[PDF] China CITIC Bank Corporation Limited

1 Important Notice The Board of Directors, the Board of Supervisors, directors, supervisors and senior management of the...

Important Notice

China CITIC Bank Corporation Limited

The Board of Directors, the Board of Supervisors, directors, supervisors and senior management of the Bank ensure that the information contained herein does not include any false records, misleading statements or material omissions, and assume several and joint liabilities for its truthfulness, accuracy and completeness. The meeting of the Board of Directors of the Bank adopted the full text and summary of the Bank’s 2015 Annual Report on 23 March 2016. All of the 9 eligible directors attended the meeting, with Directors Li Zheping and Yuan Ming entrusting Directors Wong Luen Cheung Andrew and Wu Xiaoqing to attend and vote on proxy, respectively. The supervisors of the Bank were present at the meeting.

China CITIC Bank Corporation Limited (A joint stock limited company incorporated in the People’s Republic of China with limited liability)

T h e Ba n k’s 2015 A n n u a l Re p o r t p re p a re d i n accordance with the PRC Accounting Standards and the International Financial Reporting Standards (IFRS) were audited by PricewaterhouseCoopers Zhong Tian LLP (Special General Partnership) and PricewaterhouseCoopers Hong Kong in accordance with the auditing standards of Mainland China a n d Ho n g Ko n g S A R re s p e c t i ve l y, w i t h b o t h firms producing an audit report with a standard unqualified audit opinion.

2015 Annual Report

Mr. Chang Zhenming as Chairman of the Board of Directors, Ms. Li Qingping as President of the Bank, Mr. Fang Heying as Vice President of the Bank in charge of the financial function, and Mr. Lu Wei as General Manager of the Finance and Accounting Department, hereby guarantee the truthfulness, accuracy and completeness of the financial report contained in the 2015 Annual Report. Profit Distribution Plan: “Profit and Dividends Distribution” in “Management Discussion and Analysis” of this report discloses the Bank’s Profit Distribution Plan for 2015 as reviewed and adopted by the Board of Directors and to be submitted to the 2015 Annual General Meeting for deliberation, which proposes to pay a cash dividend of RMB2.12 per 10 shares (before tax). No scheme for transfer of capital reserve to share capital will be applied for the current year. Risk reminder on for ward looking statements: Forward looking statements such as future plans and development strategies contained in the report do not constitute substantive commitments of the Bank to investors. Investors and relevant persons shall maintain adequate risk awareness of such statements and understand the differences between plans, projections and commitments. The terms the “Bank”, the “Company”, “CITIC Bank” and “CNCB” mentioned herein all refer to China CITIC Bank Corporation Limited while the term the “Group” mentioned herein refers to China CITIC Bank Corporation Limited and its subsidiaries. Unless otherwise specially noted, the denomination currency used herein is Renminbi.

Material Risk Reminder

No.9 Chaoyangmen Beidajie, Dongcheng District, Beijing Postal Code : 100010 http://bank.ecitic.com

Stock Code : 0998

During the reporting period, the Bank was not aware of any material risk that would adversely affect its future development strategy and business targets. The Bank has described in detail the major risks that it was and may be exposed to in operation and management and its countermeasures t h e re o f i n t h i s re p o r t . P l e a s e re f e r t o “ R i s k Management” and “Outlook” in “Management Discussion and Analysis” for details.

Corporate Introduction Founded in 1987, the Bank is among the earliest emerging commercial banks established during China’s reform and opening up and China’s first commercial bank participating in financing at both domestic and international financial markets. It is renowned at home and abroad for brushing numerous track records in the contemporary Chinese financial history. Over the years, it has made positive contributions to China’s economic development. The Bank simultaneously listed its A + H shares at the Shanghai Stock Exchange and the Stock Exchange of Hong Kong Limited in April 2007, and acquired CITIC International Financial Holdings Corporation Limited (“CIFH”) in 2009. With its London Representative Office opening for business and its Sydney Representative Office entering the preparation stage both in 2015, the Bank officially initiated a new round of its Going Global strategy. Moreover, with the CBRC approving its subscription for shares in CTBC Financial Holding Co., Ltd. (“CTBC”) in Taiwan in December 2015, the Bank is expected to become the first Mainland China financial institution to make equity investment in Taiwan. Currently, the Bank registered total consolidated assets of more than RMB5 trillion, ranking 94th among the “Top 2,000 Global Enterprises” published by the Forbes magazine in May 2015, and ranking 33rd in terms of tier-one capital and 46th in terms of total assets among the “Top 1,000 World Banks” published by The Banker magazine of the United Kingdom in July 2015. As such, the Bank has become an international financial institution with rich capital resources, strong comprehensive competitive edges and impressive brand influence. Under the current domestic context of the economic “new normal” and financial sector liberalization, and with the vision of becoming “the bank offering the best comprehensive finance services”, the Bank leverages to the maximum the unique competitive advantages of CITIC Group that attach equal attention to financial services and the real economy and upholds the core values of “integrity, innovation, coordination and excellence” and the business management philosophy of “compliance, smart, teamwork and efficiency”. In doing so, the Bank provides corporate customers and institutional customers with integrated financial solutions in corporate banking business, international business, financial market business, institutional banking business, investment banking business, factoring business, and custody business; and offers individual customers diversified financial products and services covering general retail banking, credit card, consumer finance, wealth management, private banking, e-banking and going abroad finance, meeting the demands of corporate, institutional and individual customers for comprehensive financial services on all fronts. As at the end of 2015, the Bank had 1,353 outlets in 128 large and medium-sized cities in China and employed over 50,000 employees nationwide. The Bank had four subsidiaries, namely, Lin’an CITIC Rural Bank Limited and CITIC Financial Leasing Co., Ltd. in mainland China, and CITIC International Financial Holdings Corporation Limited (“CIFH”) and CNCB (Hong Kong) Investment Co., Ltd. (formerly China Investment and Finance Limited) in Hong Kong. CITIC Bank International Limited (“CNCBI”), a wholly-owned subsidiary of CIFH had more than 41 outlets in Hong Kong, Macao, New York, Los Angeles, Singapore and mainland China, and employed more than 1,900 employees.

Content 2

Definition

Corporate Introduction

Financial Highlights

Chairman’s Statement

President’s Statement

Honors

Business Summary

Management Discussion and Analysis

Economic, Financial and Regulatory Environments

Analysis of the Financial Statements

Business Overview

Risk Management

Capital Management

Management of Financial Statement Consolidation

Profit and Dividends Distribution

Material Investments, Material Acquisitions, and Disposals and Restructurings of Assets

Shareholdings in Other Listed Companies and Financial Enterprises

Information about Structured Vehicles Controlled by the Bank

Outlook

Management of Corporate Social Responsibility

Report of Board of Directors

Changes in Share Capital and Shareholdings of Substantial Shareholders

Preference Shares

Directors, Supervisors, Senior Management and Staff

114

Corporate Governance Report

133

Independent Auditor’s Report and Financial Report

281

Reference for Shareholders

283

Corporate Structure

284

List of Domestic and Overseas Affiliates

Definition Articles of Association Bank/Company/China CITIC Bank/CITIC Bank/CNCB BBVA Board of Directors Board of Supervisors CBRC Central Bank/PBOC China AMC China Securities China Tobacco CIAM CIFH CITIC Corporation Limited CITIC Financial Leasing CITIC Futures CITIC Group CITIC Industrial Investment CITIC Limited CITIC Loyalty CITIC Pacific CITIC PE CITIC Press CITIC Real Estate CITIC Securities CITIC Securities (Shandong) CITIC Tourism CITIC Trust CITIC-CP Asset Management CITIC-Prudential Fund Management CITIC-Prudential Life Insurance CNCB Investment CNCBI CNCBI (China) Commercial Banks Law Company Law CSRC CTBC IFRS Group HKSFC/SFC Hong Kong Listing Rules Joint-stock Banks

Lin’an CITIC Rural Bank MOF NSSF PricewaterhouseCoopers PRC GAAP Reporting Period SEHK

Articles of Association of China CITIC Bank Corporation Limited China CITIC Bank Corporation Limited Banco Bilbao Vizcaya Argentaria S.A. Board of Directors of the Bank Board of Supervisors of the Bank China Banking Regulatory Commission The People’s Bank of China China Asset Management Co., Ltd. China Securities Co., Ltd. China Tobacco Corporation CITIC International Assets Management Limited CITIC International Financial Holdings Limited CITIC Corporation Limited (formerly known as CITIC Limited prior to renaming in August 2014) CITIC Financial Leasing Co., Ltd. CITIC Futures Co., Ltd. CITIC Group Corporation Limited (formerly known as CITIC Group Corporation prior to renaming in December 2011) CITIC Industrial Investment Group Corp. Ltd. CITIC Limited (formerly known as CITIC Pacific Limited prior to renaming in August 2014) CITIC Loyalty Business Technology Co., Ltd. CITIC Pacific Limited (renamed CITIC Limited in August 2014) CITIC Private Equity Funds Management Co., Ltd CITIC Press Group Limited CITIC Real Estate Co., Ltd. CITIC Securities Co., Ltd. CITIC Securities (Shandong) Co., Ltd. CITIC Tourism Co., Ltd. CITIC Trust Co., Ltd. CITIC-CP Asset Management Company Limited CITIC-Prudential Fund Management Company Limited CITIC-Prudential Life Insurance Company Ltd. CNCB (Hong Kong) Investment Co., Ltd. (formerly China Investment and Finance Limited) CITIC Bank International Limited CNCBI (China) Co., Ltd. Law of the People’s Republic of China on Commercial Banks Company Law of the People’s Republic of China China Securities Regulatory Commission Chinese Taiwan CTBC Financial Holding Co., Ltd. International Financial Reporting Standards China CITIC Bank Corporation Limited and its subsidiaries Hong Kong Securities and Futures Commission The Listing Rules of The Stock Exchange of Hong Kong Limited Including China CITIC Bank, China Merchants Bank, China Minsheng Bank, Industrial Bank, Shanghai Pudong Development Bank, China Everbright Bank, Huaxia Bank, Ping’an Bank, Guangdong Development Bank, China Zheshang Bank, China Bohai Bank and Evergrowing Bank. Zhejiang Lin’an CITIC Rural Bank Limited Ministry of Finance of the People’s Republic of China National Council for Social Security Fund PricewaterhouseCoopers Zhong Tian LLP (Special General Partnership) People’s Republic of China Generally Accepted Accounting Principles for the period from 1 January 2015 to 31 December 2015 The Stock Exchange of Hong Kong Limited

Definition

SSE Standing Committee of the NPC State Council Tianan Property Insurance Yuan/RMB

Shanghai Stock Exchange Standing Committee of the National People’s Congress State Council of the People’s Republic of China Tianan Property Insurance Company Limited of China RMB Yuan

In this report, geographical regions1, as defined for the Group and the Bank and in combination with disclosure of the financial report, are as follows: “Yangtze River Delta” refers to the areas where 5 tier-1 branches of the Bank are located, namely, Shanghai, Nanjing, Suzhou, Hangzhou and Ningbo, plus the area where Lin’an CITIC Rural Bank, a subsidiary of the Bank is located. “Pearl River Delta and West Strait” refers to the areas where 6 tier-1 branches of the Bank are located, namely, Fuzhou, Xiamen, Guangzhou, Shenzhen, Dongguan, and Haikou. “Bohai Rim” refers to the areas where 6 tier-1 branches of the Bank are located, namely, Beijing, Tianjin, Shijiazhuang, Jinan, Qingdao and Dalian, plus the area where CITIC Financial Leasing, a subsidiary of the Bank is located. “Central region” refers to the areas where 6 tier-1 branches of the Bank are located, namely, Hefei, Zhengzhou, Wuhan, Changsha, Nanchang and Taiyuan. “Western region” refers to the areas where 12 tier-1 branches of the Bank are located, namely, Chongqing, Nanning, Guiyang, Hohhot, Yinchuan, Xining, Xi’an, Chengdu, Urumqi, Kunming, Lanzhou, and Lhasa. “Northeastern region” refers to the areas where 3 tier-1 branches of the Bank are located, namely, Harbin, Changchun and Shenyang; In addition, the “Head Office” refers to the headquarters of the Bank and the Credit Card Center; and “Hong Kong” includes CNCB Investment, CIFH and their respective subsidiaries. This report is compiled both in Chinese and English. Should there be any discrepancy between the Chinese and English versions, the Chinese version shall prevail.

During the reporting period, changes in the Bank’s tier-one branches included new establishment of the Lhasa Branch and consolidation of Wuxi and Tangshan branches respectively into Nanjing Branch and Shijiazhuang Branch. For the purpose of financial report disclosure of the Bank, Dalian Branch was listed in “Bohai Rim”.

China CITIC Bank Corporation Limited 2015 Annual Report

Corporate Introduction Corporate Information Registered Name in Chinese:

中信銀行股份有限公司（簡稱「中信銀行」）

Registered Name in English:

CHINA CITIC BANK CORPORATION LIMITED (abbreviated as “CNCB”)

Legal Representative:

Chang Zhenming

Authorized Representatives:

Li Qingping, Wang Kang

Secretary to the Board of Directors:

Wang Kang

Joint Company Secretaries:

Wang Kang, Wendy Kam Mei Ha (FCS, FCIS)

Securities Representative of the Company:

Wang Junwei

Registered Address:

No. 9 Chaoyangmen Beidajie,

Postal code of the registered address:

100010

Office Address:

No.9 Chaoyangmen Beidajie, Dongcheng District, Beijing

Office Postal Code:

100010

Official Website:

bank.ecitic.com

Telephone Number/Fax Number:

+86-10-85230010/+86-10-85230079

Email Address:

[emailprotected]

Principal Place of Business in Hong Kong:

Level 54, Hopewell Center, 183 Queen’s Road East, Hong Kong

Newspapers for Information Disclosure:

China Securities Journal, Shanghai Securities News,

Dongcheng District, Beijing

Securities Times Websites for Information Disclosure:

Website designated by the CSRC to publish A-share annual report: www.sse.com.cn Website designated by the SEHK to publish H-share annual report: www.hkexnews.hk

Place Where Annual Report is Kept:

Office of the Board of Directors and Board of Supervisors, CITIC Bank

Legal adviser as to PRC Laws:

East & Concord Partners

Legal adviser as to Hong Kong Laws:

Clifford Chance

Domestic Auditor:

PricewaterhouseCoopers Zhong Tian LLP (Special General Partnership) 11/F, PricewaterhouseCoopers Center, 202 Hu Bin Road,Shanghai (Postal code: 200021)

Domestic signing CPAs:

Hu Yan & Wu Weijun

Overseas Auditor:

PricewaterhouseCoopers Limited

Overseas signing CPA:

Margarita Ho

A-share Registrar:

Shanghai Branch of China Securities Depository and

22/F, Prince’s Building, Central, Hong Kong

Clearing Corporation Limited 36th Floor, China Insurance Building, No. 166 East Lujiazui Road, Pudong New District, Shanghai

Corporate Introduction

H-share Registrar:

Computershare Hong Kong Investor Services Limited Room 1712-1716 17/F Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong

Listing Venue, Stock Name and Stock Code:

A-share: Shanghai Stock Exchange CNCB 601998 H-share: The Stock Exchange of Hong Kong Limited CITIC BANK 0998

Contact Persons and Contact Details Name Address Telephone Number Fax Number Email Address

Secretary to the Board of Directors Wang Kang No. 9 Chaoyangmen Beidajie, Dongcheng District, Beijing +86-10-85230010 +86-10-85230079 [emailprotected]

Securities Representative of the Company Wang Junwei No. 9 Chaoyangmen Beidajie, Dongcheng District, Beijing +86-10-85230010 +86-10-85230079 [emailprotected]

Changes in Principal Business since Listing Since its listing on both the Shanghai Stock Exchange and the Stock Exchange of Hong Kong Limited in April 2007 till the end of reporting period, the Bank made two registrations for changes in business scope at the State Administration for Industry and Commerce on 23 November 2012 and 8 December 2014, respectively. As at the end of the reporting period, the business scope of the Bank covered: (1) licensed business items, including: absorption of public deposits; granting of short, medium and long-term loans; domestic and overseas settlement; bill acceptance and discount; issuance of financial bonds; agency issuance business, agency payment, and underwriting of government bonds; trading in government bonds and financial bonds; placements with and from banks and other non-bank financial institutions; foreign exchange trading and agency foreign exchange trading; bank card business; L/C services and guarantee; agency receipt and payment; safe deposit box services; foreign exchange settlement and sales; open-ended funds agency business; gold business; custody services for securities investment funds, enterprise annuities, insurance funds and QFIIs; other businesses approved by the banking regulatory authority under the State Council; concurrent insurance agency business (expiring on 8 September 2017); and (2) general business items: none. From the end of the reporting period till the disclosure date of the report, the Bank registered for a change in its scope of business with the Beijing Municipal Administration for Industry & Commerce on 27 January 2016, adding “gold import and export” as a new business item.

China CITIC Bank Corporation Limited 2015 Annual Report

Financial Highlights Operating Performance Unit: RMB million

Item Operating income Total profit Net profit attributable to shareholders of the Bank Net operating cash flow Per share Basic earnings per share (RMB) Diluted earnings per share (RMB) Net operating cash flow per share (RMB)

2015

2014

Growth rate (%)

2013

145,545 54,986

124,839 54,574

16.59 0.75

104,813 52,549

41,158 (20,835)

40,692 34,150

1.15 —

39,175 (136,228)

0.88 0.88 (0.43)

0.87 0.87 0.73

1.15 1.15 —

0.84 0.84 (2.91)

For the year 2015 Item Operating income Net profit attributable to shareholders of the Bank Net operating cash flow

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

33,026

36,931

37,667

37,921

10,928 (31,117)

11,658 69,297

10,340 1,441

8,232 (60,456)

Increase/ (decrease) in percentage point

Profitability Indicators Item Return on average assets (ROAA) Return on average equity (ROAE, excluding minority interest) Cost-to-income ratio (excluding business tax and surcharges) Credit cost Net interest spread Net interest margin

2015

2014

0.90%

1.07%

(0.17)

1.20%

2013

14.26%

16.77%

(2.51)

18.48%

27.87% 1.51% 2.13% 2.31%

30.41% 1.06% 2.19% 2.40%

(2.54) 0.45 (0.06) (0.09)

31.43% 0.62% 2.40% 2.60%

Financial Highlights

Scale Indicators Unit: RMB million

Item Total assets Total loans and advances to customers Total liabilities Total deposits from customers Placements from banks and non-bank financial institutions Total equity attributable to the Bank’s shareholders Net asset per share attributable to the Bank’s shareholders (RMB)

31 December 2015

31 December 2014

Growth rate (%)

31 December 2013

5,122,292 2,528,780 4,802,606 3,182,775

4,138,815 2,187,908 3,871,469 2,849,574

23.76 15.58 24.05 11.69

3,641,193 1,941,175 3,410,468 2,651,678

49,248

19,648

150.65

41,952

317,740

259,677

22.36

225,601

6.49

5.55

16.94

4.82

Asset Quality Indicators Unit: RMB million

31 December 2015

Item Performing loans Non-performing loans (NPLs) Allowance for impairment of loans NPL ratio Provision coverage ratio The ratio of allowance for impairment of loans to total loans Note:

31 December Growth rate(%)/ 2014 increase (decrease)

2,492,730 36,050 60,497 1.43% 167.81%

2,159,454 28,454 51,576 1.30% 181.26%

2.39%

2.36%

15.43 26.70 17.30 0.13 (13.45) 0.03

31 December 2013 1,921,209 19,966 41,254 1.03% 206.62% 2.13%

Performing loans include pass and special mention loans. NPLs include substandard, doubtful and loss loans.

China CITIC Bank Corporation Limited 2015 Annual Report

Financial Highlights

Capital Adequacy Indicators Item

31 December 2015

31 December 2014

9.12% 9.17% 11.87% 5.26%

8.93% 8.99% 12.33% 5.19%

Core tier-one capital adequacy ratio Tier-one capital adequacy ratio Capital adequacy ratio Leverage ratio Leverage ratio

5.26%

5.19%

Increase/ (decrease) in percentage point 0.19 0.18 (0.46) 0.07

31 December 2013 8.78% 8.78% 11.24% 4.81%

0.07

4.81%

31 December 2015

31 December 2014

31 December 2013

87.78 44.97 42.48 89.27 75.63 76.28 65.37

111.64 51.82 52.59 40.45 73.08 74.44 56.47

— 46.40 43.45 106.78 72.79 72.35 79.83

Supplementary Financial Indicators Major Indicators(1) Liquidity coverage ratio(2) Liquidity ratio Including: Renminbi Foreign currencies Loan-to-deposit ratio Including: Renminbi Foreign currencies Notes: (1)

Standard (%) ≥100 ≥25 ≥25 ≥25 ≤75 ≤75 ≤75

The figures were calculated in accordance with the regulatory standards of the Chinese banking industry. Except for liquidity coverage ratio, all other indicators were from the Bank’s data.

(2)

As per the requirements of the Rules on Liquidity Risk Management of Commercial Banks (Provisional), the liquidity coverage ratio of commercial banks should reach 100% by the end of 2018 and shall, during the transition period, reach 60%, 70%, 80% and 90% at the end of 2014, 2015, 2016 and 2017, respectively.

Differences between IFRS and PRC Accounting Standards There is no difference between the 2015 year-end net assets and the net profit for the reporting period calculated by the Group according to the PRC accounting standards and those calculated by the Group as per the International Financial Reporting Standards.

Financial Highlights

Five-Year Financial Summary Unit: RMB million

Item Operating performance Operating income Total profit Net profit attributable to the Bank’s shareholders Net operating cash flow Per share Basic earnings per share (RMB) Diluted earnings per share (RMB) Net operating cash flow per share (RMB) Scale indicators Total assets Total loans and advances to customers Total liabilities Total deposits from customers Total equity attributable to the Bank’s shareholders Net asset per share attributable to the Bank’s shareholders (RMB) Profitability indicators Return on average assets (ROAA) Return on average equity (ROAE) Cost-to-income ratio (excluding business tax and surcharges) Credit cost Net interest spread Net interest margin Asset quality indicators NPL ratio Allowance coverage ratio The ratio of allowance for impairment of loans to total loans Capital adequacy ratio Core tier-one capital adequacy ratio Tier-one capital adequacy ratio Capital adequacy ratio

2015

2014

2013

2012

2011

145,545 54,986

124,839 54,574

104,813 52,549

89,711 41,609

77,092 41,590

41,158 (20,835)

40,692 34,150

39,175 (136,228)

31,032 (55,426)

30,819 300,104

0.88 0.88 (0.43)

0.87 0.87 0.73

0.84 0.84 (2.91)

0.66 0.66 (1.18)

0.71 0.71 6.41

5,122,292 2,528,780 4,802,606 3,182,775

4,138,815 2,187,908 3,871,469 2,849,574

3,641,193 1,941,175 3,410,468 2,651,678

2,959,939 1,662,901 2,756,853 2,255,141

2,765,881 1,434,037 2,587,100 1,968,051

317,740

259,677

225,601

198,356

174,496

6.49

5.55

4.82

4.24

3.73

0.90% 14.26%

1.07% 16.77%

1.20% 18.48%

1.10% 16.65%

1.27% 20.92%

27.87% 1.51% 2.13% 2.31%

30.41% 1.06% 2.19% 2.40%

31.43% 0.62% 2.40% 2.60%

31.58% 0.84% 2.61% 2.81%

29.88% 0.43% 2.85% 3.00%

1.43% 167.81%

1.30% 181.26%

1.03% 206.62%

0.74% 288.25%

0.60% 272.31%

2.39%

2.36%

2.13%

2.12%

1.62%

9.12% 9.17% 11.87%

8.93% 8.99% 12.33%

8.78% 8.78% 11.24%

9.29% 9.29% 12.42%

— — —

China CITIC Bank Corporation Limited 2015 Annual Report

Chang Zhenming Chairman

Chairman’s Statement

In 2015, in face with extremely complicated economic and financial situations, the Group made proactive efforts to adapt itself to the “new normal” of economic development, pushed forward its new strategy in an in-depth manner, kept boosting its capacity for risk control, promoted development with innovation, and made full use of the market opportunities available in the course of economic transformation. As a result, the Group satisfactorily fulfilled various tasks and maintained a momentum of healthy stable growth in the overall sense.

Hereby, I would like to report to all shareholders that, as at the end of the reporting period, the Group’s total assets reached RMB5.12 trillion, a growth of 23.76% over the end of the previous year; total liabilities stood at RMB4.80 trillion, an increase of 24.05% over the end of the previous year; and customer deposits totaled RMB3.18 trillion, up 11.69% over the end of the previous year. For the whole year, the Group realized net profit attributable to shareholders of RMB41.158 billion, an increase of 1.15% over the previous year; a return on average assets (ROAA) of 0.90% and a return on weighted average equity of 14.55%, indicating stable operating profitability. With a non-performing loan (NPL) ratio of 1.43% and a provision coverage ratio of 167.81%, the Group kept its asset quality basically stable. The Group recorded an end-of-year capital adequacy ratio of 11.87%. In terms of total assets, the Bank ranked 46th in the “Top 1,000 World Banks” published by The Banker magazine of the United Kingdom, up 2 places over the previous year.

In 2015, the Bank quickened its strategic planning and continued to explore new development plans. During the reporting period, the Bank completed its private offering of additional shares to China Tobacco Corporation, further enriching its capital resources. The subscription for a stake in CTBC Financial Holding Co., Ltd. in Taiwan had been approved by the CBRC, and the Bank is expected to become the first Mainland China financial institution to invest in CTBC in Taiwan. Acquisition of BBVA’s shareholding in CIFH enabled the Bank whole ownership of CIFH. In addition, the Bank established CITIC Financial Leasing Co., Ltd., and initiated restructuring of its credit card business and asset management business towards corporate models of operation. Through injection of additional capital into CNCB Investment, the Bank built up the capacity of its overseas platform for investment banking. The Bank made a breakthrough in the development of its overseas organizations with its London Representative Office successfully licensed for operation.

As always, the Bank attached paramount importance to risk control, continued to push for risk control system reform and strengthened total risk management and control. Throughout the year, the Board of Directors, with an understanding of external circumstantial changes, quickened the promotion of establishing total risk management system of the Bank, formulated earmarked policies on risk management, updated and refined relevant rules and regulations, and thereby made risk management of the Bank more comprehensive, forward looking and instructive. The Bank enjoyed relatively stable asset quality throughout the year, with its provision coverage ratio exceeding the corresponding regulatory requirement.

China CITIC Bank Corporation Limited 2015 Annual Report

C h a i r m a n ’s S t a t e m e n t

The national economy’s new normality of accelerated adjustment, structural refinement and model changes will test the Bank’s resistance to stress in capital management, liquidity management and disposals of non-performing assets. Supplyside structural reform along with its requirement on “cutting excess industrial capacity, de-stocking, de-leveraging, lowering corporate costs, and improving weak links” will be conducive to long-term development of the banking industry on the one hand, but will bring along short-term risks on the other. The Board of Directors will continue to pay attention to changes in market conditions and regulatory policies, perform its duties diligently and strengthen the establishment of risk culture and management system, with a view to further enhance the Bank’s risk management and control capability and ensure the sustainable healthy development of the Bank’s business.

During the reporting period, the Bank strove to seek breakthroughs in homogeneous competition with enthusiastic efforts to pioneer and innovate. In partnership with Baidu, the Bank jointly sponsored and applied to regulatory authorities for the establishment of Baixin Bank which is expected to become the first direct banking firm established in China as an independent legal entity, and as such jointly explored the innovative model of cross-sector cooperation between a traditional financial institution and an internet company. The concepts of “innovation, coordination, green, open and sharing” will expose the banking industry to historical opportunities for healthy development. We hope to tide through the labor pains in the shift of old and new driving forces, the transformation from old to new models, and the replacement of old with new paths, and achieve leapfrog development of the Bank within the shortest possible time limit. The Bank was awarded “the Most Innovative Bank in 2015”, “Top 10 Internet Finance Innovative Organization”, “the Annual Gold Bank for Innovation”, “the Annual Gold Joint Stock Bank”, etc. from medias both at home and abroad and banking associations.

The Board of Directors never stops its self- improvement. In 2015, the Board of Directors diligently implemented governmental policies and regulatory requirements, pushed forward development of the Bank’s rules and regulations on corporate governance with greater vigor, made further amendments and improvements to the Articles of Association, and thereby upgraded the Bank’s corporate governance in a continuous manner. Directors were dedicated to their duties and effectively performed their due diligence. Their in-depth research of and scientific decision making on critical issues of the Group guided the Group to sustain its healthy development. In accordance with relevant laws and regulations and its Articles of Association, the Bank successfully re-elected its fourth session of the Board of Directors.

In 2015, the Bank took the initiative to perform its social responsibility to all stakeholders, promoting sustainable harmonious development of the economy, the society and the environment. In parallel with its positive response to government strategies and compliance with government requirements. Meanwhile, the Bank made continuing efforts to build its customer service capacity and protect consumer rights and interests. Enthusiastic to pay back to the society, the Bank actively participated in charity events and public benefit activities. In 2015, the Bank continued its support to green credit, developed green intermediary loans, placed tougher control on credit grant to heavy-pollution high-energy-consumption and overcapacity industries, drove forward development of internet finance, and practiced energy conservation and emission reduction. Through refining its internal work procedures, the Bank created a work system that supports the development of a green bank.

C h a i r m a n ’s S t a t e m e n t

Looking forward to 2016, we need to be aware not only of the important support that the implementation of the Five Major Policies (i.e., a stable macro-economic policy, a well-targeted industrial policy, a flexible micro-economic policy, a practical reform policy and a pro-vulnerable-group social policy) will bring to the actual development of the banking sector, but also of the impacts that such policy implementation will exert on business operation. The Bank will stick to its strategic transformation and, in the larger context of integrated CITIC Group business operation, keep boosting capacity building for provision of comprehensive finance services, intensify risk control, and make the best of its efforts to repay trust and support of all shareholders and social communities with outstanding performance!

Chang Zhenming Chairman 23 March 2016

China CITIC Bank Corporation Limited 2015 Annual Report

Li Qingping President

President’s Statement

In 2015, the Bank formulated its Three-Year Development Plan and set a development strategy more in line with its own characteristics. During the reporting period, the Bank, in the face of complicated and severe economic and financial situation, resolutely implemented all strategic deployment, deepened the structural reform, stimulated its energy in business operation so that the Bank promoted the transformation of business operation in an overall manner, withstood severe challenges and made satisfactory achievements on all tasks.

C ontinuous acceleration of business transformation and ongoing optimization of business structure During the reporting period, the Group realized a RMB145.545 billion business operating income, a year-on-year growth of 16.59%; and recorded a profit before provision of RMB95.023 billion, a year-on-year growth of 21.44%. Despite the slight rise in the ratio of non-performing loans (“NPLs”), the Bank attained overall controllability of asset quality thanks to its over-fulfillment of the NPL disposal plan. As at the end of the reporting period, consolidated total assets of the Group exceeded RMB5 trillion, while customer deposits and loans in all definitions grew by 11.69% and 15.58% over the end of the previous year, respectively, maintaining the its leading status among all joint-stock banks. During the reporting period, guided by its new development strategy, the Bank kept speeding up its business transformation, and optimized its business structure continuously. In 2015, the share of demand deposits in total deposits of the Bank went further up, and the balance of active liabilities increased by a large margin, further diversifying the sources of liabilities. In contrast, the balances of loans to the wholesale sector and overcapacity industries took up lower proportions in the Bank’s total corporate loan balance, making the Bank more risk resilient. The share of fee-based income had further increased, and the proportion of net operating income from retail banking and financial market business rose further, reflecting a more balanced income structure and more robust driving forces for sustainable development.

D evelopment guided by strategic orientation and breakthroughs in product innovation During the reporting period, with the goal to become the “bank offering the best comprehensive finance services”, the Bank adopted business models of “commercial banking + investment banking”, “banking + non-banking”, “on- + off- balance sheet” and “domestic + overseas” and offered customers with comprehensive financing services. By integrating its unique products and services, the Bank launched its “Transaction +” brand to the market and became the first commercial bank in China to establish its own exclusive brand for transaction banking. In full upgrading of its “going abroad” products and services, the Bank enjoyed better brand reputation. In partnership with Baidu, the Bank jointly sponsored and applied to the regulatory authorities for the establishment of Baixin Bank which is expected to become the first direct banking firm established in China as an independent legal entity, and as such jointly explored the innovative model of cross-sector cooperation between a traditional financial institution and an internet company. During the reporting period, the Bank was qualified for over 400 public finance agency businesses at all levels, achieving full coverage of qualifications for centralized receipt and payment of all provincial treasuries and all local treasury cash management pilot areas. In retail banking, its innovative product “loans secured by residential properties” gained rapid growth. Its credit card business registered a new historical record of profits. Moreover, the Bank secured its peer leadership in the scale of spot foreign exchange market making business at the financial market, cross-border Renminbi foreign exchange receipts and payments, the scale of unsecured bond issue at the inter-bank market, and the transaction volume in asset management of commercial drafts.

China CITIC Bank Corporation Limited 2015 Annual Report

P r e s i d e n t ’s S t a t e m e n t

R apid development in key regions and steady progress in platform construction During the reporting period, in partnership with affiliates and subsidiaries of CITIC Group, the Bank supported the “One Belt One Road” government strategy with RMB700 billion investments and finance, establishing strategic partnership with multiple local governments. At the same time, the Bank continued to increase its support to the integration of Beijing, Tianjin and Hebei Province so as to cover critical areas such as infrastructure, urban construction and industry relocation. In addition, the Bank dispatched expert teams to participate in the development of its branch in the Shanghai Free Trade Zone, facilitating the formulation of such supporting policies as differentiated authorization, synergized marketing and interest interaction. All these contributed to rapid growth of key businesses in key regions. During the reporting period, the Bank sped up development of outlets in key regions within the territory of China, achieving full coverage of all provinces, autonomous regions and centrally administered municipalities in China. In addition, the Bank implemented its strategy on developing “small, smart and multi-business-model” outlets, pushing forward the transformation of outlets. In addition, the construction of e-channels went faster, which, among others, resulted in the brand new mobile bank, personal online bank and WeChat bank. These further boosted customer experience and market competitiveness of the Bank. Successful online operation of the new core system with smooth switch and commissioning in one go across the bank and covering all business lines doubled the efficiency of business processing. Moreover, the Bank made breakthroughs in the development of its overseas organizations with its London Representative Office successfully licensed for operation.

A chievements in institutional reform and marked capacity improvement in risk management and control In 2015, the Bank expedited the construction of a total risk management system. Specifically, it built the “three defense lines” for risk management, enhancing the Bank’s risk management and control capability. More intensive efforts were exerted to improve rules/regulations and authorization management, and upgrade compliance review, rectification and accountability. Meanwhile, the Bank put into effective play the role of audit by formulating its program for reform of the audit system, moving audit portals ahead, and producing risk reminders in a timely manner. The Bank sped up reform of its innovation system, established the Product Innovation Committee and never ceased the efforts to innovate products, obtaining a reassuring results. Throughout the year, the Bank vigorously promoted the human resources reform, continued to refine the duties and performance management system, which offered more vitality to the organization and incentives to employees.

A new momentum in Party construction and a new stage of corporate culture development During the reporting period, the Bank convened work for “tougher Party governance and tougher Bank governance” in all aspects. The Bank organized specialized education events for the “Three Strict and Three Steady” theme in an in-depth manner. In 2015, an official corporate culture system came into being at the Bank, under which the Bank released the Handbook of CITIC Bank on Corporate Culture, and developed its Three-Year Plan on Development of Corporate Culture, ushering in a new stage of corporate culture construction. Various competitions were organized, encouraging employees to become role models and make greater contributions. A series of cultural and sports activities plus initiatives for building better homes and providing greater care for employees were put in place, further enriching the cultural life of employees and nurturing greater coherence among staff. To further perform its social responsibility, the Bank donated RMB15.5911 million to poverty-stricken areas and extremely poor vulnerable groups, decided to donate RMB6 million to Tibet and Gansu Province on an annual basis, and assigned cadres to concerned localities for more pertinent and accurate poverty reduction. 2016 marks the beginning year of China’s 13th Five-Year Plan and a critical year for the Bank to deepen the execution of its new strategy. Specifically, the Bank will prioritize its efforts in the following eight aspects: (1) maintain strategic focus, and implement the strategy with greater vigor; (2) emancipate mindsets to speed up development via innovation; (3) deepen transformation and respond to market changes more proactively; (4) increase synergy to build the CITIC Combined Fleet; (5) strictly control risk and construct a scientific risk management system; (6) refine management and optimize performance evaluation and resource allocation; (7) enhance self-improvement for higher professional competency; and (8) reinforce Party construction and further develop corporate culture.

P r e s i d e n t ’s S t a t e m e n t

Availing myself of this opportunity and on behalf of the senior management of the Bank, I would like to extend our sincere gratitude to all investors and friends of all communities for your care and support, to the Board of Directors and Board of Supervisors for your guidance and help, and to all managers and staff of the Bank for your input and contribution! A great cause goes with a great spirit. Focusing on its strategic development goals, the Bank will exert the best of its efforts to develop itself into the “bank offering the best comprehensive finance services” with greater enthusiasm, higher morale and a more down-to-earth work style!

Li Qingping Executive Director and President 23 March 2016

China CITIC Bank Corporation Limited 2015 Annual Report

Honors January

•

February

In the “6th 360° Consumer Assessment of Banks” sponsored by Yinhang.com, the Bank won the “Award for Consumer Satisfaction with Bank Products”.

•

April

The brand of the Bank was valued at USD4.897 billion and ranked 52nd among the “Top 500 Global Bank Brands” published by The Banker magazine of the United Kingdom.

•

May

The Bank was named “2014 Outstanding Settlement Member of the Year” and granted the “2014 Award for Outstanding Performance in Foreign Exchange Clearing” and “2014 Award for Outstanding Performance in Clearing of OTC Interest Rate Financial Derivatives” by the Shanghai Clearing House.

•

The Bank was listed among the “2015 Top 100 Capital Brands of Listed Companies in China” by the China Research Center for Management of Market Capitalization of Listed Companies.

•

The Banker magazine of China granted the Bank the “Award for Innovation of Top 10 Financial Products” in its assessment of candidates for the “2015 Financial Innovation Award in China”.

•

When assessing operational quality of financial institutions, the Deutsche Bank granted the Bank the “2014 Award for Excellence in USD and EUR Clearing Efficiency”.

•

The Bank ranked 94th among the “Top 2,000 Global Enterprises” published by the Forbes magazine.

•

The China Banking Association (CBA) granted the Bank the “2014 Award for the Most Socially Responsible Financial Institution in the Banking Sector” and the “2014 Social Responsibility Award for Excellence in Green Finance in the Banking Sector”.

•

the Federal Bank of Australia granted the Bank the “2014 Award for Excellence in Australian Dollar Clearing Efficiency”.

•

In its assessment of candidates for the “Golden Ox Top 100 Listed Companies in China in 2014”, China Securities Daily rated the Bank one of the “Golden Ox Top 100 Listed Companies in China in 2014” and the “2014 Golden Ox Company of the Year for Highest Profitability”.

•

ChinaHR.com named the Bank “The Best Employer of the Banking Sector” in the 13th competition for the “Best Employers in the Eyes of University Students”.

•

The Bank ranked 33rd in terms of tier-one capital and 46th in terms of total assets out of the “Top 1,000 World Banks” published by The Banker magazine of the United Kingdom.

•

JPMorgan Chase issued the Bank “2014 USD Clearing Quality Accreditation” in its assessment of operational quality of financial institutions worldwide.

•

The Credit Card Customer Service Center of the Bank was rated “The Best Call Center in China” by the Customer Management Committee of CCCS.

June

July

Honors

September

November

December

•

The Daily Economic News granted the “Private Banking Brand Award” to private banking business of the Bank in its assessment of candidates for “Top Brands of High-end Wealth Management in China”.

•

The Bank was named “The Best Commercial Bank for Wealth Management” in the competition for “2015 Single-Item Awards for National Commercial Banks” sponsored by The Banker magazine of China.

•

China Business granted the Bank the honor of “The Most Competitive Bank in Corporate Banking in 2015”.

•

The 21st Century Business Herald named the Bank “Bank of the Year 2015 for Excellence in Corporate Auto Finance” in its assessment of “Auto Finance Service in China”.

•

The Bank won the title “Outstanding Brand for Providing Financial Services with Universal Benefits”.

•

HKICPA granted the Bank “Gold Medal for Best Disclosure of Corporate Governance Information in 2015”.

•

The Bank’s mobile banking was awarded “The Best Mobile Banking in China in 2015” by “China Interne Economic Forum Gold i Award”.

•

In the competition for the “2015 Gold-Medal List of Financial Institutions in China” jointly sponsored by The Financial Times and the Financial Research Institute of the Chinese Academy of Social Sciences, the Bank was named “The Most Innovative Bank in 2015” and placed on the list of the “Top Ten Innovative Internet Banks in 2015”.

•

The Bank won the “Award for Excellence in Asset Custody Services” in the competition for the title “2015 Industry Leaders in China” sponsored by JRJ.com.

•

The Economic Observer granted the Bank the honor “Bank of the Year for Excellent Foreign Exchange Financial Services” in its “2014-2015 Competition for Excellence in Financial Services in China”.

•

In its assessment of candidates for the “Dongfang Wealth Ranking Billboard”, Eastmoney.com named the Bank the “Most Innovative Bank” and the “Best Internet Finance Bank” in 2015.

•

The Bank won the “2015 Award for Best Customer Experience of Online Banking in China” from China Financial Certification Authority (“CFCA”) during the latter’s assessment of candidates for the “The Best E-Banks in China”.

•

In the competition for the “6th Golden Pixiu Award” for excellence in financial wealth management, an initiative jointly sponsored by the Financial Management magazine and Beijing Gold-Medal Wealth Research Institute, the Bank was named “Gold Medal Bank of the Year for Innovation” and “Gold Medal Joint-Stock Commercial Bank of the Year”.

•

The Trade Finance magazine named the Bank “The Best Foreign Exchange Finance Bank in 2015”.

•

In the competition for the “2015 Innovated in China Special Award” sponsored by China Business Times, the Bank won the honor “The Best Bank for Cross-Sector Cooperation”.

China CITIC Bank Corporation Limited 2015 Annual Report

Business Summary Note on Main Business of the Company during the Reporting Period Under the current domestic context of the economic “new normal” and financial sector liberalization, and with the vision of becoming “the bank offering the best comprehensive finance services”, the Bank leveraged to the maximum the unique competitive advantages of CITIC Group that attached equal attention to financial services and the real economy, and exerted the best of its efforts to create an integrated service platform. Upholding its “customer focus” business philosophy, the Bank provided corporate and institutional customers with integrated financial solutions in corporate banking business, international business, financial market business, institutional banking business, investment banking business, factoring business, and custody business; and offered individual customers diversified financial products and services covering retail banking, credit card, consumer finance, wealth management, private banking, e-banking and going abroad finance, meeting the demands of corporate, institutional and individual customers for comprehensive financial services on all fronts. Please refer to “Management Discussion and Analysis” of this report for details.

Note on Material Changes in the Company’s Main Assets during the Reporting Period Please refer to “Analysis of the Financial Statements” in “Management Discussion and Analysis” of this report for details.

Core Competitiveness Analysis In March 2015, the Bank formulated its 2015-2017 Strategic Plan, setting up a clearer development strategy more in line with its own characteristics. During the reporting period, the Bank implemented various strategic deployments with a resolute stance, deepened its institutional reform, stimulated business dynamics, and promoted business transformation on all fronts. As a result, its core competitiveness enjoyed a further boost, which is mainly reflected in the following aspects:

•

The new strategy guided the development of a new pattern. With the vision of becoming the “bank offering the best comprehensive finance services”, the Bank reinforced total-asset operation and transformed from credit grant orientation to provision of comprehensive finance services to customers, forming a new pattern of comprehensive services. The Bank obtained CBRC approval for its equity investment in CTBC Financial Holding Co., Ltd. in Taiwan, and is expected to become the first Mainland China financial institution to invest in CTBC in Taiwan. Establishment of CITIC Financial Leasing expanded the Bank’s business scope even further. In addition, the Bank developed CNCB Investment into its overseas full-license platform for investment banking. As such, a new pattern of platform-based development was in place. The Bank also made breakthroughs in the development of its overseas organizations and overseas business, and greatly enhanced cross-border business interaction between itself and CNCBI, giving rise to a new pattern of international development.

•

The Bank created a new market image for itself through innovative development. In partnership with Baidu, the Bank jointly sponsored the establishment of Baixin Bank. Through enhanced cross-sector cooperation with internet companies, the Bank developed innovative products, continuously enhancing its influence in internet finance. Centering on enterprise transaction behavior and transaction chains, the Bank launched its “Transaction +” brand, and fully upgraded its “going abroad” products and services, harvesting further enhancement of its brand reputation. The Bank further boosted its new image of “Big Individual Products” with its distinctive competitive edges in “comprehensive financial services for government” and “asset custody”. The Bank stabilized its No.1 ranking among peers in the scale of spot foreign exchange market making business at the financial market, topped all joint-stock banks in terms of crossborder Renminbi foreign exchange receipts and payments, and won the first place in terms of the transaction volume in asset management of commercial drafts.

•

The Bank made proactive efforts to create new engines for business growth. (1) New engines for asset business: In partnership with affiliates and subsidiaries of CITIC Group, the Bank supported the “One Belt One Road” government strategy with nearly RMB700 billion investments and finance, establishing strategic partnership with multiple local governments, and continuously increased support to the integration of Beijing, Tianjin and Hebei Province. (2) New engines for cross-border business: The Bank recorded rapid business growth in cross-border mergers and acquisitions and equity investment and finance. (3) Channel creation for deployment of new engines: Outlets were developed in key regions at a faster pace. In addition, the Bank accelerated the implementation of its strategy on developing “small, smart and multi-business-model” outlets and construction of e-channels. All these further boosted customer experience and market competitiveness of the Bank.

Business Summar y

•

Structural reform triggered new dynamics. The Bank quickened the construction of a total-risk management system, and built the “three defense lines” for risk management, thus further improving its capability for risk management and control. Further optimization of the credit review and approval process resulted in better quality and higher efficiency of the process. More intensive efforts were made to construct the internal control system and authorization management, and enhance independence of audit. The establishment of the Product Innovation Management Committee released product innovation dynamics. Reform of the performance evaluation system strengthened the driving force for business growth, and effectively motivated all units and employees. In its adaptation to the new situations of interest rate liberalization, the Bank pushed forward transformation of deposit and loan management towards on- and off- balance sheet total assets and liabilities management. In addition, the Bank actively promoted reform of its human resources. A more standard job system with more effective performance evaluation was put in place. More efforts were made to apply competitive processes in talent selection and cultivate internationalized talents.

•

The Bank created a new growth momentum in business synergy. Greater efforts on the part of the Bank to lead coordination at the CITIC Group level for better synergy included the set-up of six synergy working groups for coordination between banking and securities, banking and trust, and banking and insurance, etc., and implementation of a group of key “One Belt One Road” projects and PPP projects. Subsidiaries and affiliates of CITIC Group registered rapid growth in terms of their deposit balances with the Bank, their number of employees on the payrolls agency paid by the Bank, and the scale of cross-selling products of financial subsidiaries of CITIC Group together with the Bank. In partnership with subsidiaries of CITIC Group, the Bank provided diversified finance to customers, and boosted internal interaction between retail and corporate banking, and carried out joint marketing within the group. As a result, the Bank harvested a marked increase in new customers and growth in business performance. A new pattern of synergy for reciprocity and win-win was in place.

•

A new stage of development in information technology. Successful online operation of the new generation core business system with smooth switch and commissioning in one go across the bank and covering all business lines doubled the efficiency of business processing, and sped up development of deposit/loan products by more than 50%. The remote centralized authorization project separated front-desk operation and back-office authorization, which, while preventing and controlling risks, further reduced the number of authorized managers and saved the cost of human resources.

China CITIC Bank Corporation Limited 2015 Annual Report

Development guided by strategic orientation and breakthroughs in product innovation

With the goal to become the “bank offering the best comprehensive finance services”, the Bank provided comprehensive financing services by adopting business models such as “commercial banking + investment banking”, “banking + non-banking”, “on- + off- balance sheet businesses” and “domestic + overseas”.

Management Discussion and Analysis Economic, Financial and Regulatory Environments The 2015 world economy lingered on in post-crisis adjustment, with recovery of major economies remaining uneven and their monetary policies continuing to divide. The US entered the cycle of interest rate hike. The EU maintained its monetary easing policy. The emerging economies saw slowdown of their economic growth. Global economic development was trapped in multiple uncertainties, including, among others, intensifying geopolitical conflicts and financial market fluctuations. In 2015, the Chinese economy assumed the “new normal”, maintaining a reasonable range of growth in the overall sense but facing a critical period of structural adjustment and growth pattern transformation. Gross domestic product (GDP) grew 6.9% year-on-year. Consumer price index (CPI) rose by 1.4% over the previous year and producer’s price index (PPI) dropped by 5.2%. As at the end of 2015, the balance of M2 registered a growth of 13.3% over the end of the previous year. Total incremental social financing for the full year amounted to RMB15.4 trillion, a year-on-year decrease of RMB467.5 billion. End-of-year combined balance of Renminbi deposits with all financial institutions reached RMB135.7 trillion, an increase of RMB15.0 trillion. End-of-year combined balance of Renminbi loans of all financial institutions recorded RMB94.0 trillion, up RMB11.7 trillion. The average exchange rate of the Renminbi against the US dollar for the whole year stood at 6.2284, depreciating 1.4% over the previous year. In 2015, the Chinese government regulatory authorities rendered active support to help the real economy attain better quality and higher efficiency, defended the bottom line of preventing systemic regional financial risks, and increased market vitality by deepening reform and opening up. The efforts on the part of the Central Bank included five cuts of bank reserve requirement ratio and interest rate, full lift of the ceilings for deposit interest rates, launch of the deposit insurance system, and initiation of the issuance of large-sum deposit certificates. These combined to signal the preliminary achievement of interest rate liberalization. Meanwhile, the Central Bank made comprehensive use of innovative monetary tools such as Standing Lending Facility (SLF) and Medium-term Lending Facility (MLF) to maintain reasonably sufficient liquidity of the banking system. On the other hand, the Standing Committee of the NPC adopted the Amendment to the Law of People’s Republic of China on Commercial Banks; regulatory requirements on loan to deposit ratio were abolished; the CBRC, while paying growing attention to indicators such as liquidity coverage ratio (LCR) and net stable funding ratio (NSFR), also amended the Rules on Liquidity Risk Management of Commercial Banks (Provisional) to build a more robust system for liquidity risk management of banks.

Analysis of the Financial Statements Overview During the reporting period, in face with complex economic and financial environments, the Group focused on implementation of its strategy, deepened business transformation, sped up reform and innovation, and guarded its risk bottom line with a resolute stance, harvesting sound and steady development in the overall sense. Growth of profitability maintained: For the reporting period, the Group realized net profit attributable to the Bank’s shareholders of RMB41.158 billion, profit before asset impairment loss of RMB95.023 billion, net interest income of RMB104.433 billion, and net non-interest income of RMB41.112 billion, representing an increase of 1.15%, 21.44%, 10.23% and 36.59% over the previous year, respectively. Relatively fast growth of business scale: As at the end of the reporting period, the Group’s total assets reached RMB5.122292 trillion, an increase of 23.76% over the end of the previous year; its total loans to customers and total deposits from customers stood at RMB2.528780 trillion and RMB3.182775 trillion respectively, indicating respective increases of 15.58% and 11.69% over the end of the previous year. Overall controllability of asset quality: As at the end of the reporting period, the Group recorded an RMB36.050 billion balance of non-performing loans (NPLs), up RMB7.596 billion or 26.70% over the end of the previous year, which corresponded to an NPL ratio of 1.43%, up 0.13 percentage point over the end of the previous year, an allowance coverage ratio of 167.81%, down 13.45 percentage points over the end of the previous year, and a ratio of allowance for impairment of loans to total loans of 2.39%, up 0.03 percentage point over the end of the previous year.

Income Statement Analysis Item Net interest income Net non-interest income Operating income Operating expenses Asset impairment loss Profit before taxation Income tax Net profit Including: Net profit attributable to the Bank’s shareholders

Unit: RMB million

2015 104,433 41,112 145,545 (50,602) (40,037) 54,986 (13,246) 41,740 41,158

2014 Increase/(decrease) Growth rate (%) 94,741 9,692 10.23 30,098 11,014 36.59 124,839 20,706 16.59 (46,796) 3,806 8.13 (23,673) 16,364 69.13 54,574 412 0.75 (13,120) 126 0.96 41,454 286 0.69 40,692

466

1.15

Management Discussion and Analysis

Operating Income During the reporting period, the Group realized an operating income of RMB145.545 billion, up 16.59% over the previous year, in which net interest income accounted for 71.8%, down 4.1 percentage points over the previous year; and net noninterest income accounted for 28.2%, up 4.1 percentage points over the previous year. Item Net interest income Net non-interest income Total

2015 (%)

2014 (%)

2013 (%)

71.8 28.2

75.9 24.1

81.8 18.2

100.0

Net Interest Income During the reporting period, the Group realized a net interest income of RMB104.433 billion, up RMB9.692 billion or 10.23% over the previous year, which was mainly attributable to the continuous increase in interest-earning assets. The table below sets out the average balances and average interest rates of the Group’s interest-earning assets and interestbearing liabilities. Average balances of assets and liabilities refer to corresponding daily balances. Unit: RMB million

2014

2015 Item Interest-earning assets Loans and advances to customers Investment in debt securities Deposits and placements with central banks Deposits and placements with banks and non-bank financial institutions Financial assets held under resale agreements Investment classified as receivables Others Subtotal Interest-bearing liabilities Deposits from customers Deposits and placements from banks and non-bank financial institutions Financial assets sold under repurchase agreements Interbank certificates of deposit Deposit certificates issued Debt securities payable Borrowings from central banks and others Subtotal Net interest income Net interest spread (1) Net interest margin (2)

Interest

Average yield/ cost rate (%)

Average balance

Interest

Average yield/ cost rate (%)

2,327,333 471,232

136,077 18,190

5.85 3.86

2,074,393 347,377

130,975 13,992

6.31 4.03

510,289

7,502

1.47

506,580

7,554

1.49

221,356

4,250

1.92

276,146

9,834

3.56

102,603 878,034 8,284

3,998 45,638 6

3.90 5.20 0.07

231,483 503,898 3,916

12,194 31,087 3

5.27 6.17 0.08

4,519,131

215,661

4.77

3,943,793

205,639

5.21

3,003,860

64,749

2.16

2,766,590

67,268

2.43

981,227

36,534

3.72

764,241

37,818

4.95

23,057 71,480 7,365 101,304

561 2,957 121 5,304

2.43 4.14 1.64 5.24

23,280 13,693 12,497 75,244

839 654 236 3,726

3.60 4.78 1.89 4.95

28,549

1,002

3.51

9,618

357

3.71

4,216,842

111,228

2.64

3,665,163

110,898

3.02

Average balance

104,433 2.13 2.31

94,741

Notes: (1)

Representing the difference between the average yield of total interest-earning assets and the average cost rate of total interest-bearing liabilities.

Calculated by dividing net interest income by average balance of total interest-earning assets.

(2)

2.19 2.40

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

The table below sets out the changes in the Group’s net interest income resulting from changes in the scale factor and the interest rate factor: Unit: RMB million

2015 compared with 2014 Item

Scale factor

Assets Loans and advances to customers Investment in debt securities Deposits and placements with central banks Deposits and placements with banks and non-bank financial institutions Financial assets held under resale agreements Investments classified as receivables Others Changes in interest income

Interest rate factor

Total

15,961 4,991 55

(10,859) (793) (107)

5,102 4,198 (52)

(1,951) (6,792) 23,084 3

(3,633) (1,404) (8,533) —

(5,584) (8,196) 14,551 3

35,351

(25,329)

10,022

Liabilities Deposits from customers Deposits and placement from banks and non-bank financial institutions Financial assets sold under repurchase agreements Interbank certificates of deposit Deposit certificates issued Debt securities payable Borrowings from central banks and others Changes in interest expense

5,766

(8,285)

(2,519)

10,741 (8) 2,762 (97) 1,290 702 21,156

(12,025) (270) (459) (18) 288 (57) (20,826)

(1,284) (278) 2,303 (115) 1,578 645 330

Changes in net interest income

14,195

(4,503)

9,692

Net Interest Margin and Net Interest Spread During the reporting period, the Group’s net interest margin stood at 2.31%, down 0.09 percentage point over the previous year, and net interest spread registered 2.13%, down 0.06 percentage point over the previous year.

Interest Income During the reporting period, the Group realized an interest income of RMB215.661 billion, up RMB10.022 billion or 4.87% over the previous year. The increase in interest income was primarily due to the increase in the scale of interest-earning assets. The Group’s average balance of interest-earning assets increased from RMB3,943.793 billion in 2014 to RMB4,519.131 billion in 2015, up RMB575.338 billion or 14.59%.

Interest Income from Loans and Advances to Customers During the reporting period, the Group achieved RMB136.077 billion interest income from loans and advances to customers, up RMB5.102 billion or 3.90% over the previous year, of which the interest income from loans and advances to customers of the Bank reached RMB131.448 billion, up RMB4.328 billion or 3.40%.

Classification by Maturity Structure The Group Unit: RMB million

2014

2015 Average balance

Interest income

Average yield (%)

Average balance

Interest income

Average yield (%)

Short-term loans Medium to long-term loans

1,178,627 1,148,706

65,540 70,537

5.56 6.14

1,158,337 916,056

73,784 57,191

6.37 6.24

Total

2,327,333

136,077

5.85

2,074,393

130,975

6.31

Item

Management Discussion and Analysis

The Bank Unit: RMB million

2014

2015 Average balance

Interest income

Average yield (%)

Average balance

Interest income

Average yield (%)

Short-term loans Medium to long-term loans

1,154,142 1,039,810

64,712 66,736

5.61 6.42

1,135,848 828,859

72,830 54,290

6.41 6.55

Total

2,193,952

131,448

5.99

1,964,707

127,120

6.47

Item

Classification by Business The Group Unit: RMB million

2014

2015 Average balance

Interest income

Average yield (%)

Average balance

Interest income

Average yield (%)

Corporate loans Discounted loans Personal loans

1,630,940 89,753 606,640

97,956 3,214 34,907

6.01 3.58 5.75

1,508,473 74,347 491,573

96,338 3,782 30,855

6.39 5.09 6.28

Total

2,327,333

136,077

5.85

2,074,393

130,975

6.31

Item

The Bank Unit: RMB million

2014

2015 Item Corporate loans Discounted loans Personal loans Total

Average balance 1,521,013 82,866 590,073 2,193,952

Interest income 94,192 2,842 34,414 131,448

Average yield (%) 6.19 3.43 5.83 5.99

Average balance 1,421,570 66,107 477,030 1,964,707

Interest income 93,169 3,516 30,435 127,120

Average yield (%) 6.55 5.32 6.38 6.47

Interest Income from Investment in Debt Securities During the reporting period, the Group’s interest income from investment in debt securities stood at RMB18.190 billion, up RMB4.198 billion or 30.00% over the previous year, primarily because average balance of investment in debt securities grew from RMB347.377 billion in 2014 to RMB471.232 billion in 2015, an increase of 35.65%.

Interest Income from Deposits and Placements with Central Banks During the reporting period, the Group’s interest income from deposits and placements with central banks amounted to RMB7.502 billion, representing a decrease of RMB52 million or 0.69% over the previous year.

Interest Income from Deposits and Placements with Banks and Non-Bank Financial Institutions During the reporting period, the Group’s interest income from deposits and placements with banks and non-bank financial institutions was RMB4.250 billion, down RMB5.584 billion or 56.78% over the previous year, mainly because the average balance of deposits and placements with banks and non-bank financial institutions decreased by RMB54.790 billion and the average yield of such deposits and placements dropped 1.64 percentage points.

Interest Income from Amounts under Resale Agreements For the reporting period, the Group’s interest income from amounts under resale agreements stood at RMB3.998 billion, down RMB8.196 billion or 67.21% over the previous year, mainly due to the RMB128.880 billion decrease in the average balance of amounts under resale agreements and a drop of 1.37 percentage points in the average yield thereof.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Interest Income from Receivables Investments During the reporting period, the Group’s interest income from receivables investments stood at RMB45.638 billion, up RMB14.551 billion over the previous year, mainly due to the continuous expansion of investment in directional asset management schemes of securities brokerages and in wealth management products of financial institutions.

Interest Expense During the reporting period, the Group’s interest expense was RMB111.228 billion, up RMB330 million or 0.30% over the previous year. The increase in interest expense was primarily due to the expansion of interest-bearing liabilities which offset the cumulative impacts of the five rounds of interest rate cuts. The Group’s average balance of interest-bearing liabilities increased from RMB3,665.163 billion in 2014 to RMB4,216.842 billion in 2015, up RMB551.679 billion or 15.05%; while the average cost rate of its interest-bearing liabilities decreased by 0.38 percentage point.

Interest Expense on Deposits from Customers During the reporting period, the interest expense on deposits from customers of the Group was RMB64.749 billion, a drop of RMB2.519 billion or 3.74% over the previous year, of which the interest expense on deposits from customers of the Bank was RMB62.700 billion, a decrease of RMB2.579 billion or 3.95% over the previous year, primarily because the five rounds of interest rate cuts reduced the average cost rate of customer deposits by 0.27 percentage point. The Group Unit: RMB million

2014

2015 Average balance

Interest expense

Average cost rate (%)

Average balance

Interest expense

Average cost rate (%)

Corporate deposits Time deposits Demand deposits

1,499,194 999,091

46,324 7,454

3.09 0.75

1,350,745 896,846

46,486 6,550

3.44 0.73

Subtotal

2,498,285

53,778

2.15

2,247,591

53,036

2.36

Personal deposits Time deposits Demand deposits

352,878 152,697

10,453 518

2.96 0.34

395,557 123,442

13,788 444

3.49 0.36

Subtotal

505,575

10,971

2.17

518,999

14,232

2.74

3,003,860

64,749

2.16

2,766,590

67,268

2.43

Item

Total The Bank

Unit: RMB million

2014

2015

Interest expense

Average cost rate (%)

Interest expense

Corporate deposits Time deposits Demand deposits

1,427,532 973,182

45,206 7,429

3.17 0.76

1,291,735 874,670

45,223 6,525

3.50 0.75

Subtotal

Item

2,400,714

52,635

2.19

2,166,405

51,748

2.39

Personal deposits Time deposits Demand deposits

302,079 136,070

9,576 489

3.17 0.36

354,200 110,370

13,111 420

3.70 0.38

Subtotal

438,149

10,065

2.30

464,570

13,531

2.91

2,838,863

62,700

2.21

2,630,975

65,279

2.48

Total

Average balance

Average cost rate (%)

Management Discussion and Analysis

Interest Expense on Deposits and Placements from Banks and Non-Bank Financial Institutions During the reporting period, the Group’s interest expense on deposits and placements from banks and non-bank financial institutions amounted to RMB36.534 billion, down RMB1.284 billion or 3.40% over the previous year, primarily due to the drop of the average cost rate of such deposits and placements by 1.23 percentage points, which offset the impacts of the increase of RMB216.986 billion in the average balance of such deposits and placements.

Interest Expense on Amounts under Repurchase Agreements During the reporting period, the Group’s interest expense on amounts under repurchase agreements was RMB561 million, down RMB278 million or 33.13% over the previous year, which was primarily due to the drop in the average cost rate of the amounts under repurchase agreements by 1.17 percentage points.

Interest Expense on Interbank Certificates of Deposit During the reporting period, the Group’s interest expense on interbank certificates of deposit amounted to RMB2.957 billion, up RMB2.303 billion or 352.14% over the previous year, mainly because of the Group’s new issuance of inter-bank certificates of deposit during the current period.

Interest Expense on Issued Deposit Certificates During the reporting period, the Group’s interest expense on issued deposit certificates stood at RMB121 million, a decrease of RMB115 million or 48.73% over the previous year, which was primarily due to the RMB5.132 billion decrease in the average balance of deposit certificates.

Interest Expense on Debt Securities Payable During the reporting period, the Group’s interest expense on debt securities payable recorded RMB5.304 billion, up RMB1.578 billion or 42.35% over the previous year, mainly because of the Group’s new issue of Renminbi denominated debt securities during the current period.

Interest Expense on Borrowings from Central Banks and other liabilities During the reporting period, the Group’s interest expense on borrowings from central banks and other liabilities stood at RMB1.002 billion, an increase of RMB645 million or 180.67% over the previous year, mainly because the average balance of borrowings from central banks was increased.

Net Non-Interest Income During the reporting period, the Group realized a net non-interest income of RMB41.112 billion, an increase of RMB11.014 billion or 36.59% over the previous year. Unit: RMB million

Item

2015

2014 Increase/(decrease)

Growth rate (%)

rate

Net fee and commission income Net gain from trading Net gain from investment securities Net gain/(loss) from arbitrage Other net operating gain

35,674 3,635 1,192 1 610

25,313 3,437 834 (2) 516

10,361 198 358 3 94

40.93 5.76 42.93 — 18.22

Total net non-interest income

41,112

30,098

11,014

36.59

Net Fee and Commission Income During the reporting period, the Group realized a net fee and commission income of RMB35.674 billion, an increase of RMB10.361 billion or 40.93% over the previous year, of which fee and commission income amounted to RMB37.639 billion, up 39.55% over the previous year. This increase was primarily due to the relatively rapid growth in items including bank card fees, agency fees and wealth management service fees.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Unit: RMB million

Item

2015

2014 Increase/(decrease) Growth rate (%) rate

Bank card fees Consulting and advisory fees Settlement fees Wealth management service fees Agency fees Commissions for custody and other trusted services Guarantee fees Others

13,419 6,972 1,747 5,808 3,711

8,358 5,638 2,213 3,958 1,795

5,061 1,334 (466) 1,850 1,916

60.55 23.66 (21.06) 46.74 106.74

2,228 3,131 623

1,522 3,178 310

706 (47) 313

46.39 (1.48) 100.97

Subtotal Fee and commission expense

37,639 (1,965)

26,972 (1,659)

10,667 (306)

39.55 18.44

Net fee and commission income

35,674

25,313

10,361

40.93

Net gain from trading During the reporting period, the Group registered RMB3,635 million net gain from trading, up RMB198 million or 5.76% over the previous year. Unit: RMB million

2015

2014 Increase/(decrease) Growth rate (%)

Net gain from foreign exchange trading Derivatives Debt securities Financial instruments designated at fair value through profit or loss

1,288 576 1,531

827 1,658 913

240

201

515.38

Net gain from trading

3,635

3,437

198

5.76

Item rate

461 (1,082) 618

55.74 (65.26) 67.69

Loss on Asset Impairment During the reporting period, the Group’s asset impairment loss was RMB40.037 billion, increasing by RMB16.364 billion or 69.13% over the previous year, of which impairment loss on loans and advances to customers stood at RMB35.120 billion, up RMB13.046 billion or 59.10% over the previous year. Unit: RMB million

Item

2015

2014 Increase/(decrease) Growth rate (%)

Loans and advances to customers Off-balance sheet assets Securities investment Others (Note)

35,120 (95) 53 4,959

22,074 4 (7) 1,602

13,046 (99) 60 3,357

59.10 — — 209.55

Total loss on asset impairment

40,037

23,673

16,364

69.13

Note:

Including the impairment losses of placements with banks and loans to banks and non-bank financial institutions, interest receivables, receivables investment and other assets.

Operating Expenses During the reporting period, the Group incurred RMB50.602 billion operating expense, representing an increase of RMB3.806 billion or 8.13% over the previous year, of which staff cost and property and equipment expenses increased by 5.82% and 12.61% respectively over the previous year. During the reporting period, the Group recorded a cost-to-income ratio of 34.77%, down 2.72 percentage points over the previous year.

Management Discussion and Analysis

Unit: RMB million

Item

2014 Increase/(decrease)

2015

Growth (%)

rate

Staff cost Property and equipment expenses and amortization Other general administrative expenses

22,387

21,156

1,231

5.82

8,763 9,419

7,782 9,031

981 388

12.61 4.30

Subtotal

40,569

37,969

2,600

6.85

Business tax and surcharges Total operating expenses

10,033 50,602

8,827 46,796

1,206 3,806

13.66 8.13

34.77%

37.49%

down 2.72 percentage points

27.87%

30.41%

down 2.54 percentage points

Cost-to-income ratio Cost-to-income ratio (deducting business tax and surcharges)

Income Tax Analysis During the reporting period, the Group’s income tax expense was RMB13.246 billion, up RMB126 million or 0.96% over the previous year. The Group’s effective tax rate stood at 24.09%, up 0.05 percentage point over the previous year.

Balance Sheet Analysis As at the end of the reporting period, total assets of the Group reached RMB5,122.292 billion, up 23.76% over the end of the previous year, mainly due to increase in the Group’s loans and advances to customers and receivables investment; and total liabilities of the Group reached RMB4,802.606 billion, up 24.05% over the end of the previous year, mainly the result of increase in deposits from customers, deposits and placements from banks and non-bank financial institutions and issued debt certificates. Unit: RMB million

31 December 2014

31 December 2015 Balance

Proportion (%)

Balance

Proportion (%)

Loans and advances to customers Receivables investment Investment in debt securities and equity instruments(1) Cash and deposits with central banks Net amount of deposits and placements with banks and loans to banks and non-bank financial institutions Amounts under resale agreements Others(2)

2,468,283 1,112,207

48.2 21.7

2,136,332 653,256

51.7 15.8

580,896 511,189

11.3 10.0

415,740 538,486

10.0 13.0

199,579 138,561 111,577

3.9 2.7 2.2

162,171 135,765 97,065

3.9 3.3 2.3

Total assets

5,122,292

100.0

4,138,815

100.0

Deposits from customers Deposits and placements from banks and non-bank financial institutions Amounts under repurchase agreements Debt certificates issued Others(3)

3,182,775

66.3

2,849,574

73.6

1,117,792 71,168 289,135 141,736

23.3 1.5 6.0 2.9

707,940 41,609 133,488 138,858

18.3 1.1 3.4 3.6

Total liabilities

4,802,606

100.0

3,871,469

100.0

Item

Notes:

(1) Including financial assets measured at fair value through profit or loss for the current period, available-for-sale financial assets, held-to-maturity investments and investments in associates.

(2) Including precious metal, derivative financial assets, interest receivables, fixed assets, intangible assets, investment properties, goodwill, deferred income tax

(3) Including borrowings from central banks, financial liabilities measured at fair value through profit or loss for the current period, derivative financial liabilities,

assets and other assets. staff remunerations payable, tax and fee payables, interest payables, estimated liabilities, deferred income tax liabilities, other liabilities and so on.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Loan Business As at the end of the reporting period, total loans and advances of the Group reached RMB2,528.780 billion, up 15.58% over the end of the previous year; and net loans and advances accounted for 48.2% of total assets, down 3.5 percentage points over the end of the previous year. The Group Unit: RMB million

31 December 2015 Balance Proportion (%)

Item

31 December 2014 Balance Proportion (%)

Corporate loans Discounted loans Personal loans

1,767,422 92,745 668,613

69.9 3.7 26.4

1,565,318 68,043 554,547

71.6 3.1 25.3

Total loans and advances to customers

2,528,780

100.0

2,187,908

100.0

Impairment allowance for loans and advances to customers Net loans and advances to customers

(60,497) 2,468,283

(51,576) 2,136,332

As at the end of the reporting period, loans and advances of the Bank totaled RMB2,364.556 billion, up 14.59% over the end of the previous year. The Bank Unit: RMB million

31 December 2015 Balance Proportion (%)

Item

31 December 2014 Balance Proportion (%)

Corporate loans Discounted loans Personal loans

1,627,573 87,219 649,764

68.8 3.7 27.5

1,465,078 59,888 538,512

71.0 2.9 26.1

Total loans and advances to customers

2,364,556

100.0

2,063,478

100.0

Impairment allowance for loans and advances to customers Net loans and advances to customers

(59,682) 2,304,874

(51,136) 2,012,342

Please refer to “Management Discussion and Analysis – Risk Management” of this report for risk analysis of loan business.

Receivables Investment As at the end of the reporting period, the Group’s receivables investment totaled RMB1,113.092 billion, an increase of RMB459.680 billion or 70.35% over the previous year, mainly due to the increase in investment in directional asset management schemes of securities brokerages and wealth management products of financial institutions. 31 December 2015 Balance Proportion (%)

31 December 2014 Balance Proportion (%)

139,971

12.6

108,535

16.6

825,016

74.1

452,319

69.2

147,605 — 500

13.3 — —

78,859 13,199 500

12.1 2.0 0.1

Total receivables investment

1,113,092

100.0

653,412

100.0

Allowance for impairment in receivables investment Net receivables investment

(885) 1,112,207

Item Fund trust schemes Directional asset management schemes of securities brokerages Wealth management products of financial institutions Corporate bonds Others

Note:

(156) 653,256

Underlying assets of investment classified as receivables mainly refer to notes, loans and interbank business assets. Among the total, loans took up 26.4%.

Management Discussion and Analysis

Investment in Debt Securities and Equity Instruments As at the end of the reporting period, total investment in debt securities and equity instruments was RMB581.097 billion, up RMB165.219 billion or 39.73% over the previous year.

Portfolio Analysis of Investment in Debt Securities and Equity Instruments Unit: RMB million

31 December 2014

31 December 2015 Value

Proportion (%)

Value

Proportion (%)

179,971 297,580 8,536

31.0 51.2 1.5

177,998 183,382 12,746

42.8 44.1 3.1

2,457

0.4

838

0.2

488,544

84.1

374,964

90.2

Investment funds Available-for-sale investment funds Trading financial assets

446 1

0.1 —

462 2

0.1 —

Total investment funds

447

0.1

464

0.1

Equity investments Available-for-sale equity investments Investments in associates

580 976

0.1 0.2

1,769 870

0.4 0.2

1,556

0.3

2,639

0.6

Certificates of deposit and inter-bank certificates of deposit Trading financial assets Available-for-sale financial assets

15,226 75,314

2.6 12.9

13,923 23,888

3.3 5.8

Total certificates of deposit and inter-bank certificates of deposit

90,540

15.5

37,811

9.1

Investments in wealth management products Available-for-sale financial assets

—

Total investment in wealth management products

—

581,097

100.0

415,878

100.0

Item Debt securities investment Held-to-maturity debt securities Available-for-sale debt securities Trading financial assets Financial assets measured at fair value through profit or loss for the current period Total debt securities

Total equity investments

Total investment in debt securities and equity instruments Impairment provision for investment in debt securities and equity instruments Net investment in debt securities and equity instruments Market value of listed securities in held-to-maturity debt securities

(201)

(138)

580,896

415,740

180,341

169,845

As at the end of the reporting period, the Group’s investment in debt securities reached RMB488.544 billion, an increase of RMB113.580 billion or 30.29% over the end of the previous year, primarily because the Group made proactive adjustments to the investment structure and allocation scale of debt securities based on market interest rates and liquidity management requirements.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Classification of Debt Securities Investment Unit: RMB million

31 December 2014

31 December 2015 Value

Proportion (%)

Value

Proportion (%)

Banks and non-bank financial institutions Government Policy banks Public entities Others(Note)

162,834 165,203 50,994 4 109,509

33.3 33.8 10.4 — 22.5

147,570 85,258 44,306 68 97,762

39.4 22.7 11.8 — 26.1

Total debt securities

488,544

100.0

374,964

100.0

Item

Note: Primarily corporate bonds.

Domestic and Overseas Debt Securities Investment Unit: RMB

million

31 December 2014

31 December 2015 Value

Proportion (%)

Value

Proportion (%)

Domestic Overseas

460,526 28,018

94.3 5.7

362,717 12,247

96.7 3.3

Total debt securities

488,544

100.0

374,964

100.0

Foreign Currency Denominated Debt Securities Held As at the end of the reporting period, the Group held a total of USD6.274 billion worth of foreign currency denominated debt securities (equivalent to RMB40.741 billion), of which the Bank held USD1.393 billion, accounting for 22.20% of the total. The Group’s impairment allowance for foreign currency denominated debt securities investment was USD25 million (equivalent to RMB164 million), all being impairment allowance accrued for debt securities held by the Bank. Breakdown of Significant Investments in Financial Debt Securities The table below sets out the breakdown of significant investments in financial debt securities held by the Group as at 31 December 2015. Unit: RMB million

Name of Debt Securities Debt Securities 1 Debt Securities 2 Debt Securities 3 Debt Securities 4 Debt Securities 5 Debt Securities 6 Debt Securities 7 Debt Securities 8 Debt Securities 9 Debt Securities 10 Total debt securities

Book value

Maturity Date

Annual interest rate (%)

Allowance accrued for impairment

4,000 4,000 3,186 2,682 2,210 2,047 2,000 1,931 1,795 1,794

28/02/2017 18/08/2029 23/04/2017 23/04/2019 06/05/2017 17/01/2018 14/03/2017 17/07/2018 20/03/2024 04/06/2017

4.20% 5.98% 4.11% 4.32% 1.83% 3.12% 3.45% 3.59% 6.60% 2.71%

— — — — — — — — — —

25,645

Management Discussion and Analysis

Changes in Allowance for Investment Impairment Unit: RMB million

As at 31 December 2014

As at 31 December 2015

Item Beginning balance Accruals during the year(1) Write-offs Transfer in/(out)(2)

138 53 — 10

205 (7) — (60)

Ending balance

201

138

Notes: (1)

Equal to the net allowance for impairment losses recognized in the consolidated income statement of the Group.

Transfer in/(out) includes the amount transferred from the allowance for impairment losses on investment in overdue debt securities to the allowance for bad

(2)

debt, the transfer of sale of impaired investments to impairment allowance upon sale and impacts due to changes in exchange rate.

Classification of Derivatives and Fair Value Analysis Unit: RMB million

Item

31 December 2014 Nominal Fair value principal Assets Liabilities

31 December 2015 Nominal Fair value principal Assets Liabilities

Interest rate derivatives Currency derivatives Other derivatives

604,523 1,600,764 23,985

1,291 11,489 1,008

995 10,119 304

298,961 978,918 50,769

977 6,406 843

754 6,208 385

Total

2,229,272

13,788

11,418

1,328,648

8,226

7,347

On-Balance Sheet Interest Receivables Unit: RMB million

31 December 2014

Increase during the current period

Loan interest receivable Interest receivable for debt securities Interest on receivables investment Other interest receivables

8,667 6,485 11,190 1,173

136,077 18,190 45,638 15,756

(134,401) (16,793) (43,865) (15,471)

10,343 7,882 12,963 1,458

Total

27,515

215,661

(210,530)

32,646

Allowances for impairment losses on interest receivables

(1,390)

Net interest receivable

26,125

Item

(2,941) 212,720

Collected during the current period

31 December 2015

2,197

(2,134)

(208,333)

30,512

Repossessed Assets Unit: RMB million

Item Original value of repossessed assets — Land, premises and buildings — Others Provisions for impairment of repossessed assets — Land, premises and buildings — Others Total book value of repossessed assets

31 December 2015

31 December 2014

1,045 85

446 458

(137) (33) 960

(156) (9) 739

Deposits from Customers The Group As at the end of the reporting period, deposits from customers of the Group totaled RMB3,182.775 billion, an increase of RMB333.201 billion or 11.69% over the end of the previous year; and deposits from customers accounted for 66.3% of total liabilities, down 7.3 percentage points over the end of the previous year. China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Unit: RMB million

Item Corporate deposits Demand deposits

Time deposits Including: negotiated deposits Subtotal Personal deposits Demand deposits Time deposits Subtotal Total deposits from customers

31 December 2015 Balance Proportion (%)

31 December 2014 Balance Proportion (%)

31 December 2013 Balance Proportion (%)

1,194,486 1,446,939 101,333 2,641,425

37.5 45.5 3.2 83.0

969,511 1,365,914 102,886 2,335,425

34.0 48.0 3.6 82.0

938,894 1,198,043 99,205 2,136,937

35.4 45.2 3.7 80.6

178,917 362,433 541,350 3,182,775

5.6 11.4 17.0 100.0

147,658 366,491 514,149 2,849,574

5.2 12.8 18.0 100.0

127,430 387,311 514,741 2,651,678

4.8 14.6 19.4 100.0

The Bank As at the end of the reporting period, the Bank’s deposits from customers totaled RMB2,994.826 billion, an increase of RMB295.229 billion or 10.94% over the end of the previous year. Unit: RMB million

Item Corporate deposits Demand deposits Time deposits Including: negotiated deposits Subtotal Personal deposits Demand deposits Time deposits Subtotal Total deposits from customers

31 December 2015 Balance Proportion (%)

31 December 2014 Balance Proportion (%)

31 December 2013 Balance Proportion (%)

1,163,000 1,366,291 100,512 2,529,291

38.9 45.6 3.4 84.5

945,128 1,300,408 102,040 2,245,536

35.0 48.2 3.8 83.2

919,663 1,143,519 98,340 2,063,182

36.4 45.2 3.9 81.6

160,207 305,328 465,535 2,994,826

5.3 10.2 15.5 100.0

133,223 320,838 454,061 2,699,597

4.9 11.9 16.8 100.0

113,377 352,929 466,306 2,529,488

4.4 14.0 18.4 100.0

Breakdown of Deposits from Customers by Currency Unit: RMB million

31 December 2015 Balance Proportion (%)

Item

31 December 2014 Balance Proportion (%)

Renminbi Foreign currencies

2,854,718 328,057

89.7 10.3

2,528,282 321,292

88.7 11.3

Total

3,182,775

100.0

2,849,574

100.0

Breakdown of Deposits by Geographical Location Unit: RMB million

Item

31 December 2015 Balance Proportion (%)

31 December 2014 Balance Proportion (%)

Bohai Rim(Note) Yangtze River Delta Pearl River Delta and West Strait Central region Western region Northeastern region Overseas

809,760 730,304 498,538 472,675 408,822 77,792 184,884

25.4 22.9 15.7 14.9 12.9 2.4 5.8

733,731 662,812 423,903 429,345 373,237 77,525 149,021

25.7 23.3 14.9 15.1 13.1 2.7 5.2

3,182,775

100.0

2,849,574

100.0

Total deposits from customers Note:

Including the Head Office.

Management Discussion and Analysis

Breakdown of Deposits by Remaining Maturity The Group Unit: RMB million

Repayable-on-demand Item

Within 3 months

Amount Proportion (%)

Within 3-12 months

Within 1-5 years

After 5 years

Amount Proportion (%)

Total

Amount Proportion (%)

Corporate deposits

1,154,801

36.3

574,729

18.1

593,216

18.6

317,785

10.0

894

—

2,641,425

83.0

Personal deposits

179,314

5.6

244,703

7.7

72,135

2.3

45,106

1.4

—

541,350

17.0

1,334,115

41.9

819,432

25.8

665,351

20.9

362,891

11.4

986

—

3,182,775

100.0

Total The Bank

Unit: RMB million

Repayable-on-demand Item

Within 3 months

Amount Proportion (%)

Within 3-12 months

Within 1-5 years

After 5 years

Amount Proportion (%)

Total

Amount Proportion (%)

Corporate deposits

1,123,318

37.5

514,617

17.2

573,061

19.2

317,401

10.6

894

—

2,529,291

84.5

Personal deposits

160,604

5.4

191,723

6.4

68,045

2.2

45,071

1.5

—

465,535

15.5

1,283,922

42.9

706,340

23.6

641,106

21.4

362,472

12.1

986

—

2,994,826

100.0

Total

Shareholders’ Equity Changes in shareholders’ equity in the Group during the reporting period are listed in the following table: Unit: RMB million

2015

Item

Other

Surplus Reserve

comprehensive

and General

Undistributed

Minority

Shareholders’

Total

Share Capital

Capital Reserve

income

Risk Provision

Profit

Interest

Equity

1 January 2015

46,787

49,296

(1,833)

69,841

95,586

7,669

267,346

1. Net profit

—

41,158

582

41,740

2. Other comprehensive income

—

5,417

—

227

5,644

—

(400)

—

(6,395)

(6,795)

2,148

9,740

—

11,888

—

18,076

(18,076)

(137)

48,953

58,636

3,584

87,917

118,668

1,946

319,686

3. Acquisition of minority interest in subsidiaries(1) 4. Capital input by ordinary shareholders(2) 5. Profit distribution 31 December 2015 Notes:

(1)

On 27 August 2015, the Bank acquired BBVA’s 29.68% equity in CIFH and thus made CIFH its wholly owned subsidiary. Because the Bank and CNCBI, a wholly owned subsidiary of CIFH, respectively held 99.05% and 0.95% equity in CNCB Investment, the above acquisition transaction increased the Bank’s direct and indirect shareholding of CNCB Investment to 100%. The Bank has completed the accounting treatment thereof according to the relevant accounting standards.

(2)

On 31 December 2015, the Bank made a private offering of 2,148 million shares to China Tobacco Corporation, raising net proceeds of RMB11.888 billion after deducting issuance costs including but not limited to underwriting and sponsor fees. After the completion of the offering, China Tobacco Corporation holds 4.39% of the Bank’s equity.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Major Off-Balance Sheet Items The table below sets out major off-balance sheet items and their balances as at the end of the reporting period. Unit: RMB million

Item

31 December 2015

31 December 2014

631,431 133,567 92,164 200,933 149,138

712,985 124,008 134,766 188,338 124,106

1,207,233

1,284,203

14,799 7,232 143,182

14,084 8,413 71,219

1,372,446

1,377,919

Credit commitments — Banker’s Acceptance bills — Letters of guarantee issued — Letters of credit issued — Irrevocable loan commitments — Credit card commitments Subtotal Operating leasing commitments Capital commitments Pledged assets Total

Cash Flow Statement Analysis Net Operating Cash Outflow Net operating cash outflow registered RMB20.835 billion, representing a growth of RMB54.985 billion over the previous year, primarily because cash outflow due to increase in loans and advancements to customers and receivables investment offsetting cash inflow from the growth in deposits from customers and inter-bank business resulted in net cash outflow.

Net Cash Outflow for Investing Activities Net cash outflow for investing activities recorded RMB142.554 billion, up RMB94.269 billion over the previous year, mainly due to the year-on-year increase in net payments on investments in debt securities.

Net Cash Inflow Generated from Financing Activities Net cash inflow generated from financing activities reached RMB154.229 billion, up RMB109.835 billion over the previous year, primarily due to the increase in net cash proceeds from private offering of shares and issuance of inter-bank deposit certificates and inter-bank bonds. Unit: RMB million

Item Net Operating Cash Outflow Including: Net cash inflow due to increase in interbank business(Note) Cash inflow due to increase in deposits from customers Cash ouflow due to increase in loans and advances to customers Cash outflow due to increase in receivables investments Net Cash Outflow for Investing Activities Including: Proceeds from redemption of investments Payments on acquisition of investments Net Cash Inflow Generated from Financing Activities Including: Proceeds from Issued debt certificates Proceeds from inward investment Principal repayment for issued debt certificates Note:

2015 (20,835) 399,532

Year-on-Year Increase (%) Major cause — (1.17)

323,142

63.90

Increase in corporate deposits

(358,952)

51.39

Increase in various loans

(459,657)

30.09

(142,554) 638,920

195.23 56.05

Increase in directional asset management schemes of securities brokerages

(775,111)

73.62

154,229

247.41

310,966

217.88

11,888 (153,296)

— 285.70

Increase in disposal and repayment of debt securities Increase in debt securities investments

Issuance of inter-bank deposit certificates and bonds Private offering of shares Repayment of matured inter-bank deposit certificates and bonds

Including deposits with banks, placements with and loans to banks and non-bank financial institutions, financial assets held under resale agreements, deposits and placements from banks and non-bank financial institutions, and financial assets sold under repurchase agreements.

Management Discussion and Analysis

Capital Adequacy Ratio and Leverage Ratio The Group calculates and discloses its capital adequacy ratios according to the Rules Governing Capital Management of Commercial Banks (Provisional) promulgated by the CBRC (implemented as of 1 January 2013). As at the end of the reporting period, the Group’s capital adequacy ratios at all levels complied with regulatory requirements of the new measures. As at the end of the reporting period, the Group recorded 9.12% core tier-one capital adequacy ratio, up 0.19 percentage point over the end of the previous year, 9.17% tier-one capital adequacy ratio, up 0.18 percentage point over the end of the previous year, and 11.87% capital adequacy ratio, down 0.46 percentage points over the end of the previous year. Unit: RMB million

Item Net core tier-one capital Net tier-one capital Net capital Risk-weighted assets Core tier-one capital adequacy ratio Tier-one capital adequacy ratio Capital adequacy ratio

31 December 2015

31 December 2014

Increase/ decrease (%)

31 December 2013

316,159 317,987 411,740 3,468,135 9.12%

262,786 264,582 362,848 2,941,627 8.93%

228,311 228,380 292,212 2,600,494 8.78%

9.17%

8.99%

11.87%

12.33%

20.31 20.18 13.47 17.90 up 0.19 percentage point up 0.18 percentage point down 0.46 percentage point

8.78% 11.24%

Unit: RMB million

Leverage ratio Net tier-one capital Adjusted balance of on-and off-balance sheet assets Notes:

(1)

31 December 2015

31 December 2014

Increase/ decrease (%)

31 December 2013

5.26%

5.19%

4.81%

317,987 6,044,069

264,582 5,096,499

up 0.07 percentage point 20.18 18.59

228,380 4,746,753

Data for 2013 were leverage ratios calculated in accordance with provisions of the Rules on Leverage Ratio of Commercial Banks (CBRC Decree 2011 No.3). Data for 2014 and onward were leverage ratios calculated in accordance with provisions of the Rules on Leverage Ratio of Commercial Bank (Revised) (CBRC Decree 2015 No.1).

(2)

For more detailed information about leverage ratios, as per the Rules on Leverage Ratio of Commercial Banks (Revised) (CBRC Decree 2015 No.1), please refer to the column on investor relations at the Bank’s website: bank.ecitic.com/eabout/inves/in_4_4.shtml.

Major Accounting Estimates and Assumptions The preparation of financial statements in conformity with the IFRS requires the Group to make certain accounting estimates and assumptions when applying its accounting policies to determine the amounts of assets and liabilities as well as profits and losses during the reporting period. The accounting estimates and assumptions made by the Group are based on its historical experience and other factors such as reasonable expectations of future events, and are reviewed on an on-going basis vis-a-vis the key assumptions involved in such estimates and the judgment on uncertainties. The accounting estimates and assumptions made by the Group have all been appropriately recognized during the current period of the changes involved and during subsequent periods of any impacts resulting from such changes. The basis for compilation of the Group’s financial statements is influenced by estimates and judgments in the following main aspects: impairment losses of loans and advancements, available-for-sale financial assets and held-to-maturity investments, impairment in available-for-sale equity investments, fair value of financial instruments, classification of held-to-maturity investments, income tax, retirement welfare liabilities, and judgment on degree of control over investment targets.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Major Financial Statement Items with More than 30% Changes Unit: RMB million

Item Precious metal Placements with other banks and non-bank financial institutions Derivative financial assets Available-for-sale financial assets

1,191 118,776 13,788 373,770

Receivables investment

1,112,207

Deposits and placements from other banks and non-bank financial institutions

1,068,544

Placement from other banks and non-bank financial institutions

49,248

Derivative financial liabilities

11,418

Financial assets sold under repurchase agreements Debt certificates issued

71,168

Other liabilities Other comprehensive income

Increase/(decrease) at previous year-end/over 2015 previous year (%)

289,135 41,652 3,584

Equity attributable to ordinary non-controlling interests Fee and commission income Net gain from investment securities

35,674 1,192

Asset impairment loss

40,037

121

189.78 74.21

Main Reason

Increase in precious metal business Increase in domestic placements with other banks and non-bank financial institutions 67.61 Increase in currency derivative financial instrument business 78.49 Increase in available-for-sale debt securities and inter-bank certificates of deposit 70.26 Increase in investment in directional asset management schemes of securities brokerages 55.25 Increase in deposits and placements from other banks and non-bank financial institutions 150.65 Increase in placement from domestic banks and non-bank financial institutions 55.41 Increase in currency derivative financial instrument business 71.04 Increase in bills sold under repurchase agreements 116.60 Increase in financial debts and interbank certificates of deposit 59.79 Increase in amounts pending liquidation — Increase in investment revaluation reserve of available-for-sale financial assets (97.93) Purchase of minority interest in subsidiaries 40.93 Rapid growth of intermediary business 42.93 Increase in revaluation net gain from disposing available-for-sale financial assets 69.13 Increase in allowance for impairment in portfolio benchmark credit assets

Management Discussion and Analysis

Segment Report Business Segments Major business segments of the Group cover corporate banking, retail banking and financial market. Data of these business segments mainly came from the Group’s management accounting system. Unit: RMB million

2014

2015

Business Segment

Segment Operating Proportion Income (%)

Segment Profit Proportion before tax (%)

Segment Operating Proportion Income (%)

Segment Profit Proportion before tax (%)

Corporate banking Retail banking Financial market business Other business

71,300 34,009 45,049 (4,813)

49.0 23.4 31.0 (3.4)

19,886 4,297 36,977 (6,174)

36.2 7.8 67.2 (11.2)

65,270 25,233 36,251 (1,915)

52.3 20.2 29.0 (1.5)

25,372 1,324 31,464 (3,586)

46.5 2.4 57.7 (6.6)

Total

145,545

100.0

54,986

100.0

124,839

100.0

54,574

100.0

Geographical Segments The table below lists operating results of the Group for the reporting period by geographical segments. Unit: RMB million

31 December 2015 Geographical Segments

Total assets (1) Amount Proportion (%)

2015

Total liabilities (2) Amount Proportion (%)

Profit before tax Amount Proportion (%)

Yangtze River Delta Pearl River Delta and West Strait Bohai Rim Central region Western region Northeastern region Head Office Hong Kong Inter-segment adjustment

1,099,815 752,965 1,114,688 617,426 557,507 93,262 2,622,096 241,411 (1,984,859)

21.5 14.7 21.8 12.1 10.9 1.8 51.3 4.7 (38.8)

1,090,635 751,135 1,099,277 609,986 551,901 92,311 2,354,458 215,502 (1,962,609)

22.7 15.6 22.9 12.7 11.5 1.9 49.0 4.5 (40.8)

9,427 (157) 11,354 8,280 5,855 198 17,819 2,210 —

17.2 (0.3) 20.6 15.1 10.6 0.4 32.4 4.0 —

Total

5,114,311

100.0

4,802,596

100.0

54,986

100.0

Notes: (1)

Excluding deferred income tax assets.

Excluding deferred income tax liabilities.

(2)

Unit: RMB million

31 December 2014 Total assets Amount Proportion (%) (Note)

Geographical Segments

2014

Total liabilities Amount Proportion (%)

Profit before tax Amount Proportion (%)

Yangtze River Delta Pearl River Delta and West Strait Bohai Rim Central region Western region Northeastern region Head Office Hong Kong Inter-segment adjustment

832,355 567,700 916,047 510,466 468,004 89,173 1,946,061 199,498 (1,399,806)

20.2 13.7 22.2 12.4 11.3 2.2 47.1 4.8 (33.9)

828,692 564,494 906,031 503,804 460,468 88,544 1,742,187 178,132 (1,400,883)

21.4 14.6 23.4 13.0 11.9 2.3 45.0 4.6 (36.2)

6,468 2,260 8,516 7,716 8,316 331 18,135 2,832 —

11.9 4.1 15.6 14.1 15.2 0.6 33.3 5.2 —

Total

4,129,498

100.0

3,871,469

100.0

54,574

100.0

Note:

Excluding deferred income tax assets.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Business Overview Corporate Finance Business Business Overview During the reporting period, the Bank made resolute efforts to “grow and expand” its corporate finance segment amid the implementation of its strategy on becoming the “bank offering the best comprehensive finance services”, and guided corporate finance business bank-wide to take the path of rapid healthy growth with a clear-cut and firm stand. Great efforts were made to build a service model driven by the two wheels of “Big Asset Management + Big Transactions”, i.e., integrate existing corporate finance products, enhance innovation of product and business models, and improve interoperability of marketing and service channels, so as to construct a “Big Asset Management + Big Transactions” corporate finance product and service system that will leverage the Bank’s advantages in resource integration and upgrade its integrated corporate finance service capacity. During the reporting period, the Bank realized RMB67.983 billion operating income from its corporate finance business, accounting for 48.55% of its total operating income, and RMB5.104 billion non-interest income from corporate finance, 13.19% of the Bank’s total non-interest income. In face with the enormous pressure resulting from economic downturn and the intensifying peer competition, the Bank faced up to challenges, and grasped available opportunities. As a result, the Bank ranked No.1 among peers1 in terms of both overall scale and incremental amount of corporate deposits, leaving peers further behind and thus consolidating its market leadership. As at the end of the reporting period, the Bank recorded 553,900 accounts of corporate deposit customers, up 11.45% over the end of the previous year, and RMB2,529.291 billion balance of corporate deposits, up 12.64% over the end of the previous year. During the reporting period, the daily average incremental corporate settlement deposits of the Bank exceeded RMB90 billion, taking up over 40% of total daily average incremental corporate deposits; and the daily average balance and periodend balance of corporate deposits both exceeded RMB800 billion. During the reporting period, the Bank made active efforts to reinforce the target-sector guidance and the investment-orientation management of its corporate business, focusing on guiding investment of assets in key sectors, pillar industries and emerging industries in the transformation of the national economy. Further combing its asset management product system led to successful launch of innovative products including “CITIC Zibao (Zhaocaibao Model)” (中信資寶「招財寶模式」) and joint lending. Meanwhile, the Bank improved its credit resource management model, boosted its high-quality asset marketing and reserve, and effectively responded to the “asset shortage” in a proactive manner, providing a solid guarantee for the steady and healthy development of its corporate asset business. As at the end of the reporting period, the Bank’s corporate loan balance registered RMB1,714.792 billion, an increase of RMB189.826 billion or 12.45% over the end of the previous year, of which the balance of Renminbi corporate general loans registered RMB1,597.900 billion, a growth of RMB187.138 billion or 13.27% over the end of the previous year.

Balance of Corporate Deposits RMB 100 Million 30,000

Balance of Corporate Loans RMB 100 Million

12.64%

20,000

25,292.91

12.45%

18,000

17,147.92

25,000 22,455.36

16,000

20,000

15,249.66

14,000

12,000 15,000 10,000

10,000 2014 End

2015 End

8,000 2014 End

Refer to the 9 domestic medium-sized joint-stock commercial banks including CITIC Bank, China Merchants Bank, China Minsheng Bank, Industrial Bank, Shanghai Pudong Development Bank, China Everbright Bank, Huaxia Bank, Ping’an Bank, and Guangdong Development Bank.

2015 End

Management Discussion and Analysis

During the reporting period, the Bank made proactive efforts to shape a new brand image of its corporate business. Centering on enterprise transaction behavior and transaction chains, and by integrating 6 sub-brands, over 150 basic products and 16 unique products, the Bank launched its “Transaction +” brand based on the philosophy of “beyond just finance” and became the first commercial bank in China to establish its own exclusive brand for transaction banking. In the “5th Competition for the Title of Financial Service Provider Most Trusted by Chinese Trade Enterprises” jointly run by the Trade Finance magazine and SINOTF.com, CITIC Bank won “The 2015 Brand of the Year for Best Transaction Banking”.

Stratified Customer Management in Corporate Banking Business During the reporting period, the Bank classified its corporate customers into five categories, namely, Head Office strategic customers, branch strategic customers, institutional customers, ordinary enterprise customers, and small enterprise customers. During the reporting period, the Bank concluded strategic cooperation agreements with over 20 customers including China Mobile Communications Corporation, State Development & Investment Corporation, China State Shipbuilding Corporation, and Greenland Holding Group Company Limited, framing long-term partnerships with such customers. As at the end of the reporting period, daily average balance of deposits from core Head Office strategic customers of the Bank stood at RMB205.119 billion, an increase of RMB27.567 billion or 15.53% over the end of the previous year. For the reporting period, net operating income from such core strategic customers reached RMB5.771 billion, an increase of RMB550 million or 10.54% over the previous year.

Institutional Banking During the reporting period, the Bank formulated its Three-Year Plan for Development of Institutional Banking Business, decided to develop a professional smart business model for institutional customers, deepened partnership with institutional customers in areas such as public finance, social security, land and resources, housing and urban/rural construction, tobacco, medical care, and education. Strategic cooperation agreements were signed with the University of International Business and Economics and the Central University of Finance and Economics. The Bank also facilitated nearly 20 of its branches to enter into strategic cooperation agreements with their municipal (district) governments and key institutional customers in their localities. CITIC Bank is one of the first pilot banks to operate online the MOF project on electronic payment of non-tax fees and the Ministry of Public Security project on cross-province payment of driving penalties. It implemented governmentsponsored fund projects in over 10 cities, organized PPP publicity programs together with more than 20 of its branches and the local governments concerned, and helped put in place numerous key PPP projects that were of substantial market influence. All these enabled the Bank to enjoy brand competitiveness in integrated services for governments. As at the end of the reporting period, the Bank recorded in total 25,800 institutional customers of all types, achieved RMB838.204 billion average daily balance of deposits from institutional customers, which, accounting for 36.30% of the average daily balance of corporate deposits of the Bank and representing an increase of RMB129.743 billion over the previous year, exceeding the average growth rate of corporate deposits of the Bank.

Trade Finance Business1 During the reporting period, the Bank focused its efforts on further promoting the application of E-supply chain finance. Based on the Haier Group project, the Bank marketed key projects including the projects for the Affiliated Hospital of Qingdao University and Samsonite, and served more than 1,500 accounts of online customers. Low-cost finance channels were expanded and double-factor factoring business cooperation agreements were concluded with multiple banks. Thanks to more vigorous product innovation, the Bank successfully launched export outright sale prepaid gold factoring, property financial leasing factoring, parallel import of automobiles, and good-brand second-hand car business, etc. Among others, auto finance business, as a “Big Individual Product” in the Bank’s “transaction banking” brand system, enabled the Bank to be named the “Bank of Best Auto Finance Service in China” for a second time in a row on the 2015 China Auto Finance Award Ceremony and won the “Award for Innovation in Auto Finance Service” at the Annual Conference of the China Automobile Circulation Association and the “Bank for Best Corporate Auto Finance in 2015” in the competition for the 2015 China Auto “Golden Engine” award. The Bank was the only one in the banking industry to harvest all the three coveted honors and thereby maintained its status as an industry leader in this regard. As at the end of the reporting period, domestic trade finance business of the whole bank registered a cumulative finance volume of RMB749.055 billion, an increase of RMB40.390 billion or 5.70% over the end of the previous year; and achieved total deposit balance of RMB179.326 billion, an increase of RMB37.055 billion or 26.05% over the end of the previous year. 1

Trade finance business includes supply chain finance, factoring finance and bill pool pledge finance.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Cash Management During the reporting period, the Bank launched multiple innovative “E-finance/asset” products including its online open wealth management project “Mobile Housekeeper”1, entrusted loan “Housekeeper” and cross-border “Housekeeper”, initiated construction of the bank-bank direct link project with CNCBI, and online operated “E-channel” bank-enterprise direct link projects with group corporations represented by CITIC Group, China Telecommunications Corporation and China Mobile Communications Corporation. These combined to help the Bank become a bank enjoying partnership with “Three-Large and One-High”2 Customers. With its “E-finance/asset” business, the Bank provided standard fund management solutions to small and medium enterprises, expanded its corporate customer group by batches, and boosted customer activity in a continuous manner. Seven product series were launched for B2B E-commerce, namely, “Commerce-Business All In One”, “Centralized Procurement All In One”, “Bid-Tender All In One”, “Fund Raising All In One”, “Benefits for People All In One”, “Crossborder Business All In One”, and “Bank-Securities All In One”. With its advanced B2B E-commerce product system and excellence in business innovation, the Bank won from China Financial Certification Authority (“CFCA”) the “2015 Award for Best Innovation in E-Commerce Business in China” and from the China Internet Association the “2015 Award for Internet Finance Innovation in China”. As at the end of the reporting period, the number of accounts of cash management customers of the Bank reached 296,400, representing an increase of 65,800 accounts or 11.03% over the end of the previous year. For the reporting period, the volume and number of cash management transactions reached RMB56.07 trillion and 48.1205 million respectively, up 47.36% and 3.0227 million transactions or 6.71% over the previous year respectively. The transaction substitution rate of cash management reached 64.33%. The “Mobile Housekeeper” recorded a cumulative sales value of RMB13.121 billion, a holding amount of RMB1.604 billion, and 5,390 accounts of contractual customers including 3,279 new customers. Compared with that before online product operation, daily incremental deposit from all contractual customers went up by RMB12.157 billion. The “Mobile Housekeeper” also generated RMB10.85 million intermediary fees. In addition, the Bank recorded a cumulative number of 217 B2B e-commerce projects, an increase of 109 projects over the end of the previous year; registered 40,900 accounts of trading members; realized 440,700 transactions with a total value of RMB106.088 billion; and pushed up daily average deposit of enterprise customers to RMB1.253 billion.

Asset Custody During the reporting period, the Bank grasped market opportunities and closely followed hot trends in the market, thereby further consolidating its advantages in “Big Individual Products” and maintaining its leading competitiveness in areas such as publicly offered funds and asset management products from securities brokerages. Throughout the whole year, 16 new publicly offered funds were under custody by the Bank. Except for Yu-E-Bao, all other funds achieved 101.86% growth in scale over previous year. The scale of publicly offered funds under custody by the Bank totaled RMB795.427 billion, ranking No.1 among all joint-stock banks and No.3 in the banking industry. Asset management products from securities brokerages recorded RMB1.35 trillion, growing by 30.25% over the previous year, ranking No.2 in the banking industry. Wealth management of the Bank progressed hand-in-hand with wealth management by local commercial banks, achieving a combined scale of RMB774.892 billion, up 53.58% over the previous year, of which wealth management by local commercial banks exceeded RMB200 billion, recording a historical high. As at the end of the reporting period, assets under the Bank’s custody reached RMB4.855224 trillion, an increase of 38.81% over the end of the previous year, of which online annuity custody amounted to RMB39.304 billion, up 38.73% over the end of the previous year, in which business area the Bank recorded 673 enterprise annuity customers, an increase of 17.45% over the end of the previous year, and 167,342 personal pension accounts, an increase of 71.89% over the end of the previous year. During the reporting period, the Bank realized commission fee of RMB2.228 billion from custody and other entrusted businesses, an increase of 46.39% over the previous year.

Mobile Housekeeper is an open non-risk-assuming corporate wealth management product sold at the Bank’s cash management customer terminal.

“Three-Large and One-High” refers to large industries, large customers, large projects and high-end individual customers.

Management Discussion and Analysis

Small Enterprise Finance Business During the reporting period, the Bank developed its small enterprise finance business in a prudent manner and put in place multiple measures at the same time to prevent, control and dissolve credit risk. As at the end of the reporting period, the Bank registered RMB31.330 billion balance of loans to small enterprises, a decrease of RMB11.737 billion or 27.25% over the end of the previous year; and 5,542 accounts of small enterprise customers, representing a drop of 2,079 accounts over the end of the previous year. As at the end of the reporting period, the Bank’s non-performing loans (NPLs) in small enterprise finance stood at RMB854 million, down RMB116 million compared with the end of the previous year. Due to shrinking business scale, however, the NPL ratio thereof rose by 0.48 percentage point to 2.73%.

Retail Finance Business Business Overview 2015 marked a critical year for comprehensive execution of the second transformation of the Bank’s retail strategy. The retail finance segment firmly implemented the bank’s new strategy, consolidated the three concepts of customer management, better input-output efficiency and perseverance, pushed forward its second transformation on all fronts, and committed itself to developing a retail bank that is characterized by “first-class customer experience, first-class profit growth, and first-class brand image”. As at the end of the reporting period, the number of personal customers of the Bank reached 57.9792 million accounts, up 16.18% over the end of the previous year; the balances of personal deposits and personal loans recorded RMB465.535 billion and RMB649.764 billion respectively, up 2.53% and 20.66% over the end of the previous year respectively; and AUM1 of personal customers registered RMB1,078.765 billion, up 17.51% over the end of the previous year. During the reporting period, sales of personal wealth management products that were developed and sold by the Bank totaled RMB2,932.503 billion, up 42.15% over the previous year; agency sales of publicly offered funds and collective wealth management products from securities brokerages amounted to RMB533.862 billion, up 220.10% over the previous year; and paid-up premiums from agency sales of insurance amounted to RMB27.405 billion, up 141.31% over the previous year. During the reporting period, the Bank achieved RMB32.373 billion operating income and RMB17.198 billion non-interest income from retail finance respectively, accounting for 23.12% of its total operating income and 44.43% of its total non-interest income, respectively.

Trading Volume of Credit Cards

Balances of Personal Loans RMB 100 Million

RMB 100 Million 10,000

20.66%

8,000

33.08%

9,000 7,000

6,497.64

6,000

8,080.81

8,000 7,000

5,385.12

6,000

5,000

6,072.02

5,000

4,000

4,000 3,000

2,000

3,000

2014 End

2015 End

2,000 2014

2015

AUM is an indicator for measurement of the scale of asset management for personal customers. It includes the balances of Renminbi and foreign currency deposits (including risk-assuming wealth management and personal structured wealth management), balances of Renminbi and foreign currency wealth management, fund volumes (including funds on the way), balance of government bonds, paid-up insurance premiums (temporarily using the first-year annualized insurance premium before system improvement), third-party depository margins, entrusted personal deposits, and margins for trading in precious metals.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Wealth Management and Private Banking During the reporting period, in its wealth management and private banking business, the Bank focused on the customer demand to improve its product, service and marketing support systems in a continuous manner. Proactive efforts were made to innovate business models, enrich differentiated product systems, expand overseas markets, and gradually refine its overseas business platforms. Development of professional wealth management teams was intensified to effectively upgrade professional quality and comprehensive business competency of the teams. Further, by leveraging the competitive edges of CITIC Group in financial services, the Bank set up the CITIC Wealth Index. More work was done to publicize the CITIC wealth management brand. Meanwhile, the Bank integrated competitive resources of CITIC Group in brand, products, services and channels to actively expand its overseas businesses. As at the end of the reporting period, the number of individuals who held VIP accounts at the Bank each with at least RMB500,000 AUM reached 428,296 accounts, representing an increase of 63,816 accounts or 17.51% over the end of the previous year; and the AUM balance of VIP customers reached RMB755.843 billion, up RMB128.669 billion or 20.52% over the end of the previous year. Private banking customers each with at least RMB6 million AUM at the Bank reached 17,069 accounts, representing an increase of 3,426 accounts or 25.11% over the end of the previous year; and the AUM balance of private banking customers stood at RMB259.568 billion, representing an increase of RMB58.004 billion or 28.78% over the end of the previous year.

Customer Management During the reporting period, the Bank focused on building the “CITIC Red” comprehensive marketing system. With the use of the portfolio approach that provided “product allocation + marketing events + bonus points + brand boost” to customers that were managed by stratum and group, the Bank satisfied customer needs for diversified financial services, and upgraded customer experience. This, with reinforcement of the service concept that “CITIC Bank fulfills Happy Dreams”, kept enhancing reputation of the Bank’s retail brand. With regard to the management of customer groups, the Bank continued its adherence to the business concept known as “three cards & one fund”, whereby it continued to manage its customers by the four unique groups of females, the middleaged and seniors, young white-collars, and those in need of going-abroad finance, mainly via its Fragrant Card, Happy Elderly Card and Elites Card, and improved product rights/interests and portfolio of financial products. In its going-abroad finance business, the Bank boosted and consolidated its business advantages in multiple areas including products, services, channels, human resources, systems and marketing activities, and compiled and released China’s first white paper on assessment indexes regarding going abroad agencies. As at the end of the reporting period, thanks to its continuous management efforts over years, the Bank recorded more than 6 million accounts of Fragrant Card users, 2 million accounts of Happy Elderly Card users, and over 2 million accounts of new customers that used the Elites Card in the first year of the card launch. The AUM of “three cards & one fund” customers took up over 60% of the Bank’s total AUM balance of all individual customers.

Management Discussion and Analysis

Personal Loan During the reporting period, the Bank followed the major trend of consumption upgrade in China and grasped the development opportunities available at the personal loan market to further improve its product marketing system, risk control operation system and resource allocation and assessment system. Specifically, the Bank attached equal attention to “business volume” and “highlight products”. Targeting residential properties of customers, a core quality asset for credit grant, the Bank innovated and optimized its “loans secured by residential properties”, interconnected consumption and business purposes, improved risk controls, and expanded “business volume”. “Loans secured by residential properties”, an outstanding product in peer competition, won the title of “Innovation Award for Top Ten Financial Products” from The Banker magazine of China. Meanwhile, the Bank made great efforts to develop “highlight products” such as consumer auto finance, online credit loans and loans backed by collateral of financial assets, which created new engines for business growth and led to sound market results. In parallel with further development of its product marketing system, the Bank initiated the construction of a “credit factory” for consumer loan business, which, by creating automated or electronic business processes and successfully operating the new retail loan management system online, reinforced the support of the system to business development of the Bank. As at the end of the reporting period, the Bank recorded a loan balance of RMB474.321 billion for personal loan 1, up RMB61.662 billion or 14.94% over the end of the previous year. 303,800 persons became customers of newly granted loans, and average retail loan products per customer recorded 5.42 products, an increase of 0.47 product over the end of the previous year.

Credit Card During the reporting period, in line with the business philosophy of “smart development”, the Bank made proactive efforts to explore innovative operation models of credit card business based on the Internet and big data, and boosted its market brand influence through cross-sector cooperation. The Bank expanded channels for customer acquisition via account innovation. The pioneering creation of credit card “Family Account” in China, a design concept of family sharing that transferred bonus points and shared rights between family members with the use of Internet technology, constituted a breakthrough of traditional models of customer acquisition and business operation. The launch of “Joint Account” was a breakthrough of “card” business concept whereby the Bank became the industry pioneer of the new “Account +” model through its successful launch of the “PhoenixMiles-CITIC Account +” and “CITIC-VariFlight Account +”. Thanks to its proactive business deployment via the mobile Internet, the Bank now owns or jointly owns more than 9 mobile Internet platforms. Of its self-owned platforms, “CITIC Card Mobile Banking” accumulated 3.6343 million log-on APP users, socialized platforms accumulated more than 30 million users in total, and the number of both CITIC Bank mobile QQ and CITIC Bank WeChat media platform users exceeded 10 million, making the Bank the first financial institution in the industry to attract more than 10 million users for both its mobile QQ and WeChat media platform. In its continuing promotion of cross-sector cooperation, during the reporting period, the Bank carried out a series of Internet financial innovations in partnership with Baidu, Alibaba, Tencent, JD.com and SF Express. The successive launch of five core products, namely, CITIC Bank–Tencent Q Card, CITIC Bank–SF Card, CITIC Bank–Taobao V Card, CITIC Bank– JD White Card, and CITIC Bank–Cash Back Card, endeavored to offer customers perfect experience and therefore further consolidated the pioneering advantages of the Bank in credit card Internet finance. To boost customer experience in using CITIC Bank cards overseas, the Bank launched a series of overseas services, including, among others, overseas emergency agency card making, overseas emergency cash withdrawal, and guarantee for tax refund. When a customer loses his/her CITIC Bank credit card overseas or is unable to use his/her CITIC Bank credit card overseas due to reasons such as demagnetization, he/she may apply for these services by calling the Bank’s customer service hotline. Within 24 hours after receiving the call, the Bank will arrange the customer to withdraw cash at a designated bank or mail an agency made card to the customer-designated receiving address.

Personal loan covers loans granted to natural persons including home mortgages, loans for business premises, private auto loans, education loans, comprehensive consumption loans, personal business loans and personal online loans.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

As at the end of the reporting period, the Bank issued a cumulative number of 30.3754 million credit cards. During the reporting period, the Bank newly issued 5.7796 million credit cards, an increase of 51.44% over the previous year; registered a credit card transaction value of RMB808.081 billion, up 33.08% over the previous year. During the reporting period, the Bank achieved rapid growth in installment payment business, with installment transactions for the whole year totaled RMB101.219 billion, up 72.63% over the previous year, successfully going beyond the RMB100 billion threshold, and business income therefrom grew by 90.53% over the previous year. For the reporting year, income from credit card business registered RMB19.480 billion, representing a growth of 46.58% over the previous year. As such, the Bank entered a brand new stage of business profitability.

E-banking The Bank continued to promote two-way balanced development of “Internet-based financial services” and “finance-based Internet business” during the reporting period. Efforts were made to speed up the strategic layout in Internet finance, uphold financial innovation and create competitive edges. As a result, the Bank enjoyed rapid growth in all E-banking indicators, applied cross-sector integration as a new driving force, and improved its comprehensive contribution on all fronts. With regard to the Internet-based financial business, the Bank accelerated its business deployment along the E-channel “Express Way”, harvesting impressive results such as significant upgrading of product online operation ratio and customer experience, marked increase in channel capacity, growing comprehensive contribution, effective mitigation of counter service pressure, saving of operating cost and extension of the service radius. (1) The Bank rapidly upgraded and innovated its mobile banking and kept enriching the application scenarios, winning multiple honors including the “2015 Best Mobile banking in China”. (2) Personal online banking version 6.0, the “Insurgent” of online banking successfully launched online during the year, brought along brand new user experience and won numerous honors such as the “2015 Award for Outstanding Innovation in Online Banking”. (3) WeChat banking version 2.0, since its successful online launch, has become an important front for customer service and management. (4) The Bank completed all-round upgrading of its electronic accounts, greatly improving its ability to acquire customers online. As at the end of the reporting period, personal Internet banking customers of the Bank numbered 18.0319 million accounts, representing an increase of 29.66% over the end of the previous year; and mobile banking customers of the Bank totaled 12.7273 million accounts, an increase of 97.23% over the end of the previous year. During the reporting period, the turnover of personal Internet banking transactions stood at RMB11.48 trillion, up 28.06% over the previous year; the value of mobile banking business recorded RMB1.14 trillion, 8.82 times higher than the previous-year figure; and the transaction substitution rate of personal E-banking reached 96.13%, up 2.98 percentage points over the previous year. In respect of finance-based Internet business, the Bank strove to win a greater share from the acquiring business market using Internet finance as the breakthrough point and focusing its efforts on mobile finance. During the reporting period, the Bank (1) launched “CITIC Bank E Payment”, an Internet-based innovative mobile finance product that provides online services for order, sales, payment and receipt between enterprises at both upper and lower streams of the supply chain on the basis of mobile customer terminals and thereby realizes “integration of four flows”, namely, commodity flow, information flow, fund flow and logistics flow; (2) launched “Cross-Border Pay”, a cross-border e-commerce payment product, thereby becoming the first commercial bank in China to possess “total-process, all-currency and fully online” cross-border e-commerce financial service capacity. As at the end of the reporting period, the Bank recorded RMB4.347 billion transaction turnover in its cross-border foreign exchange payment business. On the day of the “11 November” shopping frenzy, the Bank took up 60% of the AliPay business relating to overseas online shopping, achieving 3.5 times growth in business scale over the previous year; (3) Launched the CITIC “QuickPass” product, i.e., after a CITIC Bank card holder applies for a Cloud Card via the Bank’s mobile banking customer terminal and activates the Cloud Card, he or she can use his or her mobile phone to pay on any POS device labeled with “UnionPay QuickPass”; (4) Launched e-channel exclusive wealth management services to create the unique brand “CITIC Bank Wealth Management Evening”, which covers the two product categories of Shouyibao and Wenjianbao and satisfies differentiated wealth management needs of different customers. During the reporting period, the Bank achieved nearly RMB390 billion agency sales of wealth management products on its mobile banking. During the reporting period, as an active response to the call of the government strategy “Internet +” for innovation and practice, the Bank jointly sponsored the establishment of Baixin Bank in partnership with Baidu, and is undergoing the formalities for regulatory approval of the application thereof. With Baixin Bank expected to become the first direct banking firm established in China as an independent legal entity, this initiative has created a brand new model of cross-sector cooperation between a traditional financial institution and an Internet company.

Management Discussion and Analysis

Financial Market Business Business Overview In 2015, the Bank developed its financial market business centering on the strategic positioning of becoming “the bank offering the best comprehensive finance services” and aiming at diversification of finance and growth in business income. Targeting the money market, the capital market and the international finance market, the Bank grasped available market opportunities, intensified innovation, and optimized business models, harvesting steady progress in all business areas and continuous improvement of operating results. During the reporting period, the Bank realized RMB44.661 billion operating income from its financial market business, accounting for 31.90% of its total operating income, and RMB16.668 billion non-interest income from the same business, accounting for 43.06% of its total non-interest income.

Financial Market Business During the reporting period, the Bank continued to practice the prudent fund management principle and strategy and put into full play the financing functions of money market instruments such as Renminbi inter-bank lending/borrowings and bond repos, which, while meeting the Bank’s requirements of liquidity management, also improved returns on short-term fund operation. In addition, the Bank made flexible use of the Central Bank’s innovative products and tools, transmitted intentions of monetary policy in a correct manner, and diligently performed its duties and responsibilities as a tier-one trader at the open market. In addition, the Bank actively developed its inter-bank deposit certificate business, and sped up the innovation of large-sum deposit certificate products, so as to expand the sources of active liabilities. Moreover, the Bank earnestly performed its responsibilities as a core member of the market interest rate pricing self-regulatory mechanism to promote development of innovative business. In face with substantial fluctuations of the exchange rate market during the reporting period, the Bank made comprehensive use of innovative exchange rate portfolio products including spot/ forward forex sales and purchase and options to satisfy customer needs for value preservation of enterprise finance, forex receipt and payment risk hedging and liabilities management. As a result, the Bank was able to provide customers with a pertinent multi-layer product series and promoted the awareness of its “anti-risk” products. Thanks to its active participation in inter-bank market transactions and performance of duties and responsibilities as a market maker, the Bank was able to maintain its Top 3 comprehensive ranking in the inter-bank foreign exchange market spot market making business. Further, the Bank continued to push forward the development of gold leasing and proprietary trading in precious metals, with both businesses realizing a rapid growth during the reporting period. Continuing its market leadership in the ranking of proprietary gold trading, the Bank also obtained PBOC’s approval of its qualification for gold import and thus subsequently ended its history of zero gold import.

Recruiting Scale of Wealth Management Products

Volume of Import and Export Foreign Exchange Receipts and Payments RMB 100 Million

100 Million USD

73.66%

50,000

5,000

44,728.78 3.79% 40,000

4,500

3,913.48

4,000

30,000

25,756.45

3,770.65

20,000

3,500

10,000

3,000 2014

2015

2014

2015

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

In addition, the Bank further consolidated its status as a core market maker in the inter-bank bond market via its active engagement in market making and trading of multi-variety multi-maturity bonds. Based on its in-depth understanding of the macro economic trends and the policy orientation, the Bank decisively grasped opportunities available from market trends, made flexible use of multiple transaction strategies, and harvested sound interest rate trading performance while ensuring safety and liquidity. Meanwhile, the Bank took the initiative to increase customer awareness of risk management, and used interest rate products to provide customers with risk management services. Moreover, the Bank diligently expanded the connotation of interest rate business, optimized its profitability model, and effectively promoted innovative businesses such as investment consulting and bond lending. Through optimization of the credit grant process for bond/debenture investment and appropriate extension of asset duration, the Bank was able to grasp market opportunities in a proactive manner and consequently increased its asset allocation and fairly successfully locked returns on medium – to long-term assets ahead of time for its proprietary debt securities investment business in the cycle of interest rate cut. In addition, the Bank rendered active support to its bankwide business growth and served key customers while striving for higher returns on assets in its debt securities investment.

International Business During the reporting period, the Bank achieved new progress in multiple areas of its international business. In its efforts to put in practice the vision of becoming “the bank offering the best comprehensive finance services”, the international business segment insisted upon value creation and light-style development, leveraged the synergy of the financial market business and earnestly implemented the Bank’s new strategy. Rapid growth was recorded in free trade zone (FTZ) innovative finance business. As at the end of the reporting period, the Bank recorded the first transactions in multiple innovative finance areas including the FT loan payment under the four-party agreement model1 in interaction with out-of-town branches, and FT cross-border merger & acquisition loans. Real effect in application of innovative products and rapid development of cross-border guarantee business markedly drove forward growth in business income and liabilities business of the whole bank. The Bank also handled the country’s first transaction of cross-border centralized operation of Renminbi funds under the multi-fund-pool model. The Bank promoted its business internationalization and overseas business network in an orderly manner. Its London Representative Office was established in April 2015, followed by the initiation of preparation for its London Branch with conditions ready for application to the CBRC on administrative licensing of the branch. The Bank gained administrative licensing from the CBRC for its application to set up its Sydney Representative Office in November 2015 and is pushing forward the application and establishment process for the Sydney Branch2. During the reporting period, the Bank achieved USD391.348 billion in import and export foreign exchange receipts and payments, up 3.79% year-on-year, for which indicator the Bank maintained its peer leadership, ranking No.1 among all joint-stock commercial banks.

Investment Banking In 2015, closely following the strategic goal of becoming “the bank offering the best comprehensive finance services”, the investment banking business line bank-wide proactively responded to changes in market competition, reinforced product innovation, continued to improve its capital intermediary services, and kept upgrading its profit making capability, resulting in continuous, steady and healthy business growth. With the launch of innovative products such as property front-end finance and private equity investment funds, the Bank further enhanced its capacity of serving large-scale customers and conducting investment banking business. During the reporting period, the Bank’s investment banking business realized RMB9.360 billion net operating income, up 53.81% over the previous year, recorded RMB3.256 billion operating income from capital-saving business, up 30.45% over the previous year, and achieved the incremental funds from financing of RMB800.891 billion for investment banking, up 42.21% over the previous year.

Interbank Business During the reporting period, the Bank upheld the focus on customer service in its inter-bank business and realized balanced development of “quality, scale and profitability”. Both the width and depth of its cooperation with mainstream financial institutions were upgraded thanks to further improvement to its stratified marketing system, enrichment of product varieties, and building of service capacity. During the reporting period, the Bank kept enhancing its business cooperation with large financial institutions, concluding head-office to head-office cooperation agreements with over 20 large financial institutions. Meanwhile, the Bank continuously deepened its comprehensive services to local commercial banks establishing partnership with 728 local commercial banks cumulatively. With steady professional capacity building in serving non-banking financial institutions, the Bank successfully qualified by the Shanghai Futures Exchange to conduct futures margin depositary business, and thereby became a bank holding all the available licenses for futures margin depositary business. In addition, the Bank became the 8th commercial bank acquiring associate membership of China Futures Association. The number of partner futures companies that used the Bank’s system to provide bank-futures-company money transfer and fund inflow/outflow services to their customers and other futures companies grew by 91.12% over the beginning of the year. 1

It enabled successful linkage between asset projects outside the FTZ and low-cost assets inside the FTZ.

In March 2016, the application for establishment of Sydney Representative Office of the Bank gained approvals and licensing by relevant regulatory authorities of Australia.

Management Discussion and Analysis

As at the end of the reporting period, the Bank’s balance of Renminbi and foreign currency denominated inter-bank assets (including deposits and placements with financial institutions) reached RMB163.076 billion, an increase of RMB33.577 billion or 25.93% over the end of the previous year; while its balance of Renminbi and foreign currency denominated interbank liabilities (including deposits and placements from financial institutions) registered RMB1,102.029 billion, an increase of RMB384.964 billion or 53.69% over the end of the previous year.

Special Business Area: Wealth Management Business In 2015, the Bank committed itself to achieving better refined management and greater profit-making capability and upgrading the level of resource allocation and liquidity management in wealth management. Aiming at “returning wealth management to the essence of asset management”, the Bank achieved scale breakthrough in wealth management direct financing instruments and net-worth products, actively promoted innovative business models such as equity investment products, dual-currency structured products and quantitative products, and guided comprehensive transformation of its wealth management business to asset management, so as to lay a good foundation for improvement of service capacity in asset management. During the reporting period, the Bank earned RMB7.847 billion business income from wealth management in all definitions, up 70.57% year-on-year, and generated a yield of RMB29.906 billion for customers, up 36.71% year-on-year. During the reporting period, the Bank’s cumulative sales of wealth management products in all definitions reached RMB4.472878 trillion, up 73.66% over the previous year, of which wealth management products developed and sold by the Bank amounted to RMB3.894098 trillion and agency sales of wealth management products recorded cumulative proceeds of RMB578.779 billion. As at the end of the reporting period, ongoing wealth management products of the Bank in all definitions totaled RMB954.352 billion, representing an increase of RMB371.318 billion or 63.69% over the end of the previous year, of which ongoing wealth management products developed and sold by the Bank amounted to RMB853.703 billion, and agency sale of ongoing wealth management products registered cumulative proceeds of RMB100.649 billion. In face with the “Golden Stage” of development for asset management business, the Bank finalized the master program on “transforming its asset management unit from a department at the Head Office to an undertaking first and then to a subsidiary”. During the transitional period, the Asset Management Undertaking Department made reference to corporate models in its operation, relatively independent from the Bank in its personnel, finance and risk management.

Service Quality Management The Bank reinforced the development of its bank-wide service systems by intensifying training, inspection, assessment of services and subsequent results announcement at both the Head Office and the branch levels, plus internal and external publicity efforts. In the competition for the “100 Best Role Model Units” of standard high-quality services in the Chinese banking industry, the Bank harvested the best results since its establishment. With 9 outlets winning this honor, the Bank ranked No.1 among all joint-stock banks in terms of the number of units placed on the role model list, and consequently won from the China Banking Association (CBA) the “2015 Award for Outstanding Provision of Standard High-quality Services”. In the 2015 campaign of the Chinese banking industry for dissemination of financial knowledge “10,000-mile Journey for Financial Literacy”, the Bank made full use of media platforms and organized publicity events via its physical outlets, communities and enterprises, achieving very positive social impact. As a result, the CBA granted the Bank the “Award for Best Achievements in the 2015 10,000-mile Journey for Financial Literacy”. Moreover, the Bank was the only joint-stock commercial bank rated Grade II by the CBRC in the latter’s first ever assessment of consumer rights protection, the highest rating in the 2015 assessment exercise.

Integrated Financial Service Platform of CITIC Group During the reporting period, the Bank further implemented the strategy of becoming “the bank offering the best comprehensive finance services”. Particularly, the Bank put into play the business synergy platform between itself and subsidiaries of CITIC Group such as CITIC Securities, CITIC Trust, China Securities, CITIC-Prudential Life Insurance, CITIC Industrial Fund, Tianan Property Insurance, CITIC Futures and CITIC Industrial Investment and that between itself and its subsidiaries including CNCBI and CNCB Investment, boosted business operation and information sharing, and constructed joint marketing and service systems. All these helped the Bank form its unique competitive advantages.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

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Sharing of channel resources was reinforced. The Bank reinforced its cooperation with subsidiaries of CITIC Group such as CITIC Securities, CITIC-Prudential Life Insurance, Tianan Property Insurance, CITIC-Prudential Fund Management, CITIC Real Estate, CITIC Tourism and CITIC Press for sharing of channel resources. Through agency product sales at physical outlets and via online banking channels, the Bank strove to build a “customer focus” valueadded service platform for its retail customers.

During the reporting period, via its physical outlets and online banking channels, the Bank as an agency sold 17 products of CITIC Securities and China Securities totaling RMB1.295 billion in value, 70 products of CITIC-Prudential Life Insurance and Tianan Property Insurance valued at RMB15.773 billion in total, 76 products of CITIC-Prudential Fund Management and China AMC totaling RMB254.736 billion in value, and also as an agency the Bank recommended RMB16.494 billion products for CITIC-CP Asset Management. In addition, CITIC Securities, CITIC-Prudential Life Insurance, CITIC Futures, CITIC-Prudential Fund Management, CITIC Real Estate, CITIC Tourism and CITIC Press also shared their institutional and outlet resources with the Bank by means of mutual access to outlets, joint organization of marketing events and display of publicity materials.

•

Boosted business cooperation: through joint research and development (R&D) and joint marketing, etc., the Bank carried out in-depth cooperation with financial subsidiaries of CITIC Group in areas including wealth management products, third-party depositary services, custody, bond underwriting, enterprise annuity and co-brand cards and thereby provided customers with integrated financial services in all aspects.

R & D of wealth management products: The Bank researched and developed 463 wealth management products and realized RMB281.753 billion sales revenues thereof in cooperation with CITIC Securities, CITIC Trust and CITICCP Asset Management.

Third-party depositary business: The Bank shared 3,309 institutional customers in third-party depositary business and 569,100 individual customers with CITIC Securities, CITIC Securities (Shandong) and China Securities.

Custody business: The Bank cooperated extensively with CITIC Securities, CITIC Trust, CITIC-Prudential Fund Management and CITIC-Prudential Life Insurance in areas such as asset management for securities brokerages, fund, trust, insurance, PE and annuities, with the balance of custody for cooperation projects within CITIC Group reaching RMB328.080 billion, and custody commission income amounting to RMB178.4408 million during the reporting period, of which intra-group annuity cooperation registered 601 accounts of customers and RMB19.481 billion business scale.

Bond underwriting: The Bank, in partnership with CITIC Securities and China Securities, jointly underwrote RMB37.1 billion debt financing tools for customers through underwriting of short-term commercial papers, medium-term notes and asset-backed securities. As one of the lead underwriters, the Bank underwrote RMB3 billion super-short-term commercial papers for CITIC Corporation Limited.

Co-brand credit cards: The Bank has issued a cumulative number of 46,700 “CNCB/CITIC-Prudential Co-brand Credit Cards” and 202,500 “CNCB/Loyalty Co-brand Cards” in respective cooperation with CITIC-Prudential Life Insurance and CITIC Loyalty.

Information Technology During the reporting period, the Bank successfully commissioned more than 10 key strategic projects, enormously lifting bank-wide capacity for application of science and technology. (1) The Bank realized, as scheduled, switch and commissioning of its new core system across the board in one go covering all business lines on 10 May 2015. Since then, the system has been in stable operation and markedly improved processing efficiency. Its customer-focus design of customer information and account structure improved customer and user experience and upgraded counter service efficiency by more than 40%. Its parameterbased product design reduced delivery cycle of general new products by nearly 50% in comparison with the old system. (2) The Bank harvested early fruits in the construction of its enterprise-level data platform and environment, realizing bank-wide sharing of information, supporting data mining, analysis and application in retail banking, and improving accuracy of information on risk monitoring and anti-money laundering. (3) The Bank revised its mobile banking and personal online banking systems and produced the updated versions that were characterized by peer leadership in advanced functionalities and customer experience and rapid growth in transaction volumes. (4) The Bank completed all the information system construction and renovation tasks involved in the project on compliance with the New Capital Accord. (5) In proactive response to the national strategy on safety and controllability, the Bank sped up the transformation of its technology framework, carried out research and development of its big data platform and distributed database platform to match bank application features, and realized multiple functions including P2P fund supervision, historical data inquiry, integrated personal banking statement reconciliation, forensic inquiry, and RMB crown word number (serial number) inquiry.

Management Discussion and Analysis

During the reporting period, the Bank adjusted its IT organizational structure by setting up its Information Technology Management Department, Software Development Center, and Data Center at the Head Office. The Information Technology Management Department is responsible for IT planning, framework, standards, regulations, processes and risk management. The Software Development Center and the Data Center are dedicated to development, implementation and system operation and maintenance. This adjustment effectively strengthened IT management and professional division of duties. In addition, the Bank completed its “13th Five-Year Plan” for the development of information technology, with a view to making forwardlooking arrangements for application of future new technologies, transformation of technology structure, development of infrastructure and capacity building for business operation in advance.

Domestic Distribution Channels Branches During the reporting period, with regard to outlet growth, the Bank implemented the second-transformation requirements of its retail strategy and followed the trend of developing “small, intelligent and multi-business-model” outlets, with enthusiastic efforts made to promote transformation of outlet development and optimize structural layout of outlets. In 2015, 124 boutique outlets and community (small and micro) outlets were newly built or in progress, 56.62% of the total newly built and inprogress outlets. Meanwhile, the Bank worked hard to standardize its outlets, unifying external images and service criteria of the outlets, increasing self-service device substitution rates, further facilitating transformation of its outlets from transaction/ settlement-based to marketing/service oriented. These efforts have initially given rise to a multi-business-model outlet service system that is based on smart (flagship) and integrated outlets, and supplemented by boutique outlets, community (small and micro) outlets and off-site self-service banks, which effectively enhanced the depth and width of the Bank’s outlet service coverage, and put into full play the functions of the outlets as the main marketing channel for retail banking. As at the end of 2015, the Bank had 1,353 domestic outlets, including 38 tier-one branches, 88 tier-two branches and 1,227 other outlets of various types. With the establishment of its Lhasa Branch in August 2015, the Bank completed its strategic institutional layout designed by the Head Office, covering all provinces, autonomous regions and centrally administered municipalities in China. Outlets of the Bank were distributed in 128 large and medium cities across all provinces, autonomous regions and municipalities.

Self-Service Outlets and Self-Service Terminals During the reporting period, the Bank developed its self-service terminals according to the principle of “controlling incremental terminals, mobilizing existing terminals, and upgrading capacity”. In parallel with appropriate increase of self-service terminals, the Bank focused on capacity upgrading and optimal layout rearrangement of its existing self-service terminals. As at the end of the reporting period, the Bank had established 3,160 self-service banks, up 5.79% over the previous year, and installed 11,044 self-service terminals, down 0.75% from the previous year.

Online Banking Platform Please refer to “Management Discussion and Analysis – Retail Finance Business” of this report for more details.

Telephone Banking Platform The telephone customer service center of the Bank provides customers with telephone banking services. During the reporting period, the Customer Service Center of the Bank received 126 million incoming calls, including 76.06 million automated phone answering service calls and 49.94 million manual service calls, achieving a 20-second manual response rate of 83.79%, a customer satisfaction rate of 98.10% in general, and a customer satisfaction rate of 97.57% regarding the handling of customer complaints. By actively making outgoing calls to 449,300 customers during the reporting period, the Bank’s Customer Service Center proactively provided customer care and telephone notice, etc.

Subsidiary Business CIFH CIFH was first incorporated in Hong Kong in December 1924 in the name of “The Ka Wah Savings Bank, Limited”, acquired by CITIC Group in June 1986, and restructured to become an investment holdings company after purchasing the then Hong Kong Chinese Bank Limited in 2002. The Bank successfully acquired 70.32% equity of CIFH in October 2009, and made CIFH its wholly-owned subsidiary in August 2015. The business scope of CIFH includes commercial banking and non-banking financial services.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

CIFH conducts its commercial banking business mainly via CNCBI, its wholly-owned subsidiary. CNCBI is a licensed bank incorporated and registered in Hong Kong. It has 34 branches in Hong Kong, one branch in each of Macau, New York, Los Angeles and Singapore respectively, and branches in Beijing, Shanghai and Shenzhen via its wholly-owned subsidiary CNCBI (China) Limited. During the reporting period, CIFH continued its full assistance to CNCBI in strengthening the latter’s cross-border interaction with the Bank, building the Bank’s overseas platform and developing Renminbi cross-border business. In terms of non-banking financial services, CIFH holds 40% equity interest in CIAM. CIAM is primarily engaged in private equity investment business, supplemented by fund management and consulting services. As at the end of the reporting period, with issued share capital of HKD7.503 billion, CIFH had total assets of HKD281.842 billion and net assets of HKD28.585 billion, an increase of 12.89% and 7.04% over the end of the previous year, respectively. For the reporting period, CIFH realized a net profit of HKD2.237 billion, down 25.78% from the previous year. •

CNCBI: The multiple adverse market factors that started to emerge in the latter half of 2014 continued to ferment in 2015, posing severe challenges to the annual operating results of CNCBI, which, despite the somewhat decline when compared with the robust performance of the previous year, remained satisfactory in the overall sense. For the reporting period, CNCBI achieved operating income of HKD5.834 billion, a decrease of 2.91% from the previous year, and net profit of HKD2.168 billion, a drop of 22.60% from the previous year.

In line with China’s key strategies such as “One Belt One Road”, “Going Global” of domestic enterprises and development of free trade zones, and through close cooperation with the Bank and subsidiaries within CITIC Group, CNCBI achieved new breakthroughs in cross-border business. Focus was placed on development of major customers, major industries and large projects, while continuous efforts were exerted to gradually increase the proportion of structured finance business, which resulted in expansion of asset scale and improvement in loan quality. In addition, platform execution and profit making capabilities of its overseas branches were leveraged to the full. As at the end of the reporting period, CNCBI registered a loan balance of HKD128.855 billion from its corporate and cross-border business, up 15.58% over the previous year. During the reporting period, CNCBI realized HKD2.734 billion net interest income and HKD744 million non-interest income from its corporate and cross-border business, representing an increase of 6.62% and 37.58% year-on-year, respectively.

The balance of deposits with CNCBI from personal and business customers exceeded HKD100 billion at the end of October 2015, a landmark in its history. In terms of cross-border business, CNCBI launched “Diamond Wealth Management” services in March 2015, targeting high-end customers in mainland China and Hong Kong, which symbolized its effective integration with the Bank’s cross-border business. The Bank practiced the cross-border collaboration appraisal mechanism for account witnessing service and cross-border interaction services provided by CNCBI, which further promoted retail business interaction between the two banks. Moreover, CNCBI became the first bank in Hong Kong to provide WeChat banking and fingerprint account inquiry services, which, by effectively reducing customer time spent on mobile-bank log in, greatly enhanced customer experience and leadership of CNCBI on the E-banking market. As at the end of the reporting period, deposits from personal and business customers of CNCBI recorded HKD102.601 billion, up 16.54% over the end of the previous year. During the reporting period, CNCBI realized HKD1.993 billion net operating income, representing an increase of 9.10% year-on-year.

•

CIAM: CIAM is committed to developing itself into a boutique private equity investment company that regards “PE+” equity investment as its core business and comparatively unique fund management and consulting services as a sideline. Meanwhile, CIAM closely follows the development trends of major agriculture-related industries and the New Overthe-Counter Market. Based on the former Henan Agricultural Fund, CIAM successfully implemented the Chongqing YBN Modern Agricultural Fund, a partnership between Shandong Farming and Grazing Fund and CITIC Group. A new material project of CIAM was among the first to get listed on the New Over-the-Counter Market in 2015.

CNCB Investment CNCB Investment, formerly China Investment and Finance Limited, is an overseas subsidiary of the Bank established in Hong Kong in 1984. During the reporting period, with regulatory approval, the Bank injected about RMB1.490 billion additional capital into CNCB Investment, and renamed the company from “China Investment and Finance Limited” to “CNCB (Hong Kong) Investment Limited”. At the moment, CNCB Investment has a registered capital of HKD1.889 billion. The Bank holds 99.05% and CNCBI holds the rest 0.95% equity interest in CNCB Investment. The business scope of CNCB Investment covers lending (it holds a Hong Kong money lender license), investment (mainly including fund investment, equity investment and long-term equity investment, etc.), and the conduct of overseas licensed investment banking business and domestic equity investment fund management business via its own subsidiaries.

Management Discussion and Analysis

During the reporting period, CNCB Investment successfully acquired CNCB (Hong Kong) Capital Limited (formerly known as Rocks Asia Capital Group Limited), a license holder approved by the Hong Kong Securities and Futures Commission, thereby qualified to conduct such regulated activities as Type 4 (Advising on securities), Type 6 (Advising on corporate finance) and Type 9 (Asset management), which will effectively build up the capacity of the Bank to provide comprehensive crossborder investment and finance services. In accordance with the development positioning of “building an overseas investment and finance platform that combines the Bank’s overseas licensed businesses and domestic non-licensed businesses”, CNCB Investment and its subsidiaries continued to enhance its interaction with the parent bank’s branches in different localities, leveraged its unique competitiveness that lied in the combination of its own debt finance and equity investment, and kept enhancing its product and service systems. As a result, it harvested rapid growth in its cross-border investment and finance business and fast improvement of operating results. During the reporting period, CNCB Investment realized net after-tax profit equivalent to RMB107.6802 million, up 68.29% over the previous year. As at the end of the reporting period, CNCB Investment had total assets and consolidated net assets equivalent to RMB5.289 billion and RMB1.9794929 billion, up 103.89% and 524.19% over the end of the previous year, respectively, and consolidated AUM of RMB28.300 billion (actual paid up amount).

Lin’an CITIC Rural Bank Lin’an CITIC Rural Bank, located in Lin’an City, Zhejiang Province, officially started operation on 9 January 2012. It has a registered capital of RMB200 million, with the Bank holding 51% of its equity interest and another 13 enterprises holding the rest 49%. Lin’an CITIC Rural Bank is mainly engaged in general commercial banking business. As at the end of the reporting period, Lin’an CITIC Rural Bank recorded total assets of RMB1,142.4407 million and net assets of RMB248.6759 million, an increase of 10.22% and 9.26% over the end of the previous year, respectively, customer deposit balance of RMB773.587 million, up RMB33.6741 million or 4.55% over the end of the previous year; a capital adequacy ratio of 32.56%, provision coverage ratio of 160.48%, and provision to loan ratio of 2.98%. During the reporting period, Lin’an CITIC Rural Bank realized net profit of RMB21.0811 million.

CITIC Financial Leasing Preparation for establishment of CITIC Financial Leasing started in February 2015 with approval from the CBRC. Wholly owned by the Bank, it was incorporated in the Binhai New Area of Tianjin with a registered capital of RMB4 billion and opened for business on 8 April 2015. CITIC Financial Leasing is a critical component of the strategic layout for both CITIC Group and the Bank to serve the real economy. It will strive for breakthroughs in the six major areas of environmental protection and energy conservation, clean energy, healthcare for the elderly, equipment manufacturing, urban digitalized renovation, and general aviation, in line with the strategy of “professional, market-oriented and international” development. Its first year of operation registered a rapid business growth in all areas, with unique performance in new energy which accounted for 28.92% of the business volume in operation and in which area the company concluded strategic cooperation agreements with multiple new energy industrial leaders. These enabled CITIC Financial Leasing to achieve mega partnership with competitive counterparts, win high attention and recognition from regulators and peers alike, and establish the unique CITIC Financial Leasing brand on market. With full leverage of the advantages available from the CITIC integrated platform, CITIC Financial Leasing endeavored to interact and synergize with subsidiaries of the Group and branches of the Bank, basically attaining multiple goals such as joint marketing, shared risk prevention, reciprocity and win-win. In parallel with expansion of its own customer channels, the company also drove forward rapid business growth of the Bank’s branches in wealth management, private placement bonds and corporate bonds. As at the end of the reporting period, CITIC Financial Leasing recorded a total assets of RMB20.221 billion, including leasing asset balance of RMB19.493 billion, total liabilities of RMB16.101 billion, and net assets of RMB4.120 billion. Cumulative lease grant during the reporting period, net operating income and net profit of the company for the reporting period stood at RMB20.553 billion, RMB454 million, and RMB120 million, respectively.

China CITIC Bank Corporation Limited 2015 Annual Report

Continuous acceleration of business transformation and ongoing optimization of business structure

The Group realized RMB145.545 billion net operating income, a growth of 16.59%; and recorded profits before allowance of RMB95.023, up 21.44% than that of the previous year. Despite a slight increase of NPL ratio, the Group controlled the asset quality well because more NPLs were disposed than planned.

Management Discussion and Analysis

Risk Management Risk Management Structure The Bank’s Comprehensive Risk Management Structure

Board of Directors

Audit and Related Party Transactions Control Committee

Risk Management Committee

Board of Directors President and President’s Panel

Risk & Internal Control Committee

Audit Department Vice President in Charge of Risk Management (Chief Risk Officer)

Risk Advisors

Regional Audit Centers

Credit Approval Department: credit risk

Credit Grant Management Department: credit risk

Law and Preservation Department: credit/legal risk

Head Office

Vice Presidents

Risk Management Department: credit risk/ market risk/ operation risk/ concentration risk/country risk

Compliance Department: compliance risk

Finance and Accounting Department: consolidation management

Assets and Liability Department: liquidity risk/bank account interest rate risk

General Office: reputation risk/ strategic risk Financial Market Department: liquidity risk

Branch President Branch Risk Director

Branches

Credit Grant Management Department

Law and Preservation Department

Credit Grant Management Department/ Risk Management Department

Vice or Assistant Branch President

Branch Departments

Management Discussion and Analysis

Risk Management System and Techniques The reporting period witnessed a steady progress in the Bank’s reform of its risk management system. To build the “three defense lines” for risk management, business management units set up risk management posts in succession, and jointly performed the responsibilities of the first defense line along with business operation units. To enhance risk management capacity, the Head Office developed the system for comprehensive assessment of risk management at branches and the system for accreditation of risk management qualifications, and reinforced research of the banking sector and management of credit grant policies. With regard to incentives and constraints for risk management, the Bank put in place the inquiry mechanism vis-a-vis major risk management issues of its branches and refined the mechanism for evaluating and managing risk directors of the branches. In line with the bank-wide strategic requirements and plan for implementation of the New Capital Accord, the Bank accelerated execution of the new capital management approach, and completed as scheduled the project on implementing the advanced measurement series of the capital management approach via effective and orderly project cluster management. All these markedly built up the Bank’s risk management capacity. The three major risk measurement systems under Pillar I were fully set up, and business application of measurement tools of all types rapidly promoted. Achievements have been made in the construction of both Pillar II and Pillar III. Data management systems and risk management information clusters were further optimized subsequent to the switch and online operation of the new core system.

Credit Risk Management Credit risk refers to the risk that a bank incurs losses in its business due to the failure of its borrower or transaction counterparty to fulfill the obligations specified in relevant agreements or contracts. The Bank’s credit risk exists primarily in its various credit grant businesses, including but not limited to on-and off-balance sheet items such as loans, guarantees, acceptance and loan commitments, bank account bond investment and derivatives transaction, as well as other business items containing credit risk such as structured finance and wealth management for financing purpose.

Credit Risk Management in Corporate Business During the reporting period, the Chinese economic growth slowed down. As a proactive response to changes in the external environment, the Bank inherited its prudent risk preference, insisted on business compliance, focused on development of highquality core customers, faced up to the challenge of financial innovation, reinforced risk limit management in asset portfolios and key areas, and persistently emphasized coordinated development of profitability, quality and scale. With regard to different industries, the Bank enthusiastically implemented the government’s macroeconomic and industrial policies, and worked for maximization of risk-adjusted return on capital (RAROC) and economic profit or economic value added (EVA). Specifically, the Bank practiced stratified management and set up portfolio management targets for different sectors, and guided the sectors to adjust and optimize their structures, with a view to preventing systemic risk and concentration risk of the concerned sectors. With regard to geographic regions, the Bank insisted upon differentiated development with unique local characters, and increased resource investment in key cities. Closely following the government’s regional development strategy, the Bank input more resources in key areas in Beijing, Tianjin and Hebei Province and along the “One Belt One Road”, and supported innovation with greater vigor, so as to cultivate its own key profit growth points. With breakthroughs made in the Shanghai Free Trade Zone and Shenzhen Qianhai Experimental Zone, the Bank helped its well managed and strongly competitive branches in key cities grow and expand. It also sped up outlet distribution in economically developed county areas. With regard to customers, the Bank deepened stratified management of customers, practiced the approach of managing strategic customers by name list, and provided the group of high-value customers with thorough in-depth services. The industrial chain model was practiced for small and medium corporate customers. By deepening the “loan service + transaction banking” financial service model and centering on both the upper and lower supply-chain streams of the core enterprises, the Bank was able to achieve economy of scale in batch development.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

With regard to the property industry, the Bank managed real estate enterprises by name list and practiced quota control over the total quantity of on and off-balance sheet property loans in persistent compliance with the principle of “total quantity control, differentiated treatment, higher access thresholds, and tighter management”. Credit was granted to commercial residential projects that mainly aimed at meeting rigid basic housing demands and partially meeting demands for housing improvement. Strict credit control was placed on high-end large-floor area residential projects featuring excessively large unit floor area and excessively high unit price. The Bank prioritized credit support to affordable housing projects that were characterized by state-owned background, good asset quality, standard operation models, and capacity to generate sufficient cash flows, and shanty town renovation projects that were included in government debts. Moreover, the Bank strictly required security for and closed management of property loan projects, and reinforced risk monitoring, control and management of existing loans. With regard to industries suffering from severe overcapacity, priority support was given to strongly competitive premium enterprises compliant with the requirements of technological upgrading, carbon emission constraints and green standards, while proactive exit was made from enterprises that were unsatisfactory in business operation, poor in market competitiveness, backward in production capacity, and non-compliant with environmental regulations. In addition, the Bank strictly forbade the provision of any form of incremental credit grant to additional capacity projects of industries suffering from severe overcapacity, and refrained from financing any construction projects that had failed to follow lawful procedures.

Risk Management of Personal Loan During the reporting period, in response to changes in the macroscopic economic situation and regulatory requirements, the Bank strictly implemented the government’s macro control policy to ensure operational compliance and risk controllability of its personal loan business. By standardizing the processes for granting loans to individual consumers and promoting the construction of a “credit factory”, the Bank improved business efficiency while ensuring risk control. Meanwhile, the Bank made proactive efforts to adjust its business structure. Focus was placed on developing the big individual “Home for Loan” Products backed by mortgage of core residential properties, to dissolve cyclic risks brought about by the economic downturn. A new retail credit management system was completed, and the touching point for systemic risk control was set up, helping improve risk control and quality monitoring of personal loan business. More work was done to carry out quantitative risk management, promote the development, deployment and application of scorecards, and enhance automated review and approval of retail loans. Measures such as clear definition of product review and approval criteria, tighter pre-lending investigation, review and verification, and stricter management of authorization enabled the Bank to reinforce risk management and control starting from business access points and effectively guard against potential entry of risk. In addition, the Bank introduced diversified post-lending monitoring and management measures, and used multiple means including earmarked inspection, systematic monitoring and asset quality announcement to ensure healthy and compliant development of personal loan business.

Risk Management of Credit Card Business With regard to risk management of credit card business, the Bank followed the philosophy of “structural adjustment, risk control and higher profitability”, deepened “all-round total-process” reform of “the risk policy framework”, and improved the construction of “a multi-dimension full-lifecycle measurement and management platform” to strictly guard the risk bottom line. Before lending, the Bank constructed and implemented the integrated credit assessment system to optimize credit resource allocation via all-round upgrading of credit assessment, conducted cross-sector cooperation and further developed its credit grant model based on the Internet and big data, and enriched and consolidated the tools for management of customer groups to deepen restructuring of customer groups. After lending, the Bank kept improving its early warning mechanism, exited from and reduced customers with high potential risks in advance, and increased support to high-value customers, so as to optimize its loan structure and loan mix. With simultaneous use of multiple channels and measures to collect credit card debts, the Bank improved recovery of non-performing assets and explored securitization of non-performing assets.

Risk Management in Financial Market Business The Bank prudently conducted its negotiable securities investment business, promoted innovation of products to hedge interest rate risk, and provided customers with risk hedging and value added services. With regard to Renminbi denominated bond investment, the Bank focused on premium enterprises in relevant sectors as key credit investment targets. With regard to foreign currency denominated bond investment, the Bank regarded bonds issued overseas by premium Chinese issuers as key targets of credit investment.

Management Discussion and Analysis

Loan Monitoring and Post-Lending Management During the reporting period, the Chinese macro economy was still caught in the overlap of shift of growth gear, labor pains of restructuring and digestion of previous stimulation policies; economic development in China entered the “new normal”; and domestic and international economic and financial environments were complicated and intertwined. All these combined to expose the quality of credit assets in the banking industry to enormous challenges. In response, the Bank focused on the fulfillment of credit asset quality indicators and ensured the stability of asset quality bank-wide on the one hand, and emphasized development of systems and processes and promoted implementation of its program on reforming the risk management system on the other hand. During the reporting period, the Bank prioritized efforts to reinforce the following aspects: The Bank implemented the project on “construction of the post-lending total management system”, put into practice the requirements of its program on reforming the risk management system, and set up responsibilities corresponding to the three defense lines. The project on constructing a new post-lending process was initiated on all fronts, focusing on pushing forward development of a bank-wide post-lending management system from the five dimensions of organization, policy, process, system and culture. Organizational systems and decision-making mechanism for risk early warning were built at the Head Office and the branches to fully leverage on the coordinative role of the three defense lines in post-lending management. A parallel-operation work mechanism was put in place to reinforce the duties of business management units as the first defense line in credit risk management. Low-quality customers were managed with name list to make risk dissolution more pertinent and effective. Important functional modules of the information system were optimized to realize effective support to the credit grant process. The Bank effectively strengthened the risk monitoring of key areas and proactively prevented and dissolved systemic credit risks, including: (1) Constructed and improved the bank-wide risk early warning system based on the risk monitoring and dissolution mechanism targeting “top ten customers of priority concern” for better capacity of risk early warning and risk dissolution; (2) Prioritized efforts to toughen risk monitoring and screening of key areas, e.g., overcapacity industries such as iron and steel, coal and coking, paper making, ship building and PV, of sectors including real estate, wholesale and coal/ coking, of customer groups such as the guarantee community and group customers, and of key businesses such as factoring, trade finance, and banker’s acceptance bills; (3) Monitored, analyzed and announced asset quality of key retail credit products on a regular basis to monitor the dissolution of delinquent loans and non-performing loans; (4) Increased efforts for proactive exit from and restructuring of risky loans, and thereby pushed the whole bank to complete the work plan on such proactive exit; (5) Monitored execution of instructive indicators for quota management of various portfolios on a monthly basis; (6) Tightened post-investment management of comprehensive finance credit business1, incorporating 7 major business categories into the scope of risk monitoring/control and setting up mechanisms such as monthly reporting on risk monitoring/control and quota monitoring. The Bank intensified efforts to dissolve and dispose delinquent loans. In 2015, via interaction between the Head Office and the branches and between the risk management units and the business units, the Bank managed its customer with name list, prepared account-specific dissolution solutions, and made comprehensive use of a series of measures including collection, reengineering, transfer and write-off to reduce delinquent loans and non-performing loans with full endeavor. Consequently, the Bank attained its yearly target on asset quality control. The Bank effectively promoted IT development for the construction of a new generation credit business system oriented toward its future strategic development. This system will standardize business management and fully cover all four of institutions, customers, products and process (“Four Full Coverage”), so as to upgrade “control, quality, efficiency and profitability” of the credit business process in all aspects.

Credit Risk Analysis Distribution of Loans

Concentration of Loans by Geographic Region As at the end of the reporting period, the Group’s total loan balance was RMB2,528.78 billion, an increase of RMB340.872 billion or 15.58% over the end of the previous year. The Group’s balances of loans to the Bohai Rim, the Yangtze River Delta and the Pearl River Delta and West Strait ranked the top three, recording RMB680.886 billion, RMB553.616 billion and RMB396.853 billion, and accounting for 26.93%, 21.89% and 15.69% of the Group’s total loan balance, respectively. In terms of growth rate, the Pearl River Delta and West Strait, the overseas market, the Bohai Rim, and the western region recorded the highest numbers, reaching 24.27%, 19.53%, 18.09% and 16.20% respectively, all being higher than the Group’s average loan growth rate. 1

Refers to innovative businesses that provide corporate and individual customers with comprehensive finance solutions beyond traditional on-and off-balance sheet transactions.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

The Group Unit: RMB million

Yangtze River Delta Bohai Rim(Note) Pearl River Delta and West Strait Central region Western region Northeastern region Overseas Total Loans Note:

31 December 2015

31 December 2014

Balance

Proportion (%)

Balance

Proportion (%)

553,616 680,886 396,853 348,882 340,226 68,949 139,368

21.89 26.93 15.69 13.80 13.45 2.73 5.51

512,214 576,598 319,360 306,274 292,793 64,071 116,598

23.41 26.35 14.60 14.00 13.38 2.93 5.33

2,528,780

100.00

2,187,908

100.00

Including the Head Office.

The Bank Unit: RMB million

Yangtze River Delta Bohai Rim(Note) Pearl River Delta and West Strait Central region Western region Northeastern region Total Loans Note:

31 December 2015

31 December 2014

Balance

Proportion (%)

Balance

Proportion (%)

550,812 660,803 394,884 348,882 340,226 68,949

23.29 27.95 16.70 14.75 14.39 2.92

509,464 573,158 317,718 306,274 292,793 64,071

24.69 27.77 15.40 14.84 14.19 3.11

2,364,556

100.00

2,063,478

100.00

Including the Head Office.

Concentration of Loans by Product As at the end of the reporting period, the Group’s corporate loan balance (excluding discounted bills) registered RMB1,767.422 billion, up RMB202.104 billion or 12.91% over the end of the previous year; and personal loan balance of the Group reached RMB668.613 billion, up RMB114.066 billion or 20.57% over the end of the previous year. Personal loans grew faster than corporate loans, with their balance proportion going up to 26.44%. Balance of discounted bills recorded an impressive growth rate of 36.3%. The Group Unit: RMB million

31 December 2015

31 December 2014

Balance

Proportion (%)

Balance

Proportion (%)

Corporate loans Personal loans Discounted bills

1,767,422 668,613 92,745

69.89 26.44 3.67

1,565,318 554,547 68,043

71.54 25.35 3.11

Total loans

2,528,780

100.00

2,187,908

100.00

Management Discussion and Analysis

The Bank Unit: RMB million

31 December 2015 Balance Proportion (%)

31 December 2014 Balance Proportion (%)

Corporate loans Personal loans Discounted bills

1,627,573 649,764 87,219

68.83 27.48 3.69

1,465,078 538,512 59,888

71.00 26.10 2.90

Total loans

2,364,556

100.00

2,063,478

100.00

Concentration of Loans by Sector As at the end of the reporting period, the loan balances of the top two sectors, namely the manufacturing sector and the wholesale and retail sector, within the corporate loans of the Group were RMB414.273 billion and RMB260.675 billion, respectively, taking up a combined proportion of 38.19% in the Group total corporate loans, down 4.92 percentage points over the end of the previous year. In terms of growth rate, loans to leasing and commercial services and real estate grew relatively faster, up 76.35% and 41.86% over the end of the previous year respectively, all being higher than the Group’s average corporate loan growth rate. The Group Unit: RMB million

Manufacturing Transportation, warehousing and postal service Production and supply of power, gas and water Wholesale and retail Real estate Water conservancy, environment and public utilities management Leasing and commercial services Construction Public and social organizations Others Total corporate loans

31 December 2015 Balance Proportion (%)

31 December 2014 Balance Proportion (%)

414,273

23.44

384,521

24.58

147,535

8.35

138,230

8.83

54,704 260,675 254,892

3.10 14.75 14.42

51,828 290,107 179,677

3.31 18.53 11.48

127,435 147,798 102,532 20,835 236,743

7.21 8.36 5.80 1.18 13.39

111,524 83,809 101,834 19,304 204,484

7.12 5.35 6.51 1.23 13.06

1,767,422

100.00

1,565,318

100.00

The Bank Unit: RMB million

Manufacturing Transportation, warehousing and postal service Production and supply of power, gas and water Wholesale and retail Real estate Water conservancy, environment and public utilities management Leasing and commercial Services Construction Public and social organizations Others Total corporate loans

31 December 2015 Balance Proportion (%)

31 December 2014 Balance Proportion (%)

403,285

24.78

377,992

25.79

144,453

8.87

136,345

9.31

49,086 245,419 224,873

3.01 15.08 13.82

51,468 275,963 160,821

3.51 18.84 10.98

120,704 146,115 101,188 20,835 171,615

7.42 8.98 6.22 1.28 10.54

111,466 83,514 100,456 19,304 147,749

7.61 5.70 6.86 1.32 10.08

1,627,573

100.00

1,465,078

100.00

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Breakdown of Loans by Type of Guarantee As at the end of the reporting period, the Group’s loan guarantee structure was further optimized. The balance of collateral and pledge loans stood at RMB1,450.118 billion, up RMB236.948 billion over the end of the previous year, and their proportion reached 57.34%, 1.89 percentage points higher over the end of the previous year; and the balance of unsecured and guaranteed loans amounted to RMB985.917 billion, up RMB79.222 billion over the end of the previous year, accounting for 38.99% of the corresponding total, down 2.45 percentage points over the end of the previous year. The Group Unit: RMB million

Type of Guarantee Unsecured loans Guaranteed loans Collateral loans Pledge loans Subtotal Discounted bills Total loans

31 December 2015

31 December 2014

Balance

Proportion (%)

Balance

Proportion (%)

492,822 493,095 1,169,587 280,531 2,436,035

19.49 19.50 46.25 11.09 96.33

392,960 513,735 953,053 260,117 2,119,865

17.96 23.48 43.56 11.89 96.89

92,745

3.67

68,043

3.11

2,528,780

100.00

2,187,908

100.00

The Bank Unit: RMB million

Type of Guarantee Unsecured loans Guaranteed loans Collateral loans Pledge loans Subtotal Discounted bills Total loans

31 December 2015

31 December 2014

Balance

Proportion (%)

Balance

Proportion (%)

467,932 435,395 1,113,612 260,398 2,277,337

19.79 18.41 47.10 11.01 96.31

368,639 469,234 917,020 248,697 2,003,590

17.86 22.74 44.45 12.05 97.10

87,219

3.69

59,888

2.90

2,364,556

100.00

2,063,478

100.00

Concentration of Borrowers of Corporate Loans The Group focused its attention on risk control over the concentration of borrowers of its corporate loans. During the reporting period, the Group complied with the applicable regulatory requirements on concentration of borrowers. Since a single borrower is defined by the Group as a specified legal entity, one borrower can be the related party of another borrower. The Group Major regulatory indicator Percentage of loans to the largest single customer (%) Percentage of loans to the top 10 customers (%)

Regulatory Standard

31 December 2015

31 December 2014

31 December 2013

≤10

2.48

2.75

3.41

≤50

14.60

12.14

14.68

Notes: (1)

Percentage of loans to the largest single customer = balance of loans to the largest single customer/net capital.

Percentage of loans to the top 10 customers = balance of loans to the top 10 customers/net capital.

(2)

Management Discussion and Analysis

The Group Unit: RMB million

31 December 2015

Sector Borrower Borrower Borrower Borrower Borrower Borrower Borrower Borrower Borrower Borrower

A B C D E F G H I J

Real estate Public management, social security and social organizations Leasing and commercial Services Leasing and commercial Services Leasing and commercial Services Mining Manufacturing Transportation, warehousing and postal service Transportation, warehousing and postal service Manufacturing

Total loans

Amount

Percentage in total loans (%)

Percentage in regulated capital (%)

10,218 9,978 7,960 5,375 4,818 4,520 4,514 4,435 4,278 4,000

0.40 0.39 0.32 0.21 0.19 0.18 0.18 0.18 0.17 0.16

2.48 2.42 1.93 1.31 1.17 1.10 1.10 1.08 1.04 0.97

60,096

2.38

14.60

As at the end of the reporting period, total balance of corporate loans from the Group to the top ten customers amounted to RMB60.096 billion, accounting for 2.38% of its total loans and 14.60% of its net capital. Loan Quality Analysis

Five-Class Loan Classification The Bank measures and manages the quality of its credit assets pursuant to the Guidelines on the Classification of Loan Risks formulated by the CBRC, which requires Chinese commercial banks to classify their credit assets into five classes, i.e., pass, special mention, substandard, doubtful and loss, of which the last three classes are viewed as non-performing loans (NPLs). In 2015, the Bank continued to reinforce centralized management of loan classification and enhance the system for management of credit asset risks by class. While adhering to the core criteria, i.e., “safety of loan recovery”, the Bank treated different classes of loans with different risk management measures after taking into full consideration various factors that may impact the quality of credit assets. The Bank’s procedure for class-specific identification of loan risk includes the following steps: business departments conduct post-lending inspections in the first place; afterward credit departments of branches propose preliminary opinions, followed by preliminary identification by credit management departments of the branches; chief risk officers at the branches review the preliminary identification results; and the Head Office finalizes the identification. To those loans with material changes in risk profiles, the Bank conducts dynamic adjustment to loan classification. The Group Unit: RMB million

31 December 2015

31 December 2014

Balance

Proportion (%)

Balance

Proportion (%)

Pass Special mention Substandard Doubtful Loss

2,402,338 90,392 20,876 11,238 3,936

95.00 3.57 0.83 0.44 0.16

2,091,293 68,161 14,618 11,773 2,063

95.58 3.12 0.67 0.54 0.09

Total Loans

2,528,780

100.00

2,187,908

100.00

Performing loans Non-performing loans

2,492,730 36,050

98.57 1.43

2,159,454 28,454

98.70 1.30

Note:

Performing loans include pass loans and special mention loans; and non-performing loans include substandard loans, doubtful loans and loss loans.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

The Bank Unit: RMB million

31 December 2015

31 December 2014

Balance

Proportion (%)

Balance

Proportion (%)

Pass Special mention Substandard Doubtful Loss

2,241,820 87,962 20,023 10,833 3,918

94.81 3.72 0.85 0.46 0.16

1,967,981 67,612 14,554 11,335 1,996

95.37 3.28 0.71 0.54 0.10

Total Loans

2,364,556

100.00

2,063,478

100.00

Performing loans Non-performing loans

2,329,782 34,774

98.53 1.47

2,035,593 27,885

98.65 1.35

Note:

Performing loans include pass loans and special mention loans; and non-performing loans include substandard loans, doubtful loans and loss loans.

As at the end of the reporting period, the balance of pass loans of the Group increased by RMB311.045 billion over the end of the previous year, accounting for 95% of the total loan balance, and representing a drop of 0.58 percentage point over the end of the previous year. The balance of special mention loans rose by RMB22.231 billion, accounting for 3.57% of the total loan balance, up 0.45 percentage point over the end of the previous year. The rise in both balance and proportion of special mention loans was mainly because: (1) The Group used more stringent and prudent criteria to classify risks, whereby loans with factors adversely affecting recovery would be identified as special mention unless otherwise identified for special reasons; and (2) Economic downturn and difficult operation of the real economy led to tight fund chain and mounting credit risks, which in turn resulted in the rise in special mention loans. As at the end of the reporting period, the balance of the Group’s non-performing loans (NPLs), recognized in accordance with the regulatory risk classification standard, stood at RMB36.05 billion, up RMB7.596 billion over the end of the previous year; and its NPL ratio was 1.43%, up 0.13 percentage point over the end of the previous year. The Group’s continuous rise in NPLs was mainly due to impacts of the larger economic environment, business deterioration of pro-cyclic industries and enterprises, and increasing spread of risks from the mutual guarantee and joint guarantee community, which led to higher probability of default, worse credit risk and more NPLs. During the reporting period, the Group worked hard to improve loan quality and further reinforced disposal of non-performing loans. By means of recovery and write-off, etc., the Group disposed RMB45.485 billion NPL principal with the speed of disposal faster than that of the previous years. During the reporting period, the Group witnessed a “dual rise” trend of both NPL balance and NPL ratio, which was consistent with the current macroscopic economic situation. At the beginning of 2015, the Group already made sufficient projection and response preparation regarding the changing trend of loan quality. Thanks to its pertinent measures for risk prevention and dissolution, the Group was able to put the changes in NPLs under control.

Migration of Loans The table below sets out the migration of the Bank’s loans across the five classes during the indicated periods. The Bank 31 December 2015

31 December 2014

31 December 2013

pass loans (%) special mention loans (%) substandard loans (%) doubtful loans (%)

2.67 31.77 59.66 41.39

3.21 30.16 58.23 38.19

1.51 27.20 45.98 17.94

Ratio of migration from performing loans to non-performing loans (%)

1.48

1.03

0.67

Migration Migration Migration Migration

ratio ratio ratio ratio

of of of of

Management Discussion and Analysis

As at the end of the reporting period, the Bank’s migration ratio from performing to non-performing loans was 1.48%, up 0.45 percentage point over the same period of the previous year. The main underlying reason was higher probability of default on the part of the borrowers due to the overlapping impacts of multiple factors in a time of economic downturn, which led to more loans migrating from performing loans to non-performing categories. Moreover, there was also a marked increase in the migration ratio of doubtful loans compared with those of the same period last year, mainly because the Group intensified its write-off efforts.

Loans Overdue The Group Unit: RMB million

31 December 2015 Balance Proportion (%) Loans repayable on demand Loans overdue: 1-90 days 91-180 days 181 days or above Subtotal Total loans Loans overdue for 91 days and above Restructured loans Notes: (1) (2)

31 December 2014 Balance Proportion (%)

2,453,880

97.04

2,111,964

96.53

36,998 9,794 28,108

1.46 0.39 1.11

43,034 8,986 23,924

1.97 0.41 1.09

74,900

2.96

75,944

3.47

2,528,780

100.00

2,187,908

100.00

37,902 8,482

1.50 0.34

32,910 13,724

1.50 0.63

Loans overdue refer to loans with principals or interests overdue for one day or above. Restructured loans refer to loans overdue or downgraded but the conditions of which (e.g. amount and term) have been rearranged.

The Bank Unit: RMB million

Loans repayable on demand Loans overdue: 1-90 days 91-180 days 181 days or above Subtotal Total loans Loans overdue for 91 days and above Restructured loans

31 December 2015

31 December 2014

Balance

Proportion (%)

Balance

Proportion (%)

2,293,468

96.99

1,990,328

96.46

33,853 9,542 27,693

1.44 0.40 1.17

40,913 8,705 23,532

1.98 0.42 1.14

71,088

3.01

73,150

3.54

2,364,556

100.00

2,063,478

100.00

37,235 8,472

1.57 0.36

32,237 13,204

1.56 0.64

Notes: (1)

Loans overdue refer to loans with principals or interests overdue for one day or above.

Restructured loans refer to loans overdue or downgraded but the conditions of which (e.g. amount and term) have been rearranged.

(2)

As at the end of the reporting period, the Group’s balance of overdue loans reached RMB74.9 billion, down RMB1.044 billion over the end of the previous year, with the proportion of overdue loans in total loans declining by 0.51 percentage point over the end of the previous year, of which 49.4% were short-term and temporary loans with a maturity of less than 3 months, and loans overdue for 91 days and above totaled RMB37.902 billion, up RMB4.992 billion over the end of the previous year. The increase in overdue loans was mainly because the borrowers suffered tight fund chains or even break of fund chains as a result of longer cycles of payback, reduction of bank loans, and greater difficulty in accessing finance, etc. The Group practiced stringent prudent management and control of loan restructuring. As at the end of the reporting period, the Group restructured RMB8.482 billion loans, down RMB5.242 billion over the end of the previous year, with the proportion thereof registering a drop of 0.29 percentage point over the end of the previous year.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Breakdown of NPLs by Product The Group Unit: RMB million

31 December 2015 Balance Proportion (%) NPL ratio (%)

31 December 2014 Balance Proportion (%) NPL ratio (%)

Corporate loans Personal loans Discounted bills

28,008 8,022 20

77.69 22.25 0.06

1.59 1.20 0.02

22,823 5,614 17

80.21 19.73 0.06

1.46 1.01 0.02

Total

36,050

100.00

1.43

28,454

100.00

1.30

The Bank Unit: RMB million

31 December 2015 Balance Proportion (%) NPL ratio (%)

31 December 2014 Balance Proportion (%) NPL ratio (%)

Corporate loans Personal loans Discounted bills

26,751 8,003 20

76.93 23.01 0.06

1.64 1.23 0.02

22,268 5,600 17

79.86 20.08 0.06

1.52 1.04 0.03

Total

34,774

100.00

1.47

27,885

100.00

1.35

As at the end of the reporting period, the Group’s balance and ratio of corporate NPLs increased by RMB5.185 billion and 0.13 percentage point over the end of the previous year, respectively; while the balance and ratio of personal NPLs grew by RMB2.408 billion and 0.19 percentage point over the end of the previous year, respectively. The rise in NPLs and NPL ratios was mainly due to the significant increase in credit risk of privately owned SMEs engaging in manufacturing, trade enterprises and overcapacity industries.

Breakdown of NPLs by Geographic Location The Group Unit: RMB million

31 December 2015 Balance Proportion (%) NPL ratio (%) Yangtze River Delta Bohai Rim Pearl River Delta and West Strait Central region Western region Northeastern region Overseas Total

31 December 2014 Balance Proportion (%) NPL ratio (%)

8,838 8,869 7,685 5,212 2,668 1,753 1,025

24.52 24.60 21.32 14.46 7.40 4.86 2.84

1.60 1.30 1.94 1.49 0.78 2.54 0.74

9,240 7,151 5,140 3,453 1,276 1,923 271

32.47 25.13 18.07 12.14 4.48 6.76 0.95

1.80 1.24 1.61 1.13 0.44 3.00 0.23

36,050

100.00

1.43

28,454

100.00

1.30

The Bank Unit: RMB million

31 December 2015 Balance Proportion (%) NPL ratio (%) Yangtze River Delta Bohai Rim Pearl River Delta and West Strait Central region Western region Northeastern region Total

31 December 2014 Balance Proportion (%) NPL ratio (%)

8,789 8,869 7,483 5,212 2,668 1,753

25.27 25.50 21.52 14.99 7.68 5.04

1.60 1.34 1.89 1.49 0.78 2.54

9,231 7,108 4,894 3,453 1,276 1,923

33.10 25.49 17.55 12.38 4.58 6.90

1.81 1.24 1.54 1.13 0.44 3.00

34,774

100.00

1.47

27,885

100.00

1.35

Management Discussion and Analysis

As at the end of the reporting period, the Group’s NPLs were mainly concentrated in the Bohai Rim, the Yangtze River Delta, and the Pearl River Delta and West Strait, with the aggregate NPL balance thereof reaching RMB25.392 billion, accounting for a combined 70.44% of the Group’s total NPL balance. The Pearl River Delta and West Strait registered the largest amount of NPL increment, i.e., RMB2.545 billion incremental NPLs and a 0.33 percentage point rise in NPL ratio. Both the central and western regions recorded fast growth in NPLs, increasing by 51% and 109% respectively over the end of the previous year. Such increase in NPLs was mainly due to: (1) concentrated risk exposure of privately owned steel trade companies in the Pearl River Delta and West Strait; and (2) mounting credit risk of overcapacity industries and SMEs in the central and western regions.

Breakdown of Corporate NPLs by Sector The Group Unit: RMB million

31 December 2014

31 December 2015 Balance

Proportion (%)

NPL ratio (%)

Balance

Proportion (%)

NPL ratio (%)

Manufacturing Transportation, warehousing and postal service Production and supply of power, gas and water Wholesale and retail Real estate Leasing and commercial services Water conservancy, environment and public utilities management Construction Public and social organizations Others

10,329

36.88

2.49

8,758

38.37

2.28

275

0.98

0.19

323

1.42

0.23

119 12,136 249 54

0.42 43.33 0.89 0.19

0.22 4.66 0.10 0.04

83 11,025 96 82

0.36 48.31 0.42 0.36

0.16 3.80 0.05 0.07

192 1,944 0 2,710

0.69 6.94 0.00 9.68

0.15 1.90 0.00 1.15

— 548 — 1,908

— 2.40 — 8.36

— 0.54 — 0.93

Total

28,008

100.00

1.59

22,823

100.00

1.46

The Bank Unit: RMB million

31 December 2014

31 December 2015 Balance

Proportion (%)

NPL ratio (%)

Balance

Proportion (%)

NPL ratio (%)

10,169

38.01

2.52

8,470

38.04

2.24

273

1.02

0.19

323

1.45

0.24

119 11,901 223 54

0.45 44.49 0.83 0.20

0.24 4.85 0.10 0.04

82 10,924 87 82

0.37 49.05 0.39 0.37

0.16 3.96 0.05 0.07

192 1,944 0 1,876

0.72 7.27 0.00 7.01

0.16 1.92 0.00 1.09

— 548 — 1,752

— 2.46 — 7.87

— 0.55 — 1.19

Total

26,751

100.00

1.64

22,268

100.00

1.52

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

As at the end of the reporting period, the Group’s non-performing corporate loans were mainly concentrated in wholesale & retail and manufacturing. NPL balances of the two sectors, accounting for a combined 80.21% of the Group total, increased by RMB1.111 billion and RMB1.571 billion respectively over the end of the previous year, and their corresponding NPL ratios increased by 0.86 and 0.22 percentage point over the end of the previous year, respectively. Such increase in NPLs was mainly because, during the economic downturn, with a poor real economy and weak risk resilience at the relevant upper and lower-stream circulation points, enterprises in these sectors were universally trapped in production and operation difficulties, hence the worsening credit risk, growing NPLs and rising NPL ratios in these sectors. As at the end of the reporting period, the Group’s NPL balances of two sectors, namely, transportation, warehousing and postal service, and leasing and commercial services, decreased by RMB48 million and RMB28 million respectively over the end of the previous year, with the corresponding NPL ratios going down by 0.04 percentage point and 0.03 percentage point respectively. Analysis of Provision for Loan Impairment

Changes in Provision for Loan Impairment The Group set aside adequate provisions for loan impairment in a timely manner according to the principles of prudence and truthfulness. Provisions for loan impairment consisted of two parts, namely, provisions based on evaluation of single items and provisions based on evaluation of portfolios. The Group Unit: RMB million

Beginning balance Accruals during the year(1) Reversal of impairment allowances(2) Transfer out Write-offs Recovery of loans and advances written off in previous years Ending balance Notes: (1) (2)

As of 31 December 2015 51,576 35,120 (592) 32 (26,239) 600 60,497

As of 31 December 2014 41,254 22,074 (460) 2 (11,610) 316 51,576

Equivalent to the net loan impairment recognized in the consolidated income statement of the Group. Equivalent to the increment of the present value of impaired loans after a period of time, which the Group recognized as interest income.

The Bank Unit: RMB million

Beginning balance Accruals during the year(1) Reversal of impairment allowances(2) Transfer out Write-offs Recovery of loans and advances written off in previous years Ending balance Notes: (1) (2)

As of 31 December 2015 51,136 34,523 (582) 2 (25,972) 575 59,682

As of 31 December 2014 40,861 21,924 (457) 1 (11,489) 296 51,136

As at the end of the reporting period, the Group’s balance of allowance for loan impairment registered RMB60.497 billion, representing an increase of RMB8.921 billion over the end of the previous year. The Group’s ratio of balance of allowance for loan impairment to NPL balance (i.e., provision coverage ratio) and ratio of balance of allowance for loan impairment to total loans (i.e., provision to loan ratio) stood at 167.81% and 2.39% respectively. The allowance coverage ratio decreased by 13.45 percentage points over the end of the previous year, while the allowance to loan ratio rose by 0.03 percentage point over the end of the previous year. During the reporting period, the Group accrued RMB35.12 billion allowance for loan impairment, up RMB13.046 billion over the previous year. The reasons for increasing such allowance were: (1) the Group made a proactive response to the risk of economic downturn by means of enhancing its risk hedging capability; and (2) with more vigorous NPL writing-off efforts, the Group needed to increase provisions as much as possible to get well prepared for write-offs.

Management Discussion and Analysis

Management of Market Risk Market risk refers to the risk of on-and off-balance sheet businesses of a bank incurring losses due to unfavorable changes in market prices (including interest rate, exchange rate, stock price and commodity price). The main market risk confronting the Bank includes interest rate risk and exchange rate risk. The Bank has established a market risk management system covering risk identification, measurement, monitoring and control, which manages market risk by exercising product access approval and risk limit management, thereby controlling market risk within an acceptable range and maximizing risk-adjusted returns.

Management of Interest Rate Risk Interest rate risk refers to the risk of losses to overall earnings and economic value of bank accounts resulting from unfavorable changes in factors such as interest rate and maturity structure, including re-pricing risk, yield curve risk, benchmark risk and option risk. The Bank manages its interest rate risk for the overall objective of observing the principle of prudent risk preference and achieving steady growth of both net interest income and economic value within the acceptable range of interest rate risk. The Bank made continuing efforts to improve its interest rate risk management and control system, innovate its management approaches, and refine its tools for such risk management and control. Among others, the Bank set up a bank account interest rate risk management structure to enhance its risk management in a continuous manner, which defines the division of duties and reporting lines among the Board of Directors, the senior management, the Asset and Liability Management Committee and relevant departments of the Bank, and designates the Asset and Liability Management Department as the comprehensive internal unit in charge of interest rate risk management of bank accounts. Under this structure, the Bank monitors changes in external macro situations and internal business structures on a regular basis, and carry out interest rate sensitivity gap management in a proactive manner to prevent excessive concentration of interest rate risk. During the reporting period, due to the impacts of the domestic and overseas economic and financial situations, and acceleration of interest rate liberalization, domestic market interest rates fluctuated more extensively, exposing interest rate risk management of financial institutions to greater challenges. In calm response to all these challenges, the Bank made proactive use of active management means such as price control and adjustment, whereby the Bank kept building its capacity for autonomous, differentiated and market-oriented pricing and further promoted the use of Loan Prime Rate (LPR). Meanwhile, with comprehensive use of multiple methods including interest rates sensitivity analysis, net interest income sensitivity analysis and stress test, the Bank measured interest rate risks of all types, carried out regular analysis of risks and projection of net interest income, reasonably set up maturity structures and product mixes of its assets and liabilities portfolios, and thereby controlled its interest rate risk at a reasonable level. Interest rate gaps of the Bank as at the end of the reporting period are detailed as follows: The Group Unit: RMB million

Item Total assets Total liabilities Asset-liability gap

Non-interest bearing

Less than 3 months

3 months to 1 year

1 to 5 years

Over 5 years

Total

129,889 119,197

2,382,200 2,875,474

1,622,052 1,331,484

827,850 404,031

160,301 72,420

5,122,292 4,802,606

(493,274)

290,568

423,819

87,881

319,686

Non-interest bearing

Less than 3 months

3 months to 1 year

1 to 5 years

Over 5 years

Total

143,570 98,247

2,183,703 2,712,875

1,589,333 1,293,161

810,829 395,954

156,860 72,420

4,884,295 4,572,657

296,172

414,875

84,440

311,638

10,692

The Bank Unit: RMB million

Item Total assets Total liabilities Asset-liability gap

45,353

(529,172)

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Management of Exchange Rate Risk Exchange rate risk refers to the risk of on and off-balance sheet businesses of a bank incurring losses due to unfavorable changes of exchange rate. The Bank measures exchange rate risk mainly through the analysis of foreign exchange exposures that consist of trading and non-trading exposures, including trading exposure that mainly results from the position in foreign exchange trading and non-trading exposure that mainly arises from foreign currency capital and foreign currency profit. The Bank manages exchange rate risk by matching foreign currency denominated assets with corresponding foreign currency denominated liabilities, and at the same time making appropriate use of financial derivatives. For businesses with potential exchange rate risk, the Bank set corresponding foreign exchange exposure limits to control its exchange rate risk at a tolerable level. Exchange rate risk of the Bank is mainly impacted by the Renminbi exchange rate against the US dollar. Since August 2015, due to impacts of multiple factors including the adjustments to the Renminbi central parity rate formation mechanism, inclusion of Renminbi in the SDR currency basket, and domestic economic slowdown, the Renminbi quickly devalued against the US dollar and its exchange rate against the US dollar registered markedly more significant fluctuations. The Renminbi depreciated by about 4.5% against the US dollar for the whole year. Thanks to its strict control of the risk exposure of foreign exchange related businesses and more intensive routine risk monitoring and early warning reporting, the Bank was able to control its exchange rate risk below the acceptable level despite such significant market fluctuations. The Bank’s foreign exchange exposures as at the end of the reporting period are set out as follows: The Group Unit: RMB million

Item

USD

HKD Other currencies

Total

Net on-balance sheet position Net off-balance sheet position

52,343 8,141

(5,888) 1,257

(16,805) 27,960

29,650 37,358

Total

60,484

(4,631)

11,155

67,008

The Bank Unit: RMB million

Item

USD

HKD Other currencies

Total

Net on-balance sheet position Net off-balance sheet position

22,458 8,172

15,049 1,227

(22,767) 27,967

14,740 37,366

Total

30,630

16,276

5,200

52,106

Liquidity Risk Management Liquidity risk refers to the risk that a bank is unable to obtain adequate capital in a timely manner and at reasonable cost to repay matured debts, perform other payment obligations and meet other capital needs for the conduct of normal business. The Bank has set up a robust governance structure for liquidity risk management which defines the division of duties among the Board of Directors, the Board of Supervisors and the senior management and their subordinate specialized committees and relevant departments of the Bank in the management of liquidity risk, with a view to improving its liquidity risk management strategies, policies and procedures. These efforts enabled the Bank to maintain a stable liquidity risk level, and to effectively identify, measure, monitor and control liquidity risk through the implementation of prudent coordinated liquidity risk management strategies. The Bank conducted a unified liquidity risk management structure. The Head Office is responsible for formulating liquidity risk management policies and strategies of the Group and its legal person institutions, and for managing liquidity risk at the legal person institution level in a centralized manner. Domestic branches of the Bank, in accordance with requirements of the Head Office, are responsible for fund management within their respective jurisdictions pursuant to their authorized mandates. All domestic and overseas affiliates of the Bank are responsible for developing their own strategies and procedures for liquidity risk management and implementing such strategies and procedures according to the requirements of competent regulatory authorities and within the Group’s master policy framework on liquidity risk management.

Management Discussion and Analysis

In response to changes in internal and external situations, the Bank made proactive efforts to promote and intensify liquidity risk management, keeping a moderately sufficient liquidity in the overall sense. During the reporting period, the Bank mainly adopted the following measures to manage its liquidity risk: (1) improved its organizational structure for liquidity risk management, optimized its liquidity risk management system, practiced liquidity limit management, conducted stress test on a regular basis, and organized emergency drills where necessary and appropriate to ensure effectiveness of its liquidity risk management emergency response plan; (2) structured its assets and liabilities in reasonable ways that could ensure stable growth and coordinated development of its main assets and liabilities and could match fund sources with application of funds; (3) reinforced management of active liabilities to ensure smooth finance channels for money market, inter-bank certificates of deposit and inter-bank deposits, and actively expanded innovative business varieties including certificates of large-amount deposits to diversify the sources of active liabilities and support the conduct of asset business; and (4) improved routine liquidity management, dynamically adjusted liquidity portfolio management strategies, and intensified management of liquidity reserves to maintain a reasonable reserve level and upgrade efficiency of daytime fund management. As at the end of the reporting period, the Group’s liquidity coverage ratio is as follows: Unit: RMB million

Item Liquidity coverage ratio Qualified premium liquid assets Net cash outflow in the coming 30 days

Value 87.8% 464,437 529,112

Liquidity gaps as at the end of the reporting period are set out as follows: The Group Unit: RMB million

Payable on demand (1,445,557)

Within 3 months

3 months to 1 year

1 to 5 years

Over 5 years

Undated

Total

(72,739)

190,827

646,227

505,851

495,077

319,686

Within 3 months

3 months to 1 year

1 to 5 years

Over 5 years

Undated

Total

(27,416)

169,077

587,221

482,406

514,485

311,638

The Bank Unit: RMB million

Payable on demand (1,414,135)

Operational Risk Management Operational risk refers to the risk of losses resulting from imperfect or deficient internal procedures, employees and IT systems and external incidents, including legal risk but excluding strategy risk and reputation risk. During the reporting period, in order to enhance the level of operational risk management on all fronts, the Bank mainly adopted the following management measures: (1) adjusted division of duties in operational risk management, shifting the leading responsibilities thereof to the departments in charge of total risk management for better management capacity therein; (2) strengthened institutional development in operational risk management, e.g., the Bank carried out a comprehensive revision of operational risk management policies and regulations, improved tools and methodologies for operational risk management, and further enhanced identification, assessment, monitoring, control and reporting of operational risk; and (3) brought improvements to the operational risk management information system. With the help of the operational risk management optimization project, the Bank optimized the operational risk management system in an all-round manner, which reinforced functions such as operational risk management, monitoring and reporting, and advanced IT level of operational risk management.

Anti-Money Laundering The Bank reinforced its efforts in risk management and internal control against money laundering in line with the Anti-Money Laundering Law of the People’s Republic of China and the PBOC’s “risk-centered” regulatory requirements on anti-money laundering.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

During the reporting period, the Bank intensified its efforts to construct an organizational mechanism against money laundering, whereby its anti-money laundering leading group gave full play to its role as the decision-making body in this aspect, and promoted the embedding of anti-money laundering internal control and risk management measures into the rules and procedures of the business units. The bank continued to improve its anti-money laundering internal control regulations, with the release of the Policy of CITIC Bank on Anti-money Laundering Risk Management, Measures of CITIC Bank on Anti-money Laundering Risk Self-Assessment and Measures of CITIC Bank on Assessment of Money Laundering and Terrorist Finance Risk and Management of Customers by Category, the Bank improved its resulted in better risk control measures. Full-process risk management and control was practiced. Anti-money laundering compliance review was reinforced during research and development of innovative financial products; anti-money laundering monitoring was carried out in a proactive manner, with corresponding trainings organized right from the induction stage; type analysis of and annual report on money laundering were submitted to the PBOC on a regular basis; the obligation of reporting large-sum suspicious transactions was earnestly performed; systems and tools were developed arduously, which resulted in smooth online operation of the new anti-money laundering risk management system, marking a new stage of information technology application in the Bank’s anti-money laundering efforts.

Capital Management The Bank practices total capital management, covering management of regulatory capital, economic capital and book capital in general and capital adequacy ratio management, capital planning, capital allocation, capital evaluation and management, etc. Capital adequacy ratio management is a core area of the Bank’s capital management, reflecting the capacity of the Bank for prudent operation and risk prevention. The Bank calculates, manages and discloses its own and the Group’s capital adequacy ratios according to the Interim Measures for Capital Management of Commercial Banks promulgated by the CBRC in June 2012. During the reporting period, capital ratios of both the Bank and the Group at all levels continuously met regulatory requirements. At the same time, the Bank steadily pushed forward implementation of the new capital management approach, with new progress registered in compliance self-assessment and outcome utilization, laying a good foundation for the following application work. Availing itself of the opportunity to implement the strategy on “light capital commitment” for development, the Bank continued to strengthen the whole-process management system covering capital planning, allocation, evaluation, measurement and monitoring. Bearing in mind its business environment, strategy development plan and risk preference, and by taking into comprehensive consideration the relationship between capital supply and demand, the Bank developed its capital plans in a forward-looking manner, so as to ensure capital adequacy for the purpose of risk prevention and satisfaction of business development needs. To become a bank of better value, in its continuous practice of the economic capital evaluation system with “economic profit” and “return on capital” at the core, the Bank kept improving the capital constraint and allocation mechanisms to guide the entire bank towards rational deployment of capital structure under the relevant capital constraints, and effectively promoted transformation of its business model and healthy sustainable development of the Bank.

Management of Financial Statement Consolidation The Bank continued to push forward the management of various work relating to financial statement consolidation, and assisted its domestic and overseas subsidiaries within the scope of such consolidation to perform their corporate governance procedures and conduct their routine business. During the reporting period, the Bank completed preparation for incorporation of its subsidiary CITIC Financial Leasing, and continued to improve its regulations and frameworks on management of financial statement consolidation. In line with the latest CBRC regulatory guidelines, the Bank revised the Administrative Measures of CITIC Bank on Consolidation of Subsidiaries’ Financial Statements, detailing provisions of the Group on corporate governance, total risk management, asset management and insider trading, and thereby deepening the connotations of financial statement consolidation management. Meanwhile, the Bank intensified its management and control of various types of significant events of its subsidiaries, which, supported and guaranteed corporate governance and business development of its subsidiaries. As such, the Group entered a brand new stage of the overall risk management and control.

Profit and Dividends Distribution To give investors reasonable return on investment and help investors develop steady expectation of investment returns, relevant provisions of the Articles of Association of the Bank lay down explicit requirements vis-a-vis dividend policies such as the base, principle, interval, method and condition and online voting of profit distribution, provide for the minimum proportion of profit distribution made in cash under general circumstances, and offer shareholders an online voting platform for participation in voting for the proposals on distribution plans. As such, the Bank fully protects legitimate rights and interests of its minority investors.

Management Discussion and Analysis

The Bank has not distributed profit through transfer of capital reserve to share capital since its initial public offering (IPO). Cash dividend distribution of the Bank in the past three years is listed as follows: Unit: RMB million

Year for which dividends are distributed 2012 2013 2014 Note:

Cash dividends every ten shares (RMB) (pre-tax)

Total amount of cash dividends (pre-tax)

Net profit attributable to shareholders of the Bank as indicated in consolidated statements

1.500 2.520 —

7,018 11,790 —

31,032 39,175 40,692

Distribution ratio (%)(Note) 22.62% 30.10% —

Distribution ratio is the ratio of the total amount of cash dividends for the current period to the net profit attributable to the shareholders of the Bank on the consolidated financial statements.

After-tax profit as shown on the Bank’s audited 2015 financial statements prepared in accordance with the PRC GAAP and IFRS, respectively, were both RMB39.672 billion. The Bank transferred 10% of its after-tax profit as shown on the financial statements prepared in accordance with the PRC GAAP to the statutory surplus reserve, which was accrued at RMB3.968 billion as at the end of the current period. The Bank allocated the general reserve of RMB14.00 billion. No discretionary reserve was allocated. In comprehensive consideration of the overall interests of all shareholders, its own need for safeguarding sustainable development and the regulatory requirements on capital adequacy ratio, the Bank proposed to distribute final dividends for the year 2015 with a total amount of RMB10.374 billion, which accounts for 26.15% of the net profit of the Bank and 25.21% of the net profit attributable to the shareholders of the Bank, and shall be denominated and declared in Renminbi and paid to A-share holders in Renminbi and to H-share holders in Hong Kong dollar. Based on the total share capital of A-shares and H-shares, the final cash dividends will be denominated and declared as RMB2.12 (pre-tax) for every 10 shares. The dividends to be paid in Hong Kong dollar shall have their amounts calculated in accordance with the average benchmark exchange rate of Renminbi to Hong Kong dollar as released by the PBOC one week prior to the convening of the general meeting (inclusive of the date of the general meeting). No scheme for transfer of capital reserve to share capital will be applied for the current year. Retained undistributed profit after dividends payment shall continue to be used to replenish the Bank’s capital, support implementation of the Bank’s development strategy, improve the Bank’s risk resilience, and satisfy regulatory requirements on capital adequacy ratios. The Bank recorded a 14.55% return on weighted average equity attributable to its shareholders in 2015 and is expected to maintain a certain level of return and contribution in 2016. This profit distribution plan (the “Plan”) complies with relevant provisions of the Articles of Association of the Bank and follows clear standards and proportions of dividends payment. After sufficient discussion and consideration at the Strategic Development Committee of the Board of Directors of the Bank, the Plan was submitted for deliberation at the meetings of the Board of Directors and the Board of Supervisors convened on 23 March 2016 and was adopted afterward. It shall be submitted to the 2015 Annual General Meeting to be convened on 26 May 2016 for approval and subject to implementation thereafter. It is expected that the Bank will pay the 2015 final dividends to its shareholders within two months as of the adoption of the Plan by the general meeting. The Bank’s independent non-executive directors have collectively expressed their independent opinion on the Plan as follows: The 2015 profit and dividends distribution plan of the Bank is consistent with the reality of the Bank and has taken the overall interests of both the Bank and all shareholders into consideration. We hereby endorse the Plan and agree to have the Plan submitted to the 2015 Annual General Meeting for deliberation. When the Plan is submitted to the 2015 Annual General Meeting for deliberation, the Bank will, as required by the regulators, offer investors online voting facilities and disclose voting results in accordance with the shareholding percentages of the voting A-share holders. The shareholding percentages are placed in the three ranges of below 1%, 1%-5%, and above 5%. Those with less than 1% shareholding will be further classified into the two categories of above and below RMB500,000 market value of shareholdings, whose voting results will be further disclosed accordingly. The preparation and implementation of this Plan fully protects the legitimate rights and interests of small and medium investors.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Material Investments, Material Acquisitions, and Disposals and Restructurings of Assets On 23 December 2014, the Board of Directors of the Bank deliberated and adopted the Proposal on CITIC Bank’s Acquisition of BBVA’s Equity in CITIC International Financial Holding Corporation Limited, giving consent to the Bank’s acquisition of BBVA’s 2,213,785,908 ordinary shares in CIFH. The proposed equity acquisition was adopted by the 2014 Annual General Meeting of the Bank, approved by the CBRC on 20 August 2015, and delivered on 27 August 2015. After the acquisition, the Bank holds 100% equity interest of CIFH. Please refer to the related announcements published on the official website of SSE (www.sse.com.cn), the official website of SEHK (www.hkexnews.hk) as well as the website of the Bank (bank.ecitic.com) for detailed information.

Shareholdings in Other Listed Companies and Financial Enterprises As at the end of the reporting period, the Group’s holding of shares and securities in other listed companies are as follows: Unit: RMB

Initial investment amount

Shareholding percentage

Book value at the end of the reporting period

Gain or loss Book value at the during the beginning of the reporting period reporting period

No.

Stock code

Stock name

00762

China Unicom (HK)

7,020,000.00

—

3,167,237.31

—

3,281,515.00

Visa Inc.

7,509,605.39

—

103,321,332.97

295,249.53

81,808,091.52

201,629.69

—

4,792,750.59

25,214.15

3,994,613.45

03996

Mastercard International CCEEC (HK)

324,698,781.12

0.82%

334,909,434.62

—

446,190,775.49

320,463.68

89,084,219.97

Total

339,430,016.20

Changes in shareholder’s interest during the reporting period Accounting item (114,277.69) Available-for-sale financial assets 21,513,241.45 Available-for-sale financial assets 798,137.14 Available-for-sale financial assets 10,210,653.50 Available-for-sale financial assets

Source of investment Cash purchase Gift/Bonus share Bonus share Cash purchase

32,407,754.40

As at the end of the reporting period, the Group’s shareholdings in non-listed financial enterprises are as follows: Unit: RMB

Name of company China UnionPay Co., Ltd.

Initial investment Number of shares amount held (share)

Book value at the end of the reporting period

Gain or loss during the reporting period

113,750,000.00

87,500,000

2.99%

113,750,000.00

4,812,500.00

161,127.66

—

419,784.62

—

Joint Electronic Teller Services

4,535,347.33

16 (Class B)

—

4,315,989.21

—

Electronic Payment Services Company (HK) Ltd.

14,263,759.80

—

13,573,874.05

—

132,059,647.88

4,812,500.00

SWIFT

Total Note:

132,710,234.79

— Available-for-sale financial assets — Available-for-sale financial assets — Available-for-sale financial assets — Available-for-sale financial assets

Source of investment Cash purchase Bonus share Bonus share Bonus share

—

Apart from the equity investment set out in the table above, CNCB Investment, a subsidiary of the Bank, also held private equity fund with net value of RMB70 million as at the end of the reporting period.

Shareholding percentage

Changes in shareholder’s equity during the reporting period Accounting item

Management Discussion and Analysis

Information about Structured Vehicles Controlled by the Bank Please refer to Note 63 to the financial statements of this report for relevant information about structured vehicles beyond the scope of the Bank’s financial statement consolidation.

Outlook Competition Pattern and Development Trends of the Banking Sector 2016 marks the beginning year of China’s 13th Five-Year Plan and a critical time for the shift of new and old economic driving forces in China. The Central Economic Work Conference pointed out explicitly that economic work in 2016 will pursue progress amid stability, which involves reinforcing supply-side structural reform while expanding aggregate demands, and specifically requires the fulfillment of five major tasks, namely, “cut excess industrial capacity, de-stock, de-leverage, lower corporate cost, and improve weak links”. For a period to come, the aggressive fiscal policy is expected to gain more vigor, while the prudent monetary policy will focus on appropriate flexibility, the two of which will combine to create an appropriate environment for structural reform. The shift of new and old economic driving forces brings along new opportunities. In the beginning year of the 13th FiveYear Plan, capital construction projects, shanty town renovation projects and PPP projects will become new growth points. With the government pushing forward merger and reengineering of traditional industries, enterprises will enjoy markedly more opportunities for merger and acquisition, which brings very promising prospects for investment banking. Meanwhile, the service sector keeps increasing its share in GDP and registers rapid growth in modern service industries such as modern logistics and healthcare. With consumption becoming the main engine of the economy, consumption in areas such as tourism, culture and education will record “explosive” growth. As China is entering the ageing society, old-age support relating to old-age security, consumption and investment, etc. will bring remarkable opportunities. All these opportunities will produce new business growth sources for commercial banks. Regional strategies of the government expand the space for development. The three major government strategies, namely, “One Belt One Road”, integration of Beijing, Tianjin and Hebei Province and the Yangtze River Economic Belt, are going forward with steady pace in parallel with the four free trade zones. This enormously expands and optimizes the spatial layout of the Chinese economy, drives forward upgrading of regional consumption and adjustment of industrial structure, and will generate massive demands for financial services in such areas as urban construction, industrial park/district development and transportation. The Renminbi will accelerate its pace of internationalization. With inclusion of the Renminbi in the SDR, global official institutions will increase their RMB reserves, while overseas clearing centers and off-shore centers will be constructed at a faster speed. Renminbi will be more extensively used in foreign exchange transactions, investment and finance. Meanwhile, residents will have markedly higher demand for more overseas asset allocation and wealth management. All of these are conducive to quicker internationalization of commercial banks. “Internet +” will change operation models of commercial banks. With its low access thresholds, no boundary and good experience, Internet finance is rapidly changing customer habit of accepting financial services, which, while impacting on traditional banking business, also provides commercial banks with the opportunity of corner overtaking.

Corporate Development Strategy The 2015-2017 Strategic Plan of CITIC Bank was officially put into practice after review and approval by the Board of Directors in March 2015. During the period of the strategic plan, the Bank will follow the strategic guidance of the plan, namely, “One Center, Two Orientations, Three Segments, Four Goals, Five Positionings, and Six Supports”, regard reform and innovation as its driving force, and insist on coordinated development of profitability, quality and scale. The ultimate goal is to develop CNCB into a bank that is unique in business, outstanding in profit-making capability and sound in asset quality, and a bank that is a leader in key regions and offers the best comprehensive finance services.

China CITIC Bank Corporation Limited 2015 Annual Report

Management Discussion and Analysis

Specifically, “One Center” means sticking to customer centric. “Two Orientations” refers to the orientations of value creation and light-style development (in the sense of light capital and light asset commitment). “Three Segments” means the formation of three business segments and profitability points, i.e., the corporate banking segment, retail banking segment, and financial market segment. By the “Four Goals”, the Bank will endeavor to attain the four strategic goals set for its core business operation, structural adjustment, customer expansion and channel development, and thereby outcompete its peers. By the “Five Positionings”, the Bank will uphold its customer positioning of focusing on large corporate customers, medium- and high-profile retail customers, and extensive coverage of inter-bank customers; its “one body plus two wings” business positioning that keeps corporate banking at the core and retail banking and financial market as the two wings; its regional positioning that focus on Beijing-Tianjin-Hebei Province integration, One Belt One Road and the Yangtze River Economic Belt; its sector positioning that emphasizes the new economy, the service sector and strategic emerging industries; and its channel positioning that includes diversification of physical outlets, mobile development of e-channels, and platform transformation of third-party channels. By “Six Supports”, the Bank will implement its comprehensive business strategy based on the CITIC platform, execute its unique business strategy with Big Individual Products as the leading component, practice its intermediary business strategy based on Big Asset Management, carry out its channel integration strategy with Internet finance as the breakthrough point, avail the opportunity of Renminbi internationalization to implement its Going Global business strategy, and execute its six strategies including driving forward business growth with innovation and placing the focus on innovation of institutional reform.

Business Plan In 2015, the Bank laid down aggressive development targets in line with the implementation of its strategy, and recorded sound plan execution results in the overall sense, with indicators such as profitability, quality and scale fully attaining the respective set targets. In 2016, the Bank will exert proactive efforts to promote better operating results and higher input-output efficiency, intensify quality control, and prevent/dissolve risks. It is expected to maintain steady scale growth of assets and liabilities, and will optimize its business structure, customer mix and profitability structure in a continuing manner. The Bank will make the best of its efforts to increase income and cut cost for faster growth in net operating income and non-interest income, and rationalize its costs and expenses. However, due to impacts of economic growth slowdown, continuing narrowing of interest margin and exposure of risks, commercial banks will continue to face considerable pressure on improving profitability.

Potential Risks The Bank may face the following potential risks in 2016: (1) With the faster deleveraging and cutting excess capacity in the manufacturing sector, enterprises in heavy industries including coal, iron and steel, petrochemicals, non-ferrous metals and construction materials will be universally in trouble, giving rise to a marked increase in the incidents of bankruptcy, merger and acquisition and default of debt; (2) Poor foundation for recovery of the property market plus intensifying divide of regions, customers and products will expose market adjustment to increasing pressure; (3) The central government has implemented local government debt replacement, which will help optimize the debt structure. However, due to growing pressure of economic downturn and continuing slow growth of local fiscal income, the risk posed by local government financing vehicles (LGFV), especially by lower-level LGFV debts remains unresolved. The Bank will stringently control risks and construct a scientific risk management system. Specifically, it will continue with its efforts to promote reform of the risk management system in an in-depth manner, reinforce the construction of a risk culture, and improve the three defense lines of risk management. Risk prevention and control will be done in a more forward looking and sensitive manner. Greater efforts will be exerted to reduce overdue loans, dispose existing NPLs at a faster pace, prevent incremental NPLs in a more proactive manner, and keep optimizing its loan structure to effectively prevent systemic risks.

Management of Corporate Social Responsibility Please refer to the 2015 Social Responsibility Report for details of the social responsibility and public benefit activities of the Bank for the reporting period. The Bank has disclosed its 2015 Social Responsibility Report on the website of SSE (www.sse.com.cn), HKExnews website of SEHK (www.hkexnews.hk) and the website of the Bank (bank.ecitic.com).

Report of Board of Directors Principal Business The Bank is engaged in banking and related financial services.

Business Review For business review of the Group for the year ended 31 December 2015, please refer to “Management Discussion and Analysis” of this report.

Major Customers As at the end of the reporting period, the income from the top five customers of the Bank constituted less than 30% of the total interest income and other operating income of the Bank.

Profit and Dividends Distribution Please refer to “Management Discussion and Analysis – Profit and Dividends Distribution” of this report.

Material Litigations and Arbitrations The Group has been involved in several litigation and arbitration cases in its ordinary and usual course of business. Most of these litigations and arbitrations were initiated by the Group for loan recovery, and there were also litigations and arbitrations resulting from disputes with customers. As at the end of the reporting period, there were 111 outstanding litigation and arbitration cases (regardless of the disputed amounts) involved in the Group’s ordinary and usual course of business where the Group acted as defendant/respondent with an aggregate disputed amount of RMB354 million.

Appropriation of Funds by the Controlling Shareholder and Other Related Parties There was no appropriation of the Bank’s funds by either the controlling shareholder or other related parties. The auditor has issued the Special Explanations for Non-Operating Fund Appropriation and Other Related Fund Transactions of China CITIC Bank Corporation Limited in 2015.

Material Related Party Transactions When entering into related party transactions with related parties during its ordinary and usual course of business, the Bank sticks to normal commercial terms and executes the transactions with terms available to related parties being no more favorable than those available to independent third parties for similar transactions. Please refer to Note 62 “Related Parties’ to the financial statements herein for details on related party transactions.

Related Party Transactions Involving Disposal and Acquisition of Assets During the reporting period, the Bank acquired BBVA’s 29.68% shareholding in CIFH. For details, please refer to the Announcement of CITIC Bank on Delivery of the Related Party Transaction regarding the Acquisition of Shareholding in CIFH (Lin 2015-37) published by the Bank on the website of SSE (www.sse.com.cn) and the HKExnews website of SEHK (www.hkexnews.hk) with the title of Completion of the Connected Transaction in Relation to the Acquisition of Shares in CIFH on 27 August 2015. Save as disclosed herein, the Bank was not engaged in any related party transactions involving disposal and acquisition of assets or equity during the reporting period.

Credit Extension Continuing Related Party Transactions The Bank attached great importance to the day-to-day monitoring and management of related party transactions involving credit extension, and ensured lawfulness and compliance of such transactions by enhancing relevant measures such as processoriented management, strict risk review and approval and better post-lending management. As at the end of the reporting period, the balance of credit extended to related parties by the Bank totaled RMB22.776 billion, of which the balance of credit extended to CITIC Group and its subsidiaries recorded RMB20.439 billion and the corresponding figure for BBVA stood at RMB2.337 billion. Such credits granted to related shareholders were pass bank loans of sound underlying quality and therefore will not have material impact on the normal operation of the Bank in terms of transaction volume, structure and quality.

China CITIC Bank Corporation Limited 2015 Annual Report

Report of Board of Directors

When extending credit to related parties, the Bank entered into such transactions on normal commercial terms with prices available to related parties being no more favorable than those available to independent third parties of similar transactions. Meanwhile, the Bank stringently followed the SSE and CBRC requirements on approval and disclosure of credit extension to related parties. As at the end of the reporting period, there was no fund exchange and appropriation in violation of the provisions of the Notice of CSRC on Issues Concerning the Standardization of Fund Exchange between Listed Companies and Their Related Parties and External Guarantee Provided by Listed Companies (Zheng Jian Fa [2003] No.56) and the Notice of CSRC on Standardization of the External Guarantee Activities of Listed Companies (Zheng Jian Fa [2005] No.120). The related party loans granted by the Bank to its de facto controller CITIC Group and its associates had no adverse impact on the operating results and financial position of the Bank.

Non-Credit Extension Continuing Related Party Transactions In 2014, the Bank entered into framework agreements on seven categories of continuing related party transactions respectively with CITIC Group and its associates, as well as with BBVA and its associates, and obtained approval for the annual caps to related party transactions for 2015-2017 at the beginning of 2015. In 2015, all related party transactions were conducted within the corresponding approved annual caps. According to the applicable provisions of Chapter 14A of the Hong Kong Listing Rules and Chapter 10 of the Shanghai Listing Rules, we hereby provide details on the above-mentioned continuing related party transactions as follows:

Non-credit extension continuing related party transactions with CITIC Group and its associates Third-Party Escrow Services According to the Third-Party Escrow Service Framework Agreement concluded between the Bank and CITIC Group in December 2014, the third-party escrow services between the Bank and CITIC Group and its associates shall be delivered on terms no more favorable than those available to or from independent third parties. The service fees payable to the Bank by CITIC Group and its associates shall be determined on the basis of relevant market rates and subject to periodic reviews. In 2015, the annual cap for the Bank’s transactions under the Third-Party Escrow Service Framework Agreement was RMB60 million. As at the end of the reporting period, the actual transaction amount incurred under this framework agreement was RMB29 million, without exceeding the approved annual cap. Asset Custody Services According to the Asset Custody Services Framework Agreement concluded between the Bank and CITIC Group in December 2014, the asset custody services, account management services and third-party regulatory services provided between the Bank and CITIC Group and its associates shall be delivered on terms no more favorable than those available to or from independent third parties. The service fees payable to each other shall be determined on the basis of relevant market rates and subject to periodic reviews. In 2015, the annual cap for the Bank’s transactions under the Asset Custody Services Framework Agreement was RMB800 million. As at the end of the reporting period, the actual transaction amount incurred under this framework agreement was RMB241 million, without exceeding the approved annual cap. Financial Consulting and Asset Management Services According to the Financial Consulting and Asset Management Services Framework Agreement entered into between the Bank and CITIC Group in December 2014, the financial consulting and asset management services provided between the Bank and CITIC Group and its associates have no fixed prices or rates. The prices and rates applicable to a particular type of service shall be determined through fair and reciprocal negotiations between the parties and on terms no more favorable than those available to or from independent third parties and may be calculated on the basis of the scale, rate and duration of the service. In 2015, the annual cap for the Bank’s transactions under the Financial Consulting and Asset Management Service Framework Agreement was RMB400 million. As at the end of the reporting period, the actual transaction amount incurred under this framework agreement was RMB142 million, without exceeding the approved annual cap.

Report of Board of Directors

Capital Transactions According to the Capital Transactions Framework Agreement entered into between the Bank and CITIC Group in December 2014, the Bank and CITIC Group and its associates shall conduct capital transactions in their ordinary and usual course of business according to applicable general market practices and on normal commercial terms. The prices and rates applicable to a particular type of transaction between the two parties shall be the prevailing market prices or the rates generally applicable to independent third parties for similar transactions. Specifically, for foreign exchange and precious metal transactions, precious metal leasing, money market transactions, and bond transactions, the two parties shall price their transactions according to openly available market prices; for agency settlement of bonds, the two parties shall decide on the rates thereof according to prevailing industrial regulations; for financial derivatives, the two parties shall determine transaction prices in accordance with market activity of the products under transaction, available open market offers and the Bank’s requirements relating to the management of various risks. In 2015, the annual caps for gains and losses of the transactions under the Capital Transactions Framework Agreement between the Bank and CITIC Group was RMB3.0 billion, the cap for the fair value of derivative financial instruments recorded as assets was RMB2.8 billion, and that for the fair value of derivative financial instruments recorded as liabilities was RMB4.3 billion. As at the end of the reporting period, the gains and losses of actual transactions under the Capital Transactions Framework Agreement amounted to RMB84 million, the actual fair value of derivative financial instruments recorded as assets was RMB61 million and that recorded as liabilities was RMB11 million, none of which exceeded the corresponding approved annual cap. Comprehensive Services According to the Comprehensive Services Framework Agreement entered into between the Bank and CITIC Group in December 2014, CITIC Group and its associates shall provide the Bank with comprehensive services including but not limited to medical insurance and enterprise annuity, procurement of goods and services, outsourcing service, value-added service, advertising service, technological service and property lease. The Bank and CITIC Group and its associates shall apply prevailing market prices or applicable rates of independent third-party transactions to the services provided under the Comprehensive Services Framework Agreement, and shall determine prices and rates of a particular type of service through fair and reciprocal negotiations. In 2015, the Bank’s annual cap for the transactions under the Comprehensive Services Framework Agreement was RMB1.4 billion. As at the end of the reporting period, the actual transaction amount incurred under this framework agreement was RMB901 million, without exceeding the approved annual cap. Asset Transfer According to the Asset Transfer Framework Agreement entered into between the Bank and CITIC Group in December 2014 and approved by the general meeting in January 2015, the transactions of asset transfer between the Bank and CITIC Group and its associates shall be made on terms no more favorable than those available to independent third parties. The transfer prices payable by the transferee shall be determined according to the following principles: (1) For transfer of general assets, as per regulatory requirements, credit assets shall be transferred on the principle of totality. When transferring a credit asset, the transferor shall use the loan principal as the transaction price, and take post-transfer obligations to be performed by the Bank into priority consideration in addition to the consideration of market supply and demand; (2) For transfer of securitized assets, the Bank, when transferring a credit asset to a related party, shall use the loan principal as the transaction price, and determine the interest rate for transfer of the securitized credit asset with reference to the yields of similar Chinese interbank market products as disclosed by the China Bond Information website and the China Money website, in combination with price enquiries made with investors, with specific terms (such as price, volume, total price and payment) to be determined upon conclusion of agreements for individual transactions; and (3) At present, there are no statutory government-prescribed prices for asset transfer. When statutory government-prescribed prices are available in the future, asset transfer shall be priced with reference to such statutory government-prescribed prices. In 2015, the Bank’s annual cap for the transactions under the Asset Transfer Framework Agreement was RMB62.0 billion. As at the end of the reporting period, the actual transaction amount incurred under this framework agreement was RMB22.378 billion, without exceeding the approved annual cap.

China CITIC Bank Corporation Limited 2015 Annual Report

Report of Board of Directors

Wealth Management and Investment Services According to the Wealth Management and Investment Services Framework Agreement entered into between the Bank and CITIC Group in December 2014 and as approved by the general meeting of the Bank in January 2015, the Bank and CITIC Group and its associates shall apply general market practices and normal commercial terms in their ordinary and usual course of business. The Bank shall provide CITIC Group and its associates with wealth management and investment services including non-principal-guaranteed wealth management and agency services, principal-guaranteed wealth management, and proprietary fund investment, while CITIC Group and its associates shall provide the Bank with intermediary services of wealth management (such as trust services and management services). The two parties shall price their services through fair and reciprocal negotiations, on normal commercial terms, in line with the categories and scopes of wealth management services, and with real-time adjustments made according to changes in market prices. In 2015, the Bank’s annual cap for the service fees of non-principal-guaranteed wealth management and agency services under the Wealth Management and Investment Service Framework Agreement was RMB2.5 billion, the annual cap for period-end balance of principals of principal-guaranteed wealth management services was RMB30.0 billion, the annual cap for yields on wealth management was RMB1.2 billion, the annual cap for period-end balance of investment funds was RMB44.0 billion, and the annual cap for the Bank’s investment returns and service fees payable to intermediaries was RMB4.4 billion. As at the end of the reporting period, the actual amounts of fees for non-principal-guaranteed wealth management and agency services incurred under this framework agreement was RMB553 million, actual period-end balance of principals of principal-guaranteed wealth management services was RMB2.768 billion, actual yields on wealth management for customers was RMB81 million, actual period-end balance of investment funds was RMB8.783 billion, and the Bank’s actual investment returns and service fees paid to intermediaries was RMB605 million, none of which exceeded the corresponding approved annual cap.

Non-Credit Extension Continuing Related Party Transactions with BBVA and its Associates Capital Transactions According to the Capital Transactions Agreement entered into between the Bank and BBVA in December 2014, the Bank and BBVA and its associates shall conduct capital transactions during their ordinary and usual course of business according to the prevailing market prices or the rates generally applicable to independent third parties for similar transactions. The prices and rates applicable to a particular type of transaction between the two parties shall be the prevailing market prices or the rates generally applicable to independent third parties for similar transactions. Specifically, for foreign exchange and precious metal transactions, precious metal leasing, money market transactions, and bond transactions, the two parties shall price their transactions according to openly available market prices; for agency settlement of bonds, the two parties shall decide on the rates thereof according to prevailing industrial regulations; for financial derivatives, the two parties shall determine transaction prices in accordance with market activity of the products under transaction, available open market offers and the Bank’s requirements relating to the management of various risks. In 2015, the annual caps for gains and losses of the transactions under the Capital Transactions Framework Agreement between the Bank and BBVA was RMB2.0 billion, the cap for the fair value of derivative financial instruments recorded as assets was RMB1.4 billion, and that for the fair value of derivative financial instruments recorded as liabilities was RMB1.3 billion. As at the end of the reporting period, the gains and losses of actual transactions under the Capital Transactions Framework Agreement amounted to RMB383 million, the actual fair value of derivative financial instruments recorded as assets was RMB100 million and that recorded as liabilities was RMB112 million, none of which exceeded the corresponding approved annual cap. Asset Transfer According to the Asset Transfer Framework Agreement entered into between the Bank and BBVA in December 2014, asset transfer transactions between the Bank and BBVA and its associates include the Bank’s transfer of its interests in concerned assets to BBVA and its associates during its ordinary and usual course of business with the use of factoring (including two-factor factoring for both import and export), etc. Such asset transfer transactions between the Bank and BBVA and its associates shall be executed with terms no more favorable than those available to independent third parties for similar transactions. The prices paid by the transferee for asset transfer transactions made under the Asset Transfer Framework Agreement between the Bank and BBVA shall be determined by the two parties on the basis of prevailing market prices and through consultation in line with specific transaction situations. In 2015, the annual cap for transactions made under the Asset Transfer Framework Agreement was RMB700 million. As at the end of the reporting period, the actual transaction amount incurred under this framework agreement was zero.

Report of Board of Directors

Related Party Transactions in Joint External Investment During the reporting period, the Bank did not have any related party transactions arising from joint external investment with its related parties.

Related Party Transactions Involving Debentures, Loans/Guarantees For information on transactions involving debentures, loans/guarantees between related parties, please refer to the financial statements herein for details.

Material Contracts and their Performance During the reporting period, the Bank did not provide custody of, contract or lease any material assets of other companies, nor did other companies provide custody of, contract or lease any material assets of the Bank. Neither was there any such custody, contract or lease that occurred in previous reporting periods and continued to the reporting period. The guarantee business is one of the off-balance sheet business items in the ordinary and usual course of business of the Bank. During the reporting period, the Bank did not have any material guarantees that need to be disclosed except for the financial guarantee services that are within the approved business scope of the Bank. Specialized Explanations and Independent Opinions of Independent Non-executive Directors Concerning the Guarantees Offered by the Bank to External Parties We, as independent non-executive directors of China CITIC Bank, have examined the guarantees offered by China CITIC Bank to external parties in an impartial, fair and objective manner, and hereby express the following specialized explanations and opinions: Upon our verification, the guarantees offered by the Group to external parties are mainly letters of guarantee, which is one of the regular banking services within the approved business scope of the Group. As at the end of the reporting period, the value balance of letters of guarantee issued by the Group was equivalent to RMB133.567 billion. The Group always attaches great importance to the management of risks related to such business, and has formulated creditability standards of the guaranteed obligor, as well as the operation procedures and the examination and approval procedures for the guarantee business based on the characteristics of risks associated therewith. During the reporting period, the above mentioned business of the Group went well, and no illegal guarantee was issued. We are of the view that the Group has effectively controlled the risks related to its guarantee business. Independent Non-executive Directors of China CITIC Bank Corporation Limited Li Zheping, Wu Xiaoqing ,Wong Luen Cheung Andrew and Yuan Ming During the reporting period, the Bank did not sign any other material contracts.

Undertakings by the Company and Its Relevant Stakeholders On 8 July 2015, CITIC Group undertook that, due to recent abnormal fluctuations of the domestic stock market, and for the purpose of promoting healthy sustainable development of the capital market and effectively safeguarding legitimate rights and interests of shareholders of listed companies in all types, CITIC Group will not, during abnormal fluctuations of the domestic stock market, decrease its shareholding of the Bank, and will, when appropriate, increase its shareholding in the Bank. To deliver the above undertaking, CITIC Limited, a company controlled by CITIC Group, bought an additional 10,313,000 H shares of CITIC Bank in the securities transaction system via its subsidiary on 22 January 2016, and planned to continue increasing its shareholding of CITIC Bank when appropriate prior to 21 January 2017, provided that the accumulative percentage of such additional shareholding does not exceed 5% of the Bank’s total issued share capital (this round of additional share acquisition inclusive). In addition, CITIC Group undertook that it will not reduce its shareholdings in the Bank either during the period when the additional shareholding of CITIC Limited (including its subsidiaries) in the Bank is in execution or during the statutory lock-up period when such reduction is forbidden.

China CITIC Bank Corporation Limited 2015 Annual Report

Report of Board of Directors

On 16 April 2012, CITIC Corporation Limited undertook that, within five years as of the delivery of its acquisition of CITIC Bank equity, it will not transfer such acquired stake in CITIC Bank (except for circumstances where CITIC Corporation Limited transfers shares in CITIC Bank to CITIC Limited’s related parties in accordance with applicable laws and regulations or as approved by the regulatory authorities, or where the shares are assigned as state-owned assets for free pursuant to the state-owned assets supervision and administration procedures); if CITIC Corporation Limited transfers the shares in CITIC Bank upon the expiry of the lock-up period, it shall obtain the prior consent from the regulatory authority in terms of the transfer and the qualification of the transferee as a shareholder of CITIC Bank. On 25 February 2013, CITIC Corporation Limited’s acquisition of the Bank’s shares was delivered, and the above undertaking of CITIC Corporation Limited became effective on the same date. On 23 September 2010, BBVA undertook that as a strategic investor of the Bank, BBVA shall take its investment in the Bank as long-term investment and that BBVA intends to hold its allotment from this rights issue for at least five years as of the date of delivery thereof, except for special situations (including but not limited to any requirements of the law or those imposed by any regulatory authorities or government bodies or stock exchanges that enjoy jurisdiction over the BBVA, applying for, being applied for or being declared bankruptcy or becoming insolvent, occurrence of macroscopic economic events, force majeure or other objective situations having material adverse impacts on the operation or financial position of BBVA). In 2011, BBVA subscribed for 1,163,097,447 H shares in the Bank’s H-share rights issue and the delivery was completed on 1 August 2011. The above mentioned undertakings by BBVA became effective on 1 August 2011. During the reporting period, the Bank was not aware of any violation of the above-mentioned undertakings. Save for these above mentioned undertakings, the Bank was not aware of any other undertakings that were performed during the reporting period or not yet performed as at the end of the reporting period by its shareholders, de factor controller, acquirer(s), directors, supervisors, senior management members or other related parties. Neither did the Bank make any undertakings that were performed during the reporting period or not yet performed as at the end of the reporting period.

Appointment and Dismissal of Accounting Firms As approved at the 2014 Annual General Meeting, the Bank engaged PricewaterhouseCoopers as its domestic auditor and PricewaterhouseCoopers Hong Kong as its overseas auditor for 2015. The Bank has engaged these two accounting firms as its auditors since the 2015 annual audit. The two accounting firms have both provided audit services to the Bank for one year. Hu Yan and Wu Weijun, signing CPAs for auditing of the Bank’s A-share financial statements, have both served the Bank for one year. As at the end of the reporting period, the Bank paid RMB9.30 million service fees to PricewaterhouseCoopers Hong Kong and PricewaterhouseCoopers for their auditing of its 2015 financial statements (excluding the audit performed for the financial statements of the Bank’s overseas subsidiaries and the Bank’s internal control); the Group’s overseas subsidiaries paid HKD6.87 million audit service fees to PricewaterhouseCoopers Hong Kong; and the Group’s domestic subsidiaries paid RMB680,000 audit service fees to PricewaterhouseCoopers. The Bank engaged PricewaterhouseCoopers to audit its internal control in 2015 and paid RMB1 million service fees for such audit in 2015. Except for the above-mentioned audit assurance service fees, the Bank paid approximately RMB3.88 million to PricewaterhouseCoopers as non-audit service fees during the reporting period.

Amendments to the Articles of Association In March 2015, the Bank amended its Articles of Association due to its private offering of preference shares. The relevant proposal on the amendment was considered and adopted by the 2014 Annual General Meeting, the First A Shareholders Class Meeting in 2015 and the First H Shareholders Class Meeting in 2015 convened on 26 May 2015, and came into effect upon approval by the CBRC in August 2015. Additions to the provisions on preference shares will be finalized and enter into effect as of the date when the Bank completes its first ever issue of preference shares. In August 2015, according to the PBOC administrative licensing, the Work Guidelines for the Board of Supervisors of Commercial Banks, Guidelines for Internal Audit of Banking Institutions, Notifications on Issues Relating to Further Implementing Payment of Cash Dividends by Listed Companies, Regulatory Guidelines for Listed Companies No. 3: Payment of Cash Dividends by Listed Companies, and SSE Guidelines on Payment of Cash Dividends by Listed Companies, the Bank sorted out relevant provisions of its Articles of Association that was adopted by the 2014 Annual General Meeting and prepared the proposal on amending the Articles of Association. This amendment was adopted by the Second Extraordinary General Meeting of the Bank held in October 2015, and became effective in December 2015 upon approval by the CBRC.

Report of Board of Directors

Please refer to the relevant announcements published by the Bank on the website of SSE (www.sse.com.cn), the HKExnews website of SEHK (www.hkexnews.hk) and the website of the Bank (bank.ecitic.com) on 6 May and 10 September 2015 and 7 January 2016 respectively for relevant details about the amendment of the Articles of Association. Investors may check against the full text of the prevailing Articles of Association of the Bank on the above websites.

Equity Incentive Scheme The Bank did not have any equity incentive scheme as at the end of the reporting period.

Use of Funds Raised and Material Investments with Non-Raised Funds All proceeds raised by the Bank were used in accordance with the purposes disclosed in relevant documents including the prospectuses for the IPOs and the rights issue, i.e., all the proceeds were used to replenish the capital of the Bank and to increase the capital adequacy ratios and risk resilience of the Bank. During the reporting period, no material investment was made by the Bank with non-raised funds.

Penalties and Remedial Actions of the Company and Its Relevant Stakeholders During the reporting period, the Bank, its directors, its supervisors, its senior management members, its controlling shareholder, its de facto controller or its acquirer had no record of being subject to investigation by competent authorities or coercive measures by judicial bodies or disciplinary bodies, transfer to judicial bodies or pursuit of criminal liabilities, investigation or administrative penalties by CSRC, ban of entry into securities markets, being identified as inappropriate candidate, significant administrative punishments by other administrative authorities such as environmental protection agencies, safety supervision organizations and tax authorities, or public censure by any stock exchanges, or punishment by other regulators that may have any material impact on the business operation of the Bank. During the reporting period, the Bank conducted its business activities in accordance with relevant laws, regulations and its articles of association in its decision making procedures. Its directors, supervisors and senior management members all performed their due diligence. The Bank is not aware of any conduct on the part of the directors, supervisors and senior management members in the performance of their duties that was against relevant laws, regulations and its articles of association or detrimental to the interests of the Bank.

Integrity of the Company and Its Relevant Stakeholders During the reporting period, neither the Bank nor its controlling shareholder or its de facto controller was involved in failure to execute valid court verdicts or failure to pay back matured debts of considerable amounts.

Reserves For details on changes in reserves of the Bank as at the end of the reporting period, please refer to Notes 48-53 to the financial statements of the report.

Distributable Reserves For details on distributable reserves of the Bank, please refer to “Financial Statements – Consolidated Statement of Changes in Equity” of the report.

Donations The Group’s external donation for the reporting period amounted to approximately RMB15.5911 million in total.

Fixed assets For details on changes in the Bank’s fixed assets as at the end of the reporting period, please refer to Note 29 to the financial statements of the report.

Retirement and Benefits For details on retirement benefits that the Bank provided for its employees, please refer to Note 41 to the financial statements of the report.

Share Capital and Public Float The Bank has sufficient public float as at the disclosure date of this report. China CITIC Bank Corporation Limited 2015 Annual Report

Report of Board of Directors

Purchase, Sale or Redemption of Shares During the reporting period, neither the Bank nor any of its subsidiaries purchased, sold or redeemed any shares of the Bank.

Pre-Emptive Rights None of the PRC laws, administrative regulations and departmental rules, or the Articles of Association of the Bank contains any mandatory provisions on pre-emptive rights for purchase of shares of listed companies. According to the Articles of Association, the Bank may increase its registered capital by way of public offering or private offering, rights issue or bonus issue to the existing shareholders, transfer of capital reserve to share capital, or other means permitted by laws and administrative regulations as approved by the relevant authorities.

Issuance of Shares For relevant information about the Bank’s issuance of shares during the reporting period, please refer to “Changes in Share Capital and Shareholdings of Substantial Shareholders” of this report.

Issuance of Debentures For relevant information about the Bank’s issuance of debentures during the reporting period, please refer to “Changes in Share Capital and Shareholdings of Substantial Shareholders” of this report.

Equity Linked Agreements Save for what is disclosed in “Preference Shares” of this report, the Bank neither entered into nor continued any equity linked agreements during the reporting period.

Equity Interest of Main Shareholders Please refer to “Changes in Share Capital and Shareholdings of Substantial Shareholders – Interests and Short Positions Held by Substantial Shareholders and Other Persons” of this report for detailed information.

Tax Deduction and Exemption Holders of A Shares In accordance with the Notice on Issues Regarding the Implementation of Differentiated Individual Income Tax Policies on Dividends and Bonus of Listed Companies (Cai Shui [2012] No.85) issued jointly by the Ministry of Finance, the State Administration of Taxation and CSRC, for the dividends obtained from listed companies by individual investors with equity record dated prior to 8 September 2015, if the duration of shareholding starting from the date when the individual investor obtained the Company’s share and ending the record date is more than one year, listed companies shall, in respect of the individual income tax thereof, pay withholding tax at a rate of 5% of the dividends; if the duration of shareholding starting from the date when the individual investor obtained the Company’s share and ending the record date is less than one year (inclusive), listed companies shall, in respect of the individual income tax thereof, pay withholding tax at a rate of 5% of the dividends for the time being, subject to adjustments to be made in accordance with the Notice at the time when the individual investors transferred their respective shares. In accordance with the Notice on Issues Regarding the Differentiated Individual Income Tax Policies on Dividends and Bonus of Listed Companies (Cai Shui [2015] No.101) issued jointly by the Ministry of Finance, the State Administration of Taxation and CSRC, for the dividends obtained from listed companies by individual investors with equity record dated after 8 September 2015, if the duration of shareholding starting from the date when the individual investor obtained the Company’s share and ending the record date is more than one year, the personal income tax on the dividends thus obtained shall be exempted for the time being; if the duration of shareholding starting from the date when the individual investor obtained the Company’s share and ending the record date is less than one year (inclusive), listed companies shall, in respect of the individual income tax thereof, refrain from withholding and paying such tax for the time being, subject to adjustments to be made in accordance with the Notice at the time when the individual investors transferred their respective shares. For residents that are shareholders of enterprises, the income tax on their cash dividends shall be paid by themselves. For Qualified Foreign Institutional Investors (QFII), listed companies are required to withhold and pay enterprise income tax at a rate of 10% pursuant to the requirements of the Notice Concerning the Relevant Questions on the Withholding and Payment of Enterprise Income Tax Relating to the Payment of Dividends, Bonus and Interest by PRC Resident Enterprises to QFII (Guo Shui Han [2009] No.47) issued by the State Administration of Taxation. Shareholders who are QFII and wish to enjoy tax concessions shall apply to the competent taxation authority for tax rebates according to the relevant rules and regulations after they receive the dividends.

Report of Board of Directors

Holders of H Shares Pursuant to the Notice of the PRC State Administration of Taxation on Issues Concerning Individual Income Tax Collection and Management after the Repeal of Guo Shui Fa [1993] No.045 (Guo Shui Han [2011] No.348), the dividend received by the overseas resident individual shareholders from the stocks issued by domestic non-foreign invested enterprises in Hong Kong is subject to the payment of individual income tax according to the items of “interest, dividend and bonus income”, which shall be withheld by the withholding agents according to relevant laws. The overseas resident individual shareholders who hold the stocks issued by domestic non-foreign invested enterprises in Hong Kong are entitled to the relevant preferential tax treatment pursuant to the provisions in the tax agreements signed between the countries where they are residents and China or the tax arrangements between Mainland and Hong Kong (Macau) SAR. The tax rate for dividends under the relevant tax agreements and tax arrangements is generally 10%, and for the purpose of simplifying tax administration, domestic non-foreign-invested enterprises issuing shares in Hong Kong may, when distributing dividend, generally withhold individual income tax at the rate of 10%, and are not obligated to file an application. If the tax rate for dividend is not equal to 10%, the following provisions shall apply: (1) for citizens from countries under agreements to be entitled to tax rates lower than 10%, the withholding agents will file applications on their behalf to seek entitlement of the relevant agreed preferential treatments, and upon approval by the tax authorities, over withheld tax amounts will be refunded; (2) for citizens from countries under agreements to be entitled to tax rates higher than 10% but lower than 20%, the withholding agents will withhold the individual income tax at the agreed-upon effective tax rate when distributing dividend (bonus), and are not obligated to file an application; and (3) for citizens from countries without tax agreements or are under other situations, the withholding agents will withhold the individual income tax at a tax rate of 20% when distributing dividend. Pursuant to the Notice of the State Administration of Taxation on the Issues Concerning Withholding Enterprise Income Tax on Dividends Paid by Chinese Resident Enterprises to H-Share Holders That Are Overseas Nonresident Enterprises (Guo Shui Han [2008] No.897), a PRC resident enterprise, when distributing dividends for 2008 and for the years afterwards to H-share holders which are overseas non-resident enterprises, shall be subject to enterprise income tax withheld at a uniform rate of 10%. Under the current practice of the Hong Kong Inland Revenue Department, no tax is payable in Hong Kong in respect of dividends paid by the Bank. Shareholders of the Bank are taxed and/or enjoy tax relief in accordance with the aforementioned regulations.

Material Environmental or Other Social Safety Issues During the reporting period, the Bank did not incur any material environmental or social safety issues.

Events Relating to Bankruptcy and/or Re-engineering During the reporting period, the Bank did not incur any event relating to bankruptcy and reconsolidation.

Major Risks For details on major risks of the Bank, please refer to “Management Discussion and Analysis” of this report.

hanges in Accounting Policies and Accounting Estimation or Correction of Significant C Accounting Errors During the reporting period, the Group did not make any changes in accounting policies and accounting estimation or correction of significant accounting errors.

Other Significant Events The Bank has disclosed all significant events incurred during the reporting period that are on the list of significant events to be disclosed as per Article 67 of the Securities Law of the People’s Republic of China and Article 30 of the Administrative Regulations on Listed Companies Information Disclosure in the form of interim announcements on the website of SSE (www.sse.com.cn), the HKExnews website of SEHK (www.hkexnews.hk) as well as the website of the Bank (bank.ecitic.com). By order of the Board of Directors

Chang Zhenming Chairman China CITIC Bank Corporation Limited 2015 Annual Report

Achievements in institutional reform and improvement in risk management and control

The Bank accelerated its building of comprehensive risk management system, established “three defense lines” for risk management, and therefore improved its risk management and control.

Changes in Share Capital and Shareholdings of Substantial Shareholders Changes in Share Capital Table on Changes in Shareholdings Unit: share

31 December 2014 Number of shares held

Changes (+,-)

Percentage (%)

New issue

Bonus issue

Capital reserve converted to shares

31 December 2015

Others

Subtotal

Shares subject to restrictions on sale: 1. Shares held by the state 2. Shares held by state-owned legal persons 3. Shares held by other domestic investors Including: Shares held by domestic non-state-owned legal persons Shares held by domestic natural persons 4. Foreign-held shares Including: Shares held by overseas legal persons Shares held by overseas natural persons

Number of shares held

Percentage (%)

Shares not subject to restrictions on sale: 1. Renminbi denominated ordinary shares 2. Domestically-listed foreign shares 3. Overseas-listed foreign shares 4. Others

46,787,327,034 31,905,164,057

100.00 68.19

0 0

46,787,327,034 31,905,164,057

100.00 68.19

14,882,162,977

31.81

14,882,162,977

31.81

Total shares

46,787,327,034

100.00

46,787,327,034

100.00

Shares held by Shareholders Subject to Restrictions on Sale As at the end of the reporting period, the Bank had neither shares nor shareholders subject to restrictions on sale.

Private Offering of A Shares and Subsequent Changes in Shareholding On 20 January 2016, the Bank completed the registration and custody formalities relating to its private offering of 2,147,469,539 A shares to China Tobacco Corporation, upon which time the Bank had a total share capital of 48,934,796,573 shares, including 2,147,469,539 shares subject to restrictions on sale, about 4.39% of total shares. Changes in shareholding thereof are detailed in the following table: Before the Change Number of shares held Percentage (%) Shares subject to restrictions on sale — Shares not subject to restrictions on sale 46,787,327,034 Total shares 46,787,327,034

— 100.00 100.00

The Change New shares issued 2,147,469,539 0 2,147,469,539

After the Change Number of shares held Percentage (%) 2,147,469,539 46,787,327,034 48,934,796,573

4.39 95.61 100.00

As per the duration of restrictions on sale, the privately offered shares subscribed by China Tobacco Corporation are expected to be publicly traded on 20 January 2019, which date shall be postponed to the next trading day in the case of a statutory holiday or weekend.

Changes in Share Capital and Shareholdings of Substantial Shareholders

Issuance and Listing of Securities Equity Financing To ensure a sustainable healthy development of its business operation, further improve its integrated competitiveness, risk resilience and sustainable profitability, and adapt to the increasingly stringent capital regulation requirements, the Board of Directors adopted relevant proposals including the Proposal on the Program of Private Offering of A Shares, giving consent to the offering of up to 2,462,490,897 (2,462,490,897th inclusive) Renminbi denominated domestically listed ordinary shares (A shares) with par value of RMB1.00 per share to China Tobacco Corporation at the subscription price of RMB4.84 per share. The aforementioned proposal on the private offering of A shares was adopted at the Bank’s Second Extraordinary General Meeting in 2014, First A Shareholders Class Meeting in 2014 and First H Shareholders Class Meeting in 2014 convened on 16 December 2014. On 30 July 2015, the Bank, as authorized by the general meeting, convened a meeting of the Board of Directors which adopted the Proposal on the Program of Private Offering of A Shares, changing the subscription price of the offering from RMB4.84 per share to RMB5.55 per share and the number of shares to be issued from 2,462,490,897 to 2,147,469,539. As at the end of the reporting period, the above-mentioned private offering plan was approved by both the CBRC and the CSRC. As per the Report of KPMG Huazhen (Special General Partnership) on Capital Verification regarding the Private Offering of Renminbi Denominated Ordinary Shares Made by China CITIC Bank Corporation Limited (KPMG Huazhen Yan Zi No. 1501428), as of 31 December 2015, the Bank received total proceeds of RMB11,918,455,941.45 from the private offering. After deducting issuance costs including but not limited to underwriting and sponsor fees, the private offering raised net proceeds of RMB11,888,695,194.53, which amount was fully used to replenish the Bank’s capital. On 20 January 2016, the Bank completed the formalities of registration, custody and restrictions on sale relating to its private offering of 2,147,469,539 A shares at China Securities Depository and Clearing Company Limited Shanghai Branch. After completion of the private offering, the Bank has a total share capital of 48,934,796,573 shares, including 34,052,633,596 A shares and 14,882,162,977 H shares. Before and after the offering, CITIC Corporation Limited was and remains the controlling shareholder of the Bank and CITIC Group its de facto controller. The private offering has not led to changes in the controlling relationship of the Bank. Please refer to the related announcements published on the website of SSE (www.sse.com.cn), the HKExnews website of SEHK (www.hkexnews.hk) as well as the website of the Bank (bank.ecitic.com) for detailed information.

Issuance of Other Bonds During the reporting period, with approval from the CBRC and the PBOC, the Bank successfully issued RMB7 billion and RMB8 billion financial bonds at the national inter-bank bond market through competitive bidding on 21 May and 13 November 2015, respectively. Both bond issues were for a maturity of 5 years at respective annual fixed interest rates of 3.98% and 3.61% at par. Proceeds raised from the two bond issues were transferred to the Bank’s account in full amounts and will be fully used to support loans for small and micro enterprises and thereby promote sustainable healthy business growth of the Bank.

Internal Employee Shares There are no internal employee shares issued by the Bank.

China CITIC Bank Corporation Limited 2015 Annual Report

Changes in Share Capital and Shareholdings of Substantial Shareholders

Information on Shareholders Total Number of Shareholders As at the end of the reporting period, the Bank had 245,475 shareholders in total, including 211,667 A shareholders and 33,808 H shareholders. As at the end of the previous month (i.e. 29 February 2016) prior to the disclosure date of this report, the Bank recorded a total number of 248,651 shareholders, including 214,886 A shareholders and 33,765 H shareholders.

Shareholdings of the Top 10 Shareholders Not Subject to Restrictions on Sale (As at the End of the Reporting Period) Unit: Share

Balance of shares subject to restrictions on sale

Increase or decrease of shareholding during the reporting period

Shares pledged or frozen

67.13% 25.89%

0 0

0 13,753,491

0 Unknown

Total number Shareholding of shares held percentage (%)

No. Name of shareholder

Nature of shareholder

Class of shares

1 2

State-owned Foreign

A-share, H-share 31,406,992,773 H-share 12,112,048,524

State-owned

A-share

871,422,670

1.86%

868,130,798

State-owned

A-share

272,838,300

0.58%

272,838,300

State-owned State-owned

H-share A-share

168,599,268 31,034,400

0.36% 0.07%

0 0

Unknown 0

State-owned State-owned Other

A-share A-share A-share

30,000,000 27,216,400 22,679,850

0.06% 0.06% 0.05%

0 0 0

30,000,000 -730,000 22,679,850

0 0 0

Other

A-share

21,516,935

0.05%

21,516,935

3 4 5 6 7 8 9 10

CITIC Corporation Limited Hong Kong Securities Clearing Company Nominee Limited China Securities Finance Corporation Limited Central Huijin Asset Management Corporation Limited China Construction Bank Limited Hebei Construction Investment (Group) Limited Liability Corporation NSSF Portfolio 503 China Poly Group Corporation Industry and Commerce Bank of China -SSE 50 ETF Securities Investment Fund Agricultural Bank of China Limited – E Fund Ruihui Flexible Allocation Mixed Launch Securities Investment Fund

Notes: (1)

The shareholdings of H shareholders were calculated based on the Bank’s share register maintained with the H-share registrar of the Bank.

On 20 January 2016, the Bank completed the formalities of registration, custody and restrictions on sale relating to its private offering of 2,147,469,539

(2)

A shares to China Tobacco Corporation at China Securities Depository and Clearing Company Limited Shanghai Branch. After completion of the private offering, the Bank has a total share capital of 48,934,796,573 shares, including 34,052,633,596 A shares and 14,882,162,977 H shares. China Tobacco Corporation holds 2,147,469,539 A shares of the Bank, about 4.39% of the Bank’s total share capital.

(3)

(4)

As at the end of the reporting period, BBVA confirmed that it held 1,525,036,861 shares or 3.26% of the Bank’s share capital via Hong Kong Securities Clearing Company Nominee Limited. Note on connected relations or concerted actions of the above shareholders: As per the 2015 Third Quarterly Report of China Construction Bank Limited, as of 30 September 2015, Central Huijin Investment Limited held 57.31% of China Construction Bank Limited’s shares. Except for this, as at the end of the reporting period, the Bank was not aware of any connected relation or concerted action between the above-mentioned shareholders.

Changes in Share Capital and Shareholdings of Substantial Shareholders

Interests and Short Positions Held by Substantial Shareholders and Other Persons As at the end of the reporting period, interests and short positions in the shares and underlying shares of the Bank held by substantial shareholders and other persons as recorded in the register that the Bank has maintained pursuant to Section 336 of the Securities and Futures Ordinance are as follows:

Name

Shareholding percentage of the issued share capital of the same class (%)

Number of shares held

Class of shares

(L)

BBVA

5,402,619,065 1,658,254,150(S) 24,329,608,919(L)

36.30 11.14(S) 76.26(L)

CITIC Group

5,470,998,787(L) 28,938,928,294(L)

36.76(L) 90.70(L)

CITIC Corporation Limited

7,018,100,475(L) 710(S) 28,938,928,294(L)

47.16(L) 0.00(S) 90.70(L)

CITIC Limited

2,468,064,479(L) 28,938,928,294(L)

16.58(L) 90.70(L)

H-share A-share

7,018,099,055(L) 28,938,928,294(L)

47.16(L) 90.70(L)

H-share A-share

Summit Idea Limited

2,292,579,000(L)

15.40(L)

H-share

Total Partner Global Limited

(L)

2,292,579,000 2,292,579,000(S)

15.40 15.40(S)

H-share

Li Ping

2,292,579,000(L)

15.40(L)

H-share

Haixia Industrial Investment Fund (Fujian) Limited

2,292,579,000(L) 2,292,579,000(S)

15.40(L) 15.40(S)

H-share

Haixia Capital Investment Fund Management Limited

2,292,579,000(L) 2,292,579,000(S)

15.40(L) 15.40(S)

H-share

Zhejiang Hexingli Holdings Group Limited

2,292,579,000(L)

15.40(L)

H-share

Zhejiang Xinhu Group Limited

2,292,579,000

(L)

15.40(L)

H-share

UBS SDIC Fund Management Co., Ltd.

2,292,579,000

(L)

15.40

(L)

H-share

SDIC Capital Holdings Co., Ltd.

2,292,579,000(L) 2,292,579,000(S)

15.40(L) 15.40(S)

H-share

State Development & Investment Corporation

2,292,579,000(L) 2,292,579,000(S)

15.40(L) 15.40(S)

H-share

Huang Wei

2,292,579,000(L)

15.40(L)

H-share

Gatherrise Limited

(L)

2,292,579,000 2,292,579,000(S)

15.40 15.40(S)

H-share

Xinhu Zhongbao Limited

2,292,579,000(L)

15.40(L)

H-share

Ningbo Jiayuan Industrial Development Limited

2,292,579,000

15.40

(L)

H-share

Funjian Investment and Development Group Corporation Limited

2,292,579,000(L) 2,292,579,000(S)

15.40(L) 15.40(S)

H-share

JPMorgan Chase & Co.

1,464,435,768(L) 35,654,883(S) 206,645,960(P)

9.84(L) 0.23(S) 1.38(P)

CITIC Shengxing Co., Ltd.

Note:

(L)

H-share A-share H-share A-share H-share A-share

H-share

(L) — long position, (S) — short position, (P) — lending pool.

Except for the information disclosed above, as at the end of the reporting period, there were no other interests or short positions of any other person or company in the shares or underlying shares of the Bank recorded in the register that the Bank has maintained pursuant to Section 336 of the Securities and Futures Ordinance requiring disclosure in accordance with Sections II and III of Part XV of the Securities and Futures Ordinance. China CITIC Bank Corporation Limited 2015 Annual Report

Changes in Share Capital and Shareholdings of Substantial Shareholders

Controlling Shareholder and De Facto Controller of the Bank As at the end of the reporting period, CITIC Corporation Limited was the controlling shareholder of the Bank. CITIC Limited was the single direct controlling shareholder of CITIC Corporation Limited. CITIC Group was the controlling shareholder of CITIC Limited, and the de facto controller of the Bank. CITIC Corporation Limited directly owned 28,938,928,294 A shares and 2,468,064,479 H shares of the Bank respectively, accounting for 61.85% and 5.28% of the total issued share capital of the Bank respectively. In total, CITIC Corporation Limited directly owned 31,406,992,773 shares of the Bank respectively, 67.13% of the Bank’s total share capital. With the Bank completing equity registration formalities for its private offering of A shares to China Tobacco Corporation on 20 January 2016, CITIC Corporation Limited directly held 31,406,992,773 shares of the Bank, 64.18% of the Bank’s total share capital as of 20 January 2016. CITIC Limited acquired additional 10,313,000 H shares of the Bank via its subsidiary on 22 January 2016 and thereafter together with its subsidiaries owned 31,417,305,773 shares of the Bank, representing 64.20% of the Bank’s total share capital. Advocated and supported by Mr. Deng Xiaoping, CITIC Group was established in 1979 by Mr. Rong Yiren. Since then, CITIC Group has fully played its important role as the pilot corporation for economic reform and the window for opening up in China. With fruitful explorations and innovation in many areas, CITIC Group has built itself a sound image and reputation at home and abroad. At present, CITIC Group has developed into a large comprehensive multinational conglomerate, paying equal attention to financial services and the real economy. Its financial services cover multiple industries and areas, including but not limited to banking, securities, trust, insurance, fund and asset management. In the real economy, CITIC Group does business in real estate, project contracting, resources, energy, infrastructure, machine manufacturing and information technology, enjoying strong integrated competitiveness and a sound momentum of development. In December 2011, with the approval from the State Council, CITIC Group contributed, together with its wholly-owned subsidiary Beijing CITIC Enterprise Management Co., Ltd., the majority of its existing operating net assets to establish CITIC Limited, with CITIC Group and Beijing CITIC Enterprise Management Co., Ltd. holding 99.9% and 0.1% of CITIC Limited’s equity interest respectively. CITIC Group as a whole was restructured into a wholly state-owned company. To complete the afore-mentioned capital contribution, CITIC Group transferred its entire equity in the Bank to CITIC Limited as capital contribution, as a result of which CITIC Limited held 28,938,929,004 shares in the Bank both directly and indirectly, accounting for 61.85% of the Bank’s total share capital. The above-mentioned share transfer was approved by the State Council, the MOF, the CBRC, the CSRC and the Hong Kong Monetary Authority. In February 2013, the relevant formalities for the share transfer were officially completed with approvals from the SSE and China Securities Depositary and Clearing Corporation Limited Shanghai Branch. In October 2013, BBVA transferred to CITIC Limited 2,386,153,679 H shares it held in the Bank, about 5.10% of the total share capital of the Bank, after which CITIC Limited increased its shareholding of the Bank to 66.95%. In August 2014, CITIC Group injected its main business assets entirely into its Hong Kong listed subsidiary CITIC Pacific, and renamed it CITIC Limited. The former CITIC Limited was renamed CITIC Corporation Limited. CITIC Limited held 100% equity in CITIC Corporation Limited. In September 2014, CITIC Corporation Limited owned an additional 81,910,800 H shares of the Bank via agreement transfer, after which, CITIC Corporation Limited held 31,406,992,773 A and H shares of the Bank, representing approximately 67.13% of the Bank’s total share capital. As at the end of the reporting period, CITIC Group’s legal representative was Mr. Chang Zhenming. Its business scope covers: information services under value-added telecommunication services Category II (only restricted to Internet information services) which exclude press, publication, education, medical and health care, pharmaceuticals, and medical devices but include electronic advertising services, and effective until 9 January 2019, and dispatch of required workers to overseas projects consistent with its resources, scale and performance. investment in and management of domestic and overseas financial enterprises and related industries including banking, securities, insurance, trust, asset management, futures, leases, funds and credit cards; investment in energy, transportation infrastructure, mining, forestry resources development and raw materials industry, machinery manufacturing, real estate development, information infrastructure, basic telecommunications and value-added telecom services, environmental protection, pharmaceuticals, biological engineering and new materials, aviation, transportation, warehousing, hotels, tourism, domestic and international trade, commerce, education, publication, media, culture and sports, domestic and overseas project design, construction, contracting and sub-contracting, and industrial investment; project tendering, exploration, design, construction, supervision, contracting and sub-contracting and consulting services; asset management; capital operation; and import and export. (Business projects that require prior approval according to law may only start operation upon such approval from competent authorities.)

Changes in Share Capital and Shareholdings of Substantial Shareholders

As at the end of the reporting period, CITIC Corporation Limited had a registered capital of RMB139.00000 billion with Mr. Chang Zhenming being its legal representative and its organizational code being 71783170-9. Its business scope covers: 1. Investment in and management of the financial sector, including investment in and management of domestic and overseas financial enterprises and related industries such as banking, securities, insurance, trust, asset management, futures, leases, funds and credit cards; 2. Investment in and management of the non-financial sector, including (1) energy, transportation and other infrastructure; (2) mining, forestry and other resources development and the raw materials industry; (3) machine manufacturing; (4) real estate development; (5) the information industry: information infrastructure, basic telecommunications and value-added telecom services; (6) commercial and trade services and other industries; environment protection; pharmaceuticals, biological engineering and new materials; aviation, transportation, warehousing, hotels and tourism; domestic and international trade, import and export, commerce; education, publication, media, culture and sports; consulting services; 3. Grant of shareholder loans to its domestic and overseas subsidiaries; capital operation; asset management; domestic and overseas project design, construction, contracting and sub-contracting, and labor export; and other business items approved by competent authorities. (This enterprise was transformed from a domestic enterprise to a foreign-invested enterprise on 22 July 2014; Business projects that require prior approval according to law may only start operation upon such approval from competent authorities. As at the end of the reporting period, the ownership structure and controlling relationship between the Bank, its controlling shareholder and its de facto controller is as follows:

CITIC Group Corporation

100%

CITIC Shengrong Co., Ltd.

CITIC Shengxing Co., Ltd.

32.53%

25.60%

CITIC Limited 100%

CITIC Corporation Limited 67.13%

China CITIC Bank Corporation Limited Note:

CITIC Shengrong Co., Ltd. and CITIC Shengxing Co., Ltd. are both wholly-owned affiliated subsidiaries of CITIC Group incorporated in the British Virgin Islands. As at 20 January 2016, CITIC Corporation Limited held about 64.18% of the Bank’s total share capital.

China CITIC Bank Corporation Limited 2015 Annual Report

Changes in Share Capital and Shareholdings of Substantial Shareholders

Equity interests in other major domestic and overseas listed companies held or controlled by CITIC Corporation Limited and CITIC Limited are listed as follows (as at 31 December 2015): Name of shareholder

Name of listed company

Place of listing

CITIC Corporation Limited 15.59%

CITIC Securities Company Limited

Shanghai, Hong Kong

600030.SH 6030.HK

15.59%

CITIC Offshore Helicopter Corporation Limited 38.63%

CITIC Offshore Helicopter Corporation Limited

Shenzhen

000099.SZ

38.63%

CITIC Corporation Limited 62.7% CITIC Investment Holdings Limited 4.69% CITIC Automobile Co., Ltd. 2.34%

CITIC Heavy Industries Co., Ltd.

Shanghai

601608.SH

69.73%

Keentech Group Ltd 49.57% CITIC Australia 9.55% Extra Yield International Ltd. 0.38%

CITIC Resources Holdings Limited

Hong Kong

1205.HK

59.50%

Hong Kong

1135.HK

74.43%

Hong Kong

1091.HK

43.46%

Hong Kong

1883.HK

58.77%

Hong Kong

1828.HK

56.07%

Shenzhen

000708.SZ

58.13%

Singapore

U19.SG

87.59%

Bowenvale Ltd 74.43%

Asia Satellite Telecommunications Holdings Limited

Highkeen Resources Limited 34.39% APEXHILL INVESTMENTS LIMITED 9.07%

CITIC Dameng Mining Industries Ltd

Richtone Enterprises Inc. 3.99% Ease Action Investments Corp. 36.71% Silver Log Holdings Ltd 18.07%

CITIC Telecom International

Numerous subsidiaries of CITIC Pacific jointly 56.07%

Dah Chong Hong Holdings Limited

CITIC Pacific (China) Investment Limited 28.18% Hubei Xinye Steel Co., Ltd. 29.95%

Daye Special Steel Co., Ltd.

CKM (Cayman) Company Limited 87.59%

CITIC Envirotech Ltd.

Stock code

Shareholding percentage (%)

Notes: (1)

The table only lists the major listed subsidiaries whose shares are held and/or controlled by CITIC Corporation Limited and CITIC Limited.

(2)

The shareholding percentages listed in the table are those of the direct shareholders.

(3)

CKM (Cayman) Company Limited is a non-wholly-owned subsidiary of CITIC Environment Investment Group Corporation Limited. The latter, a whollyowned subsidiary of CITIC Corporation Limited, holds 62.65% equity in CKM (Cayman) Company Limited.

Equity interests in other major domestic and overseas listed companies held or controlled by CITIC Group are listed as follows (as at 31 December 2015): No. Name of invested company 1

CITIC Limited

Stock code

Shareholding percentage

HK.0267

58.13%

Shareholder (s) CITIC Shengxing Co., Ltd. 32.53% CITIC Shengrong Co., Ltd. 25.60%

Notes: (1)

The above table only lists the major listed subsidiaries whose shares are held and/or controlled by CITIC Group.

The shareholding percentages listed in the table are those of the direct shareholders.

(2)

Other Legal-Person Shareholders Holding 10% or More Shares of the Bank As at the end of the reporting period, there were no other legal-person shareholders holding 10% or more shares of the Bank except CITIC Corporation Limited.

Preference Shares On 20 March 2015, the Board of Directors of the Bank deliberated and adopted relevant proposals including the Proposal on the Program on Private Offering of Preference Shares, giving consent to the offering of up to 350,000,000 (350,000,000th inclusive) Renminbi denominated preference shares at RMB100.00 par value per share. The aforementioned proposal on the private offering of preference shares was adopted at the Bank’s 2014 Annual General Meeting, the First A Shareholders Class Meeting in 2015 and the First H Shareholders Class Meeting in 2015 convened on 26 May 2015. The above-mentioned Program on Private Offering of Preference Shares obtained approval and regulatory opinion from the CBRC on 1 September and 15 October 2015, respectively, and needs to be submitted to the CSRC for approval and implementation thereafter. At the moment, the Bank is actively preparing review materials for the CSRC and plans to complete the first issuance by the end of 2016. Please refer to the related announcements published on the website of SSE (www.sse.com.cn), the HKExnews website of SEHK (www.hkexnews.hk) as well as the website of the Bank (bank.ecitic.com) for detailed information.

China CITIC Bank Corporation Limited 2015 Annual Report

Directors, Supervisors, Senior Management and Staff Basic Information on Directors, Supervisors and Senior Management of the Bank Board of Directors Name

Position

Gender

Date of birth

Term of office

Year-beginning shareholding

Year-end shareholding

Chang Zhenming Zhu Xiaohuang Li Qingping Sun Deshun Zhang Xiaowei Li Zheping Wu Xiaoqing Wong Luen Cheung Andrew Yuan Ming

Chairman, Non-executive Director Non-executive Director Executive Director, President Executive Director, First Vice President Non-executive Director Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director

Male Male Female Male Male Male Female Male Male

Oct. 1956 Jul. 1956 Oct.1962 Nov.1958 Oct. 1957 Feb. 1965 Oct. 1953 Aug. 1957 Jan. 1952

Aug.2013-May 2018 Jan. 2013-May 2018 Mar. 2014-May 2018 Mar. 2014-May 2018 Jan. 2013-May 2018 May 2009Oct. 2012-May 2018 Nov. 2012-May 2018 Sep. 2014-

0 0 0 0 0 0 0 0 0

Notes: 1.

The starting time of the terms of office of the continuing directors, supervisors and senior management members mentioned refers to the time of their respective initial assumption of office of these positions. The same applies below.

Having been an independent director of the Bank for more than 6 years, Mr. Li Zheping will complete the relevant departure formalities in accordance with the provisions of the Bank’s Articles of Association, subject to the conditions that the new independent director replacing him officially assumes office and that the Bank’s number of board members and board structure comply with regulatory requirements.

Mr. Yuan Ming resigned his positions as independent director, Chairman and member of the Audit and Related Party Transactions Control Committee, and member of the Nomination and Remuneration Committee of the Board of Directors of the Bank on 11 December 2015 due to personal time arrangement reasons. Before the new independent director replacing him officially assumes office, however, Mr. Yuan Ming will continue to perform his duties in connection with the afore-mentioned positions.

Board of Supervisors

Name

Title

Gender

Date of birth

Term of office

Year-beginning shareholding

Year-end shareholding

Cao Guoqiang Shu Yang Wang Xiuhong Jia Xiangsen Zheng Wei Cheng Pusheng Wen Shuping Ma Haiqing

Chairman of the Board of Supervisors Supervisor External Supervisor External Supervisor External Supervisor Employee Representative Supervisor Employee Representative Supervisor Employee Representative Supervisor

Male Male Female Male Male Male Female Male

Dec. 1964 May 1965 Oct.1946 April.1955 Mar.1974 Feb. 1968 Apr.1957 Dec.1970

Dec.2015-May 2018 Oct.2015-May 2018 Jan.2014-May 2018 May 2015-May 2018 May 2015-May 2018 May 2015-May 2018 Jan.2015-May 2018 May 2015-May 2018

0 0 0 0 0 0 0 0

Directors, Super visors, Senior Management and Staff

Senior Management Members Name

Title

Gender

Date of birth

Term of office

Year-beginning shareholding

Year-end shareholding

Li Qingping Sun Deshun Zhang Qiang Zhu Jialin Fang Heying Guo Danghuai Yang Yu Qiao Wei

Executive Director, President Executive Director, First Vice President Vice President Vice President Vice President in charge of finance function Vice President Vice President Secretary of the Committee for Disciplinary Inspection Secretary to the Board of Directors

Female Male Male Male Male Male Male

Oct. 1962 Nov. 1958 Apr. 1963 Oct. 1964 Jun. 1966 May 1964 Dec. 1962

Since Jul. 2014 Since Dec. 2011 Since Mar. 2010 Since Sep. 2014 Since Nov. 2014 Since Nov. 2014 Since Dec. 2015

0 0 0 0 0 0 0

Male Male

Sep. 1966 Jun. 1972

Since Aug. 2015 Since May 2015

0 16800

Wang Kang Note:

Please refer to “Interests and Short Positions in the Shares, Underlying Shares and Debentures of the Bank Held by Its Directors, Supervisors and Senior Management” of this chapter for Board Secretary Wang Kang’s shareholding in the Bank.

Non-incumbent Directors, Supervisors and Senior Management Members (From 1 January 2015 till the Disclosure Date of the Report) Name Dou Jianzhong Gonzalo José Toraño Vallina Ouyang Qian Zheng Xuexue Li Gang Deng Yuewen Su Guoxin Cao Guoqiang Wang Lianfu Li Xin

Position prior to departure from office Non-executive Director Non-executive Director Chairman of the Board of Supervisors Supervisor Employee Representative Supervisor Employee Representative Supervisor Vice President Vice President Secretary of the Committee for Disciplinary Inspection and Chairman of Trade Union Secretary to the Board of Directors

Gender

Date of birth

Departure time

Year-beginning shareholding

Year-end shareholding

Male Male Male Male Male Male Male Male Male

Feb.1955 Nov.1960 Sep. 1955 Feb.1955 Mar.1969 Jan.1964 Feb. 1967 Dec. 1964 Oct.1954

May 2015 May 2015 Oct. 2015 Aug. 2015 May 2015 May 2015 Aug. 2015 Oct. 2015 Aug. 2015

0 0 0 0 0 0 0 0 0

Male

Jan.1970

May 2015

China CITIC Bank Corporation Limited 2015 Annual Report

Directors, Super visors, Senior Management and Staff

Resumes of Directors, Supervisors and Senior Management Members Directors

100

Mr. Chang Zhenming

Mr. Zhu Xiaohuang

Ms. Li Qingping

Chinese Nationality

Chairman and non-executive director of the Bank. Mr. Chang joined the Bank’s Board of Directors in August 2013. Mr. Chang has been Chairman of CITIC Group and CITIC Corporation Limited since December 2011, Chairman of the Board of Directors of CITIC Limited (formerly known as CITIC Pacific) since April 2009, Chairman of CITIC Hong Kong (Holdings) Limited since March 2011, vice chairman of CIFH and chairman of CIAM since October 2006, and chairman of CITIC Press Group since February 2008. Mr. Chang served as the chairman of CITIC Group from December 2010 to December 2011, and as the vice chairman and president of CITIC Group from July 2006 to December 2010. He was a vice chairman and a non-executive director of the Bank from December 2006 to May 2011, and served as a non-executive director of CNCBI from November 2006 to March 2013. Mr. Chang was a vice chairman and president of China Construction Bank Corporation from July 2004 to July 2006. Mr. Chang was an executive director and a vice general manager of CITIC Group from August 1995 to July 2004, and assistant president of China International Trust and Investment Corporation from January 1994 to August 1995. Mr. Chang was a vice president of the Bank from September 1993 to January 1994 and assistant president of the Bank from October 1992 to September 1993. Mr. Chang is a senior economist. He graduated from Beijing Second Foreign Language College with a bachelor’s degree in Japanese language and literature, and received his master’s degree in business administration from New York College of Insurance.

Non-executive director of the Bank. Mr. Zhu was the president of the Bank from September 2012 to June 2014, an executive director of the Bank from January 2013 to June 2014, resigned his president-ship and became a non-executive director of the Bank in July 2014. Mr. Zhu is currently Chairman of the Board of Supervisors of CITIC Group. From August 2012 to July 2014, Mr. Zhu was a vice general manager of CITIC Limited. From February 2011 to August 2012, Mr. Zhu was an executive director and vice president of China Construction Bank Corporation (“CCB”). He worked at CCB as an executive director, vice president and chief risk officer from July 2010 to February 2011. Mr. Zhu served as vice president and chief risk officer of CCB from June 2008 to July 2010. He was the chief risk officer of CCB from April 2006 to June 2008. From March 2006 to April 2006, he was an executive vice chairman of CCB’s risk management and internal control committee. Mr. Zhu served as general manager of the corporate banking business department of CCB from October 2004 to March 2006. He was the president of Guangdong branch of CCB from May 2001 to October 2004. Mr. Zhu served successively as deputy director of administrative office, deputy director of head office’s No. 1 credit department, deputy general manager of credit management department, vice president of Liaoning Branch, and general manager of banking department of CCB from September 1993 to May 2001. He served successively as a cadre, deputy director and director of the head office’s regulatory department of CCB from February 1982 to September 1993. Mr. Zhu is a senior economist, and a recipient of a special PRC government grant. He obtained his bachelor’s degree in infrastructure finance and credit from Hubei Finance and Economics College in 1982 and obtained a degree in economic law from Peking University in October 1985. He also obtained his doctorate degree in world economics from Sun Yat-Sen University in 2006.

Executive director and President of the Bank. Ms. Li has been a non-executive director of the Bank since March 2014, Party Secretary of the Bank since May 2014, and an executive director and President of the Bank since July 2014. She takes overall charge of the Bank’s work in general and the Human Resources Department, the Information Department, the Software Development Center and the Data Center in particular. Ms. Li is concurrently an executive director of CITIC Group, an executive director/vice general manager/ executive committee member of CITIC Limited, an executive director/vice general manager of CITIC Corporation Limited, Chairperson of CIFH, and vice chairperson of CITIC Prudential Life Insurance. Prior to that, Ms. Li was Party committee member of CITIC Group and concurrently vice general manager/ Party committee member of CITIC Limited between September 2003 and May 2014, director of retail banking and concurrently general manager of personal banking and personal credit department of Agricultural Bank of China (ABC) from January 2009 to May 2009, Party Secretary and President of ABC Guangxi Branch from January 2007 to December 2008, and earlier, a cadre, deputy section chief, section chief, deputy general manager and general manager of the International Banking Department at the ABC Head Office from August 1984 to January 2007. Ms. Li enjoys over 30 years’ professional experience in the Chinese banking industry. She is a senior economist and graduated from Nankai University in international finance with a master’s degree in economics.

Directors, Super visors, Senior Management and Staff

Mr. Sun Deshun

Mr. Zhang Xiaowei

Mr. Li Zheping

Chinese Nationality

Executive director and first-vice president of the Bank. Mr. Sun Deshun has been a vice Party secretary of the Bank since October 2011, a vice president of the Bank since December 2011, an executive director of the Bank since March 2014, and first-vice president of the Bank since May 2014. He now takes specific charge of the Risk Management Department, Credit Approval Department, Credit Grant Management Department and Law and Preservation Department, and cocharge of the Human Resources Department. He is concurrently Chairman of CNCBI. Prior to that, Mr. Sun worked at the Bank of Communications of China (BOCC) as a vice president of BOCC’s Beijing management department and concurrently Party secretary and president of BOCC Beijing branch from January 2010 to October 2011, and Party secretary/president of BOCC Beijing branch from December 2005 to December 2009. He worked in Haidian office, Haidian sub-branch, Beijing branch and data center (Beijing) of Industrial and Commercial Bank of China (ICBC) from May 1984 to November 2005, during which period he held various positions including assistant president and vice president of ICBC Beijing branch from December 1995 to November 2005, and general manager of the ICBC data center (Beijing) from January 1999 to April 2004. Mr. Sun worked in the PBC from April 1981 to May 1984. Mr. Sun enjoys over 30 years’ experience in the Chinese banking industry. He graduated from Dongbei University of Finance and Economics with a master’s degree in economics.

Non-executive director of the Bank. Mr. Zhang joined the Bank’s Board of Directors in January 2013. He is currently an executive director, president and chief executive officer of CNCBI in Hong Kong. Prior to that, Mr. Zhang was an executive director and the general manager of Wing Lung Bank Limited from January 2012 to September 2012. From 2002 to the end of 2011, Mr. Zhang was the president of China Merchants Bank Hong Kong branch. From 2000 to 2002, he worked at the Hong Kong representative office of China Merchants Bank as the chief representative, during which period he led the preparation work for the establishment of China Merchants Bank Hong Kong branch. From 1995 to 2000, Mr. Zhang worked at Bank of Communications Hong Kong branch and served as a vice president. From 1991 to 1995, Mr. Zhang worked at Bank of Communications Hainan branch and served as the head of the international business department and a vice president of the bank. From 1984 to 1991, he worked in different departments at the headquarters of the Agricultural Bank of China Limited including the planning department, the economic restructuring office and the international business department, and served successively as a clerk, deputy division head and division head. Mr. Zhang has 31 years’ experience in the banking industry in both mainland China and Hong Kong. Mr. Zhang received a master’s degree in monetary banking from the Graduate School of the People’s Bank of China.

Independent non-executive director of the Bank. Mr. Li joined the Bank’s Board of Directors in May 2009. He is the chief executive officer and editor-in-chief of the Modern Bankers press. He was chairman of Tongxin Assets Valuation Co., Ltd. from 1995 to 2003, editor-in-chief of the Theory Column of China Securities Journal from 1993 to 1995, a teaching assistant at the China Financial Training Center from 1989 to 1993. Mr. Li is an independent director of UBS SDIC Fund Management Co., Ltd. from August 2008 to present, an independent director of Guangdong Nanyue Bank from July 2014 to present, an independent director of Everbright Securities Company Limited from November 2014 to present. Mr. Li graduated from Shanxi University of Finance and Economics with a bachelor’s degree in economics, and obtained a master’s degree in economics from the Graduate School of the PBC head office.

China CITIC Bank Corporation Limited 2015 Annual Report

101

Directors, Super visors, Senior Management and Staff

102

Ms. Wu Xiaoqing

Mr. Wong Luen Cheung Andrew Mr. Yuan Ming

Chinese Nationality

Independent non-executive director of the Bank. Ms. Wu joined the Board of Directors of the Bank in October 2012. She retired in October 2008. Ms. Wu was the deputy accountant general of Sinosteel Corporation and chairman of Sinosteel Assets Management Co., Ltd. from September 2005 to October 2008, the deputy accountant general of Sinosteel Corporation and a director of Sinosteel Assets Management Co., Ltd. from December 1999 to September 2005. She successively served as the deputy head and the head of the Financial Department of Sinosteel Corporation from January 1995 to December 1999. Prior to that, Ms. Wu successively worked in the Finance Division of the Government Offices Administration of the State Council and the Finance Department of China Metallurgical Raw Materials Corporation. Ms. Wu has long been engaged in the fields of financial and accounting management, with rich working experience in financial management and accounting for large central-government-owned enterprises, and is familiar with accounting standards and relevant laws and regulations on corporate tax. Ms. Wu is a Chinese certified public accountant and a senior accountant. She graduated from the Department of Finance of Renmin University of China (majoring in accounting) with a bachelor’s degree.

Independent non-executive director of the Bank. Mr. Wong joined the Board of Directors of the Bank in November 2012. He is an independent director of CANADIAN SOLAR INC and an independent nonexecutive director of ACE Life Insurance Co., Ltd. Mr. Wong is also an independent nonexecutive director and vice chairman of the board of directors of Huangzhong Holdings Company Limited, an external director of Shenzhen Yantian Port Group Co., Ltd. and a senior advisor to the vice chairman of the board of Henderson Land Development Company Limited. Besides, he is a director of China Overseas Friendship Association. Since 2013, Mr. Wong Luen Cheung Andrew has been a member of the eleventh Chinese People’s Political Consultative Conference (CPPCC), Shaanxi Provincial Committee, Xian, China. Mr. Wong held various senior positions at the Royal Bank of Canada, including the vice representative for China operations, representative of southern China, and branch manager of the Shanghai branch. He also held various positions at the Union Bank of Switzerland, including head of China desk and executive director of debt capital markets. Mr. Wong previously also served as a director of China Citicorp International Limited, a merchant banking arm of Citibank. Further, Mr. Wong was the head of Greater China business of Hang Seng Bank Limited and the managing director of corporate and investment banking — Greater China of DBS Bank Limited, Hong Kong. Mr. Wong Luen Cheung Andrew has been a member of the CPPCC Shenzhen Committee since 2002. Mr. Wong Luen Cheung Andrew was awarded the National Excellent Independent Director by the SSE in 2010 and also received the Medal of Honor (Hong Kong SAR) from the Hong Kong SAR Government in 2011

Independent non-executive director of the Bank. Mr. Yuan joined the Board of Directors of the Bank in September 2014. From December 2011 to March 2013, Mr. Yuan served as a deputy director of the economic committee of Guangxi Zhuang Autonomous Region Committee of the tenth session of CPPCC. From December 2003 to February 2012, Mr. Yuan served as the head and party committee secretary of Guangxi Branch of China Construction Bank, where he already was the principal head from April 2003 to December 2003. From July 1997 to April 2003, he was the head and party committee secretary of Jilin Branch of China Construction Bank. From July 1987 to July 1997, he was the deputy head and party committee member of Jilin Branch of China Construction Bank. From February 1986 to July 1987, Mr. Yuan served as an office manager of Jilin Branch of China Construction Bank. From November 1984 to February 1986, Mr. Yuan served as the head and party committee secretary of Tonghua central sub-branch of China Construction Bank Jinlin Branch. From February 1979 to November 1984, Mr. Yuan served as a cadre, chief clerk and deputy head of the comprehensive planning division of Jilin Branch of China Construction Bank. From October 1975 to February 1979, Mr. Yuan was a cadre of the finance and trade office of Yanbian government. From September 1973 to October 1975, Mr. Yuan studied in Jilin Yanbian Finance and Trade College, majoring in commerce and economics. From December 1968 to September 1973, he was an intellectual youth in the Dapuchaihe commune of Dunhua County, Jilin Province. Mr. Yuan is a senior economist, and has obtained a master’s degree in economics.

Directors, Super visors, Senior Management and Staff

Supervisors

Mr. Cao Guoqiang

Mr. Shu Yang

Ms. Wang Xiuhong

Chinese Nationality

Chairman of the Board of Supervisors of the Bank. Mr. Cao has been Chairman of the Board of Supervisors of the Bank since December 2015, in charge of the Audit Department of the Bank. He serves a temporary position at CITIC Group as the general manager of its finance department since April 2015. He is a director of CITIC Holdings Limited since December 2015, a director of CITIC Heye Investment Co. Ltd. since December 2013, and a director of CIFH and CNCBI since October 2009. He was vice president of the Bank from March 2010 to October 2015, assistant president of the Bank from April 2006 to March 2010, and general manager of the Budget and Finance Department of the Bank from April 2005 to April 2006. Prior to that, Mr. Cao served as assistant general manager, deputy general manager and general manager of the planning and treasury department of China Merchants Bank (CMB) head office, general manager of the planning and treasury department of CMB’s Shenzhen administrative department, a director and deputy general manager (in charge) of China Merchant Bank Pawn Co., Ltd., and a director of Shenzhen Speed International Investment Co., Ltd. Mr. Cao also worked in the planning and treasury division of the PBC Shaanxi branch as a senior staff member and deputy section chief from July 1988 to June 1992. Mr. Cao is a senior economist with nearly 30 years’ experience in Chinese banking industry. He graduated from Hunan College of Finance and Economics with a bachelor’s degree in monetary banking and obtained his master’s degree in monetary banking from Shaanxi College of Finance and Economics.

Shareholder representative supervisor of the Bank. Mr. Shu has been concurrently general manager of the Audit Department of CITIC Group and general manager of the Audit, Inspection and Compliance Department of CITIC Limited since May 2015. He was general manager of the Risk Management Department of CITIC Group from January 2010 to May 2015. In his career he held numerous positions including project manager at Bohai Aluminum Section of CITIC Industrial Investment Group Corp. Ltd., deputy head of the project division under the comprehensive planning department of CITIC Group Corporation, treasurer of CITICSTEEL USA Inc., vice general manager of CITIC USA Holding Inc., vice director of the project division under the comprehensive planning department of CITIC Group Corporation, vice general manager and general manager of CITICSTEEL USA Inc., and general manager and chief New York Office representative of CITIC USA Holding Inc. Mr. Shu graduated from Nanjing University of China majoring in quantitative mathematics, and Widener University of the USA majoring in accounting.

External supervisor of the Bank. Ms. Wang is honorary president of China Women Judges Society. She was president of China Women Judges Society and vice president of China Judges Society from December 2003 to January 2015. Ms. Wang served as a member of the judicial committee of the Supreme People’s Court of PRC (vice minister level) from October 2004 to December 2010; head of the administrative tribunal and a member of the judicial committee of the Supreme People’s Court of PRC from May 2003 to September 2004; a deputy director of Political Department of the Supreme People’s Court of PRC from February 1997 to April 2003; executive vice president and deputy Party secretary of the High People’s court of Jilin province and vice president of China Women Judges Association from February 1994 to January 1997. Prior to that, Ms. Wang had successively served at Siping District Timber Company in Jilin, Intermediate People’s court of Siping District, Liaoyuan Intermediate People’s court and Jilin Intermediate People’s court. With her long-term services in the judicial system, Ms. Wang is very experienced in legal matters. Ms. Wang graduated from Beijing Political Science and Law School (currently known as China University of Political Science and Law).

China CITIC Bank Corporation Limited 2015 Annual Report

103

Directors, Super visors, Senior Management and Staff

104

Mr. Jia Xiangsen

Mr. Zheng Wei

Mr. Cheng Pusheng

Chinese Nationality

External supervisor of the Bank. Mr. Jia was concurrently chief audit executive and director general of the audit bureau of Agricultural Bank of China (“ABC”) head office between March 2010 and March 2014, and headed the ABC head office audit bureau between April 2008 and March 2010. From April 1984 to April 2008, Mr. Jia held various positions at ABC Beijing Branch, including, among others, deputy head of Fengtai District sub-branch, deputy division director (in charge), head of Dongcheng District sub-branch, and eventually vice president and vice Party secretary of the branch. He was also general manager of the Corporate Banking Department of ABC head office, and president of Agricultural Bank of Guangdong Province. Prior to that, he worked at Chaoyang and Fengtai District Offices of Beijing Municipal People’s Bank. Mr. Jia graduated from the graduate school of the Chinese Academy of Social Sciences majoring in monetary banking.

External supervisor of the Bank. Mr. Zheng is a professor and Dean of Risk Management and Insurance Science at the School of Economics in Peking University. Since March 1999 to present, Mr. Zheng has been assistant dean, deputy dean and dean of Risk Management and Insurance Science at the School of Economics in Peking University. From July 1998 to present, he has had numerous titles including teaching assistant, lecturer, associate professor, professor, and Ph.D. tutorprofessor at the School of Economics in Peking University. He was an independent director of Bank of China Insurance Limited between April 2008 and April 2014, a member of the Risk Management Committee and chairman of the Audit Committee of the company’s Board of Directors. Between August 1999 and January 2000, Mr. Zheng was a visiting scholar to the Business School of the University of Wisconsin–Madison. Mr. Zheng graduated from the School of Economics in Peking University with a doctoral degree in finance.

Employee representative supervisor of the Bank. Mr. Cheng has been general manager of the Audit Department of the Bank since May 2015 when the CBRC approved his qualifications for office. He was general manager of the Bank’s Centralized Procurement Center between October 2013 and January 2015, deputy general manager of the Bank’s Budget and Finance Department and concurrently head of the financial management division within the department between August 2008 and March 2011, head of the financial management division within the Budget and Finance Department between June 2005 and August 2008, deputy head of the budget management division within the Budget and Finance Department between March 2004 and June 2005, and before that a staff member, deputy section chief, section chief and deputy general manager at the Bank’s Budget and Finance Department. Mr. Cheng did his master’s program at the Graduate School of Shaanxi College of Finance and Economics between August 1992 and July 1995, and worked as an employee at Wanrong sub-branch of People’s Bank of China Shanxi Branch.

Directors, Super visors, Senior Management and Staff

Ms. Wen Shuping

Mr. Ma Haiqing

Chinese Nationality

Employee representative supervisor of the Bank. Since June 2013 to present, she has been the chairperson of the trade union (vice president level) of Nanchang Branch. From March 2011 to June 2013, she served as a member of the CPC Committee (vice president level), chairperson of the trade union and secretary of the discipline inspection commission of Nanchang Branch. From July 2009 to March 2011, she was a member of the CPC Committee (assistant president level), the chairperson of the trade union and secretary of the discipline inspection commission of Nanchang Branch. During April 2009 to July 2009, she was a member of the CPC Committee (assistant president level) and the chairperson of the trade union of Nanchang Branch. She was chairperson of the trade union (assistant president level) from February to April 2009 of Nanchang Branch. From November 2007 to February 2008, she was secretary of the Party committee of Nanchang Branch. From January 2003 to October 2007, Ms. Wen served as a deputy department director level cadre at Jiangxi Branch of China Development Bank. She was a personnel & education cadre at the business department, deputy director of the personnel training department and the organization department of the Jiangxi Branch of Agricultural Development Bank of China (“ABC”) from March 1997 to December 2002.Ms. Wen worked at the personnel department of ABC Jiangxi Nanchang Suburb Branch from May 1991 to February 1997 where she was an officer and then a deputy section chief. From October 1987 to April 1991, Ms. Wen worked at ABC Jiangxi Fengcheng Branch. From March 1985 to September 1987, Ms. Wen worked at the trade union of the Food Bureau of Jiangxi Yichun Shanggao County as the Secretary of Youth League Committee and a trade union officer. From June 1980 to February 1985, Ms. Wen worked at Zhendu Grain Management Agency and Grain & Oil Processing Factory of the Food System of Shanggao County. From December 1978 to May 1980, she served as the deputy secretary of the Communist Youth League and deputy director of the All-China Women’s Federation Zhendu Commune Branch, Shanggao County. From July 1975 to November 1978, she was sent to Jingtou Village, Zhendu Commune, Shanggao County and was elected as a member of the policy education team of the commune and the county. Ms. Wen holds a bachelor’s degree in political education.

Employee representative supervisor of the Bank. Mr. Ma has headed the General Office of the Bank’s Head Office since February 2015. Between July 2013 and February 2015, he was the general manager of the business settlement division under the Business Department at the Bank’s Head Office; from May 2012 to July 2013, he was the general manager of the accounting division under the Business Department at the Bank’s Head Office; and between September 2009 to May 2012, he was the deputy general manager of the corporate banking division under the Business Department at the Bank’s Head Office. Mr. Ma has worked at CITIC Bank since 1994, holding various positions including staff member at the Bank’s Leasing Department and Credit Department, staff member, deputy division director and assistance general manager at the corporate banking division under the Business Department of the Bank’s Head Office, and deputy general manager of the risk management division under the Business Department of the Bank’s Head Office. Mr. Ma graduated from the Central University of Finance and Economics with a bachelor’s degree in accounting and later a master’s degree in finance.

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Directors, Super visors, Senior Management and Staff

Senior Management

Ms. Li Qingping

Mr. Sun Deshun

Mr. Zhang Qiang

Chinese Nationality

Executive director and President of the Bank. Executive director and first-vice president of Vice president of the Bank. Mr. Zhang has Please refer to “Directors” of this chapter for the Bank. Please refer to “Directors” of this been a vice president of the Bank since March Ms. Li’s resume. chapter for Mr. Sun’s resume. 2010. For a long time, Mr. Zhang was in charge of the Bank’s corporate banking and financial market business. He is now in charge of the Bank’s Inter-bank Business Department, Financial Market Department, Investment Banking Department, International Business Department, Bill Center and CNCB (Hong Kong) Investment. Prior to that, Mr. Zhang served as an assistant president and a Party committee member of the Bank from April 2006 to March 2010, during which time he was concurrently general manager of the Department of Corporate Banking at the Bank’s Head Office from April 2006 to March 2007, deputy general manager, executive deputy general manager and general manager of the Business Department at the Bank’s Head Office from January 2000 to April 2006. From September 1990 to January 2000, Mr. Zhang held various positions in the Bank’s Credit Department, Jinan Branch and Qingdao Branch, including deputy general manager and general manager of the Credit Department as well as vice president and president of the branches. Mr. Zhang has been working at the Bank ever since he joined the Bank in September 1990, accumulating nearly 30 years’ experience in the Chinese banking sector. He is a senior economist and graduated from Zhongnan University of Finance and Economics (now Zhongnan University of Finance, Economics and Law) and Liaoning University with a bachelor’s degree in economics and a master’s degree in finance respectively.

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Directors, Super visors, Senior Management and Staff

Mr. Zhu Jialin

Mr. Fang Heying

Mr. Guo Danghuai

Chinese Nationality

Vice President of the Bank. Mr. Zhu has been a Party committee member of the Bank since March 2013, a vice president of the Bank since September 2014, and concurrently Party secretary and general manager of the Business Department at the Bank’s Head Office of the Bank since October 2014. He is now in charge of the Board Office, Administration Department and Capital Construction Office of the Bank. Prior to that, Mr. Zhu was a board director and deputy CEO of CITIC Prudential Life Insurance between May 2005 and March 2013, deputy managing director and CEO of CITIC Prudential Life Insurance between March 2004 and May 2005, and deputy managing director of CITIC Prudential Life Insurance between May 2000 and March 2004. Between October 1998 and May 2000, Mr. Zhu worked at CITIC Bank on various positions including Chief Collection Officer and concurrently general manager of the Asset Preservation Department. Between December 1997 and October 1998, Mr. Zhu headed the CITIC Corporation insurance preparation group. He was seconded to Nippon Life Insurance Company and Sompo Japan Insurance Inc. between January 1997 and December 1997. From August 1986 to January 1997, Mr. Zhu worked at the Head Office of CITIC Bank, holding various positions in succession including office staff, deputy section chief, and secretary to the President of the Bank, during which period he was seconded to Nomura Securities between September 1988 and September 1989.

Vice President of the Bank in charge of finance. Mr. Fang has been a Party committee member of the Bank since August 2014 and a vice president of the Bank since November 2014. He is now in specific charge of the Bank’s Asset and Liability Department, Finance and Accounting Department, Business Operation Management Department and Wealth Management Department, and takes co-charge of the Information Technology Department, the Software Development Center and the Data Center. Prior to that, he became a director of CNCB Investment in January 2014 and started to head the Bank’s financial market business in May 2013. He was concurrently Party secretary and president of Hangzhou Branch of the Bank between May 2014 and September 2014, served as Party secretary and president of Suzhou Branch of the Bank from March 2007 to May 2013. From September 2003 to March 2007, he successively held various positions including member of party committee, assistant president, and vice president of Hangzhou Branch of the Bank. From December 1996 to September 2003, he worked at Hangzhou Branch of the Bank, successively holding the positions of section chief and deputy general manager of the credit department, president and party secretary of Fuyang Branch, deputy general manager of international settlement department, deputy general manager of retail business department, and general manager of business department. From July 1996 to December 1996, he was deputy director of Hangzhou East office of Pudong Development Bank. From December 1992 to July 1996, he worked in the credit department of experimental urban credit cooperative of Zhejiang Bank School, successively holding the positions of credit clerk, manager, and assistant general manager. From July 1991 to December 1992, he was one of the teachers at Zhejiang Bank School.

Vice President of the Bank. Mr. Guo has been a Party committee member of the Bank since August 2014 and a vice president of the Bank since November 2014. He is now in specific charge of the Bank’s Retail Banking Department, Small Enterprise and Consumer Finance Department, E-banking Department, Credit Card Center, Centralized Procurement Center. Since April 2015, Mr. Guo has been Chairman of CITIC Financial Leasing Co., Ltd. Prior to that, from May 2013 to August 2014, he was chief auditor of the Bank. From March 2010 to May 2013, he served as the party secretary and general manager of the Business Department at the Bank’s Head Office. From July 2006 to March 2010, he was Party secretary and president of Tianjin Branch of the Bank. From January 2005 to July 2006, he served as the general manager of the international business department of the Bank. From August 2001 to January 2005, he was assistant president of the Bank. From November 2000 to August 2001, he was designated by CITIC Group to be Chairman of CITIC Guo’an Group and lead the project on acquisition of Shantou Commercial Bank. From September 1999 to November 2000, he was president and party secretary of Shenyang Branch of the Bank. From August 1986 to September 1999, he worked for the Bank, successively holding the positions of staff, deputy sector chief and sector chief, and also served as deputy general manager and general manager of the business department of Capital Mansion, assistant president and vice president of CITIC Bank Beijing Branch, and vice general manager of the Business Department at the Bank’s Head Office.

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Directors, Super visors, Senior Management and Staff

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Mr. Yang Yu

Mr. Qiao Wei

Mr. Wang Kang

Chinese Nationality

Vice President of the Bank. Mr. Yang has been a Party committee member of the Bank since July 2015 and a vice president of the Bank since December 2015. He is now in specific charge of the Bank’s Corporate Banking Department, Group Customer Department, Institutional Banking Department, Asset Custody Department and CITIC Financial Leasing Co., Ltd. Prior to that, he was President and Party Secretary of China Construction Bank Jiangsu Branch between March 2011 and June 2015, and President and Party Secretary of China Construction Bank Hebei Branch between July 2006 and February 2011. Between August 1982 and June 2006, Mr. Yang worked at China Construction Bank Henan Branch, holding various positions, including staff and deputy head of budget and finance division, deputy head and Party committee member of Xinyang Prefecture central sub-branch, head of planning division, head of intermediary business division, Party group member and branch chief of Zhengzhou municipal railway sub-branch, Party secretary and president of Zhengzhou branch, Party secretary and branch chief of Jinshui sub-branch, and deputy Party secretary and vice president (in charge) of Henan branch. Mr. Yang is a senior economist with a master’s diploma and a doctorate degree in management.

Secretary of the Committee for Disciplinary Inspection. Mr. Qiao has been a Party committee member and Secretary of the Committee for Disciplinary Inspection of the Bank since July 2015 and Secretary of the Bank’s Institutional Party Committee since August 2015. He is now in specific charge of the Bank’s General Office, Compliance Department, Committee for Disciplinary Inspection and Supervision, and the Culture, Labor Union Office & Security Department. Prior to that, between May 2010 and July 2015, he was deputy director general and concurrently chief of No.2 section in No.5 Cadres’ Division of the Organization Department of the CPC Central Committee; from December 2001 to May 2010, he was a researcher (section chief level) at No.3 section in No.4 Cadres’ Division and at No.4 section in No.5 Cadres’ Division, a researcher (section chief level) and concurrently deputy section chief and section chief at No.3 section in No.5 Cadres’ Division, and chief of No.2 section in No.5 Cadres’ Division of the Organization Department of the CPC Central Committee. Mr. Qiao was a cadre, a deputy section chief and a section chief at China Development Bank between March 1994 and December 2001, and was once a cadre at the secretariat of the State Raw Materials Investment Office between July 1989 and March 1994. Mr. Qiao has a bachelor’s degree in archive science from Renmin University and an EMBA from China Europe International Business School (“CEIBS”).

Secretary to the Board of Directors and Joint Company Secretary of the Bank. Mr. Wang has been general manager of the Asset and Liability Department of the Bank since January 2015 and concurrently Board Secretary and Joint Company Secretary of the Bank since May 2015. He was Party Secretary and President of CITIC Bank Wuxi Branch between June 2013 and January 2015, and Party Secretary of CITIC Bank Wuxi Branch between March 2013 and June 2013. Mr. Wang worked at the Bank’s Budget and Finance Department between August 2003 and March 2013, being its general manager between April 2008 and March 2013, its deputy general manager (in charge) between August 2007 and April 2008, its deputy general manager between June 2006 and August 2007, and its assistant general manager and head of the budget management division between August 2003 and June 2006. Mr. Wang was deputy head (in charge) of the Bank’s shareholding reform office from February 2002 to August 2003. He worked at the office of the president’s secretaries between May 2001 and January 2002, being its deputy head and secretary to the President. Mr. Wang was secretary to the President of the Bank between August 1997 and May 2001, and worked at the Comprehensive Planning Department of the Bank between April 1996 and August 1997. He is a senior economist with an EMBA, a master’s degree in economics and a bachelor’s degree in engineering.

Directors, Super visors, Senior Management and Staff

Appointment and Dismissal of Directors, Supervisors and Senior Management Directors In May 2015, the 2014 Annual General Meeting of the Bank completed re-election of the fourth session of the Board of Directors of the Bank. Mr. Chang Zhenming, Mr. Zhu Xiaohuang, Ms. Li Qingping, Mr. Sun Deshun, Mr. Zhang Xiaowei, Ms. Wu Xiaoqing, Mr. Wong Luen Cheung Andrew, Mr. Yuan Ming and Mr. Qian Jun were elected to sit on the fourth session of the Board of Directors. Except for Mr. Qian Jun, all other directors officially assumed their directorship of the fourth session of the Board of Directors of the Bank after the Annual General Meeting adopted the concerned resolution. Mr. Qianjun will assume office as of the date of CBRC approval of his qualifications for independent directorship of the Bank, before which time Mr. Li Zheping will continue to perform his duties and responsibilities as a director of the Bank. As of the date of birth of the fourth session of the Board of Directors, Mr. Dou Jianzhong and Mr. Gonzalo José Toraño Vallina are no longer directors of the Bank.

Supervisors In January 2015, the Bank’s Board of Supervisors received the Resolution of the Trade Union of CITIC Bank on Electing Ms. Wen Shuping Employee Representative Supervisor of the 3rd Board of Supervisors of the Bank, and thereafter elected Ms. Wen Shuping employee representative supervisor of the 3rd Board of Supervisors of the Bank, whose term of office became effective on 15 January 2015 and terminated upon expiry of the term of office of the 3rd Board of Supervisors. In March 2015, the meeting of the Bank’s Board of Supervisors adopted the proposal on nominating Mr. Jia Xiangsen and Mr. Zheng Wei external supervisors of the Bank and agreed to submit the nomination proposal to the Bank’s general meeting for approval. In May 2015, the 2014 Annual General Meeting of the Bank elected Mr. Jia Xiangsen and Mr. Zheng Wei external supervisors of the Bank, effective immediately. In May 2015, the 2014 Annual General Meeting of the Bank completed re-election of the fourth session of the Board of Supervisors of the Bank. Mr. Ouyang Qian, Mr. Zheng Xuexue, Ms. Wang Xiuhong, Mr. Jia Xiangsen and Mr. Zheng Wei were elected non-employee representative supervisors of the fourth session of the Board of Supervisors of the Bank. The democratic procedures of the Employees’ Assembly of the Bank elected Ms. Wen Shuping, Mr. Cheng Pusheng and Mr. Ma Haiqing employee representative supervisors of the fourth session of the Board of Supervisors of the Bank. As of the date of birth of the fourth session of the Board of Supervisors, Mr. Li Gang and Mr. Deng Yuewen are no longer supervisors of the Bank. In August 2015, due to his retirement from CITIC Group, Mr. Zheng Xuexue resigned his positions as non-employee representative supervisor of the Bank, chairman and member of the Supervision Committee of the Board of Supervisors, and member of the Nomination Committee of the Board of Supervisors, effective as of 12 August 2015. In August 2015, the meeting of the Bank’s Board of Supervisors agreed to adopt the resolution on nominating Mr. Shu Yang supervisor of the Bank and submit the nomination proposal to the Bank’s general meeting for approval. In October 2015, the 2nd Extraordinary General Meeting of the Bank in 2015 elected Mr. Shu Yang supervisor of the fourth session of the Board of Supervisors of the Bank, effective immediately. In October 2015, because of retirement, Mr. Ouyang Qian resigned his positions as chairman of the Board of Supervisors and supervisor of the Bank, effective as of 16 October 2015. In October 2015, the meeting of the Bank’s Board of Supervisors agreed to adopt the resolution on nominating Mr. Cao Guoqiang supervisor of the Bank and submit the nomination proposal to the Bank’s general meeting for approval. In December 2015, the 3rd Extraordinary General Meeting of the Bank in 2015 elected Mr. Cao Guoqiang supervisor of the fourth session of the Board of Supervisors of the Bank, and in December 2015 the 6th Session of the fourth session of the Board of Supervisors elected Mr. Cao Guoqiang Chairman of the Board of Supervisors of the Bank, effective immediately.

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Directors, Super visors, Senior Management and Staff

Senior Management Members In March 2015, the meeting of the Board of Directors of the Bank adopted the resolution on appointing Mr. Wang Kang Secretary to the Board of Directors of the Bank, prior to which Mr. Li Xin had resigned his position as Board Secretary of the Bank, effective upon official inauguration of the new board secretary. Mr. Wang Kang officially assumed office as Secretary to the Board of Directors of the Bank on 21 May 2015, upon which time the resignation of Mr. Li Xin simultaneously became effective. In May 2015, the meeting of the Board of Directors of the Bank adopted the proposal on continuing appointment of Ms. Li Qingping President of the Bank, Mr. Sun Deshun First Vice President of the Bank, Mr. Su Guoxin, Mr. Cao Guoqiang, Mr. Zhang Qiang, Mr. Zhu Jialin, Mr. Fang Heying and Mr. Guo Danghuai vice president of the Bank, and Mr. Wang Kang Secretary to the Board of Directors of the Bank. In July 2015, Mr. Qiao Wei became Secretary of the Committee for Disciplinary Inspection, replacing Mr. Wang Lianfu who no longer held this position due to retirement. In August 2015, the meeting of the Board of Directors of the Bank adopted the proposal on dismissing Mr. Su Guoxin from his position as vice president of the Bank due to work rearrangements, effective as of 18 August 2015. In August 2015, the meeting of the Board of Directors of the Bank adopted the proposal on appointing Mr. Yang Yu vice president of the Bank, who assumed the office as such upon the CBRC approval of his qualifications for the office in December 2015. In October 2015, Mr. Cao Guoqiang, Vice President of the Bank, resigned his vice-president-ship due to work rearrangements,. effective as of 16 October 2015.

Remunerations of Directors, Supervisors and Senior Management The scheme of remunerations for the Bank’s directors, supervisors and senior management shall be reviewed by the Nomination and Remuneration Committee under the Board of Directors and approved by the Board of Directors. An allowance system is implemented for independent non-executive directors and external supervisors. In accordance with applicable PRC laws, the Bank has participated in various types of statutory contribution and pension schemes organized by the Chinese government for the benefit of its entire staff (including the executive directors, supervisors, and senior management members that are also employees of the Bank). Actual pre-tax remunerations that all directors, supervisors and senior management members (both incumbent and non-incumbent) received from the Bank during the reporting period totaled RMB36.2261 million. The Bank offers remunerations to executive directors, supervisors and senior management members who are at the same time employees of the Bank, which include basic salary, bonus, employee welfare and insurance, housing reserve fund and annuity. Independent non-executive directors and external supervisors of the Bank receive allowances from the Bank. None of the non-executive directors (excluding independent directors) and shareholder representative supervisors who hold positions in other entities where they have equity interest receives any form of salary or directors’ fee from the Bank. The Bank has not provided any incentive shares to directors, supervisors or senior management.

I nterests and Short Positions in the Shares, Underlying Shares and Debentures of the Bank Held by Its Directors, Supervisors and Senior Management Mr. Wang Kang officially assumed the office as Secretary to the Board of Directors of the Bank on 21 May 2015 upon which time he held 16,800 A shares of the Bank. There was no change in his shareholding during the reporting period. As at the end of the reporting period, except for the Bank’s Board Secretary Mr. Wang Kang, no other directors, supervisors or senior management members of the Bank, incumbent or non-incumbent, held any shares, share options or restrictive shares of the Bank.

Interests of Directors and Supervisors in Material Contracts During the reporting period, neither the Bank or its holding companies, nor any of its subsidiaries or fellow subsidiaries entered into any material contract in relation to the business of the Bank in which any director or supervisor has material interests, whether directly or indirectly.

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Service Contracts of Directors and Supervisors None of the directors or supervisors of the Bank has concluded with the Bank or any of the Bank’s affiliates any service contract that may not be terminated within one year since the entry into effect of the contract or that may only be terminated with the payment of other compensations in addition to the statutory compensations.

Relationships among Directors, Supervisors and Senior Management There are no material financial, business, family or other relationships among directors, supervisors or senior management of the Bank.

Interests of Directors in Business Competing with the Bank None of the directors of the Bank has any interest in business which directly or indirectly competes or may compete with the Bank’s business.

Insurance for Directors In 2015, the Bank bought directors liability insurance for all of its board directors.

Human Resources Management and Staff Profile As at the end of the reporting period, the Bank (including its subsidiaries) had 56,489 employees, including 49,915 under labor contracts with the Bank and 6,574 dispatched to the Bank or hired with letters of engagement by the Bank. Of all the employees, 9,863 served as managerial function, 42,720 as technical function and 2,593 as supporting function. 10,027 employees, 17.75% of the total, held post-graduate degrees or above; 37,597 employees, 66.56% of the total, held bachelor’s degrees; and 8,865 employees, 15.69% of the total, held junior diplomas and qualifications below junior diploma level. The Bank paid for a total number of 760 retirees.

Human Resources Management During the reporting period, the Bank kept reforming and improving its human resources management according to the principle of combining effective incentives and strict constraints. The Bank devoted great efforts to human resources system developing and process combing, set up and improved its post sequence, further clarified post descriptions, formulated and amended relevant rules and regulations, and further consolidated the foundation for its human resources management. At the same time, the Bank enhanced the development of management teams at all levels, promoted staff turnover, cultivated reserve talents, supplemented and adjusted managers at the branches and Head Office departments, and thereby promoted a more reasonable structure of its core talent team and continuous improvement of overall managerial quality. Moreover, efforts were made to determine reasonable staffing level, construct a scientific market-oriented personnel allocation model, optimize the personnel structure, improve personnel allocation efficiency, introduce various types of talents in a timely and effective manner, and improve labor relation management. A remuneration system with job value as its core was established to enhance its remuneration system and improve its remuneration structure. Impressive progress in remuneration management of the Bank included more intensive job assessment and supervision, standard distribution of remuneration and welfare and payment of insurance, a greater role of incentives, and protection of employee rights and interests. More efforts were exerted to strengthen IT-based management. Development of the new generation e-HR system was initiated, in the hope of providing express and accurate human resources information of all types to business operation and management, and consequently promoting business growth of the Bank.

Training and Development of Human Resources The Bank focused its training and development of human resources on the deployment of its strategic transformation and committed its efforts to cultivating talent teams that were consistent with strategic requirements, strong in strategy execution, and outstanding in comprehensive competitiveness. Forward-looking comprehensive efforts were made to carry out cadre training at all levels, reserve cadre training, and training of internationalized talents. Job training and professional training of staff members were done in a continuous in-depth manner by stratum and type. To vigorously promote its transformation, the Bank furthered its promotion of online learning and mobile learning, and made training more supportive to business. An enabling environment was created to build the Bank into a learning organization through the organization of various learning activities such as staff reading, “CNCB Lectures” and knowledge competitions. During the reporting period, the Bank hosted 6,064 domestic training sessions of all categories, recording participation statistics of 523,000 person-times. For the full year of 2015, the E-learning system recorded 1.755 million person-times of online learning, and held 289 online examinations. The “CNCB WeChat University” recorded registered membership of 52,000 staff, achieving full coverage of its employees, organized 33 examinations that recorded participation statistics of 14,000 persontimes, and online operated 74 WeChat courses that had an attendance level of 18,000 person-times.

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Rapid development in key regions and steady progress in platform construction

The Bank enjoyed rapid growth of key businesses in key regions, sped up development of outlets in key regions within the territory of China, implemented its strategy on developing “small, smart and multi-business-model” outlets at a quicker pace and promoted outlets transformation.

Corporate Governance Report Corporate Governance Structure General Meeting

Board of Directors

Board of Supervisors

Audit and Related Party Transactions Control Committee

Strategic Development Committee

Nomination and Remuneration Committee

Risk Management Committee

Supervision Committee

Nomination Committee

Senior Management

Anti-money Laundering Leading Group

Inquiry Working Committee

Procurement Committee

Financial Market Business Committee

Head Office Credit Risk Early Warning Committee

Marketing Committee

Credit Approval Committee

Non-performing Assets Disposal Committee

Product Innovation Committee

Information Technology Committee

Asset and Liability Committee

Support Committee

Retail Business Committee

Wholesale Business Committee

Risk and Internal Control Committee

Overall Profile of Corporate Governance In consideration of its own realities as well as the challenges and opportunities resulting from domestic economic development and adjustment, the Bank, in 2015, made continuing efforts to refine its corporate governance structure in line with domestic and overseas regulatory requirements, in order to ensure that the Board of Directors, the Board of Supervisors and their specialized committees play the role of strategic guidance, scientific decision making and effective supervision in important events pertaining to the Bank’s business operation and management. The Bank made further improvements to the effective check and balance mechanism consisting of the general meeting, the Board of Directors, the Board of Supervisors and the senior management. In accordance with regulatory and policy requirements, the Board of Directors, the Board of Supervisors and their specialized committees performed their due diligence to guarantee compliant operation and steady development of the Bank in all business areas. During the reporting period, the Bank successfully completed the re-election of its Board of Directors and Board of Supervisors, safeguarding smooth work transition of the two boards and their specialized committees. Innovation in communication mechanisms enhanced information flow among the two boards and the management, furthering the guiding role of the boards in the Bank’s strategy implementation, business development, risk control and internal control/compliance, and upgrading the two boards’ decision-making level and operation efficiency. To further improve its corporate governance rules and regulations, the Bank sorted out the provisions of its Articles of Association according to the CBRC Guidelines on Corporate Governance of Commercial Banks, with the consequent amendment of the Articles of Association officially entering into effect during the reporting period. As a further support to the performance of duty by directors and supervisors, the Bank, during the reporting period, organized directors and supervisors and the secretary to the Board of Directors to participate in trainings sponsored by SSE and CSRC Beijing Bureau and to carry out field researches in its branches, involving 17 and 33 persons respectively. There is no discrepancy between the Bank’s institutional structure and operation of corporate governance and the corresponding requirements stipulated in the Company Law and the regulations issued by the CSRC and the SEHK. Neither are there any significant outstanding corporate governance issues that the regulators required the Bank to address.

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Information on General Meeting, Board of Directors and Board of Supervisors During the reporting period, the Bank convened 1 annual general meeting, 3 extraordinary general meetings, 2 A shareholders class meetings, 2 H shareholders class meetings, 11 meetings of the Board of Directors (including 4 regular on-site meetings, 5 extraordinary on-site meetings convened for significant events and 2 meetings for voting by correspondence), 9 meetings of the Board of Supervisors (all held on-site), and 30 meetings of the specialized committees under the two boards. These meetings were all held in compliance with the procedures specified in the Articles of Association of the Bank.

General Meeting General Meetings and Shareholders’ Rights Responsibilities of general meetings The general meeting is the Bank’s organ of power. Its responsibilities include making decisions on the Bank’s business guiding principles and investment plans, deliberating and approving the Bank’s annual financial budgets, final accounts, profit distribution plans and loss remedy plans, deliberating and approving the use of financing proceeds for other than set purposes, electing and replacing directors as well as shareholder representative supervisors and external supervisors, deliberating and approving work reports of the Board of Directors and Board of Supervisors, producing resolutions on plans of the Banks on merger, division, dissolution, liquidation or change in the corporation form of the Bank, issue of debt securities or other valuable papers for the purpose of capital replenishment of the Bank as well as the listing thereof, repurchase of the Bank’s ordinary shares, and amending the Bank’s Articles of Association.

Annual general meeting The annual general meeting of the Bank provides an effective communication platform between the shareholders and the Board of Directors. For the convening of a general meeting, the Bank shall issue a written notice 45 days prior to the date of the meeting, informing all shareholders on record of the matters to be deliberated as well as the date and venue of the meeting. Shareholders who intend to attend the meeting shall send their written reply slip to the Bank 20 days before the date of the meeting. Directors, supervisors and senior management members of the Bank shall attend the general meeting and answer shareholders’ questions at the meeting. Domestic and overseas auditors engaged by the Bank shall also attend the general meeting and answer relevant questions related to external audit, the audit reports and their contents, accounting policies and independence of auditors. Unless otherwise provided for or arranged, shareholders of the Bank may vote by poll at the general meeting according to domestic and overseas regulatory rules. Details of the voting procedure are explained to the shareholders at the beginning of the meeting to ensure the shareholders’ familiarity with such procedures. Chairman of the general meeting shall put forward respective proposals vis-a-vis each and every important issue. Voting results shall be published on the website of the Bank and the websites designated by the domestic and overseas stock exchanges where the Bank is listed within the same business day on which such general meeting is convened.

Extraordinary general meetings In accordance with the Articles of Association of the Bank, extraordinary general meetings may be convened upon written request of shareholders that individually or jointly hold 10% or more of the Bank’s voting shares (actual numbers of shares are calculated as per the shareholdings of the requesting shareholders on the dates when such written requests are made). The Board of Directors, the Board of Supervisors and shareholders that jointly hold 3% or more of the Bank’s shares are entitled to present to the Bank their proposals for the general meetings.

Submitting proposals to general meetings Shareholders that individually or jointly hold 3% or more of the Bank’s shares may produce their interim proposals and submit them in writing to the convener of the general meetings 10 days prior to the meeting. Within two days upon the receipt of such proposals, the convener shall issue supplementary notices for the general meeting to announce contents of the proposals, and submit the interim proposals to the general meeting for deliberation.

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Convening of extraordinary meetings of the Board of Directors Extraordinary meetings of the Board of Directors may be convened when proposed by shareholders that represent 10% or more of the voting shares. The Chairman of the Board of Directors shall convene and preside over the board meeting within 10 days as of the receipt of the proposal made by shareholders that represent 10% or more of the voting shares.

Making inquiries to the Board of Directors To make inquiries to the Board of Directors, shareholders are entitled to raise their concerns to the Board of Directors or the Bank via email to [emailprotected] or via other contacts as provided on the Bank’s website. The Bank has published all of its announcements, press releases and useful company information on its website to improve its information transparency.

Convening of General Meetings During the Reporting Period During the reporting period, the Bank convened 1 annual general meeting, 3 extraordinary general meetings, 2 A shareholders class meetings and H shareholders class meetings, where 34 proposals were adopted after deliberation. The Bank has disclosed resolutions of the general meetings on the websites designated by the domestic and overseas stock exchanges where the Bank is listed as well as the Bank’s website. On 8 January 2015, the Bank convened its First Extraordinary General Meeting in 2015. The Bank’s independent nonexecutive director Mr. Wong Luen Cheung Andrew attended and chaired the meeting. On 26 May 2015, the Bank held its 2014 Annual General Meeting, its First A Shareholders Class Meeting in 2015 and its First H Shareholders Class Meeting in 2015. The Bank’s executive directors Ms. Li Qingping presided over the meetings. The Bank’s executive director Mr. Sun Deshun, non-executive director Mr. Zhang Xiaowei, and independent non-executive directors Ms. Wu Xiaoqing and Mr. Wong Luen Cheung Andrew attended these meetings. On 15 October 2015, the Bank convened its Second Extraordinary General Meeting in 2015. The Bank’s executive director Ms. Li Qingping presided over the meetings and independent non-executive directors Ms. Wu Xiaoqing and Mr. Wong Luen Cheung Andrew attended the meeting. On 16 December 2015, the Bank convened its Third Extraordinary General Meeting in 2015, its Second A Shareholders Class Meeting in 2015 and its Second H Shareholders Class Meeting in 2015. The Bank’s executive director Ms. Li Qingping presided over the meetings and independent non-executive directors Ms. Wu Xiaoqing and Mr. Wong Luen Cheung Andrew attended these meetings.

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Corporate Governance Report

Board of Directors Composition and Responsibilities of the Board of Directors The Board of Directors is the decision-making body of the Bank. As at the end of the reporting period, the Board of Directors consisted of 9 members, including 2 executive directors, namely, Ms. Li Qingping and Mr. Sun Deshun; 3 non-executive directors, namely, Mr. Chang Zhenming, Mr. Zhu Xiaohuang and Mr. Zhang Xiaowei; and 4 independent non-executive directors, namely, Mr. Li Zheping, Ms. Wu Xiaoqing, Mr. Wong Luen Cheung Andrew and Mr. Yuan Ming. As per the Articles of Association, the principal responsibilities of the Board of Directors of the Bank include the following: to convene the general meetings and make a work report to the meeting; to implement resolutions of the general meetings; to determine the development strategies, business plans and investment plans of the Bank; to prepare the annual financial budget and final accounts of the Bank; to prepare the profit distribution plans and loss remedy plans for the Bank; in accordance with the Articles of Association and within the scope of mandate authorized by the general meeting, to determine major investment, major asset acquisition and disposal and other major matters of the Bank; to prepare proposals for the increase or reduction of registered capital of the Bank; to prepare proposals for merger, division, dissolution, liquidation of the Bank or change in the corporate form of the Bank; to prepare proposals for the issue of debt securities or other valuable papers for the purpose of capital replenishment of the Bank as well as the listing thereof; to decide all the matters in relation to the issue of debt securities other than those issued for the purpose of capital replenishment of the Bank; to prepare proposals for repurchase of the Bank’s stocks; to prepare proposals for the amendment of the Bank’s Articles of Association; to appoint or dismiss president and board secretary of the Bank and determine their remunerations, rewards or punishments; according to nomination of the president, to appoint or dismiss vice president(s) and assistant president of the Head Office and other members of the senior management that the Board of Directors intends to appoint or dismiss, and to determine matters relating to their remunerations, rewards and punishments; to review and establish the basic management system and internal management framework of the Bank; to establish, improve and effectively implement the Bank’s internal controls; to review and establish the codes and standards of the Bank, which shall specify the codes of conduct for management and business staff at all levels, require explicitly employees at all levels to promptly report the possible conflict of interests, define specific accountability terms and establish a corresponding mechanism to handle the same; to decide the establishment of domestic tier-one (directly controlled) by the Head Office branches, directly controlled institutions and overseas institutions; to decide the information disclosure policies and procedures of the Bank; to decide the information reporting system of the Bank and request the senior management to report operation matters of the Bank to it on a regular basis; to propose the appointment or dismissal of the accounting firms to the general meetings; to formulate procedures on management of related party transactions; to review and approve or to authorize the Audit and Related Party Transactions Control Committee under the Board of Directors to approve the related party transactions (except for the related party transactions that should be approved by the general meeting in accordance with applicable laws); to report specifically related party transactions and the implementation of the relevant procedures to the general meeting; to review and approve the proposals submitted by each specialized committee under the Board of Directors; according to the applicable regulatory requirements, to listen to the work reports of the President of the Bank and other members of senior management, and to monitor and ensure the effective discharge of their management responsibilities; to review and approve the rules of procedures of each committee of the Board of Directors; pursuant to regulatory requirements of the regulators of the banking industry of the State Council on financial statements consolidation, to assume final responsibility for management of the Bank’s financial statements consolidation, to develop overall strategic guidelines for the Bank’s financial statements consolidation, to review and supervise the formulation and implementation of specific plans on financial statements consolidation, and to establish a mechanism for regular review and assessment thereof; to exercise any other authorities prescribed by laws, administrative regulations, rules or the Articles of Association or conferred by the general meetings. The Board of Directors of the Bank has completed self-assessment of the effectiveness of its internal control design and operation. Please refer to “Corporate Governance Report – Statement of the Board of Directors and the Board of Supervisors on Responsibilities in Relation to Internal Control” of this report for details.

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Meetings of the Board of Directors During the reporting period, the Board of Directors convened 11 meetings whereby 95 proposals were deliberated and adopted, including the proposals respectively regarding the Bank’s Plan on Institutional Development, Strategic Plan 2015-2017, 2014 Profit Distribution Plan, 2015 Financial Budget, Plan on Private Offering of A Shares, and Amendment of the Articles of the Articles of Association, and listened to 16 presentations including the Bank’s Report on 2014 Operating Results, Report on Management of Capital Adequacy Ratios in 2014, Report on Management of Liquidity Risk in 2014, Report on TotalRisk Management in 2014, Report on the Credit Risk Internal Rating System, and Report on Progress in Implementing the New Capital Management Approach. The attendance at the meetings by the relevant members during the reporting period is listed as follows:

Members of the Board of Directors Chang Zhenming Zhu Xiaohuang Li Qingping Sun Deshun Zhang Xiaowei Li Zheping Wu Xiaoqing Wong Luen Cheung Andrew Yuan Ming Non-incumbent Directors Dou Jianzhong Gonzalo José Toraño Vallina

In-person attendance/number of meetings

Attendance by proxy/number of meetings

8/11 8/11 10/11 9/11 9/11 9/11 11/11 11/11 8/11

3/11 3/11 1/11 2/11 2/11 2/11 — — 3/11

2/3 3/3

1//3 —

Responsibility Statement of the Board of Directors on the Financial Report The following statement, which sets out the responsibilities of the Board of Directors to this report, should be read in conjunction with, but distinguished from, the auditor’s opinion as set out in the financial statements contained herein. The directors acknowledge that they are responsible for preparing the financial statements of the Bank that give a true view of the operating results of the Bank for each financial year. The directors are not aware of any events or conditions that could have material and adverse impact on the Bank’s on-going operation.

Independence of Independent Non-Executive Directors and Their Performance on Duties The independent non-executive directors of the Bank have no business or financial interests in the Bank or its subsidiaries, nor do they assume any management positions in the Bank. Therefore, their independence is well guaranteed. The Bank has received an annual confirmation letter from each independent non-executive director confirming their independence, and recognized their independence. The independent non-executive directors of the Bank, through attending the general meetings, meetings of the Board of Directors and of the specialized committees under the Board of Directors, effectively discharged their duties. They also enhanced their understanding of business development of the branches by multiple means including field surveys and symposiums. Both the Audit and Related Party Transactions Control Committee and the Nomination and Remuneration Committee under the Board of Directors were chaired by independent non-executive directors with independent non-executive directors constituting their entire membership. According to the Work System of China CITIC Bank Corporation Limited on Annual Reporting by Independent Directors, the independent non-executive directors of the Bank communicated with the auditors and fully performed their role of independent supervision. The independent non-executive directors did not raise any objections to the resolutions adopted by either the Board of Directors or its specialized committees during the reporting period.

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The independent non-executive directors of the Bank raised relevant opinions and suggestions regarding the Bank’s operation and management, business development, strategic planning, profit distribution, remunerations of senior management, risk management and related party transactions. The Bank attached great importance to such inputs and implemented them in accordance with its real situations. For information regarding independent non-executive directors’ attendance of the general meetings during the reporting period, please refer to “Corporate Governance Report – Convening of General Meetings during the Reporting Period” of this report.

Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers The Bank has adopted the Model Code for Securities Transactions by Directors of Listed Issuers under Appendix 10 of the Listing Rules of SEHK (the “Model Code”) to regulate the securities transactions conducted by its directors and supervisors. The Bank has made specific enquiry of all directors and supervisors in this regard, and all directors and supervisors confirmed that they had strictly complied with the provisions set out in the Model Code throughout the reporting period.

The Board of Directors’ Deliberation of the Social Responsibility Report The Board of Directors deliberated the 2015 Social Responsibility Report of China CITIC Bank Corporation Limited as a separate proposal and had no objection to the content of the social responsibility report.

Specialized Committees under the Board of Directors As at the end of the reporting period, there were 4 specialized committees under the Board of Directors, namely the Strategic Development Committee, the Audit and Related Party Transactions Control Committee, the Risk Management Committee and the Nomination and Remuneration Committee.

Strategic Development Committee As at the end of the reporting period, the Bank’s Strategic Development Committee consisted of 4 directors, with non-executive director Mr. Chang Zhenming as chairman, and Mr. Zhu Xiaohuang, Ms. Li Qingping, and Mr. Sun Deshun as members. Its principal responsibilities include: research and review the Bank’s business targets and long-term development strategies, business and organizational development plans, major investment and finance plans as well as other important matters that would affect the Bank’s development, supervise and inspect implementation of the Bank’s annual business plans and investment programs as authorized by the Board of Directors, and put forward recommendations thereof to the board. During the reporting period, the Strategic Development Committee convened 8 meetings and adopted 20 proposals including, among others, the Bank’s Strategic Plan 2015-2017, 2014 Profit Distribution Plan, and 2015 Financial Budget. The attendance at the meetings by the relevant members during the reporting period is listed as follows: In-person attendance/ Attendance by proxy/ number of meetings number of meetings Incumbent Members Chang Zhenming Zhu Xiaohuang Li Qingping Sun Deshun

6/8 5/8 8/8 6/8

2/8 3/8 — 2/8

Non-incumbent Members Dou Jianzhong Gonzalo José Toraño Vallina

2/2 2/2

— —

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Audit and Related Party Transactions Control Committee As at the end of the reporting period, the Bank’s Audit and Related Party Transactions Control Committee comprised 3 directors, with independent non-executive director Mr. Yuan Ming as chairman, and Ms. Wu Xiaoqing and Mr. Wong Luen Cheung Andrew as committee members. The principal responsibilities of the Audit and Related Party Transactions Control Committee include supervising the Bank’s internal control, financial information and internal audit, identifying related parties of the Bank, as well as reviewing and filing the Bank’s related party transactions within its authorized mandate. For the reporting period, the Audit and Related Party Transactions Control Committee convened 8 meetings which reviewed 31 proposals including, among others, proposals regarding regular reports, caps on credit extension to related parties, and engagement of auditors for 2015 and their remunerations, and listened to 7 presentations respectively about the 2014 annual audit, the 2014 operating results, the operating results of the first half of 2015, and the operating results of the third quarter of 2015, etc. The attendance at the meetings by the relevant members during the reporting period is listed as follows: In-person attendance/ Attendance by proxy/ number of meetings number of meetings Incumbent Members Yuan Ming Wu Xiaoqing Wong Luen Cheung Andrew

6/8 8/8 8/8

2/8 — —

Non-incumbent members Li Zheping Gonzalo José Toraño Vallina

2/3 2/3

1/3 1/3

During the preparation and audit of the Bank’s 2015 Annual Report, the Audit and Related Party Transactions Control Committee of the Bank reviewed the audit time frame and progress schedule of the external auditors, checked on and supervised external auditors’ work. The committee reviewed the Bank’s financial statements twice, first time before the certified public accountants (CPAs) responsible for the annual audit arrived at the premise, and the second time after the CPAs produced their preliminary audit opinions. In addition, the committee carried out several rounds of adequate communication with the CPAs responsible for the annual audit. The Audit and Related Party Transactions Control Committee convened a meeting on 17 March 2016, expressing the view that the financial statements gave a true, accurate and complete view of the overall situation of the Bank. Based on its review of the external auditor’s summary report regarding this round of annual audit, and its comprehensive objective assessment of the performance of the audit assignment and its professional quality, the committee gave the consent that the Bank continue to engage PricewaterhouseCoopers as its domestic auditor and PricewaterhouseCoopers Hong Kong as its overseas auditor in 2016, and decided to submit these matters to the Board of Directors for further deliberation.

Risk Management Committee As at the end of the reporting period, the Bank’s Risk Management Committee comprised 4 directors with Mr. Zhu Xiaohuang, Ms. Li Qingping, Mr. Sun Deshun and Ms. Wu Xiaoqing as members. The committee is mainly responsible for supervising the senior management’s control of credit risk, liquidity risk, market risk, operational risk, compliance risk and reputation risk, carrying out regular assessment of the Bank’s risk preference, credit grant policy, liquidity risk management policy, market risk management policy, operational risk management policy, compliance risk management policy, reputation risk management policy, lawfulness and compliance of business operation, management profile and risk resilience, putting forward recommendations to the Board of Directors on how to improve risk management and internal control of the Bank, deliberating proposals on risk management that are submitted to the Board of Directors for review and put forward relevant recommendations to the Board of Directors in accordance with the Bank’s overall strategy, as well as guiding, reminding and supervising the senior management regarding protection of consumer rights and interests.

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During the reporting period, the Risk Management Committee convened 5 meetings where it deliberated and adopted 19 proposals including, among others, those respectively regarding the Bank’s Administrative Measures on Internal Assessment of Capital Adequacy, Policy on Stress Test, 2014 Report on Internal Assessment of Capital Adequacy, Risk Preference Statement, Policy on Total Risk Management (Version 2015, Provisional), Relevant Regulations on Operational Risk and Administrative Measures on Management of Information and Technology Risks (Version 2.0, 2015), and listened to 9 presentations including the Bank’s Report on Total Risk Management for the First Half of 2015, Report on Commissioning of the New Core System, and Report on Progress in Implementing the New Capital Management Approach. The attendance at the meetings by the relevant members during the reporting period is listed as follows: In-person attendance/ Attendance by proxy/ number of meetings number of meetings Incumbent Members Zhu Xiaohuang Li Qingping Sun Deshun Wu Xiaoqing

3/5 5/5 5/5 5/5

2/5 — — —

Non-incumbent members Dou Jianzhong Gonzalo José Toraño Vallina Li Zheping

2/2 2/2 1/2

— — 1/2

Nomination and Remuneration Committee As at the end of the reporting period, the Bank’s Nomination and Remuneration Committee comprised 3 directors, with independent non-executive director Mr. Wong Luen Cheung Andrew as chairman, and Ms. Wu Xiaoqing and Mr. Yuan Ming as members. Principal responsibilities of the Nomination and Remuneration Committee include assisting the Board of Directors in formulating procedures and standards on nomination of candidates for directorship and senior management membership, drafting remuneration schemes, performance evaluation rules and incentives programs for directors, supervisors and senior management members, and raising recommendations thereof to the Board of Directors. During the reporting period, the Nomination and Remuneration Committee convened 5 meetings which adopted by voting 19 proposals including, among others, those respectively regarding nomination of members for the Strategic Development Committee of the fourth session of the Board of Directors, nomination of members for the Risk Management Committee of the fourth session of the Board of Directors, nomination of members for the Audit and Related Party Transactions Control Committee of the fourth session of the Board of Directors, nomination of the President and vice presidents of the Bank, and nomination of the board secretary of the Bank. The attendance at the meetings by the relevant members during the reporting period is listed as follows: In-person attendance/ Attendance by proxy/ number of meetings number of meetings Incumbent Members Wong Luen Cheung Andrew Wu Xiaoqing Yuan Ming

5/5 5/5 3/5

— — 2/5

According to the regulatory requirements of the CSRC and division of duties for corporate governance purpose, the Nomination and Remuneration Committee under the Board of Directors studied and examined the remuneration schemes for senior management of the Bank and supervised their implementation. The committee is of the view that the senior management of the Bank performed its fiduciary and due diligence duties in 2015 within its scope of mandates and responsibilities specified in relevant laws and regulations and the Articles of Association, under the leadership and authorization of the Board of Directors and the supervision of the Board of Supervisors, which in turn further increased corporate value and shareholders’ value of the Bank. Upon review, the committee further holds that the remunerations for directors, supervisors and senior management members as disclosed by the Bank are consistent with relevant remuneration policies and schemes, and are made in compliance with applicable information disclosure standards required by domestic and overseas regulators for listed companies. The committee confirms that the Bank did not have any share incentive scheme as at the end of the reporting period. China CITIC Bank Corporation Limited 2015 Annual Report

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During the reporting period, the Nomination and Remuneration Committee performed the nomination procedure for directors and senior management members in line with the Rules of Procedures of China CITIC Bank Corporation Limited for the Nomination and Remuneration Committee under the Board of Directors, including conducting preliminary review of the would-be directors’ qualifications based on written materials about the nominees and by taking into consideration the candidates’ work experiences, professional qualifications and expertise, and putting forward relevant recommendations to the Board of Directors; and conducting preliminary review of the qualifications for office of candidates for the senior management that the Board intends to appoint or remove and putting forward relevant recommendations to the Board of Directors.

Board of Supervisors The Board of Supervisors is the supervisory body of the Bank reporting to the general meeting. As at the end of the reporting period, the Board of Supervisors consisted of 8 members, with Mr. Cao Guoqiang as chairman, and Mr. Shu Yang, Ms. Wang Xiuhong, Mr. Jia Xiangsen, Mr. Zheng Wei, Mr. Cheng Pusheng, Ms. Wen Shuping and Mr. Ma Haiqing as members, among whom 2 are shareholder representative supervisors, 3 are external supervisors, and the other 3 are employee representative supervisors. During the reporting period, the Board of Supervisors held 9 meetings, at which the supervisors deliberated and adopted 27 proposals including those respectively regarding the Provisional Measures of the Bank on the Board of Supervisors’ Evaluation of Duty Performance on the Part of the Board of Directors, Board of Supervisors and the Senior Management, Amendment of the Rules of Procedures of the Board of Supervisors, 2014 Profit Distribution Plan of the Bank, 2014 Annual Report of the Bank, 2014 Social Responsibility Report of the Bank, and 2014 Report of the Bank on Internal Control Assessment. In addition, the Board of Supervisors supervised the Bank’s operation and management by attending Board of Directors meetings as non-voting delegates, conducting field studies at branches and sub-branches, carrying out earmarked inspections, reviewing various documents and listening to reports from the senior management. The attendance at the meetings by the relevant members during the reporting period is listed as follows: In-person attendance/ Attendance by proxy/ number of meetings number of meetings

122

Incumbent Members Cao Guoqiang Shu Yang Wang Xiuhong Jia Xiangsen Zheng Wei Cheng Pusheng Wen Shuping Ma Haiqing

— 2/3 6/9 5/6 6/6 6/6 9/9 6/6

1/1 1/3 3/9 1/6 — — — —

Non-incumbent members Ouyang Qian Zheng Xuexue Deng Yuewen Li Gang

6/6 — 3/3 1/3

— 4/4 — 2/3

Corporate Governance Report

Specialized Committees Under the Board of Supervisors The Supervision Committee and the Nomination Committee have been set up as specialized committees under the Board of Supervisors.

Supervision Committee As at the end of the reporting period, the Supervision Committee of the Board of Supervisors of the Bank comprised 3 supervisors, with Mr. Jia Xiangsen, Mr. Zheng Wei and Mr. Ma Haiqing as members. On 16 March 2016, the Board of Supervisors of the Bank appointed Mr. Shu Yang member and chairman of its Supervision Committee. Primary responsibilities of the committee include, among others, drafting programs on supervision of the Bank’s financial activities and inspecting the implementation thereof, supervising the Board of Directors to make sure that the latter set up prudent business philosophies, values and standards and formulate development strategies consistent with the Bank’s realities, and carrying out supervisory inspections of the Bank’s business decisions, risk management and internal control. During the reporting period, the Supervision Committee convened 2 meetings which considered and adopted the proposals respectively regarding the 2015 Interim Report of CITIC Bank and 2015 Third Quarterly Report of CITIC Bank. The attendance at the meetings by the relevant members during the reporting period is listed as follows: In-person attendance/ Attendance by proxy/ number of meetings number of meetings Incumbent Members Jia Xiangsen Zheng Wei Ma Haiqing Non-incumbent members Zheng Xuexue Li Gang

2/2 2/2 1/2

— — 1/2

— —

Nomination Committee As at the end of the reporting period, the Nomination Committee of the Board of Supervisors of the Bank comprised 3 supervisors, with Ms. Wang Xiuhong as the chairperson and Ms. Wen Shuping and Mr. Cheng Pusheng as members. On 16 March 2016, the Board of Supervisors of the Bank appointed Mr. Shu Yang as a member of its Nomination Committee. The primary responsibilities of the committee include, among others, drafting procedures and standards on shortlisting candidate supervisors elected by the general meetings and their subsequent appointment, and conducting preliminary review of candidate supervisors elected by the general meetings vis-a-vis their qualifications for office and putting forward corresponding recommendations. Employee supervisors of the Bank are democratically elected or dismissed by employees of the Bank. During the reporting period, the Nomination Committee convened 3 meetings which considered and adopted by voting proposals regarding nomination of chairperson for the Nomination Committee of the fourth session of the Board of Supervisors of the Bank, nomination of Mr. Shu Yang candidate supervisor of the fourth session of the Board of Supervisors, and nomination of Mr. Cao Guoqiang candidate supervisor of the fourth session of the Board of Supervisors. The attendance at the meetings by the relevant members during the reporting period is listed as follows: In-person attendance/ Attendance by proxy/ number of meetings number of meetings Incumbent Members Wang Xiuhong Cheng Pusheng Wen Shuping

3/3 3/3 3/3

— — —

Non-incumbent members Deng Yuewen Zheng Xuexue

— 1/1

— —

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Independent Opinions of the Board of Supervisors on Relevant Matters Compliance of Business Operation The Bank conducted business in accordance with the Company Law, the Commercial Banks Law and its own Articles of Association. The decision-making procedures were lawful and valid. No violations of relevant laws and regulations or the Articles of Association, or acts that would impair interests of the Bank and its shareholders were identified on the part of the directors or senior management members in their course of duty performance.

Truthfulness of the Financial Report The 2015 financial report gives a true, objective and accurate view of the financial position and operating results of the Bank.

Use of Proceeds During the reporting period, the actual use of proceeds was consistent with the purposes stated in the Bank’s prospectus for IPO and rights issue.

Acquisition and Disposal of Assets During the reporting period, the Board of Supervisors was not aware of any asset acquisition or disposal by the Bank that might result in the impairment of the interests of the shareholders or loss of the Bank’s assets, or would constitute insider trading.

Related Party Transactions During the reporting period, the Board of Supervisors was not aware of any related party transactions that might result in the impairment of the interests of the Bank or its shareholders.

Implementation of Resolutions Adopted at the General Meetings The Board of Supervisors had no objections to the reports and proposals that the Board of Directors submitted to the general meetings for consideration during the reporting period. The Board of Supervisors supervised the implementation of the resolutions adopted at the general meetings and believed that the Board of Directors diligently implemented the related resolutions adopted at the general meetings.

The Board of Supervisors’ Deliberation on the Social Responsibility Report The Board of Supervisors deliberated the 2015 Social Responsibility Report of China CITIC Bank Corporation Limited and had no objections to the content of the social responsibility report.

Senior Management The senior management, which is comprised of 9 members, is the executive body of the Bank reporting to the Board of Directors. There is strict division of duties and separation of power between the Bank’s senior management and the Board of Directors. As authorized by the Board of Directors, the senior management manages and makes decisions on business operation within its mandate. The Board of Directors evaluates the performance of the senior management, the results of which shall be used as the basis for determining remunerations and other incentive arrangements for the senior management. The senior management should truthfully report to the Board of Directors or the Board of Supervisors on a regular basis or as required by the Board of Directors or the Board of Supervisors, information regarding the Bank’s business performance, important contracts, financial positions, risk profiles, business prospect and significant events.

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stablishment and Implementation of Performance Evaluation and Incentive Mechanisms E for Senior Management The Bank has set up its mechanism for annual performance evaluation of the senior management, which assesses the senior management’s attainment of operation targets and ability to discharge duties. Results of the annual performance evaluation are used as important basis for determining the executives’ remunerations, appointment or removal, rearrangement of positions, exchanges, and participation in trainings.

Chairman and President During the reporting period, the positions of chairman and president of the Bank were separate: Mr. Chang Zhenming, serving as Chairman of the Bank, was responsible for presiding over general meetings, convening and presiding over the Board of Directors’ meetings and examining the implementation of the resolutions of the Board of Directors and other relevant matters. Ms. Li Qingping, serving as President of the Bank, was responsible for implementing the Board of Directors’ resolutions, and leading the Bank in its business operation and management and other relevant matters. The division of duties between the chairman and president of the Bank was clearly defined and in compliance with the Hong Kong Listing Rules.

Company Secretary The Bank has engaged, externally, Ms. Wendy Kam (FCS, FCIS) as the joint company secretary of the Bank. The main contact person of Ms. Wendy Kam in the Bank is Mr. Wang Kang, the Secretary to the Board of Directors and joint company secretary of the Bank. The contact information of Mr. Wang is: Tel: +86-10-85230010; Fax: +86-10-85230079.

Management of Related Party Transactions The Board of Directors and its Audit and Related Party Transactions Control Committee attach great importance to the management of related party transactions and have carefully performed their duties of review, approval and supervision in relation to the management of related parties and related party transactions to ensure lawfulness and compliance of related party transactions conducted throughout the Bank. In 2015, in compliance with the regulatory requirements in Shanghai and Hong Kong, the Bank kept enhancing its related party transactions management mechanisms, and boosted overall refined management of related party transactions, rendering strong support to business compliance bank-wide, promoting synergy of the Group and increasing shareholder value. Specifically, the Bank made the following efforts: (1) The Bank reinforced dynamic management and updating of related parties and reproduced its list of related parties covering 2,511 legal persons and 1,771 natural persons. (2) The Bank successfully obtained approval from the general meetings regarding its application for the 2015-2017 annual caps for continuing related party transactions, which included related party transactions in 8 major categories and over 90 varieties. This practice fully covered all business varieties of related party transactions of the Bank and therefore greatly improved efficiency of business review and approval process. (3) The Bank optimized the mechanism for credit line management of related party transactions and further improved use efficiency of such credit lines. (4) The Bank compiled the Handbook of CITIC Bank on Related Party Transactions (Version 2.0), which, by analyzing, identifying and computing in unified ways the related-party transaction components involved in up to 100 businesses and products, contributed to continuous standardization of related party transaction management. (5) The Bank conducted the annual audit of related party transactions, as well as in-depth investigations of key businesses, management processes, operation mechanisms and data quality. (6) The Bank ensured compliance of related party transactions bank-wide by performing review, approval, disclosure and routine monitoring of related party transactions. It also coordinated with CITIC Limited in the latter’s management of related party transactions to ensure comprehensiveness, accuracy and completeness of information disclosure.

Statement on Horizontal Competition and Related Party Transactions The Bank has not been involved in any horizontal competition or related party transactions resulting from partial restructuring, characteristics of particular industries, government policies or mergers and acquisitions.

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Independence from the Controlling Shareholder The Bank is fully independent from its controlling shareholder in business operation, personnel, assets, organizational structure and financial matters, and maintains independent and complete business separate from that of its controlling shareholder and is capable of independent business operation. In terms of business, the Bank has a complete business structure and capability to operate directly on the market in an independent manner and is engaged independently in business operation within its authorized business scope, without interference or control by its controlling shareholder or any other related parties, and free of any adverse impact on the independence and completeness of its operating autonomy as a result of its related relationship with its controlling shareholder and other related parties. In terms of personnel, the Bank has its own independent labor, personnel and payroll management systems. Except for the President of the Bank who concurrently serves as Deputy General Manager of CITIC Limited, none of the other members of the Bank’s senior management has taken any position in the controlling shareholder or any other entities controlled by the controlling shareholder; neither has any member of the financial staff of the Bank taken any position concurrently in the controlling shareholder or any other entities controlled by the controlling shareholder. In terms of assets, the Bank has the ownership or use right of the land and buildings as well as intellectual property rights such as trademarks and domain names that are related to its business operation. In terms of financial matters, the Bank has established an independent accounting and finance department, an independent accounting system and an independent financial management framework for independent financial decision making. It has set up its own bank account according to law and shares no bank account with its controlling shareholder. The procedures and requirements in relation to the opening of accounts with the Bank by the controlling shareholder are identical to those applicable to any other third party that has opened accounts with the Bank, and the accounts of the controlling shareholder are completely separated from the fund and accounts of the Bank. In terms of institutional structure, the Bank has established the general meeting, the Board of Directors, the Board of Supervisors, and set up business and management departments as required by its business operation and management. The Bank exercises its discretion on business operation and management independently, and is free from any mix of institutional structure with its controlling shareholder.

Independent Non-Executive Directors’ Statement on Undertakings Made by CITIC Group and CIFH under the Non-competition Deed CITIC Group transferred its 70.32% equity interest in CIFH to the Bank on 23 October 2009, thus CIFH was released from all obligations under the Non-Competition Deed. The independent non-executive directors of the Bank came to a conclusion on the non-competition undertakings of CITIC Group, holding that CITIC Group honored its non-competition undertakings during the reporting period. CITIC Group produced a statement on performance of its non-competition undertakings under the Non-Competition Deed it entered into with the Bank on 13 March 2007.

Development and Review of Corporate Governance Policies and Practices The Board of Directors consistently attaches great importance to the establishment and improvement of its internal systems relating to corporate governance. During the reporting period, the Bank amended its Articles of Association in line with relevant regulatory requirements, and main amendments include but not limited to articles related to provision of preference shares and articles related to change of business scope. According to relevant regulatory requirements, the Bank formulated a series of policies and regulations in this regard, including the Measures of the Board of Directors of China CITIC Bank Corporation Limited on Performance Evaluation of Directors, Implementation Rules for the Measures of the Board of Directors of China CITIC Bank Corporation Limited on Performance Evaluation of Directors (Provisional) and Detailed Working Principles of China CITIC Bank Corporation Limited for the Secretary to the Board of Directors, thereby further improving regulatory requirements on the Board of Directors and independent non-executive directors and upgrading the Bank’s corporate governance while enhancing duty performance by directors.

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eview and Supervision of Training and Continuing Professional Development of R Directors, Supervisors and the Senior Management The Board of Directors kept urging the directors and senior management members to participate in relevant trainings for better professional development in general, and for capacity building and better performance of duty in particular. During the reporting period, in accordance with CSRC and CBRC requirements, the Board of Directors arranged directors to participate in trainings for directors organized by CSRC Beijing Bureau. These trainings achieved very good results. At the same time, to meet SEHK requirements on continuing professional development of directors during the reporting period, the Bank subscribed for learning journals, 21st Century Directors and Momentum, for its directors, supervisors and senior management members. During the reporting period, the Bank’s incumbent and current-period non-incumbent directors, supervisors, vice president in charge of finance and Secretary to the Board of Directors received the following external trainings:

Name

Title

Trainer

Chang Zhenming Zhu Xiaohuang Li Qingping Sun Deshun Zhang Xiaowei Wu Xiaoqing Ouyang Qian

Non-Executive Director Non-Executive Director Executive Director Executive Director Non-Executive Director Independent Non-Executive Director Chairman of the Board of Supervisors (non-incumbent) Supervisor External Supervisor External Supervisor Employee Representative Supervisor Employee Representative Supervisor Employee Representative Supervisor Vice President Secretary to the Board of Directors

CSRC CSRC CSRC CSRC CSRC CSRC CSRC

Beijing Beijing Beijing Beijing Beijing Beijing Beijing

Bureau Bureau Bureau Bureau Bureau Bureau Bureau

Concentrated Concentrated Concentrated Concentrated Concentrated Concentrated Concentrated

lecturing lecturing lecturing lecturing lecturing lecturing lecturing

1 1 1 1 1 1 1

CSRC CSRC CSRC CSRC

Beijing Beijing Beijing Beijing

Bureau Bureau Bureau Bureau

Concentrated Concentrated Concentrated Concentrated

lecturing lecturing lecturing lecturing

2 1 2 2

CSRC CSRC CSRC CSRC SSE

Beijing Beijing Beijing Beijing

Bureau Bureau Bureau Bureau

Concentrated Concentrated Concentrated Concentrated Concentrated

lecturing lecturing lecturing lecturing lecturing

2 1 0.5 0.5 5

Shu Yang Wang Xiuhong Zheng Wei Cheng Pusheng Wen Shuping Ma Haiqing Fang Heying Wang Kang

Training Model

Training Duration (day)

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As per regulatory requirements, directors of the Bank reviewed the monthly updates and other reading materials provided to them concerning the latest developments in the Bank’s business operation and the banking industry as well as related legal and regulatory requirements. The Bank compiled 4 issues of Correspondence for Directors and Supervisors and 56 issues of References for Directors and Supervisors during the reporting period to help directors and supervisors gain a comprehensive understanding of the business momentum, strategic implementation, risk control, internal control and compliance of the Bank. Below is a summary of the incumbent directors’ continuing professional development during the reporting period:

Name Non-executive directors Chang Zhenming (Chairman) Zhu Xiaohuang Zhang Xiaowei Executive directors Li Qingping (President) Sun Deshun (First Vice President) Independent non-executive directors Li Zheping Wu Xiaoqing Wong Luen Cheung Andrew Yuan Ming

Trainings on business, directors’ duties and corporate governance

Monthly updates and other reading materials on latest developments in the Bank’s business operation and the banking industry as well as related legal and regulatory requirements

3 3 3

3 3

3 3 3 3

Mr. Wang Kang, Secretary to the Board of Directors of the Bank participated in relevant professional trainings organized by regulators, completing 15 hours of training time during the reporting period, and thereby complied with relevant regulatory requirements of SEHK.

eview and Supervision of the Company’s Policies and Practices for Compliance with R Legal and Regulatory Requirements The Board of Directors attaches great importance to the Bank’s compliance with domestic and overseas laws, regulations and regulatory requirements. Upon consideration and approval by the Board of Directors, the Bank formulated Compliance Policies of China CITIC Bank, established and improved a bank-wide compliance risk management framework, and clarified responsibilities for compliance risk management, which provided a guarantee for the Bank’s compliant operations in accordance with laws and regulations, and played an important role in publicizing the compliance concept and promoting a compliance culture in the Bank.

ormulation and Review of the Code of Conduct for Employees and Directors of the F Bank and the Compliance Supervision thereof To regularize employee conduct and enhance staff capacity, the Bank formulated the China CITIC Bank Employee Code of Conduct under the guidance of the Board of Directors, stipulating professional ethics, professional disciplines, professional image, office environment, and work atmosphere, guiding its employees to comply with the code of conduct.

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Corporate Governance Report

During the reporting period, under the guidance of the Board of Directors, the Bank formulated the Handbook of CITIC Bank on Duty Performance of Directors and Supervisors, which, by explicitly defining the obligations of directors and supervisors in their duty performance and the rules and regulations thereon, contributed to scientific management of such duty performance at the Bank. In addition, the Bank developed the Measures of China CITIC Bank Corporation Limited on Management of Field Research Conducted by Directors (Provisional), further regulating work requirements and cost management of such field researches. The Board of Supervisors developed the Measures of CITIC Bank on the Board of Supervisors’ Evaluation of Duty Performance on the Part of the Board of Directors, Board of Supervisors and Senior Management (Provisional). The Band further standardised and improved the mechanism under which the Board of Supervisors evaluates duty performance on the part of the Board of Directors, Board of Supervisors and senior management.

Compliance with the Corporate Governance Code Under the Hong Kong Listing Rules The Bank was in compliance with all code provisions as well as most of the recommended best practices of the Corporate Governance Code, set out in Appendix 14 to the Hong Kong Listing Rules throughout the year ended 31 December 2015, except for the following: According to Code A.1.3 of the Corporate Governance Code, the board meeting notice shall be given at least 14 days before each regular board meeting, while a ten-day notice to directors and supervisors shall be given for regular board meetings according to Article 167 of the Articles of Association. The Bank adopted the ten-day prior notice for regular board meetings in its Articles of Association because a ten-day prior notice is deemed sufficient according to laws of the People’s Republic of China. According to Code A.6.7 of the Corporate Governance Code, independent non-executive directors and other non-executive directors should attend the general meetings. Some directors were unable to attend the general meetings of the Bank due to other work arrangements. Please refer to “Corporate Governance Report – Convening of General Meetings During the Reporting Period” of this report for detailed information. According to Code A.5.6 of the Corporate Governance Code, the Nomination and Remuneration Committee or the Board of Directors should have a policy on membership diversity of the Board of Directors, and should disclose the policy or a summary of the policy in the corporate governance report. The current Board of Directors of the Bank comprises members of different gender, age, culture, education background, and professional experience. The Board of Directors has formulated the Policy on Diversification of Board Membership to comply with the requirement of Code A.5.6 of the Corporate Governance Code. Given the changes in the external operation environment and regulatory requirements in general, and in the business scope and scale of banks in particular, there is no end to improvement of internal control of banks. Therefore, the Bank will follow the requirements of external regulators, the requirements for listed companies and the criteria of leading banks in the world to continuously optimize its internal control management.

Management of Investor Relations The Bank attaches great attention to the management of investor relations and has built up a multi-layer investor communication service system. The Bank maintains comprehensive and in-depth interaction and communication with its investors through channels and approaches such as results-release press conferences, road shows, meetings with visiting investors, investors’ forums, investors’ hotline and the SSE E-interaction platform. The Bank also diligently listened to recommendations from investors and reported relevant information reflected from the capital market and its investors to the decision makers. As a result, a two-way information communication mechanism between the Bank and the capital market has been established. During the reporting period, the Bank convened two results-release press conferences, organized global road shows in Hong Kong, USA, Canada, Europe and the Middle East, and visited more than 50 important institutional investors. For the whole year, the Bank communicated with capital market participants by more than 2,000 person-times cumulatively through meetings with visiting investors, investors’ forums, investors’ hotline, relies to emails and use of Internet platforms. As such, the Bank delivered relevant information of the Bank to the capital market in a proactive manner.

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Corporate Governance Report

Information Disclosure and Management of Insider Information For better transparency, the Bank makes information disclosure in compliance with the regulatory requirements of the CBRC, the CSRC and the places where it is listed, and publishes periodic reports and interim announcements according to law to ensure timely, fair, accurate, truthful and complete information disclosure, and to safeguard legitimate rights and interests of investors and other stakeholders. When disclosing information, the Bank makes sure that it applies the more stringent information disclosure requirements to ensure equal treatment to all investors. During the reporting period, the Bank completed over 90 disclosures of interim announcement, disclosed periodic reports at the SSE and the SEHK. As such, the Bank disclosed to the market important information pertaining to its financial performance, significant changes in its corporate information and material projects in a timely manner. The Bank has already established a mechanism for registration and filing of information insiders and external users of insider information, incorporating into the scope of insider management both internal personnel and persons from external agencies such as auditors that have access to annual financial reporting data prior to disclosure to ensure that no relevant information is leaked in any form prior to disclosure, thereby protecting legitimate rights and interests of its investors and other stakeholders. With close attention paid to institutional development for management of insider information and information insiders, the Bank formulated internal rules and regulations such as the Measures for Accountability of Material Errors in Annual Report Information Disclosure and the Measures for Management of Insider Information and Information Insiders. In addition, the Bank carried out self-examination regarding insider trading of the Bank’s securities prior to disclosure of the annual reports in strict accordance with the Administrative Measures for Insider Information and Information Insiders. Meanwhile, the Bank established its system on registration and filing for external information submission, which registered and recorded submission basis, submission time, external recipients and categories of information submitted as well as written reminders to external information users to observe their confidentiality obligation. During the reporting period, the Bank was not aware of any trading of the Bank’s securities by information insiders prior to disclosure of its annual report; neither was the Bank subject to any regulatory action or administrative punishment imposed by regulators due to insider trading.

tatement of the Board of Directors and the Board of Supervisors on Responsibilities S in Relation to Internal Control The purpose of the Bank’s internal control is to ensure lawfulness and compliance of operation, safety of assets, and truthfulness and completeness of information contained in the financial reports to improve business efficiency and effectiveness, and to implement development strategy. The Board of Directors authorized the internal audit function to self-assess the effectiveness of internal control design and operation in accordance with the Basic Standards for Enterprise Internal Control, the Guidelines for Assessment of Enterprise Internal Control, the Guidelines for Internal Control of Commercial Banks, and the PRC Internal Audit Standards, plus the requirements of the Bank’s rules and measures on internal control. The latter produced the 2015 Report of China CITIC Bank Corporation Limited on Assessment of Internal Control, holding that the Bank’s internal control was valid as of 31 December 2015 (record date). In the course of assessing its internal control, the Bank was not aware of any material defects in internal control. Please refer to the related announcements published on the website of SSE (www.sse.com.cn), the HKExnews website of SEHK (www.hkexnews.hk) as well as the website of the Bank (bank.ecitic.com) as at the disclosure date of this report for detailed information. The Board of Supervisors has reviewed the 2015 Report of China CITIC Bank Corporation Limited on Assessment of Internal Control and holds no objection to the content of this report.

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Corporate Governance Report

Development of Internal Control and Major Measures Adopted Improvement in internal control mechanisms: The Bank formulated its Basic Regulations on Internal Control, Administrative Measures for Internal Control and Compliance at Tier-Two Branches, and Interim Measures on Supervision over the Performance of Internal Control and Compliance Due Diligence, so as to construct a more robust internal control system and ensure stable and healthy business operation and management. A series of internal rules including Basic Provisions on Institutionalized Management, Measures for Review of Internal Control, and Administrative Measures for Risk Reporting of Internal Control and Compliance were revised and distributed to intensify regulatory and compliance management of mechanisms and reports and to control and manage compliance risk in a more effective manner. Specialized rules and regulations were developed for specific business lines to further improve business risk management mechanisms and standardize business process management. These, among others, include the Administrative Measures for Joint Lending Business, Administrative Measures for Corporate Domestic L/G Business, Measures for Management of Loan Collaterals, Measures for Management of Certificates of Large-Sum Deposits, Measures for Management of the Bank’s Credit Grant Policy, Policy on Operational Risk Management, Administrative Measures for Cash Management Business, Measures for Management of Domestic Branches, Measures for Management of Renminbi Interest Rate Derivatives Business, Administrative Measures for Asset Custody Fund Clearing Business, and Administrative Measures for Performance Assessment of Fiscal Resources. More intensive prevention and control of case risk: The Bank attached great importance to case risk screening, and carried out such screening in line with the principle of “business-specific responsibility, full coverage and risk control”. Focusing on the six key areas of credit business and counter services, the Bank rectified problems found in the screenings one by one, and thereby effectively prevented and dissolved case risk. Completion of “Double Curb” examination and special screening of employee conduct: Solid efforts were made to carry out the one-year “Double Curb” examination, whereby the Bank proactively revealed irregularities and potential risks, made timely corrections and rectifications, held responsible persons/units accountable, and submitted special reports to the State Council and the CBRC. In the 2-month special screening of employee conduct and the “Looking Back” self-review in the “Double Curb” examination, the Bank, for the first time in its history, examined integrity of its employees on a full scale, with on-job employees reporting examination results on their own accord. This exercise enhanced active awareness of compliance, identified via screening key targets and areas for prevention and control, intensified education and training on whistle blowing, and effectively upgraded the Bank’s ability for risk identification, monitoring and analysis. Improvement in internal control measures: The Bank put in place multiple pertinent measures at the same time to enhance its internal control, targeting different types of risks and business areas, covering, among others, credit risk, market risk, liquidity risk, operational risk, safe production of information system and management of financial statements consolidation. To better guide and manage employee conduct, the Bank also developed the Handbook of CITIC Bank on Corporate Culture, Employee Handbook of CITIC Bank, and Employee Compliance Handbook of CITIC Bank. In-depth promotion of authorization management: By refining a series of institutionalized regulatory measures including the Measures of CITIC Bank on Management of President’s Authorization, the Bank intensified daily management of authorization, reinforced development of the authorization system under the tier-one legal person structure, and thereby laid the institutional foundation for bank-wide authorization management. In strict compliance with the principles of comprehensive authorization, quantitative and limited authorization and differentiated authorization, the Bank refined its matrix authorization framework, and reinforced its support for authorization of newly established units and innovative businesses. Through re-check on authorization, dynamic adjustment of authorization, authorization assessment, and routine guidance and management of authorization, the Bank effectively promoted implementation of authorization bank-wide. More intensive compliance review: The Bank effectively improved its compliance review by revising a series of rules and regulations including the Measures of CITIC Bank on Compliance Review. The whole year recorded a compliance review volume of 557 cases, a cumulative number of 1,614 suggestions and an opinion adoption rate of 94%. With focus placed on more stringent compliance review of innovative businesses and strategic “Big Individual Products”, the Bank promoted business innovation and development while strictly guarding its compliance bottom line. The emphasis on compliance review and normative review of regulations and measures enabled the Bank to internalize external requirements and standardize its own rules and measures even further. The establishment of the compliance consulting mechanism helped the Bank to provide its affiliates and employees at all levels with advices and suggestions on matters involving compliance risk, which in turn led to proactive and effective compliance.

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Corporate Governance Report

Vigorous efforts to rectify problems for real effect: According to the risk-focus principle, branches and sub-branches of the Bank effectively pushed forward point-to-point rectification of problems for real effect. The Head Office carried out rectification from the sources to enhanced top-level design from the perspectives of refining regulations, standardizing processes, improving mechanisms and optimizing systems, and produced rectification and risk prevention/control measures for the branches and sub-branches. These created a virtuous cycle going from problem detection to self-conscious rectification, and scheduled reporting on rectification progress to regulators at all levels as well as to the Bank’s Board of Directors, Board of Supervisors and senior management. Expansion of channels for information exchange and communication: With full leverage of the information platform role of its intranet, the Bank edited and distributed internal reading and exchange materials such as the Bank-wide Work Dynamics and Theoretical Studies to create the platform for business and theoretical exchanges. In addition, the Bank organized publicity events on internal control and compliance and education/training sessions on case studies and early warning by a variety of means including document distribution, video training, knowledge competition and release of The Risk Reminder. These efforts enabled the Bank to better disseminate outstanding business case studies, advanced business experiences and typical risk early warnings, upgraded employee awareness and understanding of risks and built employee capacity for prevention and dissolution of risks, which in turn safeguarded steady and healthy development of business operation and management bank-wide.

Internal Audit In 2015, the internal audit function of the Bank further developed its independent professional audit system, increased audit coverage, reinforced total process control of audit assignments, intensified project full-process control, consolidated basic management of audit, and realized the role of audit as an independent force of supervision, in accordance with the positioning of “risk warning, supervision assessment, and value-added management”, and the management requirements on “fully revealing material irregularities, and timely detecting trend-revealing risks”. Meanwhile, the Bank released the Five-Year Plan of CITIC Bank on Development of Audit Work, aiming at new development in the eights areas of audit system, audit regulations, management system, system platform, audit approaches, audit teams, audit culture, and audit transformation, for continuous upgrading of audit quality, efficiency and effectiveness. During the reporting period, the Bank reinforced supervision of the audit process in key areas and areas prone to cases risks and risks of employee misconduct. The Bank organized special audit of areas including credit grant, truthfulness of performance, financial management, financial market, the New Capital Accord, related party transactions, information technology and screening of employee conduct, and carried out full audit of some branches and subsidiaries. In addition, the Bank promoted upgrading of its audit information system, and reinforced pre-review data analysis to enhance audit efficiency and effectiveness in a continuing manner.

External Audit of Internal Control The Bank engaged PricewaterhouseCoopers to audit the effectiveness of its internal control over financial reporting as at 31 December 2015 in accordance with relevant requirements of the Guidelines on Audit of Enterprise Internal Control and the professional standards for China’s Certified Public Accountants. Based on the audit performed, PricewaterhouseCoopers presented its Audit Report on Internal Control to the Bank. For details, please refer to the announcement dated the same as the disclosure date of the report and published by the Bank on the official website of SSE (www.sse.com.cn), the official website of SEHK (www.hkexnews.hk) as well as the website of the Bank (bank.ecitic.com). In its opinion of the Bank’s internal control over financial reporting report, PricewaterhouseCoopers concluded that, the bank is in accordance with the Basic Standards for Enterprise Internal Control and relevant requirements and maintained effective control over its financial reporting in all material aspects as at 31 December 2015.

132

Independent Auditor’s Report

To the shareholders of China CITIC Bank Corporation Limited (Incorporated in the People’s Republic of China with Limited Liability) We have audited the consolidated financial statements of China CITIC Bank Corporation Limited (the “Bank”) and its subsidiaries set out on pages 134 to 276, which comprise the consolidated statement of financial position as at 31 December 2015, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Directors’ Responsibility for the Consolidated Financial Statements The directors of the Bank are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards, and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Bank and its subsidiaries as at 31 December 2015, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

PricewaterhouseCoopers Certified Public Accountants Hong Kong, 23 March 2016

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133

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2015 (Amounts in millions of Renminbi unless otherwise stated)

Year ended 31 December Notes Interest income Interest expense

2014

215,661 (111,228)

205,639 (110,898)

Net interest income Fee and commission income Fee and commission expense

104,433 37,639 (1,965)

94,741 26,972 (1,659)

Net fee and commission income Net trading gain Net gain from investment securities Net hedging gain/(loss) Other operating income

7 8 9 10

35,674 3,635 1,192 1 610

25,313 3,437 834 (2) 516

145,545 (50,602)

124,839 (46,796)

94,943

78,043

(35,120) (4,917)

(22,074) (1,599)

(40,037) 27 53 —

(23,673) 2 192 10

54,986 (13,246)

54,574 (13,120)

41,740

41,454

Operating income Operating expenses

Operating profit before impairment Impairment losses on — Loans and advances to customers — Others Total impairment losses Revaluation gain on investment properties Share of profit of associates Net gain on disposal of an associate Profit before tax Income tax expense

Profit for the year Other comprehensive income, net of tax: Items that may be reclassified subsequently to profit or loss when specific conditions are met (net of tax): Available-for-sale financial assets: net movement in fair value reserve Exchange difference on translating foreign operations Others Items that will not be reclassified to profit or loss (net of tax): Net changes on the measurement of defined benefit plan Others

4,275 1,364 3 (6) 8 15

5,234 (43) (1) (10) —

5,644

5,180

Total comprehensive income for the year

47,384

46,634

Net profit attributable to: Equity holders of the Bank Non-controlling interests

41,158 582

40,692 762

41,740

41,454

46,575 809

45,866 768

47,384

46,634

0.88

0.87

Other comprehensive income, net of tax

Total comprehensive income attribute to: Equity holders of the Bank Non-controlling interests Basic and diluted earnings per share (RMB)

The accompanying notes form an integral part of these consolidated financial statements.

134

2015

Consolidated Statement of Financial Position As at 31 December 2015 (Amounts in millions of Renminbi unless otherwise stated)

31 December 2015

31 December 2014

16 17

511,189 80,803 1,191

538,486 93,991 411

18 19 20 21 22 23 24 25 26 27 29 30 31 32 33 34

118,776 26,220 13,788 138,561 30,512 2,468,283 373,770 179,930 1,112,207 976 15,983 802 325 854 7,981 40,141

68,180 27,509 8,226 135,765 26,125 2,136,332 209,404 177,957 653,256 870 14,738 407 280 795 9,317 36,766

5,122,292

4,138,815

37,500 1,068,544 49,248 — 11,418 71,168 3,182,775 8,302 4,693 38,159 2 289,135 10 41,652

50,050 688,292 19,648 573 7,347 41,609 2,849,574 11,521 5,985 37,311 5 133,488 — 26,066

4,802,606

3,871,469

Notes Assets Cash and balances with central banks Deposits with banks and non-bank financial institutions Precious metals Placements with and loans to banks and non-bank financial institutions Financial assets at fair value through profit or loss Derivative financial assets Financial assets held under resale agreements Interest receivable Loans and advances to customers Available-for-sale financial assets Held-to-maturity investments Investment classified as receivables Investments in associates Property, plant and equipment Intangible assets Investment properties Goodwill Deferred tax assets Other assets Total assets Liabilities Borrowings from central banks Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial liabilities at fair value through profit or loss Derivative financial liabilities Financial assets sold under repurchase agreements Deposits from customers Accrued staff costs Taxes payable Interest payable Provisions Debt securities issued Deferred tax liabilities Other liabilities Total liabilities

36 37 38 20 39 40 41 42 43 44 45 33 46

China CITIC Bank Corporation Limited 2015 Annual Report

135

Consolidated Statement of Financial Position

(Continued)

As at 31 December 2015 (Amounts in millions of Renminbi unless otherwise stated)

Notes

31 December 2015

31 December 2014

Equity Share capital Capital reserve Other comprehensive income/(loss) Surplus reserve General reserve Retained earnings

47 48 49 50 51 52

48,935 58,636 3,584 23,362 64,555 118,668

Total equity attributable to equity holders of the Bank Non-controlling interests

317,740 1,946

259,677 7,669

319,686

267,346

5,122,292

4,138,815

Total equity Total liabilities and equity

46,787 49,296 (1,833) 19,394 50,447 95,586

The accompanying notes form an integral part of these consolidated financial statements. Approved and authorised for issue by the board of directors on 23 March 2016.

Chang Zhenming Chairman

136

Li Qingping President

Fang Heying Vice President in charge of finance function

Lu Wei Company stamp General Manager of Finance and Accounting Department

Consolidated Statement of Changes in Equity For the year ended 31 December 2015 (Amounts in millions of Renminbi unless otherwise stated)

Equity attributable to equity holders of the Bank

As at 1 January 2015 (i) Net profit (ii) Other comprehensive income Total comprehensive income (iii) Changes in ownership interests in subsidiaries without change of control (iv) Proceeds from shares issuance (v) Profit appropriations — Appropriations to surplus reserve — Appropriations to general reserve — Dividends paid to non-controlling interests

Non-controlling interests

Notes

Share capital

Other Capital comprehensive reserve income

Surplus reserve

General reserve

Retained earnings

46,787 — —

49,296 — —

(1,833) — 5,417

19,394 — —

50,447 — —

95,586 41,158 —

5,844 445 227

1,825 137 —

267,346 41,740 5,644

—

5,417

—

41,158

672

137

47,384

— 2,148

(400) 9,740

— —

(6,395) —

— —

(6,795) 11,888

— — —

3,968 — —

— 14,108 —

(3,968) (14,108) —

— — —

— — (137)

48,935

58,636

3,584

23,362

64,555

118,668

121

1,825

319,686

47 50 51

As at 31 December 2015

Equity attributable to equity holders of the Bank

As at 1 January 2014 (i) Net profit (ii) Other comprehensive income Total comprehensive income (iii) Capital contribution by owners Capital contributed by holders of other equity instruments Non-controlling interest of a new tier 2 subsidiary (iv) Profit appropriations — Appropriations to surplus reserve — Appropriations to general reserve — Appropriations to equity holders of the Bank — Dividends paid to non–controlling interests As at 31 December 2014

Ordinary Other equity equity Instruments holders holders Total equity

Non-controlling interests

Notes

Share capital

Other Capital comprehensive reserve income

Surplus reserve

General reserve

Retained earnings

46,787 — —

49,296 — —

(7,007) — 5,174

15,495 — —

44,340 — —

76,690 40,692 —

5,124 696 6

— 66 —

230,725 41,454 5,180

—

5,174

—

40,692

702

46,634

— —

— 18

1,825 —

1,825 18

— — — —

3,899 — — —

— 6,107 — —

(3,899) (6,107) (11,790) —

— — — —

— — — (66)

— — (11,790) (66)

46,787

49,296

(1,833)

19,394

50,447

95,586

5,844

1,825

267,346

50 51

Ordinary Other equity equity Instruments holders holders Total equity

The accompanying notes form an integral part of these consolidated financial statements.

China CITIC Bank Corporation Limited 2015 Annual Report

137

Consolidated Cash Flow Statement For the year ended 31 December 2015 (Amounts in millions of Renminbi unless otherwise stated)

Year ended 31 December Operating activities Profit before tax Adjustments for: — Revaluation loss/(gain) on investments, derivatives and investment properties — Investment gain — Net loss/(gain) on disposal of property, plant and equipment, intangible assets and other assets — Unrealised foreign exchange loss/(gain) — Impairment losses — Depreciation and amortisation — Interest expense on debt securities issued — Dividend income from equity investment — Income tax paid Changes in operating assets and liabilities: Decrease/(increase) in balances with central banks (Increase)/decrease in deposits with banks and non-bank financial institutions (Increase)/decrease in placements with and loans to banks and non-bank financial institutions Decrease/(increase) in financial assets at fair value through the profit or loss (Increase)/decrease in financial assets held under resale agreements Increase in loans and advances to customers Increase in investment classified as receivables Increase in deposits from banks and non-bank financial institutions (Decrease)/increase in borrowings from central banks Increase/(decrease) in placements from banks and non-bank financial institutions (Decrease)/increase in financial liabilities at fair value through profit or loss Increase in financial assets sold under repurchase agreements Increase in deposits from customers Increase in other operating assets Increase in other operating liabilities Subtotal Net cash flows (used in)/from operating activities

138

2015

2014

54,986

54,574

519 (111)

(1,061) (147)

9 104 40,037 2,454 8,382 (10) (14,749)

(1) (558) 23,673 2,194 4,616 (131) (14,265)

91,621

68,894

20,959

(37,378)

(2,400)

36,129

(34,393) 1,382 (2,757) (358,952) (459,657) 380,182 (12,550)

72,073 (23,916) 151,003 (237,111) (353,337) 133,624 50,050

29,350 (573) 29,550 323,142 (29,169) 3,430

(22,223) 573 33,657 197,153 (36,451) 1,410

(112,456)

(34,744)

(20,835)

34,150

Consolidated Cash Flow Statement

(Continued)

For the year ended 31 December 2015 (Amounts in millions of Renminbi unless otherwise stated)

Year ended 31 December Note

2015

2014

638,920

409,437

22 69 (775,111)

26 135 (446,451)

(6,427) (27)

(11,432) —

(142,554)

(48,285)

11,888 310,966 — (153,296) (8,420) (137) (6,772)

— 97,826 1,825 (39,745) (3,674) (11,856) 18

Net cash flows from financing activities

154,229

44,394

Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents as at 1 January Effect of exchange rate changes on cash and cash equivalents

(9,160) 228,375 7,149

30,259 199,643 (1,527)

226,364

228,375

207,745

195,142

(102,040)

(68,891)

Investing activities Proceeds from disposal and redemption of investments Proceeds from disposal of property, plant and equipment, land use rights, and other assets Cash received from equity investment income Payments on acquisition of investments Payments on acquisition of properties and equipment and other assets Cash paid for acquisition of a subsidiary

Net cash flows used in investing activities Financing activities Cash received from capital issuance Cash received from debt securities issued Cash received from other equity instruments issued Cash paid for redemption of debt securities issued Interest paid on debt securities issued Dividends paid Cash (paid)/received for transactions with non-controlling interests

Cash and cash equivalents as at 31 December

Cash flows from operating activities include: Interest received Interest paid

The accompanying notes form an integral part of these consolidated financial statements.

China CITIC Bank Corporation Limited 2015 Annual Report

139

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Corporate information China CITIC Bank Corporation Limited (the “Bank” or “CNCB”) is a joint stock company incorporated in the People’s Republic of China (the “PRC” or “Mainland China”) on 31 December 2006. Headquartered in Beijing, the Bank’s registered office is located at No.9 Chaoyangmen Beidajie, Dongcheng District, Beijing, China. The Bank listed its A shares and H shares on Shanghai Stock Exchange and the Main Board of The Stock Exchange of Hong Kong Limited, respectively on 27 April 2007. As at 31 December 2015, the Group mainly operates in Mainland China with branches covering 31 provinces, autonomous regions and municipalities. In addition, the Bank’s subsidiaries have operations in Mainland China, Hong Kong and other overseas countries and regions. For the purpose of these financial statements, Mainland China refers to the PRC excluding the Hong Kong Special Administrative Region of PRC (“Hong Kong”), the Macau Special Administrative Region of the PRC (“Macau”) and Taiwan. Overseas refers to countries and regions other than Mainland China. The principal activities of the Bank and its subsidiaries (collectively the “Group”) are the provision of corporate and personal banking services, conducting treasury business, the provision of asset management, finance leasing and other non-banking financial services. The financial statements were approved by the Board of Directors of the Bank on 23 March 2016.

Basis of preparation These financial statements have been prepared on a going concern basis. The consolidated financial statements for the year ended 31 December 2015 comprise the Bank and its subsidiaries and the Group’s interest in associates.

(a) Accounting year The accounting year of the Group is from 1 January to 31 December.

(b) Functional currency and presentation currency The functional currency of the Bank is Renminbi. The functional currencies of overseas subsidiaries are determined in accordance with the primary economic environment in which they operate, and are translated into Renminbi for the preparation of the consolidated financial statements according to Note 4(b)(ii). The financial statements of the Group are presented in Renminbi and, unless otherwise stated, expressed in millions of Renminbi.

140

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Statement of compliance These financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”), and the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622). These financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and investment properties, which are carried at fair value. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

(a) New and amended standards adopted by the Group The following standards have been adopted by the Group for the first time during the financial year ended 31 December 2015: (i) (ii) (iii)

Amendments to IAS 19 (as revised in 2011) Amendments to IFRSs Amendments to IFRSs

Employee benefits – To Plans that Require Employees or Third Parties to Contribute Towards the Cost of Benefits Annual Improvements to IFRSs 2010 – 2012 Cycle Annual Improvements to IFRSs 2011 – 2013 Cycle

(i)

Amendment to IAS 19 – Employee benefits applies to defined benefit plans where employees or third parties are required to bear some of the cost of the plan. The amendment clarifies the accounting by entities with plans that require contributions linked only to service in each period. Entities with plans that require contributions that vary with service period will be required to recognise the benefit of those contributions over employees’ service period.

(ii)

Amendments from annual improvements to IFRSs – 2010 – 2012 Cycle, on IFRS 8, ‘Operating segments’, IAS 16, ‘Property, plant and equipment’ and IAS 38, ‘Intangible assets’ and IAS 24, ‘Related party disclosures’.

(iii)

Amendments from annual improvements to IFRSs – 2011 – 2013 Cycle, on IFRS 3, ‘Business combinations’, IFRS 13, ‘Fair value measurement’ and IAS 40, ‘Investment property’.

(b) New Hong Kong Companies Ordinance (Cap.622) In addition, the requirements of Part 9 “Accounts and Audit” of the new Hong Kong Companies Ordinance (Cap. 622) came into operation during the financial year ended 31 December 2015, as a result, there are changes to presentation and disclosures of certain information in the consolidated financial statements.

China CITIC Bank Corporation Limited 2015 Annual Report

141

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Statement of compliance (Continued) (c) Standards and amendments that are not yet effective and have not been adopted before their effective dates by the Group in 2015 The Group has not adopted the following new and revised IFRSs that have been issued but are not yet effective. Effective for annual periods beginning on or after (i) (ii) (iii)

IFRS 14 Amendments to IFRS 11 Amendments to IAS 16 and IAS 38 (iv) Amendments to IAS 27 (v) Amendments to IFRSs (vi) Amendments to IFRS 10, IFRS 12 and IAS 28 (vii) Amendments to IAS 1 (viii) IFRS 15 (ix) IFRS 9 (x) IFRS 16 (xi) Amendments to IFRS 10 and IAS 28

Regulatory Deferral Account Acquisition of Interests in Joint Operations Clarification of Acceptable Methods of Depreciation and Amortization Equity Method in Separate Financial Statements Annual improvements to IFRSs 2012 – 2014 cycle Investment Entities: Applying the Consolidation Exception Disclosure Initiative Revenue from Contracts with Customers Financial Instruments Leases Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture

(xii) Amendments to IAS 12 (xiii) Amendments to IAS 7

Income Taxes Statement of cash flows

(i)

1 January 2016 1 January 2016 1 January 2016 1 January 2016 1 January 2016 1 January 2016 1 January 2016 1 January 2018 1 January 2018 1 January 2019 The amendments were originally intended to be effective for annual periods beginning on or after 1 January 2016. The effective date has now been deferred/removed. 1 January 2017 1 January 2017

IFRS 14: Regulatory Deferral Account The IASB has issued IFRS 14 – Regulatory Deferral Accounts, an interim standard on the accounting for certain balances that arise from rate-regulated activities (“regulatory deferral accounts”). IFRS 14 is only applicable to entities that apply IFRS 1 – First-time Adoption of International Financial Reporting Standards as first-time adopters of IFRS. It permits such entities, on adoption of IFRS, to continue to apply their previous GAAP accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral accounts. The interim standard also provides guidance on selecting and changing accounting policies (on first-time adoption or subsequently) and on presentation and disclosure. The Group anticipates that the adoption of this new standard should not have any impact on the Group’s consolidated financial statements.

(ii)

Amendments to IFRS 11: Acquisition of Interests in Joint Operations The amendments to IFRS 11 – Joint Arrangements provide specific guidance on accounting for the acquisition of an interest in a joint operation that is a business. The amendments require an investor to apply the principles of business combination accounting when it acquires an interest in a joint operation that constitutes a business. The Group anticipates that the adoption of the amendments will not have a significant impact on the Group’s consolidated financial statements.

(iii) Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortization The amendments to IAS 16 – Property, Plant and Equipment, clarify that depreciation of an item of property, plant and equipment based on revenue generated by using the asset is not appropriate. The amendments to IAS 38 – Intangible Assets, establish a rebuttable presumption that amortization of an intangible asset based on revenue generated by using the asset is inappropriate. The presumption may only be rebutted in certain limited circumstances. The Group anticipates that the adoption of these amendments will not have a significant impact on the Group’s consolidated financial statements.

142

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Statement of compliance (Continued) (c) Standards and amendments that are not yet effective and have not been adopted before their effective dates by the Group in 2015 (Continued) (iv)

Amendments to IAS 27: Equity Method in Separate Financial Statements The IASB has amended IAS 27 – Separate Financial Statements. The amendment allows entities to use equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The Group has early adopted this amendment in 2015 and choose to use equity method to account for investment in joint ventures and associates in separate financial statement. The adoption of this new amendment does not have a significant impact on the Group’s consolidated financial statements.

(v)

Amendments to IFRSs: Annual Improvements to IFRSs 2012 – 2014 cycle The Annual Improvements to IFRSs 2012 – 2014 Cycle include a number of amendments to various IFRSs, including the amendments IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations regarding methods of disposal, the amendments to IFRS 7 – Financial Instruments: Disclosures regarding servicing contracts, the amendments to IAS 19 – Employee Benefits regarding discount rates, the amendments to IAS 34 Interim Financial Reporting regarding disclosure of information. The Group anticipates that the adoption of these amendments will not have a significant impact on the Group’s consolidated financial statements.

(vi) Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception The amendments to IFRS 10 clarify that the exception from preparing consolidated financial statements is available to intermediate parent entities which are subsidiaries of investment entities. The exception is available when the investment entity parent measures its subsidiaries at fair value. The intermediate parent would also need to meet the other criteria for exception listed in IFRS 10. The amendments also clarify that an investment entity should consolidate a subsidiary which is not an investment entity and which provides services in support of the investment entity’s investment activities, such that it acts as an extension of the investment entity. However, the amendments also confirm that if the subsidiary is itself an investment entity, the investment entity parent should measure its investment in the subsidiary at fair value through profit or loss. This approach is required regardless of whether the subsidiary provides investment-related services to the parent or to third parties. The amendments to IAS 28 allow an entity which is not an investment entity, but has an interest in an associate or a joint venture which is an investment entity, a relief to retain the fair value measurement applied by the investment entity associate or joint venture, or to unwind the fair value measurement and instead perform a consolidation at the level of the investment entity associate or joint venture for their subsidiaries when applying the equity method. The Group anticipates that the adoption of these amendments will not have a significant impact on the Group’s consolidated financial statements.

(vii) Amendments to IAS 1: Disclosure Initiative The amendments clarify guidance in IAS 1 on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies. Although the amendments do not require specific changes, they clarify a number of presentation issues and highlight that preparers are permitted to tailor the format and presentation of the financial statements to their circumstances and the needs of users. The Group anticipates that the adoption of the amendments will not have a significant impact on the Group’s consolidated financial statements.

China CITIC Bank Corporation Limited 2015 Annual Report

143

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Statement of compliance (Continued) (c) Standards and amendments that are not yet effective and have not been adopted before their effective dates by the Group in 2015 (Continued) (viii) IFRS 15: Revenue from Contracts with Customers IFRS 15 establishes a comprehensive framework for determining when to recognise revenue and how much revenue to recognise through a 5-step approach. The core principle is that a company should recognise revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. It moves away from a revenue recognition model based on an ‘earnings processes’ to an ‘assetliability’ approach based on transfer of control. IFRS 15 provides specific guidance on capitalization of contract cost and license arrangements. also includes a cohesive set of disclosure requirements about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The Group anticipates that the adoption of these amendments will not have a significant impact on the Group’s consolidated financial statements.

(ix)

IFRS 9: Financial Instruments The complete version of IFRS 9 – Financial Instruments was issued in July 2014. It replaces the guidance in IAS 39 – Financial Instruments: Recognition and Measurement that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income (“OCI”) and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI in which case the accumulated fair value changes in OCI will not be recycled to the profit or loss in the future. A new expected credit losses model will replace the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement, except for the recognition of changes in own credit risk in other comprehensive income for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. The Group is in the process of assessing the impact on the Group’s consolidated financial statements from this new standard.

(x)

IFRS 16: Leases IFRS 16 provides updated guidance on the definition of leases, and the guidance on the combination and separation of contracts. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. IFRS 16 requires lessees to recognise lease liability reflecting future lease payments and a ‘right-of-use-asset’ for almost all lease contracts, with an exemption for certain short-term leases and leases of low-value assets. The lessors accounting stays almost the same as under IAS 17. However, the new accounting model for lessees is expected to impact negotiations between lessors and lessees. The Group is in the process of assessing the impact on the Group’s consolidated financial statements from this new standard.

(xi)

Amendments to IFRS 10 and IAS 28: On the Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture These amendments address an inconsistency between the requirements in IFRS 10 – Consolidated Financial Statements and those in IAS 28 – Investment in Associates and Joint Ventures in the sale and contribution of assets between an investor and its associate or joint venture. A full gain or loss is recognised when a transaction involves a business. A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if those assets are in a subsidiary. The Group anticipates that the adoption of these amendments will not have a significant impact on the Group’s consolidated financial statements.

144

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Statement of compliance (Continued) (c) Standards and amendments that are not yet effective and have not been adopted before their effective dates by the Group in 2015 (Continued) (xii) Amendments to IAS 12: Income Taxes These amendments on the recognition of deferred tax assets for unrealised losses clarify how to account for deferred tax assets related to debt instruments measured at fair value. The Group anticipates that the adoption of these amendments will not have a significant impact on the Group’s consolidated financial statements.

(xiii) Amendments to IAS 7: Statement of Cash Flows The IASB has issued an amendment to IAS 7 introducing an additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment is part of the IASB’s Disclosure Initiative, which continues to explore how financial statement disclosure can be improved. The Group anticipates that the adoption of these amendments will not have a significant impact on the Group’s consolidated financial statements.

Significant accounting policies and accounting estimates (a) Consolidated financial statements (i)

Business combinations involving enterprises under common control A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The assets acquired and liabilities assumed are measured based on their carrying amounts in the financial statements of the acquiree at the combination date. The difference between the carrying amount of the net assets acquired and the consideration paid for the combination (or the total face value of shares issued) is adjusted against share premium in the capital reserve with any excess adjusted against retained earnings. The issuance costs of equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Other acquisition-related costs are expensed when incurred. The combination date is the date on which one combining enterprise obtains control of other combining enterprises.

(ii)

Business combinations not involving entities under common control A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties before the business combination. Where (i) the aggregate of the acquisition date fair value of assets transferred (including the acquirer’s previously held equity interest in the acquiree), liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree, exceeds (ii) the acquirer’s interest in the acquisition date fair value of the acquiree’s identifiable net assets, the difference is recognised as goodwill (Note 4(m)). If (i) is less than (ii), the difference is recognised in profit or loss for the current period. The issuance costs of equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Other acquisition-related costs are included in the consideration for the acquisition. Any difference between the fair value and the carrying amount of the assets transferred as consideration is recognised in profit or loss. The acquiree’s identifiable asset, liabilities and contingent liabilities, if the recognition criteria are met, are recognised by the Group at their acquisition date fair value. The acquisition date is the date on which the acquirer obtains control of the acquiree. For a business combination not involving enterprises under common control and achieved in stages, the Group remeasures its previously-held equity interest in the acquiree to its fair value at the acquisition date. The difference between the fair value and the carrying amount is recognised as investment income for the current period; the amount recognised in other comprehensive income relating to the previouslyheld equity interest in the acquire and will be reclassified subsequently to profit or loss, and other changes in the owners’ equity under equity accounting, are transferred to investment income in the period in which the acquisition occurs.

China CITIC Bank Corporation Limited 2015 Annual Report

145

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (a) Consolidated financial statements (Continued) (iii) Consolidated financial statements The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Bank and its subsidiaries. The Bank controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Bank has power, only substantive rights (held by the Bank and other parties) are considered. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Non-controlling interest is presented separately in the consolidated statement of financial position within owners’ equity. Net profit or loss and total comprehensive income attributable to non-controlling equity holders are presented separately in the consolidated statement of profit or loss and other comprehensive income. When the amount of loss for the current period attributable to the non-controlling interest of a subsidiary exceeds the non-controlling interest’s portion of the opening balance of equity holders’ equity of the subsidiary, the excess is allocated against the non-controlling interests. When the accounting period or accounting policies of a subsidiary are different from those of the Bank, the Bank makes necessary adjustments to the financial statements of the subsidiary based on the Bank’s own accounting period or accounting policies. Intra-group balances, transactions and cash flows, and any unrealised profit or loss arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is evidence of impairment. Where a subsidiary was acquired during the reporting period, through a business combination involving enterprises under common control, the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at the date the ultimate controlling party first obtained control. Therefore the opening balances and the comparative figures of the consolidated financial statements are restated. In the preparation of the consolidated financial statements, the subsidiary’s assets, liabilities and results of operations are included in the consolidated statement of financial position and the consolidated statement of profit or loss and other comprehensive income, respectively, based on their carrying amounts in the consolidated financial statements of the ultimate controlling party, from the date that common control was established. Where a subsidiary was acquired during the reporting period, through a business combination not involving enterprises under common control, the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date. Where the Bank acquires a non-controlling interest from a subsidiary’s non-controlling equity holders or disposes of a portion of an interest in a subsidiary without a change in control, the difference between the amount by which the non-controlling interests are adjusted and the amount of the consideration paid or received is adjusted to the reserve (share premium) in the consolidated statement of financial position. If the credit balance of reserve (share premium) is insufficient, any excess is adjusted to retained earnings. When the Group loses control of a subsidiary due to the disposal of a portion of an equity investment, the Group derecognises assets, liabilities, non-controlling interests and other related items in equity holders’ equity in relation to that subsidiary. The remaining equity investment is remeasured at its fair value at the date when control is lost. Any gains or losses therefore incurred are recognised as investment income for the current period when the control is lost.

146

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (b) Foreign currency translations (i)

Translation of foreign currency transactions When the Group receives capital in foreign currencies from investors, the capital is translated to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency transactions are, on initial recognition, translated into Renminbi by applying the spot exchange rates at the dates of the transaction. Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the reporting date. The resulting exchange differences are recognised in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated to Renminbi using the exchange rate at the transaction date. Non-monetary items that are measured at fair value in a foreign currency are translated using the foreign exchange rate at the date the fair value is determined. The differences arising from the translation of available-for-sale equity investments is recognised in other comprehensive income. Changes in the fair value of monetary assets denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the monetary assets and other changes in the carrying amount. Translation differences related to changes in the amortised cost are recognised in the consolidated income statement, and other changes in the carrying amount are recognised in other comprehensive income.

(ii)

Translation of financial statements denominated in foreign currency The foreign currency financial statements are translated into Renminbi for the preparation of consolidated financial statements. The assets and liabilities in the foreign currency financial statements are translated into Renminbi at the spot exchange rates prevailing at the balance sheet date. The equity items, except for “retained earnings”, are translated to Renminbi at the spot exchange rates at the dates on which such items arose. Income and expenses are translated at exchange rates at the date of the transactions, or a rate that approximates the exchange rates of the date of the transaction. The resulting exchange differences are recognised in other comprehensive income of equity holder’s equity. Upon disposal of a foreign operation, the cumulative amount of the translation differences recognised in equity holders’ equity which relates to that foreign operation is transferred to profit or loss in the period in which the disposal occurs.

(c) Financial instruments (i) Classification The Group classifies financial instruments into different categories at inception, depending on the purpose for which the assets were acquired or the liabilities were incurred, and on the contractual terms of the financial instruments. The categories are: financial assets and financial liabilities at fair value through the profit or loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets and other financial liabilities. Financial assets at fair value through the profit or loss Financial assets at fair value through the profit or loss include those classified as held for trading, and those designated by the Group upon recognition as at fair value through the profit or loss. A financial asset is classified as held for trading if it is: (i) acquired or incurred principally for the purpose of selling or repurchasing it in the near term; (ii) part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profittaking; or (iii) a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument). Financial assets are designated at fair value through the profit or loss upon initial recognition when: (i) the financial assets or are managed, evaluated and reported internally on a fair value basis; (ii) the designation eliminates or significantly reduces an accounting mismatch in the gain and loss recognition arising from the difference in measurement bases of the financial assets; or (iii) a contract contains one or more embedded derivatives, i.e. an entire hybrid (combined) contract, unless: (i) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the hybrid (combined) contract; or (ii) it is clear with little or no analysis when a similar hybrid (combined) instrument is first considered that separation of the embedded derivative is prohibited.

China CITIC Bank Corporation Limited 2015 Annual Report

147

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (c) Financial instruments (Continued) (i)

Classification (Continued) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity, other than: (i) those that the Group, upon initial recognition, designates as at fair value through the profit or loss or as available-for-sale; (ii) those that meet the definition of loans and receivables. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than: (i) those that the Group intends to sell immediately or in the near term, which will be classified as held for trading; (ii) those that the Group, upon initial recognition, designates as at fair value through the profit or loss or as available-for-sale, or (iii) those where the Group may not recover substantially all of its initial investment, other than because of credit deterioration, which will be classified as available-for-sale. Loans and receivables mainly comprise balances with central banks, deposits and placements with and loans to banks and non-bank financial institutions, financial assets held under resale agreements, investment classified as receivables, as well as loans and advances to customers. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified as: (i) financial assets at fair value through the profit or loss, (ii) held-to-maturity investments or (iii) loans and receivables. Financial liabilities at fair value through the profit or loss Financial liabilities at fair value through the profit or loss include those classified as held for trading, and those designated by the Group upon recognition as at fair value through the profit or loss. A financial liability is classified as held for trading if it is: (i) acquired or incurred principally for the purpose of selling or repurchasing it in the near term; (ii) part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or (iii) a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument). Financial liabilities are designated at fair value through the profit or loss upon initial recognition when: (i) the financial liabilities or are managed, evaluated and reported internally on a fair value basis; (ii) the designation eliminates or significantly reduces an accounting mismatch in the gain and loss recognition arising from the difference in measurement bases of the financial liabilities; or (iii) a contract contains one or more embedded derivatives, i.e. an entire hybrid (combined) contract, unless: (i) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the hybrid (combined) contract; or (ii) it is clear with little or no analysis when a similar hybrid (combined) instrument is first considered that separation of the embedded derivative is prohibited. Other financial liabilities Other financial liabilities are financial liabilities other than those at fair value through the profit or loss, and mainly comprise borrowings from central banks, deposits and placements from banks and non-bank financial institutions, financial assets sold under repurchase agreements, deposits from customers and debts securities issued.

148

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (c) Financial instruments (Continued) (ii)

Derivatives and embedded derivatives Derivatives mainly include forward and swap contracts in foreign currency market and interest rate market. The Group uses derivatives to hedge its exposure on foreign exchange and interest rate risks. The Group adopts hedge accounting in accordance with Note 4(e) for derivatives designated as hedging instruments if the hedge is effective. Other derivatives are accounted for as trading financial assets or financial liabilities. Derivatives are recognised at fair value upon initial recognition. Positive fair value is recognised as assets while the negative fair value is recognised as liabilities. Gain or loss on re-measurement to fair value is recognised immediately in profit or loss. Certain derivative is embedded into a non-derivative instrument (the host contract). The embedded derivatives are separated from the host contract and accounted for as a derivative when (i) the economic characteristics and risks of the embedded derivative are not closely related to the host contract; (ii) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and (iii) the hybrid (combined) instrument is not measured at fair value with changes in fair value recognised in profit or loss. When the embedded derivative is separated, the host contract is accounted for in accordance with Note 4(c)(i).

(iii) Recognition and derecognition All financial assets and financial liabilities are recognised in the statement of financial position, when and only when, the Group becomes a party to the contractual provisions of the instrument. Financial assets The Group derecognises a financial asset, if the part being considered for derecognition meets one of the following conditions: (i) the contractual rights to receive the cash flows from the financial asset expire; or (ii) the contractual rights to receive the cash flows of the financial asset have been transferred, the Group transfers substantially all the risks and rewards of ownership of the financial asset; or (iii) the Group retains the contractual rights to receive the cash flows of the financial asset have been retained, but assumes a contractual obligation to pay the cash flows to the eventual recipient in an agreement that meets all the conditions of derecognition of transfer of cash flows and transfers substantially all the risks and rewards of ownership of the financial asset. Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the difference between the two amounts below is recognised in profit or loss: —

the carrying amount of the financial asset transferred;

—

the sum of the consideration received from the transfer and any cumulative gain or loss that has been recognised directly in equity.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, but retains control, the Group continues to recognise the financial asset to the extent of its continuing involvement in the financial asset. If the Group has not retained control, it derecognises the financial asset and recognises separately as assets or liabilities any rights and obligations created or retained in the transfer.

China CITIC Bank Corporation Limited 2015 Annual Report

149

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (c) Financial instruments (Continued) (iii) Recognition and derecognition (Continued) Securitisation As part of its operations, the Group securitises financial assets, generally through the sale of these assets to structured entities which issue securities to investors. Further details on prerequisites for derecognition of financial assets are set out above. When the securitisation of financial assets that do qualify for derecognition, the relevant financial assets are derecognised in their entirety and a new financial asset or liabilities is recognised regarding the interest in the unconsolidated securitisation vehicles that the Group acquired. When the securitisation of financial assets that do not qualify for derecognition, the relevant financial assets are not derecognised, and the consideration paid by third parties are recorded as a financial liability; when the securitisation of financial assets that partially qualify for derecognition, the book value of the transferred asset should be recognised between the derecognised portion and the retained portion based on their respective relative fair values, and the difference between the book value of the derecognised portion and the total consideration paid for the derecognised portion shall be recorded in profit or loss. Sales of assets on condition of repurchase The derecognition of financial assets sold on condition of repurchase is determined by the economic substance of the transaction. If a financial asset is sold under an agreement to repurchase the same or substantially the same asset at a fixed price or at the sale price plus a reasonable return, the Group will not derecognise the asset. If a financial asset is sold together with an option to repurchase the financial asset at its fair value at the time of repurchase (in case of transferor sells such financial asset), the Group will derecognise the financial asset. Financial liability The financial liability is derecognised only when: (i) the underlying present obligation specified in the contracts is discharged/cancelled, or (ii) an agreement between the Group and an existing lender to exchange the original financial liability with a new financial liability with substantially different terms, or a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

(iv) Measurement Financial instruments are measured initially at fair value plus or minus, in the case of a financial instrument not at fair value through the profit or loss, transaction costs that are directly attributable to the acquisition or issue of the instruments. Transaction costs for financial instruments at fair value through profit or loss are expensed immediately. Subsequent to initial recognition, held-to-maturity investments, loans and receivables and other financial liabilities are measured at amortised cost under effective interest rate method, while other categories of financial instruments are measured at fair value, without any deduction for transaction costs that may occur on sale or other disposal. Investments in available-for-sale equity instruments that do not have a quoted market price in an active market and fair value cannot be reliably measured are measured at cost. Gain or loss on a financial instrument classified as at fair value through profit or loss is recognised in profit or loss.

150

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (c) Financial instruments (Continued) (iv)

Measurement (Continued) Gain or loss on an available-for-sale financial asset is recognised directly as other comprehensive income, except for impairment losses and foreign exchange gains or losses resulted from monetary financial assets which are recognised directly in profit or loss. When the financial asset is derecognised, at which time the cumulative gains or losses previously recognised in other comprehensive income are removed from other comprehensive income and recognised in profit or loss. Interest on available-for-sale financial assets calculated using the effective interest method is recognised in profit or loss. Dividend income from the available-for-sale equity instruments is recognised in profit or loss when the investee declares the dividends. When the available-for-sale financial assets are sold, gains or losses on disposal include the difference between the net sale proceeds and the carrying value, and the accumulated fair value adjustments which are previously recognised in other comprehensive income shall be reclassified from other comprehensive income to the profit or loss. For financial instrument carried at amortised cost, a gain or loss is recognised in profit or loss when the financial instrument is derecognised, impaired, or through the amortisation process.

(v) Impairment The Group assesses at the reporting date the carrying amount of a financial asset (other than those at fair value through profit or loss). If there is objective evidence that the financial asset is impaired, the Group will recognise the impairment loss in profit or loss. Objective evidence that a financial asset is impaired included but is not limited to: —

significant financial difficulty of the borrower or issuer;

—

a breach of contract by the borrower or issuer, such as a default or delinquency in interest or principal payments;

—

the Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the Group would not otherwise consider;

—

it becoming probable that the borrower will enter bankruptcy or other financial reorganizations;

—

disappearance of an active market for that financial asset because of financial difficulties of the issuer;

—

observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group, including: adverse changes in the payment status of borrowers in the group, an increase in the unemployment rate in the geographical area of the borrowers, a decrease in property prices for mortgages in the relevant area, or adverse changes in industry conditions that affect the borrowers in the group;

—

significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the borrower or issuer operates, indicating that the cost of an investment in an equity instrument may not be recovered by the investor;

—

a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost; and

—

other objective evidence indicating there is an impairment of a financial asset.

China CITIC Bank Corporation Limited 2015 Annual Report

151

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (c) Financial instruments (Continued) (v)

Impairment (Continued) The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant and individually or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Financial assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in collective assessment of impairment. Impairment of financial assets carried at amortised cost For financial assets carried at amortised cost, an impairment loss is recognised in the consolidated income statement when there is objective evidence that the assets are impaired. The impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. For financial assets with variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. The calculation of present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that are expected to result from foreclosure, less the cost of obtaining and selling the collateral. Impairment reversal and written-off If, in a subsequent period, the amount of the impairment loss on loans and advances, receivables and held-to-maturity investments decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. The reversal shall not result in a carrying amount of the financial asset that exceeds the amortised cost at the date of the reversal, had the impairment not been recognised. The amount of the reversal is recognised in profit or loss. When the Group determines that a financial assets carried at amortised cost has no reasonable prospect of recovery after the Group has completed all the necessary legal or other proceedings, the financial assets carried at amortised cost is written off against its allowance for impairment losses. If in a subsequent period the financial assets carried at amortised cost written off is recovered, the amount recovered will be recognised in profit or loss through impairment losses. Rescheduled loans Rescheduled loans are loans that have been restructured due to deterioration in the borrower’s financial position and where the Group has made concessions that it would not otherwise consider. Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. The group has analysed derecognition of rescheduled loans in accordance with Note 4(c)(iii). Management continuously reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subject to individual or collective impairment assessment, and the provision is calculated using the loan’s original effective interest rate.

152

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (c) Financial instruments (Continued) (v)

Impairment (Continued) Available-for-sale financial assets When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair value that had been recognised directly in other comprehensive income is removed from other comprehensive income and recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is removed from other comprehensive income is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss. For investments in equity instruments measured at cost, the amount of any impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset and recognised in profit or loss. If, in a subsequent period, the fair value of available-for-sale financial assets increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss shall be treated in accordance with following principle: (i) the impairment loss on debt instruments classified as available-for-sale should be reversed, with the amount of the reversal recognised profit or loss; (ii) the impairment loss on equity instruments classified as available-for-sale should not be reversed through profit or loss. Any subsequent increase in the fair value of such assets is recognised directly in other comprehensive income; or (iii) the impairment loss of available-for-sale equity investments carried at cost should not be reversed. Impairment losses recognised in respect of such financial assets are not reversed in a subsequent period. This is the case even if no loss or a smaller loss would have been recognised had the impairment been assessed only at the end of the year to which the interim period relates.

(vi)

Presentation of financial assets and financial liabilities Financial assets and financial liabilities are presented separately in the statement of financial position and are not offset. However, financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position when the Group currently has a legally enforceable right to set off the recognised amounts and the transactions are intended to be settled on a net basis, or by realising the asset and settling the liability simultaneously.

(vii) Financial assets held under resale and financial assets sold under repurchase agreements Financial assets held under resale agreements are transactions which the Group acquires financial assets which will be resold at a predetermined price in the future date under resale agreements. Financial assets sold under repurchase agreements are transactions which the Group sells financial assets which will be repurchased at a predetermined price in the future date under repurchase agreements. Cash advanced or received is recognised as amounts held under resale and repurchase agreements on the statement of financial position. Assets held under resale agreements are recorded in memorandum accounts as off-balance sheet items. Assets sold under repurchase agreements continue to be recognised in the statement of financial position. The difference between the sale and repurchase consideration, and that between the purchase and resale consideration, should be expired over the period of the respective transaction using the effective interest method and are included in interest expense and interest income, respectively.

(viii) Equity instrument The consideration received from the issuance of equity instruments net of transaction costs is recognised in owners’ equity. Consideration and transaction costs paid by the Bank for repurchasing self-issued equity instruments are deducted from equity holders’ equity.

China CITIC Bank Corporation Limited 2015 Annual Report

153

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (d) Precious metals Precious metals comprise gold and other precious metals. Precious metals that are not related to the Group’s precious metals trading activities are initially measured at acquisition cost and subsequently measured at the lower of cost and net realisable value. Precious metals acquired by the Group for trading purposes are initially measured at fair value and subsequent changes in fair value are recorded in profit or loss.

(e) Hedging Hedge accounting is a method which recognises the offsetting effects on profit or loss of changes in the fair values of the hedging instrument and the hedged item in the same accounting period(s). Hedged items are the items that expose the Group to risks of changes in fair value and that are designated as being hedged. A hedging instrument is a designated derivative whose changes in fair value are expected to offset changes in the fair value of the hedged item. Hedges are assessed by the Group for effectiveness on an ongoing basis and determined to have been highly effective throughout the accounting periods for which the hedging relationship was designated. The Group only adopts fair value hedging accounting. A hedge is considered to be highly effective when it meets both the criteria as follows: —

the hedging instrument must be expected to be highly effective in achieving offsetting changes in fair value attributive to the hedged risk during the period for which the hedge is designated.

—

the changes in fair value or cash flow must offset each other in the range of 80 percent to 125 percent.

Fair Value Hedges A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a particular risk and could affect profit or loss. The gain or loss from re-measuring the hedging instrument at fair value is recognised in profit or loss. The gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of the hedged item and is recognised in profit or loss. When a hedging instrument expires or is sold, terminated or exercised, or no longer meets the criteria for hedge accounting, the Group discontinues prospectively the hedge accounting treatments. If the hedged item is a financial instrument measured at amortised cost, any adjustment to the carrying amount of the hedged item is amortised to profit or loss from the adjustment date to the maturity date using the recalculated effective interest rate at the adjustment date.

154

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (f)

Interests in subsidiaries Initial Recognition The initial cost of an investment obtained through a business combination involving entities under common control is the Group’s share of the subsidiary’s equity in the consolidated financial statements of the ultimate controlling party at the combination date. The difference between the initial investment cost and the carrying amounts of the consideration given is adjusted to share premium in capital reserve. If the balance of the share premium is insufficient, any excess is adjusted to retained earnings. For an interest in subsidiary obtained through a business combination not involving enterprises under common control and achieved in stages, the initial cost comprises the carrying value of previously-held equity investment in the acquiree immediately before the acquisition date, and the additional investment cost at the acquisition date. Any amounts recognised in other comprehensive income relating to the previously-held equity interest in the acquiree, are reclassified to profit or loss as investment income when the equity investment is disposed of. The initial cost of an investment obtained through a business combination involving entities not under common control, the initial investment cost represents the aggregate of the fair values of assets transferred, liabilities assumed, and equity securities issued by the Group, in exchange for control of the acquiree. An interest in a subsidiary acquired other than through a business combination is initially recognised in accordance with following principles: at the actual consideration paid if the Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities.

Measurement and recognition of investment gains or losses In the Bank’s financial statements, interests in subsidiaries are accounted for using the cost method. Dividends declared by subsidiaries are recognised in investment income. Investments in subsidiaries are stated at cost less impairment losses (see Note 4(o)) in the statement of financial position.

(g) Interests in associates An associate is an enterprise over which the Group has significant influence. Investment cost in an associate is initially recognised in accordance with the following principles: at the consideration paid if the Group acquires the investment by cash, or at the fair value of the equity securities issued if an investment is acquired by issuing equity securities. An investment in an associate is accounted for using the equity method, unless the investment is classified as held for sale. The Group adopts the following accounting treatments when using the equity method: —

Where the initial investment cost of an associate exceeds the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition, the investment is initially recognised at the initial investment cost. Where the initial investment cost is less than the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition, the investment is initially recognised at the investor’s share of the fair value of the investee’s identifiable net assets, and the difference is charged to profit or loss.

China CITIC Bank Corporation Limited 2015 Annual Report

155

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (g) Interests in associates (Continued) —

After the acquisition of the investment, the Group recognises its share of the investee’s profit or loss and other comprehensive income as investment income or losses and other comprehensive income respectively, and adjusts the carrying amount of the investment accordingly. Once the investee declares any cash dividends or profit distributions, the carrying amount of the investment is reduced by that amount attributable to the Group. Changes in the Group’s share of the investee’s owners’ equity, other than those arising from the investee’s net profit or loss, other comprehensive income or profit distribution (“other changes in equity holders’ equity”), is recognised in the Group’s equity, and the carrying amount of the investment is adjusted accordingly. The Group recognises its share of investee’s net profits or losses, other comprehensive income and other changes in equity holders’ equity after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on the fair value of the investee’s identifiable net assets at the date of acquisition. Unrealised profits and losses resulting from transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates. Unrealised losses resulting from transactions between the Group and its associates are eliminated in the same way as unrealised gains but only to the extent that there is evidence of impairment.

—

The Group discontinues recognising its share of net losses of investees after the carrying amount of investment to the joint ventures or associates and any long-term interest that in substance forms part of the Group’s net interest in the associates are reduced to zero, except to the extent that the Group has an obligation to assume additional losses. Where net profits are subsequently made by the associates, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not have control or joint control over those policies. The Group makes provision for impairment of interests in associates in accordance with the principles described in Note 4(o)(ii).

(h) Property, plant and equipment Property, plant and equipment is asset held by the Group for the conduct of business and is expected to be used for more than one year. Construction-in-progress, an item of property, represents property under construction and is transferred to properties when ready for its intended use.

(i) Cost Property, plant and equipment is stated at cost upon initial recognition. The cost of a purchased property, plant and equipment comprises the purchase price, related taxes, and any directly attributable expenditures for bringing the asset to working condition for its intended use. The cost of a self-constructed property, plant and equipment comprises the construction materials, direct labor costs and those expenditures necessarily incurred for bringing the asset to working condition for its intended use. Subsequent to initial recognition, property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment.

156

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (h) Property, plant and equipment (Continued) (ii)

Subsequent costs The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the consolidated statement of profit or loss and other comprehensive income as an expense when incurred.

(iii) Depreciation Depreciation is calculated to write off the cost, less residual value if applicable, of property, plant and equipment and is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment (Note 29). The estimated useful lives are as follows: Estimated useful lives Buildings Computer equipment and others

30 – 35 years 3 – 10 years

No depreciation is provided in respect of construction in progress. The residual value and useful lives of assets are reviewed, and adjusted if appropriate, as of each reporting date.

(iv) Impairment Impairment losses on property, plant and equipment are accounted for in accordance with the accounting policies as set out in Note 4(o).

(v)

Disposal and retirement Gains or losses arising from the disposal or retirement of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss on the date of disposal or retirement.

(i)

Land use rights Land use rights are stated at cost less amortisation. Land use rights are amortised on a straight-line basis over the respective periods of grant. Impairment loss on land use rights is accounted for in accordance with the accounting policies as set out in Note 4(o).

(j)

Intangible assets Software and other intangible assets are initially recognised at cost. The cost less estimated net residual values (if any) of the intangible assets is amortised on a straight-line basis over their useful lives, and charged to profit or loss. Impaired intangible assets are amortised net of accumulated impairment losses. Impairment loss on intangible assets is accounted for in accordance with the accounting policies as set out in Note 4(o).

China CITIC Bank Corporation Limited 2015 Annual Report

157

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (k) Investment properties Investment properties are land and/or buildings which are owned and/or held under a leasehold interest to earn rental income and/or for capital appreciation. The Group’s investment properties are accounted for using the fair value model for subsequent measurement when either of the following conditions is met: —

There is an active property market in the location in which the investment property is situated;

—

The Group can obtain the market price and other relevant information regarding the same type of or similar properties from the property market, so as to reasonably estimate the fair value of the investment property.

Investment properties are stated in the statement of financial position at fair value. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognised in profit or loss.

(l) Lease A lease is classified as either a finance lease or an operating lease. A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of a leased asset to the lessee, irrespective of whether the legal title to the asset is eventually transferred. An operating lease is a lease other than a finance lease.

(i)

Finance leases Where the Group is a lessor under finance leases, an amount representing the sum of the minimum lease receipts and unguaranteed residual value, net of initial direct costs, all discounted at the implicit lease rate (the “net lease investment”), is included in “loans and advances to customers” on statement of financial position as a lease receivable. At the commencement of the lease term, the Group recognises the aggregate of the minimum lease receipts determined at the inception of a lease and the initial direct costs as finance lease receivable. The difference between the net lease investment and the aggregate of their present value is recognised as unearned finance income which is included in “loans and advances to customers” as well. Unrecognised finance income under finance leases is amortised using the effective interest rate method over the lease term. Hire purchase contracts having the characteristics of finance leases are accounted for in the same manner as finance leases. Impairment losses are accounted for in accordance with the accounting policy as set out in Note 4(c)(v). Where the Group is a lessee under finance leases, an amount equal to the lower of the fair value of the leased asset and the present value of the minimum lease payments, each determined at the inception of the lease, is included in “property, plant and equipment” on statement of financial position as a leased asset. An amount equal to the minimum lease payments is included in “other liabilities” on statement of financial position recognised as a long-term payable. The difference between the recorded amount of the leased asset and the recorded amount of the payable shall be accounted for as unrecognised finance charge. The Group recognises financial charge for the current period using the effective interest method. Depreciation policy are accounted for in accordance with the accounting policy as set out in Note 4(h) and impairment losses are accounted for in accordance with the accounting policy as set out in Note 4(o). If there is a reasonable certainty that the lessee will obtain ownership of the leased asset by the end of the lease term, the leased asset should be depreciated over its useful life. Otherwise, leased asset is depreciated over the shorter of the lease term and its estimated useful life.

158

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (l) Lease (Continued) (ii)

Operating leases Where the Group leases out assets under operating leases, the assets are included in the statement of financial position according to their nature and, where applicable, are depreciated in accordance with the Group’s depreciation policies, as set out in Note 4(h) except where the asset is classified as an investment property. Impairment losses are accounted for in accordance with the accounting policy as set out in Note 4(o). Revenue arising from operating leases is recognised in accordance with the Group’s revenue recognition policies, as set out in Note 4(u)(iv). Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased assets. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

(m) Goodwill Goodwill represents the excess of the cost of a business combination over the Group’s interest in the fair value of the acquiree’s identifiable net assets. Goodwill is not amortised. Goodwill arising from a business combination is allocated to each cash-generating unit (“CGU”) or group of CGUs, that is expected to benefit from the synergies of the combination. The Group performs impairment test on goodwill annually. Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable net assets over the cost of a business combination is recognised immediately in profit or loss. On disposal of the related CGU or group of CGUs, any attributable amount of the purchased goodwill net of allowance for impairment losses, if any, is included in the calculation of the profit or loss on disposal. Impairment loss on goodwill is accounted for in accordance with the accounting policies as set out in Note 4(o).

(n) Repossessed assets In the recovery of impaired loans and advances, the Group may take possession of assets held as collateral through court proceedings or voluntary delivery of possession by the borrowers. Where it is intended to achieve an orderly realisation of the impaired assets and the Group is no longer seeking repayment from the borrower, repossessed assets are reported in “other assets”. When the Group seizes assets to compensate for the losses of loans and advances and interest receivables, the repossessed assets are initially recognised at fair value, plus any taxes paid for the seizure of the assets, litigation fees and other expenses incurred for collecting the repossessed assets are included in the carrying value of repossessed assets. When the fair value less costs to sell is lower than a repossessed asset’s carrying amount, an impairment loss is recognised in the consolidated statement of profit or loss and other comprehensive income. Repossessed assets are recognised at the carrying value, net of allowance for impairment losses. Any gain or loss arising from the disposal of the repossessed asset is included in the consolidated statement of profit or loss and other comprehensive income in the period in which the item is disposed.

China CITIC Bank Corporation Limited 2015 Annual Report

159

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (o) Allowance for impairment of non-financial assets At the end of each reporting period, the Group assesses whether there is any indication that a non-financial asset may be impaired. If any indication exists that an asset may be impaired, the Group estimates the recoverable amount of the asset. If there is any indication that an asset may be impaired and it is not possible to estimate the recoverable amount of an individual asset, the Group determines the recoverable amount of the CGU to which the asset belongs. CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash flows from other assets or groups of assets. The recoverable amount of an asset (or CGU, group of CGUs) is the higher of its fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset (or CGU, group of CGUs). The Group considers all relevant factors in estimating the present value of future cash flows, such as the expected future cash flows, the useful life and the discount rate.

(i)

Testing CGU with goodwill for impairment For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the CGU or group of CGUs that is expected to benefit from the synergies of the combination. A CGU or group of CGUs to which goodwill has been allocated is tested for impairment by the Group annually, or whenever there is an indication that the CGU or group of CGUs are impaired, by comparing the carrying amount of the CGU or group of CGUs, including the goodwill, with the recoverable amount of the CGU or group of CGUs. The recoverable amount of the CGU or group of CGUs are the estimated future cash flows, which are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU or group of CGUs with allocated goodwill. At the time of impairment testing of a CGU or group of CGUs to which goodwill has been allocated, there may be an indication of an impairment of an asset within the CGU containing the goodwill. In such circumstances, the Group tests the asset for impairment first, and recognises any impairment loss for that asset before testing for impairment on the CGU or group of CGUs containing the goodwill. Similarly, there may be an indication of an impairment of a CGU within a group of CGUs containing the goodwill. In such circumstances, the Group tests the CGU for impairment first, and recognises any impairment loss for that CGU, before testing for impairment the group of CGUs to which the goodwill is allocated.

(ii)

Impairment loss If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. That reduction is recognised as an impairment loss and recognised in the profit or loss. For a CGU or a group of CGUs, the amount of impairment loss firstly reduces the carrying amount of any goodwill allocated to the CGU or group of CGUs, and then reduces the carrying amount of other assets (other than goodwill) within the CGU or group of CGUs, pro rata on the basis of the carrying amount of each asset. The carrying amount of an asset should not be reduced below the highest of: its fair value less costs of disposal (if measurable) its value in use (if measurable) zero.

(iii) Reversing an impairment loss If, in a subsequent period, the amount of impairment loss of the non-financial asset except for goodwill decreases and the decrease can be linked objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the profit or loss. A reversal of impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior periods. An impairment loss in respect of goodwill is not reversed.

160

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (p) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

(q) Employee benefits (i)

Short-term employee benefits During the accounting period when an employee has rendered service to the Group, the Group recognises the undiscounted amount of short-term employee benefits as a liability and as an expense, unless another IFRS requires or permits the inclusion of the benefits in the cost of an asset. Short-term employee benefits include wages, bonuses and social security contributions such as medical insurance, work-related injury insurance and maternity insurance, as well as housing provident funds, which are all calculated based on the regulated benchmark and ratio.

(ii)

Post-employment benefits: Defined contribution plans Pursuant to the relevant laws and regulations in the PRC, The Group participated in a defined contribution basic pension insurance in the social insurance system established and managed by government organisations. The Group makes contributions to basic pension insurance plans based on the applicable benchmarks and rates stipulated by the government. Basic pension insurance contributions are charged to profit or loss when the related services are rendered by the employees. In addition to the statutory provision plan, the Bank’s employees have joined its annuity scheme (the “scheme”) which was established by the CITIC Group Corporation (“CITIC Group”) in accordance with policies regarding the state owned enterprise annuity policy. The Bank has made annuity contributions in proportion to its employee’s gross salaries which are expensed in profit or loss when the contributions are made. The Group operates a defined contribution provident fund and a Mandatory Provident Fund scheme for Hong Kong staff. Contributions are charged to profit or loss as and when the contribution fall due.

(iii) Post-employment benefits: Defined benefit plans The defined benefit plans of the Group are the supplementary retirement benefits provided to the domestic employees. The Group adopts the projected unit credit actuarial cost method, using unbiased and mutually compatible actuarial assumptions to estimate the demographic and financial variables, to measure the obligation associated in the defined benefits plan. The discounted present value of the defined benefit obligation, is recognised as the liabilities of the defined benefit plans. The Group recognises the obligation of defined benefit plans in the accounting period in which the employees render the related services. Past-service costs are recognised immediately in the statement of profit or loss and other comprehensive income. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit or loss and other comprehensive income. Re-measurement arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

China CITIC Bank Corporation Limited 2015 Annual Report

161

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (r) Government grants Government grants are transfers of monetary assets or non-monetary assets from the government to the Group at no consideration except for any capital contribution from the government as an investor in the Group. Special funds such as investment grants allocated by the government, if clearly defined in official documents as part of “capital reserve” are dealt with as capital contributions, and not regarded as government grants. A government grant is recognised when there is reasonable assurance that the grant will be received and that the Group will comply with the conditions attaching to the grant. If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount that is received or receivable. If a government grant is in the form of a transfer of a non-monetary asset, it is measured at its fair value. Grants related to assets are government grants whose primary condition is that an entity qualifying for them should purchase, construct or otherwise acquire long-term assets. Grants related to income are government grants other than those related to assets. A government grant related to an asset is recognised initially as deferred income and amortised to profit or loss on a straight-line basis over the useful life of the asset. A grant that compensates the Group for expenses to be incurred in the subsequent periods is recognised initially as deferred income and recognised in profit or loss in the same periods in which the expenses are recognised. A grant that compensates the Group for expenses incurred is recognised in consolidated statement of profit or loss and other comprehensive income immediately.

(s) Provisions and contingent liabilities A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors pertaining to a contingency such as the risks, uncertainties and time value of money are taken into account as a whole in reaching the best estimate. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows. A possible obligation arising from past transactions or events whose existence can only be confirmed by the occurrence or non-occurrence of one or more future uncertain events; or a present obligation that arises from past transactions or events and it is not probable that an outflow of economic benefits is required to settle the obligation or the amount of the obligation cannot be measured reliably, is disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(t)

Fiduciary activities The Group acts in a fiduciary capacity as a custodian, trustee, or an agent for customers. Assets held by the Group and the related undertakings to return such assets to customers are excluded from the financial statement as the risks and rewards of the assets reside with the customers. Entrusted lending is the business where the Group enters into entrusted loan agreements with customers, whereby the customers provide funding (the “entrusted funds”) to the Group, and the Group grants loans to third parties (the “entrusted loans”) at the instruction of the customers. As the Group does not assume the risks and rewards of the entrusted loans and the corresponding entrusted funds, entrusted loans and funds are recorded as offbalance sheet items at their principal amounts and no impairment assessments are made for these entrusted loans.

162

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (u) Income recognition Revenue is the gross inflow of economic benefit arising in the course of the Group’s ordinary activities when those inflows result in increases in equity, other than increases relating to contributions from owners. Provided it is probable that economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in the statement of profit or loss and other comprehensive income as follows:

(i)

Interest income Interest income arising from the use of entity assets by others is recognised in the statement of profit or loss and other comprehensive income based on the duration and the effective interest rate. Interest income includes the amortisation of any discount or premium or other differences between the initial carrying amount of an interest-bearing instrument and its amount at maturity calculated on an effective interest rate basis. The effective interest method is a method of calculating the amortised cost of financial assets and liabilities and of allocating the interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial instrument. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but does not consider future credit losses. The calculation includes all fees and interest paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Interest on the impaired financial assets is recognised using the rate of interest used to discount future cash flows (“unwinding of discount”) for the purpose of measuring the related impairment loss.

(ii)

Fee and commission income Fee and commission income is recognised in profit or loss when the corresponding service is provided. Origination or commitment fees received by the Group which result in the creation or acquisition of a financial asset are deferred and recognised as an adjustment to the effective interest rate. If the commitment expires without the Group making a loan, the fee is recognised as revenue on expiry.

(iii) Dividend income Dividend income is recognised in profit or loss on the date when the Group’s right to receive payment is established.

(iv)

Rental income from operating lease Rental income received under operating leases is recognised as other operating income in equal instalments over the periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives granted are recognised in profit or loss as an integral part of the aggregate net lease payments receivable.

(v)

Finance income from finance lease and hire purchase contract Finance income implicit in finance lease and hire purchase payments is recognised as interest income over the period of the leases so as to produce an approximately constant periodic rate of return on the outstanding net investment in the leases for each accounting period. Contingent rental income is recognised as income in the accounting period in which they are earned.

China CITIC Bank Corporation Limited 2015 Annual Report

163

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (v) Income tax Current tax and deferred tax are recognised in profit or loss except to the extent that they relate to a business combination or items recognised directly in equity (including other comprehensive income). Current income tax is the expected tax payables on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payables in respect of previous periods. Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences also arise from unused tax losses and unused tax credits. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. At the reporting date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled according to the requirements of tax laws. The Group also considers the possibility of realisation and the settlement of deferred tax assets and deferred tax liabilities in the calculation. Balances of deferred tax assets and deferred tax liabilities, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities if the Group has the legally enforceable right to set off current tax assets against current tax liabilities and meet the additional conditions that deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.

(w) Cash equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, with original maturity of three months or less at acquisition.

(x) Profit distribution Proposed dividends which are declared and approved after the end of each reporting period are not recognised as a liability in the statement of financial position and are instead disclosed as a subsequent event after the end of each reporting period in the notes to the financial statements. Dividends payable are recognised as liabilities in the period in which they are approved.

(y) Related parties If the Group has the power, directly or indirectly, to control, jointly control or exercise significant influence over another party, or vice versa, or where the Group and one or more parties are subject to common control, jointly control from another party, they are considered to be related parties. Related parties may be individuals or enterprises.

(z) Operating segments The identification of operating segments of the Group is on the basis of internal reports that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segment and assess its performance. On the basis of the operating segments, the Group identifies the reportable segments, using a combination of factors including products and services, geographical areas, regulatory environments and etc., which the management has chosen for organization. The operating segments that meet the specified criteria have been aggregated, and the operating segments that meet quantitative thresholds have been reported separately. The amount reported for each operating segment item is the measure reported to the chief operating decision maker for the purposes of allocating resources to the segment and assessing its performance. Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment accounting policies are consistent with those for the consolidated financial statements.

164

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (aa) Significant accounting estimates and judgements Preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and associated key assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

(i)

Impairment losses on loans and advances and investment classified as receivables The Group reviews its financial asset portfolio, which includes loans and advances and investment classified as receivables, to assess impairment on a periodic basis during the year. In determining whether an impairment loss should be recognised in the consolidated income statement, the Group makes estimates and judgments as to whether there is any observable data indicating that there is objective evidence of impairment and the extent, if any, to which it will have a measurable decrease in the estimated future cash flows related to individually significant loans and advances and investment classified as receivables or pools of loans and advances and investment classified as receivables with similar risk characteristics, as described in Note 4 (c)(v) impairment of financial assets carried at amortised cost. Significant judgments are made in the determination of whether objective evidence of impairment exists in individually significant loans and advances and investment classified as receivables or pools of smallerbalance loans and advances and investment classified as receivables with similar risk characteristics. Among other things, objective evidence of impairment includes deterioration in the financial condition of specific borrowers (or specific pools of borrowers) affecting their ability to meet their loan payment obligations, as well as increasing industry sector over-capacity or obsolescence, or deterioration in national or regional economic conditions that are correlated to increasing loans and advances and investment classified as receivables defaults. These judgments are made both during management’s regular assessments of loans and advances and investment classified as receivables quality and when other circumstances indicate the possibility that objective evidence of impairment may exist. Where it is determined that objective evidence of impairment exists, significant judgments and estimates are made in estimating the adverse impact on future cash flows related to individually significant impaired loans and advances and investment classified as receivables. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. Factors affecting these estimates include the availability and granularity of information related to specific borrowers and issuers, and the clarity of the correlation between qualitative factors, such as industry sector performance or changes in regional economic conditions and loans and advances and investment classified as receivables defaults of related borrowers. When the decrease may not have been identified individually or the individual loans and advances and investment classified as receivables is not significant, management uses estimates based on historical loss experience on a collective basis on loans and advances and investment classified as receivables with similar credit risk characteristics to assess the impairment loss. Significant judgments are also applied to the calculation of collectively assessed impairment. Critical factors affecting these judgments include modelling assumptions (e.g., loss given default) and levels of correlation between qualitative factors and loans and advances and investment classified as receivables default. The collective impairment loss is assessed after taking into account: (i) historical loss experience in portfolios of similar credit risk characteristics; (ii) the emergence period between a loss occurring and that loss being identified; and (iii) the current economic and credit environments and whether in management’s experience these indicate that the actual level of inherent losses is likely to be greater or less than that suggested by historical experience. The Group considers the impact of the changes and uncertainty in the macro-economic environment, in which the Group operates when assessing the methodology and assumptions used for loss estimation, as well as management’s capability in managing loans and advances and investment classified as receivables portfolio, and makes adjustments where appropriate.

China CITIC Bank Corporation Limited 2015 Annual Report

165

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (aa) Significant accounting estimates and judgements (Continued) (ii)

Impairment of available-for-sale equity investments For available-for-sale equity investments, a significant or prolonged decline in fair value below cost is considered to be objective evidence of impairment. Judgement is required when determining whether a decline in fair value has been significant or prolonged. In making this judgement, the Group considers historical data of market volatility and historical share price of the specific equity investment as well as other factors, such as sector performance, and financial information regarding the investee.

(iii) Fair value of financial instruments For financial instruments without active market, the Group determines fair values using valuation techniques which include discounted cash flow models, as well as other types of valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads and foreign currency exchange rates. Where discounted cash flow techniques are used, estimated cash flows are based on management’s best estimates and the discount rate used is a market rate at the end of each reporting period applicable for an instrument with similar terms and conditions. Where other pricing models are used, inputs are based on observable market data at the end of each reporting period. However, where market data are not available, management needs to make estimates on such unobservable market inputs based on assumptions. Changes in assumptions about these factors could affect the estimated fair value of financial instruments.

(iv)

Classification of held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity investments if the Group has the intention and ability to hold them until maturity. In evaluating whether the requirements to classify a financial asset as held-to-maturity are met, management makes significant judgements. Failure in correctly assessing the Group’s intention and ability to hold specific investments until maturity may result in reclassification of the whole portfolio as available-for-sale.

(v)

Income taxes Determining income tax provisions involves judgement on the future tax treatment of certain transactions. There are certain transactions and activities for which the ultimate tax determination is uncertain during the ordinary course of business. The Group carefully evaluates the tax implications of transactions and tax provisions are set up accordingly. The tax treatment of such transactions is reconsidered periodically to take into account all changes in tax legislations. Deferred tax assets are recognised for tax losses not yet used and temporary deductible differences. As those deferred tax assets can only be recognised to the extent that it is probable that future taxable profits will be available against which the unused tax credits can be utilised, management’s judgement is required to assess the probability of future taxable profits. Management’s assessment is constantly reviewed and additional deferred tax assets are recognised if it becomes probable that future taxable profits will allow the deferred tax assets to be recovered.

(vi)

Employee retirement benefit obligations The Group has established liabilities in respect of the employee’s supplementary retirement benefits. The amounts of employee benefit expense and these liabilities depends on the assumptions used in calculating such amounts. The assumptions include discount rates, pension benefit inflation rates, medical benefit inflation rates, and other factors. Actual results that differ from the assumptions are recognised in the Group’s profit and loss at the end of each reporting period. While management believes that its assumptions are appropriate, differences in actual experience or changes in assumptions may affect the Group’s expense related to its employee retirement benefit obligations.

166

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Significant accounting policies and accounting estimates (Continued) (aa) Significant accounting estimates and judgements (Continued) (vii) Determination of control over structured entities The Group invests in a number of unconsolidated structured entities which are sponsored and managed by other entities for investment return and interest income therefrom. Such structured entities include wealth management products, investment management products managed by securities companies, trust investment plans, asset-backed financings and investment funds. The Group also sponsors some structured entities, which are not subject to any guarantee by the Group of the principal invested or interest to be paid. The Group makes judgment on whether it controls the structured entities and should consolidate them. When performing this assessment, the Group considers several factors including, among other things, the scope of its decision-making authority over the structured entities, the rights held by other parties, the remuneration to which it is entitled in accordance with the related agreements for the assets management and other services, the Group’s exposure to variability of returns from other interests that it holds in the structured entities. The Group performs re-assessment periodically.

5 Taxation The Group’s main applicable taxes and tax rates are as follows:

Business tax Business tax is charged at 5% on taxable income.

City construction tax City construction tax is calculated at the range of 1% to 7% of business tax.

Education surcharge and Local education surcharges Education surcharge and Local education surcharges are calculated as 3% and 2% of business tax respectively.

Income tax The income tax rate that is applicable to the Bank and its subsidiaries in Mainland China is 25%. Taxation on overseas operations is charged at the relevant local rates. Tax paid on overseas operations is set off to the extent it is allowed under the relevant income tax laws of the PRC. All tax exemptions are determined upon approval from the relevant tax authorities. Taxation arising from the above taxes are presented as “tax payable” in the statement of financial position.

China CITIC Bank Corporation Limited 2015 Annual Report

167

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Net interest income Year ended 31 December 2015

2014

7,502 1,325

7,554 4,963

2,925 3,998 45,638

4,871 12,194 31,087

97,956 34,907 3,214 18,190 6

96,338 30,855 3,782 13,992 3

Subtotal

215,661

205,639

Interest expense arising from: Borrowings from central banks Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial assets sold under repurchase agreements Deposits from customers Debt securities issued Others

(994) (35,792) (742) (561) (64,749) (8,382) (8)

(350) (36,624) (1,194) (839) (67,268) (4,616) (7)

(111,228)

(110,898)

104,433

94,741

Interest income arising from (Note (i)): Deposits with central banks Deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Financial assets held under resale agreements Investment classified as receivables Loans and advances to customers — corporate loans — personal loans — discounted bills Investments in debt securities Others

Subtotal Net interest income Note: (i)

Interest income includes interest income accrued on individually assessed impaired financial assets of RMB656 million for the year ended 31 December 2015 (2014: RMB527 million).

Net fee and commission income Year ended 31 December 2015

2014

Fee and commission income Bank card fees Consultancy and advisory fees Commission for wealth management services Agency fees and commission (Note (i)) Guarantee fees Commission for custodian business and other fiduciary Settlement and clearance fees Others

13,419 6,972 5,808 3,711 3,131 2,228 1,747 623

8,358 5,638 3,958 1,795 3,178 1,522 2,213 310

Total Fee and commission expense

37,639 (1,965)

26,972 (1,659)

Net fee and commission income

35,674

25,313

Note: (i)

Agency fees and commission represent fees earned for underwriting bonds and investment funds, sale of insurance products and provision of entrusted lending activities.

168

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

Net trading gain Year ended 31 December 2015

2014

Debt securities Foreign currencies Derivatives Financial instrument designated at fair value through profit or loss

1,531 1,288 576 240

913 827 1,658 39

Total

3,635

3,437

Net gain from investment securities Year ended 31 December 2015 Net gain from sale of available-for-sale securities Net gain from rediscounted bills Others Total

60 906 226 1,192

2014 2 852 (20) 834

10 Net hedging gain/(loss) Year ended 31 December 2015 Net gain/(loss) of fair value hedge

2014 (2)

11 Operating expenses Year ended 31 December 2015

2014

Staff costs — salaries and bonuses — welfare expenses — social insurance — housing fund — labour union expenses and employee education expenses — housing allowance — other short-term benefits — post-employment benefits – defined contribution plans — post-employment benefits – defined benefit plans — other long-term benefits

15,260 1,296 1,057 1,211 636 439 165 2,291 11 21

15,149 1,259 933 1,023 631 377 134 1,622 8 20

Subtotal

22,387

21,156

Property and equipment expenses — rent and property management expenses — depreciation — amortisation expenses — electronic equipment operating expenses — maintenance — others

4,523 1,540 914 821 618 347

3,971 1,382 812 688 615 314

Subtotal

8,763

7,782

10,033

8,827

16 3

18 4

19 9,400

22 9,009

Business tax and surcharges Other general and administrative expenses — audit services — non-audit services — auditors’ remuneration — others Subtotal Total

9,419

9,031

50,602

46,796

China CITIC Bank Corporation Limited 2015 Annual Report

169

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

11 Operating expenses (Continued) (a) Individuals with highest emoluments For the year ended 31 December 2015, of the 5 individuals with the highest emoluments in the Bank, there was no director (2014: Nil) and four were supervisor (2014: two), whose emoluments are disclosed in Note 67. The aggregate of the emoluments before individual income tax in respect of the other one (2014: three) highest paid individuals of the Bank were as follows: Year ended 31 December 2015 RMB’000

2014 RMB’000

Salaries and other emoluments Discretionary bonuses Retirement scheme contributions

584 2,007 158

2,140 6,350 482

Total

2,749

8,972

The emoluments before individual income tax of the one (2014: three) individuals of the Bank with the highest emoluments are within the following bands: Year ended 31 December RMB2,000,001 – RMB3,000,000 RMB3,000,001 – RMB3,500,000

2015

2014

1 —

1 2

12 Impairment losses on assets Year ended 31 December

Loans and advances to customers

2014 RMB’000

35,120

22,074

Deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Interest receivable Available-for-sale financial assets Held-to-maturity investments Investment classified as receivables Repossessed assets Off-balance sheet items Others

— 2,941 57 (4) 729 41 (95) 1,248

(27) 1,286 – (7) 156 82 4 113

Subtotal

4,917

1,599

40,037

23,673

Total

170

2015 RMB’000 —

(8)

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

13 Income tax (a) Recognised in the statement of profit or loss and other comprehensive income Year ended 31 December Current tax — Mainland China — Hong Kong — Overseas Deferred tax

Note

2015

2014

33(b)

12,992 304 41 (91)

15,318 410 20 (2,628)

13,246

13,120

Income tax

Mainland China and Hong Kong income tax have been provided at the rate of 25% and 16.5% respectively. Overseas tax has been provided at the rates of taxation prevailing in the countries in which the Group operates respectively.

(b) Reconciliation between income tax expense and accounting profit Year ended 31 December 2015

2014

Profit before tax

54,986

54,574

Income tax calculated at statutory tax rate Effect of different tax rates in other regions Tax effect of non-deductible expenses Tax effect of non-taxable income — interest income arising from PRC government bonds — others

13,747 (196) 431

13,644 (268) 508

(699) (37)

(703) (61)

Income tax

13,246

13,120

14 Earnings per share Earnings per share information for the year ended 31 December 2015 and 2014 is computed by dividing the consolidated net profit attributable to equity holders of the Bank by the weighted average number of shares in issue during the year. There was no difference between basic and diluted earnings per share as there were no potentially dilutive shares outstanding during the year ended 31 December 2015 and 2014. Year ended 31 December Net profit attributable to equity holders of the Bank Weighted average number of shares (in million shares) Basic and diluted earnings per share (in RMB)

2015

2014

41,158 46,787 0.88

40,692 46,787 0.87

China CITIC Bank Corporation Limited 2015 Annual Report

171

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

15 Other comprehensive gain, net of tax Year ended 31 December Items that may be reclassified subsequently to profit or loss when specific conditions are met Other comprehensive income of available-for-sale financial assets — net changes in fair value recognised during the year — net amount transferred to profit or loss Income tax relating to other comprehensive income of available-for-sale financial assets Other comprehensive income for available-for-sale financial assets, net of tax Exchange differences on translation Others Items that will not be reclassified to profit or loss Actuarial loss on defined benefit plans Income tax relating to changes on the measurement of defined benefit plans Changes on the measurement of defined benefit plans, net of tax Others Other comprehensive income, net of tax

2015

2014

6,578 (865)

6,486 490

(1,438)

(1,742)

4,275 1,364 3

5,234 (43) (1)

(8)

(7)

(3)

(6) 8

(10) — 5,180

5,644

16 Cash and balances with central banks The Group Notes

31 December 2015

31 December 2014

31 December 2015

31 December 2014

7,355

7,232

7,158

7,022

432,965 63,656 3,797 3,416

457,233 70,166 3,855 —

432,207 63,273 3,797 3,416

456,219 69,715 3,855 —

511,189

538,486

509,851

536,811

Cash Balances with central banks — statutory deposit reserve funds — surplus deposit reserve funds — fiscal deposits — foreign exchange reserve Total

(i) (ii) (iii) (iv)

The Bank

Notes: (i)

The Group places statutory deposit reserves with the People’s Bank of China (“PBOC”) and overseas central banks where it has operations. The statutory deposit reserves are not available for use in the Group’s daily business. As at 31 December 2015, the statutory deposit reserve placed with the PBOC was calculated at 15% (2014: 18%) of eligible Renminbi deposits for domestic branches of the Bank. The Bank was also required to deposit an amount equivalent to 5% (2014: 5%) of its foreign currency deposits from domestic branch customers as statutory deposit reserve. The statutory RMB deposit reserve rates applicable to Zhejiang Lin’an CITIC Rural Bank Corporation Limited, a subsidiary of the Group, was at 9.5% (31 December 2014: 14%). The amounts of statutory deposit reserves placed with the central banks of overseas countries are determined by respective jurisdictions. The foreign currency reserve deposits placed with the PBOC are non-interest bearing.

(ii)

The surplus deposit reserve is maintained with the PBOC for the purposes of clearing.

(iii)

Fiscal deposits placed with the PBOC that are not available for use in the Group’s daily operations, and are non-interest bearing.

(iv)

The foreign exchange reserve is maintained with the PBOC in accordance with the related notice issued by the PBOC on 31 August 2015. The reserve is payable on a monthly basis at 20% of the total contract amount of customers driven forward transactions in the previous month. Such foreign exchange reserve is non-interest bearing and will be repayable in 12 months according to the Notice.

172

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

17 Deposits with banks and non-bank financial institutions (a) Analysed by types and locations of counterparties The Group Note

The Bank

31 December 2015

31 December 2014

31 December 2015

31 December 2014

In Mainland China — banks — non-bank financial institutions

36,194

37,348

33,370

36,731

12,766

3,834

12,766

3,834

Subtotal

48,960

41,182

46,136

40,565

22,668

43,767

18,664

41,124

Outside Mainland China — banks — non-bank financial institutions

9,175

9,042

—

Subtotal

31,843

52,809

18,664

41,124

Gross balance Less: Allowances for impairment losses

80,803

93,991

64,800

81,689

—

80,803

93,991

64,800

81,689

31 December 2015

31 December 2014

31 December 2015

31 December 2014

57,323

70,434

42,057

56,859

Net balance

(b) Analysed by remaining maturity The Group Note

The Bank

Demand deposits Time deposits with remaining maturity — within one month — between one month and one year — over one year

12,005

4,552

11,664

4,387

11,475 —

17,495 1,510

11,079 —

18,933 1,510

Subtotal

23,480

23,557

22,743

24,830

Gross balance

80,803

93,991

64,800

81,689

—

80,803

93,991

64,800

81,689

Less: Allowances for impairment losses Net balance

China CITIC Bank Corporation Limited 2015 Annual Report

173

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

18 Placements with and loans to banks and non-bank financial institutions (a) Analysed by types and locations of counterparties The Group Note

The Bank

31 December 2015

31 December 2014

31 December 2015

31 December 2014

In Mainland China — banks — non-bank financial institutions

15,320

21,071

974

4,243

77,262

32,601

77,462

32,601

Subtotal

92,582

53,672

78,436

36,844

26,202

14,516

17,910

9,729

Outside Mainland China — banks — non-bank financial institutions Subtotal Gross balance Less: Allowances for impairment losses

Net balance

—

1,938

1,245

26,202

14,516

19,848

10,974

118,784

68,188

98,284

47,818

(8)

68,180

98,276

31 December 2015

31 December 2014

31 December 2015

31 December 2014

57,439

39,466

48,197

31,399

61,298 47

28,693 29

50,057 30

16,390 29

118,784

68,188

98,284

47,818

118,776

47,810

(b) Analysed by remaining maturity The Group Note Within one month Between one month and one year Over one year Gross balance Less: Allowances for impairment losses Net balance

174

(8) 118,776

The Bank

(8) 68,180

(8) 98,276

(8) 47,810

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

19 Financial assets at fair value through profit or loss The Group 31 December 2014

31 December 2015

31 December 2014

(a)

8,536

12,746

8,357

12,740

(b)

15,226 1

13,923 2

15,226 —

13,923 —

(c)

2,457

838

1,766

838

26,220

27,509

25,349

27,501

Notes Held for trading purpose — debt trading financial assets — certificates of interbank deposit — investment funds Financial assets designated at fair value through profit or loss Total

The Bank

31 December 2015

There was no significant limitation on the ability of the Group and the Bank to dispose of financial assets at fair value through the profit or loss.

(a) Held for trading purpose – debt trading financial assets The Group

The Bank

31 December 2015

31 December 2014

31 December 2015

31 December 2014

386 2,581

1,012 1,365

386 2,581

1,012 1,365

2,073 3,371

3,503 6,823

2,045 3,345

3,503 6,823

8,411

12,703

8,357

12,703

—

44 42

43 —

— —

37 —

125

—

Total

8,536

12,746

8,357

12,740

Listed in Hong Kong Listed outside Hong Kong Unlisted

697 7,737 102

832 11,302 612

648 7,709 —

832 11,296 612

Total

8,536

12,746

8,357

12,740

Issued by In Mainland China — governments — policy banks — banks and non-bank financial institutions — corporates Subtotal Outside Mainland China — governments — banks and non-bank financial institutions — corporates Subtotal

China CITIC Bank Corporation Limited 2015 Annual Report

175

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

19 Financial assets at fair value through profit or loss (Continued) (b) Held for trading purpose – certificates of interbank deposit held for trading were measured at fair value The Group

The Bank

31 December 2015

31 December 2014

31 December 2015

31 December 2014

Issued by Banks in Mainland China

15,226

13,923

15,226

13,923

Listed outside Hong Kong

15,226

13,923

15,226

13,923

The Bank

31 December 2015

31 December 2014

31 December 2015

31 December 2014

Issued by In Mainland China — banks — corporates

1,766 —

268 570

1,766 —

268 570

Subtotal

1,766

838

1,766

838

691

—

Total

2,457

838

1,766

838

Listed outside Hong Kong

2,457

838

1,766

838

Outside Mainland China — corporates

Debt securities traded on the China Domestic Inter-bank Bond Market are included in “Listed outside Hong Kong”.

176

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

20 Derivatives Derivatives include forward, swap and option transactions undertaken by the Group in foreign exchange, precious metals and interest rate markets related to trading, asset and liability management and customer initiated transactions. The Group, through the operations of its branch network, acts as an intermediary for a wide range of customers for structuring deals to offer risk management solutions to match individual customer needs. These positions are actively managed through hedging transactions with external parties to ensure the Group’s net exposures are within acceptable risk levels. The Group also uses these derivatives for proprietary trading purposes and to manage its own asset and liability and structural positions. Derivatives, except for those which are designated as hedging instruments (Note 20(c)), are held for trading. Derivatives classified as held for trading are for trading and customer initiated transactions purpose, and those for risk management purposes but do not meet the criteria for hedge accounting. The contractual/notional amounts of derivatives provide a basis for comparison with fair values of derivatives recognised on the consolidated statement of financial position but do not necessarily indicate the amounts of future cash flows involved or the current fair values of the derivatives and, therefore, do not indicate the Group’s exposure to credit or market risks. The Group 31 December 2015 Nominal amount Assets Liabilities

31 December 2014 Nominal amount Assets Liabilities

Hedging instruments (Note (c)) — interest rate derivatives Non-Hedging instruments — interest rate derivatives — currency derivatives — precious metal derivatives — other derivatives

11,144

237

8,128

238

593,379 1,600,764 18,763 5,222

1,054 11,489 1,008 —

957 10,119 304 —

290,833 978,918 29,762 21,007

739 6,406 843 —

724 6,208 385 —

Total

2,229,272

13,788

11,418

1,328,648

8,226

7,347

The Bank 31 December 2015 Nominal amount Assets Liabilities

31 December 2014 Nominal amount Assets Liabilities

Non-Hedging Instruments — interest rate derivatives — currency derivatives — precious metal derivatives — other derivatives

575,624 1,234,722 18,763 5,222

1,042 8,334 1,008 —

954 7,181 304 —

257,469 671,630 29,762 21,007

723 4,072 843 —

713 3,902 385 —

Total

1,834,331

10,384

8,439

979,868

5,638

5,000

China CITIC Bank Corporation Limited 2015 Annual Report

177

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

20 Derivatives (Continued) (a) Nominal amount analyzed by remaining maturity The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Within three months Between three months and one year Between one year and five years Over five years

814,085 1,299,448 113,995 1,744

536,387 590,341 198,783 3,137

596,230 1,148,841 88,580 680

392,527 481,812 105,450 79

Total

2,229,272

1,328,648

1,834,331

979,868

(b) Credit risk weighted amounts The Group 31 December 2015 Default risk of counter party — interest rate derivatives — currency derivatives — precious metal derivatives — other derivatives Credit valuation adjustment Total

The Bank

31 December 31 December 2014 2015

31 December 2014

683 7,960 911 4,742 4,412

732 11,252 601 9,200 11,064

529 4,026 911 4,742 3,751

490 6,006 601 9,200 9,827

18,708

32,849

13,959

26,124

The credit risk weighted amount has been computed in accordance with “Regulation Governing Capital of Commercial Banks (provisional)” promulgated by the China Banking Regulatory Commission (“CBRC”) in the year of 2012, and depends on the status of the counterparties and the maturity characteristics of the instruments, including those customer-driven back-to-back transactions.

(c) Fair value hedge A subsidiary of the Group utilises fair value hedge to eliminate the effect of fair value changes of financial assets and financial liabilities caused by market interest rate fluctuations. Interest rate swap contracts are used for hedging interest risks arising from available-for-sale debt securities, certificates of deposit and subordinated bonds issued.

178

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

21 Financial assets held under resale agreements (a) Analysed by types and locations of counterparties The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

In Mainland China — banks — non-bank financial institutions

136,959 251

131,083 4,111

136,959 251

131,083 4,111

Subtotal

137,210

135,194

137,210

135,194

Outside Mainland China — banks

1,351

571

—

571

Subtotal

1,351

571

—

571

Gross balance Less: Allowances for impairment losses

138,561 —

135,765 —

137,210 —

135,765 —

Net balance

138,561

135,765

137,210

135,765

(b) Analysed by types of collateral The Group 31 December 2015 Discounted bills Securities Others

The Bank

31 December 31 December 2014 2015

31 December 2014

70,788 67,232 541

84,350 48,481 2,934

70,788 65,882 540

84,350 48,481 2,934

Gross balance Less: Allowances for impairment losses

138,561 —

135,765 —

137,210 —

135,765 —

Net balance

138,561

135,765

137,210

135,765

The Bank

31 December 31 December 2014 2015

31 December 2014

Within one month Between one month and one year More than one year

135,200 3,261 100

124,067 10,710 988

135,200 1,910 100

124,067 10,710 988

Gross balance Less: Allowances for impairment losses

138,561 —

135,765 —

137,210 —

135,765 —

Net balance

138,561

135,765

137,210

135,765

China CITIC Bank Corporation Limited 2015 Annual Report

179

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

22 Interest receivable The Group Note Investment classified as receivables Loans and advances to customers Debt securities Others Gross balance Less: Allowance for impairment losses

Net balance

31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

12,963 10,343 7,882 1,458

11,190 8,667 6,485 1,173

12,963 10,026 7,657 1,334

11,190 8,431 6,352 962

32,646 (2,134)

27,515 (1,390)

31,980 (2,131)

26,935 (1,389)

30,512

26,125

29,849

25,546

23 Loans and advances to customers (a) Analysed by nature The Group Note

31 December 31 December 2014 2015

31 December 2014

Corporate loans — loans — discounted bills — finance lease receivables

1,749,543 92,745 17,879

1,564,766 68,043 552

1,627,573 87,219 —

1,465,078 59,888 —

Subtotal

1,860,167

1,633,361

1,714,792

1,524,966

Personal loans — residential mortgages — business loans — credit cards — others

268,926 105,770 175,801 118,116

232,117 108,927 126,133 87,370

258,014 104,795 175,443 111,512

222,621 108,726 125,851 81,314

Subtotal

668,613

554,547

649,764

538,512

2,528,780

2,187,908

2,364,556

2,063,478

Gross balance Less: Allowances impairment losses — individually assessed — collectively assessed Subtotal Net balance

180

31 December 2015

The Bank

(15,345) (45,152)

(11,153) (40,423)

(15,089) (44,593)

(11,024) (40,112)

(60,497)

(51,576)

(59,682)

(51,136)

2,468,283

2,136,332

2,304,874

2,012,342

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

23 Loans and advances to customers (Continued) (b) Analysed by assessment method of allowance for impairment losses The Group

Loans and advances for which allowance is collectively assessed Gross loans and advances Less: Allowance for impairment losses Net balance

2,492,730 (39,306) 2,453,424

Loans and advances for which allowance is collectively assessed Gross loans and advances Less: Allowance for impairment losses Net balance

2,159,454 (36,469) 2,122,985

31 December 2015 Identified impaired loans and advances (Note (i)) for which for which allowance allowance is is individually collectively assessed assessed (Note (ii)) 8,011

28,039

(5,846)

(15,345)

2,165

12,694

31 December 2014 Identified impaired loans and advances (Note (i)) for which for which allowance allowance is is individually collectively assessed assessed (Note (ii)) 5,608

22,846

(3,954)

(11,153)

1,654

11,693

Total

Gross impaired loans and advances as a % of gross total loans and advances

2,528,780

1.43%

(60,497) 2,468,283

Total

Gross impaired loans and advances as a % of gross total loans and advances

2,187,908

1.30%

(51,576) 2,136,332

The Bank

Loans and advances for which allowance is collectively assessed Gross loans and advances Less: Allowance for impairment losses Net balance

2,329,782 (38,754) 2,291,028

31 December 2015 Identified impaired loans and advances (Note (i)) for which for which allowance allowance is is individually collectively assessed assessed (Note (ii)) 8,003

26,771

(5,839)

(15,089)

2,164

11,682

Total

Gross impaired loans and advances as a % of gross total loans and advances

2,364,556

1.47%

(59,682) 2,304,874

China CITIC Bank Corporation Limited 2015 Annual Report

181

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

23 Loans and advances to customers (Continued) (b) Analysed by assessment method of allowance for impairment losses (Continued) The Bank (Continued)

Loans and advances for which allowance is collectively assessed Gross loans and advances Less: Allowance for impairment losses Net balance

2,035,593 (36,164) 1,999,429

31 December 2014 Identified impaired loans and advances (Note (i)) for which for which allowance allowance is is individually collectively assessed assessed (Note (ii)) 5,600

22,285

(3,948)

(11,024)

1,652

11,261

Total

Gross impaired loans and advances as a % of gross total loans and advances

2,063,478

1.35%

(51,136) 2,012,342

Notes: (i)

Identified impaired loans and advances to customers include loans and advances for which objective evidence of impairment exists and which have been assessed as bearing significant impairment losses which are assessed individually or collectively (portfolios of homogeneous loans and advances).

(ii)

As at 31 December 2015, loans and advances of the Group for which impairment allowance was individually assessed amounted to RMB28,039 million (31 December 2014: RMB22,846 million). The secured and unsecured portion of these loans and advances were RMB7,322 million (31 December 2014: RMB5,923 million) and RMB20,717 million (31 December 2014: RMB16,923 million) respectively. The fair value of collateral held against these loans and advances amounted to RMB13,748 million (31 December 2014: RMB11,050 million). The individual impairment allowance made against these loans and advances were RMB15,345 million (31 December 2014: RMB11,153 million).

As at 31 December 2015, the loans and advances of the Bank for which the impairment allowance was individually assessed amounted to RMB26,771 million (31 December 2014: RMB22,285 million). The secured portion and unsecured portion of these loans and advance was RMB6,977 million (31 December 2014: RMB5,547 million) and RMB19,794 million (31 December 2014: RMB16,738 million) respectively. The fair value of collateral held against these loans and advances amounted to RMB13,715 million (31 December 2014: RMB10,558 million). The individual impairment allowance made against these loans and advances was RMB15,089 million (31 December 2014: RMB11,024 million).

Fair value of collateral was estimated by management based on the latest external valuations, if available, adjusted by taking into account the current realisation experience as well as market condition.

182

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

23 Loans and advances to customers (Continued) (c) Movements of allowance for impairment losses The Group Loans and advances for which allowance is collectively assessed

Year ended 31 December 2015 Impaired loans and advances for which for which allowance is allowance is collectively individually assessed assessed

Total

As at 1 January 2015 Impairment charges on loans Reversal of impairment for the year Unwinding of discount on allowance Transfer out (Note (i)) Write-offs Recovery of loans and advances written off in previous year

36,469 2,818 — — 19 — —

358

242

600

As at 31 December 2015

39,306

5,846

15,345

60,497

Year ended 31 December 2014 Impaired loans and advances for which for which allowance is allowance is collectively individually assessed assessed

Total

Loans and advances for which allowance is collectively assessed

3,954 5,670 (358) — — (3,778)

2,656 2,764 (10) — — (1,466)

11,153 28,933 (1,943) (592) 13 (22,461)

8,966 15,820 (3,336) (460) 1 (10,144)

51,576 37,421 (2,301) (592) 32 (26,239)

As at 1 January 2014 Impairment charges on loans Reversal of impairment for the year Unwinding of discount on allowance Transfer out (Note (i)) Write-offs Recovery of loans and advances written off in previous year

29,632 6,836 — — 1 —

41,254 25,420 (3,346) (460) 2 (11,610)

—

306

316

As at 31 December 2014

36,469

3,954

11,153

51,576

China CITIC Bank Corporation Limited 2015 Annual Report

183

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

23 Loans and advances to customers (Continued) (c) Movements of allowances for impairment losses (Continued) The Bank Loans and advances for which allowances is collectively assessed

Total

36,164 2,590 — — — — —

353

222

575

As at 31 December 2015

38,754

5,839

15,089

59,682

Year ended 31 December 2014 Impaired loans and advances for which for which allowances is allowances is collectively individually assessed assessed

Total

Loans and advances for which the allowances is collectively assessed

3,948 5,645 (353) — — (3,754)

—

289

296

As at 31 December 2014

36,164

3,948

11,024

51,136

Transfer out includes the effect of exchange rate.

8,835 15,690 (3,296) (457) 1 (10,038)

51,136 36,713 (2,190) (582) 2 (25,972)

29,373 6,791 — — — —

(i)

2,653 2,746 (7) — — (1,451)

11,024 28,478 (1,837) (582) 2 (22,218)

Note:

184

Year ended 31 December 2015 Impaired loans and advances for which for which allowances is allowances is collectively individually assessed assessed

40,861 25,227 (3,303) (457) 1 (11,489)

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

23 Loans and advances to customers (Continued) (d) Overdue loans analysed by overdue period The Group

Overdue within three months

Overdue between three months and one year

31 December 2015 Overdue between one year and Overdue over three years three years

Total

Unsecured loans Guaranteed loans Loans with pledged assets — loans secured by collateral — pledged loans

3,425 8,907

3,063 5,285

2,508 5,105

297 230

9,293 19,527

21,579 3,087

12,142 1,595

6,341 1,000

274 62

40,336 5,744

Total

36,998

22,085

14,954

863

74,900

Overdue within three months

Overdue between three months and one year

31 December 2014 Overdue between one year and Overdue over three years three years

Total

Unsecured loans Guaranteed loans Loans with pledged assets — loans secured by collateral — pledged loans

3,459 12,756

3,405 7,129

1,437 3,193

384 326

8,685 23,404

21,837 4,982

10,342 1,277

4,292 845

243 37

36,714 7,141

Total

43,034

22,153

9,767

990

75,944

Overdue within three months

Overdue between three months and one year

31 December 2015 Overdue between one year and Overdue over three years three years

Total

The Bank

Unsecured loans Guaranteed loans Loans with pledged assets — loans secured by collateral — pledged loans

3,272 7,794

2,991 5,181

2,508 5,083

297 230

9,068 18,288

20,233 2,554

11,944 1,584

6,119 1,000

236 62

38,532 5,200

Total

33,853

21,700

14,710

825

71,088

China CITIC Bank Corporation Limited 2015 Annual Report

185

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

23 Loans and advances to customers (Continued) (d) Overdue loans analysed by overdue period (Continued) The Bank (Continued)

Overdue within three months

Overdue between three months and one year

31 December 2014 Overdue between one year and Overdue over three years three years

Total

Unsecured loans Guaranteed loans Loans with pledged assets — loans secured by collateral — pledged loans

3,172 12,335

3,401 6,936

1,437 3,109

384 326

8,394 22,706

20,922 4,484

10,033 1,277

4,291 845

161 37

35,407 6,643

Total

40,913

21,647

9,682

908

73,150

Overdue loans represent loans of which the principal or interest are overdue one day or more.

(e) Finance lease receivables Finance lease receivables transactions are attributable to the Group’s subsidiaries, CITIC Financial Leasing Limited (“CFLL”) and CITIC International Finance Holdings limited (“CIFH”), include net investment in machines and equipment leased to customers under finance lease and purchase contracts which having the characteristics of finance leases. These contracts usually run for an initial period of 5 to 20 years, with an option for acquiring the leased asset at a contractual price value. The total minimum finance lease receivables under finance lease and purchase contracts and their present values are as follows: 31 December 2015 Present value of minimum Minimum finance leases finance leases receivables receivables Within one year (including one year) One year to two years (including two years) Two years to three years (including three years) Over three years Gross balance Less: Allowance for impairment losses — individually assessed — collectively assessed Net balance

186

31 December 2014 Present value of minimum Minimum finance leases finance leases receivables receivables

3,543

4,388

117

133

3,689

4,343

3,212 7,435

3,678 8,171

42 323

49 368

17,879

20,580

552

630

(3) (214) 17,662

(6) (1) 545

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

24 Available-for-sale financial assets The Group Notes Debt securities Certificates of deposit Equity investments — measured at fair value — measured at cost Investment funds Wealth management products

(a) (b) (c) (d)

Total

31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

297,444 75,314 580 446 134 422 10

183,300 23,888 1,769 1,637 132 447 —

263,535 64,945 162 48 114 352 —

165,867 20,650 1,700 1,586 114 320 —

373,770

209,404

328,994

188,537

(a) Debt securities analysed by location of counterparties The Group 31 December 2015 In Mainland China — governments — policy banks — banks and non-bank financial institutions — corporates

The Bank

31 December 31 December 2014 2015

31 December 2014

97,953 32,675 64,060 75,734

32,786 25,762 56,203 56,556

97,338 32,675 59,141 72,618

32,687 25,762 54,384 52,399

270,422

171,307

261,772

165,232

Outside Mainland China — governments — banks and non-bank financial institutions — public entities — corporates

16,759 7,130 — 3,133

6,401 2,888 49 2,655

1,135 561 — 67

— 537 — 98

Subtotal

27,022

11,993

1,763

635

Total

297,444

183,300

263,535

165,867

Listed in Hong Kong Listed outside Hong Kong Unlisted

8,457 258,974 30,013

5,792 156,774 20,734

4,269 254,664 4,602

3,910 155,864 6,093

Total

297,444

183,300

263,535

165,867

Subtotal

(b) Certificates of deposit analysed by location of counterparties The Group 31 December 2015 In Mainland China — banks Outside Mainland China — banks

The Bank

31 December 31 December 2014 2015

31 December 2014

72,053

22,772

64,945

20,650

3,261

1,116

—

Total

75,314

23,888

64,945

20,650

Listed outside Hong Kong

75,314

23,888

64,945

20,650

China CITIC Bank Corporation Limited 2015 Annual Report

187

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

24 Available-for-sale financial assets (Continued) (c) Equity investments analysed by location of counterparties The Group Note

31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

In Mainland China — corporates Outside Mainland China — banks and non-bank financial institutions — corporates

115

1,666

114

1,662

126 339

38 65

48 —

38 —

Total

580

1,769

162

1,700

338 108 134

3 1,634 132

— 48 114

— 1,586 114

580

1,769

162

1,700

Listed in Hong Kong Listed outside Hong Kong Unlisted Total

(i)

Note: (i)

Debt securities traded on the China Domestic Inter-bank Bond Market are included in “Listed outside Hong Kong”.

(d) Investment funds analysed by location of counterparties The Group 31 December 2015

188

The Bank

31 December 31 December 2014 2015

31 December 2014

Outside Mainland China — banks and non-bank financial institutions

422

447

352

320

Total

422

447

352

320

Unlisted

422

447

352

320

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

25 Held-to-maturity investments Debt securities analysed by location of counterparties The Group Notes In Mainland China — governments — policy banks — banks and non-bank financial institutions — corporates Subtotal

31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

50,066 15,738

45,031 17,179

50,066 15,738

45,031 17,179

87,654 26,469

84,501 31,199

87,654 26,469

84,501 31,199

179,927

177,910

179,927

177,910

Outside Mainland China — governments — banks and non-bank financial institutions — public entities

—

40 4

41 19

40 4

41 19

Subtotal

Gross balance Less: Allowance for impairment losses

179,971 (41)

177,998 (41)

179,971 (41)

177,998 (41)

179,930

177,957

179,930

177,957

272 174,848 4,810

208 169,637 8,112

272 174,848 4,810

208 169,637 8,112

Total

179,930

177,957

179,930

177,957

Fair value Of which: listed securities

185,152 180,341

177,856 169,845

185,152 180,341

177,856 169,845

Total Listed in Hong Kong Listed outside Hong Kong Unlisted

(i)

Note: (i)

Debt securities traded on the China Domestic Inter-bank Bond Market are included in “Listed outside Hong Kong”.

China CITIC Bank Corporation Limited 2015 Annual Report

189

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

26 Investment classified as receivables The Group Note

31 December 2015

Investment management products managed by securities companies Wealth management products issued by financial institutions Trust investment plans Corporate bonds Others Gross balance Less: Allowance for impairment losses

Net balance

The Bank

31 December 31 December 2014 2015

31 December 2014

825,016

452,319

822,616

451,979

147,605 139,971 — 500

78,859 108,535 13,199 500

147,605 139,971 — 500

78,859 108,535 13,199 500

1,113,092 (885)

653,412 (156)

1,110,692 (885)

653,072 (156)

1,112,207

653,256

1,109,807

652,916

As of 31 December 2015, RMB75,639 million (31 December 2014: RMB39,286 million) of investment classified as receivables listed above were managed by related companies of CITIC Corporation Limited (CITIC Ltd.), the Bank’s immediate parent company. The underlying assets of investment classified as receivables primarily include investment in rediscounted bills, corporate loans, certificates of interbank deposit and wealth management products issued by other financial institutions.

27 Investments in associates The Group

Investments in associates

Notes

31 December 2015

31 December 2014

(a)~(c)

976

870

976

870

Total

(a) The Group holds its investment in an associate through CIFH and details of the associate as at 31 December 2015 was as follows:

Name of company

Forms of business structure

CITIC International Assets Management Corporation Limited (“CIAM”)

Effective percentage of shares and voting right held Place of by the Group incorporation Hong Kong

40%

Principal activities Investment holding and assets management

Nominal value of issued shares HKD2,218 million

(b) Financial information of the associate is as follow:

190

Name of Enterprise

Total assets

CIAM

2,709

As at or for the year ended 2015 Total Total Operating liabilities net assets income 239

2,470

450

Net profit 179

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

27 Investments in associates (Continued) (c) Movement of the Group’s interests in associates CIAM Initial investment cost

893

As at 1 January 2015 Share of net profit of associates for the year Share of other comprehensive income of associates for the year Dividend received Exchange difference

870 52 6 (8) 56

As at 31 December 2015

976 CCHL Note (i)

CIAM

Total

1,038

893

1,931

1,338 133 (35) (1,438) 2

838 37 (8) — 3

2,176 170 (43) (1,438) 5

Initial investment cost As at 1 January 2014 Share of gain of associates for the year Dividend received Disposal Exchange difference As at 31 December 2014

—

870

Note: (i)

CITC Capital Holdings Limited (“CCHL”) was disposed during the year ended 31 December 2014.

28 Investment in subsidiaries The Bank 31 December 2015

31 December 2014

(i)

16,570

9,797

(ii)

1,577

(iii) (iv)

102 4,000

102 —

22,249

9,986

Notes Investment in subsidiaries — CIFH — CNCB (Hong Kong) Investment Limited (“CNCB Investment”) — Zhejiang Lin’an CITIC Rural Bank Corporation Limited (“Lin’an Rural Bank”) — CFLL Total

China CITIC Bank Corporation Limited 2015 Annual Report

191

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

28 Investment in subsidiaries (Continued) Major subsidiaries of the Group as at 31 December 2015 are as follows:

Name of company

Place of incorporation

Particulars of the issued and paid up capital

CIFH (Note (i))

Hong Kong

HKD7,503 million

Commercial banking and other financial services

CNCB Investment (Note (ii)) Hong Kong

HKD1,889 million

Lending services

Principal activities

Lin’an Rural Bank (Note (iii)) Mainland China RMB200 million

Commercial banking

CFLL (Note (iv))

Financial lease operations

Mainland China RMB4,000 million

% of ownership directly held by the Bank

% of ownership held by subsidiaries of the Bank

The Group’s effective interest

100%

—

100%

99.05%

0.95%

100%

51%

—

51%

100%

—

100%

Notes: (i)

CIFH is an investment holding company registered and headquartered in Hong Kong. Its business scope through its subsidiaries covers commercial banking and non-banking financial services. The Bank acquired 70.32% of CIFH’s shares and voting right through business combination under common control on 23 October 2009. The Bank completed the acquisition of the remaining 29.68% of CIFH’s share from BBVA on 27 August 2015, making the Bank wholly-owned holding company of CIFH.

(ii)

CNCB Investment, formerly named as China Investment and Finance Limited, was founded in Hong Kong in 1984 with registered capital of HKD25 million. Holding a money lending licence issued by the Hong Kong Company Registrar, CNCB Investment’s business scope includes capital market investment, lending and other related services. As at 2 April 2015, the Bank, as approved by China Banking Regulatory Commission, increased its capital investment in CNCB Investment by HKD1,864 million. After the capital injection, the registered capital of CNCB Investment increased to HKD1,889 million, and the Bank holds 99.05% of CNCB Investment’s shares. As at 27 August 2015, the Bank acquired 29.68% equity interest of CIFH held by BBVA, such that the Bank becomes the 100% equity holder of CIFH. Since CIFH holds the remaining 0.95% equity interest of CNCB Investment, as at 31 December 2015, the Bank effectively held 100% shareholding in CNCB Investment.

As at 15 June 2015, CNCB Investment acquired 100% interest in a new subsidiary, Asia Rock Capital Group Limited (“Asia Rock”), for a cash consideration of USD1.57 million. At the date of acquisition, the carrying amount of Asia Rock’s net equity was USD0.03 million, resulting in a goodwill of USD1.54 million (Note 32).

(iii)

Lin’an Rural Bank was founded in Zhejiang Province of Mainland China in 2011 with a registered capital of RMB200 million. Its principal activities are commercial banking related businesses. The Bank holds 51% of Lin’an Rural Bank’s shares and voting rights.

(iv)

192

The Bank established its wholly subsidiary CFLL in 2015 with registered capital of RMB4 billion. Its principal business activities are financial leasing.

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

29 Property, plant and equipment The Group Buildings (Note (ii))

Computer equipment and others

Construction in progress

Total

Cost or deemed cost: As at 1 January 2015 Additions Transfers Disposals Exchange difference

12,264 1,227 863 (10) 28

1,684 300 (863) — —

8,368 1,258 — (216) 58

22,316 2,785 — (226) 86

As at 31 December 2015

14,372

1,121

9,468

24,961

Accumulated depreciation: As at 1 January 2015 Depreciation charges Disposals Exchange difference

(2,992) (449) 3 (14)

— — — —

(4,586) (1,091) 193 (42)

(7,578) (1,540) 196 (56)

As at 31 December 2015

(3,452)

—

(5,526)

(8,978)

Net carrying value: As at 1 January 2015 As at 31 December 2015 (Note (i))

9,272

1,684

3,782

14,738

10,920

1,121

3,942

15,983

Computer equipment and others

Total

The Group Buildings (Note (ii))

Construction in progress

Cost or deemed cost: As at 1 January 2014 Additions Disposals Exchange difference

11,409 863 (10) 2

1,548 136 — —

7,145 1,420 (197) —

20,102 2,419 (207) 2

As at 31 December 2014

12,264

1,684

8,368

22,316

Accumulated depreciation: As at 1 January 2014 Depreciation charges Disposals Exchange difference

(2,557) (438) 4 (1)

— — — —

(3,811) (944) 169 —

(6,368) (1,382) 173 (1)

As at 31 December 2014

(2,992)

—

(4,586)

(7,578)

Net carrying value: As at 1 January 2014

8,852

1,548

3,334

13,734

As at 31 December 2014 (Note (i))

9,272

1,684

3,782

14,738

China CITIC Bank Corporation Limited 2015 Annual Report

193

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

29 Property, plant and equipment (Continued) The Bank Buildings (Note (ii))

Construction in progress

Total

Cost or deemed cost: As at 1 January 2015 Additions Transfers Disposals

11,803 1,226 863 (10)

1,683 300 (863) —

7,382 1,158 — (196)

20,868 2,684 — (206)

As at 31 December 2015

13,882

1,120

8,344

23,346

Accumulated depreciation: As at 1 January 2015 Depreciation charges Disposals

(2,776) (440) 3

— — —

(3,869) (990) 174

(6,645) (1,430) 177

As at 31 December 2015

(3,213)

—

(4,685)

(7,898)

Net carrying value: As at 1 January 2015 As at 31 December 2015 (Note (i))

9,027

1,683

3,513

14,223

10,669

1,120

3,659

15,448

Computer equipment and others

Total

The Bank Buildings (Note (ii))

194

Computer equipment and others

Construction in progress

Cost or deemed cost: As at 1 January 2014 Additions Disposals

10,950 863 (10)

1,547 136 —

6,216 1,346 (180)

18,713 2,345 (190)

As at 31 December 2014

11,803

1,683

7,382

20,868

Accumulated depreciation: As at 1 January 2014 Depreciation charges Disposals

(2,351) (429) 4

— — —

(3,174) (848) 153

(5,525) (1,277) 157

As at 31 December 2014

(2,776)

—

(3,869)

(6,645)

Net carrying value: As at 1 January 2014

8,599

1,547

3,042

13,188

As at 31 December 2014 (Note (i))

9,027

1,683

3,513

14,223

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

29 Property, plant and equipment (Continued) Notes: (i)

As at 31 December 2015, the net book value of the related properties was approximately RMB1,850 million (31 December 2014: RMB1,921 million). The Group believes the incomplete registration procedure does not affect the rights of the Group as the legal successor to these properties.

(ii)

Analysed by remaining term of leases The net carrying value of premises at the reporting date is analysed by the remaining terms of the leases as follows: The Group

Long term leases (over 50 years), held in Hong Kong Medium term leases (10-50 years), held in Hong Kong Medium term leases (10-50 years), held in Mainland China Permanent term lease, held in overseas Total

The Bank

31 December

2015

2014

2015

2014 —

—

158

162

—

10,669

9,027

10,669

9,027

—

10,920

9,272

10,669

9,027

30 Intangible assets The Group Cost or deemed cost As at 1 January 2015 Additions As at 31 December 2015

Software

Others

Total

938 527

42 —

980 527

1,465

1,507

Amortisation As at 1 January 2015 Charge for the year

(560) (131)

(13) (1)

(573) (132)

As at 31 December 2015

(691)

(14)

(705)

Net carrying value As at 1 January 2015

378

407

As at 31 December 2015

774

802

Software

The Group Others

Total

Cost or deemed cost As at 1 January 2014 Additions

771 167

42 —

813 167

As at 31 December 2014

938

980

Amortisation As at 1 January 2014 Charge for the year

(439) (121)

(11) (2)

(450) (123)

As at 31 December 2014

(560)

(13)

(573)

Net carrying value As at 1 January 2014

332

363

As at 31 December 2014

378

407

China CITIC Bank Corporation Limited 2015 Annual Report

195

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

30 Intangible assets (Continued) The Bank Cost or deemed cost As at 1 January 2015 Additions As at 31 December 2015

Software

Others

Total

938 526

42 —

980 526

1,464

1,506

Amortisation As at 1 January 2015 Charge for the year

(560) (131)

(13) (1)

(573) (132)

As at 31 December 2015

(691)

(14)

(705)

Net carrying value As at 1 January 2015

378

407

As at 31 December 2015

773

801

Software

The Bank Others

Total

Cost or deemed cost As at 1 January 2014 Additions

771 167

42 —

813 167

As at 31 December 2014

938

980

Amortisation As at 1 January 2014 Charge for the year

(439) (121)

(11) (2)

(450) (123)

As at 31 December 2014

(560)

(13)

(573)

Net carrying value As at 1 January 2014

332

363

As at 31 December 2014

378

407

31 Investment properties The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Fair value as at 1 January Change in fair value Exchange difference

280 27 18

277 2 1

— — —

Fair value as at 31 December

325

280

—

Investment properties of the Group are buildings held by subsidiaries and mainly located in Hong Kong and leased to third parties through operating leases. There are active real estate markets where the investment properties are located and the Group is able to obtain market price and related information of similar properties, and therefore makes estimation about the fair value of the investment properties as at 31 December 2015. All investment properties of the Group were revalued at 31 December 2015 by an independent firm of surveyors, Prudential Surveyors (Hong Kong) Limited, on an open market value basis. The fair value is in line with the definition of “IFRS13 – Fair value measurement”. The revaluation surplus or deficit has been credited to the profit or charged to the loss respectively. Prudential Surveyors (Hong Kong) Limited has among their staff Fellows of the Hong Kong Institute of Surveyors with recent experience in the location and category of properties being valued.

196

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

31 Investment properties (Continued) (a) Analysed by remaining term of leases The net carrying value of investment properties at the reporting date is analysed by the remaining terms of the leases as follows: The Group 31 December 2015 Long term leases (over 50 years), held in Hong Kong Medium term leases (10-50 years), held in Hong Kong Medium term leases (10-50 years), held in Mainland China Total

The Bank

31 December 31 December 2014 2015

31 December 2014

—

276

237

—

325

280

—

32 Goodwill The goodwill brought forward from 31 December 2014 arose from CIFH’s previous business combination of its subsidiaries not under common control. The additions during year ended 31 December 2015 was attributable to CNCB Investment’s acquisition of a new subsidiary Rock Asia Capital Group Limited (Note 28(ii)). The Group 31 December 2015

31 December 2014

As at 1 January Additions Exchange difference

795 10 49

792 — 3

As at 31 December

854

795

Based on the result of impairment test, no impairment losses on goodwill were recognised as at 31 December 2015 (2014: Nil).

33 Deferred tax assets The Group 31 December 2015

31 December 2014

Deferred tax assets Deferred tax liabilities

7,981 (10)

9,317 —

Net

7,971

9,317

The Bank 31 December 2015

31 December 2014

Deferred tax assets

7,930

9,296

Net

7,930

9,296

China CITIC Bank Corporation Limited 2015 Annual Report

197

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

33 Deferred tax assets (Continued) (a) Analysed by nature The Group 31 December 2015 Deductible/ (taxable) Deferred temporary tax assets/ differences (liabilities) Deferred tax assets — allowance for impairment losses — fair value adjustments — employee retirement benefits and salaries payable — others Total

31 December 2014 Deductible/ (taxable) Deferred temporary tax assets/ differences (liabilities)

38,879 (8,060)

9,694 (2,017)

31,422 (1,031)

7,830 (250)

2,818 (1,647)

704 (400)

7,595 (684)

1,899 (162)

31,990

37,302

7,981

9,317

The Group 31 December 2015 Deductible/ (taxable) Deferred temporary tax assets/ differences (liabilities)

31 December 2014 Deductible/ (taxable) Deferred temporary tax assets/ differences (liabilities)

Deferred tax liabilities — fair value adjustments — others

(59) (1)

(10) —

— —

Total

(60)

(10)

—

The Bank 31 December 2015 Deductible/ (taxable) Deferred temporary tax assets/ differences (liabilities) Deferred tax assets — allowance for impairment losses — fair value adjustments — employee retirement benefits and salaries payable — others Total

198

31 December 2014 Deductible/ (taxable) Deferred temporary tax assets/ differences (liabilities)

38,511 (8,093)

9,628 (2,023)

31,110 (941)

7,778 (235)

2,794 (1,493)

699 (374)

7,590 (575)

1,897 (144)

31,719

7,930

37,184

9,296

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

33 Deferred tax assets (Continued) (b) Movement of deferred tax The Group Allowance for impairment losses

Fair value adjustments

As at 1 January 2015 Recognised in profit or loss Recognised in other comprehensive income Exchange difference

7,830 1,861

(250) (335)

— 3

(1,438) (4)

As at 31 December 2015

9,694

As at 1 January 2014 Recognised in profit or loss Recognised in other comprehensive income As at 31 December 2014

Employee retirement benefits and accrued staff cost 1,899 (1,197)

Others

Total deferred tax assets

(162) (238)

9,317 91

2 —

— —

(1,436) (1)

(2,027)

704

(400)

7,971

5,459 2,371

1,518 (26)

1,637 265

(180) 18

8,434 2,628

—

(1,742)

(3)

—

(1,745)

7,830

(250)

1,899

(162)

9,317

Fair value adjustments

Employee retirement benefits and accrued staff cost

Others

Total deferred tax assets

The Bank Allowance for impairment losses As at 1 January 2015 Recognised in profit or loss Recognised in other comprehensive income

7,778 1,850

(235) (335)

—

(1,453)

As at 31 December 2015

9,628

(2,023)

As at 1 January 2014 Recognised in profit or loss Recognised in other comprehensive income

5,420 2,358

As at 31 December 2014

1,897 (1,200)

(144) (230)

9,296 85

—

(1,451)

699

(374)

7,930

1,517 (26)

1,636 264

(163) 19

8,410 2,615

—

(1,726)

(3)

—

(1,729)

7,778

(235)

1,897

(144)

9,296

There is no material unrecognised deferred tax assets or liabilities as at 31 December 2015 (31 December 2014: Nil).

China CITIC Bank Corporation Limited 2015 Annual Report

199

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

34 Other assets The Group Notes Prepayments for properties and equipment Precious metal contracts Fee and commission receivables Leasehold improvements Advanced payments and settlement accounts Prepaid rent Repossessed assets Land use rights Others

(a)

31 December 2015

31 December 2014

12,555 12,443 2,777 1,793

11,447 15,061 2,222 1,595

12,412 12,443 2,776 1,793

11,406 15,061 2,222 1,591

1,355 1,072 960 851 6,335

2,299 898 739 876 1,629

1,328 1,065 960 851 3,724

2,299 891 739 876 716

40,141

36,766

37,352

35,801

(b) (c)

Total

The Bank

31 December 31 December 2014 2015

(a) Prepayments for properties and equipment Prepayments mainly represent payments that the Group made for office buildings and software equipment.

(b) Repossessed assets The Group Note

31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Premises Others

1,045 85

446 458

1,045 85

446 458

Gross balance Less: Allowance for impairment losses

1,130

904

1,130

904

Net balance

(170)

(165)

(170)

(165)

960

739

960

739

(c) Others On 29 January 2016, the Bank made an announcement that its Lanzhou branch was involved in a risk incident in relation to its rediscounted bill business with an exposure of RMB969 million. The incident is currently under investigation by the local public security bureau. As 31 December 2015, the Bank prudently recorded a provision under impairment losses on assets in the consolidated statement of profit or loss and other comprehensive income.

200

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

35 Movements of allowance for impairment losses The Group

Notes Placements with and loans to banks and non-bank financial institutions Interest receivable Loans and advances to customers Available-for-sale financial assets Held-to-maturity investments Investment classified as receivables Other assets

18 22 23 25 26

Total

Notes Deposit with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Interest receivable Loans and advances to customers Available-for-sale financial assets Held-to-maturity investments Investment classified as receivables Other assets

As at 1 January

Year ended 31 December 2015 Transfer Charge for Reversal for in/(out) the year the year Note (i) Write-offs

As at 31 December

8 1,390 51,576 97 41 156 882

— 3,398 37,421 63 — 729 1,379

— (457) (2,301) (6) (4) — (90)

— 26 40 6 4 — 6

— (2,223) (26,239) — — — (178)

8 2,134 60,497 160 41 885 1,999

54,150

42,990

(2,858)

(28,640)

65,724

Year ended 31 December 2014 Transfer Charge for Reversal for in/(out) the year the year Note (i) Write-offs

As at 31 December

As at 1 January

—

(8)

—

18 22 23

15 688 41,254 157 48 — 750

— 1,460 25,420 10 — 156 265

(27) (174) (3,346) (10) (7) — (70)

20 (16) (142) (60) — — (10)

— (568) (11,610) — — — (53)

8 1,390 51,576 97 41 156 882

42,912

27,311

(3,642)

(200)

(12,231)

54,150

Years ended 31 December 2015 Transfer Charge for Reversal for in/(out) the year the year Note (i) Write-offs

As at 31 December

25 26

Total

The Bank

18 22 23 25 26

As at 1 January 8 1,389 51,136 69 41 156 882

— 3,396 36,713 56 — 729 1,193

— (457) (2,190) (5) (4) — (90)

— 26 (5) 4 4 — 6

— (2,223) (25,972) — — — (178)

8 2,131 59,682 124 41 885 1,813

53,681

42,087

(2,746)

(28,373)

64,684

China CITIC Bank Corporation Limited 2015 Annual Report

201

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

35 Movements of allowance for impairment losses (Continued) The Bank (Continued)

As at 1 January

Years ended 31 December 2014 Transfer Charge for Reversal for in/(out) the year the year Note (i) Write-offs

As at 31 December

—

(8)

—

18 22 23

15 688 40,861 124 48 — 749

— 1,459 25,227 — — 156 265

(27) (174) (3,303) (10) (7) — (69)

20 (16) (160) (45) — — (10)

— (568) (11,489) — — — (53)

8 1,389 51,136 69 41 156 882

42,485

27,107

(3,598)

(203)

(12,110)

53,681

25 26

Note: (i)

Transfer in/(out) includes the effect of exchange rate and disposals during the year. Besides allowance for impairment losses above, the Group also charged impairment losses for off-balance sheet items. Details are disclosed in Note 12.

36 Deposits from banks and non-bank financial institutions Analysed by types and locations of counterparties The Group 31 December 2015 In Mainland China — banks — non-bank financial institutions

31 December 2014

396,463 655,307

299,416 341,785

396,587 655,338

299,436 341,785

1,051,770

641,201

1,051,925

641,221

Outside Mainland China — banks — non-bank financial institutions

16,722 52

47,026 65

17,704 1

57,137 4

Subtotal

16,774

47,091

17,705

57,141

1,068,544

688,292

1,069,630

698,362

Subtotal

Total

202

The Bank

31 December 31 December 2014 2015

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

37 Placements from banks and non-bank financial institutions Analysed by types and locations of counterparties The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

In Mainland China — banks — non-bank financial institutions

31,494 13,729

9,834 512

16,497 13,729

9,858 512

Subtotal

45,223

10,346

30,226

10,370

Outside Mainland China — banks

4,025

9,302

2,173

8,333

Subtotal

4,025

9,302

2,173

8,333

49,248

19,648

32,399

18,703

Total

38 Financial liabilities at fair value through profit or loss The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Short position in debt securities

—

573

—

573

Total

—

573

—

573

39 Financial assets sold under repurchase agreements (a) Analysed by type and location of counterparties The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

In Mainland China — PBOC — banks — non-bank financial institutions

8,917 60,223 1,970

6,460 34,218 703

8,917 60,223 1,970

6,460 34,218 703

Subtotal

71,110

41,381

71,110

41,381

Outside Mainland China — banks

228

—

Subtotal

228

—

71,168

41,609

71,110

41,381

Total

(b) Analysed by type of collateral The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Discounted bills Debt securities

27,492 43,676

6,460 35,149

27,492 43,618

6,460 34,921

Total

71,168

41,609

71,110

41,381

China CITIC Bank Corporation Limited 2015 Annual Report

203

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

40 Deposits from customers (a) Analysed by nature The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Demand deposits — corporate customers — personal customers

1,187,929 178,917

963,292 147,658

1,156,445 160,207

938,909 133,223

Subtotal

1,366,846

1,110,950

1,316,652

1,072,132

Time and call deposits — corporate customers — personal customers

1,446,939 362,433

1,365,914 366,491

1,366,291 305,328

1,300,408 320,838

Subtotal

1,809,372

1,732,405

1,671,619

1,621,246

Outward remittance and remittance payables Total

6,557

6,219

6,555

6,219

3,182,775

2,849,574

2,994,826

2,699,597

(b) Analysed by type of collateral The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Bank acceptance Guarantees Letters of credit Others

292,556 21,775 9,241 121,310

268,607 15,283 23,634 149,327

292,489 21,320 9,241 109,274

268,544 13,364 23,626 141,640

Total

444,882

456,851

432,324

447,174

41 Accrued staff costs The Group

Notes Short-term employee benefits Post-employment benefits — defined contribution plans Post-employment benefits — defined benefit plans Other long-term benefits Total

204

As at 1 January

Year ended 31 December 2015 Additions Reductions Transfer during during out the year the year (Note (i))

As at 31 December

(a)

11,387

20,064

(19,512)

(b)

2,291

(2,275)

—

(c)

40 78

11 21

(2) (36)

— —

49 63

11,521

22,387

(21,825)

(3,781)

8,158

8,302

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

41 Accrued staff costs (Continued) The Group (Continued)

Notes Short-term employee benefits Post-employment benefits — defined contribution plans Post-employment benefits — defined benefit plans Other long-term benefits

Year ended 31 December 2014 Additions Reductions As at during during As at 1 January the year the year 31 December

(a)

10,369

19,506

(18,488)

11,387

(b)

1,622

(1,622)

(c)

34 81

9 20

(3) (23)

40 78

10,500

21,157

(20,136)

11,521

Total

The Bank As at 1 January

Notes Short-term employee benefits Post-employment benefits — defined contribution plans Post-employment benefits — defined benefit plans Other long-term benefits

10,737

18,677

(18,166)

(b)

2,284

(2,269)

—

(c)

40 78

11 21

(2) (36)

— —

49 63

10,871

20,993

(20,473)

Notes

Total

As at 31 December

(a)

Total

Short-term employee benefits Post-employment benefits — defined contribution plans Post-employment benefits — defined benefit plans Other long-term benefits

Year ended 31 December 2015 Additions Reductions Transfer during during out the year the year (Note (i)) (3,781)

(3,781)

7,467

7,610

Year ended 31 December 2014 Additions Reductions As at during during As at 1 January the year the year 31 December

(a)

9,912

18,251

(17,426)

10,737

(b)

1,555

(1,555)

(c)

34 81

9 20

(3) (23)

40 78

10,043

19,835

(19,007)

10,871

China CITIC Bank Corporation Limited 2015 Annual Report

205

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

41 Accrued staff costs (Continued) (a) Short-term employee benefits The Group

As at 1 January

Year ended 31 December 2015 Additions Reductions during during Transfer out As at the year the year (Note (i)) 31 December

Salaries and bonuses Social insurance Welfare expenses Housing fund Labor union expenses and employee education expenses Housing allowance Others

10,589 19 — 25

15,260 1,057 1,296 1,211

(14,934) (1,041) (1,296) (1,210)

711 28 15

636 439 165

(432) (433) (166)

Total

11,387

20,064

(19,512)

(3,781) — — — — — — (3,781)

7,134 35 — 26 915 34 14 8,158

Year ended 31 December 2014 Additions Reductions As at during during As at 1 January the year the year 31 December Salaries and bonuses Social insurance Welfare expenses Housing fund Labor union expenses and employee education expenses Housing allowance Others Total

9,742 24 — 16

15,149 933 1,259 1,023

(14,302) (938) (1,259) (1,014)

10,589 19 — 25

538 36 13

631 377 134

(458) (385) (132)

711 28 15

10,369

19,506

(18,488)

11,387

The Bank

As at 1 January Salaries and bonuses Social insurance Welfare expenses Housing fund Labor union expenses and employee education expenses Housing allowance Others Total

206

Year ended 31 December 2015 Additions Reductions during during Transfer out As at the year the year (Note (i)) 31 December

9,946 19 — 25

14,023 1,039 1,283 1,202

(13,738) (1,025) (1,283) (1,200)

709 28 10

631 437 62

(427) (431) (62)

10,737

18,677

(18,166)

(3,781) — — — — — — (3,781)

6,450 33 — 27 913 34 10 7,467

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

41 Accrued staff costs (Continued) (a) Short-term employee benefits (Continued) The Bank (Continued) Year ended 31 December 2014 Additions Reductions As at during during As at 1 January the year the year 31 December Salaries and bonuses Social insurance Welfare expenses Housing fund Labor union expenses and employee education expenses Housing allowance Others

9,290 23 — 16

13,957 915 1,251 1,017

(13,301) (919) (1,251) (1,008)

9,946 19 — 25

536 36 11

628 375 108

(455) (383) (109)

709 28 10

Total

9,912

18,251

(17,426)

10,737

Note: (i)

This represents deferred emoluments payable to employees in respect of services provided to the Group. Such amount will be distributed according to plans. As at 31 December 2015, the deferred emolument payable amounted to RMB3,781 million and was included in “other liabilities” (Note 46).

(b) Post-employment benefits-defined contribution plans Post-employment benefits-defined contribution plans includes costs of statutory retirement plan. Pursuant to the relevant laws and regulations in the PRC governing labor and social security, the Group joins statutory retirement plan for the employees as set out by city and provincial governments. The Group is required to make contributions based on defined ratios of the salaries, bonuses and certain allowance of the employees to the statutory retirement plan under the administration of the government. In addition to the above statutory retirement plan, the Bank’s qualified employees have joined a defined contribution retirement scheme (the “Scheme”) which was established by the Group and managed by the CITIC Group. The Bank has made annuity contributions at 5% (2014: 4%) of its employee’s gross wages. In 2015, the Bank made annuity contribution amounting to RMB571 million (2014: RMB349 million). The Group’s employees based in Hong Kong join the Mandatory Provident Fund Scheme with certain contribution ratios pursuant to the relevant laws and regulations.

(c) Post-employment benefits – defined benefit plans The Group offers supplementary retirement benefits for certain of its qualified employees in Mainland China. The retired staff can elect to join this supplementary retirement benefit plan. The amount that is recognised as at balance sheet day presents the discounted value of benefit obligation in the future. The Group’s obligations in respect of the supplementary retirement benefit plan as at the reporting date are based on the projected unit credit actuarial cost method and computed by a qualified professional actuary firm (a member of Society of Actuaries in the United States of America). Save for the above, the Group has no other material obligation for payment of retirement benefits.

China CITIC Bank Corporation Limited 2015 Annual Report

207

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

42 Taxes payable The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Income tax Business tax and surcharges Others

2,248 2,563 (118)

3,662 2,308 15

2,134 2,556 4

3,529 2,301 7

Total

4,693

5,985

4,694

5,837

43 Interest payable The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Deposits from customers Debt securities issued Others

28,701 2,061 7,397

28,876 2,052 6,383

28,180 2,004 7,238

28,352 1,918 6,289

Total

38,159

37,311

37,422

36,559

44 Provisions The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Litigation provisions

Total

(a) Movement of provisions: The Group 31 December 2015 As at 1 January Accruals Reversals Payments As at 31 December

208

The Bank

31 December 31 December 2014 2015

31 December 2014

5 3 (1) (5)

71 8 (36) (38)

2 2 (1) (1)

71 4 (36) (37)

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

45 Debt securities issued The Group Notes Long-term debt securities issued Subordinated bonds issued: — by the Bank — by CIFH Certificates of deposit issued Certificates of interbank deposit issued

31 December 2015

(b)

31 December 2014

(a)

31,295

16,302

31,472

16,479

(b) (c) (d) (e)

70,434 7,345 8,705 171,356

75,427 6,906 11,167 23,686

70,434 — — 171,356

75,427 — — 23,686

289,135

133,488

273,262

115,592

Total (a)

The Bank

31 December 31 December 2014 2015

As at the end of the reporting period, long-term debt securities issued by the Bank were as follows:

Bond Type

Issue Date

Maturity Date

Fixed Fixed Fixed Fixed

8 November 2013 27 February 2014 21 May 2015 13 November 2015

12 27 25 17

rate rate rate rate

bond bond bond bond

November 2018 February 2017 May 2020 November 2020

Annual Interest Rate

Nominal Value RMB

5.2% 4.125% 3.98% 3.61%

15,000 1,500 7,000 8,000

The carrying value of the Bank’s subordinated bonds issued as at 31 December represents: Notes Subordinated fixed rate bonds maturing: — in May 2020 — in June 2021 — in May 2025 — in June 2027 — in August 2024 Total

(i) (ii) (iii) (iv) (v)

31 December 2015

31 December 2014

— 2,000 11,500 19,977 36,957

5,000 2,000 11,500 19,974 36,953

70,434

75,427

Notes: (i)

The interest rate on the subordinated fixed rate bonds issued on 28 May 2010 is 4.00% per annum. The Bank redeemed the bonds through the exercise of an early redemption option on 28 May 2015.

(ii)

The interest rate on the subordinated fixed rate bonds issued on 22 June 2006 is 4.12% per annum. The Bank has an option to redeem the bonds on 22 June 2016. If they are not redeemed, the interest rate of the bonds will increase to 7.12% per annum for the next five years.

(iii)

The interest rate on the subordinated fixed rate bonds issued on 28 May 2010 is 4.30% per annum. The Bank has an option to redeem the bonds on 28 May 2020. If they are not redeemed, the interest rate of the bonds will remain at 4.30% per annum for the next five years.

(iv)

The interest rate on the subordinated fixed rate bonds issued on 21 June 2012 is 5.15% per annum. The Bank has an option to redeem the bonds on 21 June 2022. If they are not redeemed, the interest rate of the bonds will remain at 5.15% per annum for the next five years.

(v)

The interest rate on the subordinated fixed rate bonds issued on 26 August 2014 is 6.13% per annum. The Bank has an option to redeem the bonds on 26 August 2019. If they are not redeemed, the interest rate of the bonds will remain 6.13% per annum for the next five years.

China CITIC Bank Corporation Limited 2015 Annual Report

209

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

45 Debt securities issued (Continued) (c)

The carrying value of CITIC Bank International Limited’s subordinated bonds issued as at 31 December represents: 31 December 2015

31 December 2014

(i)

3,462

3,274

(ii)

1,933

1,808

(iii)

1,950

1,824

7,345

6,906

Notes Subordinated fixed rate bonds maturing on 24 June 2020 Subordinated fixed rate bonds maturing on 28 September 2022 Subordinated fixed rate bonds maturing on 7 May 2024 Total (i)

Subordinated bonds with nominal value of USD500 million at interest rate of 6.875% per annum were issued on 24 June 2010 by CITIC Bank International Limited. The bonds are listed on SGX-ST.

(ii)

Subordinated bonds with nominal value of USD300 million at interest rate of 3.875% per annum were issued on 27 September 2012 by CITIC Bank International Limited.

(iii)

Subordinated bonds with nominal value of USD300 million at interest rate of 6.00% per annum were issued on 7 November 2013 by CITIC Bank International Limited.

(d)

These certificates of deposit were issued by CITIC Bank International Limited with interest rate ranging from 0.46% to 3.73% per annum.

(e)

As at 31 December 2015, the Bank had issued certain certificates of interbank deposits, totaling RMB171,356 million, with yield ranging from 2.75% to 4.77% per annum. The original expiry terms are between 1 month to 2 years.

46 Other liabilities The Group 31 December 2015

210

The Bank

31 December 31 December 2014 2015

31 December 2014

Settlement and clearing accounts Advances and deferred expenses Precious metal contracts Deferred emoluments payable (Note 41(i)) Payment and collection accounts Accrued expenses Dormant accounts Others

23,718 2,947 2,935 3,781 541 389 339 7,002

10,848 2,717 7,747 — 262 170 248 4,074

21,396 2,073 2,935 3,781 539 325 269 4,545

10,422 1,740 7,747 — 262 170 248 3,847

Total

41,652

26,066

35,863

24,436

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

47 Share capital The Group and the Bank 31 December 2015 Number of shares Nominal (millions) Value

Note A-Share H-Share

(i)

Total

34,053 14,882

48,935

31 December 2014 Number of shares Nominal (millions) Value

Note A-Share H-Share

34,053 14,882

(i)

Total

31,905 14,882

46,787

Note: (i)

On 31 December 2015, the Bank through private placement issued 2,147,469,539 shares to China National Tobacco Corporation (CNTC), at an issuance price of RMB5.55 per share, raising RMB11,888 million in total after deduction of issuance expenses (including underwriting and sponsorship fees). Such issuance resulted in an increase in share capital and share premium by RMB2,148 million and RMB9,740 million, respectively. CNTC holds 4.39% shares of the Bank after the issuance. KPMG Huazhen issued related capital verification report (KPMG Huazhen Yan Zi No.1501428) on 31 December 2015.

48 Capital reserves The Group

Share premium Other reserves

The Bank

31 December 31 December 2014 2015

31 December 2014

Notes

31 December 2015

47(i) (i)

58,555 81

49,214 82

61,359 —

51,619 —

58,636

49,296

61,359

51,619

Total Note: (i)

In August 2015, the Bank completed the acquisition of 29.86% of CIFH’s shares from BBVA. The difference between the consideration and the related carrying amount of CIFH’s net asset of RMB0.4 billion was debited to capital premium (Note 28(i) and (ii)).

49 Other comprehensive income/(loss) Other comprehensive income/(loss) comprises items that may be reclassified subsequently to profit or loss when specific conditions are met, mainly include fair value changes of available-for-sale financial assets, exchange difference on translating foreign operations etc; and items that will not be reclassified to profit or loss, such as net changes on the measurement of defined benefit plan (Note 41).

China CITIC Bank Corporation Limited 2015 Annual Report

211

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

50 Surplus reserve The Group and the Bank Year ended 31 December 2015

Year ended 31 December 2014

As at 1 January Appropriations

19,394 3,968

15,495 3,899

As at 31 December

23,362

19,394

Under the relevant PRC Laws, the Bank and the Bank’s subsidiaries in Mainland China are required to appropriate 10% of its net profit, as determined under regulations issued by the regulatory bodies of the PRC, to the statutory surplus reserve until the reserve balance reaches 50% of the registered capital. After making the appropriation to the statutory surplus reserve, the Bank may also appropriate its net profit to the discretionary surplus reserve upon approval by equity holders at the Annual General Meeting. The Bank makes its appropriation on an annual basis. Subject to the approval of equity holders, statutory surplus reserves may be used for replenishing accumulated losses, if any, and may be converted into capital, provided that the balance of statutory surplus reserve after such capitalisation is not less than 25% of the registered capital before the process.

51 General reserve The Group Year ended 31 December 2015

The Bank

Year ended Year ended 31 December 31 December 2014 2015

Year ended 31 December 2014

As at 1 January Appropriations

50,447 14,108

44,340 6,107

50,350 14,000

44,250 6,100

As at 31 December

64,555

50,447

64,350

50,350

Pursuant to relevant Ministry of Finance (“MOF”) notices, the Bank and the Group’s banking subsidiaries in Mainland China are required to set aside a general reserve to cover potential losses against their assets. With the regulations enforced from 1 July 2012, the minimum general reserve balance should increase to 1.5% of the ending balance of gross risk-bearing assets with a transition period of five years. The Bank makes its appropriation on an annual basis.

212

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

52 Profit appropriations and retained earnings (a) Profit appropriations and distributions other than dividends declared during the year The Group

Notes Appropriations to — surplus reserve — general reserve As at 31 December

50 51

Year ended 31 December 2015

The Bank

Year ended Year ended 31 December 31 December 2014 2015

Year ended 31 December 2014

3,968 14,108

3,899 6,107

3,968 14,000

3,899 6,100

18,076

10,006

17,968

9,999

In accordance with the approval from the Board of Directors dated 23 March 2016, the Bank appropriated RMB3,968 million to statutory surplus reserve fund and RMB14,000 million to general reserve for the year of 2015. The Group’s subsidiaries Lin’an rural bank and CFLL made appropriations to general reserve in accordance with relevant regulatory requirements.

(b) On 23 March 2016, the Board of Directors proposed a cash dividend of RMB2.12 per 10 shares in respect of

the year ended 31 December 2015. Subject to the approval of the equity holders at the Annual General Meeting, approximately RMB10,374 million is payable to those on the register of equity holders as at the relevant record date. This proposal is a non-adjusting event after the reporting period and has not been recognised as liability at the reporting date.

of RMB50 million (31 December 2014: RMB34 million), of which RMB16 million (2014: RMB11 million) was the appropriation made by the subsidiaries for the year ended 31 December 2015. Such statutory surplus reserves in the retained earnings cannot be distributed.

53 Non-controlling interests As at 31 December 2015, non-controlling interests included an amount of RMB1.83 billion representing other equity instruments issued by CBI, an entity ultimately controlled by the Group. Such instruments are perpetual non-cumulative subordinated additional tier 1 capital securities (the “Capital Securities”) with nominal value totalling USD300 million carrying a coupon rate of 7.25% per annum, payable semi-annually, until the first call date on 22 April 2019. The coupon rate will be reset every five years to a rate equivalent to the prevailing five year US Treasury rate plus 5.627% per annum. CBI may, at its sole discretion, elect to cancel any payment of coupon, in whole or in part, or redeemed Capital Securities in whole on the first call date and any subsequent coupon distribution date. These Capital Securities are classified as equity instruments.

China CITIC Bank Corporation Limited 2015 Annual Report

213

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

54 Notes to consolidated cash flow statement (a) Cash and cash equivalents The Group 31 December 2015

31 December 2014

7,355

7,232

63,656

70,166

70,826

86,284

64,458 20,069

48,663 16,030

Total of cash equivalents

219,009

221,143

Total

226,364

228,375

Cash Cash equivalents Surplus deposit reserve funds Deposits with banks and non-bank financial institutions due within three months when acquired Placements with and loans to banks and non-bank financial institutions due within three months when acquired Investment securities due within three months when acquired

(b) Non-cash related investment and financing activities In 2015, the Bank injected further capital of RMB1.49 billion into its wholly owned subsidiary CNCB Investment and established a wholly owned subsidiary CFLL with a capital of RMB4 billion. Such transactions had no cash outflows at the Group level.

55 Commitments and contingent liabilities (a) Credit commitments The Group’s credit commitments take the form of loan commitments, credit card commitments, financial guarantees, letters of credit and acceptance. Loan commitments and credit card commitments represent the undrawn amount of approved loans with signed contracts and credit card limits. Financial guarantees and letters of credit represent guarantees provided by the Group to guarantee the performance of customers to third parties. Acceptance comprises undertakings by the Group to pay bills of exchange drawn on customers. The Group expects the majority acceptance to be settled simultaneously with the reimbursement from the customers. The contractual amounts of credit commitments by category are set out below. The amounts disclosed in respect of loan commitments and credit card commitments assume that amounts are fully drawn down. The amounts of guarantees, letters of credit and acceptances represent the maximum potential loss that would be recognised at the reporting date if counterparties failed to perform as contracted.

214

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

55 Commitments and contingent liabilities (Continued) (a) Credit commitments (Continued) The Group 31 December 2015 Contractual amount Loan commitments — with an original maturity of within one year — with an original maturity of one year or above

The Bank

31 December 31 December 2014 2015

31 December 2014

130,985

141,614

58,612

80,787

69,948

46,724

68,092

45,557

Subtotal

200,933

188,338

126,704

126,344

Guarantees Letters of credit Acceptances Credit card commitments

133,567 92,164 631,431 149,138

124,008 134,766 712,985 124,106

131,094 90,373 628,790 141,993

123,004 130,002 711,552 117,409

1,207,233

1,284,203

1,118,954

1,208,311

Total

(b) Credit commitments analysed by credit risk weighted amount The Group 31 December 2015 Credit risk weighted amount of contingent liabilities and commitments

The Bank

31 December 31 December 2014 2015 455,254

391,878

31 December 2014 451,089

387,825

The credit risk weighted amount refers to the amount as computed in accordance with the rules set out by the CBRC and depends on the status of counterparties and the maturity characteristics. The risk weighting used range from 0% to 150%.

(c) Capital commitments The Group had the following authorised capital commitments in respect of properties and equipment at the reporting date: The Group 31 December 2015 Contracted for Authorised but not contracted for

7,119 113

The Bank

31 December 31 December 2014 2015 8,369 44

6,979 113

31 December 2014 8,329 44

China CITIC Bank Corporation Limited 2015 Annual Report

215

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

55 Commitments and contingent liabilities (Continued) (d) Operating lease commitments The Group leases certain properties and equipment under operating leases, which typically run for an initial period of one to five years and may include an option to renew the leases when all terms are renegotiated. As at 31 December, the Group’s future minimum lease payments under non-cancellable operating leases were as follows: The Group 31 December 2015 Within one year After one year but within two years After two years but within three years After three years but within five years After five years Total

The Bank

31 December 31 December 2014 2015

31 December 2014

2,864 2,553 2,173 3,510 3,699

2,583 2,396 2,143 3,417 3,545

2,649 2,373 2,036 3,311 3,586

2,392 2,233 2,005 3,204 3,375

14,799

14,084

13,955

13,209

(e) Outstanding contingencies including litigation and disputes The Group has assessed and has made provision for any probable outflow of economic benefits in relation to commitments and contingent liabilities at the reporting date in accordance with its accounting policies including litigation and disputes. The Group believes that the final result of these lawsuits and other contingencies will not have material impact on the financial position or operations of the Group. As at 31 December 2015, the Group was involved in certain pending litigation with gross claims of RMB394 million (as at 31 December 2014: RMB339 million). Based on the opinion of internal and external legal counsels, the Group had made a provision of RMB2 million (as at 31 December 2014: RMB5 million) against these litigation.

(f)

Bonds redemption obligations As an underwriting agent of PRC government bonds, the Group has the responsibility to buy back those bonds sold by it should the holders decide to early redeem the bonds held. The redemption price for the bonds at any time before their maturity dates is based on the nominal value plus any interest unpaid and accrued up to the redemption date. Accrued interest payables to the bond holders are calculated in accordance with relevant rules of the MOF and the PBOC. The redemption price may be different from the fair value of similar instruments traded at the redemption date. The redemption obligations below represent the nominal value of government bonds underwritten and sold by the Group, but not yet matured at the reporting date: The Group and the Bank

Bonds redemption obligations

31 December 2015

31 December 2014

13,371

12,107

The original maturities of these bonds vary from one to five years. Management of the Group expects the amount of redemption before maturity dates of these bonds will not be material. The MOF will not provide funding for the early redemption of these bonds on a back-to-back basis, but will settle the principal and interest upon maturity.

216

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

55 Commitments and contingent liabilities (Continued) (g) Commitment to share acquisition and disposal On 26 May 2015, the Group and CTBC Financial Holding Co., Ltd (hereinafter referred to as “CTBC”) entered into a private placement agreement. The Group agreed to acquire 602,678,478 ordinary shares representing 3.8% of CTBC’s total share capital after this placement, for a cash consideration of NTD 13,090 million. On the same day, CBI entered into an agreement to dispose its 100% shares in CITIC Bank International (China) Limited to CTBC Bank Co., Ltd., a wholly-owned subsidiary of CTBC, for a cash consideration of Hong Kong Dollars equivalent to RMB2,353 million. As at the reporting date, these two agreements were still subject to the approval of regulators in the relevant jurisdictions and are conditional on simultaneous completion.

56 Pledged assets (a) Financial assets pledged as collateral The carrying amount of financial assets pledged as collateral in the Group’s ordinary course of businesses, including repurchase agreements, borrowings from central banks are disclosed as below: The Group 31 December 2015

The Bank

31 December 31 December 2014 2015

31 December 2014

Debt securities Discounted bills Others

115,553 27,492 137

64,738 6,414 67

115,553 27,492 —

64,491 6,414 —

Total

143,182

71,219

143,045

70,905

(b) Collateral accepted as securities for assets The Group conducts resale agreements under usual and customary terms of placements, and holds collateral for these transactions. As at 31 December 2015, the fair values of collateral held by the Group under resale agreements for which the Group was permitted to sell or re-pledge in the absence of default for the transactions was nil (31 December 2014: RMB573 million).

China CITIC Bank Corporation Limited 2015 Annual Report

217

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

57 Transactions on behalf of customers (a) Entrusted lending business The Group provides entrusted lending business services to corporations and individuals, as well as entrusted provident housing fund mortgage business services. All entrusted loans are made under the instruction or at the direction of these entities, individuals or provident housing fund centre and are funded by entrusted funds from them. For entrusted assets and liabilities and entrusted provident housing fund mortgage business, the Group does not take on credit risk in relation to these transactions, but acts as an agent to hold and manage these assets and liabilities at the instruction of the entrusting parties and receives fee income for the services provided. Trust assets are not assets of the Group and are not recognised on the statement of financial position of the Group. Surplus funding is accounted for as deposits from customers. Income received and receivable for providing these services is included in the statement of profit or loss and other comprehensive income as fee income. At the reporting date, the entrusted assets and liabilities were as follows: The Group and the Bank

Entrusted loans Entrusted funds

31 December 2015

31 December 2014

606,264 606,334

524,538 524,538

(b) Wealth management services The Group’s wealth management services to customers mainly represent sale of wealth management products, which are not subject to any guarantee by the Group of the principle invested or interest to be paid, to corporate and personal banking customers. The funds raised by wealth management products from investors are invested in various investments, including debt securities and money market instruments, credit assets and other debt instruments, equity instruments etc. Credit risk, liquidity risk and interest rate risk associated with these products are borne by the customers. The Group only earns commission which represents the charges on customers in relation to the provision of custodian, sale and management services. The income is recognised in the consolidated statement of profit or loss and other comprehensive income as commission income. The Group has entered into placements transactions at market interest rates with the wealth management products vehicles (Note 63(b)). The assets and liabilities of these wealth management products are not assets and liabilities of the Group and are not recognised on the statement of financial position. As at the reporting date, the assets and liabilities under these wealth management products were as follows: The Group and the Bank

Underlying investments of wealth management products Funds raised from investors of wealth management products

31 December 2015

31 December 2014

659,118 633,852

393,413 376,613

As at 31 December 2015, RMB72,549 million (as at 31 December 2014: RMB58,225 million) of these wealth management products invested in investments in which certain subsidiaries and associates of the CITIC Group acted as trustees.

218

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

58 Segment reporting Measurement of segment assets and liabilities, and segment income and expenses is based on the Group’s accounting policies. Internal charges and transfer pricing of transactions between segments are determined for management purpose and have been reflected in the performance of each segment. Net interest income and expenses arising from internal charges and transfer pricing adjustments are referred to as “Internal net interest income/expenses”. Interest income and expenses earned from third parties are referred to as “External net interest income/expenses”. Segment income, expense, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment assets and liabilities do not include deferred tax assets and liabilities. Segment income, expenses, assets, and liabilities are determined before intra-group balances, and intra-group transactions are eliminated as part of the consolidation process. Segment capital expenditure is the total costs incurred during the year to acquire assets (including both tangibles assets and intangible assets) whose estimated useful lives are over one year.

(a) Business segments The Group has the following main business segments for management purpose:

Corporate banking This segment represents the provision of a range of financial products and services to corporations, government agencies and non-financial institutions. The products and services include corporate loans, deposit taking activities, agency services, remittance and settlement services and guarantee services.

Personal banking This segment represents the provision of a range of financial products and services to individual customers and small enterprises. The products and services comprise loans, deposit services, securities agency services, remittance and settlement services and guarantee services.

Treasury business This segment conducts capital markets operations, inter-bank operations, and investment banking businesses, which, specifically, includes inter-bank money market transactions, repurchase transactions, and investments and trading in debt instruments. Furthermore, treasury business segment also carries out derivatives instruments, derivatives and forex trading for customers; and manages the Group’s liquidity position.

Others and unallocated These represent non-banking businesses provided by the Group’s subsidiaries (CIFH and CNCB Investment), alone with head office assets, liabilities, income and expenses that are not directly attributable to a segment. During the year, the Group changed the allocation basis for corporate foreign currency deposits between the corporate banking segment and the treasury business segment; and its internal funding pricing to better reflect the resources deployed by each segment. The related comparative figures have been restated accordingly.

China CITIC Bank Corporation Limited 2015 Annual Report

219

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

58 Segment reporting (Continued) (a) Business segments (Continued) Corporate Banking

Year ended 31 December 2015 Personal Treasury Others and Banking Business Unallocated

External net interest income/(expense) Internal net interest income/(expense)

44,326 20,981

27,199 (10,924)

36,248 (8,710)

(3,340) (1,347)

104,433 —

Net interest income Net fee and commission income Other net income (Note (i))

65,307 6,010 (17)

16,275 17,077 657

27,538 12,837 4,674

(4,687) (250) 124

104,433 35,674 5,438

Operating income Operating expenses — depreciation and amortisation — others Impairment losses Revaluation gain on investment properties Share of gain of associates

71,300

34,009

45,049

(4,813)

145,545

(881) (22,015) (28,518) — —

(295) (21,275) (8,142) — —

(918) (4,714) (2,440) — —

(360) (144) (937) 27 53

(2,454) (48,148) (40,037) 27 53

19,886

4,297

36,977

(6,174)

54,986

Profit/(loss) before tax Income tax

(13,246)

Net profit/(loss) Capital expenditure

Segment assets Interest in associate Deferred tax assets

41,740 1,261

407

1,344

300

3,312

Corporate Banking

Personal Banking

31 December 2015 Treasury Others and Business Unallocated

Total

1,999,792 —

635,043 —

2,057,056 —

421,444 976

2,553,460

572,089

1,577,136

99,911

Total asset Segment liabilities Deferred tax liabilities Off-balance sheet credit commitments

5,113,335 976 7,981 5,122,292

Total liabilities

220

Total

4,802,596 10 4,802,606

965,931

149,138

92,164

—

1,207,233

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

58 Segment reporting (Continued) (a) Business segments (Continued) Corporate Banking

Year ended 31 December 2014 Personal Treasury Others and Banking Business Unallocated

Total

External net interest income/(expense) Internal net interest income/(expense)

50,200 9,559

20,385 (5,589)

25,661 (2,660)

(1,505) (1,310)

94,741 —

Net interest income Net fee and commission income Other net income (Note (i))

59,759 5,431 80

14,796 10,306 131

23,001 9,546 3,704

(2,815) 30 870

94,741 25,313 4,785

Operating income Operating expenses — depreciation and amortisation — others Impairment losses Revaluation gain on investment properties Share of gain of associates

65,270

25,233

36,251

(1,915)

124,839

(952) (21,918) (17,028) — —

(344) (18,805) (4,760) — —

(725) (3,234) (828) — —

(173) (645) (1,057) 2 202

(2,194) (44,602) (23,673) 2 202

Profit/(loss) before tax

25,372

1,324

31,464

(3,586)

54,574

Income tax

(13,120) 41,454

Net profit Capital expenditure

Segment assets Interest in associate Deferred tax assets

1,215

442

912

2,660

Corporate Banking

Personal Banking

31 December 2014 Treasury Others and Business Unallocated

Total

1,953,573 —

673,290 —

1,458,938 —

42,827 870

2,168,473

545,031

1,036,166

121,799

4,138,815

Total asset Segment liabilities

3,871,469 3,871,469

Total liabilities Off-balance sheet credit commitments

4,128,628 870 9,317

1,025,331

124,106

134,766

—

1,284,203

Note: (i)

Other net income consists of net trading gain, net gain from investment securities, net hedging gain/(loss) and other operating income.

China CITIC Bank Corporation Limited 2015 Annual Report

221

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

58 Segment reporting (Continued) (b) Geographical segments The Group operates principally in Mainland China with branches and sub-branches located in 31 provinces, autonomous regions and municipalities directly under the central government. The Bank’s principal subsidiaries, CNCB Investment and CIFH are registered and operating in Hong Kong. The other subsidiaries, Lin’an Rural Bank and CFLL are registered in Mainland China. In presenting information by geographical segment, operating income is allocated based on the location of the branches that generated the revenue. Segment assets and capital expenditure are allocated based on the geographical location of the underlying assets. Geographical segments, as defined for management reporting purposes, are as follows:

222

—

“Yangtze River Delta” refers to the following areas where tier-1 branches of the Group are located: Shanghai, Nanjing, Suzhou, Hangzhou and Ningbo, as well as Lin’an Rural Bank;

—

“Pearl River Delta and West Strait” refers to the following areas where tier-1 branches of the Group are located: Guangzhou, Shenzhen, Dongguan, Fuzhou, Xiamen, and Haikou;

—

“Bohai Rim” refers to the following areas where tier-1 branches of the Group are located: Beijing, Tianjin, Dalian, Qingdao, Shijiazhuang, Jinan and CFLL;

—

“Central” region refers to the following areas where tier-1 branches of the Group are located: Hefei, Zhengzhou, Wuhan, Changsha, Taiyuan and Nanchang;

—

“Western” region refers to the following areas where tier-1 branches of the Group are located: Chengdu, Chongqing, Xi’an, Kunming, Nanning, Hohhot, Urumqi, Guiyang, Lanzhou, Xining, Yinchuan and Lhasa;

—

“Northeastern” region refers to the following areas where tier-1 branch of the Group is located: Shenyang, Changchun and Harbin;

—

“Head Office” refers to the headquarter of the Bank and the Credit Card Center; and

—

“Hong Kong” includes all the operations of CNCB Investment, CIFH and its subsidiaries.

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

58 Segment reporting (Continued) (b) Geographical segments (Continued) Year ended 31 December 2015 Yangtze Pearl River River Delta and Delta West Strait

Bohai Rim

Central

External net interest income Internal net interest income/(expense)

18,909 1,751

11,853 3,030

14,581 6,689

14,734 285

14,491 (1,158)

2,273 55

24,808 (10,754)

2,784 102

— —

104,433 —

Net interest income Net fee and commission income Other net income (Note (i))

20,660 4,920 1,326

14,883 2,776 556

21,270 4,857 653

15,019 3,197 437

13,333 3,173 402

2,328 504 79

14,054 15,274 844

2,886 973 1,141

— — —

104,433 35,674 5,438

Operating income Operating expense — depreciation and amortisation — others Impairment losses Revaluation gain on investment properties Share of gain of associates

26,906

18,215

26,780

18,653

16,908

2,911

30,172

5,000

—

145,545

(391) (262) (9,255) (6,009) (7,833) (12,101) — — — —

(429) (8,734) (6,263) — —

(285) (6,484) (3,604) — —

(317) (6,002) (4,734) — —

(93) (1,310) (1,310) — —

(468) (8,243) (3,642) — —

(209) (2,111) (550) 27 53

— — — — —

(2,454) (48,148) (40,037) 27 53

9,427

11,354

8,280

5,855

198

17,819

2,210

—

54,986

Profit before tax

(157)

Western Northeastern

Head Office

Hong Kong Elimination

Total

Income tax

(13,246)

Net profit

41,740

Capital expenditure

342

131

451

225

1,057

970

—

3,312

Elimination

Total

31 December 2015 Yangtze Pearl River River Delta and Delta West Strait Segment assets Interest in associate Deferred tax assets

1,099,815 —

752,965 —

Bohai Rim

Central

Western

Northeastern

Head Office

Hong Kong

1,114,688 —

617,426 —

557,507 —

93,262 —

2,622,096 —

240,435 976

(1,984,859) 5,113,335 — 976 7,981

Total assets Segment liabilities Deferred tax liabilities

5,122,292 1,090,635

751,135

1,099,277

609,986

551,901

92,311

2,354,458

215,502

256,116

164,181

226,170

178,355

126,693

27,043

141,993

86,682

(1,962,609) 4,802,596 10

Total liabilities Off-balance sheet credit commitment

4,802,606 —

1,207,233

China CITIC Bank Corporation Limited 2015 Annual Report

223

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

58 Segment reporting (Continued) (b) Geographical segments (Continued) Year ended 31 December 2014

Yangtze Pearl River River Delta and Delta West Strait

Bohai Rim

Central

External net interest income Internal net interest income/(expense)

15,608 2,654

11,359 978

10,632 6,635

11,456 1,964

12,158 (71)

2,683 (126)

28,046 (12,536)

2,799 502

— —

94,741 —

Net interest income Net fee and commission income Other net income (Note (i))

18,262 3,842 935

12,337 2,428 349

17,267 3,746 777

13,420 2,371 293

12,087 2,565 251

2,557 535 57

15,510 9,058 1,256

3,301 768 867

— — —

94,741 25,313 4,785

Operating income Operating expense — depreciation and amortisation — others Impairment losses Revaluation gain on investment properties Share of gain of associates

23,039

15,114

21,790

16,084

14,903

3,149

25,824

4,936

—

124,839

(349) (8,898) (7,324) — —

(238) (5,729) (6,887) — —

(416) (8,354) (4,504) — —

(257) (5,867) (2,244) — —

(257) (5,399) (931) — —

(75) (1,343) (1,400) — —

(416) (7,042) (231) — —

(186) (1,970) (152) 2 202

— — — — —

(2,194) (44,602) (23,673) 2 202

6,468

2,260

8,516

7,716

8,316

331

18,135

2,832

—

54,574

Profit before tax

Western Northeastern

Head Office

Hong Kong Elimination

Income tax

(13,120)

Net profit

41,454

Capital expenditure

321

181

Yangtze Pearl River River Delta and Delta West Strait Segment assets Interest in associate Deferred tax assets

832,355 —

567,700 —

237

598

240

446

564

—

2,660

Elimination

Total

31 December 2014 Bohai Rim

Central

Western

Northeastern

Head Office

Hong Kong

916,047 —

510,466 —

468,004 —

89,173 —

1,946,061 —

198,628 870

(1,399,806) 4,128,628 — 870 9,317 4,138,815

Total assets Segment liabilities

828,692

564,494

906,031

503,804

460,468

88,544

1,742,187

178,132

(1,400,883) 3,871,469 3,871,469

Total liabilities Off-balance sheet credit commitment

274,533

192,548

252,594

201,186

141,853

28,261

117,409

75,819

—

Note: (i):

224

Total

Other net income consists of net trading gain, net gain from investment securities, net hedging gain and other operating income.

1,284,203

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management This section presents information about the Group’s exposure to and its management and control of risks, in particular the primary risks associated with its use of financial instruments: — Credit risk

Credit risk represents the potential loss that may arise from the failure of a debtor or counterparty to meet its contractual obligations or commitments to the Group.

— Market risk

Market risk arises from unfavourable changes in market prices (interest rate, exchange rate, stock price or commodity price) that lead to a loss of on-balance-sheet or off-balance-sheet business in the Group.

— Liquidity risk

Liquidity risk arises when the Group, in meeting the demand of liabilities due and other payment obligations as well as the needs of business expansion, is unable to sufficiently, timely or costeffectively acquire funds.

— Operational risk Operational risk arises from inappropriate or problematic internal procedures, personnel, IT systems, or external events, such risk includes legal risk, but excluding strategy risk and reputational risk. The Group has established policies and procedures to identify and analyse these risks, to set appropriate risk limits and controls, and to constantly monitor the risks and limits by means of reliable and up-to-date management information systems. The Group regularly modifies and enhances its risk management policies and systems to reflect changes in markets, products and best practice risk management processes. Internal auditors also perform regular audits to ensure compliance with relevant policies and procedures.

(a) Credit risk Credit risk represents the potential loss that may arise from a customer or counterparty’s failure to meet its obligations when due. The Group identifies and manages this risk through its target market definitions, credit approval process, post-disbursement monitoring and remedial management procedures. Credit risk arises primarily from credit business. In respect of treasury businesses, credit risk mainly represents impairment losses of debt securities due to default by issuers, and, inability of derivative counterparties in fulfilling their obligations.

Credit business In addition to underwriting standards, the principal means of managing credit risk are credit limit management, credit approval process, post-disbursement monitoring procedures such as early warning and examination etc. The Group has policies and procedures to evaluate the potential credit risk of a particular counterparty or transaction and to approve the transaction. The Group undertakes ongoing credit analysis and monitoring at several levels. The policies are designed to promote early detection of counterparty, industry or product exposures that require special monitoring. The Risk and Internal Control Committee monitors overall portfolio risk as well as individual problem credit business, both actual and potential, on a regular basis. The Group adopts a credit risk classification approach to manage the portfolio risk. Credit businesses are classified as non-impaired and impaired based on the different risk level. When one or more event demonstrates there is objective evidence of impairment and losses, corresponding credit businesses classified as impaired. The allowance for impairment loss on impaired credit businesses is collectively or individually assessed as appropriate. The Group applies a series of criteria in determining the classification of credit business. The credit business classification criteria focuses on a number of factors, including (i) the financier’s ability to repay the credit business, (ii) the financier’s repayment history, (iii) the financier’s willingness to repay, (iv) the net realizable value of collateral if any, and (v) the prospect for the support from any financially responsible guarantor. The Group also takes into account the length of time for which payments of principal and/or interests on credit business are overdue.

China CITIC Bank Corporation Limited 2015 Annual Report

225

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) Credit business (Continued) The Group’s retail credit policies and approval processes are designed with reference to the fact that there are high volumes of relatively homogeneous, small value transaction in each retail loan category. Because of the nature of retail banking, the credit policies are based primarily on the Group’s strategy and statistical analyses of risks with respect to different products and types of customers. The Group monitors its own and industry experience to determine and periodically revise product terms and desired customer profiles. The risks involved in credit-related commitments and contingencies are essentially the same as the credit risk involved in extending credit business facilities to customers. These transactions are, therefore, subject to the same credit application, portfolio maintenance and collateral requirements as for customers’ application for credit businesses. Concentration of credit risk exists when changes in geographic, economic or industrial factors similarly affect the Group’s counterparties whose aggregate credit exposure is material in relation to the Group’s total exposures. The Group’s portfolio of credit business is diversified along industry, geographic and product sectors.

Treasury business The Group sets credit limits for treasury operations based on the credit risk inherent in the products, counterparties and geographical area. The Group’s system closely monitors the credit exposure on a real-time basis, regularly reviews its credit limit policies and adjusts the credit limits, taken into account various factors including market condition at the time.

(i)

Maximum credit risk exposure The maximum exposure to credit risk at the reporting date without taking into consideration of any collateral held or other credit enhancement is represented by the net balance of each type of financial assets in the statement of financial position after deducting any impairment allowance. A summary of the maximum exposure is as follows: The Group

226

The Bank

31 December 2015

31 December 2014

31 December 2015

31 December 2014

503,834

531,254

502,693

529,789

Balances with central banks Deposits with bank and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Financial assets at fair value through profit or loss Positive fair value of derivatives Financial assets held under resale agreements Interest receivables Loans and advances to customers Available-for-sale financial assets Held-to-maturity investments Investment classified as receivables Other financial assets

80,803

93,991

64,800

81,689

118,776 26,219 13,788 138,561 30,512 2,468,283 372,758 179,930 1,112,207 36,222

68,180 27,507 8,226 135,765 26,125 2,136,332 207,188 177,957 653,256 21,615

98,276 25,349 10,384 137,210 29,849 2,304,874 328,480 179,930 1,109,807 33,439

47,810 27,501 5,638 135,765 25,546 2,012,342 186,517 177,957 652,916 20,815

Subtotal Credit commitments

5,081,893 1,207,233

4,087,396 1,284,203

4,825,091 1,118,954

3,904,285 1,208,311

Maximum credit risk exposure

6,289,126

5,371,599

5,944,045

5,112,596

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (ii)

Distribution by credit exposure of loans and advances to customers, due from central bank and other banks and non-bank financial institutions, financial assets held under resale agreements and investment securities and investment classified as receivable are as follows: The Group

Notes Impaired Individually assessed Gross balance Allowance for impairment losses

31 December 2015 Due from central bank and other Financial banks and Investments non-bank assets held Loans and financial under resale Investment classified as advances to securities receivables customers institutions agreements

28,039 (15,345)

30 (8)

— —

128 (120)

— —

Net balance

12,694

—

Collectively assessed Gross balance Allowance for impairment losses

8,011 (5,846)

— —

2,165

—

35,118 6,418

— —

Gross balance Allowance for impairment losses

41,536 (5,544)

— —

Net balance

35,992

—

2,451,194 (33,762)

703,391 —

138,561 —

578,956 (57)

1,113,092 (885)

Net balance

2,417,432

703,391

138,561

578,899

1,112,207

Net balance of total assets

2,468,283

703,413

138,561

578,907

1,112,207

Net balance Overdue but not impaired — less than three months — three months to one year

Neither overdue nor impaired Gross balance Allowance for impairment losses

(i)

(ii)

China CITIC Bank Corporation Limited 2015 Annual Report

227

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (ii)

Notes Impaired Individually assessed Gross balance Allowance for impairment losses

22,846 (11,153)

29 (8)

— —

207 (123)

— —

Net balance

11,693

—

Collectively assessed Gross balance Allowance for impairment losses

5,608 (3,954)

— —

Net balance

1,654

—

42,313 5,285

— —

Gross balance Allowance for impairment losses

47,598 (5,538)

— —

Net balance

42,060

—

2,111,856 (30,931)

693,404 —

135,765 —

412,568 —

653,412 (156)

Net balance

2,080,925

693,404

135,765

412,568

653,256

Net balance of total assets

2,136,332

693,425

135,765

412,652

653,256

Overdue but not impaired — less than three months — three months to one year

Neither overdue nor impaired Gross balance Allowance for impairment losses

228

31 December 2014 Due from central bank and other Financial banks and Investments non-bank assets held Loans and financial under resale Investment classified as advances to securities receivables customers institutions agreements

(i)

(ii)

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (ii)

Notes Impaired Individually assessed Gross balance Allowance for impairment losses

26,771 (15,089)

30 (8)

— —

116 (108)

— —

Net balance

11,682

—

Collectively assessed Gross balance Allowance for impairment losses

8,003 (5,839)

— —

2,164

—

32,287 6,226

— —

Gross balance Allowance for impairment losses

38,513 (5,513)

— —

Net balance

33,000

—

2,291,269 (33,241)

665,747 —

137,210 —

533,808 (57)

1,110,692 (885)

Net balance

2,258,028

665,747

137,210

533,751

1,109,807

Net balance of total assets

2,304,874

665,769

137,210

533,759

1,109,807

Net balance Overdue but not impaired — less than three months — three months to one year

Neither overdue nor impaired Gross balance Allowance for impairment losses

(i)

(ii)

China CITIC Bank Corporation Limited 2015 Annual Report

229

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (ii)

Notes Impaired Individually assessed Gross balance Allowance for impairment losses

22,285 (11,024)

29 (8)

— —

118 (110)

— —

Net balance

11,261

—

Collectively assessed Gross balance Allowance for impairment losses

5,600 (3,948)

— —

Net balance

1,652

—

40,208 5,152

— —

Gross balance Allowance for impairment losses

45,360 (5,524)

— —

Net balance

39,836

—

1,990,233 (30,640)

659,267 —

135,765 —

391,967 —

653,072 (156)

Net balance

1,959,593

659,267

135,765

391,967

652,916

Net balance of total assets

2,012,342

659,288

135,765

391,975

652,916

Overdue but not impaired — less than three months — three months to one year

Neither overdue nor impaired Gross balance Allowance for impairment losses

230

(i)

(ii)

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (ii)

Collateral and other credit enhancements for overdue but not impaired loans and advances

As at 31 December 2015, the corporate loans and advances of the Group which were overdue but not impaired were RMB30,741million (as at 31 December 2014: RMB39,141 million). The secured and unsecured portion of these loans and advances were RMB17,988 million (as at 31 December 2014: RMB21,634 million) and RMB12,753 million (as at 31 December 2014: RMB17,507 million), respectively. The fair value of collateral held against these loans and advances amounted to RMB23,701 million (as at 31 December 2014: RMB30,187 million).

As at 31 December 2015, the corporate loans and advances of the Bank which were overdue but not impaired were RMB28,521 million (2014: RMB36,906 million). The secured and unsecured portion of these loans and advances were RMB16,701 million (2014: RMB20,237 million) and RMB11,820 million (2014: RMB16,669 million) respectively. The fair value of collateral held against these loans and advances amounted to RMB19,282 million (2014: RMB25,143 million).

The fair value of collateral was estimated by management based on the latest available external valuations, if any, adjusted by taking into account the current realisation experience as well as market situation.

(ii)

The balance represents collectively assessed allowance of impairment losses.

(iii) Loans and advances to customers analysed by industry sector: The Group 31 December 2015 Loans and advances Gross secured by balance % collateral

31 December 2014 Loans and advances Gross secured by balance % collateral

414,273 260,675 254,892 147,798 147,535 127,435 102,532

16.4 10.3 10.1 5.8 5.8 5.0 4.1

201,490 161,575 216,414 87,060 72,340 64,321 47,940

384,521 290,107 179,677 83,809 138,230 111,524 101,834

17.6 13.3 8.2 3.8 6.3 5.1 4.7

171,481 168,279 152,514 47,054 67,508 53,463 46,484

54,704 20,835 236,743

2.2 0.8 9.4

20,219 4,880 95,296

51,828 19,304 204,484

2.4 0.9 9.3

16,480 4,624 78,505

Subtotal Personal loans Discounted bills

1,767,422 668,613 92,745

69.9 26.4 3.7

971,535 478,582 —

1,565,318 554,547 68,043

71.6 25.3 3.1

806,392 406,778 —

Gross loans and advances to customers

2,528,780

100.0

1,450,117

2,187,908

100.0

1,213,170

Corporate loans — manufacturing — wholesale and retail — real estate — rental and business services — transportation, storage and postal services — water, environment and public utility management — construction — production and supply of electric power, gas and water — public management and social organizations — others

China CITIC Bank Corporation Limited 2015 Annual Report

231

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (iii) Loans and advances to customers analysed by industry sector: (Continued) The Bank 31 December 2015 31 December 2014 Loans and Loans and advances advances Gross secured by Gross secured by balance % collateral balance % collateral Corporate loans — manufacturing — wholesale and retail — real estate — rental and business services — transportation, storage and postal services — water, environment and public utility management — construction — production and supply of electric power, gas and water — public management and social organizations — others

403,285 245,419 224,873 146,115 144,453 120,704 101,188

17.0 10.4 9.5 6.2 6.1 5.1 4.3

196,107 157,118 201,943 85,812 71,676 57,661 47,267

377,992 275,963 160,821 83,514 136,345 111,466 100,456

18.3 13.4 7.8 4.0 6.6 5.4 4.9

169,657 164,742 140,107 47,026 66,841 53,454 46,053

49,086 20,835 171,615

2.1 0.9 7.2

15,022 4,880 75,263

51,468 19,304 147,749

2.5 0.9 7.2

16,390 4,624 64,852

Subtotal Personal loans Discounted bills

1,627,573 649,764 87,219

68.8 27.5 3.7

912,749 461,262 —

1,465,078 538,512 59,888

71.0 26.1 2.9

773,746 391,971 —

Gross loans and advances to customers

2,364,556

100.0

1,374,011

2,063,478

100.0

1,165,717

As at 31 December, impaired loans and individual and collective impairment allowance in respect of economic sectors which constitute 10% or more of total loans and advances to customers are as follows: The Group

Manufacturing Wholesale and retail Real estate

Manufacturing Wholesale and retail

232

Impaired loans and advances

Individually assessed impairment allowance

10,338 12,127 249

5,378 7,475 54

Impaired loans and advances

Individually assessed impairment allowance

8,758 11,025

4,465 5,424

31 December 2015 Collectively assessed Impairment Impaired loan impairment charged written off allowance during the year during the year 8,894 6,313 2,505

9,176 14,140 (20)

31 December 2014 Collectively assessed Impairment impairment charged allowance during the year 7,435 6,985

6,547 9,522

(7,871) (12,174) —

Impaired loan written off during the year (3,456) (6,110)

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (iii) Loans and advances to customers analysed by industry sector: (Continued) The Bank

Impaired loans and advances

Individually assessed impairment allowance

10,169 11,901 223

5,340 7,406 54

Impaired loans and advances

Individually assessed impairment allowance

8,470 10,924

4,385 5,423

Manufacturing Wholesale and retail Real estate

Manufacturing Wholesale and retail

(iv)

31 December 2015 Collectively assessed Impairment Impaired loan impairment charged written off allowance during the year during the year 8,821 6,238 2,503

9,166 14,016 (17)

31 December 2014 Collectively assessed Impairment impairment charged allowance during the year 7,412 6,938

(7,877) (12,213) —

Impaired loan written off during the year

6,518 9,477

(3,416) (6,064)

Loans and advances to customers analysed by geographical sector: The Group 31 December 2014

31 December 2015

Bohai Rim (including Head Office) Yangtze River Delta Pearl River Delta and West Strait Central Western Northeastern Outside Mainland China Total

Gross balance

Loans and advances secured by collateral

Gross balance

Loans and advances secured by collateral

680,886 553,616 396,853 348,882 340,226 68,949 139,368

26.9 21.9 15.7 13.8 13.5 2.7 5.5

315,863 330,052 298,743 205,182 201,975 42,845 55,457

576,598 512,214 319,360 306,274 292,793 64,071 116,598

26.4 23.4 14.6 14.0 13.4 2.9 5.3

258,442 288,924 230,554 176,516 172,627 41,980 44,127

2,528,780

100.0

1,450,117

2,187,908

100.0

1,213,170

The Bank 31 December 2014

31 December 2015

Bohai Rim (including Head Office) Yangtze River Delta Pearl River Delta and West Strait Central Western Northeastern Total

Gross balance

Loans and advances secured by collateral

Gross balance

Loans and advances secured by collateral

660,803 550,812 394,884 348,882 340,226 68,949

28.0 23.3 16.7 14.7 14.4 2.9

297,929 328,263 297,817 205,182 201,975 42,845

573,158 509,464 317,718 306,274 292,793 64,071

27.8 24.7 15.4 14.8 14.2 3.1

257,823 287,069 229,702 176,516 172,627 41,980

2,364,556

100.0

1,374,011

2,063,478

100.0

1,165,717

China CITIC Bank Corporation Limited 2015 Annual Report

233

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (iv)

Loans and advances to customers analysed by geographical sector: (Continued) As at 31 December, impaired loans and individual and collective impairment allowance in respect of geographic sectors which constitute 10% or more of total advances to customers are as follows: The Group 31 December 2015 Individually Impaired assessed loans and impairment advance allowance Bohai Rim (including Head Office) Yangtze River Delta Pearl River Delta and West Strait Central Western

8,869 8,838 7,685 5,212 2,443

3,354 4,124 3,440 1,873 1,281

31 December 2014 Individually Impaired assessed loans and impairment advance allowance Bohai Rim (including Head Office) Yangtze River Delta Pearl River Delta and West Strait Central Western

7,151 9,240 5,140 3,453 1,276

1,962 3,766 2,685 1,042 458

Collectively assessed impairment allowance 12,624 9,398 8,361 7,380 5,795

Collectively assessed impairment allowance 10,766 9,959 7,318 6,255 4,923

The Bank 31 December 2015 Individually Impaired assessed loans and impairment advance allowance Bohai Rim (including Head Office) Yangtze River Delta Pearl River Delta and West Strait Central Western

8,869 8,789 7,482 5,212 2,443

3,354 4,113 3,388 1,873 1,281

31 December 2014 Individually Impaired assessed loans and impairment advance allowance Bohai Rim (including Head Office) Yangtze River Delta Pearl River Delta and West Strait Central Western

234

7,108 9,231 4,894 3,453 1,276

1,919 3,765 2,655 1,042 458

Collectively assessed impairment allowance 12,414 9,384 8,355 7,380 5,795

Collectively assessed impairment allowance 10,763 9,940 7,309 6,255 4,923

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (v)

Loans and advances to customers analysed by type of collateral The Group 31 December 2015

(vi)

The Bank

31 December 31 December 2014 2015

31 December 2014

Unsecured loans Guaranteed loans Secured loans — loans secured by collateral — pledged loans

492,822 493,095

392,960 513,735

467,932 435,395

368,639 469,234

1,169,587 280,531

953,053 260,117

1,113,612 260,398

917,020 248,697

Subtotal Discounted bills

2,436,035 92,745

2,119,865 68,043

2,277,337 87,219

2,003,590 59,888

Gross loans and advances to customers

2,528,780

2,187,908

2,364,556

2,063,478

Rescheduled loans and advances to customers The Group 31 December 2015 % of total Gross loans and balance advances Rescheduled loans and advances Less: — rescheduled loans and advances overdue more than 3 months — rescheduled loans and advances overdue less than 3 months

31 December 2014 % of total Gross loans and balance advances

8,482

0.34%

13,724

0.63%

5,310

0.21%

6,901

0.32%

3,172

0.13%

6,823

0.31%

The Bank 31 December 2015 % of total Gross loans and balance advances Rescheduled loans and advances Less: — rescheduled loans and advances overdue more than 3 months — rescheduled loans and advances overdue less than 3 months

31 December 2014 % of total Gross loans and balance advances

8,472

0.36%

13,204

0.64%

5,310

0.22%

6,901

0.33%

3,162

0.14%

6,303

0.31%

Rescheduled loans and advances are those loans and advances which have been restructured or renegotiated because of deterioration in the financial position of the borrowers, or of the inability of the borrowers to meet the original repayment schedule and for which the revised repayment terms are a concession that the Group would not otherwise consider. China CITIC Bank Corporation Limited 2015 Annual Report

235

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (vii) Debt instruments analysed by credit rating The Group adopts a credit rating approach to manage credit risk of its debt securities portfolio. The ratings are obtained from major rating agencies where the issuers of the securities are located. The carrying amounts of debt securities investments analysed by rating as at the end of the reporting period are as follows: The Group 31 December 2015

Debt securities issued by: — governments — policy banks — public entities — banks and non-bank financial institutions — corporates Total

Unrated (Note (i))

AAA

Below A

Total

126,538 50,416 4

27,025 — —

4,694 578 —

6,818 — —

127 — —

165,202 50,994 4

75,632 1,714

143,357 87,681

16,040 13,887

13,040 4,181

5,314 1,861

253,383 109,324

254,304

258,063

35,199

24,039

7,302

578,907

31 December 2014

Unrated (Note (i))

AAA

Below A

Total

Debt securities issued by: — governments — policy banks — public entities — banks and non-bank financial institutions — corporates

85,200 43,301 19

6 — —

52 1,005 —

— — 49

— — —

85,258 44,306 68

117,288 11,711

48,142 77,178

11,348 3,032

6,646 3,546

2,136 1,993

185,560 97,460

Total

257,519

125,326

15,437

10,241

4,129

412,652

The Bank 31 December 2015

Debt securities issued by: — governments — policy banks — public entities — banks and non-bank financial institutions — corporates Total

236

Unrated (Note (i))

AAA

Below A

Total

126,462 50,416 4

22,461 — —

— 578 —

— — —

148,923 50,994 4

74,513 526

143,357 87,578

10,929 12,713

1,778 1,487

762 195

231,339 102,499

251,921

253,396

24,220

3,265

957

533,759

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (a) Credit risk (Continued) (vii) Debt instruments analysed by credit rating (Continued) The Bank (Continued) 31 December 2014

Unrated (Note (i))

AAA

Below A

Total

Debt securities issued by: — governments — policy banks — public entities — banks and non-bank financial institutions — corporates

78,706 43,300 19

— — —

52 1,005 —

— — —

78,758 44,305 19

115,747 10,582

48,142 77,056

11,348 2,599

1,725 792

841 61

177,803 91,090

Total

248,354

125,198

15,004

2,517

902

391,975

Note: (i)

Unrated debt investments held by the Group and the Bank are bonds issued primarily by the Chinese government, policy banks, banks, and non-bank financial institutions.

(b) Market risk Market risk refers to risks that may cause a loss of on-balance-sheet and off-balance-sheet business for the Group due to the adverse movement of market prices, including interest rates, foreign exchange rates, stock prices and commodity prices. The Group has established a market risk management system that formulates procedures to identify, measure, supervise and control market risks. This system aims to limit market risk to an acceptable level through examining and approving new products and limit management. Risk and Internal Control Committee of the Group is responsible for approving market risk management policies, establishing appropriate organisational structure and information systems to effectively identify, measure, monitor and control market risks, and ensure adequate resources to reinforce the market risk management. The Risk Management Department is responsible for independently managing and controlling market risks of the Group, including developing market risk management policies and authorisation limits, providing independent report of market risk, to identify, measure and monitor the Group’s market risk. Business departments are responsible for the day-to-day management of market risks, including effectively identifying, measuring, controlling market risk factors associated with the relevant operation, so as to ensure the dynamic balance between business development and risk undertaking. The Group uses sensitivity analysis, foreign exchange exposure and interest rate re-pricing gap analysis as the primary instruments to monitor market risk. Interest rate risk and currency risk are major market risks that expose the Group.

Interest rate risk The Group’s interest rate exposures mainly arise from the mismatching of assets and liabilities’ re-pricing dates, as well as the effect of interest rate volatility on trading positions. The Group primarily uses gap analysis to assess and monitor its re-pricing risk and adjust the ratio of floating and fixed rate exposures, the loan re-pricing cycle, as well as optimise the term structure of its deposits accordingly. The Group implements various methods, such as duration analysis, sensitivity analysis, stress testing and scenario simulation, to measure and monitor interest risk limits and exposure, and; supervise, manage and report on a regular basis. China CITIC Bank Corporation Limited 2015 Annual Report

237

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Interest rate risk (Continued) The following tables summarise the effective interest rates, and the next re-pricing dates or contractual maturity date whichever is earlier for the assets and liabilities as at the end of each reporting date. The Group 31 December 2015

Assets Cash and balances with central bank Deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Financial assets held under resale agreements Investment classified as receivables Loans and advances to customers (Note (ii)) Investments (Note (iii)) Others

Total

Noninterest bearing

1.47%

511,189

14,567

496,622

1.22%

80,803

—

2.59%

118,776

3.90% 5.20% 5.85% 3.86%

Between one and five years

More than five years

—

74,077

6,726

—

78,139

40,120

—

495

138,561 1,112,207

— 3,583

138,320 452,100

141 461,183

100 183,372

— 11,969

2,468,283 580,896 111,577

310 1,991 109,416

1,035,127 107,371 444

990,598 121,567 1,717

428,157 216,221 —

14,091 133,746 —

5,122,292

129,889

2,382,200

1,622,052

827,850

160,301

3.50%

37,500

—

13,500

24,000

—

3.80%

1,068,544

1,632

536,885

528,017

1,010

1,000

1.81%

49,248

—

37,039

11,874

335

—

2.43% 2.16% 4.65%

71,168 3,182,775 289,135 104,236

— 16,263 — 101,302

67,976 2,137,461 82,007 606

3,192 665,174 96,899 2,328

— 362,891 39,795 —

— 986 70,434 —

4,802,606

119,197

2,875,474

1,331,484

404,031

72,420

319,686

10,692

(493,274)

290,568

423,819

87,881

Total assets Liabilities Borrowing from central banks Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial assets sold under repurchase agreements Deposits from customers Debt securities issued Others Total liabilities Interest rate gap

238

Between three Less than three months and one year months

Effective interest rate (Note (i))

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Interest rate risk (Continued) The Group (Continued) 31 December 2014

Between three Less than three months and one year months

Between one and five years

More than five years

—

89,799

2,682

1,510

—

52,611

15,095

—

453

135,765 653,256

— —

131,871 165,430

3,068 370,548

826 117,278

— —

2,136,332 415,740 97,065

238 1,539 81,277

984,930 79,066 5,831

974,735 89,141 9,957

154,359 162,620 —

22,070 83,374 —

4,138,815

90,307

2,040,792

1,465,226

436,593

105,897

3.50%

50,050

—

50,000

—

5.08%

688,292

1,369

571,472

104,872

10,579

—

1.15%

19,648

—

14,179

4,406

1,063

—

3.60% 2.43% 4.55%

41,609 2,849,574 133,488 88,808

— 13,355 — 80,147

39,440 1,883,466 21,008 3,513

2,169 685,792 13,519 4,575

— 263,226 20,260 573

— 3,735 78,701 —

Total liabilities

3,871,469

94,871

2,583,078

815,383

295,701

82,436

Interest rate gap

267,346

(4,564)

(542,286)

649,843

140,892

23,461

Effective interest rate (Note (i))

Total

Noninterest bearing

1.49%

538,486

7,232

531,254

3.24%

93,991

—

3.96%

68,180

5.27% 6.17% 6.31% 4.03%

China CITIC Bank Corporation Limited 2015 Annual Report

239

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Interest rate risk (Continued) The Bank 31 December 2015

Total

Noninterest bearing

1.47%

509,851

14,371

495,480

1.52%

64,800

—

2.94%

98,276

3.91% 5.20% 5.99% 3.95%

Between one and five years

More than five years

—

58,421

6,379

—

60,693

37,066

—

495

137,210 1,109,807

— 3,583

136,969 452,100

141 461,123

100 182,032

— 10,969

2,304,874 556,522 102,955

— 22,763 102,831

895,992 84,013 35

969,669 114,866 89

425,132 203,565 —

14,081 131,315 —

4,884,295

143,570

2,183,703

1,589,333

810,829

156,860

3.50%

37,400

—

13,500

23,900

—

3.83%

1,069,630

596

539,007

528,017

1,010

1,000

1.73%

32,399

—

28,540

3,859

—

2.43% 2.21% 4.82%

71,110 2,994,826 273,262 94,030

— 6,555 — 91,096

67,918 1,983,706 79,598 606

3,192 641,107 90,758 2,328

— 362,472 32,472 —

— 986 70,434 —

4,572,657

98,247

2,712,875

1,293,161

395,954

72,420

311,638

45,323

(529,172)

296,172

414,875

84,440

240

Between three Less than three months and one year months

Effective interest rate (Note (i))

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Interest rate risk (Continued) The Bank (Continued) 31 December 2014

Between three Less than three months and one year months

Between one and five years

More than five years

—

77,550

2,629

1,510

—

32,158

15,178

—

453

135,765 652,916

— —

131,871 165,430

3,068 370,348

826 117,138

— —

2,012,342 403,981 91,322

— 10,456 75,534

873,780 70,858 5,831

964,493 85,660 9,957

152,101 154,209 —

21,968 82,798 —

3,962,636

93,033

1,887,267

1,451,333

425,784

105,219

3.50%

50,000

—

50,000

—

5.17%

698,362

226

581,485

106,072

10,579

—

2.98%

18,703

—

13,785

4,406

512

—

3.79% 2.48% 5.03%

41,381 2,699,597 115,592 83,278

— 6,219 — 74,617

39,212 1,776,811 14,433 3,513

2,169 651,413 9,253 4,575

— 261,419 16,479 573

— 3,735 75,427 —

Total liabilities

3,706,913

81,062

2,479,239

777,888

289,562

79,162

Interest rate gap

255,723

11,971

(591,972)

673,445

136,222

26,057

Effective interest rate (Note (i))

Total

Noninterest bearing

1.50%

536,811

7,022

529,789

3.43%

81,689

—

4.70%

47,810

5.27% 6.17% 6.47% 4.08%

Notes: (i)

Effective interest rate represents the ratio of interest income/expense to average interest bearing assets/liabilities during the year.

(ii)

For loans and advances to customers at Group level, the “Less than three months” category includes overdue amounts (net of allowance for impairment losses) of RMB50,079 million as at 31 December 2015 (as at 31 December 2014: RMB43,496 million).

For loans and advances to customers at Bank level, the “Less than three months” category includes overdue amounts (net of allowance for impairment losses) of RMB46,872 million as at 31 December 2015 (as at 31 December 2014: RMB43,486 million).

(iii)

Investments include the financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity investments and investments in associates.

China CITIC Bank Corporation Limited 2015 Annual Report

241

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Interest rate risk (Continued) The Group uses sensitivity analysis to measure the potential effect of changes in interest rates on the Group’s net interest income. The following table sets forth the results of the Group’s interest rate sensitivity analysis as at 31 December 2015 and 31 December 2014. 31 December 2015 Other Net interest comprehensive income income +100 basis points -100 basis points

(2,753) 2,753

(906) 906

31 December 2014 Net interest income (552) 552

Other comprehensive income (686) 686

This sensitivity analysis is based on a static interest rate risk profile of the Group’s non-derivative assets and liabilities and certain assumptions as discussed below. The analysis measures only the impact of changes in interest rates within one year, showing how annualised interest income would have been affected by repricing of the Group’s non-derivative assets and liabilities within the one-year period. The analysis is based on the following assumptions: (i) all assets and liabilities that reprice or mature within the three months bracket, and the after three months but within one year bracket are both reprice or mature at the beginning of the respective periods, (ii) it does not reflect the potential impact of unparalleled yield curve movements, and (iii) there are no other changes to the portfolio, all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Due to the assumptions adopted, actual changes in the Group’s net interest income and other comprehensive income resulting from increases or decreases in interest rates may differ from the results of this sensitivity analysis.

Currency risk Currency risk arises from the potential change of exchange rates that cause a loss to the on-balance-sheet and off-balance sheet business of the Group, the Group measures its currency risk with foreign currency exposures, and manages its currency risk by spot and forward foreign exchange transactions and matching its foreign currency denominated assets with corresponding liabilities in the same currency, as well as using derivative financial instruments, mainly foreign exchange swaps, to manage its exposure.

242

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Currency risk (Continued) The exposures at the reporting date were as follows: The Group RMB Assets Cash and balances with central bank Deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Financial assets held under resale agreements Investment classified as receivables Loans and advances to customers Investments Others Total assets

31 December 2015 USD HKD

Others

Total

465,281

45,102

613

193

511,189

37,835

29,019

9,860

4,089

80,803

79,776

29,751

6,615

2,634

118,776

137,210 1,109,612 2,227,366 527,396 98,924

1,351 2,595 168,536 24,883 8,541

— — 63,532 15,299 3,885

— — 8,849 13,318 227

138,561 1,112,207 2,468,283 580,896 111,577

4,683,400

309,778

99,804

29,310

5,122,292

37,500

—

37,500

1,028,229

34,148

847

5,320

1,068,544

Liabilities Borrowings from central banks Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial assets sold under repurchase agreements Deposits from customers Debt securities issued Others

38,814

9,714

—

720

49,248

71,168 2,854,718 273,085 89,850

— 192,475 14,350 6,748

— 99,888 1,700 3,257

— 35,694 — 4,381

71,168 3,182,775 289,135 104,236

Total liabilities

4,393,364

257,435

105,692

46,115

4,802,606

290,036

52,343

(5,888)

(16,805)

1,053,858

110,380

35,143

7,852

1,207,233

8,141

1,257

27,960

11,088

Net on-balance sheet position Credit commitments Derivatives (Note (i))

(26,270)

319,686

China CITIC Bank Corporation Limited 2015 Annual Report

243

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Currency risk (Continued) The Group (Continued) RMB Assets Cash and balances with central bank Deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Financial assets held under resale agreements Investment classified as receivables Loans and advances to customers Investments Others Total assets

Others

Total

526,072

10,145

2,078

191

538,486

17,389

67,694

5,908

3,000

93,991

45,714

21,359

315

792

68,180

135,194 652,033 1,918,137 388,142 90,525

571 1,223 154,673 15,468 2,797

— — 54,167 8,403 3,309

— — 9,355 3,727 434

135,765 653,256 2,136,332 415,740 97,065

3,773,206

273,930

74,180

17,499

4,138,815

50,050

—

50,050

661,496

21,950

392

4,454

688,292

5,423

13,218

—

1,007

19,648

41,381 2,528,282 117,576 80,839

228 225,951 10,824 2,379

— 78,818 2,488 3,181

— 16,523 2,600 2,409

41,609 2,849,574 133,488 88,808

Total liabilities

3,485,047

274,550

84,879

26,993

3,871,469

288,159

(620)

(10,699)

(9,494)

267,346

Credit commitments

1,137,105

113,081

27,163

6,854

1,284,203

Derivatives (Note (i))

(19,902)

(14,798)

25,585

17,848

8,733

Net on-balance sheet position

244

31 December 2014 USD HKD

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Currency risk (Continued) The Bank RMB Assets Cash and balances with central bank Deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Financial assets held under resale agreements Investment classified as receivables Loans and advances to customers Investments Others Total assets

31 December 2015 USD HKD

Others

Total

464,442

44,817

415

177

509,851

34,439

26,301

650

3,410

64,800

76,912

19,945

1,419

—

98,276

137,210 1,107,212 2,190,187 529,093 94,148

— 2,595 105,614 10,594 8,123

— — 2,779 16,570 19

— — 6,294 265 665

137,210 1,109,807 2,304,874 556,522 102,955

4,633,643

217,989

21,852

10,811

4,884,295

37,400

—

37,400

1,029,474

34,059

777

5,320

1,069,630

23,025

8,654

—

720

32,399

71,110 2,815,265 273,262 87,209

— 147,624 — 5,194

— 6,019 — 7

— 25,918 — 1,620

71,110 2,994,826 273,262 94,030

Total liabilities

4,336,745

195,531

6,803

33,578

4,572,657

296,898

22,458

15,049

(22,767)

1,048,159

61,845

1,594

7,356

1,118,954

8,172

1,227

27,967

11,089

Net on-balance sheet position Credit commitments Derivatives (Note (i))

(26,277)

311,638

China CITIC Bank Corporation Limited 2015 Annual Report

245

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Currency risk (Continued) The Bank (Continued) RMB Assets Cash and balances with central bank Deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Financial assets held under resale agreements Investment classified as receivables Loans and advances to customers Investments Others Total assets

31 December 2014 USD HKD

Others

Total

524,992

9,775

1,879

165

536,811

17,292

61,336

967

2,094

81,689

32,103

15,510

197

—

47,810

135,194 651,693 1,899,740 395,798 85,641

571 1,223 103,054 7,693 5,124

— — 1,203 — 18

— — 8,345 490 539

135,765 652,916 2,012,342 403,981 91,322

3,742,453

204,286

4,264

11,633

3,962,636

50,000

—

50,000

671,786

21,836

286

4,454

698,362

5,063

12,633

—

1,007

18,703

41,381 2,496,448 115,592 76,598

— 188,554 — 4,463

— 6,989 — 191

— 7,606 — 2,026

41,381 2,699,597 115,592 83,278

Total liabilities

3,456,868

227,486

7,466

15,093

3,706,913

285,585

(23,200)

(3,202)

(3,460)

255,723

Credit commitments

1,131,175

71,045

188

5,903

1,208,311

Derivatives (Note (i))

(8,388)

4,322

1,840

11,790

9,564

Net on-balance sheet position

Note: (i)

The derivatives represent the net notional amount of currency derivatives, including undelivered foreign exchange spot, foreign exchange forward, foreign exchange swap and currency option.

246

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (b) Market risk (Continued) Currency risk (Continued) The Group uses sensitivity analysis to measure the potential effect of changes in foreign currency exchange rates on the Group’s profit or loss. The following table sets forth, as at 31 December 2015 and 31 December 2014, the results of the Group’s foreign exchange rate sensitivity analysis. 31 December 2015 Other Profit comprehensive before tax income 1% appreciation 1% depreciation

407 (407)

(18) 18

31 December 2014 Profit before tax 139 (139)

Other comprehensive income (3) 3

This sensitivity analysis is based on a static foreign exchange exposure profile of assets and liabilities and certain assumptions as follows: (i) the foreign exchange sensitivity is the gain and loss recognised as a result of 100 basis point fluctuation in the foreign currency exchange rates against RMB, (ii) the exchange rates against RMB for all foreign currencies change in the same direction simultaneously and does not take into account the correlation effect of changes in different foreign currencies, and (iii) the foreign exchange exposures calculated include both spot foreign exchange exposures, foreign exchange derivative instruments, and; all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Due to the assumptions adopted, actual changes in the Group’s profit resulting from increases or decreases in foreign exchange rates may differ from the results of this sensitivity analysis.

China CITIC Bank Corporation Limited 2015 Annual Report

247

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (c) Liquidity risk Liquidity risk arises when the Group, in meeting the demand of liabilities due and other payment obligations as well as the needs of business expansion, is unable to sufficiently, timely or cost-effectively acquire funds. The Group’s liquidity risk arises mainly from the mismatch of assets to liabilities and customers may concentrate their withdrawals. The Group has implemented overall liquidity risk management on the entity level. The headquarters has the responsibility for developing the whole Group’s liquidity risk policies, strategies, and implements centralised management of liquidity risk on the entity level. The domestic and foreign affiliates develop their own liquidity policies and procedures within the Group’s liquidity strategy management framework, based on the requirements of relevant regulatory bodies. The Group manages liquidity risk by setting various indicators and operational limits according to the overall position of the Group’s assets and liabilities, with referencing to market condition. The Group holds some assets with high liquidity to meet unexpected and material demand for payments in the ordinary course of business. The tools that the Group uses to measure and monitor liquidity risk mainly include liquidity gap analysis, liquidity indicators (including but not limited to regulated and internal managed indicators, such as loan-todeposit ratio, liquidity ratio, liquidity gap rate, excess reserves rate) monitoring, scenario analysis and stress testing. On this basis, the Group establishes regular reporting mechanisms for liquidity risk to report the latest situation of liquidity risk to the senior management on a timely basis.

Analysis of the remaining contractual maturity of assets and liabilities The Group

Assets Cash and balances with central banks Deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Financial assets held under resale agreements Investment classified as receivables Loans and advances to customers (Note (ii)) Investments (Note (iii)) Others Total assets Liabilities Borrowings from central banks Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial assets sold under repurchase agreements Deposits from customers Debt securities issued Others Total liabilities (Short)/long position

248

Repayable on demand

Within 3 months

Between three months and one year

71,059

—

57,103

31 December 2015 Between one and five years

More than five years

Undated (Note (i))

Total

3,416

—

436,714

511,189

16,974

6,726

—

80,803

—

81,118

37,620

—

118,776

— —

138,320 452,100

141 461,183

100 186,955

— 11,969

— —

138,561 1,112,207

19,429 296 23,220 171,107

504,373 63,979 14,711 1,271,575

892,359 113,642 25,133 1,540,220

602,310 261,416 8,984 1,059,781

418,369 139,919 8,952 579,209

31,443 1,644 30,577 500,400

2,468,283 580,896 111,577 5,122,292

—

13,500

24,000

—

37,500

225,398

312,518

528,022

1,010

1,000

596

1,068,544

—

37,039

11,874

335

—

49,248

— 1,334,115 — 57,151 1,616,664 (1,445,557)

67,976 819,432 80,028 13,821 1,344,314 (72,739)

3,192 665,351 97,281 19,673 1,349,393 190,827

— 362,891 41,392 7,926 413,554 646,227

— 986 70,434 938 73,358 505,851

— — — 4,727 5,323 495,077

71,168 3,182,775 289,135 104,236 4,802,606 319,686

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (c) Liquidity risk (Continued) Analysis of the remaining contractual maturity of assets and liabilities (Continued) The Group (Continued)

Repayable on demand

Within 3 months

Between three months and one year

77,398

—

70,434

31 December 2014 Between one and five years

More than five years

Undated (Note (i))

Total

—

461,088

538,486

19,365

2,682

1,510

—

93,991

—

50,799

17,360

—

68,180

— —

131,709 165,430

3,068 370,548

988 117,278

— —

135,765 653,256

20,578 4,190 17,193

469,777 33,044 31,338

790,021 75,585 17,563

485,009 203,675 1,733

336,118 96,437 956

34,829 2,809 28,282

2,136,332 415,740 97,065

189,793

901,462

1,276,827

810,193

433,511

527,029

4,138,815

—

50,000

—

50,050

124,269

448,572

104,872

10,579

—

688,292

—

14,179

4,406

1,063

—

19,648

— 1,290,019 — 42,583

39,440 591,897 17,897 12,738

2,169 682,497 14,665 9,491

— 265,392 18,593 18,090

— 19,769 82,333 2,380

— — — 3,526

41,609 2,849,574 133,488 88,808

Total liabilities

1,456,871

1,174,723

818,150

313,717

104,482

3,526

3,871,469

(Short)/long position

(1,267,078)

(273,261)

458,677

496,476

329,029

523,503

267,346

China CITIC Bank Corporation Limited 2015 Annual Report

249

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (c) Liquidity risk (Continued) Analysis of the remaining contractual maturity of assets and liabilities (Continued) The Bank 31 December 2015

250

Repayable on demand

Within 3 months

Between three months and one year

70,431

—

3,416

—

436,004

509,851

42,056

16,365

6,379

—

64,800

—

63,688

34,566

—

98,276

— —

136,969 452,100

141 461,123

100 185,615

— 10,969

— —

137,210 1,109,807

17,123 296 19,813

467,133 42,285 14,657

842,534 106,262 25,099

548,856 247,772 8,484

399,482 137,488 7,444

29,746 22,419 27,458

2,304,874 556,522 102,955

149,719

1,193,197

1,479,520

990,827

555,383

515,649

4,884,295

—

13,500

23,900

—

37,400

225,789

313,218

528,017

1,010

1,000

596

1,069,630

Between one and five years

More than five years

Undated (Note (i))

Total

—

28,540

3,859

—

32,399

— 1,283,922 — 54,143

67,918 706,340 79,598 11,499

3,192 641,106 90,758 19,611

— 362,472 32,472 7,652

— 986 70,434 557

— — — 568

71,110 2,994,826 273,262 94,030

Total liabilities

1,563,854

1,220,613

1,310,443

403,606

72,977

1,164

4,572,657

(Short)/long position

(1,414,135)

(27,416)

169,077

587,221

482,406

514,485

311,638

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (c) Liquidity risk (Continued) Analysis of the remaining contractual maturity of assets and liabilities (Continued) The Bank (Continued)

31 December 2014

Repayable on demand

Within 3 months

Between three months and one year

76,737

—

56,859

20,691

2,629

—

32,611

— —

Between one and five years More than five years

Undated (Note (i))

Total

—

460,074

536,811

1,510

—

81,689

15,178

—

47,810

131,709 165,430

3,068 370,348

988 117,138

— —

135,765 652,916

18,946 4,190 14,605

437,732 26,082 30,730

751,392 72,563 17,558

450,073 193,990 1,731

320,396 95,429 956

33,803 11,727 25,742

2,012,342 403,981 91,322

171,337

844,985

1,232,736

765,430

416,781

531,367

3,962,636

—

50,000

—

50,000

124,494

457,217

106,072

10,579

—

698,362

—

13,785

4,406

512

—

18,703

— 1,251,178 — 40,224

39,212 500,985 14,433 12,336

2,169 664,246 9,253 9,341

— 263,419 16,479 18,092

— 19,769 75,427 2,380

— — — 905

41,381 2,699,597 115,592 83,278

Total liabilities

1,415,896

1,087,968

795,487

309,081

97,576

905

3,706,913

(Short)/long position

(1,244,559)

(242,983)

437,249

456,349

319,205

530,462

255,723

China CITIC Bank Corporation Limited 2015 Annual Report

251

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (c) Liquidity risk (Continued) Credit Commitments include loan commitment, bank acceptance, credit card commitments, guarantees and letters of credit. The tables below summarise the amounts of credit commitments by remaining contractual maturity. The Group

Bank Acceptance Credit Card Commitments Guarantees Loan Commitments Letter of Credit Total

31 December 2015

Less than 1 year

1-5 years

Over 5 years

Total

631,431 149,138 81,573 90,501 91,406

— — 50,887 62,712 759

— — 1,106 47,720 —

631,431 149,138 133,566 200,933 92,165

1,044,049

114,358

48,826

1,207,233

31 December 2014

Less than 1 year

1-5 years

Over 5 years

Total

712,985 124,106 96,815 87,223 133,009

— — 25,560 62,412 1,757

— — 1,633 38,703 —

712,985 124,106 124,008 188,338 134,766

1,154,138

89,729

40,336

1,284,203

The Bank

1-5 years

Over 5 years

Total

Bank Acceptance Credit Card Commitments Guarantees Loan Commitments Letter of Credit

628,790 141,993 80,215 20,646 89,683

— — 49,773 58,342 690

— — 1,106 47,716 —

628,790 141,993 131,094 126,704 90,373

Total

961,327

108,805

48,822

1,118,954

Bank Acceptance Credit Card Commitments Guarantees Loan Commitments Letter of Credit Total

252

31 December 2015

Less than 1 year

31 December 2014

Less than 1 year

1-5 years

Over 5 years

Total

711,552 117,409 95,884 27,668 129,922

— — 25,487 59,978 80

— — 1,633 38,698 —

711,552 117,409 123,004 126,344 130,002

1,082,435

85,545

40,331

1,208,311

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

59 Financial risk management (Continued) (c) Liquidity risk (Continued) Notes: (i)

For cash and balances with central banks, the undated period amount represents statutory deposit reserve funds and fiscal deposits maintained with the PBOC. For placements with and loans to banks and non-bank financial institutions, loans and advances to customers and investments, the undated period amount represent the balances being impaired or overdue for more than one month. Equity investments are also reported under undated period.

(ii)

The balances of loans and advances to customers which are overdue within one month but not impaired are included in repayable on demand.

(iii)

Investments include the financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity investments and investments in associates. For investments, the remaining term to maturity does not represent the Group’s intended holding period.

(d) Operational risk Operational risk refers to the risk of loss arising from inappropriate or problematic internal procedures, personnel, IT systems, or external events, including legal risk, but excluding strategy risk and reputational risk. The Group manages operational risk through a control-based environment by establishing a sound mechanism of operational risk management in order to identify, assess, monitor, control, mitigate and report operational risks. The framework covers all business functions ranging from finance, credit, accounting, settlement, savings, treasury, intermediary business, computer applications and management, special assets resolution and legal affairs. Key controls include: —

establishing matrix and centralised authorization mechanism, strict prohibition of unauthorised activities;

—

through consistent legal responsibility framework, taking strict disciplinary actions against non compliance in order to ensure accountability;

—

promoting operational risk management culture throughout the organization; building a team of operational risk management professionals. Through formal training and performance appraisal system in raising risk management awareness;

—

strengthening cash and account management in accordance with the relevant policies and procedures, intensifying the monitoring of suspicious transactions. Ensure our staff are well-equipped with the necessary knowledge and basic skills on anti money laundering through continuous training;

—

backup systems and disaster recovery plans covering all the major activities, especially back office operations in order to minimise any unforeseen interruption. Insurance cover is arranged to mitigate potential losses associated with certain disruptive events.

In addition to the above, the Group improves its operational risk management information systems on an ongoing basis to efficiently identify, evaluate, monitor, control and report its level of operational risk. The Group’s management information system has the functionalities of recording and capturing lost data and events of operational risk to further support operational risk control and self-assessment, as well as monitoring of key risk indicators.

China CITIC Bank Corporation Limited 2015 Annual Report

253

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

60 Capital Adequacy Ratio Capital adequacy ratio reflects the Group’s operational and risk management capability and it is the core of capital management. The Group’s capital management objectives are to meet the legal and regulatory requirements, and to prudently determine the capital adequacy ratio under realistic exposures with reference to the capital adequacy ratio levels of leading global banks and the Group’s operating situations. The Group considers its strategic development plans, business expansion plans and risk variables in conducting its scenario analysis, stress testings and other measures to forecast, plan and manage capital adequacy ratio. The Group’s management monitors the Group’s and the Bank’s capital adequacy regularly based on regulations issued by the CBRC. The required information is filed with the CBRC by the Group and the Bank semi-annually and quarterly, respectively. From 1 January 2013, the Group commenced the computation of its capital adequacy ratios in accordance with “Regulation Governing Capital of Commercial Banks (provisional)” and other relevant regulations promulgated by the CBRC in the year of 2012. The requirements pursuant to these regulations may have certain differences comparing to those applicable in Hong Kong and other jurisdictions. Under the “Regulation Governing Capital of Commercial Banks (provisional)”, the Bank is required to meet the minimum core tier-one capital adequacy ratio, tier-one capital adequacy ratio and capital adequacy ratio of 7.50%, 8.50% and 10.50%, respectively, by the end of 2018. In addition, overseas subsidiaries and branches are directly regulated by the respective local banking regulators and the requirements of capital adequacy ratios differ by country. During the period, the Group has complied in full with all its externally imposed capital requirements. The capital adequacy ratios calculated in accordance with “Regulation Governing Capital of Commercial Banks (provisional)”. According to the requirements, for credit risk, the capital requirement was measured using the weighting method. The market risk was measured by adopting the standard approach and the operational risk was measured by using the basic indicator approach.

254

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

60 Capital Adequacy Ratio (Continued) Relevant requirements promulgated by the CBRC are listed as below. 31 December 2015

31 December 2014

Core tier-one capital adequacy ratio Tier-one capital adequacy ratio Capital adequacy ratio

9.12% 9.17% 11.87%

8.93% 8.99% 12.33%

Components of capital base Core tier-one capital: Paid-in capital Share capital Qualified portion of capital reserve Other comprehensive income/(loss) Surplus reserve General reserve Retained earnings Qualified portion of non-controlling interests

48,935 58,636 3,584 23,362 64,555 118,668 75

46,787 49,296 (1,833) 19,394 50,447 95,586 4,311

Total core tier-one capital Core tier-one capital deductions: Goodwill (net of related deferred tax liability) Other intangible assets other than land use right (net of related deferred tax liability)

317,815

Net core tier-one capital Other tier-one capital (Note (i))

316,159 1,828

262,786 1,796

Tier-one capital Tier-two capital: Qualified portion of tier-two capital instruments issued and share premium Surplus allowance for loan impairment Qualified portion of non-controlling interests

317,987

264,582

69,299 24,447 7

73,618 23,123 1,525

Net capital base

411,740

362,848

3,468,135

2,941,627

Total risk-weighted assets

263,988

(854)

(795)

(802)

(407)

Note: (i)

As at 31 December 2015, the Group’s other tier-one capital is the qualified portion of non-controlling interests, mainly represents the Capital Securities (Note 53).

China CITIC Bank Corporation Limited 2015 Annual Report

255

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value Fair value estimates are generally subjective in nature, and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1:

quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. This level includes listed equity securities and debt instruments on exchanges and exchange-traded derivatives.

Level 2:

inputs other than quoted prices included within Level 1 are observable for assets or liabilities, either directly or indirectly. A majority of the debt securities classified as level 2 are Renminbi bonds. The fair values of these bonds are determined based on the evaluation results provided by China Central Depository & Clearing Corporate Limited. This level also includes a majority of OTC derivative contracts, the evaluation method of which includes Forward Pricing Model, Swap Modal and Option Pricing Model. Input parameters are sourced from the Open market such as Bloomberg and Reuters.

Level 3:

inputs for assets or liabilities are based on unobservable parameters. This level includes equity investments and debt instruments with one or more than one significant unobservable parameters. Management determine the fair value through inquiring from counterparties or using the valuation techniques. The model incorporate unobservable parameters such as discount rate and market price volatilities.

The fair value of the Group’s financial assets and financial liabilities are determined as follows: —

If traded in active markets, fair values of financial assets and financial liabilities with standard terms and conditions are determined with reference to quoted market bid prices and ask prices, respectively;

—

If not traded in active markets, fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models or discounted cash flow analysis using prices from observable current market transactions for similar instruments. If there were no available observable current market transactions prices for similar instruments, quoted prices from counterparty is used for the valuation, and management performs analysis on these prices. Discounted cash flow analysis using the applicable yield curve for the duration of the instruments is used for derivatives other than options, and option pricing models are used for option derivatives.

The Group has established an independent valuation process for financial assets and financial liabilities. The Risk Management Department performs an independent review of the valuation methodologies, inputs, assumptions and valuation results. The Operations Department records the accounting for these items according to the result generated from the valuation process and accounting policies. The Finance and Accounting Department prepares the disclosure of the financial assets and financial liabilities, based on the independently reviewed valuation. The Group’s valuation policies and procedures for different types of financial instruments are approved by the Risk Management Committee. Any change to the valuation policies, or the related procedures, must be reported to the Risk Management Committee for approval before they are implemented. For the year ended 31 December 2015, there was no significant change in the valuation techniques or inputs used to determine fair value measurements.

256

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (a) Fair value of financial assets and financial liabilities not measured at fair value Financial assets and liabilities not carried at fair value of the Group include Cash and balances with central banks, Deposits with banks and non-bank financial Institutions, Placements with and loans to banks and non-bank financial Institutions, Financial assets held under resale agreements, Loans and advances to customers, Held-tomaturity investments, Investment classified as receivables, Borrowings from central banks, Deposits from banks and non-bank financial Institutions, Placements from banks and non-bank financial Institutions, Financial assets sold under repurchase Agreements, Deposits from customers and Debt securities issued. Except for the items shown in the tables below, the maturity dates of aforesaid financial assets and liabilities are within a year or are mainly floating interest rates, as a result, their carrying amounts are approximately equal to their fair value. The Group Carrying values

Fair values

31 December 31 December 31 December 31 December 2015 2014 2015 2014 Financial assets: Held-to-maturity investments Investment classified as receivables Financial liabilities: Debt securities issued — certificates of deposit (not for trading purpose) issued — debt securities issued — subordinated bonds issued — certificates of interbank deposit issued

179,930 1,112,207

177,957 653,256

185,152 1,124,181

177,856 656,435

8,705 31,295 77,779 171,356

11,167 16,302 82,333 23,686

8,706 32,381 83,181 171,501

11,193 16,656 83,715 24,978

The Bank Carrying values

Fair values

31 December 31 December 31 December 31 December 2015 2014 2015 2014 Financial assets: Held-to-maturity investments Investment classified as receivables Financial liabilities: Debt securities issued — debt securities issued — subordinated bonds issued — certificates of interbank deposit issued

179,930 1,109,807

177,957 652,916

185,152 1,121,853

177,856 656,088

31,472 70,434 171,356

16,479 75,427 23,686

32,558 75,566 171,501

16,834 76,566 24,978

China CITIC Bank Corporation Limited 2015 Annual Report

257

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (a)

The fair value of financial assets and financial liabilities not measured at fair value (Continued) Fair value of financial assets and liabilities above at fair value hierarchy is as follows: The Group Level 1 Financial assets: Held-to-maturity investments Investment classified as receivables Financial liabilities: Debt securities issued — certificates of deposit (not for trading purpose) issued — debt securities issued — subordinated bonds issued — certificates of interbank deposit issued

Total

833 —

184,319 1,124,181

— —

185,152 1,124,181

— — 7,615 —

8,706 32,381 75,566 171,501

— — — —

8,706 32,381 83,181 171,501

31 December 2014 Level 2 Level 3

Total

Level 1

258

31 December 2015 Level 2 Level 3

Financial assets: Held-to-maturity investments Investment classified as receivables

1,365 —

176,491 656,435

— —

177,856 656,435

Financial liabilities: Debt securities issued — certificates of deposit (not for trading purpose) issued — debt securities issued — subordinated bonds issued — certificates of interbank deposit issued

— — 7,149 —

11,193 16,656 76,566 24,978

— — — —

11,193 16,656 83,715 24,978

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (a)

The fair value of financial assets and financial liabilities not measured at fair value (Continued) Fair value of financial assets and liabilities above at fair value hierarchy is as follows: (Continued) The Bank Level 1 Financial assets: Held-to-maturity investments Investment classified as receivables Financial liabilities: Debt securities issued — debt securities issued — subordinated bonds issued — certificates of interbank deposit issued

Financial liabilities: Debt securities issued — debt securities issued — subordinated bonds issued — certificates of interbank deposit issued

Total

833 —

184,319 1,121,853

— —

185,152 1,121,853

— — —

32,558 75,566 171,501

— — —

32,558 75,566 171,501

31 December 2014 Level 2 Level 3

Total

Level 1 Financial assets: Held-to-maturity investments Investment classified as receivables

31 December 2015 Level 2 Level 3

1,365 —

176,491 656,088

— —

177,856 656,088

— — —

16,834 76,566 24,978

— — —

16,834 76,566 24,978

China CITIC Bank Corporation Limited 2015 Annual Report

259

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (b) The year-end fair value of financial assets and financial liabilities measured at fair value The Group

As at 31 December 2015 Recurring fair value measurements Assets Financial assets at fair value through profit or loss Trading financial assets — debt securities — investment funds — certificates of interbank deposit Financial assets designed at fair value through profit or loss — debt securities Derivative financial assets — interest rate derivatives — currency derivatives — precious metals derivatives Available-for-sale financial assets — debt securities — investment funds — certificates of deposit and certificates of interbank deposit — wealth management products — equity instruments Total financial assets measured at fair value

260

Level 1 (Note (i))

Level 2 (Note (i))

Level 3 (Note (ii))

Total

479 — —

8,057 — 15,226

— 1 —

8,536 1 15,226

—

2,457

—

2,457

— 17 —

1,288 11,472 1,008

3 — —

1,291 11,489 1,008

40,313 —

257,120 352

11 70

297,444 422

671 — 424

74,643 10 —

— — 22

75,314 10 446

41,904

371,633

107

413,644

Liabilities Derivative financial liabilities — interest rate derivatives — currency derivatives — precious metals derivatives

— (1) —

(992) (10,118) (304)

(3) — —

(995) (10,119) (304)

Total financial liabilities measured at fair value

(1)

(11,414)

(3)

(11,418)

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (b) The year-end fair value of financial assets and financial liabilities measured at fair value (Continued) The Group (Continued)

As at 31 December 2014 Recurring fair value measurements Assets Financial assets at fair value through profit or loss Trading financial assets — debt securities — investment funds — certificates of interbank deposit Financial assets designed at fair value through profit or loss — debt securities Derivative financial assets — interest rate derivatives — currency derivatives — precious metals derivatives Available-for-sale financial assets — debt securities — investment funds — certificates of deposit and certificates of interbank deposit — equity instruments Total financial assets measured at fair value Liabilities Financial liabilities at fair value through profit or loss — Short position in debt securities Derivative financial liabilities — interest rate derivatives — currency derivatives — precious metals derivatives Total financial liabilities measured at fair value

Level 1 (Note (i))

Level 2 (Note (i))

Level 3 (Note (ii))

Total

1,616 — —

11,130 — 13,923

— 2 —

12,746 2 13,923

—

838

—

838

— 10 —

972 6,396 843

5 — —

977 6,406 843

23,055 —

160,233 320

12 127

183,300 447

228 89

23,660 1,548

— —

23,888 1,637

24,998

219,863

146

245,007

—

(573)

— (1) —

(744) (6,207) (385)

(10) — —

(754) (6,208) (385)

(574)

(7,336)

(10)

(7,920)

China CITIC Bank Corporation Limited 2015 Annual Report

261

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (b) The year-end fair value of financial assets and financial liabilities measured at fair value (Continued) The Bank

As at 31 December 2015 Recurring fair value measurements Assets Financial assets at fair value through profit or loss Trading financial assets — debt securities — certificates of interbank deposit Financial assets designed at fair value through profit or loss — debt securities Derivative financial assets — interest rate derivatives — currency derivatives — precious metals derivatives Available-for-sale financial assets — debt securities — investment funds — certificates of deposit and certificates of interbank deposit — equity instruments Total financial assets recurringly measured at fair value

262

Level 1 (Note (i))

Level 2 (Note (i))

Level 3 (Note (ii))

Total

300 —

8,057 15,226

— —

8,357 15,226

—

1,766

—

1,766

— — —

1,039 8,334 1,008

3 — —

1,042 8,334 1,008

7,030 —

256,497 352

8 —

263,535 352

— 48

64,945 —

— —

64,945 48

7,378

357,224

364,613

Liabilities Derivative financial liabilities — interest rate derivatives — currency derivatives — precious metals derivatives

— — —

(951) (7,181) (304)

(3) — —

(954) (7,181) (304)

Total financial liabilities measured at fair value

—

(8,436)

(3)

(8,439)

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (b) The year-end fair value of financial assets and financial liabilities measured at fair value (Continued) The Bank (Continued)

As at 31 December 2014 Recurring fair value measurements Assets Financial assets at fair value through profit or loss Trading financial assets — debt securities — certificates of interbank deposit Financial assets designed at fair value through profit or loss — debt securities Derivative financial assets — interest rate derivatives — currency derivatives — precious metals derivatives Available-for-sale financial assets — debt securities — investment funds — certificates of deposit and certificates of interbank deposit — equity instruments Total financial assets measured at fair value Liabilities Financial liabilities at fair value through profit or loss — Short position in debt securities Derivative financial liabilities — interest rate derivatives — currency derivatives — precious metals derivatives Total financial liabilities measured at fair value

Level 1 (Note (i))

Level 2 (Note (i))

Level 3 (Note (ii))

Total

1,609 —

11,131 13,923

— —

12,740 13,923

—

838

—

838

— — —

718 4,072 843

5 — —

723 4,072 843

6,832 —

159,026 320

9 —

165,867 320

— 38

20,650 1,548

— —

20,650 1,586

8,479

213,069

221,562

—

(573)

— — —

(703) (3,902) (385)

(10) — —

(713) (3,902) (385)

(573)

(4,990)

(10)

(5,573)

Notes: (i)

During the current year, there were no significant transfer between Level 1 and Level 2 of the fair value hierarchy.

China CITIC Bank Corporation Limited 2015 Annual Report

263

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (b) The year-end fair value of financial assets and financial liabilities measured at fair value (Continued) Notes: (Continued) (ii)

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in the Level 3 fair value hierarchy: The Group

Assets

Trading financial assets Investment funds As at 1 January 2015

264

Financial assets designed at fair value through Derivative profit or financial loss assets Debt Interest rate securities derivatives

Liabilities

Available-for-sale financial assets Debt Investment Equity securities funds instruments

Derivative financial liabilities Interest rate Total derivatives

Total

—

127

—

146

(10)

Total gains or losses — in profit or loss — in other comprehensive income Purchase Settlements

—

(2)

—

— — (1)

— — —

— — (1)

(17) (40) —

— — —

(17) (40) (2)

— — —

As at 31 December 2015

—

107

(3)

Total gain or loss for the year included in profit or loss for assets and liabilities held at the end of the reporting period

—

(2)

—

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (b) The year-end fair value of financial assets and financial liabilities measured at fair value (Continued) Notes: (Continued) (ii)

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in the Level 3 fair value hierarchy: (Continued) The Group (Continued)

Trading financial assets Investment funds As at 1 January 2014

Assets Financial assets designed at fair value through Derivative profit or financial Available-for-sale financial loss assets assets Debt Interest rate Debt Investment securities derivatives securities funds

Liabilities

Derivative financial liabilities Interest rate Total derivatives

Total

290

357

(17)

— — — —

— — — (40)

(8) — — 1

— (1) — —

— (25) 15 (153)

(8) (26) 15 (192)

12 — — (5)

As at 31 December 2014

—

127

146

(10)

Total gain or loss for the year included in profit or loss for assets and liabilities held at the end of the reporting period

—

(8)

—

(8)

Total gains or losses — in profit or loss — in other comprehensive income Purchase Settlements

China CITIC Bank Corporation Limited 2015 Annual Report

265

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

61 Fair value (Continued) (b) The year-end fair value of financial assets and financial liabilities measured at fair value (Continued) Notes: (Continued) (ii)

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in the Level 3 fair value hierarchy: (Continued) The Bank Assets

Liabilities

Derivative financial

Available-for-sale

assets

financial assets

Derivative financial liabilities

Interest rate

derivatives

Debt securities

Total

— in profit or loss

(2)

—

(2)

— in other comprehensive income

—

(1)

—

(3)

—

Derivative financial

Available-for-sale

assets

financial assets

As at 1 January 2015

derivatives (10)

Total (10)

Total gains or losses

As at 31 December 2015 Total gain or loss for the year included in profit or loss for assets and liabilities held at the end of the reporting period

Assets

Liabilities Derivative financial liabilities

Interest rate

As at 1 January 2014

Interest rate

derivatives

Debt securities

Total

derivatives

Total

(17)

Total gains or losses — In profit or loss

(8)

(7)

— In other comprehensive income

—

(1)

—

Settlements

—

(5)

As at 31 December 2014

(10)

—

Total gain or loss for the year included in profit or loss for assets and liabilities held at the end of the reporting period

266

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

62 Related parties (a) Relationship of related parties (i)

The Group is controlled by CITIC Corporation Limited (incorporated in Hong Kong), which owns 67.13% of the company’s shares. The ultimate parent of the Group is CITIC Group (incorporated in China).

(ii)

Related parties of the Group include subsidiaries, joint ventures and associates of CITIC Corporation Limited and CITIC Group as well as BBVA, which held 3.12% and 9.60% interests in the Bank as at 31 December 2015 and 31 December 2014, respectively.

For the year ended 31 December 2015, the financial statements of the principal subsidiaries stated above were audited by the firms within the worldwide network of PricewaterhouseCoopers.

(b) Related party transactions During the relevant years, the Group entered into transactions with related parties in the ordinary course of its banking businesses including lending, assets transfer, wealth management, investment, deposit, settlement and clearing; and off-balance sheet transactions. These banking transactions were conducted under normal commercial terms and conditions and priced at the relevant market rates prevailing at the time of each transaction. In addition, transactions during the relevant year and the corresponding balances outstanding at the reporting dates are as follows: Year ended 31 December 2015 Ultimate holding company and fellow entities BBVA Profit and loss Interest income Fee and commission income and other operating income Interest expense Net trading gain/(loss) Other service fees

268

—

154 (649) 66 (673)

— — 383 —

— — 8 —

Year ended 31 December 2014 Ultimate holding company and fellow entities BBVA Profit and loss Interest income Fee and commission income and other operating income Interest expense Net trading gain/(loss) Other service fees

Associates

385 423 (1,595) 380 (848)

Associates

—

— (2) (124) —

— — — —

China CITIC Bank Corporation Limited 2015 Annual Report

267

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

62 Related parties (Continued) (b) Related party transactions (Continued) 31 December 2015

Assets Interest receivable Gross loans and advances to customers Less: collectively assessed allowance for impairment loss Loans and advances to customers (net) Placements with and loans to banks and non-bank financial institutions Derivative financial assets Investments Other assets Liabilities Deposits from customers Derivative financial liabilities Deposits from banks and non-bank financial institutions Interest payable Other liabilities Off-balance sheet items Guarantees and letters of credit Acceptances Guarantees received Nominal amount of derivatives

268

Ultimate holding company and fellow entities

BBVA

Associates

69 14,793

— 1,094

— —

—

14,642

(151)

1,094

—

22 61 406 9,271

— 100 — 988

— — 976 —

49,555 11

— 112

22 —

21,887 110 1,550

— — —

968 90 8,574 2,780

255 — — 39,755

— — — —

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

62 Related parties (Continued) (b) Related party transactions (Continued) Ultimate holding company and fellow entities Assets Gross loans and advances to customers Less: collectively assessed allowance for impairment loss Loans and advances to customers (net) Gross amount of deposits with banks and non-bank financial institutions Placements with and loans to banks and non-bank financial institutions Less: Allowance for impairment losses Placement with banks and non-bank financial institutions (net) Investments Other assets Liabilities Deposits from customers Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Derivative financial liabilities Interest payable Other liabilities Off-balance sheet items Guarantees and letters of credit Acceptances Guarantees received Nominal amount of derivatives

31 December 2014 BBVA

Associates

—

6,537

—

183

673

—

— —

21 252 7,759

— — 152

— 870 —

26,359

—

35,233

470

—

512 8 194 26

437 103 — —

— — —

204 258 10 3,001

307 — 33 19,789

— — — —

6,588 (51)

28 (7)

The Bank entered into banking transactions with its subsidiaries at arm’s length in the ordinary course of business. These transactions are eliminated on consolidation.

(c) Key management personnel and their close family members and related companies Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including directors, supervisors and executive officers. The Group enters into banking transactions with key management personnel and their close family members and those companies controlled or jointly controlled by them in the normal course of business. Other than those disclosed below, there are no material transactions and balances between the Group and these individuals, their close family members or those companies controlled or jointly controlled by them.

China CITIC Bank Corporation Limited 2015 Annual Report

269

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

62 Related parties (Continued) (c)

Key management personnel and their close family members and related companies (Continued) The aggregate amount of relevant loans outstanding as at 31 December 2015 to Directors, Supervisors and Executive officers amounted to RMB11.63 million (as at 31 December 2014: RMB12.74 million). The compensation paid or payable to key management for employee services is shown below: Year ended 31 December 2015 RMB’000

Year ended 31 December 2014 RMB’000

13,669 17,042 2,729

13,051 19,601 2,279

33,440

34,931

Salaries and other emoluments Discretionary bonuses Contributions to defined contribution retirement schemes

(d) Contributions to defined contribution retirement schemes and supplementary retirement benefits The Group has established a supplementary defined contribution plan for its qualified employees which is administered by CITIC Group (Note 41(b)).

(e) Transactions with state-owned entities in the PRC The Group operates in an economic regime currently predominated by entities directly or indirectly owned by the PRC government through its government authorities, agencies, affiliations and other organisations (collectively referred to as “state-owned entities”). Transactions with state-owned entities include but are not limited to the following: —

lending and deposit taking;

—

taking and placing of inter-bank balances;

—

derivative transactions;

—

entrusted lending and other custody services;

—

insurance and securities agency, and other intermediary services;

—

sale, purchase, underwriting and redemption of bonds issued by state-owned entities;

—

purchase, sale and leases of property and other assets; and

—

rendering and receiving of utilities and other services.

These transactions are conducted in the ordinary course of the Group’s banking business on terms similar to those that would have been entered into with non-state-owned entities. The Group has also established its pricing strategy and approval processes for major products and services, such as loans, deposits and commission income. The pricing strategy and approval processes do not depend on whether the customers are state-owned entities or not. Having due regard to the substance of the relationships, the Directors are of opinion that none of these transactions are material related party transactions that require separate disclosure.

270

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

63 Structured entities (a) Unconsolidated structured entities sponsored by third party institutions in which the Group holds an interest The Group invests in a number of unconsolidated structured entities which are sponsored by other entities for investment return. Such structured entities include wealth management products, investment management products managed by securities companies, trust investment plans, asset-backed financings and investment funds and the Group does not consolidate these structured entities. The following table sets out an analysis of the carrying amounts of interests held by the Group as at 31 December 2015 in the structured entities sponsored by third party institutions, as well as an analysis of the line items in the statement of financial position in which relevant assets are recognised: 31 December 2015 Carrying amount Held-to- Available for Investment maturity sale financial classified as investments assets receivables

Maximum Total loss exposure

Wealth management products Investment management products managed by securities companies Trust investment plans Asset-backed securities Investment funds

—

147,605

147,615

— — 5,306 —

— — 8 70

825,016 139,971 — —

825,016 139,971 5,314 70

Total

5,306

1,112,592

1,117,986

Total

Maximum loss exposure

Held-tomaturity investments

31 December 2014 Carrying amount Available for Investment sale financial classified as assets receivables

Wealth management products Investment management products managed by securities companies Trust investment plans Asset-backed securities Investment funds

—

78,859

— — 7,110 —

— — 9 127

452,319 108,535 — —

452,319 108,535 7,119 127

Total

7,110

136

639,713

646,959

The maximum exposures to risk in the above wealth management products, trust investment plans, investment management products managed by securities companies and investment funds are the fair value or the carrying value (whichever is higher) of the assets held by the Group at the reporting date. The maximum exposures to risk in the asset-backed financings are the amortised cost or fair value of the assets held by the Group at the reporting date in accordance with the line items of these assets recognised in the statement of financial positions.

China CITIC Bank Corporation Limited 2015 Annual Report

271

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

63 Structured entities (Continued) (b) Unconsolidated structured entities sponsored by the Group Unconsolidated structured entities sponsored by the Group mainly include non-principal or interest guaranteed wealth management products. The nature and purpose of these structured entities are to generate fees from managing assets on behalf of investors. These structured entities are financed through the issue of notes to investors. Interest held by the Group includes fees charged by providing management services. During the year of 2015, the amount of fee and commission income earned from the above mentioned structured entities by the Group was RMB5,808 million (2014: RMB3,958 million), the amount of interest income earned from the placements by the Group to the above mentioned structured entities is RMB390 million (2014: RMB401 million). As at 31 December 2015, the carrying amounts of management fee and interest receivables being recognised in the statement of financial position was RMB387 million (31 December 2014: RMB857 million). As at 31 December 2015, the amount of assets held by the unconsolidated non-principal or interest guaranteed wealth management products which are sponsored by the Group was RMB659,118 million (31 December 2014: RMB393,413 million). As at 31 December 2015, the amount of the placements from the Group with non-principal or interest guaranteed wealth management products sponsored by the Group is RMB252,66 million (31 December 2014: RMB16,800 million). During the year of 2015, the maximum exposure of the placements from the Group with non-principal or interest guaranteed wealth management products sponsored by the Group is RMB36,675 million (2014: RMB39,420 million). The transactions were conducted under normal business terms and conditions. The aggregated amount of the non-principal or interest guaranteed wealth management products sponsored and issued by the Group after 1 January 2015 and matured before 31 December 2015 was RMB604.2 billion (2014: RMB393.9 billion).

64 Transfers of financial assets The Group enters into transactions in the normal course of business by which it transfers recognised financial assets to third parties or to structured entities. In some cases where these transfers may give rise to full or partial derecognition of the financial assets concerned. In other cases where the transferred assets do not qualify for derecognition as the Group has retained substantially all the risks and rewards of these assets, the Group continued to recognise the transferred assets. The Group enters into securitisation transactions in the normal course of business by which it transfers credit assets to structured entities which issue asset-backed securities to investors. The Group may retain interests in the form of subordinated tranches which would give rise to the Group’s retention of risk and rewards on the transferred assets. The Group will assess whether to derecognise the assets or not based on the extent of risks and rewards retained. In 2015, the Group has derecognised loans and advances of RMB7.52 billion in the asset-backed securitisation transactions (2014: RMB6.20 billion). As at December 2015, the Group neither transferred nor retained substantially all risks and rewards of ownership of certain transferred assets and retained the control of the transferred assets. The management recognised RMB0.29 billion in both assets and liabilities representing its continuing involvement in this connection (31 December 2014: Nil). In addition, the Group also disposed of its loans and advances to customers in the ordinary course of business during the year ended 31 December 2015.

65 Offsetting financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously (“the offset criteria”). As at 31 December 2015, the Group did not enter into enforceable master netting arrangements with counterparties and therefore there were no offsettings of any assets and liabilities in the consolidated statement of financial position.

272

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

66 Statements of financial position and changes in equity of the Bank Statement of financial position 31 December 2015

31 December 2014

Assets Cash and balances with central banks Deposits with banks and non-bank financial institutions Precious metals Placements with and loans to banks and non-bank financial institutions Financial assets at fair value through profit or loss Derivative financial assets Financial assets held under resale agreements Interest receivable Loans and advances to customers Available-for-sale financial assets Held-to-maturity investments Investment classified as receivables Interests in subsidiaries Property, plant and equipment Intangible assets Deferred tax assets Other assets

509,851 64,800 1,191

536,811 81,689 411

98,276 25,349 10,384 137,210 29,849 2,304,874 328,994 179,930 1,109,807 22,249 15,448 801 7,930 37,352

47,810 27,501 5,638 135,765 25,546 2,012,342 188,537 177,957 652,916 9,986 14,223 407 9,296 35,801

Total assets

4,884,295

3,962,636

Liabilities Borrowings from central banks Deposits from banks and non-bank financial institutions Placements from banks and non-bank financial institutions Financial liabilities at fair value through profit or loss Derivative financial liabilities Financial assets sold under repurchase agreements Deposits from customers Accrued staff costs Taxes payable Interest payable Provisions Debt securities issued Other liabilities

37,400 1,069,630 32,399 — 8,439 71,110 2,994,826 7,610 4,694 37,422 2 273,262 35,863

50,000 698,362 18,703 573 5,000 41,381 2,699,597 10,871 5,837 36,559 2 115,592 24,436

Total liabilities

4,572,657

3,706,913

Equity Share capital Capital reserve Other comprehensive income Surplus reserve General reserve Retained earnings

48,935 61,359 4,790 23,362 64,350 108,842

46,787 51,619 435 19,394 50,350 87,138

Total equity

311,638

255,723

4,884,295

3,962,636

Total liabilities and equity

China CITIC Bank Corporation Limited 2015 Annual Report

273

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

66 Statements of financial position and changes in equity of the Bank (Continued) Statement of changes in equity Share capital

Other Capital comprehensive reserve income

Surplus reserve

General reserve

Retained earnings

Total equity

46,787

51,619

435

19,394

50,350

87,138

255,723

(i) Net profit (ii) Other comprehensive income

— —

— 4,355

— —

39,672 —

39,672 4,355

Total comprehensive income

—

4,355

—

39,672

44,027

2,148

9,740

—

11,888

— —

3,968 —

— 14,000

(3,968) (14,000)

— —

As at 31 December 2015

48,935

61,359

4,790

23,362

64,350

108,842

311,638

As at 1 January 2014

46,787

51,619

(4,732)

15,495

44,250

69,937

223,356

(i) Net profit (ii) Other comprehensive income

— —

— 5,167

— —

38,990 —

38,990 5,167

Total comprehensive income

—

5,167

—

38,990

44,157

— —

3,899 —

— 6,100

(3,899) (6,100)

— —

—

(11,790)

46,787

51,619

435

19,394

50,350

87,138

255,723

As at 1 January 2015

(iii) Proceeds from shares issuance (iv) Profit appropriations — Appropriations to surplus reserve — Appropriations to general reserve

(iii) Profit appropriations — Appropriations to surplus reserve — Appropriations to general reserve — Appropriations to equity holders of the Bank As at 31 December 2014

274

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

67 Benefits and interests of directors and supervisors (a) Directors and supervisors’ emoluments The remuneration of every director and supervisor is set out below: For the year ended 31 December 2015: Emoluments paid or receivable in respect of a person’s services as a director and supervisor of the Bank

Employer’s contribution to retirement benefit scheme RMB’000

Remunerations paid or receivable in respect of accepting office as director and supervisor RMB’000

Emoluments paid or receivable in respect of director and supervisor’s other services in connection with the management of the affairs of the Bank RMB’000

Total RMB’000

Fees RMB’000

Salary RMB’000

Discretionary bonuses RMB’000

Housing allowance RMB’000

Estimated money value of other benefits RMB’000

Executive directors Li Qingping (Note (i)) Sun Deshun

— —

— 700

— 691

— —

— 392

— 195

— —

— 1,978

Non-executive directors Chang Zhenming (Note (i)) Zhu Xiaohuang (Note (i)) Zhang Xiaowei

— — —

Independent non-executive Directors Li Zheping Wu Xiaoqing Wong Luen Cheung Andrew Yuan Ming

300 300 300 275

— — — —

300 300 300 275

Supervisors Cao Guoqiang Shu Yang (Note (i)) Wang Xiuhong Jia Xiangsen Zheng Wei Cheng Pusheng Wen Shuping Ma Haiqing

— — 300 100 175 — — —

600 — — — — 300 290 223

632 — — — — 1,999 1,277 2,202

— — — — — — — —

378 — — — — 227 25 282

190 — — — — 140 217 191

— — — — — — — —

1,800 — 300 100 175 2,666 1,809 2,898

— — — — — —

— — 583 — 328 290

— — 549 — 2,071 1,768

— — — — — —

— — 329 — 316 254

— — 163 — 164 189

— — — — — —

— — 1,624 — 2,879 2,501

Name

Former Directors and Supervisors resigned in 2015 Dou Jianzhong (Note (i)) Gonzalo Jose Torano Vallin Ouyang Qian Zheng Xuexue (Note (i)) Li Gang Deng Yuewen Note: (i)

Mrs. Li Qingping, Mr. Chang Zhenming, Mr. Zhu Xiaohuang, Mr. Dou Jianzhogn, Mr. Shu Yang, Mr. Zheng Xuexue did not receive any fees from the Group. Their emoluments were borne by the major Equity Holders of the Bank.

China CITIC Bank Corporation Limited 2015 Annual Report

275

Notes to the Financial Statements (Amounts in millions of Renminbi unless otherwise stated)

67 Benefits and interests of directors and supervisors (Continued) (a) Directors and supervisors’ emoluments (Continued) For the year ended 31 December 2014 (restated): Certain of the comparative information of directors and supervisors’ emoluments for the year ended 31 December 2014 previously disclosed in accordance with the predecessor Companies Ordinance have been restated in order to comply with the new scope and requirements by the Hong Kong Companies Ordinance (Cap.622). Emoluments paid or receivable in respect of a person’s services as a director and supervisor of the Bank

Employer’s Estimated contribution Housing money value of to retirement allowance other benefits benefit scheme RMB’000 RMB’000 RMB’000

Remunerations paid or receivable in respect of accepting office as director and supervisor RMB’000

Emoluments paid or receivable in respect of director and supervisor’s other services in connection with the management of the affairs of the Bank RMB’000

Total RMB’000

Fees RMB’000

Salary RMB’000

Discretionary bonuses RMB’000

Executive Directors Li Qingping Sun Deshun

— —

257 658

406 1,229

— —

110 419

71 199

— —

844 2,505

Non-executive Directors Chang Zhenming Dou Jianzhong Zhang Xiaowei Gonzalo Jose Torano Vallin Zhu Xiaohuang

— — — — —

— — — — 257

— — — — 406

— — — — —

— — — — 116

— — — — 70

— — — — —

— — — — 849

Independent non-executive Directors Li Zheping Wu Xiaoqing Wong Luen Cheung Andrew Yuan Ming

300 300 300 75

— — — —

300 300 300 75

Supervisors Ouyang Qian Zheng Xuexue Deng Yuewen Li Gang Wang Xiuhong

— — — — 275

700 — 251 300 —

1,328 — 1,856 2,020 —

— — — — —

409 — 262 278 —

195 — 147 153 —

— — — — —

2,632 — 2,516 2,751 275

Former Directors and Supervisors resigned in 2014 Zhuang Yumin Liu Shulan Chen Xiaoxian Guo Ketong Xing Tiancai Luo Xiaoyuan

25 225 — — 250 225

— — — — —

25 225 — — 250 225

Name

(b) Other benefits and interests No direct or indirect retirement benefits and termination benefits were paid to directors as at 31 December 2015 (2014: Nil). For the year ended 31 December 2015 and 31 December 2014, the balance of loans and advances from the Group to Directors, Supervisors or certain controlled body corporates and connected entities of the Directors or Supervisors was not significant. No significant transactions, arrangements and contracts in relation to the Group’s business to which the Company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year 2015 (2014: Nil).

276

Unaudited supplementary financial information (Expressed in millions of Renminbi unless otherwise stated)

The information set out below does not form part of the audited financial statements, and is included herein for information purposes only.

Difference between the financial report prepared under IFRSs and that prepared in accordance with PRC GAAP China CITIC Bank Corporation (the “Bank”) prepares consolidated financial statements, which includes the financial statements of the Bank and its subsidiaries (collectively the “Group”), in accordance with International Financial Reporting Standards (“IFRSs”) and its interpretations promulgated by the International Accounting Standards Board and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. As a financial institution incorporated in the People’s Republic of China (the “PRC”) and listed in the Shanghai Stock Exchange, the Group also prepares its consolidated financial statements for the year ended 31 December 2015 in accordance with the Accounting Standards for Business Enterprises and other relevant regulations issued by the regulatory bodies of the PRC (collectively “PRC GAAP”). There is no difference in the net profit for the year ended 31 December 2015 or total equity as at 31 December 2015 between the Group’s consolidated financial statements prepared in accordance with IFRSs and those prepared in accordance with PRC GAAP respectively.

Liquidity coverage ratio Liquidity coverage ratio

31 December 2015

31 December 2014

87.78%

111.64%

The liquidity coverage ratios were also in accordance with the Rules on Liquidity Risk management of Commercial Banks (Provisional) issued by the CBRC and applicable calculation requirements, and based on the data determined under the PRC GAAP.

Currency concentrations US Dollars Spot assets Spot liabilities Forward purchases Forward sales Options Net (short)/long position

309,778 (257,435) 716,892 (729,696) 20,945 60,484

US Dollars Spot assets Spot liabilities Forward purchases Forward sales Options Net (short)/long position

31 December 2015 HK Dollars Others 99,804 (105,692) 54,444 (53,203) 16 (4,631)

Total

29,310 (46,115) 95,056 (66,922) (174)

438,892 (409,242) 866,392 (849,821) 20,787

11,155

67,008

31 December 2014 HK Dollars Others

273,930 (274,550) 439,345 (469,947) 15,804

74,180 (84,879) 36,632 (10,956) (91)

17,499 (26,993) 55,218 (35,412) (1,958)

(15,418)

14,886

8,354

Total 365,609 (386,422) 531,195 (516,315) 13,755 7,822

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Unaudited supplementary financial information (Expressed in millions of Renminbi unless otherwise stated)

International claims International claims are the sum of cross-border claims in all currencies and local claims in foreign currencies. The Group is principally engaged in business operations within Mainland China, and regards all the claims on third parties outside Mainland China as cross border claims. International claims include Balances with Central Banks, Deposits with Banks and Non-Bank Financial Institutions, Placements with and Loans to Banks and Non-Bank Financial Institutions, Financial Assets Held for Trading, Financial Assets Designated at Fair Value through Profit or Loss, Loans and Advances to Customers, Financial Assets Held under Resale Agreements, Available-for-Sale Financial Assets, Held-to-Maturity Investments and Investment Classified as Receivables. International claims are disclosed based on different countries or regions. A country or region is reported where it constitutes 10% or more of the aggregate amount of international claims, after taking into account any risk transfers. Risk transfer is only made if the claims are guaranteed by a party in a country which is different from that of the counterparty or if the claims are on an overseas branch of a bank whose head office is located in another country.

Banks

Total

Asia Pacific excluding Mainland China — of which attributed to Hong Kong Europe North and South America Africa

16,894 7,430 2,971 73,887 1

7,706 964 3,078 27,920 —

44,586 30,177 10,110 121,678 70

69,186 38,571 16,159 223,485 71

Total

93,753

38,704

176,444

308,901

31 December 2014 Non-bank Official private sector sector

Total

Banks

278

31 December 2015 Non-bank Official private sector sector

Asia Pacific excluding Mainland China — of which attributed to Hong Kong Europe North and South America Africa

10,827 5,946 3,121 73,888 1

5,975 5,964 17 40,730 —

39,897 24,181 4,362 127,459 193

56,699 36,091 7,500 242,077 194

Total

87,837

46,722

171,911

306,470

Unaudited supplementary financial information (Expressed in millions of Renminbi unless otherwise stated)

Overdue loans and advances to customers by geographical sectors 31 December 2015 Loans and Advances Gross loans and overdue over 3 advances months Bohai Rim (include Head Office) Yangtze River Delta Pearl River Delta and West Strait Central Western Northeastern Outside Mainland China

Impaired loans

680,886 553,615 396,853 348,882 340,226 68,949 139,369

10,056 9,194 7,110 6,363 3,185 1,698 296

8,869 8,838 7,685 5,212 2,668 1,753 1,025

2,528,780

37,902

36,050

Gross loans and advances

31 December 2014 Loans and Advances overdue over 3 months

Impaired loans

576,598 512,214 319,360 306,274 292,793 64,071 116,598

8,557 10,064 6,055 4,239 1,624 1,996 375

7,151 9,240 5,140 3,453 1,276 1,923 271

2,187,908

32,910

28,454

Total

Bohai Rim (include Head Office) Yangtze River Delta Pearl River Delta and West Strait Central Western Northeastern Outside Mainland China Total

Impaired loans and advances to customers include loans and advances for which objective evidence of impairment exists and has been identified:

—

individually; or

—

collectively: for portfolios of homogeneous loans and advances.

Gross overdue amounts due from banks and other financial institutions and overdue loans and advances to customers (a) Gross overdue amounts due from banks and other financial institutions Gross amounts due from banks and other financial institutions which have been overdue As a percentage of total gross amounts due from banks and other financial institutions

31 December 2015

31 December 2014

0.04%

0.02%

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Unaudited supplementary financial information (Expressed in millions of Renminbi unless otherwise stated)

Gross amount of overdue amounts due from banks and other financial institutions and overdue loans and advances to customers (Continued) (b) Gross amounts of overdue loans and advances to customers

31 December 2015

31 December 2014

Gross loans and advances to customers which have been overdue with respect to either principal or interest for periods of: — between 3 and 6 months — between 6 and 12 months — over 12 months

9,794 12,291 15,817

8,986 13,167 10,757

Total

37,902

32,910

As a percentage of total gross loans and advances to customers: — between 3 and 6 months — between 6 and 12 months — over 12 months

0.38% 0.49% 0.63%

0.41% 0.60% 0.49%

Total

1.50%

—

The above analysis represents loans and advances overdue for more than 3 months as required by the Hong Kong Monetary Authority.

—

Loans and advances with a specific repayment date are classified as overdue when the principal or interest is overdue.

—

Loans and advances repayable on demand are classified as overdue when a demand for repayment has been served on the borrower but repayment has not been made in accordance with the instructions. If the loans and advances repayable on demand are outside the approved limit that was advised to the borrower, they are also considered as overdue.

—

As at 31 December 2015, the loans and advances to customers of RMB31,601 million (2014: RMB26,681 million) and RMB6,301 million (2014: RMB6,229 million) of the above overdue loans and advances were subject to individual assessment and collective assessment for impairment respectively. The covered portion and uncovered portion of these individually assessed loans were RMB5,985 million (2014: RMB8,668 million) and RMB25,616 million (2014: RMB18,013 million) respectively. The fair value of collateral held against these individually assessed loans and advances was RMB11,946 million (2014: RMB14,099 million). The fair value of collateral was estimated by management based on the latest available external valuations adjusted by taking into account the current realization experience as well as market situation. The impairment allowance made against these individually assessed loans and advances were RMB19,509 million (2014: RMB11,442 million).

Non-bank Mainland China exposures The Bank is a commercial bank incorporated in the Mainland China with its banking business primarily conducted in Mainland China. As of 31 December 2015, the majority of the Bank’s non-bank exposures arose from businesses with Mainland China entities or individuals. Analyses of various types of exposures by counterparties have been disclosed in the notes to the consolidated financial statements.

280

Reference for Shareholders Information on Shares IPOs On 27 April 2007 the Bank was concurrently listed on SSE and SEHK.

Ordinary Shares As at the end of the reporting period, the number of issued shares of the Bank was 46,787,327,034, including 31,905,164,057 A shares and 14,882,162,977 H shares. With regard to the Bank’s private offering of 2,147,469,539 A shares to China Tobacco Corporation. Please refer to “Changes in Share Capital and Shareholdings of Substantial Shareholders” of this report for details.

Dividends The Board of Directors proposed to pay a cash dividend of RMB2.12 (pre-tax) every 10 shares for 2015. Please refer to “Management Discussion and Analysis” of this report for detailed information about dividends distribution.

Stock Code and Stock Name: A-share SSE 601998 CNCB Reuters 601998.SS Bloomberg 601998 CH H-share SEHK 0998 CITIC BANK Reuters 998.HK Bloomberg 998 HK

Shareholders’ Inquiry If shareholders have any inquiry about their shareholdings, such as share transfer, “street name” shares, address redirecting and loss of share certificate, please post letters to the following addresses: A-share China Securities Depository and Clearing Corporation Limited Shanghai Branch 3/F, China Insurance Building, No. 166 Lu Jia Zui East Road, Pudong New District, Shanghai Tel: +86-21—68870587 H-share Computershare Hong Kong Investor Services Limited Room 1712-16, 17/F, Hopewell Centre, No. 183 Queen’s Road East, Wan Chai, Hong Kong Tel: +852-2862 8555 Fax: +852-2865 0990 E-mail: [emailprotected]

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Reference for Shareholders

Credit Rating As at the end of the reporting period, the Bank had the following ratings: Ratings by Moody’s Investors Service: (1) Baa1 for long-term rating, (2) P-2 for short-term rating, (3) ba1 for basic credit rating, and (4) neutral for rating prospect. Ratings by Fitch ratings: (1) BBB for default rating, (2) 2 for support rating, (3) BBB for support bottom line rating, (4) b+ for survival rating, and (5) neutral for rating prospect.

Index Constituent Stock A-share Index of SSE SSE 50 Index SSE 180 Index SSE Composite Index SSE Corporate Governance Index New SSE Composite Index Shanghai-Shenzhen 300 Index China Securities Index 100 Index China Securities Index 800 Index

Investors’ Inquiry For any inquiry, investors may contact: Investor Relations Team of China CITIC Bank Corporation Limited Address: No. 9 Chaoyangmen Beidajie, Dongcheng District, Beijing Tel: +86-10-85230010 Fax: +86-10-85230079 E-mail: [emailprotected]

Other Information This annual report is available in both the Chinese and English languages. To obtain copies of the annual report prepared in accordance with the international accounting standards, please write to Computershare Hong Kong Investor Services Limited, the Bank’s H-share Registrar. For copies of the annual report prepared in accordance with the PRC accounting standards, please visit places of business of the Bank. This annual report is also available (in both the Chinese and English languages) on the following websites: bank.ecitic.com, www.sse.com.cn, www.hkexnews.hk. Should you have any queries about how to obtain copies of this annual report or how to access the annual report on the Bank’s website, please call the Bank’s hotline at +86-10-85230010.

282

Administration Department

Anti-money Laundering Leading Group

Centralized Procurement Center

Inquiry Working Committee Department for Disciplinary Inspection and Supervision

Procurement Committee

Operation Management Department Information Technology Management Department

E-banking Department

Nomination and Remuneration Committee

Shareholder’s General Meeting

Financial Market Business Committee

Wealth Management Department Asset Custody Department

Marketing Committee

Commercial Draft Center

Risk Management Committee

Credit Approval Committee

Interbank Business Department Financial Markets Department

Non-performing Assets Disposal Committee Credit Card Center Small Enterprise & Consumer Finance Department

Product Innovation Committee

Institutional Banking Department Group Customers Department

Asset and Liability Committee

Investment Banking Department

Support Committee

Retail Business Committee

Wholesale Business Committee

International Business Department

(or Quasi Tier-one) Departments

Corporate Banking Department Audit Department Compliance Department Law and Preservation Department Credit Business Management Department

Credit Approval Department

Risk and Internal Control Committee Risk Management Department Asset and Liability Department Finance and Accounting Department Human Resources Department

Note:

Senior Management Strategic Development Committee

Board O

Board of Directors

Corporate Structure

Audit and Related Party Transactions Control Committee

Retail Banking Department

Information Technology Committee

after organizational completion and official operation of the Asset Management Business Center. In March 2016, the Bank’s “Small Enterprise & Consumer Finance Department” was renamed “Consumer Finance Department”.

Capital Construction Department

The corporate structure of the Bank as at the end of the reporting period is illustrated in the above chart. In February 2016, the Bank set up its Asset Management Business Center, and will cancel its Wealth Management Department

CNCB (Shenzhen) Fund CITIC Financial Leasing

CNCB (Beijing) Fund

Lin’an CITIC Rural Bank

CNCB (Hong Kong) Capital CNCB Investment

CIAM CIFH

Units Directly under

Supervision Committee

CNCBI

Sub-Branches

Tier-two Branches Nomination Committee

Tier-one Branches

Board O

Board of Supervisors

Integrated Procurement Center Administration Management Department

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283

List of Domestic and Overseas Affiliates As at the end of the reporting period, the Bank had 1,353 outlets in 128 large and medium-sized cities in China, consisting of 38 tier-one branches (directly managed by the Head Office), 88 tier-two branches, 8 out-of-town sub-branches, and 1,219 other business outlets. CITIC Bank International (CNCBI), an affiliate of the Bank, had 41 outlets in Hong Kong, Macao, New York, Los Angeles, Singapore and mainland China.

Head Office

Region Province Bohai Beijing Rim

284

Address: No.9 Chaoyangmen Beidajie, Dongcheng District, Beijing Postal Code: 100010 Website: bank.ecitic.com Tier-one Branches Number Name of branch of outlets Address/Postal Code Beijing branch

Tel: 4006800000 Fax: 010-85230002/3 Hotline: 95558 Tier-two branches (out-of-town sub-branches) Telephone/Fax

Address: Tower A, Investment Plaza, No. 27, Financial Street, Xicheng District, Beijing Postal Code:100033 Address: F/3-8 Tianjin Global Financial Center, No. 2, North Dagu Road, Heping District, Tianjin Postal Code: 300020

010-66211769 010-66211770

0311-87033788 0311-87884483

Tianjin

Tianjin Branch 32

022-23028888 022-23028800

Hebei

Shijiazhuang Branch

Address: CITIC Tower, No. 10, Ziqiang Road, Shijiazhuang, Hebei Province Postal Code: 050000

Shandong

Jinan Branch

Address: CITIC Plaza, No. 150, Leyuan 0531-86911315 Street, Jinan, Shandong Province 0531-86929194 Postal Code: 250011

Name of branch Address/Postcode

Telephone/Fax —

Binhai New Area Address: No.16, Third Avenue, 022-25206823 Branch Tianjin Economic 022-25206631 Development Zone Postal Code: 300457 Tianjin Pilot Free Address: 102-202, No. 2 Building, Financial 022-24895003 Trade Zone Center, No. 158, Xisandao, 022-84908313 Branch Airport Logistic Industry Area, Tianjin Tangshan Branch Address: No. 46, Xinhua West Road, 0315-3738508 Tangshan, Hebei Province 0315-3738522 Postal Code: 063000 Baoding Branch Address: No.178, Middle Swan Road, 0312-2081598 Baoding City, Hebei Province 0312-2081510 Postal Code: 071000 Handan Branch Address: Jinlin Building, No. 408 0310-7059688 Renmin Road, Congtai District, 0310-2076050 Handan, Hebei Province Postal Code: 056002 Cangzhou Branch Address: Yihe Mansion, intersection of 0317-5588001 West Jiefang Road and Jing’er 0317-5588018 Avenue, Canal District, Cangzhou City, Hebei Province Postal Code: 061001 Chengde Address: No.107 Fuhua New World Plaza, 0314-2268838 Branch Xinhua Road, Shuangqiao District, 0314-2268839 Chengde City, Hebei Province Postal Code: 067000 Zibo Branch Address: CITIC Mansion, No. 230 0533-2210138 Liuquan Road, Zhangdian District, 0533-2210138 Zibo, Shandong Province Postal Code: 255000 Jining Branch Address: No. 28, Gongxiao Road, 0537-2338888 Jining, Shandong Province 0537-2338888 Postal Code: 272000 Dongying Branch Address: No. 128, Fuqian Avenue, 0546-7922255 Dongcheng, Dongying, 0546-8198666 Shandong Province Postal Code: 257091 Linyi Branch Address: No.138 Linyi Road, 0539-8722768 Linyi Economic Development 0539-8722768 Zone, Shandong Province Postal Code: 276034

List of Domestic and Overseas Affiliates

Tier-one Branches Region Province

Tier-two branches (out-of-town sub-branches)

Number Name of branch of outlets Address/Postal Code Telephone/Fax Name of branch Qingdao Branch 59 Address: No. 22, Mid Hong Kong Road, 0532-85022889 Weihai Branch Qingdao, Shandong Province 0532-85022888 Postal Code: 266071 Yantai Branch

Weifang Branch

Rizhao Branch

Liaoning

Dalian Branch

Address: No. 29, Renmin Road, Zhongshan District, Dalian City, Liaoning Province Postal Code: 116001

0411-82821868 Branch of Dalian 0411-82815834 Economic Development Zone Anshan Branch

Yingkou Branch

Yangtze Shanghai River Delta

Jiangsu

Shanghai Branch 50

Nanjing Branch 86

Address: Aurora Plaza, No. 99. Fucheng Road, Pudong New District, Shanghai Postal Code: 200120

021-58771111 021-58776606

Address: No. 348, Zhongshan Road, Nanjing, Jiangsu Province Postal Code: 210008

025-83799181 025-83799000

Shanghai Pudong Branch Shanghai Pilot Free Trade Zone Branch Wuxi Branch Changzhou Branch Yangzhou Branch Taizhou Branch Nantong Branch

Zhenjiang Branch

Yancheng Branch Suzhou Branch 28

Address: No. 258, Zhuhui Road, Suzhou, Jiangsu Province Postal Code: 215006

0512-65190307 0512-65198570

Address/Postcode Address: No. 2, North Qingdao Road, Weihai, Shandong Province Postal Code: 264200 Address: 77 Changjiang Road, Economic and Technological Development Area, Yantai City, Shandong Province Postal Code: 264006 Address: No. 246 East Shengli Street, Kuiwen District, Weifang, Shandong Province Postal Code: 261041 Address: 66 Qinhuangdao Road, Economic Development Area, Rizhao City, Shandong Province Postal Code: 276800 Address: No.223 Jinma Road, Dalian Economic Development Zone, Liaoning Province Postal Code: 116600 Address: No.35 Wuyi Road, Tiedong District, Anshan City, Liaoning Province Postal Code: 114000 Address: No.8 Yinggang Road, Bayu Quan, Yingkou City, Liaoning Province Postal Code: 115007 1/F Tomson Finance Tower, 710 Oriental Road, Shanghai Postal Code:200122 Address: CNCB, No.1 Jilong Road, Waigaoqiao Bonded Area, Shanghai Postal Code: 200131 Address: No. 187, Zhongshan Road, Wuxi, Jiangsu Province Postal Code: 214001 Address: Boai Plaza, No.72, Boai Road, Changzhou, Jiangsu Province Postal Code: 213003 Address: No. 171, Weiyang Road, Yangzhou, Jiangsu Province Postal Code: 225300 Address: No. 15, Gulou Road, Taizhou Postal Code: 225300 Address: Nantong Tower, No. 20, Central Renmin Road, Nantong, Jiangsu Province Postal Code: 226001 Address: Building No. 66, Shenhua Guancheng International, No.8, Tanshan Road, Zhenjiang, Jiangsu Province Postal Code: 212003 Address: No.188, South Yingbin Road, Yancheng, Jiangsu Province Postal Code: 224000 —

Telephone/Fax 0631-5336802 0631-5314076 0535-6611030 0535-6611032

0536-8056002 0536-8056002 0633-7895558 0633-8519177 0411-87625961 0411-87615093 0412-2230815 0412-2230815 0417-8208939 0417-8208989 021-68752833 021-68751178 021-58693053 021-58691213 0510-82707177 0510-82709166 0519-88108833 0519-88107020 0514-87890717 0514-87890531 0523-86399111 0523-86399120 0513-81120909 0513-81120900 0511-89886271 0511-89886200

0515-89089958 0515-89089900

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List of Domestic and Overseas Affiliates

Tier-one Branches Region Province Zhejiang

Tier-two branches (out-of-town sub-branches)

Number Name of branch of outlets Address/Postal Code

Telephone/Fax

Hangzhou Branch

0571-87032888 Jiaxing Branch 0571-87089180

Address: No. 88, Yan’an Road, Hangzhou, Zhejiang Province Postal Code: 310002

Name of branch Address/Postcode

Shaoxing Branch Wenzhou Branch Yiwu Branch Huzhou Branch Taizhou Branch Lishui Branch Zhoushan Branch

Pearl Fujian River Delta and West Strait

Ningbo Branch 27

Address: CITIC Tower, No. 36, 0574-87733226 Zhenming Road, Haishu District, 0574-87733060 Ningbo, Zhejiang Province Postal Code: 315010

Fuzhou Branch 43

Address: Hengli Financial Center, No. 6, Guanfengting Street, Gulou District, Fuzhou, Fujian Province Postal Code: 350001

Xiamen Branch 17

286

Address: CITIC Bank Building (Huijing City), No. 81, West Hubin Road, Xiamen, Fujian Province Postal Code: 361001

Address: No. 639, East Zhongshan Road, Jiaxing, Zhejiang Province Postal Code: 314000 Address: No. 289, West Renmin Road, Shaoxing, Zhejiang Province Postal Code: 312000 Quarter, Nature City Garden Phase II, Shifu Road, Wenzhou Postal Code: 325000 Address: No. 100, Huangyuan Road, Yiwu, Zhejiang Province Postal Code: 322000 Address: No. 318, Huancheng West Road, Huzhou, Zhejiang Province Postal Code: 313000 Address: No. 489, Shifu Avenue, Taizhou, Zhejiang Province Postal Code: 318000 Address: No.1, Zijin Road, Lishui, Zhejiang Province Postal Code: 323000 Address: F/1-5, East Side Building of Zhongchang International Mansion, No.31 Hexing Road, Lincheng, Dinghai District, Zhoushan City, Zhejiang Province Postal Code: 316021 —

0591-87613100 Quanzhou Branch Address: F/1-3, Kaixiang Building, 0591-87537066 No. 336, Fengze Street, Quanzhou, Fujian Province Postal Code: 362000 Putian Branch Address: 1/F & 2/F, Phoenix Building, No. 81, Licheng Avenue, Chengxiang District, Putian, Fujian Province Postal Code: 351100 Zhangzhou Address: 1/F -4/F, Yiqun Building, Branch West Shengli Road, Zhangzhou Postal Code: 363000 Ningde Branch Address: No.70 South Jiaocheng Road, Ningde, Fujian Province Postal Code: 352100 0592-2385088 Longyan Branch Address: F/1-3, No. 153, East Fushan 0592-2389000 International Center, Denggao West Road, Xinluo District, Longyan, Fujian Province Postal Code: 364000

Telephone/Fax 0573-82097693 0573-82093454 0575-85227222 0575-85110428 0577-88858466 0577-88858575 0579-85378838 0579-85378817 0572-2226078 0572-2226001 0576-81889666 0576-88819916 0578-2082977 0578-2082985 0580-8258288 0580-8258655

0595-22148687 0595-22148222 0594-2853280 0594-2853260

0596-2995568 0596-2995207 0593-8991918 0593-8991901 0597-2956510 0597-2956500

List of Domestic and Overseas Affiliates

Tier-one Branches Region Province

Number Name of branch of outlets Address/Postal Code

Guangdong Guangzhou Branch

Hainan

Tier-two branches (out-of-town sub-branches)

Shenzhen Branch

Dongguan Branch

Haikou Branch 7

Telephone/Fax

Address: CITIC Plaza, No. 233, 020-87521188 North Tianhe Road, Guangzhou, 020-87520668 Guangdong Province Postal Code: 510613

Name of branch Address/Postcode

Telephone/Fax

Foshan Branch

0757-83994912 0757-83998273

Address: A Tower, Caifu Plaza, No. 37, Fenjiang South Road, Chancheng District, Foshan, Guangdong Province Postal Code: 528000 Zhongshan Address: No. 82, Dixing Plaza 2, Branch Zhongshansi Road, Zhongshan, Guangdong Province Postal Code: 528400 Jiangmen Branch Address: CNCB Tower, No. 131, Yingbin Avenue, Jiangmen, Guangdong Province Postal Code: 529000 Huizhou Branch Address: 1/F & 5/F, Dalong Building (Phase II), No. 2 Wenhua 1st Road, Jiangbei, Huizhou, Guangdong Province Postal Code: 516000 Zhuhai Branch Address: No. 1, Guanhaimingju Floor 1&2, Jidajingshan Road, Xiangzhou District, Zhuhai, Guangdong Province Postal Code: 519015 Zhaoqing Branch Address: No.06, 07 & 08, F/1, and C1, C2 and C3, Mall 2, F/3, Integrated Building for Self Use, No. 9 Hengyu Bay, Xinghu Avenue, Zhaoqing City, Guangdong Province Postal Code: 526040 Shantou Branch Address: 102 Glorious Century Plaza, Time Square, Longhu District, Shantou, Guangdong Province Postal Code: 515000 0755-25941266 Shenzhen Qianhai Address: F/1, 2 and 3, Building 11A, Address: Phase II Time Square, No.8 Third Central Road, Shenzhen, 0755-25942028 Branch and F/1, 2 and 3, Building 11B, Guangdong Province 1 Qianwan Road, Qianhai Shenzhen-Hong Kong Postal Code: 518048 Cooperation District, Shenzhen, Guangdong Province Postal Code: 518067 0769-22667888 — Address: Nanfeng Center, No. 106, Hongfu Road, Nancheng District, 0769-22667999 Dongguan, Guangdong Province Postal Code: 523070 Address: F/1-3, Banshan Hua Yuan, No.1 0898-68578310 Sanya Branch Address: Building G, Juxinyuan, No.180 Phoenix Road, Jiyang District, Middle Jinmao Road, Longhua 0898-68578364 Sanya, Hainan Province District, Haikou, Hainan Province Postal Code: 572000 Postal Code: 570125

0760-88668311 0760-88668383 0750-3939098 0750-3939029 0752-2898862 0752-2898851

0756-3292968 0756-3292956

0758-2312888 0758-2109113

020-89997888 020-89997829 0755-26869310 0755-26867195

0898-88895558 0898-88861755

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List of Domestic and Overseas Affiliates

Tier-one Branches Region Province Central Anhui Region Western Region

Henan

288

Tier-two branches (out-of-town sub-branches)

Number Name of branch of outlets Address/Postal Code Hefei Branch

Zhengzhou Branch

Address: No. 396, Huizhou Avenue, Baohe District, Hefei, Anhui Province Postal Code: 230001

Address: CITIC Mansion, No.1 Business Inner Ring Road, Zhengdong New District, Zhengzhou, Henan Province Postal Code: 450018

Telephone/Fax

Name of branch Address/Postcode

0551-62898328 Wuhu Branch 0551-62896226 Anqing Branch

Address: X1-X4, West Jing Street, No. 8, Jinghu Road, Wuhu Postal Code: 241000

Telephone/Fax 0553-3888685 0553-3888685

Address: No. 1, Zhongxing Road, 0556-5280606 Anqing, Anhui Province 0556-5280605 Postal Code: 246005 Bengbu Branch Address: No. 1859, Caifu Plaza, 0552-2087001 Tushan East Road, Bengbu, 0552-2087001 Anhui Province Postal Code: 233000 Chuzhou Branch Address: No.79 West Langya Road, 0550-3529558 Chuzhou City, Anhui Province 0550-3529559 Postal Code: 239000 Maonshan Branch Address: No.1177 Central Huxi Road, 0555-2773228 Maonshan City, Anhui Province 0555-2773225 Postal Code: 243000 0371-55588888 Luoyang Branch Address: No.405 Middle Zhongzhou Road, 0379-69900958 0371-55588555 West Industrial Area, Luoyang, 0379-69900139 Henan Province Postal Code: 471000 Jiaozuo Branch Address: No. 1736, Tanan Road, 0391-8768282 Jiaozuo, Henan Province 0391-8789969 Postal Code: 454000 Nanyang Branch Address: Intersection of Meixi Road & 0377-61626896 Zhongzhou Road, Nanyang, 0377-61628299 Henan Province Postal Code: 473000 Anyang Branch Address: F/1, Anyang Workers’ Cultural 0372-5998026 Palace, No. 30, Jiefang Avenue, 0372-5998086 Anyang, Henan Province Postal Code: 455000 Pingdingshan Address: F/1-2, Phase II of Pingan Yi Yuan, 0375-2195563 0375-2195519 Branch Middle Miners’ Road, Pingdingshan City, Henan Province Postal Code: 467000 0373-5891022 Xinxiang Branch Address: F/1-2, Xinghairuyi Building, 0373-5891055 intersection of Xinzhong Avenue & East Renmin Road, Xinxiang, Henan Province Postal Code: 453000

List of Domestic and Overseas Affiliates

Tier-one Branches Region Province

Tier-two branches (out-of-town sub-branches)

Number Name of branch of outlets Address/Postal Code

Hubei

Wuhan Branch 43

Hunan

Changsha Branch

Jiangxi

Nanchang Branch

Telephone/Fax

Name of branch Address/Postcode

Telephone/Fax

Address: No. 747, Hankou Construction 027-85355111 Avenue, Wuhan, Hubei Province 027-85355222 Postal Code: 430015

Huangshi Branch Address: F/1-3, No.71 West Hangzhou 0714-6226555 Road, Tuanchengshan, 0714-6226555 Huangshi City, Hubei Province Postal Code: 453000 Xiangyang Branch Address: 1/F, Special No.1 Nanpaopu 0710-3454199 Street, People’s Square, 0710-3454166 Xiangyang City, Hubei Province Postal Code: 441000 Ezhou Branch Address: 1/F, Hongchen Mansion, No. 91 0711-3835776 Gucheng Road, Ezhou District, 0711-3835789 Ezhou, Hubei Province Postal Code: 436000 Yichang Branch Address: No. 2 Meianchangdi Office Wing, 0717-6495558 Floor 1 & 2, Xilinyi Road, 0717-6433698 Xilin District, Yichang, Hubei Province Postal Code: 443000 Shiyan Branch Address: F/1-2, Hua Fu Ming Di Project, 0719-8106678 No.3 Middle Beijing Road, 0719-8106606 Maojian District, Shiyan City, Hubei Province Postal Code: 442000 Address: Beichen Times Square, No.1500 0731-84582008 Zhuzhou Branch Address: Building No.2 Yaohua Jinyuan 0731-22822800 North Xiangjiang Road, 0731-84582008 Mansion, North Yangtze Road, 0731-22822829 Kaifu District, Changsha, Tianyuan District, Zhuzhou, Hunan Province Hunan Province Postal Code: 410000 Postal Code: 412000 Xiangtan Branch Address: No. 19, Middle Furong Road, 0731-52350999 Yuetang District, Xiangtan, 0731-55571058 Hunan Province Postal Code: 412000 0734-8669859 Hengyang Branch Address: No. 38, Jiefangdadao, Huaxin Development Zone, 0734-8669899 Hengyang, Hunan Province Postal Code: 421001 0730-8923077 Yueyang Branch Address: No. 366, Jianxiang Road, Yueyanglou District, Yueyang, 0730-8923078 Hunan Province Postal Code: 414000 0799-6890078 0791-6660107 Pingxiang Branch Address: Yun Yuan Building, No.16, Address: Tower A, No. 16, Hengmao 0791-6660107 East Jianshe Road, Pingxiang, 0799-6890005 Guoji Huacheng, No. 333, South Square Road, Nanchang Jiangxi Province Postal Code: 330003 Postal Code: 337000 0792-8193526 Jiujiang Branch Address: Tower B, Jinxuanyijun Hotel, No. 276, Changhong Avenue, 0792-8193596 Lushan District, Jiujiang City, Jiangxi Province Postal Code: 332000 0797-2136885 Ganzhou Branch Address: B Tower, Caifu Plaza, No.16, Xingguo Road, Zhanggong 0797-2136863 District, Ganzhou, Jiangxi Province Postal Code: 341000

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List of Domestic and Overseas Affiliates

Tier-one Branches Region Province Shanxi

Western Chongqing Region

Tier-two branches (out-of-town sub-branches)

Number Name of branch of outlets Address/Postal Code Taiyuan Branch 25

Chongqing Branch

Guangxi

Nanning Branch 18

Guizhou

Guiyang Branch 14

Inner Hohhot Branch 33 Mongolia

Ningxia

290

Yinchuan Branch

Address: Block A, Princes’ Palace Commercial Building, No. 9, Fuxi Street, Taiyuan, Shanxi Province Postal Code: 030002

Telephone/Fax

Name of branch Address/Postcode

Telephone/Fax

0351-3377040 0351-3377000

Lvliang Branch

0358-8212615 0358-8212630

Address: No. 5 Chengxi Avenue, Jiangbei District, Chongqing Postal Code: 400024 Address: No. 36-1, Shuangyong Road, Nanning, Guangxi Zhuang Autonomous Region Postal Code: 530021

023-63107677 023-63107527

Address: Fuzhong International Plaza, No. 126, Xinhua Road, Guiyang, Guizhou Province Postal Code: 550002 Address: CITIC Building, Jintai Center, Ruyihe Avenue, Ruyi Development Area, Hohhot, Inner Mongolia Autonomous Region Postal Code: 010020

0851-5587009 0851-5587377

Address: No.160 Middle Beijing Road, Yinchuan, Ningxia Hui Autonomous Region Postal Code:750002

0951-7653000 0951-7653000

0771-5569881 0771-5569889

0471-6664933 0471-6664933

Address: No.1, Lijing Road, Lishi District, Lvliang, Shanxi Province Postal Code: 033000 Datong Branch Address: 1/F-3/F, 19-21 Podium Building, Yu Hua Di Jing, Intersection of Yuhe West Road & Pingcheng East Street, Datong, Shanxi Province Postal Code: 037008 Changzhi Branch Address: Office Building, Upper City No.2, Binhe City, No.288 Chengdong Road, Changzhi, Shanxi Province Postal Code: 046000 Linfen Branch Address: F/1-3 Hongjing International Building, West Xiangyang Road, Yaodu District, Shanxi Province Postal Code: 041000

0352-2513779 0352-2513800

0355-8590000 0355-8590956

0357-7188008 0357-7188010

— Liuzhou Branch Address: No. 7, South Side of Guizhong 0772-2083609 Avenue, Liuzhou, Guangxi 0772-2083622 Zhuang Autonomous Region Postal Code: 545006 Qinzhou Branch Address: No. 10, Yongfu West Road, 0777-2366139 Qinzhou, Guangxi 0777-3253388 Postal Code: 535000 Guilin Branch Address: China Software•Modern City 0773-3679878 F/1,3,4, No.28 Wangjiang Road, 0773-3679819 Qixing District, Guilin, Guangxi Postal Code: 541000 Zunyi Branch Address: Tian’an Hotel, Xiamen Road, 0852-8322999 Huichuan District, Zunyi, 0852-8627318 Guizhou Province Postal Code: 563000 Baotou Branch Address: No. 64, Youyi Avenue, Rare-Earth 0472-5338930 Hi-Tech Industrial Development 0472-5338909 Zone, Baotou, Inner Mongolia Autonomous Region Postal Code: 014010 Erdos Branch Address: Anxiajiayuan, Tianjiao Road, 0477-8188031 Dongsheng District, Erdos, 0477-8187016 Inner Mongolia Autonomous Region Postal Code: 017000 Chifeng Address: No. 128, West Hada Street, 0476-8867021 0476-8867022 Hongshan District, Chifeng, Inner Mongolia Autonomous Region Postal Code: 024000 —

List of Domestic and Overseas Affiliates

Tier-one Branches Region Province

Tier-two branches (out-of-town sub-branches)

Number Name of branch of outlets Address/Postal Code

Qinghai

Sining Branch

Shaanxi

Xi’an Branch

Sichuan

Chengdu Branch

Xinjiang

Urumqi Branch 9

Yunnan

Kunming Branch

Gansu

Lanzhou Branch 16

Tibet

Lhasa Branch

Address: No.1 Jiaotong Lane, Xining, Qinghai Province Postal Code:810008 Address: No. 1, Middle Zhuque Road, Xi’an, Shaanxi Province Postal Code: 710061

Telephone/Fax

Name of branch Address/Postcode

0971-8812658 0971-8812616 029-89320050 029-89320054

Address: La Défense Tower, No.1480 028-85258881 Tianfu Avenue, High-Tech Area, 028-85258898 Chengdu, Sichuan Province Postal Code: 610041

Address: CITIC Bank Tower, No.165, North Xinhua Road, Urumqi Postal Code: 830002 Address: Fulin Square, No. 81, Baoshan Street, Kunming, Yunnan Province Postal Code: 650021

0991-2365936 0991-2365888

Address: No. 638, West Donggang Road, Lanzhou, Gansu Province Postal Code: 730000 Address: No. 22 Jiangsu Road, Chengguan District, Lhasa City, Tibet Autonomous Region Postal Code: 850000

0931-8890699 0931-8890699

— Xianyang Branch Address: Lvyuan Building, No.108 Middle 029-33192679 Qinhuang Road, Xianyang, 029-33192691 Shaanxi Province Postal Code: 712000 Baoji Branch Address: No 50, Caifu Plaza B, 0917-3158980 Gaoxindadao, Baoji, 0917-3158809 Shaanxi Province Postal Code: 721013 Weinan Branch Address: Xinda Plaza, Shijimingzhu Plaza, 0913-2089622 Chaoyangdajie, Weinan, 0913-2089606 Shaanxi Province Postal code: 714000 Yulin Branch Address: No.248 Changxing Road, 0912-6662063 Yulin Economic Development 0912-6662052 Zone, Shaanxi Province Postal code: 719000 Yibin Branch Address: No.4 West Guangchang Road, 0831-2106910 Yibin, Sichuan Province 0831-2106915 Postal Code: 644001 Dazhou Branch Address: F/1-5 Building No.8, Tongjin 0818-3395590 International New City, Middle 0818-3395559 Jinlong Avenue, Tongchuan District, Dazhou, Sichuan Province Postal Code: 635000 —

0871-63648555 Qujing Branch 0871-63648667 Dali Branch

0891-6599106 0891-6599103

Telephone/Fax

Jinsui Phase III, No. 310, West Nanning Road, Qilin District, Qujing, Yunnan Province Postal Code: 655000 Address: Mansion of the Disaster Relief Materials Center of the Bureau of Civil Affairs, Wanhua Road, Xiaguan District, Dali, Yunan Province Postal Code: 671000 —

0874-3119086 0874-3118526 0872-3035229 0872-3035228

—

China CITIC Bank Corporation Limited 2015 Annual Report

291

List of Domestic and Overseas Affiliates

Tier-one Branches Region Province

Tier-two branches (out-of-town sub-branches)

Number Name of branch of outlets Address/Postal Code

Northeastern Heilongjiang Harbin Branch 19 Region Jilin

Changchun Branch

Liaoning

Shenyang Branch

Telephone/Fax

Address: No. 233, Hongqi Avenue, Xiangfang District, Harbin, Heilongjiang Province Postal Code: 150090 Address: No. 1177, Changchun Avenue, Changchun, Jilin Province Postal Code: 130041 Address: No. 336, Daxi Road, Shenhe District, Shenyang, Liaoning Province Postal Code: 110014

Name of branch Address/Postcode

Telephone/Fax

0451-55558112 Mudanjiang 0451-53995558 Branch

Address: No. 80 Xisantiao Road, Xi’an District, Mudanjiang City, Heilongjiang Province Postal Code: 157099 0431-81910011 Jilin Branch Address: No. 818 East Jiefang Road, 0431-81910123 Changyi District, Jilin, Jilin Province Postal Code: 132001 024-31510456 Fushun Branch Address: No. 10, Xinhua Avenue, 024-61510234 Shuncheng District, Fushun, Liaoning Province Postal Code: 113006 Huludao Branch Address: No. 50, Xinhua Avenue, Lianshan District, Huludao, Liaoning Province Postal Code: 125001

0453-6313011 0453-6313016 0432-65156111 0432-65156100 024-53886701 024-53886711 0429-2808185 0429-2800885

Subsidiaries and Overseas Representative Office China

HongKong

CIFH

—

Address: Room 2701-9, 27/F, CITIC Tower +852-36073000 CNCBI 1 Tim Mei Avenue, Central, Hong Kong +852-25253303 CIAM

CNCB Investment

Address: 23/F, Bank of America Tower, 12 +852 2843 0280 Harcourt Road, Central,Hong Kong +852 2537 7083

Address: 18/F, Tower C, Fuhua Mansion, 010-65558028 No.8 Chaoyangmen Beidajie, Dongcheng 010-65550809 District, Beijing Address: 20/F, North Tower, Excellence Time Square Phase II, No.8 Central 3 Road, Futian District, Shenzhen, Guangdong Province

0755-8277-4986 0755-83204967

Address: No. 777, Shijing Street, Jincheng 0571-61109006 Gaohong Sub-branch of Address: Building 2-3, 0571-61130886 Road, Lin’an, Zhejiang Province 0571-61106889 Zhejiang Lin’an CITIC Xuexiyuan, Industrial 0571-61130886 Postal Code: 311300 Rural Bank Function Area, Gaohong Town, Lin’an City, Zhejiang Province Postal Code: 11300

China

Zhejiang

Lin’an CITIC Rural Bank

China

Tianjin

CITIC Financial — Leasing Co., Ltd.

Address: 2-310 Kuangshi Guoji Dasha, CBD, Binhai New Area, Tianjin Postal Code: 300450

4006800000 010-85230072

—

London 1 Representative Office

Second Floor, 34 Threadneedle Street, London, EC2R 8AY

+44-28-3824 9269

—

Europe UK

+852 3603 6633 +852 3603 4000

Address: Room 2106, 21/F, Tower 2, Lippo +852-25212353 CNCB (Hong Address: Room 2801, 28/F, Tower 2, Lippo +852-25212353 Centre, No. 89, Queensway, Hong Kong +852-28017399 Kong) Capital Centre, No. 89, Queensway, Hong Kong +852-28017399 Limited CIF Investment Fund Management (Beijing) Co., Ltd. CIF Investment Fund Management (Shenzhen) Co., Ltd.

292

Address: 61-65 Des Voeux Road Central Hong Kong

Important Notice

China CITIC Bank Corporation Limited

China CITIC Bank Corporation Limited (A joint stock limited company incorporated in the People’s Republic of China with limited liability)

2015 Annual Report

Material Risk Reminder

No.9 Chaoyangmen Beidajie, Dongcheng District, Beijing Postal Code : 100010 http://bank.ecitic.com

Stock Code : 0998

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