Interim 2014 Report Contents Definition 2 Chapter I Corporate Information 3 Chapter II Summary of Accounting Information and Financial Index 5 Chapter III Management Discussion and Analysis 7 Chapter IV Changes in Share Capital and Particulars of Shareholders 55 Chapter V Profile of Directors, Supervisors, Senior Management, 58 Employees and Institutions Chapter VI Corporate Governance 63 Chapter VII Material Events 66 Chapter VIII Interim Financial Statement 72 INTERIM REPORT 2014 Huishang Bank Corporation Limited Definition In this interim report, unless the context otherwise specifies, the following terms shall have the meaning set out below. “The Bank” or “Huishang Bank” means Huishang Bank Corporation Limited, including its subsidiaries, branches and sub-branches “CBRC” means China Banking Regulatory Commission (中國銀行業監督管理委員會) “CSRC” means China Securities Regulatory Commission (中國證券監督管理委員會) “CBRC Anhui Office” means China Banking Regulatory Commission Anhui Office (中國銀行業監督管理委員 會安徽監管局) “Domestic Shares” means ordinary shares issued by our Bank in the PRC, with a nominal value of RMB1.00 “Hong Kong” means Hong Kong Special Administrative Region of the PRC “Hong Kong Stock Exchange” means The Stock Exchange of Hong Kong Limited “Hong Kong Listing Rules” means Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited “Listing” means the listing of H shares of the Bank on the Hong Kong Stock Exchange “Listing Date” means the date on which dealings in the H shares of the Bank first commence on the Hong Kong Stock Exchange, i.e. 12 November 2013 “Non-green Industries” means the heavily-polluting, highly energy-consuming and over-capacity industries “Three Dimensional Rural Issues” abbreviation for issues related to agriculture, rural areas and farmers “PBOC” means the People's Bank of China “PRC” means the People's Republic of China “Yuan” or “RMB” means Renminbi, the lawful currency of China. Unless otherwise specifies, any monetary amount referred to in this report will be Renminbi “HK$” or “Hong Kong dollars” means Hong Kong dollars, the lawful currency of Hong Kong 2 INTERIM REPORT 2014 Huishang Bank Corporation Limited Chapter I Corporate Information 1.1 CORPORATE INFORMATION 1.1.1 Statutory Chinese name: 徽商銀行股份有限公司 Statutory English name: Huishang Bank Corporation Limited 1.1.2 Statutory representative: Li Hongming Authorized representatives: Wu Xuemin, Ngai Wai Fung Board of Directors secretary: Hu Dongdong Joint company secretaries: Ngai Wai Fung, Hu Dongdong 1.1.3 Registered and business office: Block A, Tianhui Building, 79 Anqing Road, Hefei, Anhui Province, PRC 1.1.4 Contact address: Block A, Tianhui Building, 79 Anqing Road, Hefei, Anhui Province, PRC Tel: +86-0551-62667787 Fax: +86-0551-62667787 Post code: 230001 Bank’s website: www.hsbank.com.cn E-mail: [email protected] 1.1.5 Principal place of business in Hong Kong: 18/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong 1.1.6 Certified public accountants: PricewaterhouseCoopers 22/F, Prince’s Building, Central, Hong Kong 1.1.7 Legal advisor as to PRC laws: King & Wood Mallesons Legal advisor as to Hong Kong laws: Latham & Watkins Compliance Advisor: Guotai Junan Capital Limited 1.1.8 Domestic shares trustee agency: China Securities Depository and Clearing Corporation Limited H shares registrar office: Computershare Hong Kong Investor Services Limited Note Huishang Bank Corporation Limited is not an authorized institution within the meaning of the Banking Ordinance (Chapter 155 of Laws of Hong Kong), is not subject to the supervision of the Hong Kong Monetary Authority, and is not authorized to carry on banking/deposit-taking business in Hong Kong. 3 INTERIM REPORT 2014 Huishang Bank Corporation Limited Chapter I Corporate Information 1.2 COMPANY PROFILE Headquartered in Hefei, Anhui Province, Huishang Bank is the first regional joint stock commercial bank in the PRC established through the merger and reorganization of city commercial banks and urban credit cooperatives with the approval of the CBRC. The Bank was incorporated on 4 April 1997. The Bank changed its name to Huishang Bank Corporation Limited on 30 November 2005. On 28 December 2005, the Bank officially merged with 5 city commercial banks of Wuhu, Ma’anshan, Anqing, Huaibei and Bengbu and 7 urban credit cooperatives of Lu’an, Huainan, Tongling, Fuyang Technology, Fuyang Xinying, Fuyang Yinhe and Fuyang Jinda in Anhui Province. The Bank officially opened on 1 January 2006. The Bank holds a financial institution license numbered B0162H234010001 from CBRC Anhui Office and a legal entity business license numbered 340000000026144 from Anhui Provincial Administration of Industry and Commerce. The registered address is Block A, Tianhui Building, 79 Anqing Road, Hefei, Anhui Province, PRC. The Bank’s principal activities include the taking of deposits from corporate and retail customers, using such deposits to finance its loans and funds business, which mainly encompass money market activities, investment and trading activities and transactions on behalf of customers in the PRC. As of 30 June 2014, Huishang Bank had a registered capital of 11,050 million and 6,184 on-the-job employees. Apart from the headquarters, the Bank had 17 branches, 207 front offices (including 10 branches of business department and 197 sub-branches) and 460 self-service areas. The Bank also owned a holding subsidiary, Jinzhai Huiyin Rural Bank Co., Ltd, and holds shares in Chery Motor Finance Service Co. Ltd and Wuwei Huiyin County Bank Co., Ltd. Huishang Bank always insists on positioning itself as a bank that: “serves the local economy; serves the SMEs; serves the general public”. Its business has sustained a relatively faster growth and its comprehensive strength has improved gradually, while its operations management improved steadily alongside with the synergic development of its scale, quality and efficiency. The Bank has established favourable social images of being a “local bank”, “people’s bank” and “SME bank”, and had now become a regional commercial bank with relatively high profile influence on the banking industry in Anhui Province and even the PRC. The Bank has been well recognised and widely praised by bank regulatory authorities as well as the community. Since 2008, the Bank has been rated by CBRC as a class two bank for five consecutive years, which attained so far the highest regulatory rating standards in the PRC. The Bank has also been chosen as one of the “Top 1000 World Banks” by The Banker, a UK magazine, for five consecutive years, in which the Bank was ranked 279th in 2013. 1.3 AWARDS FOR THE FIRST HALF OF 2014 During the first half of 2014, the Bank has won numerous accolades and rewards in contests organized by domestic authorities: ◆ In January, the Bank was awarded “The Best City Commercial Bank of Trading and Finance in 2013” by the Third China Trade Finance Annual Conference; ◆ In January, the Bank was awarded “2013 Gold Medals for Chinese Financial Institution – Annual Small and Medium-Sized Bank with the Best Potential Growth” by the Financial Times; ◆ In January, the Bank was awarded the First Prize of “Non-tax Agency Work of Provincial Government in 2013” awarded jointly by Anhui Provincial Department of Finance and the Hefei Central Sub-branch of PBOC; ◆ In March, the Bank was awarded “Outstanding Dealers in China’s Bond Market” in the selection of Outstanding Members in China’s Bond Market in 2013 organized by China Central Depository & Clearing Co. Ltd.; ◆ In March, the Bank was awarded “Excellent Trader in Inter-bank Demotic Market in 2013” as well as individual awards of “Outstanding Trading Supervisor” and “Outstanding Trader” by the national inter-bank lending center; ◆ In April, the Bank was awarded “A-class Agencies of the Underwriting Agencies of Saving Bonds in 2013” by the Hefei Central Sub-branch of PBOC. 4 INTERIM REPORT 2014 Huishang Bank Corporation Limited Chapter II Summary of Accounting Information and Financial Index 2.1 MAIN FINANCIAL INFORMATION Unit: in millions of RMB Changes over the corresponding period of the January to January to previous year Results of operation June 2014 June 2013 (%)+/(-) Net operating income(1) 6,000 5,118 17.23 Profit before income tax 3,731 3,207 16.34 Net profit attributable to shareholders of the Bank 2,839 2,452 15.78 Unit: RMB Changes over the corresponding period of the January to January to previous year By per share June 2014 June 2013 (%)+/(-) Basic earnings attributable to shareholders of the Bank 0.26 0.30 -13.33 Diluted earnings attributable to shareholders of the Bank 0.26 0.30 -13.33 Net closing assets attributable to shareholders of the Bank 3.01 2.71 11.07 Unit: in millions of RMB Changes over the end of the 30 June 31 December previous year Scale indicators 2014 2013 (%)+/(-) Total assets 442,966 382,109 15.93 Including: Total loans and advances 211,787 195,449 8.36 Total liabilities 409,644 350,437 16.90 Including: Total deposits from customers 306,494 272,798 12.35 Equity attributable to shareholders of the Bank 33,274 31,625 5.21 Note: (1) Net operating income comprises net interest income, net fee and commission income, net trade income, net income from investment in securities as well as other net operating income, excluding net investment income from associates and joint ventures. 5 INTERIM REPORT 2014 Huishang Bank Corporation Limited Chapter II Summary of Accounting Information and Financial Index 2.2 FiNANCIAL RATIOS Unit: % Changes over the corresponding period of the January to