Xiamen International Bank Co., Ltd. Annual Report 2016 Table of Contents Company Profile ............................................................................................................... 2 Chairman’s Statement ....................................................................................................... 3 President's Report ............................................................................................................. 5 Honors and Awards ........................................................................................................... 7 Definitions ...................................................................................................................... 10 Important Notice .............................................................................................................. 11 Note on Major Risks ....................................................................................................... 12 Chapter 1 Company Profile ............................................................................................ 13 Chapter 2 Summary of Accounting and Business Data .................................................. 14 Chapter 3 Changes in Share Capital and Shareholders .................................................. 19 Chapter 4 The Directors, Supervisors, Executives, Employees and Institutions ........... 22 Chapter 5 Corporate Governance Structure.................................................................... 42 Chapter 6 Report of the Board of Directors ................................................................... 62 Chapter 7 Social Responsibility ................................................................................... 101 Chapter 8 Major Events ................................................................................................ 106 Chapter 9 List of Documents for Reference .................................................................. 112 Chapter 10 Financial Report .......................................................................................... 114 Company Profile Xiamen International Bank Co., Ltd. (herein after referred to as XIB) was established on August 31, 1985 and is headquartered in Xiamen. It was China's first Sino-foreign joint venture bank. In 2013, it was transformed from a limited liability company to a joint stock limited company and was restructured from a Sino-foreign joint venture bank to a Chinese-funded commercial bank. Thirty-one years since its establishment, the Bank still strive to make progress through reform and innovation, and provide customers with high-quality services. The Bank is committed to creating outstanding value to grow step by step into a commercial bank that has favorable benefits, sound development, high-quality assets, and enjoys a good reputation both at home and abroad. The Bank continues to ascend the ranks of The Banker's Top 1000 World Banks—in 2016 moving up 39 places to number 215 in terms of assets, and up 114 places to 242 for tier-one capital. The Bank has subsidiaries in Hong Kong and Macao—Xiamen International Investment Limited (Hong Kong) and Luso International Banking Ltd. Luso International Banking Ltd. has thirteen branches and a representative office in the Hengqin area of Zhuhai, and its preparations for the establishment of a branch in Guangzhou have already been approved. It is ranked top three in the comprehensive banks category, in terms of Macao local main indexes. The Bank has a total of sixty branch offices in mainland China, in cities like Beijing, Shanghai, Zhuhai, Xiamen, Fuzhou, Ningde, Longyan, Quanzhou, Zhangzhou, Putian and Sanming, and are gradually perfecting its national network. Looking to the future, the Bank will strive to provide customers with services that are friendly, convenient and secure, with a high level of quality and professionalism, as well as offering differentiated, personalized and internationalized financial products and solutions. In the process the Bank will create good returns for theshareholders, the society and the employees. Xiamen International Bank is looking forward to working with you to create a brilliant future! 2 Chairman’s Statement In 2016, facing complex changes of the external environment, the Bank carried out reforms in changing the operation and management models to adhering to the 2016 work guidelines of "Sorting out detailed categories and carrying out in-depth exploring of differen business lines, supplementing those what we lack of; based on internationalization and diversification of the Bank, continuing to create our excellencies and characters", taking the initiative to respond to internal and external challenges, promote the stable development of our business, and make steady progress in all the key areas of our work, with satisfying results. By the end of 2016, the Bank's total assets had reached CNY 563.527 billion, up 23% from the previous year; annual after-tax profit was CNY 4.226 billion, up 27% comparing to last year. Our non-performing loan ratio by the end of the year was 0.70%, remaining a stable and sound asset quality in the context of overall rising risk in the banking sector. In 2016, the Bank successfully issued 2 billion new shares, raising capital of CNY 9.6 billion, reaching a historic high. In the national inter-bank bond market, the Bank successfully issued 7 billion tier two capital bonds, setting a record for both the single greatest circulation, and the lowest interest rate among credit subjects of the same level 3 in the same period. This has laid a solid capital base for our business development and strategic layout. The bank has continuously strengthened its international positioning, with further consolidation and development of our strategic layout advantages across the mainland, Hong Kong and Macao. In December 2016, the Bank signed an agreement with the Bank of China (Hong Kong) for the acquisition of Chiyu Banking Corporation Limited—our way of promoting the "spirit of Tan Ka Kee" through real action, while putting into practice the national "Belt and Road" strategy and advancing the construction of Fujian's Free Trade Zone. As the preparations for the construction of the Guangzhou Branch of the Bank’s subsidiary Luso International Banking Ltd. was granted, and Luso International Banking Ltd. will become the first bank of the Macao region to establish an operational branch in Guangzhou. For the above achievements, on behalf of the Board of Directors, I would like to extend my sincerest thanks to those who have always cared about and supported us, including all levels of government, regulators, customers, shareholders and the community. I also would like to express my heartful thanks to all the employees of the Bank, for all their hard work! Looking forward to 2017, the external situation remains complex, the space for continuing with traditional models in the banking industry is becoming more and more limited. The Bank will propose a forward-thinking organizational layout; seek reform and innovation, and go all out to achieve success. The Bank will deepen reforms in operational and management modelsand speed up the pace of transformation, transition and upgrading. This is a crucial year in the Fourth Five-Year Plan, and we fully intend to use it to lay afirm foundation that will allow us to bring the Bank to new heights. 4 President's Report In 2016, in the face of new developments, such as severe and complex international economic and financial situations, the downward pressure on the domestic economy that still exists, and changes ofmonetary policy, the banking industry is under increasing pressure in terms of operation and management. The Bank is working avtively to address the requirements set out by the Board of Directors and General Meeting of Shareholders, breaking through the bottleneck by means of reform, and letting innovation lead new development so that we can promote size, returns, and robust growth of the Bank, further optimize the structure of our business, and maintain good and stable assets quality. By the end of 2016, the bank's deposits and loan balance had grown 30% and 39% respectively year on year; after-tax profits for the full year grew 27% compared with the previous year; the non-performing loan ratio by the end of the year was 0.7%, provision coverage ratio was 331.14%, and asset quality remained stable and sound.In 2016, the Bank's overseas institution, Luso InternationalBank, continued to achieve high-quality and efficient development, and its total assets reached the threshold of CNY 100 billion , putting it among Macao's top three banks according to key indicators. The Bank continues to advance the reform of our operation and management model, carrying forward the "dual advantages" of its organization and culture, making efforts to create a "dual engine" of comprehensive-quality management and technological leadershipin order to create a good system and mechanism for the Bank’s development. The Bank keeps going in the direction of differentiation, internationalization, and intensification, and works hard to make greater inroads into the local market. The Bank consolidatesits business advantages in cross-border finance, steps up support for the real economy and small, medium and micro-sized enterprises; actively gains access to third-party payment platforms, launches Apple Pay products, and constructes a comparatively complete mobile payments system, spurring on healthy development in the retail business. The Bank