Financial Highlights Total assets balance Total deposits balance Unit: billion Yuan Unit: billion Yuan Since the public listing in 2007, Bank of Beijing has maintained a balanced development of profit, scale and quality, and achieved outstanding performance. : : : : : : : : : : Equity attributed to parent Total loans balance company’s shareholders Unit: billion Yuan Unit: billion Yuan : : : : : : : : : : Net Profit Total dividend Unit: billion Yuan Unit: billion Yuan : : : : : : : : : : Table of Contents 02 Message from the Chairman 04 Message from the President 07 Definitions and Significant Risk Warning 08 Section I Important Notice 09 Section II Corporate Information 11 Section III Summary of Accounting Data and financial Indicators 16 Section IV Report of Board of Directors 49 Section V Significant Matters 55 Section VI Changes in Share Capital and Status of Shareholders 59 Section VII Information of Directors, Supervisors, Senior Management and Employee 71 Section VIII Corporate Governance 76 Section IX Internal Control 78 Section X Honors Received During Reporting Period 80 Section XI Financial Statement 81 Section XII Documents for Inspection 83 Bank of Beijing 2012 Annual Auditors' Report and Financial Statements Notes Legal Notice: The English version is an unofficial courtesy translation of the original Chinese document. In case of any inconsistence, the Chinese version shall prevail. 02 | Bank of Beijing Annual Report 2012 Message from the Chairman As the year of 2013 arriving, Bank of Beijing has stepped into its 18th year of development. It was in 2012 that the CPC had its successful 18th Congress. Also in 2012, following the scientific guidance of government departments and regulatory authorities, with the theme of scientific development, Bank of Beijing has worked hard to endeavor its journey on strategic transformation and business structure optimization. At the end of 2012, Bank of Beijing’s total assets balance reached 1.12 trillion Yuan; net profit was 11.7 billion Yuan, with a YOY growth of 30%; profit per capital was over 1.40 million Yuan, while cost/income ratio was 26%, which enabled the Bank to become the best profit per capital bank listed for six successive years; the Bank’s ROA was 1.13%, ROE was 19.14%, CAR reached 12.90%, NPL ratio was 0.59% and provision coverage ratio was 420%. Currently, the Bank ranks No.132 in terms of tier1 capital on the Top1000 World Banks list, with a brand value over 10 billion Yuan. In addition to outstanding business results, Bank of Beijing also achieved various strategic breakthroughs: It has successfully completed the first private placement after public listing, which raised 11.8 billion Yuan capital. Regional institutions increased to 68 branches, with asset contribution over 40% to the Bank’s total assets. Bank of Beijing Consumer Finance Company realized profit of 40.00 million Yuan and developed more than 40 thousand clients; ING-BoB Life Insurance greatly improved its competitiveness, and now ranks No.1 among joint venture companies; all the three village banks have maintained a good development, and built a diversified, professional and centralized comprehensive financial service platform. The Bank also launched a three-year blueprint for “technology finance”, committing minimum 100 billion Yuan financing support to technology companies; provided in total 50 billion Yuan to support culture & creative sectors, to build the “Best bank in culture finance service”, and its market share in Beijing reached over 50%; promoted “Beijing Social Security Card” and developed bank-hospital settlement connection, to improve the convenience for citizens. The success of Bank of Beijing is fundamentally attributed to the great age of the reform & opening up, to the prosperous development of China’s economy, to the scientific decision-making of the Party, State Council and government authorities, to the appropriate guidance from regulators, and to the care and support from our shareholders, clients and the public. On behalf of the Bank, I would like to express our utmost gratitude to all of you. Thank you. Towards the journey ahead, under the guidance of the 18th CPC Congress spirit, Bank of Beijing will continue to impellent the macro policy, to build an international top-class modern bank, in order to contribute more to China’s growth. Chairman: 04 | Bank of Beijing Annual Report 2012 Message from the President The year of 2012 has been significantly important for China, where the Party’s 18th Congress was organized successfully, China’s economy had stable and relatively rapid development, interest rate de-regulation has been accelerated and the livelihood and social security for the people has been tremendously improved. Faced the changing environment, Bank of Beijing has strived towards its goal to deliver satisfactory performance to investors. Steady improvement of business results. In 2012, Bank of Beijing has accelerated its transformation and enhanced fine management, which achieved a balanced development of scale, profit and quality. Total assets balance at year-end was 1.12 trillion Yuan, up by 17% compared to 2011-end; total deposits and loans balance reached 713.8 billion Yuan and 496.7 billion Yuan respectively, which increased by 16% and 22%. Net profit achieved was 11.7 billion Yuan, with a YOY growth of 30%. ROA was 1.13% and ROE was 19.14%. Profit per capital exceeded 1.40 million Yuan while maintaining a 26% cost/income ratio. NPL ratio at year-end was 0.59% while provision coverage ratio was 420%. The provision/total loan ratio also reached regulatory requirement of 2.50% four years ahead of schedule. The Bank maintained a good asset quality and strong risk resistance capacity. Remarkable progress of strategic transformation. Driving by innovation, the Bank achieved rapid growth in SME, retail and fee business. At the end of 2012, SME lending balance was 190.8 billion Yuan, up by 25% than 2011-end. Its contribution in total corporate lending also increased by 3 percent to 51%. Growth of retail banking was above the average business growth, where savings deposits increased by 21% and contribution in total deposits went up to almost 20%, retail loan balance accounted for 18% of total lending. Net fee & commission income was 2.7 billion, with a YOY growth of 66%. Outstanding featured financial brands. In 2012, Bank of Beijing continued a featured, differentiated and professional development, to build “technology finance”, “culture finance” and “consumer finance”. It provided in total 100.0 billion Yuan loan to over 4000 high-tech micro companies in Zhongguancun Innovation Zone; market share of culture finance in Beijing has always been above 50%; it also granted 2.2 billion Yuan consumer finance and year-end balance was 1.9 billion with 42 thousand clients. Great recognition of brand value. On the latest list of “The Banker” for Top1000 World Banks, Bank of Beijing ranks No.132 in terms of tier 1 capital, up by 13 positions than 2011. On the “Top500 most valuable Chinese brands” by the “World Brand Lab”, it ranks No.134 with a brand value of 10.64 billion Yuan, up by 5 positions than 2011. The year of 2013 will be the critical year for China’s “12th five-year” planning, and a challenging year for banking sector’s transformation. Bank of Beijing has fully prepared itself to embrace the new chapter and continue to build a legendary bank! President: 6 | Bank of Beijing Annual Report 2012 Bank of Beijing Annual Report 2012 | 07 Definitions and Significant Risk Warning Definitions Unless otherwise stated, the following terms shall have the meaning set out below in this Report: In the Report Definition The Bank, the Company, BoB Bank of Beijing Co., Ltd. AOA, Articles of Association The Articles of Association of the Bank PBOC, Central Bank People’s Bank of China CBRC China Banking Regulatory Commission CSRC China Securities Regulatory Commission SSE The Shanghai Stock Exchange Yuan Renminbi Yuan Significant Risk Warning The Company mainly faces credit risk, market risk, liquidity risk and operational risk etc in its operation. The Company has taken measures to effectively manage and control those business risks. Details please refer to Section IV Report of Board of Directors. 08 | Bank of Beijing Annual Report 2012 Section I Important Notice 1.1 The Board of Directors, Supervisory Board and Directors, Supervisors as well as senior managers of the Bank hereby warrant that there are no false records, misleading statements or material omissions in the information contained in this report, and undertake individual and joint obligations for the authenticity, accuracy and integrity of the report content. 1.2 This annual report (including text and summary) was reviewed and approved by the Company’s Board of Directors on 25 April 2013. 1.3 Profit distribution plan of the reporting term or capital surplus conversion to equity plan. Based on the total share capital of 8.80 billion shares as of 2012-end as the foundation, every 10 shares held by shareholders will receive cash dividend 4.00 Yuan (tax inclusive), in total 3.52 billion Yuan (tax inclusive). 1.4 The annual financial statement of the Company has been audited by PricewaterhouseCoopers Zhongtian Public Certified Accountants, who also issued standard unqualified audit report. 1.5 Mr. Yan Bingzhu, Chairman, Mrs. Yan Xiaoyan, President, Mrs. Du Zhihong, CFO, and Mrs. Yao Yi, Head of Finance, hereby guarantee the authenticity and integrity of the financial statements contained in this annual report. 1.6 This report may contain forward-looking statements that involve future plans. These forward-looking statements mentioned do not constitute a commitment by the Bank to its investors. Investors should be aware of the investment risks. Bank of Beijing Annual Report 2012 | 09 Section II Corporate Information 2.1 Registered Corporate Name in Chinese: ӑ̚ᩏᛠᐦ͊థᬌМՂ (Chinese abbreviation: ӑ̚ᩏᛠ ) Registered Corporate Name in English: Bank of Beijing Co.,Ltd.