Content Corporate Information 2 Summary of Accounting Information and Financial Indicators 4 Management Discussion and Analysis 7 Changes in Share Capital and Information on Shareholders 84 Directors, Supervisors, Senior Management and Employees 93 Corporate Governance 99 Important Events 102 Organizational Structure 107 Review Report to the Board of Directors 108 Consolidated Statement of Profit or Loss and Other Comprehensive Income 109 Consolidated Statement of Financial Position 111 Consolidated Statement of Changes in Equity 113 Consolidated Cash Flow Statement 116 Notes to the Unaudited Interim Financial Report 119 Definition of Terms 234 Corporate Information Legal Name of the Company Legal Representative 中原銀行股份有限公司1 (abbreviated as 中 Mr. DOU Rongxing 原銀行) Authorized Representatives English Name of the Company Mr. JIA Tingyu ZHONGYUAN BANK CO., LTD.1 Mr. ZHANG Ke (abbreviated as ZYBANK) Joint Company Secretaries Registered Office Mr. ZHANG Ke Zhongke Golden Tower, No. 23 Shangwu Ms. LEUNG Wing Han Sharon Waihuan Road, Zhengdong New District CBD, Zhengzhou, Henan Province, PRC Unified Social Credit Code 9141000031741675X6 Headquarters in China Zhongke Golden Tower, No. 23 Shangwu Financial Licence Institution Number Waihuan Road, Zhengdong New District B0615H241010001 CBD, Zhengzhou, Henan Province, PRC Auditors Principal Business Place in Hong Kong PRC Auditor 40/F, Sunlight Tower, No. 248 Queen’s KPMG Huazhen LLP Road East, Wanchai, Hong Kong 8/F, KPMG Tower E2, Oriental Plaza, 1 East Chang’an Avenue, Dongcheng District, Board of Directors Beijing, PRC Executive Directors: International Auditor Mr. DOU Rongxing (Chairperson) KPMG (Public Interest Entity Auditor Mr. WANG Jiong registered in accordance with the Financial Mr. LI Yulin Reporting Council Ordinance) Mr. WEI Jie 8/F, Prince’s Building, 10 Chater Road, Central, Hong Kong Non-executive Directors: Mr. LI Qiaocheng Legal Advisors Mr. LI Xipeng Mr. MI Hongjun Legal Advisors as to PRC Laws King & Wood Mallesons Independent Non-executive Directors: 17–18/F, East Tower, World Financial Ms. PANG Hong Center, 1 Dongsanhuan Zhonglu, Mr. LI Hongchang Chaoyang District, Beijing, PRC Mr. JIA Tingyu Mr. CHAN Ngai Sang Kenny 1 Zhongyuan Bank Co., Ltd. is not an authorized institution within the meaning of the Banking Ordinance (Chapter 155 of the Laws of Hong Kong), not subject to the supervision of the Hong Kong Monetary Authority, and not authorized to carry on banking and/or deposit-taking business in Hong Kong. 2 ZHONGYUAN BANK CO., LTD. 2020 INTERIM REPORT Corporate Information Legal Advisors as to Hong Kong Laws Paul Hastings 21–22/F, Bank of China Tower, 1 Garden Road, Hong Kong H Share Registrar Computershare Hong Kong Investor Services Limited Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong Domestic Shares Trustee Agency China Securities Depository and Clearing Corporation Limited 23/F, Tower B, Investment Plaza, No. 27 Jin Rong Street, Xi Cheng District, Beijing, China H Share Stock Code 1216 Preference Share Stock Code 4617 Investor’s Enquiry Website Address http://www.zybank.com.cn Contact Telephone No. (86) 0371–85517898 Fax (86) 0371–85519888 Email [email protected] ZHONGYUAN BANK CO., LTD. 3 2020 INTERIM REPORT Summary of Accounting Information and Financial Indicators For the six months ended June 30, Change over the corresponding period of 2020 2019 last year (in millions of RMB, unless otherwise stated, except percentages) Rate of Operating Results change (%) Net interest income 8,220.5 7,591.7 8.3 Net fee and commission income 1,158.6 995.1 16.4 Operating income 10,591.7 9,657.5 9.7 Operating expenses (3,069.5) (3,331.4) (7.9) Impairment losses on assets (5,120.7) (3,700.2) 38.4 Profit before tax 2,386.5 2,625.9 (9.1) Net profit 2,026.0 2,078.8 (2.5) Net profit attributable to equity shareholders of the Bank 1,972.0 2,074.5 (4.9) Calculated on a per share Rate of basis (RMB) change (%) Net assets per share attributable to equity shareholders of the Bank (1) 2.40 2.31 3.9 Earnings per share(2) 0.10 0.10 – Profitability Indicators (%) Change Return on average total assets(3) 0.57 0.65 (0.08) Return on average equity(4) 8.28 9.05 (0.77) Net interest spread(5) 2.44 2.58 (0.14) Net interest margin(6) 2.53 2.64 (0.11) Net fee and commission income to operating income 10.94 10.30 0.64 Cost-to-income ratio(7) 28.09 33.65 (5.56) 4 ZHONGYUAN BANK CO., LTD. 2020 INTERIM REPORT Summary of Accounting Information and Financial Indicators Change over June 30, December 31, the end of 2020 2019 last year (in millions of RMB, unless otherwise stated, except percentages) Capital adequacy ratio indicators (8)(%) Change Calculated based on the Administrative Measures for the Capital of Commercial Banks Core tier-one capital adequacy ratio 8.53 8.51 0.02 Tier-one capital adequacy ratio 10.30 10.31 (0.01) Capital adequacy ratio 13.00 13.02 (0.02) Total equity to total assets 8.13 8.15 (0.02) Asset quality indicators (%) Change Non-performing loan ratio (9) 2.27 2.23 0.04 Allowance coverage ratio (10) 151.39 151.77 (0.38) Allowance to gross loan ratio (11) 3.43 3.39 0.04 Other indicator (%) Loan-to-deposit ratio 80.70 77.71 2.99 Rate of Scale indicators change (%) Total assets 723,807.7 709,885.0 2.0 Of which: Net loans and advances to customers 328,766.6 291,230.1 12.9 Total liabilities 664,936.2 652,054.0 2.0 Of which: deposits from customers 423,720.6 389,731.5 8.7 Share capital 20,075.0 20,075.0 – Equity attributable to shareholders of the Bank 57,756.9 56,744.7 1.8 Non-controlling interests 1,114.6 1,086.3 2.6 Total equity 58,871.5 57,831.0 1.8 ZHONGYUAN BANK CO., LTD. 5 2020 INTERIM REPORT Summary of Accounting Information and Financial Indicators (1) Calculated by dividing equity attributable to equity holders of the parent company after deduction of other equity instruments at the end of the Reporting Period by the total number of ordinary shares at the end of the Reporting Period. (2) The ratio of net profit (net of dividends of preference shares distributed during the year) attributable to shareholders of the Bank to weighted average number of ordinary shares. (3) Represents net profit for the period as a percentage of average balance of total assets at the beginning and the end of the period. (4) Calculated based on the “Rules on the Preparation and Submission of Information Disclosed by Companies that Offer Securities to the Public No. 9 – Calculation and Disclosure of Return on Net Assets and Earnings Per Share” (Revision 2010) issued by China Securities Regulatory Commission. Represents net profit attributable to shareholders of the Bank for the period as a percentage of weighted average balance attributable to shareholders of the Bank for the period. (5) Calculated as the difference between the average yield on total interest-earning assets and the average cost of total interest-bearing liabilities, calculated based on daily average of the interest-earning assets and the interest-bearing liabilities. (6) Calculated by dividing net interest income by the average interest-earning assets, and based on daily average interest-earning assets. (7) Calculated by dividing operating expenses after deduction of taxes and surcharges by operating income. (8) The Administrative Measures for the Capital of Commercial Banks was issued on June 7, 2012 and came into effect on January 1, 2013 by replacing the Administrative Measures for Capital Adequacy Ratio of Commercial Banks. (9) Calculated by dividing total non-performing loans and advances by gross loans and advances to customers. Gross loans and advances to customers are exclusive of accrued interest. (10) Calculated by dividing allowance for impairment losses on loans and advances to customers by total non-performing loans. Total allowance for impairment losses on loans and advances to customers included allowance for impairment losses on loans at amortized cost and allowance for impairment losses on loans at fair value through other comprehensive income. (11) Calculated by dividing allowance for impairment losses on loans and advances to customers by gross loans and advances to customers. 6 ZHONGYUAN BANK CO., LTD. 2020 INTERIM REPORT Management Discussion and Analysis 1. Past Economic and Financial Environment and Future Prospects During the Reporting Period, the impact of the novel coronavirus pneumonia outbreak on global economic growth appeared. As the resumption of work and production progressed, the economic indicators of some economies gradually improved. The economic growth of major economies declined in the first quarter, and the economic growth of the United States, the Eurozone, Japan, and the United Kingdom were all negative. As many countries announced the gradual relaxation of epidemic prevention and control measures in phases and regions and promoted the resumption of work and production, the economy showed signs of improvement. The International Monetary Fund (IMF) once again decreased its forecast 2020 global economy growth rate to -4.9% in June. The novel coronavirus pneumonia outbreak will continue to affect the global economy, and a deep global economic recession is inevitable. During the Reporting Period, China’s economy fell first and then rose, with the epidemic prevention and control situation continued to improve, the main indicators showed recovery growth, the economic operation recovered steadily, and the overall social development was stable. In the first half of 2020, the GDP was RMB45,661,400 million, representing a year-on-year decrease of 1.6%. Among them, the first quarter fell by 6.8% year-on-year, and the second quarter increased by 3.2%.