Information Disclosure of NCCB 2011 Contents Chapter 1 Important Notes.......................................................................................................1 Chapter 2 Brief Introduction to NCCB.................................................................................... 2 Chapter 3 Financial Highlights.................................................................................................3 Chapter 4 Report of the Board of Directors........................................................................... 5 Chapter 5 Risk Management................................................................................................. 10 Chapter 6 Shareholders and Related Party Transactions.................................................14 Chapter 7 Information on Directors, Supervisors, Senior Management and Staff.........15 Chapter 8 Corporate Governance.........................................................................................16 Chapter 9 Report of Supervisory Board............................................................................... 18 Chapter 10 Significant Events................................................................................................. 21 Chapter 11 Audit Report........................................................................................................... 23 1 Chapter 1 Important Notes The Board of Directors of Nanchong City Commercial Bank, the Supervisory Board, all their members and the Senior Management hereby acknowledge and warrant that the report contains no false records, misleading statements or major omissions, and assume joint and several liabilities as to the authenticity, accuracy and integrity of the content. Relative contents have been approved by 15th Meeting of the Third Board of Directors on March 11, 2012. Ascenda Certified Public Accountants Co., Ltd has audited the Financial Report according to Independent Auditing Standards for CPAs in China and issued its Audit Report without reservation. Mr. Huang Guangwei, the Chairman of the Board, Mr. Xing Min, the President, and Mr. Guo Yue, the Chief Financial Officer, declare and guarantee the authenticity and completeness of the financial statements in this report. Board of Directors Nanchong City Commercial Bank Co., Ltd. 2 Chapter 2 Brief Introduction to NCCB 南充市商业银行股份有限公司 Legal Chinese Name Nanchong City Commercial Bank Co., Ltd. (Abbreviation: NCCB, hereinafter referred to as “the Bank”) Legal Representative Huang Guangwei Secretary to the Board Jian Ting Registered Office No.1 Fujiang Road, Shunqing District, Nanchong, Sichuan, China Business Address No. 301 Wenhua Road, Shunqing District, Nanchong, Sichuan, China Telephone 86-817-2228870 Fax 86-817-2220889 Website www.cgnb.cn E-mail [email protected] Business Development 2008-2011 Unit: million Yuan 80000 70000 60000 50000 Loans 40000 Deposits 30000 Assets 20000 10000 0 2007 2008 2009 2010 2011 3 Chapter 3 Financial Highlights 1. Key profit indicators （from the consolidated financial statements） Unit: million Yuan Net interest income 1,453.43 Net intermediary business income 300.81 Other business income 2.26 Investment gains 252.01 Net amount of non-operating revenue and expenditure 8.70 Profit before capital loss reserve being raised 1,461.75 Gross profit 1,330.55 Net profit 1,058.03 Net cash flow Generated from operating activities 22,629.53 Net increase from cash and cash equivalents 20,274.16 2. Key financial data and indicators（from the consolidated financial statements） Unit: million Yuan, % Total assets 75,754.55 Total liabilities 72,046.73 Shareholders’ equity 3,707.82 Deposits 69,322.16 Loans 15,899.14 including: bank notes business 28.09 NPL 66.92 Excess reserves ratio (%) 10.62 Capital adequacy (%) 16.65 NPL ratio (%) 0.42 Loan loss provision adequacy (%) 405.22 Provision coverage ratio (%) 588.85 Loan-to-deposit ratio (%) 35.40 Liquidity ratio (%) 81.95 Inter-bank borrowing ratio (%) 0.29 Inter-bank lending ratio (%) 0.11 Loan Concentration ratio to top ten clients (%) 20.47 Loan Concentration ratio of a single client (%) 2.94 Loan Concentration ratio of a single group client (%) 4.69 Interest recovery ratio (%) 100.87 Average ROA (%) 1.78 Average ROE (%) 40.69 3. Changes in main operating indicators （from the consolidated financial statements） 4 Unit: million Yuan 2011 2010 2009 Total assets 75,754.55 43,113.33 24,155.06 Deposit balance 69,322.16 37,662.24 20,162.05 Loan balance 15,899.14 12,976.42 10,049.00 Operating income 3,585.68 1,543.56 947.78 Shareholders’ equity 3,707.82 1,493.06 963.18 Earnings per share (Yuan) 1.25 0.95 1.01 Cost to profit ratio (%) 22.00 27.40 29.69 4. The capital structure and its movement （from the consolidated financial statements） Unit: million Yuan 2011 2010 2009 Core capital 3,696.76 1,497.29 955.49 Paid-in capital 1,001.21 600.00 300.00 Capital reserve 809.70 7.97 7.97 Surplus reserve and common reserve 600.88 307.93 196.21 Undistributed profit 1,250.07 560.18 434.94 Minority equity 34.90 21.21 16.37 Supplementary capital 316.75 171.32 104.34 Fair-value variation 11.06 -4.23 3.85 Provision for loan loss 305.69 175.55 100.49 Long-term tier II bonds - - - Convertible bonds - - - Less: 174.00 9.00 - Goodwill - - - Investment in non-owner-occupied real estate - - - Capital investment in industrial or commercial - - - enterprises Unwritten-off part of loan loss - - - Unconsolidated capital investment in - - - non-banking financial institutions Unconsolidated capital investment in banking 174.00 9.00 - financial institutions Net capital 3,839.51 1,659.61 1,059.83 5 Chapter 4 Report of the Board of Directors Since the constitution of the third board of directors of NCCB in April 2009, under the leadership of the board, senior management and staff of the Bank worked together to make NCCB a modern bank specialized in SMEs (Small and Medium size Enterprises) financial services. With the core value of “kindness in heart as water nourish the world” and bold entrepreneurship, the Bank accomplished Business development and transformation, professional development, risk management system upgrading and bank image promotion. Ⅰ Main work and achievements in 2011 1. the Bank further enhanced the core decision-making role of the Board, corporate governance running well The board of Directors held 4 board meetings and 1 general meeting of shareholders in 2011. With a high sense of responsibility, the Directors performed their duties conscientiously and strictly in accordance with company procedures in decision-making, to ensure that the Bank running on a standardized, efficient and secure orbit: First, the analysis of macroeconomic and financial trends is targeted and guiding. In the high quality board meetings, the directors use their expertise and professional knowledge to express their views freely and debate intensely. Analysis and understanding are moving in depth; Second, special committees conscientiously perform their duties to improve the efficiency and effectiveness of the board through pre-discussion and consultation; Third, the board reached a consensus on implementation of the strategy of the Bank. For instance, market positioning Services for SMEs and professionalism is the direction and foundation of the Bank’s sustainable development. To adapt the severe macroeconomic situation and approaching interest rate liberalization, the Bank must insist on the philosophy of “boutique bank, professional bank, and security bank”. Fourth, the board deepened understanding of cross-regional development and rural financial development. Fifth, the board reached a consensus on the corporate culture. Sixth, Board meetings are getting increasingly standardized, including the conditions of the meeting venue, quality of meeting materials, dress codes and other aspects had significantly improved and changed, illustrated that the Bank’s comprehensive quality improved continuously. Thanks to the leadership of the board, senior management seriously implemented the resolutions around the objectives and tasks set by the board, strengthened management and risk control, promoted specialization, accelerated innovation and development, reached objectives and tasks of every year through fruitful hard work. Board of supervisors performed supervisory functions and strengthened the effectiveness of supervision, which made corporate governance become increasingly standardized. In addition, the Bank’s market-oriented mechanism and systems operated on the right track which ensured the proactiveness of client managers, tellers and management staff, kept the Bank’s steady and fast development. 2.The Bank was under rapid development with good indicators and growth potential. 6 Founded ten years in 2011, the Bank realized the objective of “ten years, one hundred times”. Assets scale, tax and profits were one hundred times of those at the beginning of establishment of the Bank. Meanwhile, rural financial works were getting new breakthrough: the total assets of Sichuan Yilong Huimin Village Bank broke though 1 billion. Shanghai Jinshan Huimin Village Bank with 300 million of register capital has started businesses at February 9, 2012. All the supervisory indicators kept excellence. Loan provision rate and leverage rate, which reached the order of Basel 3 three years ahead. 3. The Bank deepened specialization and business transformation construction works and effectiveness gradually appeared. The strategy of specialization and professionalization is crucial to create a unique modern boutique bank, the specialization