Bank of Communications Co., Ltd. Bank of Communications Co., Ltd. (A joint stock company incorporated in the People’s Republic of China with limited liability) Address and Postcode 2020 188 Yin Cheng Zhong Lu, Pudong New District, Shanghai, P.R. China 200120 Annual Report www.bankcomm.com Contents Important Reminders 02 Definitions 03 General Information 04 Financial Highlights 07 Statement from Chairman of the Board of Directors 08 Statement from President 12 Management Discussion and Analysis Economic and Financial Environment 17 Financial Statement Analysis 17 Business Review 34 Risk Management 59 Deepen the Reform 69 Outlook 71 After restructuring, BoCom BoCom was listed BoCom is one of the became the first nationwide on the Hong Kong note-issuing banks with state-owned joint-stock Stock Exchange. the longest history in commercial bank in China modern China. 2005 Founded in 1987 1908 i Bank of Communications Co., Ltd. Corporate Governance Changes in Shares and Shareholders 73 Directors, Supervisors, Senior Management and Human Resource Management 81 Corporate Governance Report 103 Report of the Board of Directors 120 Report of the Board of Supervisors 126 Social Responsibilities 130 Significant Events 132 Organisation Chart and List of Institutions 134 Consolidated Financial Statements and Others Independent Auditor’s Report 141 Consolidated Financial Statements 148 Notes to the Consolidated Financial Statements 154 Unaudited Supplementary Financial Information 298 Supplementary Information on Leverage Ratio, Liquidity Coverage Ratio and 305 Net Stable Funding Ratio BoCom carries out FinTech and digital transformation. BoCom builds the leading bank The State Council approved the Scheme on the Deepening in the Yangtze River Delta. BoCom was listed on of Reform of Bank of the Shanghai Stock Communications. Exchange. 2020 2015 2007 Century-Old Financial Services Brand Annual Report 2020 H Share 1 IMPORTANT REMINDERS I. The Board of Directors, the Board of Supervisors and Directors, Supervisors, Senior Management of the Bank are responsible for the authenticity, accuracy and completeness of the Annual Report, free of false records, misleading statements or material omissions and assume individual and joint legal responsibilities. II. The 2020 Annual Report and its summary of the Bank have been reviewed and approved at the 18th meeting of the 9th Session of the Board of Directors of the Bank on 26 March 2021. The number of directors who should attend the meeting was 15, with 15 directors attending the meeting in person. III. Mr. Ren Deqi, Chairman of the Bank, Mr. Guo Mang, Principal in charge of accounting and Mr. Chen Yu, Head of Accounting Department represent that they are responsible for the authenticity, accuracy and completeness of the financial statements in Annual Report. IV. The Group’s financial statements that were prepared in accordance with China Accounting Standards were audited by PricewaterhouseCoopers Zhong Tian LLP (Special General Partnership). Those prepared in accordance with International Financial Reporting Standards were audited by PricewaterhouseCoopers, both with unqualified auditor’s reports issued. V. The proposal on profit distribution for the year of 2020 was reviewed by the Board of Directors: based on the total issued ordinary shares of 74.263 billion of the Bank as at the end of the Reporting Period, a cash dividend of RMB0.317 (including tax) per share would be distributed to registered shareholders of A share and H share, totalling RMB23.541 billion. There is no proposal on bonus share or proposal on conversion of capital reserve into share capital for the current year. VI. Prospective statements involved in the report, such as future plans and development strategies, do not constitute a substantive commitment of the Group to investors. Investors and stakeholders are required to keep sufficient risk awareness and understand the differences among the plan, forecasting and commitment. VII. The Group’s operation is mainly exposed to risks including credit risk, market risk, operational risk and compliance risk. The Group took and will continue to take various steps to effectively manage risks. For more details, please refer to section of “Management Discussion and Analysis – Risk Management”. 2 Bank of Communications Co., Ltd. DEFINITIONS The following terms will have the following meanings in this Report unless otherwise stated: “Bank”, “BoCom” Bank of Communications Co., Ltd. “CBIRC” China Banking and Insurance Regulatory Commission “CHI” Central Huijin Investment Ltd. “CSRC” China Securities Regulatory Commission “Group” The Bank and its subsidiaries “Hong Kong Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited “HSBC” The Hongkong and Shanghai Banking Corporation Limited “Ministry of Finance” Ministry of Finance of the People’s Republic of China “PBOC” The People’s Bank of China “SSE” The Shanghai Stock Exchange “SSF” The National Council for Social Security Fund Major products and services of the Bank “Benefit Loan” Online credit consumption loans launched by the Bank for qualified customers. “BoCom Tong Ye Fortune” An interbank wealth management brand of the Bank with core value of “Corporation for Everlasting Enterprises” devoted to providing comprehensive product support and service solution for interbank financial customers. “Cloud Banking” A WeChat Mini Program-based online marketing service platform of the Bank for account managers. “Go Pay” A one-stop digital service platform of finance and life for all customers. “Inclusive e-Loan” Online inclusive financing business services launched by the Bank for qualified customers. “Mobile Banking” A mobile APP providing online business processing and other services to personal customers of the Bank and covering a variety of financial products and life service needs of customers. “OTO Fortune” A main brand of retail business of the Bank with core value of “Creating and Sharing Abundant Wealth with Noble Virtue” devoted to realising value maintenance and appreciation of wealth for customers. “Win to Fortune” A corporate wealth management brand of the Bank providing comprehensive one-stop wealth management solutions for corporate and government institutions through intelligent financial service and digital transformation. Annual Report 2020 H Share 3 GENERAL INFORMATION I. CORPORATE INFORMATION Chinese name: 交通銀行股份有限公司 Domestic auditor: PricewaterhouseCoopers Zhong Chinese 交通銀行 Tian LLP (Special General abbreviation: Partnership) English name: Bank of Communications Co., Ltd. 11th Floor PricewaterhouseCoopers Centre, 2 Corporate Avenue, 202 Legal representative: Ren Deqi Hu Bin Road, Shanghai, PRC Authorised Ren Deqi, Gu Sheng Name of auditor Hu Liang, Ma Yingni representatives: signed: Secretary of the Gu Sheng International PricewaterhouseCoopers Board of Directors auditor: and Company 22/F, Prince’s Building, Central, Secretary: Hong Kong Name of auditor Ling Tung Man Tom Registered address: 188 Yin Cheng Zhong Lu, China signed: (Shanghai) Pilot Free Trade Zone, Shanghai, P.R. China PRC legal advisor: Grandall Law Firm (Shanghai) Hong Kong legal advisor: DLA Piper Hong Kong Contact and address: 188 Yin Cheng Zhong Lu, Pudong New District, Shanghai Share Registrar and Transfer Office Postal code: 200120 A Share: China Securities Depository and Clearing Tel: 86-21-58766688 Corporation Limited, Shanghai Branch Fax: 86-21-58798398 No. 188 South Yanggao Road, Pudong E-mail: [email protected] New District, Shanghai, P.R. China Official website: www.bankcomm.com H Share: Computershare Hong Kong Investor Principal place of 20 Pedder Street, Central, Hong Services Limited business in Hong Kong Flat 1712-1716, 17th Floor, Hopewell Kong: Centre, 183 Queen’s Road East, Wanchai, Hong Kong Information Disclosure and Places Where the Annual Report Is Available Other Information A share China Securities Journal, Shanghai Unified social credit code: 9131000010000595XD Securities News, Securities Times and website of the SSE at www. sse.com.cn H share Website of HKEx News at www. hkexnews.hk Places where the Board of Directors Office of the annual report is Bank and principal business available locations Information of Shares Classes Stock exchange Stock name Stock code A Share Shanghai Stock Bank of 601328 Exchange Communications H Share The Stock Exchange of BANKCOMM 03328 Hong Kong Limited Domestic Shanghai Stock BOCOMPREF1 360021 Preference Exchange Share 4 Bank of Communications Co., Ltd. GENERAL INFORMATION II. COMPANY PROFILE AND PRINCIPLE ACTIVITIES Founded in 1908, the Bank is one of the note-issuing banks with the longest history in modern China. The Bank reopened after reorganisation on 1 April 1987 and became the first nationwide state-owned joint-stock commercial bank in China, with Head Office located in Shanghai. The Bank was listed on the Hong Kong Stock Exchange in June 2005 and on the Shanghai Stock Exchange in May 2007. The Bank provides the customers with corporate banking, personal banking and interbank and financial market businesses. Corporate banking businesses include offering deposits and loans, supply chain finance, cash management, international settlement and trade finance, investment banking, asset custody, wealth management and all kinds of intermediary businesses to corporate customers and government agencies. Personal banking businesses include services such as deposits and loans, wealth management,