Ey China Listed Banks Review and Outlook 2019

01 / Faster growth in operating income and net profit and slower growth in impairment allowance
Listed banks
in China: 2019
review and outlook
Listed banks in China: 2019 review and outlook / 1

Introduction
This is the 13th EY annual report on China’s listed
banks. The purpose of this annual report is to provide
an outlook on the direction of the future development
26 city commercial banks
• B
► ank of Beijing (BOB)
of China’s banking industry based on the observations
•► Bank of Shanghai (BSH)
of the businesses, operating models and regulatory
• Bank of Jiangsu (BJS)
environment of 51 listed banks in mainland China.
•► Bank of Ningbo (BONB)
The report covers • Bank of Nanjing (BONJ)
51 listed banks
•► Huishang Bank (HSB)
•► Shengjing Bank (SJB)
•► Harbin Bank (HRB)
with total assets and net profit accounting for 82% and
•► Bank of Hangzhou (BHZ)
88% of all commercial banks in China, respectively.
•► Bank of Guiyang (BGY)
6 large commercial banks •►

•►
•►
Bank of Zhengzhou (BZZ)
Bank of Tianjin (BTJ)
Bank of Jinzhou (BJZ)
• I► ndustrial and Commercial Bank of China (ICBC)
• China Construction Bank (CCB) •► Bank of Chengdu (BOCD)
• Agricultural Bank of China (ABC) •► Zhongyuan Bank (Z YB)
• Bank of China (BOC) •► Bank of Chongqing (BCQ)
• Bank of Communications (BOCOM) •► Bank of Gansu (BGS)
• Postal Savings Bank of China (PSBC) •► Bank of Qingdao (BQD)
9
•► Bank of ChangshaB
（ OCS）
•► Jiangxi BankJ
（ XB）
national joint-stock commercial
•► Bank of JiujiangJ
（ JCCB）
banks •► Bank of Xi’anB
（ OXA）
• C
► hina Merchants Bank (CMB)
•► Luzhou City Commercial BankL
（ ZCCB）
•► I► ndustrial Bank (IB)
•► Jinshang Bank (JSB)
• S
► hanghai Pudong Development Bank (SPDB)
•► Bank of Suzhou (BSZ)
• C
► hina Minsheng Bank (CMBC)
•► Bank of Guizhou (BGZ)
• C
► hina CITIC Bank (CITIC)
•
•
C
► inda Everbright Bank (CEB)
P
► ing An Bank (PAB) 10 rural commercial banks
• H
► uaxia Bank (HX) •► Chongqing Rural Commercial Bank (CQRCB）
• C
► hina Zheshang Bank (CZB) •► Guangzhou Rural Commercial Bank (GRCB)
•► Zijin Rural Commercial Bank (ZJRCB）
The data contained in this report, unless otherwise
•► Changshu Rural Commercial Bank (CSRCB)
noted, are sourced from the annual reports published
by the listed banks. Apart from the data for SJB, HSB, •► Wuxi Rural Commercial Bank (WXRCB)
HRB, BTJ, BOJZ, BCQ, JTRCB, CRCB, ZYB, BOGS, JXB, •► Jiangyin Rural Commercial Bank (JYRCB)
JSB, BGZ, JJCCB and LZCCB which are collected from •► Rural Commercial Bank of Zhangjiagang (ZJGRCB)
their respective financial statements prepared under •► Suzhou Rural Commercial Bank (SZRCB）
the International Financial Reporting Standards (IFRS), •► Jilin Jiutai Rural Commercial Bank (JTRCB)
data of other banks are collected from their financial •► Qingdao Rural Commercial Bank (QRCB）
statements prepared under the Chinese Accounting
Standards for Business Enterprises. For comparison, we
have made necessary adjustments to the classification
of certain data in order to make them more comparable.
For the listed banks that restated their 2017 and 2018
financial statements, the restated figures are used in
the report. Unless otherwise noted, the averages of all
indicators of the listed banks are weighted averages.
2
Contents
Executive Summary 02
01 Faster growth in operating income and

net profit and slower growth in
impairment allowance 04
02 Accelerated growth in total assets and

on-going asset structure optimization 18
03 Retail business transformation built on

customer-oriented differentiators 26
04 Divergent asset quality profiles and

increased pressure on city and
rural commercial banks 30
05 On-going transformation of wealth

management operations and challenges
in post-transition period 36
06 Innovative and expanded capital tools

to accelerate capital replenishment 40
07 Sustainable development of
green finance and accelerated growth
of inclusive finance 46
08 Increasing FinTech investment to

continue to drive innovation 50
09 Enhancing resilience to tap into

new opportunities amid pandemic 56
10 Outlook 60
Appendix 64
Listed
Listedbanks
banksininChina:
China:2019
2019review
review and
and outlook
outlook / 1
The year 2019 was a crucial year for the Chinese banking
Executive industry. In the first decade of the 21st century, the industry
experienced rapid development in line with China’s rapid
summary economic growth; and in the second decade, profit growth

across the industry tended to be slower and more volatile
amid slowing economy and heightened financial regulation.
Looking at the financial results of Chinese listed banks in 2019
and forecasting trends for the next decade, the course can be
summarized in three words: volatility, uncertainty and resilience.
1
remained on a downward trend. Large commercial
banks and rural commercial banks saw an upswing after
Volatility.. a decline in total assets growth. Particularly, the total
assets growth rate of rural commercial banks increased
In the past three years, China’s listed banks collectively
by 12.43%, 6.70% and 10.92%, respectively, in the past
realized a net profit of RMB1,748.36 billion in 2019,
three years, presenting a typical V-shaped movement.
up 7.32% from 2018. Net profit growth stemmed the
2
downward trend seen in 2018 and gained momentum
through 2019, which was mainly attributable to the
accelerated growth in operating income and slower Uncertainty.
growth in loan loss provision. Between 2017 and
2019, large commercial banks and national joint-stock Listed banks in China have faced more uncertainties in an
commercial banks saw rising net profit growth while increasingly complex operating environment domestically
city commercial banks and rural commercial banks both and globally, coupled with tightening regulation.
experienced a V-shaped movement. Particularly, the net The volatile operating performance of listed banks
profit of city commercial banks posted bumpy growth was largely caused by heightened macroeconomic
over the three-year period at 12.80%, -3.12% and uncertainties. In 2019, downside risks to the global
11.41%, respectively. economy were more prominent, and uncertainties from
Following a subdued growth in 2017, listed banks saw rising geopolitical tensions and prolonged China-US
a rapid growth in operating income in 2018 and 2019. trade frictions clouded the prospects for global economic
Particularly, the operating income growth of rural growth. Despite stable economic operation in 2019, with
commercial banks exhibited an inverted V-shaped curve, GDP growing by 6.1% year-on-year (y-o-y), China faced
at 3.27%, 19.50% and 9.65%, respectively, which was downward pressure on economic growth as structural and
mainly due to sharper volatility in investment income cyclical factors constrained the prospects. In addition,
growth. In addition, the fee and commission income the COVID-19 outbreak in 2020 has inevitably had
of listed banks grew slightly by 0.28% in 2017 and adverse impact on economic operation, with GDP growth
declined by 1.45% in 2018, due to the implementation in the first quarter of 2020 declining to -6.8%. Globally,
of new regulations on asset management and lowering the accelerated spread of the pandemic has caused
fee charges to support the real economy, among other greater financial volatility and dampened economic and
factors. In 2019, the fee and commission income growth trade growth severely. Meanwhile, larger-than-expected
rebounded to 9.66% as listed banks grew their bank stimulus policies introduced across economies to address
card business rapidly, accelerated the transformation of the impact might change the international economic and
wealth management business and increased the volume trade landscape to a certain extent, posing considerable
of net asset value (NAV) wealth management products uncertainties to global growth and exposing China’s
(WMPs) that are aligned with the new regulations. listed banks to new challenges in business operation and
development.
Between 2017 and 2019, the overall loan loss provisions
of listed banks increased by 7.27%, 28.79% and 11.12%, Regulatory and financial reforms had implications for
respectively, presenting an inverted V-shape. In the listed banks in the following aspects. The formation
same period, the loan loss provisions of city commercial mechanism of the loan prime rate (LPR) officially rolled
banks increased by 0.92%, 75.62% and 12.70%, out in 2019 amid deepening interest rate liberalization
respectively, while rural commercial banks recorded posed pricing challenges for listed banks; the
more volatile growth of -21.89%, 103.04% and 9.18%, implementation of new regulations on asset management
respectively. and the implementation rules have driven listed banks
to transform their wealth management business. The
Volatility is also reflected in asset and liability growth. year 2020 marks the end of the transition period for
The total assets of listed banks grew by 7.01%, 6.53% implementing new regulations on asset management, but
and 8.91%, respectively, between 2017 and 2019. listed banks still face challenges in the disposal of legacy
The total assets growth of national joint-stock banks non-standard assets, the promotion of new products,
continued to rise while that of city commercial banks NAV management, and the strategic positioning of their
2
wealth management subsidiaries as they proceed with steadily. As at the end of 2019, the core Tier-1 capital
business transformation under the new regulations and adequacy ratios (CARs), Tier-1 CARs and CARs rose by
implementation rules. In addition, in an effort to urge 0.19 percentage point, 0.41 percentage point, and
the banking industry to improve asset quality, regulators 0.36 percentage point, respectively, from the
proposed Interim Measures for the Risk Classification beginning of the year. Going forward, listed banks
for Financial Assets of Commercial Banks (already open should continuously seek innovative capital
for public consultation), which, along with other policies, replenishment instruments and enhance capital
are expected to have impacts on different types of banks strength by replenishing capital via multiple channels.
once effective. They also need to improve capital efficiency, investing
in long-term growth while improving returns on capital.
In 2019, listed banks also addressed the potential impact
on their financial results as they started to implement Increasing FinTech investment. In 2019,
the new financial instrument standard and applied the listed banks increased their FinTech
new standard on the classification of financial assets, investment from multiple dimensions, further
which resulted in an increased proportion of financial strengthening the role of FinTech in driving growth and
assets measured at fair value and the replacement of transformation and embracing accelerated innovation.
the “incurred loss” model with “expected credit loss” The COVID-19 outbreak is expected to accelerate the
model in the calculation of impairment provisions. process of economic digitalization across the board,
3
highlighting the urgency and importance of digital
transformation in listed banks. Thus, they need to
continuously invest in FinTech, integrate digitalization
Resilience. and technology with business to create new engines
that can drive high-quality development, and deploy
Enhancing operational resilience is key for listed banks
innovative approaches to optimize customer-oriented
to respond to the uncertainties in the external
businesses, products, services, processes, management
environment and achieve long-term sustainable
and risk control based on new technologies such as
development. Resilience can be built by:
big data, artificial intelligence (AI) and blockchain, in
Improving risk management. In 2019, listed an effort to improve customer experience and achieve
banks enhanced their credit risk prevention a win-win result in strengthening both customer and
and control, and increased write-off and bank values.
disposal of non-performing assets. As a result, the
Fulfilling social responsibilities. In 2019,
average non-performing loan (NPL) ratio decreased to
China’s listed banks actively responded to
1.46% as at 31 December 2019, down from 1.52% at
national strategies and continuously promoted
the beginning of 2019. However, divergent trends were
the development of green finance and inclusive
noted in different types of listed banks. The NPL ratio of
financial services. Particularly, large commercial banks
large commercial banks and national joint-stock banks
increased their green credit and inclusive finance loans
decreased while that of city commercial banks and rural
by 13.3% and 45.0%, respectively. For listed banks,
commercial banks increased. In 2020, listed banks
financial performance and environment, social and
need to further strengthen credit risk management to
governance (ESG) performance are equally important.
address the potential rise in the NPL ratio in the wake of
On the one hand, to enjoy policy dividends, listed banks
the COVID-19 outbreak. In addition, listed banks should
must align their strategies and efforts with the national
closely monitor market and liquidity risks amid current
initiative to vigorously promote the construction of
financial market volatility and remain alert to new risks.
ecological civilization and develop inclusive finance.
Optimizing business structure. In 2019, On the other hand, only when they actively perform
China’s listed banks stepped up their support social responsibilities, demonstrate customer-centered
for the real economy. The proportion of loans commitment, attach importance to the protection of
in total assets further increased while the proportion consumer rights and interests, and maintain a good
of non-standard investments continued to decrease. reputation and image, can they gain trust and enhance
In addition, listed banks diversified the sources of customer loyalty.
core liabilities, increasing the proportion of deposits
The year 2020 is the closing year of building a
in liabilities, and continuously reducing interbank
moderately prosperous society in all respects as well
liabilities. Listed banks also further developed retail
as the National 13th Five-Year Plan, but also the
banking to achieve increased proportion of both income
success of preventing and defusing financial risks
and balance sheets. Looking ahead, listed banks need
as a regulatory initiative. However, the outbreak of
to further optimize the business structure to expand
COVID-19 has inevitably impacted China’s economic
revenue sources and enhance risk resilience.
operation to a large extent. Looking ahead, listed
Replenishing capital and improving capital banks need to strengthen operational resilience, set
efficiency. In 2019, listed banks enhanced out long-term plans, and seek new opportunities amid
their capacity to generate capital internally uncertainties to navigate the bumpy ride through
while attracting supplementary capital from external economic cycles and achieve long-term sustainable
providers, seeing the capital base being strengthened development.

01 Faster growth in
operating income
and net profit and
slower growth in
impairment allowance
4
The growth in net profit posted divergence among different types of listed
banks. Large commercial banks realized a total net profit of RMB1,136.50
Net profit
billion, growing by 5.63%, up 0.92 percentage point from the growth rate of
7.32%
4.71% in 2018. Particularly, PSBC reported the highest net profit growth of
16.52%, up 6.72 percentage points from 2018, which was attributable mainly
to the growth in net interest income and net fair value gains. The net profit
growth of the other five large commercial banks ranged from 4.90% to 5.32%.
In 2019, China’s National joint-stock commercial banks realized a total net profit of RMB424.44
listed banks realized billion, growing by 10.14%, up 3.94 percentage points from the growth rate
in 2018. Most notably, CMB reported a 15.60% net profit growth and led the
a total net profit of
growth among peers in the same group for three consecutive years, benefiting
RMB1,748.36 billion, mainly from stable credit impairment losses and higher growth in net interest
an increase of 7.32%, up income, net fee income and other net income. CMBC, CZB and PAB each
reported faster growth, up 10.29 percentage points, 8.34 percentage points
2.97 percentage points
and 6.59 percentage points, respectively.
from the growth rate
City commercial banks realized a total net profit of RMB158.05 billion in
of 4.35% in 2018. The 2019. Net profit growth stood at 12.80%, -3.12% and 11.41% for 2017, 2018
net profit of listed banks and 2019, respectively, mainly due to the more volatile net profit growth of
posted higher growth BJZ, which stood at 10.87% (RMB9.09 billion), -149.92% (RMB-4.54 billion)
and 76.60% (RMB-1.06 billion), respectively, between 2017 and 2019.
as net interest margin Excluding BJZ from calculation, city commercial banks’ three-year net profit
(NIM) remained stable, growth was 12.93%, 6.60% and 8.68%, respectively, while the growth rate
net fee and commission in 2019 was up by 2.08 percentage points from 2018. Four city commercial
banks recorded decline in net profit while 22 city commercial banks saw
income showed a
continued increase, with BONB, BHZ, ZYB, BJZ and BOGZ each reporting a
rebound in growth, net profit growth of more than 20%.
and the impairment Rural commercial banks realized a total net profit of RMB29.38 billion, an
allowance exhibited a increase of 13.21%, up 6.79 percentage points from 2018. Eight of 10 listed
slower growth. rural commercial banks reported a growth rate of more than 10%. JYRCB
recorded the fastest growth of 29.74%, which was attributable mainly to the
5.58% growth in net interest income, the decline in credit impairment losses
resulted from the lower non-performing loan (NPL) ratio, and the 300% rise in
profit or loss from changes in fair value.
Trend of the net profit growth of the listed banks
16%
14%
13.21%
12% 12.80% 11.41%
10% 10.14%
8.74%
8%
6.42% 7.32%
6% 6.20%
5.54% 4.71% x 5.63%
5.27% x
4% 4.11% x
4.35%
2%
2017 2018 2019
0%
-2% -3.12%
-4% x Large commercial banks National joint-stock commercial banks
City commercial banks Rural commercial banks
All listed banks
Source: Calculated based on the annual reports and prospectuses published by the listed banks.

Net profit amount growth rate* (RMB million)
2017 2018 2019
Amount Growth rate Amount Growth rate Amount Growth rate
ICBC 287,451 2.99% 298,723 3.92% 313,361 4.90%
CCB 243,615 4.83% 255,626 4.93% 269,222 5.32%
ABC 193,133 4.93% 202,631 4.92% 212,924 5.08%
BOC 184,986 0.51% 192,435 4.03% 201,891 4.91%
BOCOM 70,691 4.49% 74,165 4.91% 78,062 5.25%
PSBC 47,709 19.94% 52,384 9.80% 61,036 16.52%
Large commercial banks 1,027,585 4.11% 1,075,964 4.71% 1,136,496 5.63%
CMB 70,638 13.24% 80,819 14.41% 93,423 15.60%
IB 57,735 6.27% 61,245 6.08% 66,702 8.91%
SPDB 55,002 2.47% 56,515 2.75% 59,506 5.29%
CMBC 50,922 4.40% 50,330 -1.16% 54,924 9.13%
CITIC 42,878 2.61% 45,376 5.83% 48,994 7.97%
CEB 31,611 4.02% 33,721 6.67% 37,441 11.03%
PAB 23,189 2.61% 24,818 7.02% 28,195 13.61%
HX 19,933 0.90% 20,986 5.28% 22,115 5.38%
CZB 10,973 8.08% 11,560 5.35% 13,143 13.69%
National joint-stock 362,881 5.54% 385,370 6.20% 424,443 10.14%
commercial banks
BOB 18,882 5.35% 20,137 6.65% 21,591 7.22%
BSH 15,337 7.06% 18,068 17.81% 20,333 12.54%
BJS 12,016 12.96% 13,263 10.38% 14,960 12.79%
BONB 9,356 19.60% 11,221 19.93% 13,791 22.90%
BONJ 9,761 16.95% 11,188 14.62% 12,567 12.33%
HSB 7,812 11.66% 8,860 13.42% 10,062 13.57%
BHZ 4,550 14.12% 5,412 18.95% 6,602 21.99%
BGY 4,588 24.37% 5,229 13.97% 5,998 14.71%
BOCD 3,913 51.49% 4,654 18.94% 5,556 19.38%
SJB 7,574 10.12% 5,126 -32.32% 5,438 6.09%
BOCS 3,985 22.54% 4,578 14.88% 5,259 14.88%
BTJ 3,943 -12.73% 4,230 7.28% 4,609 8.96%
BCQ 3,764 7.48% 3,822 1.54% 4,321 13.06%
HRB 5,309 6.99% 5,574 4.99% 3,635 -34.79%
BGZ 2,255 14.99% 2,877 27.58% 3,564 23.88%
BOZZ 4,334 7.14% 3,101 -28.45% 3,373 8.77%
ZYB 3,906 16.25% 2,365 -39.45% 3,206 35.56%
BOXA 2,101 4.32% 2,365 12.57% 2,679 13.28%
BSZ 2,150 8.20% 2,314 7.63% 2,611 12.83%
BQD 1,904 -8.86% 2,043 7.30% 2,336 14.34%
JXB 2,915 73.72% 2,771 -4.94% 2,109 -23.89%
JJCCB 1,762 13.02% 1,787 1.42% 1,881 5.26%
JSB 1,231 19.28% 1,314 6.74% 1,482 12.79%
LZCCB 619 14.21% 658 6.30% 634 -3.65%
BOGS 3,364 75.12% 3,440 2.26% 511 -85.15%
BJZ 9,090 10.87% -4,538 -149.92% -1,062 76.60%
City commercial banks 146,421 12.80% 141,859 -3.12% 158,046 11.41%
CQRCB 9,008 12.59% 9,164 1.73% 9,988 8.99%
CRCB 5,891 15.37% 6,832 15.97% 7,911 15.79%
QRCB 2,140 12.39% 2,444 14.21% 2,847 16.49%
CSRCB 1,322 25.31% 1,585 19.89% 1,900 19.87%
ZJRCB 1,138 10.16% 1,254 10.19% 1,417 13.00%
WRCB 993 12.33% 1,076 8.36% 1,252 16.36%
JTRCB 1,638 -29.27% 1,184 -27.72% 1,196 1.01%
JYRCB 758 -1.17% 780 2.90% 1,012 29.74%
ZJGRCB 754 8.33% 818 8.49% 937 14.55%
SZRCB 739 12.14% 810 9.61% 915 12.96%
Rural commercial 24,381 8.74% 25,947 6.42% 29,375 13.21%
All listed banks 1,561,268 5.27% 1,629,140 4.35% 1,748,360 7.32%
Source: Annual reports and prospectuses published by the listed banks.
*Net profits of listed banks are presented in RMB million, on which the calculation of growth rates is based.
6
The need to improve profitability
ROA Decline in ROE
Levelled off 0.59 percentage

point off
Although listed banks saw higher growth in net profit in 2019, the weighted average return on equity (ROE) slid
by 0.59 percentage point to 12.48% from 13.07% in 2018; the average return on assets (ROA) was 0.93%, which
remained flat as compared with 2018, signaling that the ROA has weighed on listed banks’ profitability. The
average ROE of large commercial banks, national joint-stock commercial banks, city commercial banks and rural
commercial banks dropped by 0.70 percentage point, 0.38 percentage point, 0.39 percentage point and 0.32
percentage point, respectively; the average ROA of large commercial banks decreased by 0.02 percentage point
while that of national joint-stock commercial banks, city commercial banks and rural commercial banks rose by
0.02 percentage point, 0.01 percentage point and 0.04 percentage point, respectively.
Trend of the ROA of the listed banks Trend of ROE of the listed banks
1.0% 0.99% 15.0%

0.98%
x x
0.95% x 0.96%
0.93% 14.37%
0.93%
0.91% 0.90% 0.92%
0.9% 0.92% 14.04%
14.0%
0.88% 13.87%
0.88%
13.75%
x
0.87%
13.33%
13.16% 13.21% x
0.8% 13.0% 12.95%
0.77% 13.07%
x 12.51%
0.76% 12.48%
12.12%
0.7% 12.0%
2017 2018 2019 11.80%
11.69%
x Large commercial banks National joint-stock commercial banks
11.30%
11.0%
All listed banks
2017 2018 2019
All listed banks

Continued increase in operating income 30%, which was mainly attributable to the growth in net
growth interest income and net fee income.
The operating income of rural commercial banks grew
1.29 by 9.65% y-o-y, down 9.85 percentage points from the

growth rate of 19.50% in 2018. ZJGRCB reported the
percentage
highest growth rate of 28.48%, mainly due to the growth
in net interest income and investment income.
points
Looking at the growth trend from 2017 to 2019, the
operating income growth rate of listed banks of all types
rebounded significantly in 2018 from the low level in
In 2019, the operating income of listed banks totaled 2017. The operating income growth of large commercial
RMB5,265.24 billion, growing by 10.42%, up 1.29 banks, national joint-stock commercial banks and city
percentage points as compare with the growth rate of commercial banks either remained stable or grew higher
9.13% in 2018. in 2019, while that of rural commercial banks declined
significantly, mainly due to sharper volatility in the
The operating income of large commercial banks
growth rate of investment income.
grew by 7.89% y-o-y while the growth rate was largely
flat compared to that of 2018. Net interest income
showed a slower growth while the growth in net fee and Trend of the operating income of the listed banks
commission income and other business income picked 20% 19.50%
up. ICBC reported the highest growth rate of 10.52%, 17.59%
which was attributable mainly to the increase in net 14.83%
15%
interest income, net fee income and net non-interest 14.07%
income in varying degrees. 9.63% 10.42%
10% 9.65%
The operating income of national joint-stock commercial 9.13%
x x 7.89%
banks grew by 14.07% y-o-y, up 4.44 percentage points 7.89%
from 2018, which was mainly driven by the growth in 5% 5.11% x
3.92%
net interest income and net fee income. Particularly, 3.43%
3.27%
CEB reported the highest operating income growth of 0%
20.47%, which was mainly attributable to optimized -0.64%
assets and liabilities structure, a 30% increase in net

-5%
interest income, and a 17.17% y-o-y growth in net fee 2017 2018 2019
and commission income.
The operating income of city commercial banks grew
by 17.59% y-o-y, up 2.76 percentage points from the
All listed banks
growth rate of 14.83% in 2018. The operating income
of BTJ, SJB, BQD and LZCCB each grew by more than Source: Annual reports and prospectuses published by the listed banks.
8
Net profit amount growth rate* (RMB million)

2017 2018 2019
ICBC 726,502 7.49% 773,789 6.51% 855,164 10.52%
CCB 621,659 2.74% 658,891 5.99% 705,629 7.09%
ABC 537,041 6.13% 598,588 11.46% 627,268 4.79%
BOC 483,278 -0.07% 504,107 4.31% 549,182 8.94%
BOCOM 196,011 1.46% 212,654 8.49% 232,472 9.32%
PSBC 224,572 18.44% 260,995 16.22% 276,809 6.06%
CMB 220,897 5.33% 248,555 12.52% 269,703 8.51%
IB 139,975 -10.89% 158,287 13.08% 181,308 14.54%
SPDB 168,619 4.88% 170,865 1.33% 190,688 11.60%
CMBC 144,281 -7.01% 156,769 8.66% 180,441 15.10%
CITIC 156,708 1.86% 164,854 5.20% 187,584 13.79%
CEB 91,850 -2.33% 110,244 20.03% 132,812 20.47%
PAB 105,786 -1.79% 116,716 10.33% 137,958 18.20%
HX 66,384 3.70% 72,227 8.80% 84,734 17.32%
CZB 34,221 1.69% 38,943 13.66% 46,364 19.06%
National joint-stock 1,128,721 -0.64% 1,237,460 9.63% 1,411,592 14.07%
commercial banks
BOB 50,353 6.10% 55,488 10.20% 63,129 13.77%
BSH 33,125 -3.72% 43,888 32.49% 49,800 13.47%
BJS 33,839 7.58% 35,224 4.09% 44,974 27.68%
BONB 25,314 7.06% 28,930 14.28% 35,081 21.26%
BONJ 24,839 -6.68% 27,406 10.33% 32,442 18.38%
HSB 22,508 7.60% 26,951 19.74% 31,159 15.61%
BHZ 14,122 2.83% 17,054 20.76% 21,409 25.54%
BGY 12,477 22.82% 12,645 1.35% 14,668 16.00%
BOCD 9,654 11.98% 11,590 20.05% 12,725 9.79%
SJB 13,250 -17.77% 15,885 19.89% 21,007 32.24%
BOCS 12,128 20.80% 13,941 14.95% 17,017 22.06%
BTJ 10,143 -14.15% 12,138 19.67% 17,054 40.50%
BCQ 10,015 4.29% 10,630 6.14% 11,791 10.92%
HRB 14,134 -0.27% 14,325 1.35% 15,124 5.58%
BGZ 8,625 6.89% 8,770 1.68% 10,706 22.08%
BOZZ 10,194 3.00% 11,157 9.45% 13,487 20.88%
ZYB 12,816 8.57% 16,784 30.96% 19,022 13.33%
BOXA 4,926 9.03% 5,976 21.32% 6,845 14.54%
BSZ 6,899 -1.54% 7,737 12.15% 9,424 21.80%
BQD 5,583 -6.89% 7,372 32.04% 9,616 30.44%
JXB 9,452 5.21% 11,351 20.09% 12,953 14.11%
JJCCB 5,804 15.94% 7,866 35.53% 9,549 21.40%
JSB 4,386 11.04% 4,753 8.37% 5,089 7.07%
LZCCB 1,680 28.54% 1,934 15.12% 2,807 45.14%
BOGS 8,053 15.52% 8,872 10.17% 7,233 -18.47%
BJZ 18,806 14.57% 21,283 13.17% 23,245 9.22%
City commercial banks 383,125 3.92% 439,950 14.83% 517,356 17.59%
CQRCB 23,988 10.74% 26,116 8.87% 26,630 1.97%
CRCB 13,479 -11.56% 20,667 53.33% 23,657 14.47%
QRCB 6,079 4.27% 7,462 22.75% 8,729 16.98%
CSRCB 4,997 11.66% 5,824 16.55% 6,445 10.66%
ZJRCB 3,622 5.23% 4,230 16.79% 4,675 10.52%
WRCB 2,851 13.13% 3,192 11.96% 3,540 10.90%
JTRCB 5,840 -1.91% 5,038 -13.73% 5,311 5.42%
JYRCB 2,507 1.54% 3,186 27.08% 3,404 6.84%
ZJGRCB 2,414 -1.03% 2,999 24.23% 3,853 28.48%
SZRCB 2,726 18.21% 3,150 15.55% 3,521 11.78%
All listed banks 4,369,412 3.43% 4,768,298 9.13% 5,265,237 10.42%
*Operating income of listed banks is presented in RMB million, on which the calculation of growth rates is based.

Divergent movement in NIM experienced a decline in NIM. Particularly, BOGS saw its
NIM slide by 41 bps due to lower interest rates on loans
In 2019, the average NIM of listed banks stood at to customers during the period and increased investment
2.16%, up 1 basis point (bp) from 2018, but divergence in more liquid bonds with lower yields, which brought
was noted among different types of listed banks. In down the average yield of interest-earning assets.
2019, the NIM of large commercial banks was 2.13%
In 2019, the average NIM of rural commercial banks
on average, a decrease of 7 bps from 2018. Except
stood at 2.51%, up 11 bps from 2018. Six rural
for BOCOM, all other five large commercial banks
commercial banks saw an increase in NIM. JTRCB’s
recorded a decrease in NIM. Particularly, ABC saw its
NIM went up by 53 bps, as the average return on loans
NIM slide by 16 bps due to intensified competition in
and advances to customers and placements with the
deposit business and higher deposit interest rates.
central bank increased, pushing up the average return
PSBC reported a drop of 17 bps due to declined average
on interest-earning assets. Four rural commercial banks
returns on total interest-earning assets and the rise in
recorded a decrease in NIM. Particularly, JYRCB’ NIM
average interest rates on total interest-bearing liabilities
fell by 21 bps from 2018, mainly due to lower return on
amid a changing market environment and fierce
interest-earning assets, such as loans, interbank lending
competition in deposits business. BOCOM’s NIM grew by
and securities investments.
7 bps, which was attributable mainly to optimized assets
and liabilities structure and the adjustment to loan Changes in NIM of the listed banks
structure.
2.6%
In 2019, national joint-stock commercial banks all
2.51%
recorded an upward trend in NIM. Their average NIM 2.5%
2.40%
stood at 2.24%, up 16bps from 2018. CZB recorded 2.4%
an increase of 41 bps in NIM, mainly attributable to
2.33%
the increase of 13 bps in average returns on interest- 2.3%
2.20%
earning assets and a decline of 19 bps in average 2.24%
2.2% x 2.16%
interest rates on interest-bearing liabilities, such as 2.11% x 2.13%
interbank business and payable bonds. CEB increased its 2.1% x 2.15% 2.10%
2.08%
NIM by 34 bps mainly due to lower cost ratio of liabilities 2.06%
2.0% 1.96%
resulting from the improved structure of assets and 1.98%
1.93%
liabilities. 1.9%
2017 2018 2019
The average NIM of city commercial banks was 2.10%,
up 12 bps from 2018, with 14 city commercial banks x Large commercial banks National joint-stock commercial banks
reporting growth. BTJ achieved a significant growth City commercial banks Rural commercial banks
of 62 bps as the bank adjusted its structure of assets
All listed banks
and liabilities and reinforced the pricing management.
Its returns on loans and advances to customers surged Source: Annual reports and prospectuses published by the listed banks.
by 121 bps. In contrast, 10 city commercial banks
10
NIM of the listed banks*

2017 2018 2019
ICBC 2.22% 2.30% 2.24%
CCB 2.21% 2.31% 2.26%
ABC 2.28% 2.33% 2.17%
BOC 1.84% 1.90% 1.84%
BOCOM 1.51% 1.51% 1.58%
PSBC 2.40% 2.67% 2.50%
Large commercial banks 2.11% 2.20% 2.13%
CMB 2.43% 2.57% 2.59%
IB 1.73% 1.83% 1.94%
SPDB 1.86% 1.94% 2.08%
CMBC** 1.62% 1.87% 2.11%
CITIC** 2.03% 2.09% 2.12%
CEB** 1.52% 1.97% 2.31%
PAB 2.37% 2.35% 2.62%
HX 2.01% 1.95% 2.24%
CZB 1.81% 1.93% 2.34%
National joint-stock 1.93% 2.08% 2.24%
commercial banks
BOB undisclosed undisclosed undisclosed
BSH 1.25% 1.76% 1.71%
BJS 1.58% 1.59% 1.94%
BONB 1.94% 1.97% 1.84%
BONJ 1.85% 1.89% 1.85%
HSB 2.31% 2.37% 2.51%
BHZ 1.65% 1.71% 1.83%
BGY 2.67% 2.33% 2.40%
BOCD 2.16% 2.21% 2.16%
SJB 1.50% 1.43% 1.76%
BOCS 2.67% 2.45% 2.42%
BTJ 1.25% 1.59% 2.21%
BCQ 2.11% 1.79% 2.11%
HRB 2.15% 1.87% 1.95%
BGZ 3.45% 2.82% 2.82%
BOZZ 2.08% 1.70% 2.16%
ZYB 2.76% 2.83% 2.65%
BOXA 2.01% 2.23% 2.26%
BSZ 2.01% 2.11% 2.09%
BQD 1.72% 1.63% 2.13%
JXB 2.26% 2.31% 2.59%
JJCCB 2.32% 2.65% 2.56%
JSB 2.25% 1.70% 1.61%
LZCCB 2.65% 2.53% 3.08%
BOGS 2.91% 2.37% 1.96%
BJZ 2.88% 2.46% 2.50%
City commercial banks 1.96% 1.98% 2.10%
CQRCB 2.62% 2.45% 2.33%
CRCB 1.70% 2.12% 2.61%
QRCB 2.60% 2.49% 2.61%
CSRCB 3.26% 3.39% 3.41%
*Only including the banks that separately disclosed this ratio.
ZJRCB 2.11% 2.08% 2.12% ** As the gains from credit card outstanding installment amount, fund
investment and assets under operating lease are not accounted for as
WRCB 2.15% 2.16% 2.02% interest income, CMB adjusted the costs of corresponding interest-bearing
JTRCB 2.38% 2.22% 2.75% liabilities and funds when calculating its NIM, and restated the figures for
2017 and 2018.
JYRCB 2.33% 2.67% 2.46% EB has reclassified the credit card installment income from fee and
ZJGRCB 2.33% 2.56% 2.74% commission income to interest income since 2019. The bank restated the
comparable data for 2018 but did not restate the comparable data for
SZRCB 2.98% 2.84% 2.71% 2017.
CITIC has reclassified the credit card installment income from fee and
Rural commercial 2.33% 2.40% 2.51%
commission income to interest income since 2019. The bank restated the
All listed banks 2.06% 2.15% 2.16% NIS and NIM for 2017 and 2018.

Rebound in net fee and commission The net fee and commission income of city commercial
income growth banks grew by 9.69% y-o-y, and the growth was led by
BOGZ, LZCCB and SJB. Specifically, BOGZ and LZCCB’s
9.66
net fee and commission income growth remarkably
reached 352.38% and 150.00%, respectively, due to
relatively low base of net fee and commission income
percentage in 2018. The net fee and commission income growth

of SJB was 84.21%, which was driven by the growing
points fee income from agency and custodian business, and

settlement and clearing business. Seven city commercial
banks saw a decline in their net fee and commission
In 2019, the net fee and commission income of listed income. BJZ reported the sharpest decrease of 67.81%,
banks amounted to RMB934.75 billion, up 9.66% y-o-y. mainly due to decreased custodian fee income and
In contrast, fee and commission income just edged settlement and clearing fee income.
up by 0.28% in 2017, and even dropped by 1.45% in
The net fee and commission income of rural commercial
2018, due to the implementation of new regulations
banks increased by 8.69% from 2018. Seven rural
on asset management and lowering fee charges to
commercial banks reported an increase in net fee and
support the real economy, among other factors. The
commission income, with JYRCB, WXRCB, QRCB and
notable 9.66% growth in 2019 was primarily driven by
SZRCB each seeing more than 30% growth, which was
the increase in agency fee income and rapid growth in
attributable mainly to the growth in wealth management
bank card business as listed banks adjusted the wealth
business, agency and settlement fee income,
management business structure and increased the
respectively. Conversely, three rural commercial banks
volume of net asset value (NAV) wealth management
reported a decline in net fee and commission income,
products (WMPs) under the new regulations on asset
with ZJGRCB recording the sharpest fall.
management.
The net fee and commission income of large Growth net fee and commission income of the listed
commercial banks increased by 8.33% y-o-y, up 4.72 banks
percentage points from 2018. PSBC, CCB and ABC
20%
each reported a growth of more than 10%, which stood
11.78%
at 18.37%, 11.58% and 11.24%, respectively. The
9.66%
net fee and commission income growth of PSBC was 10%
6.45%
9.69%
x 8.69%
attributable mainly to the 25.7% growth in settlement 3.85% 3.61%
8.33%
0.28% x
and clearing business and the 13.28% growth in bank 0%
card business and point-of-sale (POS) service. The -3.88% x -1.45%
net fee and commission income growth of CCB was -7.45%

-7.29%
-10% -8.84%
attributable mainly to the 13.92% growth in bank card
business and the 38.10% growth in e-banking. The
net fee and commission income growth of PSBC was -20%
-21.15%
attributable mainly to the growth of both e-banking and
bank card business, by 28.4% and 18.0%, respectively. -30%
2017 2018 2019
The net fee and commission income of national joint-
stock commercial banks increased by 11.78% from
2018. An upswing in net fee and commission income
was seen at all listed banks, with CITIC, IB, CEB and All listed banks
PAB each recording a notable growth of above 10%, Source: Annual reports and prospectuses published by the listed banks.
thanks to the growth in bank card fee income. CITIC
reported the highest net fee and commission income
growth of 25.34%, attributable mainly to the 41.95% Source: Annual reports and prospectuses published by the listed banks.
*Net fee and commission income of listed banks is presented in RMB million, on
bank card fee income growth. which the calculation of growth rates is based.
**Since 2019, CITIC has made reclassification of its credit card installment in-
come, classifying it from fee income to interest income and restating the figures
for both 2017 and 2018 in the financial statements. The amount of net fee and
commission income for 2018 has been presented based on the restated figure
for the year; and the amount of fee and commission income for 2017 remains
unchanged as the restated figure for the year is unavailable.
**Since 2019, CEB has made reclassification of its credit card installment in-
come, classifying it from fee income to interest income and restating the figures
for 2018 in the financial statements. The amount of net fee and commission
income for 2018 has been presented based on the restated figure for the year.
12
Net fee and commission amount and growth rate of the listed banks* (RMB Million)
2017 2018 2019
ICBC 139,625 -3.69% 145,301 4.07% 155,600 7.09%
CCB 117,798 -0.60% 123,035 4.45% 137,284 11.58%
ABC 72,903 -19.83% 78,141 7.18% 86,926 11.24%
BOC 88,691 0.03% 87,208 -1.67% 89,612 2.76%
BOCOM 40,551 10.21% 41,237 1.69% 43,625 5.79%
PSBC 12,737 10.78% 14,434 13.32% 17,085 18.37%
Large commercial banks 472,305 -3.88% 489,356 3.61% 530,132 8.33%
CMB 64,018 5.18% 66,480 3.85% 71,493 7.54%
IB 38,739 5.98% 42,978 10.94% 49,679 15.59%
SPDB 45,580 12.01% 39,009 -14.42% 40,447 3.69%
CMBC 47,742 -8.65% 48,131 0.81% 52,295 8.65%
CITIC** 46,858 10.83% 37,008 -21.02% 46,384 25.34%
CEB** 30,774 9.47% 19,773 -35.75% 23,169 17.17%
PAB 30,674 10.10% 31,297 2.03% 36,743 17.40%
HX 18,407 25.59% 17,758 -3.53% 18,016 1.45%
CZB 8,013 7.20% 4,252 -46.94% 4,579 7.69%
National joint-stock 330,805 6.45% 306,686 -7.29% 342,805 11.78%
commercial banks
BOB 10,579 10.21% 8,879 -16.07% 7,386 -16.81%
BSH 6,256 1.61% 5,980 -4.41% 6,567 9.82%
BJS 5,779 -0.74% 5,222 -9.64% 6,023 15.34%
BONB 5,896 6.35% 5,794 -1.73% 7,784 34.35%
BONJ 3,489 -19.46% 3,588 2.84% 4,044 12.71%
HSB 2,844 14.17% 3,706 30.31% 4,164 12.36%
BHZ 1,617 -21.62% 1,183 -26.84% 1,665 40.74%
BGY 1,414 -0.42% 1,219 -13.79% 968 -20.59%
BOCD 393 -15.48% 308 -21.63% 427 38.64%
SJB 1,613 -15.73% 627 -61.13% 1,155 84.21%
BOCS 1,091 28.96% 1,580 44.82% 1,773 12.22%
BTJ 2,033 45.01% 1,538 -24.35% 2,266 47.33%
BCQ 1,680 -12.77% 1,342 -20.12% 1,258 -6.26%
HRB 2,445 2.17% 2,391 -2.21% 2,226 -6.90%
BGZ -10 -105.26% 21 -310.00% 95 352.38%
BOZZ 1,865 53.50% 1,874 0.48% 1,610 -14.09%
ZYB 770 71.49% 1,280 66.23% 1,866 45.78%
BOXA 760 6.00% 783 3.03% 582 -25.67%
BSZ 883 -14.11% 915 3.62% 1,073 17.27%
BQD 829 -6.64% 866 4.46% 1,217 40.53%
JXB 1,491 54.99% 653 -56.20% 667 2.14%
JJCCB 350 114.72% 279 -20.29% 416 49.10%
JSB 332 -17.62% 424 27.71% 625 47.41%
LZCCB -2 -481.82% 2 -200.00% 5 150.00%
BOGS 377 47.27% 166 -55.97% 253 52.41%
BJZ 737 -8.90% 758 2.85% 244 -67.81%
City commercial banks 55,511 3.85% 51,378 -7.45% 56,359 9.69%
CQRCB 2,296 8.40% 2,066 -10.02% 2,322 12.39%
CRCB 2,291 -23.02% 1,548 -32.43% 1,682 8.66%
QRCB 163 -9.44% 149 -8.59% 199 33.56%
CSRCB 424 42.28% 367 -13.44% 324 -11.72%
ZJRCB 177 -27.16% 256 44.63% 264 3.13%
WRCB 163 -9.44% 86 -47.24% 112 30.23%
JTRCB 615 -17.78% 376 -38.86% 317 -15.69%
JYRCB 52 4.00% 65 25.00% 99 52.31%
ZJGRCB 114 -8.80% 33 -71.05% 7 -78.79%
SZRCB 69 9.52% 72 4.35% 128 77.78%
Rural commercial 6,364 -8.84% 5,018 -21.15% 5,454 8.69%
All listed banks 864,985 0.28% 852,438 -1.45% 934,750 9.66%

Continued decline in cost-to-income ratio strengthened overall cost control. CMBC achieved a
cost-to-income ratio of 26.74%, down 3.33 percentage
1.27
points from 2018, as it continuously refined its financial
management and improved input-output efficiency.
percentage
In 2019, the average cost-to-income ratio of city
commercial banks was 27.71%, down 1.23 percentage
points
points from 2018. Five city commercial banks recorded
a slight increase in cost-to-income ratio from 2018, with
BGS seeing the largest increase by 6.81 percentage
In 2019, the average cost-to-income ratio of listed banks points. Other city commercial banks reported a y-o-y
continued its downward trend, standing at 29.34%, decline in cost-to-income ratio, with BSZ seeing the
down 1.27 percentage points from 2018. largest decline by 6.05 percentage points.
In 2019, the cost-to-income ratio of large commercial In 2019, the average cost-to-income ratio of rural
banks was 32.50%, a decline of 0.43 percentage point commercial banks was 33.21%, down 1.40 percentage
from the average cost-to-ratio in 2018. PSBC and CCB points from 2018. CSRCB, WXRCB and SZRCB saw
each saw an increase in cost-to-income ratio, while the an increase in cost-to-income ratio while other rural
other four banks reported a decrease. PSBC’s 56.57% commercial banks reported a decline. JTRCB had the
cost-to-income ratio was considerably higher than that highest cost-to-income ratio of 51.08%.
of the peers as the bank not only bore its own operating
cost, but also paid commissions to other entities under Changes in the cost-to-income ratio of the listed
China Post Group (CPG) that acted as its deposit-taking banks
agent. PSBC’s cost-to-income ratio increased by 0.16 40%
percentage point from 2018, mainly due to increased
commissions paid to other CPG entities for growing 36.69%
deposits under the agency agreement, as well as the 35% 34.61%
increase in staff costs for increased recruitment of IT 34.36% x 32.93% 33.21%
and other high-caliber talent. x x 32.50%
31.76% 30.61%
In 2019, the average cost-to-income ratio of national 30%
30.06%
29.43% 29.34%
joint-stock commercial banks was 27.65%, down 1.78 29.85%
27.71%
28.94%
percentage points from 2018. CMB saw a slight increase 27.65%
while other banks all reported a decrease in this ratio. 25%
CZB and CMBC saw the cost-to-income ratio decline by 2017 2018 2019
more than 3 percentage points. CZB’s cost-to-income x Large commercial banks National joint-stock commercial banks
ratio stood at 26.24%, a decline of 3.45 percentage
points from 2018, which was driven by its effort to
All listed banks
continuously optimize the asset and liability structure
by reducing less-efficient and inefficient assets, and Source: Annual reports and prospectuses published by the listed banks.
14
Cost-to-income ratios of the listed banks Slower growth in loan impairment allowance
2017 2018 2019
ICBC 24.46% 23.91% 23.28%
CCB
ABC
26.95%
32.96%
26.42%
31.27%
26.53%
30.49% 17.67%
BOC 28.34% 28.09% 28.00%
BOCOM 31.85% 31.50% 30.11% In 2019, the loan impairment allowance of listed banks
PSBC 61.57% 56.41% 56.57% calculated based on the data presented in the income
Large commercial banks* 34.36% 32.93% 32.50% statements totaled RMB1,241.52 billion, increasing by
CMB 30.23% 31.02% 32.09% 11.12%, down 17.67 percentage points from 2018. In
IB 27.63% 26.89% 26.03% 2018, loan impairment losses increased significantly as
SPDB 24.34% 24.90% 22.58% listed banks downgraded loans overdue by more than
CMBC 31.72% 30.07% 26.74% 90 days to NPLs and correspondingly increased loan
CITIC 29.92% 30.57% 27.70%
impairment allowance. Rural commercial banks and
city commercial banks recorded higher ratios of loans
CEB 31.92% 28.79% 27.27%
overdue by at least 90 days and NPLs, thus increasing
PAB 29.89% 30.32% 29.61%
loan impairment allowance by 103.04% and 75.62%,
HX 32.96% 32.58% 30.59%
respectively. Another major reason for the faster growth
CZB 31.91% 29.69% 26.24%
in loan impairment allowance for city commercial
banks was that BJZ made a substantial provision of
commercial banks*
RMB17.5 billion in 2018. In 2019, benefiting mainly
BOB 26.85% 25.19% 23.23%
from the decline in new NPLs as compared to 2018, city
BSH 24.47% 20.52% 19.98%
commercial banks’ loan impairment allowance posted
BJS 28.80% 28.68% 25.64%
slower growth. The growth rate of loan impairment
BONB 34.63% 34.44% 34.32%
allowance for large commercial banks, city commercial
BONJ 29.20% 28.61% 27.39%
banks and rural commercial banks decreased y-o-y by
HSB 25.90% 23.02% 22.76%
25.54 percentage points, 62.92 percentage points
BHZ 31.74% 29.91% 28.71% and 93.86 percentage points, respectively. The loan
BGY 28.10% 26.73% 26.30% impairment allowance of national joint-stock commercial
BOCD 28.27% 25.77% 26.52% banks grew faster by 8.72 percentage points, as they
SJB 26.22% 24.13% 21.31% stepped up efforts in disposal and write-off of NPLs in
BOCS 33.67% 34.12% 30.72% 2019, and increased provisions for expected credit loss
BTJ 29.42% 27.18% 22.20% out of lower provision coverage ratio in an attempt to
BCQ 22.00% 22.93% 22.27% enhance risk resilience and address future uncertainties.
HRB 29.71% 30.88% 32.71%
Changes in the loan impairment losses of the listed
BGZ 33.05% 33.91% 30.84%
banks
BOZZ 26.15% 27.96% 26.46%
ZYB 44.00% 40.59% 38.45% 105%
103.04%
BOXA 30.09% 27.97% 25.68%
BSZ 38.04% 37.73% 31.68% 90%
BQD 31.60% 32.97% 31.88%
75.62%
JXB 32.18% 30.48% 26.08% 75%
JJCCB 32.50% 27.86% 28.12%
JSB 37.19% 35.75% 34.79%
60%
LZCCB 31.89% 34.54% 35.95%
BOGS 24.81% 24.72% 31.53%
45%
BJZ 15.71% 15.91% 14.88%
City commercial banks* 29.85% 28.94% 27.71%
CQRCB 33.94% 30.33% 28.54% 30% x 29.33%
21.89% x 23.37%
CRCB 37.11% 28.05% 27.25% 28.79%
QRCB 35.69% 32.23% 30.25% 15% 12.70%
11.12%
CSRCB 37.14% 36.53% 38.24% 7.27% 14.65% 9.18%
0.92% x 3.79%
ZJRCB 35.01% 33.42% 29.69% 0%
WRCB 30.03% 29.18% 29.66% -7.37%
JTRCB 50.77% 54.72% 51.08% -15%
JYRCB 38.29% 32.03% 31.66% -21.89%
ZJGRCB 36.33% 35.43% 31.15% -30% 2017 2018 2019

SZRCB 32.63% 34.18% 34.61%
Rural commercial* 36.69% 34.61% 33.21% x Large commercial banks National joint-stock commercial banks
All listed banks* 31.76% 30.61% 29.34% City commercial banks Rural commercial banks
Source: Calculated based on the annual reports and prospectuses published by All listed banks
the listed banks.
*Simple arithmetic average Source: Annual reports and prospectuses published by the listed banks.

In 2019, the average cost of credit of listed banks Cost of credit of the listed banks
decreased y-o-y by 0.01 percentage point to 1.22%. 2017 2018 2019
Specifically, the cost of credit decreased by 0.05 ICBC 0.91% 0.99% 1.01%
percentage point for large commercial banks, increased CCB 1.00% 1.07% 1.04%
by 0.13 percentage point for national joint-stock ABC 0.91% 1.15% 1.04%
commercial banks, decreased by 0.12 percentage point BOC* 0.81% 0.95% 0.80%
for city commercial banks, and decreased by 0.13 BOCOM 0.66% 0.85% 0.97%
percentage point for rural commercial banks. PSBC 0.64% 1.09% 1.03%
Large commercial banks 0.88% 1.03% 0.98%
CMB 1.76% 1.58% 1.29%
Changes in the cost of credit of the listed banks IB 1.27% 1.42% 1.46%
SPDB 1.77% 1.73% 1.84%
2.0%
CMBC 1.22% 1.49% 1.86%
1.72%
1.71% CITIC* 1.64% 1.40% 1.79%
1.57% 1.60% CEB 1.03% 1.54% 1.86%
1.5% 1.58%
PAB* 2.55% 2.35% 2.54%
1.49% 1.36% HX 1.26% 1.34% 1.68%
1.19% 1.22%
1.03%
1.23% CZB 1.54% 1.24% 0.81%
1.07% x
1.0% x 0.98% National joint-stock 1.57% 1.58% 1.71%
0.88% x commercial banks
0.85%
BOB 1.12% 1.40% 1.14%
BSH 1.00% 2.02% 1.41%
0.5%
2017 2018 2019 BJS 1.17% 1.15% 1.33%
BONB 1.76% 1.02% 1.36%
BONJ 1.05% 1.52% 1.53%
City commercial banks Rural commercial banks HSB 1.44% 1.35% 1.08%
All listed banks BHZ 1.66% 1.80% 1.88%
BGY 2.00% 2.16% 1.69%
Source: Calculated based on the annual reports and prospectuses published by
the listed banks. BOCD 1.30% 1.62% 1.27%
SJB 0.51% 1.56% 2.49%
BOCS 1.40% 1.66% 1.81%
BTJ 0.58% 1.44% 1.75%
BCQ 1.43% 1.84% 1.43%
HRB 0.95% 0.66% 1.42%
BGZ 3.25% 1.82% 1.26%
BOZZ 1.46% 2.40% 2.67%
ZYB 0.67% 2.68% 1.34%
BOXA 0.65% 0.83% 0.95%
BSZ 1.18% 1.17% 1.42%
BQD 1.39% 1.97% 2.02%
JXB 1.85% 1.61% 2.44%
JJCCB 1.40% 1.99% 1.47%
JSB 1.10% 1.80% 0.93%
LZCCB 1.28% 1.19% 2.14%
BOGS 1.06% 1.37% 2.17%
BJZ 0.95% 5.97% 3.65%
City commercial banks 1.19% 1.72% 1.60%
CQRCB 1.03% 1.61% 1.21%
CRCB 0.23% 1.57% 1.37%
QRCB 0.99% 1.48% 1.64%
CSRCB 1.64% 1.81% 1.54%
ZJRCB 0.90% 0.45% 1.14%
WRCB 0.65% 1.13% 0.89%
JTRCB 0.52% 0.66% 0.69%
JYRCB 0.90% 2.30% 1.79%
ZJGRCB 1.35% 1.40% 2.21%
SZRCB 1.89% 2.02% 1.81%
Rural commercial 0.85% 1.49% 1.36%
All listed banks 1.07% 1.23% 1.22%
the listed banks.
*Data for BOC, CITIC, PAB are disclosed in the banks’ annual reports.
16

中国上市银行2019年回顾及未来展望
02 Accelerated growth
in total assets and
on-going asset
structure optimization
18
02 / Accelerated growth in total assets and on-going asset structure optimization
As at 31 December 2019, the total assets of listed banks amounted to

RMB196,470.85 billion, growing by RMB16,075.81 billion, or 8.91%, from
In 2019, the total
2018 year-end. The total assets of large commercial banks, national joint-
assets of listed banks stock commercial banks, city commercial banks and rural commercial banks
grew more rapidly in grew by 8.32%, 10.44%, 8.63% and 10.92%, respectively. The total assets
an environment with of large commercial banks, national joint-stock commercial banks and rural
commercial banks grew at a faster pace, while city commercial banks saw
ample liquidity backed divergent growth, with HRB and BJZ reporting total asset contraction as the
by targeted and across- two banks decreased the volume of interbank funding and placements with
the-board reserve banks and other financial institutions and scaled down financial investment.
requirement ratio (RRR)

cuts by the People’s Growth of the total assets of the listed banks
Bank of China (PBOC). 14% 13.11%

Meanwhile, 12% 12.43%
10.92%
the proportion of loans 9.57% 10.44%
10% 8.91%
in total assets continued x 8.63%
8%
to grow while the 7.33%
7.01% x 6.61%
6.70% 8.32%
x
proportion of interbank 6% 6.53%
investment continued 4% 3.51%

5.02%
to decline as listed 2%
banks made on-going 0%

efforts to optimize asset 2017年末 2018年末 2019年末
structure and support

the real economy. City commercial banks Rural commercial banks
All listed banks

Total assets amount and growth rate* (RMB Million)
31 December 2017 31 December 2018 31 December 2019
ICBC 26,087,043 8.08% 27,699,540 6.18% 30,109,436 8.70%
CCB 22,124,383 5.54% 23,222,693 4.96% 25,436,261 9.53%
ABC 21,053,382 7.58% 22,609,471 7.39% 24,878,288 10.03%
BOC 19,467,424 7.27% 21,267,275 9.25% 22,769,744 7.06%
BOCOM 9,038,254 7.56% 9,531,171 5.45% 9,905,600 3.93%
PSBC 9,012,551 9.04% 9,516,211 5.59% 10,216,706 7.36%
CMB 6,297,638 5.98% 6,745,729 7.12% 7,417,240 9.95%
IB 6,416,842 5.44% 6,711,657 4.59% 7,145,681 6.47%
SPDB 6,137,240 4.78% 6,289,606 2.48% 7,005,929 11.39%
CMBC 5,902,086 0.11% 5,994,822 1.57% 6,681,841 11.46%
CITIC 5,677,691 -4.27% 6,066,714 6.85% 6,750,433 11.27%
CEB 4,088,243 1.70% 4,357,332 6.58% 4,733,431 8.63%
PAB 3,248,474 9.99% 3,418,592 5.24% 3,939,070 15.22%
HX 2,508,927 6.48% 2,680,580 6.84% 3,020,789 12.69%
CZB 1,536,752 13.43% 1,646,695 7.15% 1,800,786 9.36%
National joint-stock 41,813,893 3.51% 43,911,727 5.02% 48,495,200 10.44%
commercial banks
BOB 2,329,805 10.09% 2,572,865 10.43% 2,737,040 6.38%
BSH 1,807,767 2.98% 2,027,772 12.17% 2,237,082 10.32%
BJS 1,770,551 10.78% 1,925,823 8.77% 2,065,058 7.23%
BONB 1,032,042 16.61% 1,116,423 8.18% 1,317,717 18.03%
BONJ 1,141,163 7.26% 1,243,269 8.95% 1,343,435 8.06%
HSB 908,100 20.31% 1,050,506 15.68% 1,131,721 7.73%
BHZ 832,975 15.67% 921,056 10.57% 1,024,070 11.18%
BGY 464,106 24.67% 503,326 8.45% 560,399 11.34%
BOCD 434,539 20.39% 492,285 13.29% 558,386 13.43%
SJB 1,030,617 13.82% 985,433 -4.38% 1,021,481 3.66%
BOCS 470,544 22.70% 526,630 11.92% 601,998 14.31%
BTJ 701,914 6.79% 659,340 -6.07% 669,401 1.53%
BCQ 422,763 13.31% 450,369 6.53% 501,232 11.29%
HRB 564,255 4.68% 615,589 9.10% 583,089 -5.28%
BGZ 286,368 25.08% 341,203 19.15% 409,389 19.98%
BOZZ 435,829 19.03% 466,142 6.96% 500,478 7.37%
ZYB 521,990 20.53% 620,444 18.86% 709,885 14.42%
BOXA 234,121 7.41% 243,490 4.00% 278,283 14.29%
BSZ 284,118 9.10% 311,086 9.49% 343,472 10.41%
BQD 306,276 10.18% 317,659 3.72% 373,622 17.62%
JXB 370,005 17.93% 419,064 13.26% 456,119 8.84%
JJCCB 271,254 20.40% 311,623 14.88% 363,352 16.60%
JSB 206,870 19.31% 227,248 9.85% 247,571 8.94%
LZCCB 70,879 33.03% 82,550 16.47% 91,681 11.06%
BOGS 271,148 10.65% 328,622 21.20% 335,045 1.95%
BJZ 723,418 34.20% 845,923 16.93% 836,307 -1.14%
City commercial banks 17,893,417 13.11% 19,605,740 9.57% 21,297,313 8.63%
CQRCB 905,338 12.78% 950,178 4.95% 1,029,790 8.38%
CRCB 735,714 11.31% 763,290 3.75% 894,154 17.14%
QRCB 251,054 20.96% 294,141 17.16% 341,667 16.16%
CSRCB 145,825 12.19% 166,704 14.32% 184,839 10.88%
ZJRCB 170,949 27.76% 193,165 13.00% 201,319 4.22%
WRCB 137,125 10.02% 154,395 12.59% 161,912 4.87%
JTRCB 187,009 -2.33% 164,253 -12.17% 173,276 5.49%
JYRCB 109,403 5.11% 114,853 4.98% 126,343 10.00%
ZJGRCB 103,129 14.36% 113,446 10.00% 123,045 8.46%
SZRCB 95,271 17.12% 116,782 22.58% 125,955 7.85%
Rural commercial 2,840,817 12.43% 3,031,207 6.70% 3,362,300 10.92%
All listed banks 169,331,164 7.01% 180,395,035 6.53% 196,470,848 8.91%
*Total assets of listed banks are presented in RMB million, on which the calculation of growth rates is based.
20
Rise in the proportion of credit assets in Changes in the asset structure of the listed banks
total assets 31 December 31 December 31 December
2017 2018 2019
1.44 Lo
人日 an
49.23% 51.50% 52.94%
percentage
assets
points Financial
Investment
29.69% 29.68% 29.36%
In 2019, as listed banks stepped up efforts to support

the real economy and seized the opportunity in
economic transformation, credit supply continued to 5.92% 5.64% 5.58%
Interbank
grow fast. The proportion of loans in total assets as at assets*
2019 year-end rose to 52.94%, up 1.44 percentage
points from 51.50% in 2018. Large commercial
banks, national stock-joint commercial banks, city 15.16% 13.18% 12.12%
Others
commercial banks and rural commercial banks saw
their proportion of loans increase by 0.91, 1.74, Source: Calculated based on the annual reports and prospectuses published by
the listed banks.
3.42 and 3.79 percentage points, respectively, from * Inter-bank assets, including assets due from banks and other financial
institutions, placements with banks and financial assets under reverse repo.
2018. LZCCB reported the fastest growth of 10.30%
in the proportion of loans. ABC reported the largest
increase of RMB1.36 trillion in net loan balance from
the prior year, as the bank stepped up credit support
for the implementation of major national strategies
and national projects, and increased lending to support
the inclusive finance initiative and the development of
agriculture, rural areas and farmers.

Continued decrease in the proportion of non-standard investment
The proportion of bond investment of listed banks continued to increase in 2019. As at 31 December 2019, the
proportion of bond investment in the financial investment of listed banks reached 77.38%, up 2.57 percentage
points from 2018 year-end. The financial investment structure of large commercial banks was relatively stable,
with the proportion of bond investment remained at around 90%. The proportion of bond investment of national
joint-stock commercial banks, city commercial banks and rural commercial banks stood at 65.41%, 45.69% and
64.17%, respectively, increasing by 5.71, 1.96 and 7.29 percentage points from the prior year. Conversely, the
proportion of non-standard investment continued to decrease.
Changes in the financial investment structure of the listed banks
100%
10% 9% 9%
90% 36% 29% 25% 23%
80% 35% 43%
40%
49%
70% 58% 56% 54% 56%
60% 90% 91% 91%
50% 77%
75%
40% 64% 71%
30% 60% 65% 57%

51%
20% 46%
42% 44% 44%
10%
0%
2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019
Large commercial banks National joint-stock City commercial banks Rural commercial banks All listed banks
commercial banks
Bond Others
Increase in the proportion of FVTPL financial investment

As at 31 December 2019, all listed banks implemented the new financial instrument standard that revised
the classification of financial assets. With this implication, the proportion of financial investments at fair value
through profit or loss (FVTPL) was 16%, up 3 and 9 percentage points, respectively, from 2018 year-end and
2017 year-end. The proportion of FVTPL financial investment of large commercial banks, national joint-stock
commercial banks, city commercial banks and rural commercial banks rose by 0.30, 3, 12 and 5 percentage points,
respectively, from 2018 year-end. However, higher proportion of FVTPL financial investment might result in
sharper profit volatility, posing challenges to listed banks in market risk management.
The ratio of FVTPL financial investment of the listed banks
50%
45%
40%
35% 15%
23%
30%
21% 26% 25% 21%
25% 42% 22%
24% 24% 24%
20% 27% 25%
29% 27%
23% 21%
15% 19%
18% 16%
10%
14%
11% 11% 13% 13%
5% 8% 7%
6%
4% 4%
0%
2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019
Large commercial banks National joint-stock City commercial banks Rural commercial banks All listed banks
commercial banks
FVTPL FVTOCI
*Financial assets measured at fair value and changes of which are recorded into profit or loss of current period include: financial assets held for trading under the original
standard and financial assets measured at fair value and changes of which are recorded into the profit or loss of current period, or financial assets held for trading under
the new financial instrument standard and financial assets measured at fair value and changes of which are recorded into the profit or loss of current period.
**Financial investments measured at fair value and changes of which are recorded into other comprehensive income include: available-for-sale financial assets under the
original standard, or other debt investments and other equity instrument investments under the new financial instrument standard, or financial assets measured at fair
value and changes of which are recorded into other comprehensive income of current period.
22
Steady increase in liabilities Changes in the liability structure

31 December 31 December 31 December
2017 2018 2019
8.36% Deposits
73.05% 74.15% 74.46%
As at 31 December 2019, the total liabilities of listed

banks amounted to RMB180,503.32 billion, increasing
by RMB13,928.03 billion, or 8.36%, from the prior 14.10% 12.50% 12.05%
Interbank
year-end, up 2.21 percentage points from the growth liabilities*
in 2018. The total liabilities of large commercial
banks, national joint-stock commercial banks and
rural commercial banks picked up, standing at 7.79%, 5.97% 6.94% 7.48%
9.74% and 10.00%, respectively. The growth rate of bonds and debt
total liabilities of city commercial banks followed the securities issued
downward trend and slowed to 8.31%, 0.85 percentage
point slower than that of 2018. The total liabilities 6.88% 6.41% 6.01%
Other
of HRB and BJZ decreased by 6.45% and 1.10%,
Source: Calculated based on the annual reports and prospectuses published by the
respectively, from the prior-year end. For HRB, the listed banks.
*Interbank liabilities, including assets from inter banks and other financial institutions,
decline was primarily due to the significant decrease in loans from other banks and financial assets sold for repurchase.
bonds payable, while for BJZ, the decline was primarily
due to shrinking customer deposits. As at 31 December 2019, the deposits of listed banks
amounted to RMB134,394.01 billion, increasing by
Growth of the total assets of the listed banks RMB10,885.77 billion, or 8.81%, from the prior year-
end, up 1.07 percentage points from the growth in
14%
12.45%
2018. The deposits of large commercial banks, national
12% 12.06% joint-stock commercial banks, city commercial banks
10.00% and rural commercial banks grew at 6.95%, 13.26%,
10% 9.16%
9.74% 11.85% and 15.07%, respectively. As at the end of
8.36%
8% 8.31% 2019, the deposits accounted for 74.46% of total
7.17% 6.28% x 7.79% liabilities, up 0.31 percentage point from the prior year-
6.63% x 6.23%
x
6% end. The proportion diverged among the different types
6.15%
4% 4.53%
of listed banks, standing at 80.54%, 63.52%, 63.97%
2.73% and 76.62%, respectively, for large commercial banks,
2% national joint-stock commercial banks, city commercial
banks and rural commercial banks, showing different
0%
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019 deposit-taking capacity and varying degrees of reliance
on deposits.
Growth in deposits of the listed banks
All listed banks 16%

15.07%
Source: Calculated based on the annual reports and prospectuses published by 14%
the listed banks. 13.26%
12.09%
12% 10.29%
11.71% 11.85%
Continued optimization of liability 10% 8.32%

8.81%
8.15%
structure 8% 7.74%
7.28%
7.19% x x
x 6.95%
In 2019, listed banks continued to optimize their 6% 6.89%
liability structure. The proportion of deposits in total

4% 3.41%
liabilities increased, while interbank liabilities continued
to decrease. Meanwhile, listed banks expanded the 2%
sources of liabilities by increasing bond issuance.

0%
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019
All listed banks

the listed banks.

The amount and growth rate of total liabilities of the listed banks* (RMB Million)
ICBC 23,945,987 8.08% 25,354,657 5.88% 27,417,433 8.14%
CCB 20,328,556 4.93% 21,231,099 4.44% 23,201,134 9.28%
ABC 19,623,985 7.54% 20,934,684 6.68% 22,918,526 9.48%
BOC 17,890,745 7.38% 19,541,878 9.23% 20,793,048 6.40%
BOCOM 8,361,983 7.61% 8,825,863 5.55% 9,104,688 3.16%
PSBC 8,581,194 8.37% 9,040,898 5.36% 9,671,827 6.98%
CMB 5,814,246 4.97% 6,202,124 6.67% 6,799,533 9.63%
IB 5,994,090 4.58% 6,239,073 4.09% 6,596,029 5.72%
SPDB 5,706,255 4.05% 5,811,226 1.84% 6,444,878 10.90%
CMBC 5,512,274 -0.57% 5,563,821 0.94% 6,151,012 10.55%
CITIC 5,265,258 -5.07% 5,613,628 6.62% 6,217,909 10.76%
CEB 3,782,807 0.37% 4,034,859 6.66% 4,347,377 7.75%
PAB 3,026,420 10.00% 3,178,550 5.03% 3,626,087 14.08%
HX 2,339,429 6.18% 2,461,865 5.23% 2,751,452 11.76%
CZB 1,447,064 12.40% 1,544,246 6.72% 1,672,758 8.32%
National joint-stock 38,887,843 2.73% 40,649,392 4.53% 44,607,035 9.74%
commercial banks
BOB 2,153,091 9.15% 2,378,731 10.48% 2,528,077 6.28%
BSH 1,660,326 1.29% 1,866,004 12.39% 2,059,855 10.39%
BJS 1,657,723 9.49% 1,801,318 8.66% 1,928,622 7.07%
BONB 974,836 16.80% 1,035,193 6.19% 1,216,981 17.56%
BONJ 1,072,952 7.13% 1,164,503 8.53% 1,255,507 7.81%
HSB 848,888 20.99% 980,229 15.47% 1,042,228 6.32%
BHZ 781,144 14.61% 863,892 10.59% 961,526 11.30%
BGY 438,476 25.19% 467,483 6.62% 520,072 11.25%
BOCD 409,515 20.81% 461,009 12.57% 522,756 13.39%
SJB 978,362 13.88% 928,403 -5.11% 942,359 1.50%
BOCS 446,548 22.97% 494,849 10.82% 560,165 13.20%
BTJ 657,158 6.76% 611,619 -6.93% 618,224 1.08%
BCQ 390,303 11.74% 415,757 6.52% 462,618 11.27%
HRB 521,846 4.02% 568,097 8.86% 531,448 -6.45%
BGZ 265,271 24.72% 315,744 19.03% 375,500 18.93%
BOZZ 402,390 16.88% 428,279 6.43% 460,587 7.54%
ZYB 475,899 19.70% 564,767 18.67% 652,054 15.46%
BOXA 216,405 7.13% 223,496 3.28% 254,615 13.92%
BSZ 261,838 9.32% 286,499 9.42% 314,518 9.78%
BQD 280,153 7.61% 290,162 3.57% 343,144 18.26%
JXB 346,733 18.51% 386,253 11.40% 421,031 9.00%
JJCCB 253,603 19.74% 288,023 13.57% 337,994 17.35%
JSB 192,193 17.39% 211,252 9.92% 227,412 7.65%
LZCCB 66,544 35.05% 76,183 14.49% 84,791 11.30%
BOGS 254,535 9.85% 303,375 19.19% 310,356 2.30%
BJZ 663,253 33.68% 785,160 18.38% 776,500 -1.10%
City commercial banks 16,669,985 12.45% 18,196,280 9.16% 19,708,940 8.31%
CQRCB 840,532 12.23% 878,469 4.51% 940,428 7.05%
CRCB 687,236 10.29% 707,709 2.98% 820,445 15.93%
QRCB 233,136 21.55% 272,798 17.01% 316,406 15.99%
CSRCB 134,716 12.68% 153,169 13.70% 166,940 8.99%
ZJRCB 160,994 29.32% 180,872 12.35% 187,570 3.70%
WRCB 127,773 10.38% 143,466 12.28% 150,182 4.68%
JTRCB 170,358 -4.16% 149,146 -12.45% 157,615 5.68%
JYRCB 100,049 5.23% 104,214 4.16% 114,470 9.84%
ZJGRCB 94,740 14.52% 103,436 9.18% 112,307 8.58%
SZRCB 86,798 18.14% 107,261 23.58% 114,330 6.59%
Rural commercial 2,636,332 12.06% 2,800,540 6.23% 3,080,693 10.00%
All listed banks 156,926,610 6.63% 166,575,291 6.15% 180,503,324 8.36%
*Total liabilities of listed banks are presented in RMB million, on which the calculation of growth rates is based.
24
Seen from the breakdown of deposits, the proportion In 2019, interest rates continued to decrease, dragging
of time deposits of listed banks increased while that of down the cost of bond issuance significantly. As the
demand deposits decreased as at 31 December 2019. industry stepped up efforts in reducing interbank
The proportion of time deposits of large commercial liabilities amid tightened regulation, commercial
banks, national joint-stock commercial banks, city banks prioritized the issuance of bonds to replenish
commercial banks and rural commercial banks capital more efficiently. As at 31 December 2019, the
rose 0.13, 2.04, 2.81 and 3.28 percentage points, balance of bonds issued by listed banks amounted to
respectively. The rise in the proportion of time deposits RMB13,501.93 billion, increasing by RMB1,941.44
pushed up the overall deposit cost, putting pressure on billion, or 16.79%, from the prior year-end. Bonds
interest margin. issued by large commercial banks and national joint-
stock commercial banks grew significantly by 35.05%
Breakdown of deposits of the listed banks in 2019
and 17.32%, respectively.
(demand deposits/time deposits)
100.00% 3.20% 4.80% 6.84% 4.37% 3.90% As at 31 December 2019, the interbank liabilities of
46.95% 52.27% 52.15% 58.35% 48.76% listed banks accounted for 12.05% of total liabilities,
80.00% down 0.45 percentage point from 2018 year-end.
Interbank transactions saw a contraction as BSB’s
60.00%
credit risk event has caused listed banks to put more
40.00%
attention to interbank credit risk. As at 31 December
2019, the proportion of interbank liabilities of large
20.00% 49.85% 42.93% 41.01% 37.28% 47.34% commercial banks, national joint-stock commercial
banks, city commercial banks and rural commercial
0.00%
Large
banks fell by 0.17, 1.28, 0.28 and 1.54 percentage
National City Rural All listed
commercial joint-stock commercial commercial banks points, respectively. LZCCB reported the largest fall
banks commercial banks banks of 6.73% in the proportion of interbank liabilities; and
banks
BOCOM reported the largest decrease of RMB201.01
Demand deposits Time deposits Others
billion in the balance of interbank liabilities.
the listed banks.
Breakdown of deposits of the listed banks in 2019

(demand deposits/time deposits)
100.00% 3.27% 4.97% 7.34% 4.82% 4.01%
46.82% 50.23% 49.34% 55.07% 47.88%
80.00%
60.00%
40.00% 49.91% 44.80% 43.32% 40.11% 48.11%
20.00%
0.00%
Large National City Rural All listed
commercial joint-stock commercial commercial banks
banks commercial banks banks
banks
Demand deposits Time deposits Others
the listed banks.
03 Retail business
transformation built on
customer-oriented
differentiators
26
03 / Retail business transformation built on customer-oriented differentiators
In 2019, the operating income from the retail business accounted for
39.19% of total operating income, up 0.73 percentage point from 2018.
In 2019, listed banks,
Profit before tax of the retail business accounted for 38.29% of total profit
on the one hand, before tax, down 1.50 percentage points from 2018. National joint-stock
continuously refined commercial banks recorded both the largest proportion in operating income
the services for retail (44.67%) and the largest proportion in profit before tax (43.18%), while
city commercial banks saw the smallest proportion of 23.72% and 23.74%,
customers to grow respectively. In contrast, city commercial banks and rural commercial banks
income by enhancing remained heavily reliant on the corporate banking and treasury business.
precision marketing In 2019, at the individual bank level, CMB and PAB saw the retail
and customer loyalty. contribution to profit before tax exceed 50%, and the latter reported the
largest proportion of 69.14%. In terms of the retail contribution to operating
On the other hand,
income, PSBC, CMB and PAB each made a contribution of over 50%, with
they increased PSBC reporting the largest, 63.79%, outperforming its peers.
investment in building Contribution of retail business to pre-tax profits of the listed banks
platform scenarios and
50%
recruiting technology- 44.06%
41.55% 43.18%
related talent for retail 41.30% x x
41.31%
40%
business, and prudently 39.08% 39.79%
x 39.06%
38.29%
increased impairment 32.91% 29.55%
34.09%
30%
provision for expected
credit losses on retail 23.74%
20%
business. As a result, 17.88%
21.37%
the retail contribution to

10%
overall operating income
2017 2018 2019
continued to increase, x Large commercial banks National joint-stock commercial banks
and the proportion of City commercial banks Rural commercial banks
profit before tax of retail All listed banks
business fell slightly. Source: Calculated based on the annual reports and prospectuses published by the listed banks.
Contribution of retail business to operating income of the listed banks
50%
42.23% 44.67%
39.49% 39.99%
40% x x x 40.05%
39.45% 39.19%
37.56% 38.46%
33.63%
30% 30.45%
30.07%
23.72%
20%
18.58% 20.63%
10%
2017 2018 2019
All listed banks

Proportion of retail assets and liabilities percentage of total personal loans decreased by 0.01
seeing continued rise percentage point from 2018 to 64.73%. For all large
commercial banks, the proportion was above 60%, with
Within the asset portfolio, retail assets as a percentage ICBC and CCB continuing to see it above 80%; for national
of total assets posted a y-o-y increase, reaching joint-stock commercial banks, the proportion averaged
22.84%, up 0.99 percentage point from 2018. All types 42.29%, and except for IB, other bank peers reported a
of listed banks reported an increase in this proportion, proportion of less than 50%, with CZB recording it below
with city commercial banks seeing the fastest growth 20%. The proportion showed significant divergence
of 1.63 percentage points. At the individual bank among city commercial banks and rural commercial
level, PSBC, CSRCB, PAB and CMB each recorded a banks, which stood at between 1.55% and 92.80%1.
proportion of over 30%.
Retail business assets as a proportion of the total Credit card loans, as part of personal loans, posted slower
growth. As at 31 December 2019, credit card loans of
assets of the listed banks
25%
24.61% 25.25% large commercial banks amounted to RMB2,965.39
22.53%
billion, growing by 10.26% from 2018, down 8.38
x x 23.50%
21.95% 22.84% percentage points from the growth in the prior year.
21.20% x 21.85% CCB reported the largest balance of RMB745.14 billion,
20%
20.15% followed by ICBC with RMB677.93 billion. ABC, BOC and
BOCOM each recorded a balance of around RMB470
16.01%
14.89% 16.00%
billion. As at 31 December 2019, the credit card balance
15%
of national joint-stock commercial banks amounted to
13.57% 14.37% RMB3,555.06 billion, increasing by 12.67% from 31
11.46% December 2018, down 10.86 percentage points from
10% the growth in 2018. CMB reported the largest balance of
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019
RMB671.10 billion, CITIC and PAB each held a balance of
above RMB500 billion, and CMBC and CEB each recorded
a balance of around RMB440 billion.
All listed banks
Source: Calculated based on the annual reports and prospectuses published by Balance of credit card loans
the listed banks. 3,800,000 12.67%
3,555,061
Personal loans, the key component of retail assets
3,500,000 23.53%
of listed banks, grew by 15.05% from 31 December
10.26%
2018 to RMB43,347.54 billion as at the end of 2019, 3,155,302
3,200,000
18.64% 2,965,389
accounting for 40.35% of total loans, showing an
2,900,000
upward trend for three consecutive years. All types 2,689,417
of listed banks saw an increase in the proportion 2,600,000
2,554,261
of personal loans. For large commercial banks and

2,266,932
national joint-stock commercial banks, the proportion 2,300,000
exceeded 40%; for city and rural commercial banks, the
2,000,000
proportion stood at 31.04% and 29.68%, respectively. Large commercial National joint-stock
Particularly, PSBC, CMB, PAB and CSRCB each banks commercial banks*
recorded a proportion of above 50%. 31 Dec. 2017 31 Dec. 2018 31 Dec. 2019
Personal loans as a proportion of total loans of the Source: Calculated based on the annual reports and prospectuses published by
the listed banks.
listed banks *CZB is excluded from calculation
50%
Online consumer lending as part of personal loans grew
42.48% rapidly in recent years, and the COVID-19 outbreak has
43.47%
40.07% increased consumer demand for contactless transactions.
40% 39.69% x 40.70%
Online lending, which relies on big data and models for
x x 40.35%
37.76%
37.32% 39.30% risk assessment, features automatic online processing
31.04% and improved loan approval and payout efficiency, thus
30% 29.48% 29.68% attracting an increasing number of customers. However,
29.45%
28.77%
the business grows so fast that it is exposed to risks
26.26%
of imprudent risk management, insufficient financial
20% consumer protection, and inadequate monitoring of
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019 the use of funds. To ensure a sound development of
x Large commercial banks National joint-stock commercial banks online lending of commercial banks, effectively prevent
City commercial banks Rural commercial banks financial risks and strengthen consumer protection, the
All listed banks China Banking and Insurance Regulatory Commission
Source: Calculated based on the annual reports and prospectuses published by (CBIRC) issued the Provisional Rules on Online Loans
the listed banks.
of Commercial Banks (Exposure Draft) (the “Rules”)
Personal housing loans remained a key part of personal on 9 May 2020. The Rules clarified the definition and
loans. Personal housing loans of listed banks as a
1 Annual reports published by the listed banks.
28
03 / Retail business transformation built on customer-oriented differentiators
scope of online loans, emphasized the strengthening of 3.19%. The interest spreads were divergent among listed
the lending process and post-lending regulation, set out banks, with PAB, CMB and CEB each reporting a high
the requirements for risk management, standardized interest spread, standing at 5.12%, 4.79% and 4.06%,
business partner management, and enhanced consumer respectively, in 2019.
protection. The Rules also required commercial banks to Average yields of personal loans and average interest
submit reports on online loans, conduct self-assessment, rates of personal deposits of large commercial banks
and report major matters or events. The implementation 6%
of the Rules is expected to have profound implications for
4.85%
online retail loans of listed banks. They should take this 5%
x x 4.96%
4.77% x
opportunity to review their online loan portfolio, improve
4%
their management system, optimize their business 3.21%
3.21% 3.12%
process, and steadily promote the development of online 3%
lending.
2% 1.64% 1.84%
Personal deposits were recorded as the core liabilities 1.56%
of listed banks. As at 31 December 2019, the 1%
2017 2018 2019
aggregate personal deposits of listed banks amounted
x Average yield of personal loans
to RMB58,439.86 billion, growing by 12.40% from 31
Average interest rate on personal deposits
December 2018 and accounting for 43.48% of total bank Spread between deposit rate and loan rate
deposits, up 1.38 percentage points from the prior year- Source: Calculated based on the annual reports and prospectuses published by the
end. City commercial banks posted the fastest growth, listed banks. The average interest rates on personal deposits of large commercial
banks were calculated without BOC as it did not disclose the data.
with personal loans accounting for 30.11% of total bank
deposits in 2019, up 3.18 percentage points from the Average yields of personal loans and average interest
prior year-end. Rural commercial banks reported the rates of personal deposits of National joint-stock
largest proportion of personal deposits in total bank commercial banks
deposits (56.91%), while national joint-stock commercial 6% 5.77% 5.90%
x
x x
banks reported the lowest proportion (23.18%). 5%
5.32%
Personal deposits as a proportion of the total

4% 3.69%
deposits of the listed banks 3.60% 3.53%
65% 3%
55.07% 2.08% 2.37%
54.91% 56.91%
55% 2%
49.54% x x x 51.30% 1.72%
49.94%
45% 43.48%
41.13% 1%
42.10% 2017 2018 2019
35%
x Average yield of personal loans
26.93% 30.11%
24.55% Average interest rate on personal deposits
25%
23.18% Spread between deposit rate and loan rate
18.49% 21.15%
15% Source: Calculated based on the annual reports and prospectuses published by the
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019 listed banks. The average interest rates on personal deposits of large commercial
banks were calculated without BOC as it did not disclose the data.
City commercial banks Rural commercial banks Improvement of customer engagement

All listed banks
In 2019, listed banks continued to tap into the potential in
the listed banks.
retail banking to improve customer engagement, enhance
customer loyalty, and promote business transformation.
Decline in interest spread between deposits ICBC has implemented the strategy of building a “Top
and loans Personal Finance Bank”, viewing mobile banking as the
core enabler of business transformation and the key
According to the analysis of the 2017-2019 average
differentiator to win the competition, with an aim to build
yields of personal loans and average interest rates of
a leading comprehensive online financial service platform.
personal deposits of large commercial banks and national
In 2019, ICBC stayed ahead of peers in terms of the
joint-stock commercial banks having higher proportion
number, loyalty and engagement level of mobile banking
of retail business, the average yield of personal loans
customers. The monthly active customers and transaction
and the average interest rate of personal deposits of
volume of BOC mobile banking increased by 49% and 41%
the two types of listed banks rose year by year, but the
y-o-y, respectively; the monthly active customers of PSBC
interest spread of 2019 was lower than that of 2018.
mobile banking increased by 31.53% y-o-y; the monthly
In 2019, listed banks recorded a yield of above 6% on
active users of CMB app and CMB Life APP increased by
personal loans including SPDB, PAB, CMB, CEB and
25.58% y-o-y, reaching 102 million; the monthly active
CZB. Particularly, PAB recorded the highest, 7.74%,
users of CEB mobile app increased by 89.82% y-o-y; the
boasting a yield of above 7.70% for three consecutive
monthly active users of PAB Pocket APP increased by
years. CMB reported the lowest interest rate of 1.28%
23.50% y-o-y, reaching 33 million; and the monthly active
on personal deposits while CZB reported the highest,
users of CITIC mobile app increased by 41.42%, reaching
2 Annual reports published by the listed banks. 11 million2.
04 Divergent asset quality
profiles and increased
pressure on city and
rural commercial banks
30
04 / Divergent asset quality profiles and increased pressure on city and rural commercial banks
Rise and fall of NPL balances

Listed banks actively The 2019 year-end balance of NPLs of 51 listed banks totaled RMB1,561
responded to external billion, an increase of RMB107.80 billion from prior year-end. The
weighted average NPL ratio fell from 1.52% at the end of 2018 to 1.46%,
macroeconomic risks
a decrease of 0.06 percentage point. The NPL ratio of large commercial
throughout 2019. By banks decreased by 0.09 percentage point from prior year-end. Except for
strengthening credit the NPL ratio of PSBC holding steady from 2018, the NPL ratio of each
risk prevention and of the Big Five declined, including the 0.19 percentage point decrease
of ABC’s NPL ratio; the NPL ratio of national joint-stock banks decreased
control and continuing by 0.07 percentage point from prior year-end. Except for the increase
to increase the write- in NPL ratios at SPDB and CZB, the NPL ratio of other national joint-
off and disposal of stock banks declined, among which the NPL ratio of CMB and CMBC each
declined 0.20 percentage point. The NPL ratio of city commercial banks
non-performing assets, increased by 0.06 percentage point from prior year-end, among which
the aggregate non- the Bank of Jinzhou increased its NPL balance by RMB10.30 billion and
performing loans NPL rate by 1.53 percentage points from prior year-end. SJB, BSH, Bank
of Jiangxi, and BTJ each increased their respective balances of NPLs by
(NPLs) of listed banks
more than RMB1 billion from prior year-end, with NPL ratios increasing
increased while the to varying degrees; the NPL ratio of rural commercial banks increased
NPL ratio decreased. by 0.08 percentage point from the end of last year, and the NPL balance
of Guangzhou Rural Commercial Bank increased from prior year-end by
However, various
RMB3.50 billion, an uptick in the NPL ratio of 0.46 percentage point. The
indicators of listed banks NPLs of these city and rural commercial banks were mainly concentrated in
are showing divergent manufacturing, wholesale and retail, commercial and service industries.
trends. The NPL ratio
and overdue ratio of Changes in the NPL ratios of the listed banks
large commercial banks 1.80%
and national joint-stock 1.71%

1.70% 1.67%
banks both declined, but 1.66%
the provision coverage 1.60%

1.55%
1.60%
1.60%
1.52%
ratio (PCR) increased 1.50% 1.51%
x 1.47%
slightly. NPLs at city 1.45%
x
1.46% 1.46%
1.40%
commercial banks and 1.39% x 1.37%
rural commercial banks 1.30%

1.32%
grew in both proportion 1.20%

and amount as pressure 31 Dec. 水2017 31 Dec. 2018 31 Dec. 2019
on asset quality x Large commercial banks National joint-stock commercial banks

increased. City commercial banks Rural commercial banks
All listed banks

NPL balances and NPL ratios of the listed banks (RMB Million)
Amount NPL Ratio Amount NPL Ratio Amount NPL Ratio
ICBC 220,988 1.55% 235,084 1.52% 240,187 1.43%
CCB 192,291 1.49% 200,881 1.46% 212,473 1.42%
ABC 194,032 1.81% 190,002 1.59% 187,210 1.40%
BOC 158,469 1.45% 166,941 1.42% 178,235 1.37%
BOCOM 68,506 1.50% 72,512 1.49% 78,043 1.47%
PSBC 27,270 0.75% 36,888 0.86% 42,844 0.86%
Large commercial banks 861,556 1.51% 902,308 1.46% 938,992 1.37%
CMB 57,393 1.61% 53,605 1.36% 52,275 1.16%
IB 38,654 1.59% 46,140 1.57% 53,022 1.54%
SPDB 68,519 2.14% 68,143 1.92% 81,353 2.05%
CMBC 47,889 1.71% 53,866 1.76% 54,434 1.56%
CITIC 53,648 1.68% 64,028 1.77% 66,117 1.65%
CEB 32,392 1.59% 38,421 1.59% 42,212 1.56%
PAB 28,997 1.70% 34,905 1.75% 38,233 1.65%
HX 24,597 1.76% 29,809 1.85% 34,237 1.83%
CZB 7,767 1.15% 10,414 1.20% 14,147 1.37%
National joint-stock 359,856 1.71% 399,331 1.67% 436,030 1.60%
commercial banks
BOB 13,371 1.24% 18,425 1.46% 20,298 1.40%
BSH 7,644 1.15% 9,712 1.14% 11,253 1.16%
BJS 10,554 1.41% 12,378 1.39% 14,357 1.38%
BONB 2,839 0.82% 3,353 0.78% 4,141 0.78%
BONJ 3,345 0.86% 4,272 0.89% 5,082 0.89%
HSB 3,300 1.05% 3,980 1.04% 4,815 1.04%
BHZ 4,519 1.59% 5,085 1.45% 5,533 1.34%
BGY 1,682 1.34% 2,306 1.35% 2,961 1.45%
BOCD 2,519 1.69% 2,854 1.54% 3,305 1.43%
SJB 4,156 1.49% 6,442 1.71% 8,005 1.75%
BOCS 1,909 1.24% 2,644 1.29% 3,181 1.22%
BTJ 3,737 1.50% 4,731 1.65% 5,765 1.98%
BCQ 2,400 1.35% 2,881 1.36% 3,131 1.27%
HRB 4,037 1.70% 4,397 1.73% 5,252 1.99%
BGZ 1,413 1.60% 1,905 1.36% 2,129 1.18%
BOZZ 1,926 1.50% 3,938 2.47% 4,645 2.37%
ZYB 3,643 1.83% 6,207 2.44% 6,679 2.23%
BOXA 1,389 1.24% 1,595 1.20% 1,802 1.18%
BSZ 1,711 1.43% 2,381 1.68% 2,448 1.53%
BQD 1,659 1.69% 2,117 1.68% 2,852 1.65%
JXB 2,125 1.64% 3,248 1.91% 4,737 2.26%
JJCCB 1,665 1.62% 2,828 1.99% 3,064 1.71%
JSB 1,598 1.64% 1,899 1.87% 2,142 1.86%
LZCCB 193 0.99% 248 0.80% 417 0.94%
BOGS 2,265 1.74% 3,689 2.29% 4,182 2.45%
BJZ 2,247 1.04% 18,508 4.99% 28,821 6.52%
City commercial banks 87,846 1.32% 132,023 1.60% 160,997 1.66%
CQRCB 3,301 0.98% 4,926 1.29% 5,460 1.25%
CRCB 4,451 1.51% 4,805 1.27% 8,320 1.73%
QRCB 2,090 1.86% 2,144 1.57% 2,615 1.46%
CSRCB 887 1.14% 914 0.99% 1,057 0.96%
ZJRCB 1,338 1.84% 1,474 1.69% 1,718 1.68%
WRCB 910 1.38% 937 1.24% 1,030 1.21%
JTRCB 1,362 1.73% 1,355 1.75% 1,617 1.68%
JYRCB 1,335 2.39% 1,356 2.15% 1,288 1.83%
ZJGRCB 872 1.78% 885 1.47% 982 1.38%
SZRCB 805 1.64% 781 1.31% 910 1.33%
All listed banks 1,326,609 1.55% 1,453,239 1.52% 1,561,016 1.46%
32
Increased write-off and disposal of NPLs increase of 121 swap transactions totaling RMB167.20
billion; BOC’s market-based debt-to-equity swap
The decline in the NPL ratio of national joint-stock business in 2019 amounted to RMB118.80 billion and
banks is partly due to the continued write-off and the bank dispatched 40 directors and 16 supervisors to
disposal efforts in 2019. National joint-stock banks be involved in the corporate governance of its 50 swap
reversed RMB363.90 billion of loan impairment reserves transactions; and BOCOM realized 69 debt-to-equity
through write-offs and disposals in 2019, an increase swaps totaling RMB64.40 billion in 2019.
of RMB66.10 billion from the previous year, or 22.20%.
Led by HX, apart from CMBC, each of the national Special Mention loan ratio continued to
joint-stock banks increased their write-off and reversed decline
loan impairment reserves to varying degrees from the
previous year. HX wrote off and reversed over RMB25 As with the NPL ratio, the Special Mention loan ratio
billion in loan impairment reserves in 2019 compared of listed banks in 2019 also maintained a downward
with the previous year, an increase of 214%. Write-offs trend. At the end of 2019, the proportion of Special
and reversal of loan impairment reserves decreased Mention loans at listed banks fell to 2.31%, a decrease
compared with the previous year at large commercial of 0.35 percentage point from the end of the previous
banks. year. Among them, the proportion of Special Mention
loans at large commercial banks decreased by 0.29%,
Reversal of provisions from NPL write-offs and the proportion at national joint-stock banks decreased
disposal of the listed banks (RMB Million) by 0.34% and the proportion at city commercial banks
decreased by 0.90 percentage point. Conversely,
900,000
rural commercial banks reported an uptick of 0.04
800,000 788,379 percentage point.
730,072
700,000
Changes in the proportion of Special Mention loans of
600,000
the listed banks
500,000
368,210 3.60%
400,000 336,565 363,908
297,797 3.33%
300,000
3.20%
200,000 3.08%
77,428 2.97%
x 2.90%
100,000 54,364 2.85%
10,478 9,701 2.80% 2.76%
2.80%
- 2.67%
Large National City Rural All listed
x
2.66%
commercial joint-stock commercial commercial banks
2.40% 2.55%
banks commercial banks banks 2.38%
2.38%
banks x 2.31%
2019 2018 2.21%
2.00% 2.00%
the listed banks. 31 Dec. 2017 31 Dec. 2018 31 Dec. 2019
At the same time, in order to address the challenge of x Large commercial banks National joint-stock commercial banks
continued growth in non-performing assets as traditional City commercial banks Rural commercial banks
disposal models remain relatively limited, several listed All listed banks
banks have been exploring and implementing innovative
models of non-performing asset disposal. Non- the listed banks.
performing asset securitization, debt-to-equity swaps
and other non-performing asset disposal models have Overdue loan ratio continued to decline
gradually transitioned to market-based operation. ICBC,
CCB, ABC, BOC and BOCOM have all established financial The overdue loan ratio of listed banks dropped from
asset investment companies that implement debt-to- 1.87% at the end of 2018 to 1.63% at 2019 year-end.
equity swap operations. According to the information By category, the ratio fell from 1.61% to 1.36% at large
disclosed in their annual reports, CCB realized a total of commercial banks, from 2.35% to 2.07% at national
RMB159.40 billion in debt-to-equity swaps in 2019; ABC joint-stock commercial banks and from 2.46% to 2.20%
has cumulatively executed 169 debt-to-equity swaps at city commercial banks, whereas the ratio rose from
totaling RMB234.40 billion as of 2019 year-end, an 1.91% to 2.08% at rural commercial banks.

Changes in the proportion of overdue loans to total at large commercial banks, 141.02% to 129.70% at
loans of the listed banks national joint-stock banks and 153.91% to 132.73% at
city commercial banks; conversely, the ratio rose at rural
2.80%
commercial banks from 137.78% to 141.02%.
2.60% 2.59% 2.46%
2.40%
The proportion of overdue loans in the NPL balance
2.35% of the listed banks
2.25% 2.20%
2.20%
2.08%
2.02% 1.91% 180.00%
2.07% 170.04%
2.00%
1.99%
1.80% 1.87% 160.00% 153.91%
1.78% x 151.10%
x 141.02% 141.02%
1.60%
1.61% 1.63% 140.00% 136.89% 132.73%
1.40% 137.78% 129.70%
x 1.36% 130.44%
120.00% 123.40%
1.20% x 111.65%
117.65% x
1.00% 100.00% 110.83% x 98.86%
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019
x Large commercial banks National joint-stock commercial banks 80.00%

31 Dec. 2017 31 Dec. 2018 31 Dec. 2019
All listed banks x Large commercial banks National joint-stock commercial banks
Source: Calculated based on the annual reports and prospectuses published by City commercial banks Rural commercial banks
the listed banks.
All listed banks
The ratio of loans over 90 days in arrears to NPLs Source: Calculated based on the annual reports and prospectuses published by
decreased y-o-y, from 79.37% at the end of 2018 to the listed banks.
69.98% at 2019 year-end. By category, the ratio fell

from 71.95% to 65.15% at large commercial banks, In April 2019, the CBIRC issued the Interim Measures
from 91.65% to 78.62% at national joint-stock banks, for the Classification of Financial Asset Risks of
from 92.60% to 74.75% at city commercial banks, and Commercial Banks (Draft for Comment), which further
from 81.27% to 70.24% at rural commercial banks. clarified the criteria for the five-level classification of
financial assets, requiring that assets overdue for more
Changes in the ratio of the loans overdue 90 days to than 90 days be classified as substandard. In addition,
NPLs of the listed banks the measures clarified the correspondence between
125.00% non-performing assets and impaired assets, refined
the identification of assets subject to reorganization
110.45%
110.00% or exposed to financial difficulties, as well as the
types of contract adjustment. Commercial banks face
105.98% 92.60%
95.00%
95.29% 91.65%
unrelenting pressure on asset quality from ever-
86.70% tightening regulatory requirements.
80.00% 78.62%
81.27%
76.05% x 79.37% 74.75% Uptick in loan provision coverage ratios
x 70.24%
65.00% 71.95% x 69.98%
65.15%
and allowance-to-loan ratio
50.00%
The weighted average provision coverage ratio (PCR) of
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019
listed banks increased by 14.47 percentage points from
the end of 2018 to 220.25% at 2019 year-end. Among
x Large commercial banks National joint-stock commercial banks them, the PCRs of large commercial banks, national
City commercial banks Rural commercial banks joint-stock banks and city commercial banks reported
All listed banks upward trends of 20.30, 6.98 and 1.06 percentage
points, respectively. Although BOCOM, IB, SPDB, HX,
the listed banks. and CZB recorded lower PCRs compared with the
prior year-end, all of the other large commercial banks
The aggregate ratio of overdue loans to NPLs across and national joint-stock banks posted improvements.
all listed banks decreased y-o-y, from 123.40% at Among city commercial banks, eight banks showed a
the end of 2018 to 111.65% at 2019 year-end. By downward trend, including declines of more than 25
category, the ratio fell from 110.83% to 98.86% percentage points at BONJ, BTJ and BGS.
34
With increases in both the balances and ratios of PCRs of the listed banks
NPLs, the PCRs of rural commercial banks fell by 7.28 2017Y/E 2018Y/E 2019Y/E
percentage points, led by the 68.55 percentage points ICBC 154.07% 175.76% 199.32%
decrease at GRCB primarily stemming from increased CCB 171.08% 208.37% 227.69%
NPL balances. ABC 208.37% 252.18% 288.75%
BOC 159.18% 181.97% 182.86%
The weighted average allowance-to-loan ratio of
BOCOM 154.73% 173.13% 171.77%
listed banks increased by 0.08 percentage point from
PSBC 324.77% 346.80% 389.45%
the previous year to 3.21% at 2019 year-end. The Large commercial banks 176.49% 207.87% 228.17%
allowance-to-loan ratio of large commercial banks, city CMB 262.11% 358.18% 426.78%
commercial banks and rural commercial banks each IB 211.78% 207.28% 199.13%
increased from the end of last year, a trend bucked by SPDB 133.39% 156.38% 133.85%
the national joint-stock banks which reported a slight CMBC 155.61% 134.05% 155.50%
0.03 percentage point decrease to 3.16% at 2019 CITIC 169.44% 157.98% 175.25%
year-end. CEB 158.18% 176.16% 181.62%
PAB 151.08% 155.24% 183.12%
Changes in provision ratios of the listed banks HX 156.51% 158.59% 141.92%
300.00% CZB 296.94% 270.37% 220.80%
283.77% National joint-stock 179.26% 191.30% 198.28%
276.49%
270.00%
commercial banks
255.47% BOB 265.57% 217.51% 224.69%
240.00%
BSH 272.52% 332.95% 337.15%
243.95%
223.79% 228.17% BJS 184.25% 203.84% 232.79%
x 224.85%
207.87% BONB 493.26% 521.83% 524.08%
210.00% 220.25%
x BONJ 462.54% 462.68% 417.73%
182.74% 205.78% 198.28%
HSB 287.45% 302.22% 303.86%
180.00% 191.30%
x BHZ 211.03% 256.00% 316.71%
179.26%
176.49% BGY 269.72% 266.05% 291.86%
150.00%
BOCD 201.41% 237.01% 253.88%
SJB 186.02% 160.81% 160.90%
120.00%
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019 BOCS 260.00% 275.40% 279.98%
BTJ 193.81% 250.37% 220.58%
BCQ 210.16% 225.87% 279.83%
City commercial banks Rural commercial banks HRB 167.24% 169.88% 152.50%
All listed banks BGZ 192.77% 243.72% 324.95%
BOZZ 207.75% 154.84% 159.85%
the listed banks. ZYB 197.50% 156.11% 151.77%
BOXA 203.08% 216.53% 262.41%
Allowance-to-loan ratios of the listed banks BSZ 201.90% 174.33% 224.07%
BQD 153.52% 168.04% 155.09%
4.50% JXB 215.17% 171.42% 165.65%
3.94%
4.07%
JJCCB 192.00% 169.69% 182.34%
4.00% JSB 183.96% 212.68% 199.92%
3.57% LZCCB 294.49% 319.36% 349.78%
3.71% 3.73%
3.50% BOGS 222.00% 169.47% 135.87%
3.23% 3.19% 3.21%
x 3.16% BJZ 268.64% 123.75% 127.28%
3.07% 3.13%
3.00% x 3.13% City commercial banks 243.95% 223.79% 224.85%
2.83% 3.03%
2.67% x CQRCB 431.24% 347.79% 380.31%
2.50% CRCB 186.75% 276.64% 208.09%
QRCB 272.16% 290.05% 310.23%
2.00% CSRCB 325.93% 445.02% 481.28%
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019 ZJRCB 245.73% 229.58% 236.95%
WRCB 193.77% 234.76% 288.18%
JTRCB 171.48% 160.41% 167.58%
City commercial banks Rural commercial banks JYRCB 192.13% 233.71% 259.13%
All listed banks ZJGRCB 185.60% 223.85% 252.14%
SZRCB 201.50% 248.18% 249.32%
the listed banks. Rural commercial 255.47% 283.77% 276.49%
All listed banks 182.74% 205.78% 220.25%
the listed banks.

05 On-going transformation
of wealth management
operations and challenges
in post-transition period
36
05 / On-going transformation of wealth management operations and challenges in post-transition period
Since the promulgation of the new asset management regulations in 2018,

regulatory efforts further accelerated in 2019 with the implementation of
In 2019, listed banks a raft of supporting regulations, including the Rules for Identification of
continued to promote Standardized Debt Assets (Draft for Comment), the Circular on Further
the transformation of Regulating the Structured Deposit Business of Commercial Banks, and Measures
for Net Capital Management of Wealth Management Subsidiaries of Commercial
their wealth management Banks (for Trial Implementation). In response to these regulatory requirements,
business, scale up listed banks have adopted a stance of responsible stewardship in their wealth
their net asset value management businesses, fully implementing the series of new regulatory
policies on asset management, actively and steadily promoting transformation
(NAV) based wealth
of their wealth management businesses, and continuing to strengthen the
management products build-out of risk management systems to realize smooth transformation of
(WMPs), and establish those businesses.
wealth management
NAV-based products increased substantially
subsidiaries. The year
Listed banks continued to promote the transformation of their wealth
2020 marks the end of
management business, steadily scaling down their legacy WMPs with expected
the transition period yields while scaling up the issuance and proportion of NAV-based WMPs within
of the new wealth the portfolio. For example, in the case of large commercial banks, the balance
of NAV-based WMPs at 2019 year-end reached RMB478.53 billion at CCB, an
management regulations.
increase of RMB178.91 billion from the end of 2018; the NAV-based WMPs
Listed banks are further balance was RMB781.94 billion at ABC, up RMB253.11 billion or 47.90%,
hampered in the reaching 38.50% share of its WMP portfolio; while that of BOCOM increased by
transformation of their RMB156.96 billion, reaching RMB274.55 billion and bringing the NAV-based
WMP share of off-balance sheet WMPs up 15.12 percentage points to 30.64%.
wealth management
Among the national joint-stock commercial banks, the balance of NAV-based
business by the WMPs at 2019 year-end was RMB334.35 billion at CCB, accounting for 42.93%
coronavirus pandemic. of its portfolio; RMB257.21 billion of regulatory-compliant NAV-based WMPs
were lodged with PAB, an annual increase of 152.20%, its share among non-
guaranteed WMPs climbing from 19.00% to 43.60%. IB managed RMB748.36
billion of NAV-based WMPs at 2019 year-end, an increase of 23.18% y-o-y,
achieving 55.96% share within its portfolio.
At city commercial banks, BOB reported a 2019 year-end balance of
RMB230.45 billion across 144 NAV-based products; BSH reported RMB190.73
billion in NAV-based WMPs registered with the China Banking Wealth
Management Registration & Depository Co., an increase of 59.28% from the
end of the previous year, accounting for 62.57% of its non-principal guaranteed
WMPs, an annual increase of 15.19 percentage points; likewise, BONJ reported
RMB141.24 billion in NAV-based WMPs, accounting for 52.70% of the bank’s
non-principal guaranteed WMPs, an increase of RMB62.36 billion and 22
percentage points from prior year-end. BHZ reported RMB174.77 billion in
NAV-based WMPs, 75.62% of its portfolio, up 43.34 percentage points; BGY’s
balance was RMB62.55 billion, up 13.44% and accounting for 80.93% of its
portfolio; BOCD recorded RMB7.66 billion, an increase of RMB7.44 billion; BTJ
reported RMB54.94 billion, portfolio share climbing from 4% to 50%. ZYB’s
NAV-based portfolio was 52.1% at 2019 year-end, an annual increase of 44.0
percentage points; BOCS launched NAV-based products in late 2019 and
reached a balance exceeding RMB10 billion and accounting for 21.28% of its
overall WMP portfolio; HRB sponsored RMB13.39 billion in NAV-based products
at 2019 year-end, an annual increase of RMB12.78 billion or 2,091.98%; HSB
reported RMB103.29 billion in NAV-based products, taking up approximately
54.99% of its overall portfolio.
Among rural commercial banks, CSRCB reported RMB13.60 billion in NAV-
based WMPs, an increase of 222.87% y-o-y; CQRCB’s balance was RMB70.76
billion, an increase of RMB60.44 billion from the prior year-end, accounting for
52.64% of its portfolio.
Comprehensive deployment of wealth management subsidiaries
As of 31 December 2019, a total of 11 wealth management subsidiaries of listed banks had commenced operation,
namely BOC Wealth Management Co., ICBC Wealth Management Co., Jianxin Wealth Management Co., ABC Wealth
Management Co., Bank of Communications Wealth Management Co., PSBC Wealth Management Co., Everbright
Wealth Management Co., China Merchants Bank Wealth Management Co., Industrial Bank Wealth Management
Co., Bank of Ningbo Wealth Management Co. and Bank of Hangzhou Wealth Management Co. Each of the banks
is actively promoting coordinated development between wealth management subsidiaries and parent banks with
respect to sales, risk management, system operation and other aspects, while also strengthening their active
management capabilities and specialization, contributing to both the stable development of the real economy and
capital markets.
Wealth Management Subsidiary Registered Total Net Net Remarks

capital assets asset profit
ICBC Wealth Management Co. 16 billion 16.40 billion 16.33 billion 330 million
Jianxin Wealth Management Co. 15 billion 15.22 billion 15.06 billion 60 million Outstanding
sponsored WMPs
RMB83.83 billion
ABC Wealth Management Co. 12 billion 12.45 billion 12.31 billion 296 million
BOC Wealth Management Co. 10 billion 10.23 billion 10.18 billion Undisclosed Outstanding
WMPs
RMB74.49 billion
Bank of Communications Wealth 8 billion 8.18 billion 8.09 billion 89 million Outstanding
Management Co. WMPs
RMB110.21
billion
PSBC Wealth Management Co. 8 billion 8.01 billion 8.03 billion Undisclosed
Everbright Wealth Management Co. 5 billion 5.02 billion 5 billion 3.70 million
Industrial Bank Wealth Management Co. 5 billion 5.01 billion 5.01 billion 8,191,400 Operating income
RMB3,900,300
China Merchants Bank Wealth 5 billion 5.19 billion Undisclosed Undisclosed
Management Co.
Bank of Ningbo Wealth Management Co. 1.50 billion 1.50 billion 1.5 billion 384,000 Operating income
RMB888,000
Bank of Hangzhou Wealth Management Co. 1 billion 1 billion 1 billion 256,300 Operating income
RMB591,700
38
05 / On-going transformation of wealth management operations and challenges in post-transition period
COVID-19 pandemic poses challenges to the transformation of the wealth

management business
The year 2020 marks the end of the transition period provided by the new asset management
regulations. Listed banks are accelerating the transformation of their wealth management business, but
uncertainty has increased due to the COVID-19 pandemic. In summary, listed banks face four major
challenges over the course of transforming their wealth management businesses:
1 Disposal of non-standard assets 3 Online promotion of WMPs

For non-standard assets that will remain In 2020, the COVID-19 pandemic has thus far re-
outstanding after the transition period, which configured the operating environment and boost-
tend to have long investment horizons, listed ed online promotion for the wealth management
banks still need to consider how to issue new business. While WMP sales have adapted to the
products to keep holding such non-standard business model transformation, questions remain
assets. However, the COVID-19 pandemic has on how to both protect the rights of investors and
impacted enterprises with physical operations in enhance sales suitability management among
2020 and listed banks need to consider factors entities selling the WMPs as agents.
such as managing liquidity risks and maintaining
financial market stability in their efforts to
determine targeted disposal plans for remaining 4 Development positioning of wealth
non-standard invested assets. management subsidiaries
In the context of national financial supply-side
2 NAV management reform and stringent regulatory environment,

wealth management subsidiaries should consider
As future diversified development touches
how to effectively draw on the advanced asset
the investment assets held by the WMPs, the
management experience of international
requirements for NAV-based management
financial groups and leverage the resource
will present certain challenges to managers,
advantages of their parent banks in order to
including areas such as system build-out, asset
explore their own business models and enhance
valuation and information disclosure. Issues on
their core competitive strengths.
building a complete NAV management system
is also a major source of pressure for the
transformation of wealth management business.

06 Innovative and
expanded capital tools
to accelerate capital
replenishment
40
06 / Innovative and expanded capital tools to accelerate capital replenishment
As multi-channel replenishment gains momentum, overall

Throughout 2019, listed capital levels remain adequate and stable
banks took advantage The overall capital adequacy level of listed banks continued to increase. As
of a supportive policy at 2019 year-end, the core Tier-1 capital adequacy ratio (CAR), Tier-1 CAR
and CAR increased by 0.19, 0.41 and 0.36 percentage points from the prior
environment to actively year to 10.17%, 11.06% and 13.88%, respectively, laying a solid foundation
pursue innovation in for the stable operation of banks. The increase in the CARs across listed
capital instruments banks was mainly due to the continuous optimization of business structure,
increased restraint in allocating capital in respect of risk-weighted assets,
and push forward the
the maintenance of strong profit growth driving improvements in capacity to
development of multiple generate capital internally; and the support of policies to actively innovate
channels of capital and expand capital replenishment channels to accelerate replenishment with
externally-sourced capital.
replenishment to steadily
boost capital adequacy Capital adequacy ratio of the listed banks
levels. As the banking 16%
x 15.73%
15.13%
industry continues 15% x
its long-term stable 14.18% x
14.32%
14.41%
development, capital 14% 13.52% 13.88%

13.69%
replenishment will require 13%
13.13%
12.99%
13.02% 13.31%
continuous enhancement. 12.84% 12.98%

12.50%
12%
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019

All listed banks
Core Tier-1 capital adequacy ratio of the listed banks

12% 11.78%
x x 11.79%
11.17% x 10.90% 11.35%

11%
10.76%
9.98%
10.17%
10%
9.82%
9.43% 9.61%
9.39% 9.55%
9.13% 9.36%
9%
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019

All listed banks
Tier-1 capital adequacy ratio of the listed banks

13% x 13.00%
12.56%
x
12% 11.97% x
11.54%
10.92%
11% 10.79% 11.08%
11.06%
10.47% 10.65%
10.41%
10% 10.15% 10.28%
10.03% 10.18%
9%
31 Dec. 2017 31 Dec. 2018 31 Dec. 2019

All listed banks

CAR of the listed banks Listed banks’ core tier-1 CAR
2017Y/E 2018Y/E 2019Y/E 2017Y/E 2018Y/E 2019Y/E
ICBC 15.14% 15.39% 16.77% ICBC 12.77% 12.98% 13.20%
CCB 15.50% 17.19% 17.52% CCB 13.09% 13.83% 13.88%
ABC 13.74% 15.12% 16.13% ABC 10.63% 11.55% 11.24%
BOC 14.19% 14.97% 15.59% BOC 11.15% 11.41% 11.30%
BOCOM 14.00% 14.37% 14.83% BOCOM 10.79% 11.16% 11.22%
PSBC 12.51% 13.76% 13.52% PSBC 8.60% 9.77% 9.90%
Large commercial banks* 14.18% 15.13% 15.73% Large commercial banks* 11.17% 11.78% 11.79%
CMB 15.48% 15.68% 15.54% CMB 12.06% 11.78% 11.95%
IB 12.19% 12.20% 13.36% IB 9.07% 9.30% 9.47%
SPDB 12.02% 13.67% 13.86% SPDB 9.50% 10.09% 10.26%
CMBC 11.85% 11.75% 13.17% CMBC 8.63% 8.93% 8.89%
CITIC 11.65% 12.47% 12.44% CITIC 8.49% 8.62% 8.69%
CEB 13.49% 13.01% 13.47% CEB 9.56% 9.15% 9.20%
PAB 11.20% 11.50% 13.22% PAB 8.28% 8.54% 9.11%
HX 12.37% 13.19% 13.89% HX 8.26% 9.47% 9.25%
CZB 12.21% 13.38% 14.24% CZB 8.29% 8.38% 9.64%
National joint-stock 12.50% 12.98% 13.69% National joint-stock 9.13% 9.36% 9.61%
commercial banks* commercial banks*
BOB 12.41% 12.07% 12.28% BOB 8.92% 8.93% 9.22%
BSH 14.33% 13.00% 13.84% BSH 10.69% 9.83% 9.66%
BJS 12.62% 12.55% 12.89% BJS 8.54% 8.61% 8.59%
BONB 13.58% 14.86% 15.57% BONB 8.61% 9.16% 9.62%
BONJ 12.93% 12.99% 13.03% BONJ 7.99% 8.51% 8.87%
HSB 12.19% 11.65% 13.21% HSB 8.48% 8.37% 8.85%
BHZ 14.30% 13.15% 13.54% BHZ 8.69% 8.17% 8.08%
BGY 11.56% 12.97% 13.61% BGY 9.51% 9.61% 9.39%
BOCD 13.66% 14.08% 15.69% BOCD 10.47% 11.14% 10.13%
SJB 12.85% 11.86% 14.54% SJB 9.04% 8.52% 11.48%
BOCS 11.74% 12.24% 13.25% BOCS 8.70% 9.53% 9.16%
BTJ 10.74% 14.53% 15.24% BTJ 8.64% 9.83% 10.62%
BCQ 13.60% 13.21% 13.00% BCQ 8.62% 8.47% 8.51%
HRB 12.25% 12.15% 12.53% HRB 9.72% 9.74% 10.22%
BGZ 11.62% 12.83% 14.45% BGZ 10.93% 10.62% 12.30%
BOZZ 13.53% 13.15% 12.11% BOZZ 7.93% 8.22% 7.98%
ZYB 13.15% 14.37% 13.02% ZYB 12.15% 9.44% 8.51%
BOXA 13.83% 14.17% 14.85% BOXA 11.59% 11.87% 12.62%
BSZ 13.51% 12.96% 14.36% BSZ 10.42% 10.07% 11.30%
BQD 16.60% 15.68% 14.76% BQD 8.71% 8.39% 8.36%
JXB 12.90% 13.60% 12.63% JXB 9.38% 10.78% 9.96%
JJCCB 10.51% 11.55% 11.64% JJCCB 8.75% 8.90% 8.97%
JSB 12.52% 12.99% 13.60% JSB 10.16% 10.63% 11.47%
LZCCB 13.69% 13.29% 12.09% LZCCB 10.40% 10.69% 9.31%
BOGS 11.54% 13.55% 11.83% BOGS 8.71% 11.01% 9.92%
BJZ 11.67% 9.12% 8.39% BJZ 8.44% 6.07% 5.14%
City commercial banks* 12.84% 13.02% 13.31% City commercial banks* 9.39% 9.43% 9.55%
CQRCB 13.03% 13.52% 14.88% CQRCB 10.39% 10.95% 12.42%
CRCB 12.00% 14.28% 14.23% CRCB 10.69% 10.50% 9.96%
QRCB 12.59% 12.55% 12.26% QRCB 10.50% 10.60% 10.48%
CSRCB 12.97% 15.12% 15.10% CSRCB 9.88% 10.49% 12.44%
ZJRCB 13.94% 13.35% 14.78% ZJRCB 9.69% 9.70% 11.07%
WRCB 14.12% 16.81% 15.85% WRCB 9.93% 10.44% 10.20%
JTRCB 12.20% 11.83% 11.98% JTRCB 9.47% 9.40% 9.55%
JYRCB 14.14% 15.21% 15.29% JYRCB 12.94% 14.02% 14.16%
ZJGRCB 12.93% 15.65% 15.10% ZJGRCB 11.82% 11.94% 11.02%
SZRCB 13.42% 14.89% 14.67% SZRCB 12.27% 10.99% 12.17%
Rural commercial* 13.13% 14.32% 14.41% Rural commercial* 10.76% 10.90% 11.35%
All listed banks* 12.99% 13.52% 13.88% All listed banks* 9.82% 9.98% 10.17%
Source: Public annual reports of the listed banks.
*Simple arithmetic average
42
Tier-1 capital adequacy ratio of the listed banks On the asset side, throughout 2019, listed banks actively
2017Y/E 2018Y/E 2019Y/E stepped up capital rationing, proactively adjusted their
ICBC 13.27% 13.45% 14.27% business structure, and achieved a reasonable increase in
CCB 13.71% 14.42% 14.68% risk-weighted assets while enhancing their ability to serve
ABC 11.26% 12.13% 12.53% the real economy.
BOC 12.02% 12.27% 12.79%
Growth rate of risk-weighted assets
BOCOM 11.86% 12.21% 12.85%
PSBC 9.67% 10.88% 10.87% 20%
Large commercial banks* 11.97% 12.56% 13.00% 18.28% 16.27%
CMB 13.02% 12.62% 12.69% 16.43%
IB 9.67% 9.85% 10.56% 15%
12.04%
SPDB 10.24% 10.79% 11.53% 11.51%
CMBC 8.88% 9.16% 10.28% 10.44%
10.44% 10.36%
CITIC 9.34% 9.43% 10.20% 10% 9.64% x 10.33%
9.93%
x 9.67%
CEB 10.61% 10.09% 11.08% 8.31% 8.15%
PAB 9.18% 9.39% 10.54% x
5%
HX 9.37% 10.43% 11.91% 5.87%
CZB 9.96% 9.83% 10.94%
0%
commercial banks*
BOB 9.93% 9.85% 10.09% 2017 2018 2019
BSH 12.37% 11.22% 10.92% x Large commercial banks National joint-stock commercial banks
BJS 10.40% 10.28% 10.10% City commercial banks Rural commercial banks
BONB 9.41% 11.22% 11.30% All listed banks
BONJ 9.37% 9.74% 10.01% Source: Calculated based on the annual reports and prospectuses published by
the listed banks.
HSB 9.46% 9.18% 10.85%
BHZ 10.76% 9.91% 9.62% The growth rate of risk-weighted assets across various
BGY 9.54% 11.22% 10.77% types of the listed banks in 2019 was lower than the
BOCD 10.48% 11.15% 10.14% growth rate of their net capital.
SJB 9.04% 8.52% 11.48%
BOCS 8.72% 9.55% 10.76% Comparison of net capital growth and risk-weighted
BTJ 8.65% 9.84% 10.63% asset growth in 2019
BCQ 10.24% 9.94% 9.82% 10.36%
HRB 9.74% 9.75% 10.24% All listed banks 15.78%
BGZ 10.93% 10.62% 12.30% Rural commercial 10.44%
15.95%
BOZZ 10.49% 10.48% 10.05% banks
9.67%
ZYB 12.16% 11.49% 10.31% City commercial
banks 13.52%
BOXA 11.59% 11.87% 12.62%
BSZ 10.45% 10.10% 11.34% National joint-stock 12.04%
commercial banks 15.14%
BQD 12.57% 11.82% 11.33% 10.33%
Large commercial
JXB 9.40% 10.79% 9.97% 15.57%
banks
JJCCB 8.75% 8.90% 8.97%
Risk-weighted asset Net capital
JSB 10.16% 10.63% 11.47%
LZCCB 10.40% 10.69% 9.31% the listed banks.
BOGS 8.71% 11.01% 9.92%
BJZ 10.24% 7.43% 6.46% On the capital side, listed banks have paid more attention
City commercial banks* 10.15% 10.28% 10.41% to improving their capacity to generate capital internally.
CQRCB 10.40% 10.96% 12.44% With continuous advancement in transformation and
CRCB 10.72% 10.53% 11.65% innovation, some listed banks gradually reduced their
QRCB 10.51% 10.61% 10.49% dependence on external capital replenishment and
CSRCB 9.92% 10.53% 12.49% promoted the growth of internally generated capital
ZJRCB 9.69% 9.70% 11.07% through profit growth. For example, BOB, BTJ and HRB
WRCB 9.93% 10.44% 10.20% each increased their core Tier-1 CAR, Tier-1 CAR and
JTRCB 9.66% 9.50% 9.66% CAR over 2019 without tapping external sources.
JYRCB 12.95% 14.04% 14.17%
At the same time, as regulators continue to promote
ZJGRCB 11.82% 11.94% 11.02%
capital instrument innovation and broaden capital
SZRCB 12.27% 10.99% 12.17%
replenishment channels, the capital acquisition
Rural commercial* 10.79% 10.92% 11.54%
All listed banks* 10.47% 10.65% 11.06%
approaches of listed banks have become more diversified
in 2019, with the issuance of perpetual bonds quickly
*Simple arithmetic average becoming one of the key approaches.
For core Tier-1 capital replenishment, a total of 10 Listed bank perpetual bond issuance in 2019*
banks successfully listed on the A-share or H-share Issuance date RMB Billion
market in 2019, and the total capital raised amounted
to RMB73.54 billion, a record high since 2017. As the BOC Jan. 2019 40
number of listed banks increased, so did the types, CMBC May. 2019 40
covering city commercial banks, rural commercial HX Jun. 2019 40
banks, national joint-stock banks and large state-owned ICBC Jul. 2019 80
banks. Among them, early Hong Kong-listed PSBC, CZB SPDB Jul. 2019 30
ABC Aug. and Sep. 2019 120
and CQRCB officially returned to the A-share market.
BO-COM Sep. 2019 40
Notably, on 10 December 2019, PSBC listed on the
CCB Nov. 2019 40
Shanghai Stock Exchange, raising RMB32.71 billion.
CITIC Dec. 2019 40
Funds raised by IPOs of listed banks in 2019 PAB Dec. 2019 20
Listing date 上市地点 Listing T
募集资金总 otal funds HSB Dec. 2019 10
market raised Total 500
RMB Source: Annual reports published by the listed banks.
equivalent *Only includes banks that separately disclosed the data.
(millions)民币）
ZJRCB 3 Jan. 2019 Shang Hai 1,150 In addition to perpetual bonds, seven listed banks have
BQD 16 Jan. 2019 Shen Zhen 2,038 successfully issued preferred shares to supplement
BOXA 1 Mar. 2019 Shang Hai 2,080 additional Tier-1 capital, with an aggregate issuance
QRCB 26 Mar. 2019 Shen Zhen 2,202 equivalent of RMB207.80 billion, the highest since 2017.
JSB 18 Jul. 2019 Hong Kong 3,264
Listed bank perpetual bond issuance in 2019*
BSZ 2 Aug. 2019 Shen Zhen 2,620
Issuance date RMB Billion
CQRCB 29 Oct. 2019 Shang Hai 9,988
CZB 26 Nov. 2019 Shang Hai 12,597 IB Apr. 2019 30
PSBC 10 Dec. 2019 Shang Hai 32,714 CRCB Jun. 2019 9.80
BGZ 30
数据来源：各银行公开年报。
Dec. 2019 Hong Kong 4,889 BOC Jun. and Aug. 2019 100
Total 73,541 CEB Jul. 2019 35
ICBC Sep. 2019 70
In addition, SNB also raised RMB18 billion through CMBC Oct. 2019 20
private placement of both H-shares and domestic shares BOCS Dec. 2019 6
Total 207.8
to boost its core capital adequacy level.
Source: Annual reports published by the listed banks.
Four listed banks issued convertible bonds, totaling *Only includes banks that separately disclosed the data.
RMB136 billion, a significant increase over the previous For Tier-2 capital, a total of 18 listed banks raised
year. RMB559.20 billion through issuance of Tier-2 capital
bonds throughout the year, which is significantly higher
Listed bank convertible bond issuance in 2019*
Issuance date RMB Billion
than 2017 and 2018.
PAB Jan. 2019 26 Listed bank Tier-2 capital bond issuance in 2019*
CITIC Mar. 2019 40 (RMB Billion)
BJS Mar. 2019 20 ICBC 110.00
SPDB Nov. 2019 50 CCB 12.90
Total 136 ABC 120.00
Source: Annual reports published by the listed banks. BOC 70.00
*Only includes banks that separately disclosed the data.
BOCOM 40.00
Perpetual bonds emerged in late 2018 as a tool for banks IB 50.00
to supplement additional Tier-1 capital. In January 2019, CMBC 40.00
BOC successfully issued its first perpetual bond, which PAB 30.00
BONJ 5.00
set a precedent in the industry. Following BOC, a total of
BJS 20.00
11 listed banks issued an aggregate of RMB500 billion in
BSH 20.00
perpetual bonds throughout the year.
BHZ 10.00
BOCD 10.50
BONB 10.00
BGY 4.50
WRCB 0.80
ZJGRCB 0.50
CQRCB 5.00
Total 559.20
Source: Annual reports published by the listed banks.
*Only includes banks that separately disclosed the data.
44
Continued pressure placed upon capital strength, but also fundamentally support banks to
further increase availability of credit. It thus better
In 2019, although the overall CAR of listed banks
supports the development of the real economy,
steadily increased, there was divergence by bank type.
especially for small- and micro-sized enterprises,
Large commercial banks had the highest CARs, followed
as well as to provide a strong backing for the
by rural commercial banks; whereas national joint-
development and transformation of banking business.
stock banks and city commercial banks had lower. City
commercial banks continued to face capital pressure, In order to further support commercial banks to
ending the year with 13.31% CAR, which was lower than broaden their capital replenishment channels,
the average level of the industry and all commercial regulatory agencies have issued a series of
banks. policies from 2019 that not only broaden capital
replenishment instruments, but also fill out the
In recent years, with the advancement of policies
working mechanisms for capital instrument
by regulatory agencies to rein in leverage and guide
identification and issuance. For example, in November
banks to return to traditional credit, listed banks
2019, the CBIRC issued the “Circular on Guiding
have developed increased demand for capital. Also,
Opinions on the Innovation of Capital Instruments
accelerated write-off of NPLs requires more capital
of Commercial Banks (Revised)” to support such
support.
issuance, such as improving the mechanisms for loss
From 2020 onward, listed banks have been facing more absorption of capital replenishment instruments.
complex domestic and overseas operating environments, The State Council has also issued a series of policy
especially the global outbreak of COVID-19, which has documents guiding the establishment of long-
a large impact on domestic and overseas economies, term capital replenishment mechanisms, focusing
societies, financial markets and people. Listed banks on supporting small- and medium-sized banks to
are actively responding to government and regulatory replenish capital through multiple channels and
requirements, fulfilling their social responsibilities optimizing their capital structure to enhance their
and benefiting the real economy, especially small- and ability to serve the real economy and enhance
medium-sized enterprises, while also facing potential risk resilience. The CBIRC further clarified that it
credit risk, interest spreads and profitability challenges. supported the injection of funds and cash-realizable
Under the influence of these factors, the capacity of assets into some high-risk small- and medium-sized
listed banks to internally generate capital through profit banks to replenish their capital, and called upon
retention may be affected to a certain extent. qualified and robust private enterprises and foreign-
funded institutions to participate in the reform and
At the same time, with the phase-in of the capital-
reorganization of these banks3.
differentiated bank regulatory regime over commercial
banks, both global systemically important banks Listed banks need to strengthen their research
(G-SIBs) and domestic systemically important banks and strategic judgment efforts in response to the
(D-SIBs) face stricter capital supervision requirements, current capital pressure, and make preparations to
which may bring capital replenishment pressure in support long-term stable development by leveraging
varying degrees. As ICBC, ABC, CCB and BOC have supportive policies and innovative tools. When
been designated as G-SIBs, they will yet face stricter formulating capital replenishment plans, banks should
capital constraints in the future. Not only will they need consider factors such as their own development,
to meet additional core Tier-1 capital requirements business structure, capacity to generate and
ranging from 1% to 3.5%, but they will also be subject retain internal capital, and changes in the external
to more stringent regulatory requirements for total loss environment in order to arrange capital replenishment
absorption capacity (TLAC), which requires forward- and make good use of domestic and foreign markets
looking capital replenishment arrangements. In addition, through selecting appropriate channels, tools, and
the PBOC and the CBIRC issued the “Measures for target investors.
Evaluation of Systemically Important Banks (Draft for
In addition to accelerating the replenishment of
Comment)” in November 2019 to strengthen additional
externally-sourced capital, listed banks should also
capital supervision of D-SIBs. This means following
commence efforts at capital rationing, balancing
the evaluation of D-SIBs in 2020, more banks may be
and dynamically matching capital with risk-weighted
designated as D-SIBs and become subject to additional
assets, appropriately reducing risk-weighted assets,
capital requirements, increasing capital pressure on
while boosting profitability, enhancing retention of
these banks.
internally-generated capital, and accelerating strategic
transformation to lay a more solid foundation for the
Capital replenishment still requires long-term sustainable development of the banking
improvement industry.
Therefore, broadening the channels of capital
replenishment and accelerating the pace of capital
replenishment can not only effectively alleviate the
capital constraints of banks and consolidate their capital 3 CBIRC, 3 April 2020.

07 Sustainable
development of
green finance and
accelerated growth of
inclusive finance
46
07 / Sustainable development of green finance and accelerated growth of inclusive finance
Policies to promote the development of green finance

In 2019, listed banks Today, green finance has become a strong engine driving the transformation
actively responded to of China’s economy to high-quality development. It is also the key to
addressing the issue of excess consumption of natural resources and
the national strategy,
serious degradation of the ecological environment ailing China for long in
continuously promoted the process of economic development. Green finance primarily includes
the development of green green credit, green bond, green fund, green insurance and carbon finance.
finance and inclusive finance Currently, listed banks mainly carry out green finance practices by extending
green credit and issuing green bonds.
business, supported the
In 2019, China’s central and local governments stepped up the introduction
construction of the nation’s of green finance policies, and the extensive local policies were rolled out and
ecological civilization, and promoted to a wider provincial coverage beyond the provinces designated
actively fulfilled social as green finance reform demonstration zones. Therefore, listed banks
tended to execute their green finance practices to be more aligned with local
responsibilities.
policies.
Summary of national and local green finance policy in 2019

Release Policy name Authority Content
date
Feb. Green Industry Guidance National As an authoritative document on the identification and classification
2019 Catalogue (2019) Development of green industry and green projects in China, the Catalogue is of
and Reform great significance to clarify the boundary of the green industry,
Commission establish a unified national green standard system, and guide funds
to focus on the most important, critical and urgent green industries
and green projects. Its release is a milestone for China's green
development.
Apr. Notice on Supporting the The People’s The policy aims to support the enterpris-es in the green finance
2019 Is-suance of Green Debt Bank of China reform and innovation pilot areas register and issue green financing
Fi-nancing Instruments in tools to diversify the financing channels and further develop China’s
the Green Finance Reform green financial market.
and Innovation Pilot Zone
Jul. Implementation Opinions The People’s The implementation opinions are aimed at summarizing and
2019 on Promoting the Reform Government introducing the experi-ence in the construction of Huadu green
and Innovation of Green of Guangzhou finance reform and innovation pilot area, promoting the city's green
Finance in Guangzhou Municipality finance reform and innovation efforts, enabling green fi-nance
to better serve the high-quality de-velopment of Guangzhou and
the construction of the Greater Bay Area, and proposing to give
incentives to newly in-troduced green finance institutions and talent.
Aug. Implementation Rules Seven provin- The implementation rules aim to support the initial interest payment
2019 for the Implementation cial authori- by non-financial enterprises in the province, and the fund-raising
of Green Bond Discount ties, including project is included in the province's green bonds. In terms of the
Policy in Jiangsu Province the Jiangsu specific discount amount, 30% of the annual actual interest paid by
(Trial) Development the non-financial enterprises that have successfully issued green
and Reform bonds will be discounted. The duration of the discount is two years,
Commission and the maximum annual discount amount of a single bond will not
exceed RMB2 million.
Sep. Notice on Introducing Tongzhou District The plan proposes to promote the con-struction of green finance
2019 Tongzhou District of People’s and sustainable financial center in Beijing, actively develop green
Implemen-tation Plan Government financial format, cultivate new financial products and format, and
for Creating a Pilot Area of Beijing further open up the financial sector.
for further Opening up Municipality
Service Industry
Sep. Opinions of Jilin Province The People’s The opinions clarify the scope of green finance support in the
2019 on Promoting the Government of province, strengthen the construction of green project pool,
Development of Green Jilin Province improve the green credit management mechanism, promote the
Finance establishment of green bank evaluation and reward mechanisms,
innovate green credit products and service methods, and subsidize
and discount green credit.
Dec. Notice on Revising the The People’s It proposed to revise the old edition of the green credit statistical
2019 Special Statistical System Bank of China system, further expand the statistical scope aligned with the national
of Green Credit green industry standard. The new edition of the statistical scope
in-cludes personal business loans, and the green standard will be
updated in accordance with the Green Industry Guidance Catalogue
(2019).

Green credit balance*(Unit: RMB100 million) state-owned banks, ABC recorded the largest proportion
2019Y/E 2018Y/E Growth rate of 8.91%, followed by CCB (8.37%) and ICBC (8.06%).
ICBC 13,508.38 12,377.58 9.14% In 2019, listed banks continued to drive forward the
CCB 11,758.02 10,422.60 12.81% green bond issuance as China’s green bond market grows
ABC 11,910.00 10,504.00 13.39% steadily. As of December 31, 6 of the 51 listed banks that
BOC 7,375.70 6,326.67 16.58% disclosed the issuance information issued a total of six
BOCOM 3,283.52 2,830.54 16.00% domestic and offshore green bonds, largely the same as
PSBC 2,433.01 1,904.05 27.78% previous years in terms of number and scale. Particularly,
CMB 1,767.73 1,660.33 6.47% IB recorded the largest issuance of RMB20 billion in
IB** 10,109 8,449 19.65% domestic green bonds, followed by ICBC’s US$2.20 billion
SPDB 2,260.53 2,175.15 3.93% of offshore Belt and Road Inter-bank Regular Cooperation
CMBC 322.55 250.75 28.63% Bond.
CITIC 651.48 629.37 3.51%
The green finance pilot areas and demonstration zones
CEB 906.99 784.00 15.69% have achieved remarkable results. Since June 2017,
PAB 252 262.84 -4.12% China has announced the construction of green finance
HX*** 798.44 566.99 40.82% reform and innovation pilot areas in Zhejiang, Jiangxi,
CZB 538.78 225.58 138.84% Guangdong, Guizhou, Xinjiang, and Gansu. In the past
BOB 285.54 Undisclosed / two years, these pilot players have issued corresponding
BSH 93.71 126.33 -25.82% green finance management and incentive systems
BJS 860 796 8.04% and established a total of nine demonstration zones,
BONB*** 75.25 56.16 33.99% gradually improving the institutional mechanism and
BONJ 447.54 284.46 57.33% vitalizing green finance and innovation with market
BHZ*** 161.32 109.47 47.37% power. As of the end of 2019, the five provinces with
BGY 179.62 155.27 15.68% eight demonstration zones under the green finance
BOCS 138.33 101.85 35.82% reform pilot program saw a total of eight listed urban
HRB 24.11 18.89 27.63% and rural commercial banks geographically based from
BSZ 46.65 Undisclosed / within, among which CZB and BGY each issued one green
BQD 115.87 94.85 22.16% financial bond with a total issuance amount of RMB8
JXB 109.31 Undisclosed / billion. The listed banks in the pilot demonstration zones
CQRCB 180.07 Undisclosed / have all established a green finance management system
CSRCB 17 Undisclosed / and engaged third-party professional institutions that
ZJRCB 38 Undisclosed / provide services in the management of proceeds and
WRCB 28.81 Undisclosed / green projects, yielding good environmental benefits.
SZRCB 13.29 Undisclosed /
* Data disclosed in the listed bank’s CRSR reports or ESG reports.
Efforts to strengthening inclusive financial
**Disclosed are green finance financing balances.
***HX, BONB and BHZ’s green credit balance as at 31 December 2018 is
services
calculated based on their respective credit balance as at 31 December 2019 and
2019 growth rate. The development of inclusive finance is not only a
goal of fulfilling corporate social responsibilities, but
In 2019, the scale of green credit of listed banks
also a strategic growth opportunity for listed financial
maintained a rapid growth. According to the
institutions. The inclusive finance initiative guides
announcement issued by the CBIRC, as of December
financial institutions to deepen the reform of institutional
31, the annual green credit balance of 21 major
mechanisms and promotes the implementation of a
Chinese banks exceeded RMB10 trillion, a y-o-y growth
separately run business unit. According to the 2019
of more than 21.5%. Among them, six state-owned
China Inclusive Finance Development Report, among the
banks provided green loans totaling RMB5,026.90
listed banks, six large commercial banks have established
billion, growing by 13.31% y-o-y. From the perspective
the inclusive finance department at the head office and
of investment scale, ICBC recorded the largest amount
all first-tier branches; nine national joint-stock banks
of green loans, reaching RMB1,350.80 billion. ABC
have established the inclusive finance department, or set
and CCB ranked second and third, respectively.
up a dedicated inclusive finance business unit or center,
From the perspective of the growth rate of green
and implemented differentiated incentives for separate
loans, PSBC saw the highest growth rate of 27.78%,
credit plans, credit due diligence, internal performance
followed by BOC and BOCOM that recorded a growth
assessment and preferential internal capital allocation
rate of 16.58% and 16%, respectively. In terms of the
related to key inclusive finance services. For example,
proportion of green credit in total credit, the top six
ICBC set the poor performance of inclusive finance
state-owned banks had an average of 7.46%, slightly
regulatory indicators as the only downgrade indicator for
lower than the 9.6% average of the 21 major banks
the bank, and PSBC distributed all the income generated
covered by the CBIRC statistical scope. Among the six
48
07 / Sustainable development of green finance and accelerated growth of inclusive finance
Issuer 2019 Green financial bond name* Issuance date Amount Place of
issuance
ICBC The first Belt & Road Inter-bank Regular 16 April 2019 RMB1 billion, Offshore
Singapore Coopera-tion Bond US$1.5 billion,
Branch EUR0.5 billion
IB Industrial Bank 2019 1st Green Bond 16 July 2019 RMB20 billion Domestic
CZB China Zheshang Bank 2019 Green Bond 16 September 2019 RMB5 billion Domestic
BOZZ Bank of Zheng-zhou 2019 1st Green Bond 3 June 2019 RMB2 billion Domestic
BGY Guiyang Bank 2019 1st Green Bond 10 September 2019 RMB3 billion Domestic
BJS Bank of Jiangsu 2019 1st Green Bond 18 April 2019 RMB10 billion Domestic
* Data from ChinaBond.com.cn and the banks’ official websites.

loans to the market. Specifically, ABC and CCB each
from RRR cuts to its branches as inclusive finance recorded a growth of 58% in inclusive finance loans;
incentives. ICBC saw a y-o-y increase of 52% in inclusive finance
Banks further implemented the credit due diligence loans to small- and micro-sized businesses; and BOC
mechanism through clear identification of the principal, disclosed a growth of 38%. Following solid national
establishment of the accountability hearing system, policy and regulatory guidance, listed banks have been
smooth internal complaint channels, and establishment engaged in the provision of inclusive finance services
of faulty tolerance and correction mechanisms, to across the board. Seen from disclosed information, the
enhance transparency and objectivity of accountability aggregate balance of loans to small- and micro-sized
for risk loans. For example, banks, such as BOCOM, businesses has posted rapid growth momentum.
have established fault tolerance and correction Inclusive finance loan balance * (Unit: RMB100 million)
mechanisms, exempting personnel who are compliant 2019Y/E 2018Y/E Growth
in lending to small- and micro- businesses from being rate
held accountable when credit risk arises. ICBC 4,715.21 3,101.14 52%
CCB 9,631.55 6,100.74 58%
Fast-growing inclusive finance loans are inseparable ABC 5,923 3,744 58%
from targeted policy incentives. The PBOC has issued BOC** 4,129 2,992 38%
a series of policies, such as the assessment of targeted BOCOM 1,639.52 1,081.33 52%
reserve cut for inclusive finance to encourage banks PSBC 6,531.85 5,449.91 20%
to allocate more credit resources in inclusive finance. Total Large commercial 32,569.92 22,468.98 45%
In 2019, further credit growth was seen across the banks
inclusive financial sector, such as small- and micro- CMB 4,048.88 3,489.93 16%
business loans, loans for farmers’ production and IB 6348.6 5,809.53 9%
operation, and guaranteed loans for start-ups. SPDB 3,871.30 3,591.31 8%
CMBC 4,400 4,069.38 8%
In 2019, the inclusive finance services further CITIC 2,042.55 1,363.53 50%
improved, seeing remarkable achievements in financial
CEB 5,004.82 4,521.33 11%
precision poverty alleviation and services to private
PAB 3,777.54 3,041.39 24%
small- and micro-sized businesses. The “Notice on
HX 1,001.40 846.73 18%
Further Strengthening the Relevant Work of Financial
CZB 2,323.52 2,045.46 14%
Services for Private Enterprises” issued by the CBIRC
Total National joint- 32,818.61 28,778.59 14%
in February 2019 required large commercial banks to stock commercial banks
lead the efforts across the board in inclusive finance, BOB 351.8 264.9 33%
and expected the inclusive finance loans to small- and BSH 373.3 170.01 40%
micro-sized businesses to grow by more than 30% y-o-y. BJS 657.5 545.6 21%
In 2019, China’s banking industry witnessed a rapid BONB 794.71 Undisclosed /
growth in inclusive finance loans, with the balance BONJ 382.91 247.03 55%
of inclusive finance loans to small- and micro-sized BGY 218.58 182.3 20%
businesses amounting to RMB11.60 trillion, an y-o-y
BOCD 665.12 Undisclosed /
increase of more than 25%. Large commercial banks
BOZZ 868.59 Undisclosed /
played an exemplary role across the industry, providing
BOXA 221.80 243.10 -9%
an impressive aggregated amount of inclusive finance
BQD 140.11 Undisclosed /
* Data disclosed in the listed bank’s CRSR reports or ESG reports. CSRCB 686.32 603.62 14%
** BOC’s balance of inclusive finance loans as at 31 December 2018 is calculated ZJRCB 389.64 Undisclosed /
based on the balance of inclusive finance loans as at 31 December 2019 and the
2019 growth rate disclosed in the 2019 annual report. WRCB 85.82 Undisclosed /

08 Increased FinTech
investment to
drive innovation
50
08 / Increasing FinTech investment to continue to drive innovation
At present, adopting digital strategy has been a priority for the banking
industry to accelerate business transformation and improve overall
In 2019, listed banks
operational capacity and risk management capacity. FinTech has also been
increased their FinTech widely applied in a wide range of banking business areas.
investment in multiple
Increasing FinTech investment to accelerate business
dimensions, further transformation and growth
strengthening the role
In 2019, the PBOC released the FinTech Development Plan (2019—2021)
of FinTech in driving (“the Plan”) to outline guidelines, basic principles, development targets,
business transformation key tasks and supportive measures for FinTech development in the next
and business growth and three years, as well as the Notice on Issuing Financial Industry Standards
to Enhance Security Management of Financial Mobile Applications (Yinfa
embracing accelerated
[2019] No.237), the FinTech Product Certification Catalog (First Batch)
innovation. and the FinTech Product Certification Rules to further clarify regulations
over FinTech. As the first medium- and long-term FinTech development
plan proposed by the PBOC, the Plan laid a solid foundation for the healthy
development of FinTech in the medium and long term and presented
opportunities for the acceleration of FinTech development. We analyzed
2019 annual reports of various listed banks and noted increased emphasis
on strategic importance of FinTech innovation and wider range of FinTech
application.
Large state-owned banks placed great emphasis on the role of FinTech
on business transformation and growth by investing heavily in FinTech
and attracting innovation talent. FinTech is a keyword of ICBC’s innovative
development in the past year. ICBC has created an all-round intelligent
banking system without boundary by promoting the in-depth integration
of technology and finance from a full range of perspectives, including
ecology, scenario, architecture, technology and institution. Integrating
online and offline businesses and connecting diverse domains, the system
boasts intelligent and inclusive customer service, open and interconnected
financial ecology, shared and connected operations, and efficient and
flexible product innovation. With a consolidated FinTech foundation, CCB
actively promoted the development of FinTech-based platforms including AI,
blockchain and the Internet of Things. It has developed collaborative smart
finance solutions to promote the enhancement of internal digital operation
and management capabilities. Leveraging the integration advantages of
the New Generation core banking system, it also developed a unified view
of corporate customers. CCB accelerated the development of “multiple
touch-points and integrated” smart channels and launched “5G+ intelligent
bank”. To empower external partners with the concept of openness and
sharing, it has built a new ecosystem for government, business and
customer communities. Moreover, it created a smart government affairs
service platform and established the “five-in-one” service model of mobile
APP, PC terminal, outlet STMs, “CCB Yunongtong” and government affairs
lobbying. ABC deeply implemented the digital transformation strategy which
was in line with the development trend of FinTech, and made significant
progress in building platforms, online financing, creating scenarios and
data governance. ABC regarded digitalization as the core driving force of
business transformation, accelerated the innovation of online products of
the “ABC E-loan” series, and continuously expanded the integration and
supply of important digital infrastructure such as technology platforms,
data assets, and middle platforms for its businesses. ABC continued
to expand smart scenarios related to the industrial chain, government
affairs and people’s livelihood, and retail consumption to serve and
support the accelerated development of the digital economy with digital
financial innovation. Driven by technology, BOCOM’s FinTech strategy has

evolved into a phase of intensive development and its customer base and steadily improving its customer
transformed its role from passive support to proactive service capabilities. CMB used FinTech to gain insights
empowerment. The bank was committed to the three into customer needs, improve service methods and
tasks of IT framework transformation, IT management improve operation efficiency, while continuously
framework optimization and data management to improving the model innovation for building an
accelerate the implementation of the strategy. The ecosystem with partners. At the same time, CMB
bank also decentralized its technology framework in further increased its efforts in digital transformation,
order to accelerate the establishment of a digital and continuously accumulated and consolidated innovation
intelligent platform system. BOCOM also focused on capabilities, further enhanced its capabilities in
building an IT management framework characterized digital customer acquisition, business operation and
by agile upgrading and rapid development in order to risk control, promoted continuous improvement
deeply integrate businesses with technology. The bank in operation and management efficiency, so as to
deeply explored the data management project in order form a sustainable, scalable, iterative and upgrading
to fully exercise data value. In addition, BOCOM’s high- innovation system. PAB attached great importance
quality technology talent pool was enlarged by three to the role of technological innovation. With talent
programs of “10,000 FinTech Talent Plan”, “FinTech mechanism as the guarantee, safe operation as
Management Trainees”, and “Empowerment and the foundation and financial technology as the
Transformation of Existing Talent”. starting point, PAB is committed to technology-
driven finance and management improvement to
National joint-stock commercial banks strived to
achieve a comprehensive digital transformation. PAB
transform and innovate by creating an innovative
continues to bring in global top technology elites and
environment and exploiting innovative business
set up leading talent teams in financial technology
models. CMB not only added provisions about
and accelerate the construction of a “Finance +
FinTech investment, market-based talent recruitment
Technology” integrated talent team. In 2018, SPDB
and allocation mechanism, and a remuneration and
launched the first open banking platform API Bank
incentive system into its Articles of Association, but
in China. The bank further scaled up API scenarios
also kept on optimizing the career development path
in 2019 to enhance the influence of innovation
of FinTech talent and strengthening their recruitment
scenarios and drive rapid growth in the overall size of
and training. The bank also gave full play to FinTech
the platform. Based on the API Bank, SPDB’s financial
as its nuclear power engine, accelerated digital
products and services were deeply integrated with
transformation and endeavored to develop itself into
governments, enterprises, and industry platforms to
a bank that offers the best customer experience.
provide ubiquitous services to customers in various
Throughout 2019, CMB had delivered remarkable
production and living scenarios.
results in business development, further consolidating
Amount and y-o-y growth of FinTech/IT investment by large commercial banks and national join-stock
commercial banks in 2019 (RMB100 million)
200.00 43.97% 44.73% 50%

176.33
180.00
163.74
36.80% 36.91% 35.80%
160.00 40%
140.00 127.90
116.54
120.00 24.66% 30%
93.61 22.94%
100.00
81.80
80.00 20%
15.15%
60.00 50.45 48.94
41.20
35.65
40.00 13.66% 34.04 26.56 10%
20.00 10.91
- 0%
CCB ICBC ABC BOC CMB PSBC BOCOM CITIC SPDB IB CEB HX PAB
Amount of FinTech/IT investment by large commercial banks and national join-stock commercial banks in 2019 (in RMB million)
Year-on-year growth of FinTech/IT investment by large commercial banks and national join-stock commercial banks in 2019
Source: Disclosures in published 2019 annual reports of the listed banks.

*PAB only disclosed the amount of FinTech/IT investment earmarked for the research and application of innovative technologies. CCB, ICBC, ABC and SPDB did not
disclose the y-o-y growth.
52
City commercial banks and rural commercial banks amount of investment, CCB, BOCOM, CEB, SPDB, PSBC
also strived to strengthen the role of FinTech in and CMB also disclosed the proportion of FinTech/IT
leading and supporting reform and innovation. JSB investment in their operating income in 2019, which
set up the FinTech Innovation Committee, leading a was more than 2% for all six listed banks. Specifically,
number of project teams to vigorously promote agility CMB reported the highest proportion of 3.72%. Nine
transformation. In 2019, JSB further increased its listed banks –BOC, BOCOM, PSBC, CMB, CITIC, CEB, IB,
FinTech investment to RMB689 million and continued PAB and HX disclosed the y-o-y FinTech/IT investment
to attract more FinTech professionals. BONJ sped up growth in 2019. Specifically, CMB and CEB reported a
the construction of an IT service line and expanded its growth of more than 40%.
talent pool. BONJ launched the “Blue π Program” and
organized the BONJ University open day under the
Seize new opportunities for innovation
theme of FinTech, so as to identify 2020 outstanding and development of the banking industry
graduates in advance to enrich its scientific and brought about by FinTech
technological talent team. BOSC invested RMB1,433
million in 2019, up 36.91% y-o-y, accounting for 2.95% TThe development of FinTech has brought new
of their operating income, which was even higher than opportunities in the innovation and development of
that of some large commercial banks and national joint- listed banks. In 2019, listed banks pressed ahead with
stock commercial banks. As at 31 December 2019, FinTech innovation and achieved innovation milestones.
BOSC had 706 IT personnel, accounting for 5.75% of For example, ICBC hosted the ECOS launch event in
its total number of employees, which was also higher Beijing on 8 November 2019. Designed to support
than that of some large commercial banks and national the transformation and development of the bank in
joint-stock commercial banks. the new era with cutting-edge financial technology,
the smart banking ecosystem thereby opened a new
Unlike previous years, several listed banks have chapter in the course of building a smart bank. ECOS
disclosed their FinTech/IT investment and the number was characterized by six achievements, which were
of FinTech/IT personnel in their 2019 annual reports. being closely integrated into various business areas
Although listed banks disclosed data on different bases, and significantly improving service capabilities and
they generally increased capital investment in FinTech customer experience. These six achievements include
and emphasis on FinTech talent. ICBC setting up an open and integrated cross-border
Four large commercial banks of CCB, ICBC, ABC and ecology and becoming the largest comprehensive
BOC all invested more than RMB10 billion in FinTech/ financial service provider in China; rolling out a brand-
IT in 2019. National joint-stock commercial banks also new innovation model of “Smart Plus”; realizing
invested billions of RMB in FinTech/IT. Specifically, highly adaptive and flexible support to fleeting
CMB invested nearly RMB10 billion. In addition to the scenarios; creating the “host plus open platform”
Number of FinTech/IT personnel and its proportion to the total number of employees of large commercial banks
and national join-stock commercial banks in 2019
40,000 7.80% 8.00%
35,000 34,800 7.00%

5.93%
6.00%
30,000
5.00%
25,000 4.07%
4.05%
4.00%
3.38%
20,000
2.75% 3.00%
15,000 10,178
2.00%
7,500
10,000
3,898 3,460 3,182 1.00%
1,910 1,542
5,000
0.00%
ICBC CCB PAB SPDB BOCOM CITIC IB CEB
Number of FinTech/IT personnel in the Bank/Group of large commercial banks and national join-stock commercial banks in 2019
Proportion of FinTech/IT personnel to total number of employees of the Bank/Group of large commercial banks and national join-stock
commercial banks in 2019
Source: Disclosures in published 2019 annual reports of the listed banks.

*The FinTech/IT personnel of BOCOM included only personnel at domestic branches. The FinTech/IT personnel of PAB also included outsourcing personnel. The
proportion of CCB was the proportion in the total number of employees of the group. PAB and SPDB did not disclose the proportion of FinTech/IT personnel.

dual-core IT architecture; forging a series of industry-leading, enterprise-level FinTech platforms; and gaining the
componentized innovation ability to make flexible combination and rapid R&D. The release of ECOS was another
important milestone in the course of ICBC’s technology development. For CCB, technology is shifting from being
merely an underlying infrastructure to the forefront of innovation, driving business process re-engineering,
organizational reforms and strategic transformation in banking. Based on an agile mechanism for its retail
banking business, in 2019, PAB used its AI Bank as the internal drive to actively build an open banking ecosystem,
achieving the connection, empowerment and integration of customers, employees and partners, and promoting the
comprehensive innovation of business models. Since launching the first API Bank in China in 2018, SPDB realized
rapid development in the size of the open platform in 2019 by further expanding the coverage of API scenarios and
enhancing the impact of innovative scenarios.
As analyzed in the EY report Banking in Asia-Pacific: Time to reinvent the digital landscape, consumer banking,
corporate and commercial banking, and investment banking businesses will all embrace digital innovation
opportunities. To maximize opportunities, incumbent banks need to accelerate digital transformation by adopting
intelligent automation to deliver operational efficiencies on the one hand, and opening APIs to allow participation
in the emerging data–sharing ecosystem and realize new growth opportunities on the other hand. It is worth
noting that, with the huge potential of digital technologies comes huge risks, as banks share not only their own but
also their customers’ data with a diverse range of external parties, elevating the risk of financial crime and cyber
attacks. Therefore, banks also need to use digital innovation to disrupt financial crimes and reduce compliance cost
and develop a cybersecurity vision and overarching strategies.
D
亚 igital innovation opportunities in consumer banking, corporate and commercial banking, and investment
banking businesses of banks in Asia-Pacific
Business area Digital innovation opportunity

Consumer banking Technology–led innovation enables cost efficiencies and lowers the risk in serving financially
excluded individuals, and micro, small and medium enterprises (MSMEs).
Important levers include: 要的手段包括：
• National digital identity systems that make it easier to open an account
• Innovative payments to simplify financial transactions
• Digital channels that provide cheaper and greater access for customers in remote areas
• Greater availability of customer data, so providers can customize offerings to better fit the
needs of unbanked individuals and MSMEs
• Alternative and non-conventional risk scoring techniques supporting loan provision to the
financially excluded without prior credit histories
Corporate and Banks are increasingly committing to digital transformation and deepening relationships
commercial banking with partners and clients within the corporate and commercial banking ecosystem. Banks are
deploying technology to increase efficiency and improve client experience with real–time cross–
border payments, mobile payment services, and APIs that can integrate the bank’s system with
the client’s enterprise resource planning (ERP) system to facilitate transaction processing.
A key opportunity lies in automating the manual processes of trade finance to harmonize and
simplify transactions, lower costs and reduce risk. Blockchain for trade finance holds great
promise and is a sought after technology by the corporate and commercial banking sector.
Investment banking Front office innovation opportunities are coming on stream for investment banks as advanced
analytics and AI help to improve decision–making, enrich insights and reduce costs. For example:
• Client onboarding: manually intensive onboarding processes could be digitized, end to end.
In this regard, technologies, such as blockchain, that address digital identity may be game
changers in the longer term.
• Client insight and analytics: using advanced analytics on position and transaction data can
identify patterns and trends for relationship managers. Advanced analytics and unstructured
data engineering can be applied to natural language input, market news, economic reports,
monetary policy changes and political events, to gain richer insights, more quickly than human
research teams.
• Trading: advanced analytics can improve the performance of front–office desks. By analyzing
executed trades and comparing them with market news and the data available to traders,
algorithms can identify suboptimal trading strategies.
Source: Banking in Asia-Pacific: Time to reinvent the digital landscape, EY Report.
54

09 Enhancing resilience
to tap into new
opportunities amid
pandemic
56
09 / Enhancing resilience to tap into new opportunities amid pandemic
Combating the pandemic through concerted efforts

The worldwide spread The COVID-19 outbreak nationwide since early 2020 has hugely affected
of the unexpected public health and even people’s lives, and the Chinese government has
COVID-19 pandemic has quickly adopted containment measures unprecedented in scope and
magnitude to address the pandemic. So far, the effectiveness has proven
brought severe economic to be robust across the country, with production restarting steadily and
impacts to China and people returning to work in phases. Nevertheless, sharper-than-expected
the world, inevitably declines have been seen in industrial output, investment, consumption and
imports and exports. According to the National Bureau of Statistics (NBS)
posing unprecedented
data, in the first quarter, the total value-added of industrial enterprises
challenges to banking above a designated size fell by 8.4% y-o-y; the total retail sales of consumer
sectors. While rolling goods went down by 15.8%; the investment in fixed assets (excluding rural
households) declined by 16.1%; and the total value of imports and exports
out measures actively
of goods contracted by 6.4%. Globally, many economies have suffered a
to combat the pandemic harder hit by the pandemic that shows signs of more rapid spread, forcing
and minimize its impact, an increasing number of countries to deploy measures such as social-
China’s listed banks have distancing, stay-at-home requirements, lockdown of cities and closure
of entertainment business. Extended social-distancing and stay-at-home
simultaneously explored measures enforced by governments have put economic activities on halt for
and analyzed the changes a prolonged period. Against the backdrop of global integration, the impact of
in day-to-day production the pandemic elsewhere across the world would in turn hit China’s economy
through global industrial chains, supply chains and financial markets, with
and lifestyle patterns extensive and far-reaching implications for its economy. This is also the case
in order to identify for the country’s banking sector that plays a pivotal role in providing credit
new growth drivers or funds for economic activities across the board.
and turn threats into Immediately after the COVID-19 outbreak, China’s central government and
opportunities. relevant regulatory authorities have decisively rolled out a package of fiscal
and financial stimulus measures to stabilize the financial market, ensure
adequate provision of funds earmarked for the containment of the pandemic
and resumption of work and production of enterprises, and alleviate
economic downturn pressure caused by the pandemic. The major measures
as of 24 April 2020 are outlined as follows4:
• The PBOC has stepped up short-term and mid-term liquidity support via
reverse repos, medium-term lending facility (MLF), targeted RRR cuts,
and lower interest rates on excess reserves, among other tools.
• In an effort to lower market rates, the central bank has rolled out
policies intensively, including cutting the 1-year MLF rate by 30 basis
points, lowering the 1-year and above-5-year loan prime rate (LPR) by
30 basis points and 15 basis points, respectively, and cutting the 7-day
and 14-day reverse repo rates by 30 basis points and 10 basis points,
respectively.
• To step up credit support, the central bank has issued RMB300 billion
special re-lending funds to policy and commercial banks via its re-lending
program to finance major enterprises involved in pandemic control,
increased the re-lending and re-discounting quota by RMB500 billion
to support enterprises to resume work and production in an orderly
way. In addition, China’s policy banks have added a special credit quota
of RMB350 billion for micro- and small-sized enterprises and private
businesses to support their efforts in resuming operations, spring
plowing and foreign-trade-related manufacturing. At the end of March,
the Executive Meeting of the State Council proposed a more than RMB3
trillion credit support program targeting small- and medium- sized
enterprises (SMEs)
4 Official websites of PBOC and CBIRC.

• To reduce the costs borne by enterprises and pandemic and to resume work and production by giving
individuals affected by the pandemic and help them them easy access to credit services; provided contactless
navigate these difficult times, favorable financial online financial services based on FinTech applications;
service policies such as reduction of fee charges and provided open platforms to address the need for
special credit arrangements have prevailed across pandemic protection and containment; and actively
China’s banking sector, with banks appropriately fulfilled corporate social responsibilities by donating
lowering the lending rates, offering fee exemption funds and materials.
and reduction, improving loan extension and renewal
arrangements, and moderately increasing NPL
tolerance.
1 Business continuity
Listed banks have moved quickly to maintain the
• Banks have endeavored to ensure smooth financial continuity of operation in line with the government’s
services by maintaining stable operation of essential comprehensive measures for minimizing the pandemic
services and key infrastructure and actively impact. CCB rolled out 10 initiatives for financial services
deploying technologies to improve accessibility and and 20 rules on pandemic prevention for outlets and
availability of online services while taking employee employee health protection; BOC established a leadership
and outlet protection measures in the aftermath of group and issued an emergency response plan to align its
the COVID-19 outbreak. customer services with public and market expectations.
• At the fiscal level, China has rolled out more active The listed banks have adjusted practices in operations
fiscal policies to hedge the impact of the pandemic, and promoted flexible working practices – to run their
such as issuing special government bonds, increasing outlets on an alternate basis, shorten business hours,
deficit rate, and scaling up the issuance of local implement onsite service booking and adopt flexible off-
government special bonds. site working arrangements for employees – to address
customer needs under social distancing measures.
2
Since the COVID-19 outbreak, the banking sector
has actively responded to the government’s call for
Credit support
delivering targeted financial services to support the
national effort in combating the pandemic and resuming Listed banks have rapidly opened green channels,
work and operation. According to the PBOC statistics, reduced fee charges, and financially supported pandemic
China’s new bank lending reached RMB7.1 trillion in prevention and control as well as enterprises expecting
the first quarter of 2020, growing by RMB1.29 trillion to resume operation. For example, as of the end of
y-o-y, a scale that has effectively propped up orderly February, ABC’s RMB and foreign currency loans grew
resumption of production by enterprises. In terms of rate by RMB526.20 billion, a y-o-y increase of RMB28.40
cuts, the weighted-average interest rate on loans under billion6. Listed banks have also actively optimized the
the RMB300 billion special re-lending quota stands eligibility models and business procedures for their
at 2.51%, and the real lending rate for enterprises is funding products and launched a number of online
around 1.26% with a 50% interest subsidy granted by credit products to improve credit approval and payout
the MOF; and the weighted-average interest rate on the efficiency.
RMB500 billion funds added through the re-lending and
Particularly, CITIC issued the first pandemic bond across
re-discounting mechanism remains lower than the 4.55%
the industry to support spring plowing, pig husbandry,
requirement of the State Council. In addition, banks
e-commerce and logistics, emergency reserves, and non-
and insurance companies have proactively performed
hazardous treatment of special wastes from pandemic
their corporate social responsibilities, highlighted by a
control activities7. BOC issued the first pandemic control
donation of funds and materials totaling RMB2.70 billion
CSR bond worth of MOP 5 billion to help Macau’s SMEs
to the frontline fighting the pandemic, a cooperative
to manage difficulties and support Macau toward smooth
effort with Chinese embassies overseas in providing
economic recovery8.
free surgical masks and disinfectant to Chinese students
studying abroad and the employees of the Chinese
enterprises working overseas, and an extensive donation
3 Contactless online financial services
of resources to 59 countries and regions severely The COVID-19 outbreak has revealed the significance
affected by the pandemic5. of digital transformation to banks. To ensure effective
Listed banks, as the backbone of the banking industry, social distancing amid the pandemic, many banks
have devoted all their efforts to fighting against the have determined to launch safer “working-at-home”,
pandemic. They have strived to maintain business “contactless” financial services, switching services from
continuity and stability in service quality while offline to online to process business via phone call, the
implementing quarantine measures across their internet, mobile apps and official accounts. Some other
organizations; supported enterprises to combat the 6 Annual reports and earnings presentations by the listed banks. BIRC website.
7 CITIC annual report.
5 CBIRC website. 8 BOC website.
58
09 / Enhancing resilience to tap into new opportunities amid pandemic
banks have processed customer identity verification profitability, risk control, operation and prospects, and
and authentication through photo uploads and remote realign their annual objectives and business strategies,
videos and conducted product marketing via webcast among other necessary measures. Meanwhile, listed
and short videos. As CCB has summarized in its annual banks are expected to analyze the potential changes
report, FinTech systems and applications have enabled in production modes and lifestyles, develop flexible
its employees to process business and credit approval at operational strategies, and tap and seize new growth
home without disruption, and to deliver online products opportunities.
and services with targeted online solutions provided to
customers. Business continuity and operational resilience is of great
significance for financial institutions as they undertake
4 Integration into broad pandemic the mission of safeguarding economic stability amid
pandemic. The health crisis triggered by the COVID-19
response efforts
outbreak impels listed banks to rethink and improve their
On the strength of open and integrated cross-industry capabilities in business continuity management, review
platforms and facilities, listed banks have effectively their measures for IT infrastructure and network and
facilitated the efforts of government organizations and information security, and develop systematic emergency
communities in intelligent community management, response plans, so that they can respond more swiftly and
delivery of necessary supplies, and household shopping flexibly to maintain social and financial stability.
services. For example, PAB has provided SME clients
with convenient mobile working services through its The COVID-19 outbreak has taken a heavy toll on
Pocket Finance app, by which enterprise clients are able wholesale and retail, accommodation and catering,
to handle employee training, attendance management transportation, culture and tourism, and import and
and salary payment. CMB has designed a pandemic export sectors, with smaller businesses facing more
response module in its app to support pandemic severe effects. Meanwhile, faster development will be
prevention and containment and launched Cloud Class to seen in areas such as biomedicine, AI, FinTech, traditional
facilitate online primary and secondary education. CEB infrastructure construction, and the development of
has leveraged its online payment strengths to guarantee new infrastructure. Thus, listed banks need to reallocate
smooth online payment of utility fees to minimize resources to address the shifting capital needs amid
outdoor exposure of the populace, particularly for those structural transformation and the reshaping of supply
living in the high-risk regions9. chains, and to ensure adequate capital supply for the
real economy. Moreover, listed banks need to closely
5 Donation of funds and materials to

fulfil corporate social responsibilities
watch the changes in asset quality, upgrade the internal
risk protection system, and minimize the exposure to
concentration risks to avert risks from changing asset
Listed banks have actively performed social structure and investment preference.
responsibilities by donating funds and materials and
fighting against the pandemic. For example, BOC has The pandemic underscores the urgency and strategic
donated RMB156 million in funds and materials and significance of digital transformation for the banking
given response aid to more than 40 countries and sector. The adoption of online banking alternatives to
regions, and the bank is expected to additionally provide minimize the impact not only works to test listed banks’
materials for countries along the Belt and Road. CCB real digital capacity, but also enables banks to look into
has cumulatively made donations of RMB298 million in customers’ business models and emergency response
funds and materials, provided free insurance coverage capability. The pandemic is prodding listed banks to review
for medical workers combating the pandemic, and set and realign their own digital transformation strategies to
up a Counter-COVID-19 and Stable Development Fund of adapt to new circumstances.
RMB5 billion10.
The COVID-19 pandemic has substantially accelerated
the process of digital transformation of economic
Strengthening resilience to tap new
activities, particularly embedding smart functionality in
opportunities manufacturing, digitalization across service sectors, and
Listed banks have been actively responding to the the pace of online-offline integration. The pandemic also
government’s call and the regulatory requirements has long-term implications for consumption habits and
for fulfilling their corporate social responsibilities preferences, with people preferring to handle personal
by introducing favorable policies to benefit the real business via online channels instead of offline ones. To
economy, especially the SMEs. However, listed banks seize the opportunities emerging from such behavioral
need to evaluate the pandemic impact on asset quality, shifts and fully meet customer needs, listed banks must
improve their FinTech capacity and expedite digital and
9 Annual reports and earnings presentations by the listed banks.
intelligent transformation of outlets and business models.
10 Annual reports and earnings presentations by the listed banks.

10 Outlook
60
10 / Outlook
As the COVID-19 pandemic spreads rapidly in many countries and shows

no sign of deceleration, global financial markets have experienced extreme
The year 2020 not volatility, and the world trade and economic growth has been curtailed
only marks the target severely. According to the IMF World Economic Outlook forecasts published
in April, the 2020 global GDP is forecast to plunge to -3%, a recession unseen
year to finish building a
since the Great Depression in 1930s. Countries have rushed to address the
moderately prosperous economic impact with larger-than-expected relief and stimulus measures or
society in all respects started reopening their economies, which may change the global economic
and trade landscape to a certain extent, adds to uncertainties or risks about
and the final year of
future growth, and poses new challenges to China expecting to quickly recover
the National 13th Five- from production disruptions and returning to the trajectory of sustainable
Year Plan, but also the development.
success in preventing and In 2020, listed banks are likely to face more severe and complex domestic
defusing financial risks. and global operating environments and a mix of challenges, albeit certain
emerging opportunities.
However, the unexpected
On the one hand, listed banks face increased difficulties in maintaining steady
outbreak of COVID-19
operation as external uncertainties persist amid global recession and China’s
has inevitably impacted growth comes under downward pressure due to structural transformation and
China’s economic cyclical implications. The net interest margin and profits of listed banks will be
operation to a large squeezed as interest rate liberalization progresses, cross-industry competition
intensifies, and favorable banking policies will be rolled out to benefit the real
extent. According to economy.
the National Bureau of
On the other hand, the banking sector is embracing the broad space for
Statistics data, the gross business development as a series of major national strategies are being
domestic product (GDP) of implemented, including the integrated development of Beijing-Tianjin-
Hebei, the integrated regional development of the Yangtze River Delta, the
China was RMB20,650.40
development of Guangdong-Hong Kong-Macao Greater Bay Area, and the
billion in the first quarter construction of Shanghai International Financial Center. New growth drivers
of 2020, a y-o-y decrease also emerge from substantial financial service demand existing in new
of 6.8% at comparable infrastructure construction, advanced manufacturing, technology-driven
innovation, and people’s livelihood improvement initiatives. In addition, relief
prices; the decline in packages rolled out by the government can boost confidence and vitality
major economic indicators among smaller businesses, laying a solid foundation for customer base
in March, including expansion and business development for banks. The pandemic is expected
to accelerate the pace of building a digital economy, especially to improve
industrial production, smart approaches in manufacturing and digitalization across service sectors,
investment and thus presenting new opportunities and unleashing potential to build a new
consumption, narrowed ecosystem for the banking sector. At the regulatory level, tightened regulation
and strengthened financial market discipline have improved the business
as compared with those environment for banks. With all these favorable factors at work, listed
for the first two months of banks will prioritize their agenda on continuously serving the real economy,
the year, indicating that addressing financial risks, and accelerating digital transformation in 2020.
China’s social stability
has been well-maintained
and the country’s healthy
economic fundamentals
remain unchanged.

Better serving the real economy with digital expertise, align business structure with
customer structure, hold asset quality stable, and
While committing adequate financial resources to consolidate achievements already made in credit risk
fight the pandemic, listed banks remain focused on management. Moreover, listed banks should improve
fully supporting the development of the real economy, market risk and liquidity risk management to establish
actively supporting the government’s policy to expand a solid buffer against external shocks, effectively
domestic demand and stabilize external demand to manage operational risk and IT risk, and step up
ensure economic stability. Looking ahead, listed banks capital replenishment to better address financial
will align their major initiatives with national strategies, risks. For large banks with more overseas branches
improving the quality and efficiency of serving the real and operations, it is essential to closely watch the
economy and supporting high-quality development. developments of the pandemic across the world and
The industry consensus is to increase the support the volatility of global markets that present challenges
for the real economy, especially for the development and risks to their overseas exposure.
of private enterprises and micro- and small-sized
businesses. For listed banks, the key to better serving Expediting technology-driven digital
the real economy is to harness underlying strengths
transformation
to achieve breakthroughs in the traditional business
sphere and make innovation in new business areas to Technology-driven digital transformation is speeding
enhance differentiated service capacity. up. The COVID-19 outbreak is accelerating the process
of economic digitalization, highlighting the urgency
Improving risk control through analytical and importance of digital transformation for listed
enhancement banks. They need to integrate digitalization and
technology with businesses and leverage it as a new
In 2020, listed banks must enhance risk awareness engine to drive high-quality development. They also
and forward-looking risk analysis to strengthen risk need to deploy innovative approaches to optimize
management comprehensively as it is crucial to customer-oriented businesses, products, services,
persevere in high-quality sustainable development. processes, management and risk control based on new
To address uncertainties and risks from the on-going technologies such as big data, AI and blockchain, in an
spread of the COVID-19 pandemic, listed banks need to effort to improve customer experience and achieve a
closely monitor and judge how risks evolve, strengthen win-win result in strengthening both customer value
industry and customer analysis, implement risk control and bank value.
62
10 /10Outlook
/ 展望

Appendix
64
Operating indicators of leading European and American banks

The Chinese banking industry has continuously strengthened its status at the global level in recent years.
Particularly, large state-owned commercial banks, as the backbone of the Chinese banking industry, have risen
to be among the leading global banks as they have significantly grown the size of balance sheets and pre-tax
profits through restructuring, bringing in strategic investors, listing on stock exchanges, and expediting business
development. More notably, ICBC, CCB, BOC and ABC have been designated as global systemically important banks
(G-SIBs), playing an increasingly important role in maintaining global financial stability.
At present, the Chinese banking industry is experiencing a critical period of a new wave of transformation and
development, particularly, when more foreign banks are expected to enter the Chinese market to compete directly
with local banks amid China’s effort to further open up the financial sector. From an outbound perspective, large
Chinese banks will seek to expand their presence in overseas markets and compete with global players as the
Belt and Road Initiative and RMB internationalization, among other national strategies, are being implemented
continuously. Thus, for large commercial banks, the focus will be on how to adapt to the changing business
environment to explore an effective way of pursuing transformation and sustainable development.
The financial indicators of 10 key European and American banks are listed in the following table, based on the annual
reports of the listed banks in the past three years. It is hoped that benchmarking the financial indicators of the
world’s leading banks will provide new ideas for the transformation and development of listed banks.
Profitability:
ROAA ROE Net profit growth

2017 2018 2019 2017 2018 2019 2017 2018 2019
Bank of America 0.80% 1.21% 1.14% 6.72% 11.04% 10.62% 2.30% 54.38% -2.55%
Citibank 0.84% 0.94% 0.98% 7.00% 9.40% 10.30% -145.19% 365.08% 7.67%
JP Morgan 0.96% 1.24% 1.33% 10.00% 13.00% 15.00% -1.18% 32.87% 12.19%
Wells Fargo 1.15% 1.19% 1.02% 11.35% 11.53% 10.23% 2.38% 1.85% -12.39%
HSBC 0.50% 0.60% 0.30% 5.90% 7.70% 3.60% 244.72% 26.48% -42.04%
Barclays -0.06% 0.23% 0.30% -3.60% 3.60% 5.30% -125.46% 458.75% 29.85%
Standard Chartered 0.20% 0.30% 0.30% 1.70% 1.40% 4.20% 763.87% -12.54% 111.00%
Deutsche Bank -0.05% 0.02% -0.38% -1.20% 0.40% -9.50% 45.80% 146.39% -1643.99%
Santander 0.58% 0.64% 0.54% 7.14% 8.21% 6.62% 9.63% 13.50% -12.87%
BNP 0.41% 0.40% 0.41% 8.90% 8.20% 8.50% 1.13% -2.46% 7.22%
NII growth NII/Total operating income Cost-income ratio

2017 2018 2019 2017 2018 2019 2017 2018 2019
Bank of America 10.08% 6.46% 1.51% 51.92% 52.91% 53.58% 62.57% 58.40% 60.17%
Citibank -0.91% 3.33% 1.69% 62.20% 63.91% 63.74% 58.30% 57.43% 56.54%
JP Morgan 8.71% 9.90% 3.97% 49.75% 50.50% 49.51% 59.10% 58.14% 56.65%
Wells Fargo 3.78% 0.88% -5.53% 56.07% 57.86% 55.52% 66.17% 64.95% 68.39%
HSBC -5.49% 8.21% -0.09% 54.77% 56.69% 54.30% 67.81% 64.45% 75.49%
Barclays -6.57% -7.95% 3.81% 46.71% 42.87% 43.49% 73.33% 76.85% 71.35%
Standard Chartered 4.97% -4.72% -1.64% 56.71% 52.71% 49.73% 72.21% 78.75% 70.92%
Deutsche Bank -15.84% 6.58% 4.22% 46.80% 52.11% 59.35% 93.40% 92.70% 108.20%
Santander 10.32% 0.13% 2.74% 70.93% 70.92% 71.67% 47.40% 47.04% 47.29%
BNP -5.30% -0.61% 0.31% 49.10% 49.54% 47.37% 69.38% 71.93% 70.27%

Assets and liabilities:
Asset growth Loan growth

2017 2018 2019 2017 2018 2019
Bank of America 4.26% 3.21% 3.38% 3.32% 1.08% 3.86%
Citibank 2.81% 4.07% 1.76% 6.83% 2.57% 2.23%
JP Morgan 1.71% 3.51% 2.47% 4.02% 5.79% -2.52%
Wells Fargo 1.12% -2.86% 1.67% -1.09% 0.78% 0.96%
HSBC 6.18% 1.44% 6.14% 10.80% 0.16% 4.91%
Barclays -6.58% 0.00% 0.61% -7.51% -20.68% 3.68%
Standard Chartered 2.60% 3.81% 4.59% 10.35% -11.41% 1.07%
Deutsche Bank -7.28% -8.58% -3.74% -1.89% 6.89% 4.69%
Santander 7.85% 1.04% 4.35% -2.70% 14.30% 6.43%
BNP -6.12% 4.67% 6.07% 7.86% 1.56% 5.35%
Loans as % of assets Deposit growth Deposits as % liabilities

2017 2018 2019 2017 2018 2019 2017 2018 2019
Bank of America 41.06% 40.22% 40.40% 3.86% 5.49% 3.86% 65.02% 66.13% 66.14%
Citibank 36.20% 35.68% 35.85% 3.27% 5.56% 5.67% 58.50% 58.89% 60.93%
JP Morgan 36.73% 37.54% 35.71% 5.00% 1.85% 6.24% 63.39% 62.16% 64.40%
Wells Fargo 48.46% 50.27% 49.92% 2.29% -3.73% 2.83% 76.62% 75.71% 76.03%
HSBC 42.07% 41.53% 41.05% 7.66% -1.07% 5.58% 61.68% 60.03% 59.39%
Barclays 37.07% 29.40% 30.29% 2.04% -0.97% 5.31% 37.36% 36.92% 38.69%
Standard Chartered 55.19% 47.10% 45.51% 9.01% 4.38% 3.12% 62.85% 68.32% 67.22%
Deutsche Bank 27.50% 32.16% 34.98% 5.56% -2.82% 1.38% 41.29% 44.11% 46.31%
Santander 54.89% 62.10% 63.34% 12.53% 0.36% 5.62% 58.15% 57.73% 58.38%
BNP 39.66% 38.49% 38.23% 0.21% 3.80% 5.00% 45.71% 45.24% 44.78%
Regulatory capital ratios:
Common equity Tier 1 capital Tier 1 capital Regulatory capital ratios

2017 2018 2019 2017 2018 2019 2017 2018 2019
Bank of America 11.50% 11.60% 11.20% 13.00% 13.20% 12.60% 14.80% 15.40% 14.70%
Citibank 12.40% 11.90% 11.80% 14.10% 13.50% 13.40% 16.30% 16.20% 16.00%
JP Morgan 12.20% 12.00% 12.40% 13.90% 13.70% 14.10% 15.90% 15.50% 16.00%
Wells Fargo 12.28% 11.74% 11.14% 14.14% 13.46% 12.76% 17.46% 16.60% 15.31%
HSBC 14.60% 14.00% 14.70% 16.50% 16.60% 17.20% 18.30% 19.40% 18.90%
Barclays 13.30% 13.20% 13.80% 17.20% 17.00% 17.70% 21.50% 20.70% 21.60%
Standard Chartered 13.60% 14.20% 13.80% 16.00% 16.80% 16.50% 21.00% 21.60% 21.20%
Deutsche Bank 14.80% 13.60% 13.60% 16.80% 15.70% 15.60% 18.60% 17.50% 17.40%
Santander 10.84% 11.30% 11.65% 12.11% 12.80% 13.05% 14.48% 14.77% 15.02%
BNP 11.70% 11.80% 12.10% 13.00% 13.10% 13.50% 14.70% 15.00% 15.50%
66
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01 / Faster growth in operating income and net profit and slower growth in impairment allowance

Listed banks in China: 2019 review and outlook / 1

6 large commercial banks •►

01 Faster growth in operating income and

02 Accelerated growth in total assets and

03 Retail business transformation built on

04 Divergent asset quality profiles and

05 On-going transformation of wealth

06 Innovative and expanded capital tools

08 Increasing FinTech investment to

09 Enhancing resilience to tap into

summary economic growth; and in the second decade, profit growth

Listed banks in China: 2019 review and outlook / 3

Trend of the net profit growth of the listed banks

-4% x Large commercial banks National joint-stock commercial banks

City commercial banks Rural commercial banks

All listed banks

Listed banks in China: 2019 review and outlook / 5

The need to improve profitability

ROA Decline in ROE

Levelled off 0.59 percentage

1.0% 0.99% 15.0%

City commercial banks Rural commercial banks

All listed banks

Source: Annual reports and prospectuses published by the listed banks.

Listed banks in China: 2019 review and outlook / 7

1.29 by 9.65% y-o-y, down 9.85 percentage points from the

assets and liabilities structure, a 30% increase in net

Net profit amount growth rate* (RMB million)

Listed banks in China: 2019 review and outlook / 9

by 121 bps. In contrast, 10 city commercial banks

NIM of the listed banks*

Listed banks in China: 2019 review and outlook / 11

percentage in 2018. The net fee and commission income growth

points fee income from agency and custodian business, and

net fee and commission income growth of CCB was -7.45%

Listed banks in China: 2019 review and outlook / 13

while other banks all reported a decrease in this ratio. 25%

ZJGRCB 36.33% 35.43% 31.15% -30% 2017 2018 2019

Listed banks in China: 2019 review and outlook / 15

Listed banks in China: 2019 review and outlook / 17

As at 31 December 2019, the total assets of listed banks amounted to

requirement ratio (RRR)

Bank of China (PBOC). 14% 13.11%

investment continued 4% 3.51%

banks made on-going 0%

structure and support

All listed banks

Listed banks in China: 2019 review and outlook / 19

In 2019, as listed banks stepped up efforts to support

Listed banks in China: 2019 review and outlook / 21

60% 90% 91% 91%

30% 60% 65% 57%

Increase in the proportion of FVTPL financial investment

Steady increase in liabilities Changes in the liability structure

As at 31 December 2019, the total liabilities of listed

All listed banks 16%

Continued optimization of liability 10% 8.32%

liability structure. The proportion of deposits in total

sources of liabilities by increasing bond issuance.

x Large commercial banks National joint-stock commercial banks

City commercial banks Rural commercial banks

All listed banks