China Construction Bank Corporation A Better Bank Annual Report 2018 A Better Living Corporate introduction China Construction Bank Corporation, headquartered in Beijing, is a leading joint stock large-scale commercial bank in China. Its predecessor, China Construction Bank, was established in October 1954. It was listed on Hong Kong Stock Exchange in October 2005 (stock code: 939) and the Shanghai Stock Exchange in September 2007 (stock code: 601939). At the end of 2018, the Bank’s market capitalisation reached US$207,179 million, ranking fifth among all listed banks in the world. The Group ranks second among global banks in terms of Tier 1 capital. The Bank provides customers with comprehensive financial services, such as personal banking, corporate banking, investment and wealth management. With 14,977 banking outlets and 345,971 staff members, the Bank serves hundreds of millions of personal and corporate customers. The Bank has commercial banking branches and subsidiaries in 29 countries and regions with nearly 200 commercial banking entities at various levels, and subsidiaries in different industries and sectors, including fund management, financial leasing, trust, insurance, futures, pension and investment banking. Adhering to the “customer-centric, market-oriented” business philosophy, the Bank is committed to developing itself into a bank with top value creation capability. The Bank strives to achieve the balance between short-term and long-term benefits, and between business goals and social responsibilities, so as to maximise the value for customers, shareholders, society and its associates. Vision Build a world class banking group with top value creation capability. Missions Provide better services to our customers, create greater value to our shareholders, build up a broader career platform for our associates, and assume full responsibilities as a corporate citizen. Core Values Integrity, Impartiality, Prudence, and Creation 2 China Construction Bank Corporation Annual Report 2018 C ontents 2 Definitions 4 Important Notice 5 Corporate Information 7 Financial Highlights 10 Chairman’s Statement 13 President’s Report MANAGEMENT DISCUSSION AND ANALYSIS 20 Financial Review 36 Business Review 64 Risk Management 79 Capital Management 83 Prospects CORPORATE GOVERNANCE 86 Corporate Social Responsibilities 93 Changes in Share Capital and Particulars of Shareholders 98 Profiles of Directors, Supervisors and Senior Management 111 Corporate Governance Report 125 Report of the Board of Directors 130 Report of the Board of Supervisors 132 Major Issues FINANCIAL STATEMENTS AND OTHERS 133 Independent Auditor’s Report 138 Financial Statements 285 Unaudited Supplementary Financial Information 289 Organisational Structure 290 Branches and Subsidiaries 296 Appendix: Indicators for Assessing Global Systemic Importance of Commercial Banks For further information, please visit www.ccb.com DEFINITIONS In this annual report, unless the context otherwise requires, the following terms shall have the meanings set out below. “AI” Artificial intelligence “AML” Anti-money laundering “Bank” China Construction Bank Corporation “Baowu Steel Group” China Baowu Steel Group Corporation Limited “Basis Point” A unit that measures the changes of interest and exchange rates, 1% of one percentage point “Board” Board of directors “CBIRC” China Banking and Insurance Regulatory Commission “CBRC” Former China Banking Regulatory Commission “CCB Asia” China Construction Bank (Asia) Corporation Limited “CCB Brasil” China Construction Bank (Brasil) Banco Múltiplo S/A “CCB Europe” China Construction Bank (Europe) S.A. “CCB Financial Leasing” CCB Financial Leasing Co., Ltd. “CCB Futures” CCB Futures Co., Ltd. “CCB Indonesia” PT Bank China Construction Bank Indonesia Tbk “CCB International” CCB International (Holdings) Limited “CCB Investment” CCB Financial Asset Investment Co., Ltd. “CCB Life” CCB Life Insurance Company Limited “CCB London” China Construction Bank (London) Limited “CCB Malaysia” China Construction Bank (Malaysia) Berhad “CCB New Zealand” China Construction Bank (New Zealand) Limited “CCB Pension” CCB Pension Management Co., Ltd. “CCB Principal Asset Management” CCB Principal Asset Management Co., Ltd. “CCB Property & Casualty” CCB Property & Casualty Insurance Co., Ltd. “CCB Russia” China Construction Bank (Russia) Limited “CCB Trust” CCB Trust Co., Ltd. “Cloud Pet” A gamified crowdsourcing application of information collection deployed in the Bank’s mobile banking, which organises a simple information collection operation as a gamified challenge and offers the users the opportunity to take the challenge anywhere and anytime they like and get rewards for their participation “Cloud Tax Loans” Unsecured loans that the Bank provides to small and micro enterprises fully online with the help of big data technologies based on the borrowers’ tax-related information “Cloud-based customer service” An umbrella term for enterprise-level remote financial customer services that the Bank provides to customers on a “comprehensive, cost-efficient, AI-assisted, multilingual and around-the-clock” basis through multiple channels and media, including phones, networks, mobile devices “Company Law” The Company Law of the People’s Republic of China “CSRC” China Securities Regulatory Commission “FITS®” Financial Total Solutions (FITS®), a comprehensive investment banking brand of the Bank incorporating a host of financial products and tools “Group”, “CCB” China Construction Bank Corporation and its subsidiaries 2 China Construction Bank Corporation Annual Report 2018 DEFINITIONS “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “Huidongni” A one-stop service platform built by the Bank for small and micro enterprises by using internet, big data and biometric technologies “Huidouquan” An innovative card acquiring product of the Bank that combines “all-type payment acceptance” with “scenario creations” “Huijin” Central Huijin Investment Ltd. “Huishibao” A high-end comprehensive settlement service platform of the Bank designed to meet the treasury management needs of niche markets and core enterprises in the supply chains “IFRS” International Financial Reporting Standards “Jianguanyi” A corporate treasury supervision service of the Bank designed to meet the needs of customers for monitoring their controlled accounts, including fund receipts and payments as well as balances “Listing Rules of Hong Kong Stock Exchange” Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited “Long Card Credit (Daiba)” A credit card service of the Bank where one can apply for a virtual credit card and receive approval instantly through the Bank’s mobile banking “Long Fortune” A fintech-based wealth management service platform of the Bank designed to deliver asset structuring, AI-assisted investment advisory, retail loans, liquidity management and AI-assisted insurance advisory services “Long Pay” A customer-centric and mobile web-based enterprise-level digital payment brand of the Bank, and also an umbrella term that refers to a group of all-inclusive and integrated payment and settlement product and service offerings “Longyixing” An AI-assisted mobile marketing and office platform for the Bank’s marketing personnel in its outlets “M&A” Merger and acquisition “Mega Asset Manager” An asset management service platform of the Bank that offers end-to-end coverage, serves all the market segments and all customer types, and incorporates all scenarios. “MOF” Ministry of Finance of the People’s Republic of China “NDRC” National Development and Reform Commission “New financial instruments standard” International Financial Reporting Standard No. 9 – Financial Instruments, issued by International Accounting or “IFRS 9” Standards Board in July 2014 “PBC” The People’s Bank of China “PRC GAAP” Accounting Standards for Business Enterprises and other relevant requirements promulgated by the MOF on 15 February 2006 and afterwards “Public cloud” A cloud-based model that is open to the public and provides convenient and pay-as-you-need computing resources (including network access, servers, storage, applications and services) through public networks “RMB” Renminbi “SFO” Securities and Futures Ordinance “Shanfutong” A dedicated service zone on e.ccb.com, the Bank’s digital corporate mall, that builds on the existing supply chain relationships of the Bank’s customers to provide electronic business convergence/collaboration and information sharing services, and also associated financial services, including settlement and reconciliation, to corporate customers and their upstream and downstream business partners “Sino-German Bausparkasse” Sino-German Bausparkasse Co., Ltd. “State Council” State Council of the People’s Republic of China “State Grid” State Grid Corporation of China “WMP” Wealth Management Product “Yangtze Power” China Yangtze Power Co., Limited “Yunongtong” A fintech-based, county-level comprehensive service platform, as part of the Bank’s inclusive finance strategy, designed to address issues such as lack of financial service in underprivileged county-level rural areas China Construction Bank Corporation 3 Annual Report 2018 IMPORTANT NOTICE The Board and the board of supervisors of the Bank and its directors, supervisors and senior management warrant that the information contained in this report is truthful, accurate and complete and there are no false presentations or misleading statements contained in, or material omissions from, this report, and that