China CITIC Bank Corporation Limited (A joint stock limited company incorporated in the People’s Republic of China with limited liability) Stock Code: 0998 2019 Annual Report Strive to Be the Company Offering the Best Comprehensive Financial Services Address : No.9 Chaoyangmen Beidajie, Dongcheng District, Beijing Postal Code : 100010 Investor Hotline : +86-10-85230010 Email Address : [email protected] Website : www.citicbank.com 2019 Annual Report This Annual Report is printed on recyclable paper Corporate Profile China CITIC Bank was founded in 1987. It is one of the earliest emerging commercial banks established during China’s reform and opening up and also China’s first commercial bank participating in financing at both domestic and international financial markets. A keen contributor to China’s economic development, the Bank is renowned at home and abroad for brushing numerous track records in the modern Chinese financial history. In April 2007, the Bank simultaneously listed its A and H shares at the Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited. The Bank aspires to become a unique and responsible enterprise offering the best comprehensive financial services with dignity and a human touch. To attain this development vision, the Bank fully leverages on the unique competitive advantages of CITIC Group in placing financial and non-financial businesses on an equal footing, and at the same time holds firm to its “customer orientation” and adheres to the business concept of “safe CITIC Bank, compliant operation, science and technology for growth, serving the real economy, market orientation and value creation”. For corporate customers and institutional customers, the Bank offers integrated financial solutions in corporate banking business, international business, financial markets business, institutional banking business, investment banking business, transaction banking business and custody business. For individual customers, the Bank provides diversified financial products and services in retail banking, credit card, consumer finance, wealth management, private banking, going abroad finance and e-banking. As such, the Bank satisfies the needs of corporate, institutional and individual customers for comprehensive financial services on all fronts. As at the end of 2019, the Bank had 1,401 outlets in 151 large and medium-sized cities in China and 6 affiliates at home and abroad including CITIC International Financial Holdings Limited, CNCB (Hong Kong) Investment Co., Ltd., CITIC Financial Leasing Co., Ltd., Zhejiang Lin’an CITIC Rural Bank Limited, CITIC aiBank Corporation Limited, and JSC Altyn Bank. CITIC Bank International Limited, a subsidiary of CIFH, recorded 38 outlets in Hong Kong SAR, Macau SAR, New York, Los Angeles, Singapore and the Chinese mainland. CNCB (Hong Kong) Investment Co., Ltd. had 3 subsidiaries in Hong Kong and the Chinese mainland. CITIC aiBank Corporation Limited, a joint venture co-sponsored by the Bank and Baidu, was the first independent legal entity practicing direct banking in China. JSC Altyn Bank had 7 outlets and 1 private banking center in Kazakhstan. The Bank has persevered in serving the real economy, engaging in stable healthy business operation and keeping abreast with the times. Thriving through over 30 years’ growth and expansion, the Bank has become a financial conglomerate with strong comprehensive competitiveness and powerful brand influence, registering more than RMB6 trillion total assets and nearly 60,000 employees. In 2019, The Banker magazine of the United Kingdom rated the Bank the 19th on its list of the “Top 500 Global Bank Brands” and the 26th on its list of the “Top 1,000 World Banks” in terms of tier-one capital. Important Notice The Board of Directors, the Board of Supervisors, directors, supervisors and senior management members of the Bank guarantee that the information contained in the 2019 Annual Report does not include any false records, misleading statements or material omissions, and assume several and joint liabilities for its truthfulness, accuracy and completeness. The meeting of the Board of Directors of the Bank adopted the full text and summary of the Bank’s 2019 Annual Report on 26 March 2020. All of the 10 eligible directors attended the meeting. The supervisors and senior management members of the Bank attended the meeting as non-voting delegates. The 2019 annual financial reports that the Bank prepared in accordance with the PRC Accounting Standards and the International Financial Reporting Standards (IFRS) were audited respectively by PricewaterhouseCoopers Zhong Tian LLP (Special and General Partnership) and PricewaterhouseCoopers in accordance with the auditing standards of the Chinese mainland and Hong Kong SAR respectively, with both firms producing an auditor’s report with a standard unqualified audit opinion. Ms. Li Qingping as Chairperson of the Board of Directors, Mr. Fang Heying as President and concurrently Chief Financial Officer of the Bank and Ms. Li Peixia as General Manager of the Finance and Accounting Department of the Bank hereby declare and guarantee the truthfulness, accuracy and completeness of the financial report contained in the Bank’s 2019 Annual Report. Profit Distribution Plan: Chapter 4 “Report of Board of Directors – Profit and Dividend Distribution of Ordinary Shares” of this report discloses the Bank’s Profit Distribution Plan for 2019 as reviewed and adopted by the Board of Directors and to be submitted to the 2019 Annual General Meeting for deliberation. The plan proposes to pay a cash dividend of RMB2.39 per 10 shares (before tax). No scheme for transfer of capital reserve to share capital will be applied for the current year. Cautionary note on forward-looking statements: Forward-looking statements such as future plans and development strategies contained in this report do not constitute substantive commitments of the Bank to its investors. Investors and relevant persons are kindly reminded to maintain adequate risk awareness of such statements and understand the differences between plans, forecasts and commitments. Material risk reminder: During the reporting period, the Bank was not aware of any material risk that would adversely affect its future development strategies and business targets. The Bank has detailed in this report the major risks that it was and may be exposed to in its operation and management and its countermeasures thereof. For relevant information thereof, please refer to “Risk Management” and “Outlook” in Chapter 3 “Management Discussion and Analysis” of the report. For the purpose of this report, numbers are expressed in Renminbi (RMB) unless otherwise specially stated. The report is compiled in both Chinese and English. Should there be any discrepancy between Chinese and English versions, the Chinese version shall prevail. Contents Chairperson’s Letter to Shareholders 4 President’s Letter to Shareholders 10 Chapter 1 Corporate Introduction 16 Chapter 2 Financial Highlights 22 Chapter 3 Management Discussion and Analysis 26 3.1 Overview of the External Macro Environment 26 and the Bank’s Operating Results 3.2 Analysis of the Financial Statements 28 3.3 Business Overview 54 3.4 Risk Management 76 3.5 Capital Management 85 3.6 Material Investments, Acquisitions and 86 Disposal and Restructuring of Assets 3.7 Information about Structured Entities 87 Controlled by the Bank 3.8 Outlook and Response 87 3.9 Management of Corporate Social Responsibility 88 Chapter 4 Report of the Board of Directors 89 Chapter 5 Changes in Ordinary Shares and Information on 114 Ordinary Shareholders Chapter 6 Preference Shares 125 Chapter 7 Convertible Corporate Bonds 128 Chapter 8 Directors, Supervisors, Senior Management 130 Members, Staff and Affiliates Chapter 9 Corporate Governance Report 150 Chapter 10 Report of the Board of Supervisors 170 Chapter 11 Independent Auditor’s Report and Financial 173 Report Mission and Vision To become a unique and responsible Vision enterprise offering the best comprehensive financial services with dignity and a human touch To create value for customers, seek happiness for employees, make Mission profit for shareholders and perform responsibility for the society Customer orientation, integrity, Core innovation, coordination values and excellence Building “trust” for long-term Brand growth, incorporating smart services motto for boundless financing 2 China CITIC Bank Corporation Limited Performance Overview Operating performance: Operating income Net profit 187.881 48.015 billion RMB billion RMB Total assets Fastest net profit growth in 5 years 6,750.433 billion RMB 7.87% Profitability: ROAA Cost-to-income ratio 0.76% 27.84% ROAE Net interest margin 11.06% 2.12% Allowance coverage ratio Asset quality: NPL ratio 175.25% The ratio of allowance for impairment of 1.65% loans to total loans 2.90% Monthly active users of Customer base: Corporate customers mobile banking APP 742,700 11.1547 million Retail banking customers Credit cards issued 102.2015 million 83.3250 million Note: Indicators under operating performance profitability and asset quality are date of the Group and indicators under customer base are date of the Bank. 2019 Annual Report 3 Chairperson’s Letter to Shareholders Li Qingping Chairperson Executive Director Chairperson’s Letter to Shareholders Dear shareholders, 2019 is a remarkable year. It marks the 70th anniversary of the PRC and the 40th anniversary of CITIC Group, the substantial shareholder of the Bank. Driven by the dream and inspiration, the