MessagefromtheChairmanoftheBoard In2012,remarkableachievementshavebeenmadeinChina'sreformandopeningupand modernizationconstruction.Againstsuchfavorablebackdrop,LongjiangBankalsohasagoodharvest. 2 0 1 2 Facingcomplexdomesticandinternationaleconomicandfinancialsituation,theBankearnestly A n n u a implementedthenationalmacroeconomicandfinancialpolicies;adheredtotheoperatingguidelines l R e p o r of"progressingwhilemaintainingstabilityandseekingbetterresultsinprogressing"underthescientific t guidanceoftheregulatoryauthorities,andeffectivelyadheredtothedevelopmentstrategy,continued toimprovecorporategovernance,madeeffortstoimprovetheoperationandmanagementlevel,and successfullycompletedvarioustasks,thussubmittingasatisfactoryanswersheettoinvestorsandclients withexcellentresults. Overthepastyear,wevigorouslypromotedthestrategicimplementation,continuedtoactively promotetheagriculturalsupplychainfinancemodelandprovidedastrongsupportfor"buildinga world-classmodernagriculturalindustrialbank";thebankalsosteadilypushedconstructionof exemplarysmallbusinessfranchiseorganizationsandbuiltahighlyefficientsmallbusinessfinancial servicessystem;weinvestedalloutefforttocreate"Xiaolongren"communitybankservicebrand, furtherenhancingthefinancialservicesfunctions;andadhereddifferentiation,characterization, communitization,professionalizationandmeticulousdevelopmentroad,havingenhancedthecore competitiveness. Inthepastyear,wewerefullycommittedtoimprovingprofitability,achievedanetprofitof 1.708billionyuan,anincreaseby52.64%overthepreviousyear;assetsyieldwas1.00%,anincrease by0.06percentagepointscomparedwithlastyear;thereturnoncapitalwas22.17%,anincreaseby 0.59percentagepointscomparedwithlastyear,withshareholderreturnscontinuingtoincrease. In2012,westrivedtoenhancetheoperationalstrength,totalassetsreached186.055billionyuan, anincreaseby21.59%overthepreviousyear;thebalanceofcorporateandindividualdepositsreached 114.095billionyuan,representinganincreaseof20.722billionyuanoverthebeginningoftheyear, anincreaseof22.2%year-on-year;theloanbalancewas35.481billionyuan,increasingby9.835 152 MessagefromtheChairmanoftheBoard billionyuan,anincreaseof38.35%,withthecreditscalecontrolledwithinthescopeapprovedbythe People'sBank. Overthepastyear,wewerecommittedtothepreventionandcontrolofalltypesofrisks,with non-performingloanratiodroppingby0.08percentagepointscomparedwithlastyear,downto 0.75%;thebankconductedthesuccessfulcompletionofthecapitalandshareincreaseandadjustment andincreaseinregisteredcapital,thecapitaladequacyratioandcorecapitaladequacyratioreached 14.18%and13.77%respectivelyattheendoftheyear,withcapitalstrengthfurtherenhancedandall majorregulatoryindicatorsincompliance. In2012,westrivedtoenhancethemanagementlevel,withstandardizedandorderly"6S" management,moreperfectperformanceappraisalsystem,acceleratedpaceofITconstruction,and moreeffectiveroleoftechnologysystemprotection;meanwhile,teambuildingcontinuedtobe strengthened;theoverallqualityofcadresandemployeesaremoreresponsivetodevelopmentneeds; also,wemadenewachievementsintheintegrationofcorporateculture,withcorevaluesmoredeeply rootedatpeople'shearts. Withthesupportfromallsectorsofthecommunityandthejointeffortsofallemployees,the Bankhassuccessfullycompletedtheplannedtasksinthefirstthree-yearphaseandusheredinanew developmentsituation.Theyear2013isthefirstyearforChinatoconductacomprehensive implementationofthespiritofthe18thCPCNationalCongress,thekeylinkyearbetweenthepast andthefuturefortheimplementationof"TwelfthFive-YearPlan"period,andthestartingyearof oursecondthree-yearplanningperiod.Standingatthenewstartingpoint,weareconfidentin rewardingshareholders,customersandthecommunitywithbetterperformance! ChairmanandSecretaryofthePartyCommitteeofLongjiangBank: 153 ImportantNote ImportantNote: Thisannualreportispreparedinaccordancewiththerelevantrequirementsof"InformationDisclo- 2 0 1 2 sureofCommercialBanks",whichisamaximumdisclosureallowedbytheexistingfinancialsystems A n n u a l andbusinessmanagementsystem.TheBoardofDirectorsofourbankensuresthattheinformation R e p o r containedinthisannualreportdoesnotcontainanyfalserecord,misleadingstatementorsignificant t omissionsofrequireddisclosures,andisresponsiblefortheauthenticity,accuracyandcompletenessof thecontent.Ourbank's2012annualfinancialstatementhasbeenauditedbyDeloitteTouche Tohmatsu,andastandardauditreportcontainingunqualifiedopinionhasbeenissued.Thisannualre- portispreparedinbothEnglishandChineserespectively.Incaseofanydiscrepanciesbetweenthe twoversions,theChineseversionshallprevail. BoardofDirectorsofLongjiangBankCorporation April26,2013 154 CompanyProfile LegalChineseName 龙江银行股份有限公司(LongjiangBankCo.,Ltd.) (Referredtoas"LongjiangBank"forshort,hereinafterreferredtoas"OurBank") LegalEnglishName LONGJIANGBANKCORPORATION LegalRepresentative YangJinxian SecretaryoftheBoard LiRuiwen Tel:0451-85706153/85706863 Fax:0451-87117802 RegisteredandOfficeAddress:No.436YouyiRoad,DaoliDistrict,Harbin,HeilongjiangProvince PostalCode:150018 InternetAddress:www.lj-bank.com E-mail:[email protected] Annualreportspreparedat:OfficeoftheBoardandmajorbusinessoutlets TheCompany'sFirstRegistrationDate:December22,2009 TheRegistrationNumberofBusinessLicenseforEnterpriseasaLegalPerson:230000100069419 FinanceLicenseNo.:B1056H223010001 TaxRegistrationNumber:230103695223154 AccountingFirmEngagedbyOurBank:DeloitteToucheTohmatsu 155 LongjiangBankOrganizationStructure 2 0 1 2 A n n u a l R e p o r t 156 SummaryofFinancialDataandBusinessData 1.Resultsofoperations (Unit:RMBthousand) Item Yr2012 Yr2011 Increaseordecreaseyoy （%） Operationincome 4,787,480 3,292,635 45.40 Profitbeforetax 1,707,766 1,119,223 52.58 ROA 1.00% 0.94% 6.36 ROE 22.17% 21.58% 2.73 BasicEPS(Yuan) 0.45 0.36 25.00 Netcashflowgeneratedfromoperatingactivities 23,253,795 18,295,695 27.10 Netcashgeneratedfromoperatingactivitiespershare(Yuan) 5.33 4.92 8.33 157 SummaryofFinancialDataandBusinessData 2.Scaleindicator (Unit:RMBthousand) 2 0 1 Item Yr2012 Yr2011 Increaseordecreaseyoy （%） 2 A n 186,055,365 153,019,170 21.59 n u a l R Ofwhich:thefinancialassetsatfairvaluethroughprofitorloss 15,989,496 16,786,842 -4.75 e p o r Held-to-maturityinvestments 5,506,642 983,561 459.87 t Loansandreceivables 41,837,567 32,440,744 28.97 Available-for-salefinancialassets 5,136,454 4,511,313 13.86 Others 117,585,206 98,296,710 19.62 176,866,836 146,657,668 20.60 Ofwhich:thefinancialliabilitiesandderivativefinancialliabilitiesatfairvaluethroughprofitorloss - - - Depositsfrombanksandotherfinancialinstitutions 39,973,946 28,359,816 40.95 Duetocustomers 114,094,984 93,372,969 22.20 Others 22,797,906 24,924,883 -8.53 9,188,529 6,361,502 44.44 Netassetspershare(Yuan) 2.08 1.69 23.08 114,094,984 93,372,969 22.20 Ofwhich:Corporatedeposit 84,952,353 71,944,973 18.08 Retaildeposits 29,142,631 21,427,996 36.00 35,480,769 25,646,162 38.35 Ofwhich:Corporateloans 21,560,304 16,328,927 32.04 Discount 32,697 1,067,123 -96.94 Retailloans 13,887,768 8,250,112 68.33 Loanimpairmentprovision 888,569 514,355 72.75 34,592,200 25,131,807 37.64 158 SummaryofFinancialDataandBusinessData 3.Qualityindicatorofasset* (Unit:RMBthousand) Item Yr2012 Yr2011 Increaseordecreaseyoy （%） Normalloans 32,184,000 23,500,043 36.95 Special-mentionedloan 1,945,185 1,963,928 -0.95 Non-performingloans 265,440 212,075 25.16 Ofwhich:Subprime 179,453 62,977 184.95 Doubtful 79,648 141,316 -43.64 Loss 6,340 7,781 -18.52 Non-performingloanratio 0.77 0.85 -7.23 Provisioncoverage 338.57 256.63 31.93 Provisionadequacyratio 184.10 407.79 -54.85 4.Theadequacyindexforcapital (Unit:RMBthousand) Item Yr2012 Yr2011 Increaseordecreaseyoy （%） Netcapital 8,786,265 6,061,890 44.95 Ofwhich:Netcorecapital 8,529,088 5,886,681 44.89 Supplementarycapital 257,427 175,200 46.93 Netrisk-weightedassets 61,944,344 49,658,279 24.74 Capitaladequacyratio（%） 14.18 12.21 16.13 Corecapitaladequacyratio（%） 13.77 11.85 16.20 159 SummaryofFinancialDataandBusinessData 5.Changesinshareholders'equityduringthereportingperiod (Unit:RMBthousand) 2 0 1 Item Thebeginningofperiod Increaseordecrease Theendofperiod 2 A n Capitalstock 3,720,000 640,000 4,360,000 n u a l R Capitalsurplus 1,053,006 656,277 1,709,283 e p o r Surplusreserves 148,750 169,805 318,555 t Generalprovisions 441,437 403,970 845,407 Undistributedprofits 906,768 908,635 1,815,403 Minorityinterest 91,541 48,340 139,881 6,361,502 2,827,027 9,188,529 6.Supplementaryfinancialindicatorsasoftheendofreporting period （Unit：%） Item Standardindicators Attheendof2012 Attheendof2011 Liquidityratio:RMB* ＞35 58.66 36.82 Foreigncurrency* ＞35 140.71 48.98 Domesticandforeigncurrency* ＞35 58.83 36.84 Loan-to-depositratio(includingdiscount) ＜60 31.12 27.50 Netcapitalratioofsinglelargestgroup borrower* ＜15 3.31 6.63 Netcapitalratiooftoptenborrowers* ＜100 20.82 38.75 Costtoincomeratio(excludingsalestax) ＜35 39.38 43.67 Note:thedatawith*inabovetablecomesfromthestatementsoftheparentcompanyandothersfrom thoseofthegroup. 160 DiscussionandAnalysisofStateofOperation ⅠThemainbusinessscopeoftheBank Publicdepositstaking;issuanceofshort-term,medium-termandlong-termloans;arranging settlementofbothdomesticandoverseasaccounts;handlingtheacceptanceanddiscountofnegotiable instruments;issuing,cashingandsellinggovernmentbondsasagents;Doinginter-banklendingand borrowing;buyingandsellingperseorasagentsforeignexchanges;engaginginbankcardbusinesses; providingL/Cserviceandguarantee;buyingandsellinggovernmentbondsandfinancialbonds; handlingreceiptsandpaymentsandinsurancebusinessesasagents;providingsafeboxes;and undertakingotherbusinessesapprovedbytheChinaBankingRegulatoryCommission. Ⅱ Businesschannels Duringthereportingperiod,thebankcontinuestovigorouslypromotetheconstructionof