CHINA MINSHENG BANKING CORP., LTD. (a joint stock limited company incorporated in the People’s Republic of China with limited liability) STOCK CODE Add. : No. 2, Fuxingmennei Avenue, Xicheng District, 2014 2014 Beijing, China Tel. : (+86-10) 58560666 ANNUAL REPORT ANNUAL Fax. : (+86-10) 58560690 REPORT Zip Code: 100031 Website: www.cmbc.com.cn This annual report is printed on environmental paper. WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 Important Notice The Board of Directors, the Supervisory Board, the Directors, Supervisors and senior management of the Company confirm that there are no misstatements, misleading representations or material omissions in this report, and assume joint and several liability for the truthfulness, accuracy and completeness of this report. The annual report was considered and approved on 30 March 2015 at the 23rd meeting of the sixth session of the Board of the Company. 17 Directors were entitled to attend the meeting. 11 Directors attended the meeting in person (including Liu Yonghao (Vice Chairman), Guo Guangchang, Ba Shusong and Wong Lihua attended by teleconference) and one Director was represented by proxy. Director Wang Junhui entrusted Chairman Hong Qi, in writing, to exercise his voting rights at the meeting. Director You Lantian was absent from the meeting. According to the profit distribution plan for the second half of 2014 passed by the Board, on the basis of the total share capital of the Company as at the record date for the purpose of profit distribution, a cash dividend of RMB1.1 (before tax) for every 10 shares will be distributed to shareholders of the Company. Such profit distribution plan shall be subject to the approval of the shareholders’ general meeting of the Company. For the purpose of this annual report, China Minsheng Banking Corp., Ltd. shall be referred to as the “Company”, the “Bank”, “China Minsheng Bank” or “Minsheng Bank”, whereas China Minsheng Banking Corp., Ltd. and its subsidiaries together shall be referred to as the “Group”. The financial data and indicators contained in this annual report are prepared according to the rules of IFRS. Unless otherwise specified, all amounts are the consolidated data of the Group and denominated in RMB. KPMG Huazhen Certified Public Accountants (Special General Partnership) and KPMG Certified Public Accountants, auditors of the Company, have audited the financial reports of 2014 prepared in accordance with the CAS and the IFRS respectively, and issued standard and unqualified auditors’ reports. Board of Directors China Minsheng Banking Corp., Ltd. Hong Qi (Chairman, Acting President), Bai Dan (Senior Management responsible for accounting) confirm the truthfulness, accuracy and completeness of the financial reports included in this annual report. WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 Contents Important Notice Corporate Governance 132 Definitions 2 Shareholders’ General Meeting 182 Material Risk Warning 5 Internal Control 183 Message from the Chairman 6 Report of the Board of Directors 189 Strategic Positioning and Targets of Report of the Supervisory Board 195 the Company 13 Major Events 200 Annual Awards 14 Corporate Social Responsibility 204 Bank Profile 16 Financial Reports 209 Summary of Financial Data and Index of Documents for Inspection 414 Indicators 18 Organisation Chart 415 Management Discussion and Analysis 20 List of Entities 416 Changes in Share Capital and Statistics of Correspondent Banks 420 Information on Shareholders 92 Directors, Supervisors, Senior Management and Employees 106 WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 2 China Minsheng Banking Corp., Ltd. Definitions In this report, unless the context otherwise requires, the following terms shall have the meanings set out below. “ACFIC” All-China Federation of Industry and Commerce (中華全國工商 業聯合會) “Bank” or “Company” or China Minsheng Banking Corp., Ltd. “China Minsheng Bank” or “Minsheng Bank” “Board” or “Board of Directors” the Board of Directors of the Company “CBRC” China Banking Regulatory Commission “Chief Financial Officer” the Chief Financial Officer of the Company “Convertible Bond(s)” or A Share convertible bonds “Minsheng Convertible Bond(s)” or “A Share Convertible Bond(s)” “CPPCC” The National Committee of the Chinese People’s Political Consultative Conference (中國人民政治協商會議全國委員會) “CSRC” China Securities Regulatory Commission “Dagong” Dagong Global Credit Rating Co., Ltd. WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 Definitions Annual Report 2014 3 “Director” a director of the Company “Group” the Bank and its subsidiaries “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on Hong Kong Stock Exchange “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “IT” information technology “Minsheng Royal Asset Minsheng Royal Asset Management Co., Ltd. Management” “Minsheng Royal Fund” Minsheng Royal Fund Management Co., Ltd. “Minsheng Financial Leasing” Minsheng Financial Leasing Co., Ltd. “Model Code” Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Hong Kong Listing Rules “NSOE(s)” non-state-owned enterprise(s) “Phoenix Plan” (鳳凰計劃) A comprehensive customer-oriented plan for strategic transformation and restructuring of the Bank in response to the liberalisation of interest rate WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 4 China Minsheng Banking Corp., Ltd. Definitions “Senior Management” Senior management of the Company “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SSE” Shanghai Stock Exchange WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 Annual Report 2014 5 Material Risk Warning The Company has no foreseeable material risks. For potential risks, please refer to “XI. Prospects and Measures — (III) Potential risks” under the section of “Management Discussion and Analysis” in this report. WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 6 China Minsheng Banking Corp., Ltd. Message from the Chairman Chairman Mr. HONG Qi WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 Message from the Chairman Annual Report 2014 7 In 2014, the global economy was mired in a period of austerity adjustments. On the other hand, the economy of China saw a new development trend with slower economic growth, structural adjustment and initial adaptation to new policies. The new development trend added to the pressure of China’s economic restructuring and downward adjustment, resulting in overcapacity. Due to the slowdown of macro-economic growth, increased risks of asset quality, accelerated liberalization of interest rate and the success of internet fi nance, the banking industry gradually resumed its reasonable growth under the new development trend. In 2014, in the face of an ever-changing external environment and complicated competition environment, the Company overcame various diffi culties and challenges by making persistent efforts in strategic transformation. In response to new challenges and opportunities, the Company ensured its stable development through preventing risk, maintaining growth, facilitating reform, making adjustment and encouraging creativity. The conditions of the operation are as follows: Steady growth of operating results. The net profi t attributable to equity shareholders of the Bank for 2014 amounted to RMB44,546 million, representing an increase of 5.36% as compared with the corresponding period of the previous year. Return on average assets and return on average shareholders’ equity were 1.26% and 20.35%, respectively, representing a slight decrease as compared with the corresponding period of the previous year. Basic earnings per share amounted to RMB1.31, representing an increase of RMB0.07 as compared with last year. As at the end of 2014, net assets per share attributable to equity shareholders of the Bank amounted to RMB7.03, representing an increase of RMB1.22 as compared with the end of 2013. Some indicators showed a slowdown of growth, refl ecting changes of the macro-environment and market demands and the determination of the Company to change and adjust its business strategies. Net profit attributable to shareholders of the Bank Net assets per share (RMB million) (RMB) 50,000 8 42,278 5.36% 44,546 7.03 40,000 1.22 6 5.81 30,000 4 20,000 2 10,000 0 0 2013 2014 2013 2014 WorldReginfo - 97e94664-5096-4eee-8ccf-71d19e68d8e0 8 China Minsheng Banking Corp., Ltd. Message from the Chairman Accelerated development of strategic businesses. In 2014, the Company further implemented its strategy of becoming a “bank for NSOEs”, “bank for small and micro enterprises” and “bank for high- end retail customers” in an orderly manner with proven results. As at the end of 2014, the Company had 11,876 NSOE customers with outstanding loan balances, and the outstanding general loans to NSOEs amounted to RMB653,505 million, accounting for 83.47% and 57.96% of corporate banking segment, respectively. Our strategic position of “bank for NSOEs” was further consolidated. In 2014, the Company maintained its leading position in small business fi nance. As at the end of 2014, outstanding loans to small and micro enterprises and the number of small business customers of the Company were RMB402,736 million and 2 ,911.9 thousand respectively, representing an increase of 52.86% as compared with the end of last year. Driven by the small business fi nance, the growth of deposits of the Company was signifi cantly strengthened. As at the end of 2014, fi nancial assets of individual customers under management