value 925,515,900.00 925,515,900.00 through current profit and loss Available-for-sale financial assets 18,381,078,619.56 18,381,078,619.56 Total financial assets 19,306,594,519.56 19,306,594,519.56
In 2017, the Bank has neither transferred fair value level of financial instruments from Level 1 and Level 2 to Level 3, nor between Level 1 and Level 2.
As for financial instruments tradable in an active market, quoted prices in the active market shall be used to determine the fair value thereof; as for those not tradable in an active market, valuation technique shall be used to determine the fair value thereof.
Financial instruments classified as Level 2 by the Bank mainly include bond investment. Fair value of RMB bonds shall be recognized based upon valuation results provided by China Central Depository & Clearing Co., Ltd. All significant valuation parameters shall be defined by adopting valuation technique concerning observable market information.
249 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
2. Financial assets and liabilities not measured at fair value
Financial assets and liabilities not measured at fair value mainly include: cash and deposits with central bank, deposits with banks, lending funds, redemptory financial assets for sale, loans and advance payments, held-to-maturity investments, Investments classified as accounts receivable, borrowing from the central bank, deposits from banks and other financial institutions, borrowing funds, financial assets sold under repurchase agreements, deposits from customers and bonds payable.
Book value and fair value of held-to-maturity investments and bonds payable are presented in the table below:
December 31, 2017 Item Book value Fair value
Financial assets: Held-to-maturity investment 16,989,480,633.07 16,353,525,301.00
Financial liabilities: Bonds payable 22,440,383,061.05 21,963,467,190.00
December 31, 2016 Item Book value Fair value
Financial assets: Held-to-maturity investment 12,437,042,862.56 12,436,972,090.00
Financial liabilities: Bonds payable 11,628,102,295.19 11,596,837,210.00
250 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
XIV. Capital adequacy ratio
Capital adequacy ratio, tier I capital adequacy ratio and core Tier I capital adequacy ratio calculated by the Bank in accordance with relevant rules of Capital
Management Method for Commercial Banks (trial) issued by CBRC (2012 No.1) are as follows: (unit: RMB ten thousand yuan)
December 31, December 31, Item 2017 2016
Core tier I capital Paid-up capital 484,693.48 440,630.44 Capital reserve 296,902.65 296,902.65 Other comprehensive income -74,152.74 -18,385.82 Surplus reserve 89,127.74 71,008.92 Generic risk reserve 256,285.54 231,973.19 Undistributed profits 254,764.94 204,133.96 Total of core tier I capital 1,307,621.61 1,226,263.34
Deduction items of core tier I capital Other intangible assets (except for land use right) 6,685.66 5,579.71 Net core tier I capital 1,300,935.95 1,220,683.63
Net amount of other tier I capitals Net tier I capital 1,300,935.95 1,220,683.63
Tier II capital Directly issued qualifying tier 2 capital instruments and related premium 390,000.00 144,000.00 Directly issued qualifying provisions for over loan 50,130.79 62,053.26 Total of tier II capital 440,130.79 206,053.26
Deduction items of tier II capital Net tier II capital 440,130.79 206,053.26
Net capital 1,741,066.74 1,426,736.89
Risk weighted asset Credit risk weighted asset 11,704,808.95 10,244,970.76
Market risk weighted asset 1,017,005.78 1,036,083.24 Operational risk weighted asset 732,577.54 658,791.83 Total of risk weighted assets 13,454,392.27 11,939,845.83
251 Notes to the Financial Statements of Chongqing Three Gorges Bank Co., Ltd. From January 1, 2017 to December 31, 2017 (Unless otherwise specified, the notes to the financial statements shall be presented in RMB)
December 31, December 31, Item 2017 2016
Core tier I capital adequacy ratio % 9.67% 10.22% Tier I capital adequacy ratio % 9.67% 10.22% Capital adequacy ratio % 12.94% 11.95%
XV. Approval of financial reports
The financial statements have been approved by the Bank.
Chongqing Three Gorges Bank Co., Ltd.
Legal representative, President:
Financial administrator:
April 13, 2018
252