2016 Introduction to 2016 Annual Results 31 March 2017 Disclaimer - - PowerPoint PPT Presentation

2016年度业绩发布

Introduction to 2016 Annual Results

31 March 2017

Disclaimer

This information was prepared by the China Everbright Bank ("CEB" or the “Bank"), without being independently verified. This document has not expressed

• r implied any representation or warranty, and you shall not rely on any forward-

looking or outlook type of language contained within. The Bank and any of its affiliates, advisors or representatives will not bear any responsibility for any loss caused in any manner as a result of any information expressed or contained within this document.

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Contents

2016 operating performance review

n Rapid increase in assets and liabilities n Business structure further optimized n Steady improvements of profitability n Overall risks kept under control n Capital further replenished n Progress made in IT innovations n Faster channel building onshore and offshore

1 2 2017 outlook

n Opportunities and challenges n Development strategies

3

2

2016 business development

n Rapid corporate banking business growth n Robust retail banking business growth n Steady treasury business growth n Increasing contribution driven by featured businesses n Strengthened brand recognition with increasing market influence

Financial overview

(RMB million) End of 2014 End of 2015 End of 2016

Total assets 2,737,010 3,167,710 4,020,042 Total loans and advances 1,299,455 1,513,543 1,795,278 Total liabilities 2,557,527 2,943,663 3,768,974 Deposits from customers 1,785,337 1,993,843 2,120,887 Equity attributable to equity shareholders of the Bank 178,975 223,493 250,455 Non-performing loan ratio 1.19% 1.61% 1.60% Provision coverage ratio 180.52% 156.39% 152.02% Core tier-1 CAR 9.34% 9.24% 8.21% Tier-1 CAR 9.34% 10.15% 9.34% CAR 11.21% 11.87% 10.80%

(RMB million) 2014 2015 2016

Operating income 78,531 93,159 94,037 Net interest income 58,259 66,459 65,288 Net fee and commission income 19,157 26,301 28,112 Operating profit 38,554 39,358 40,180 Net profit 28,928 29,577 30,388 Net profit attributable to equity shareholders of the Bank 28,883 29,528 30,329 ROAA 1.12% 1.00% 0.85% ROAE 17.36% 15.50% 13.80% Cost/income ratio 29.82% 26.91% 28.77%

Balance sheet summary Income statement summary

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Contents

2016 operating performance review

n Rapid increase in assets and liabilities n Business structure further optimized n Steady improvements of profitability n Overall risks kept under control n Capital further replenished n Progress made in IT innovations n Faster channel building onshore and offshore

1

4

Rapid increase in assets and liabilities

RMB billion

Total loans

17.54% CAGR

RMB billion

Total deposits

8.99% CAGR

RMB billion

Total assets

RMB billion

Total liabilities

21.40% CAGR

+6.37% +28.04% + 1 8 . 6 1 %

5 21.19% CAGR

+26.91%

RMB billion

Balance of core corporate deposits and core deposits from retail customers

14.96% CAGR for balance of core corporate deposits 9.83% CAGR for balance of core deposits from retail customers

+12.70%

Retail loans contribution

Business structure further optimized

Note

• 1. Industries with overcapacity include steel, coal, cement, plate glass, electrolytic aluminum and shipbuilding.
• 2. Customer deposits include corporate and retail customer deposits

Proportion of loans to industries with overcapacity1

6

Daily average balance of demand deposits and customer deposits2

CAGR 15.89% for daily average balance of demand deposit

Overall risks kept under control

Key risk index Risk control measures

The Bank strengthened overall risk management, reinforced internal compliance construction, various risks kept under control in general

– Improved risk management system

• Roles and responsibilities were well defined with enhanced

comprehensive risk management throughout the process and involving all people concerned

• Further enhanced building of three lines of defense
• Business risk management system was adjusted and improved in

respect of the financial market

– Improved credit risk management

• Active efforts were made to promote credit structure adjustments by

making good use of the incremental fund and dormant fund

• Improved the credit review and approval process and promote system
• f specialized credit review staff for corporate customers
• Developed a credit risk alarming system to enhance control over key

links of lending business

• Enhanced asset quality review management to cover the whole cycle

and process of all assets

– Strict liquidity risk and market risk management

• Enhanced pressure testing and application of the results, adjusted and

controlled asset growth in a timely way, dynamically adjusted limitation

• n liquidity risks and strictly controlled liquidity risk in the industry
• Closely followed economic and financial conditions at home and

abroad, changes in policies and market conditions, enhanced analysis, research and pre-judgement, prudently managed market risk

– Enhanced operational and compliance risk management

• During the looking-back stage of the industry’s special inspection

campaign to “strengthen internal management and control, to strengthen the external supervision, to curb illegal operation, to curb crime”, inspection was enhanced over key fields and areas of weakness to facilitate effective rectification

• Sorted out key points for better internal control and management of

community-level network outlets End of 2016 End of 2015 Regulatory requirement Ratio of special- mentioned loans 3.78% 4.39% Non-performing loan ratio 1.60% 1.61% ≤ 5% Provision coverage ratio 152.02% 156.39% ≥150% Liquidity ratio (RMB) 63.18% 54.90% ≥ 25% Liquidity ratio (foreign currency) 78.81% 98.87% ≥ 25% Liquidity coverage ratio 86.56% 84.78% ≥ 80% Loan exposure to single largest customer 2.37% 2.38% ≤ 10% Loan exposure to top ten customers 14.62% 11.86% ≤ 50% Asset quality Liquidity Risk concentration

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Capital further replenished

%

Capital Adequacy Ratio Capital Replenishment Measures Organic capital replenishment – Improve profitability – Stick to development of capital-light businesses External capital replenishment – In August 2016, we completed the second batch preference share offering in an amount of RMB10 billion – In June 2016, the Bank's SGM approved public

• ffering of 30 billion A-share convertible corporate

bonds and the listing proposal – In November 2016, the Bank's EGM approved motion of offering not more than RMB40 billion tier 2 capital bonds – In March 2017, the Bank completed the offer of 28 billion tier 2 capital bonds and 30 billion convertible bonds

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Core tier-1 capital adequacy ratio Tier-1 capital adequacy ratio Capital adequacy ratio

Aggressive IT Innovation

Accelerate technology innovation through adoption of new technology Proactive innovative technology mechanism establishment CBRC IT risk management studies The PBOC Technology Development Award

Completed the establishment of key systems including new generation custody, unified corporate customers quota, mobile payment, internet credit, overseas core, overseas trading funds, phase II asset management system, and RMB cross-border payment Continually facilitated the application of new technologies including cloud computing, big data and block chain Development of intermediate business cloud platform and cash management cloud platform, and construction of large data application and development platform Development of block chain technology-based charitable donation platform Introduction of face recognition, speed of light observation, health insurance mobile payment platform, staff GWC and other innovative projects 10

Faster channel building onshore and offshore

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There are 2 offshore institutions, Hong Kong branch and Seoul branch respectively. Currently, Hong Kong branch, Seoul branch and Everbright International are in

• peration

Accelerated the establishment of

• verseas presence in 2016 with

Europe and Luxembourg branch receiving CBRC’s approval for preparation for construction. Full coverage in domestic China Has set up 1,119 branches in 115 economic center cities across 30 provinces, autonomous regions and municipalities Branch network covers major domestic cities including Beijing, Shanghai, Tianjin, Chongqing, Shijiazhuang, Taiyuan, Hohhot, Dalian, Shenyang, Changchun, Heilongjiang, Nanjing, Suzhou, Wuxi, Hangzhou, Ningbo, Hefei, Fuzhou, Xiamen, Nanchang, Jinan, Qingdao, Yantai, Zhengzhou, Wuhan, Changsha, Guangzhou, Shenzhen, Nanning, Haikou, Chengdu, Kunming, Xi'an, Urumqi, Guiyang, Lanzhou, Yinchuan, Xining, etc Lhasa branch is under preparation Establishment of multiple new branches in 2016 In 2016, 72 branches, including

• ne 1st level branch, eight 2nd

level branches and 63 operation branches, were established In 2016, continued establishment

• f domestic institutions. Xining

level 1 branch received qualification for operation; opening

• f eight level 2 branches in

Baoding, Zhenjiang, Ganzhou, Rizhao, Huanggang, Yiyang, Xiamen area of China (Fujian) Pilot Free Trade Zone and Qianhai Shenzhen of China (Guangdong) Pilot Free Trade Zone; opening of 63 operation branches Accelerate establishment of

• verseas presence

Contents

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2 2016 Business development

n Rapid corporate banking business growth n Robust retail banking business growth n Steady treasury business growth n Increasing contribution driven by featured businesses n Strengthened brand recognition with increasing market influence

Rapid corporate banking business growth

RMB billion

Corporate loan balance1

10 thousand

• No. of small and micro lending clients

CAGR 14.54%

+17.29%

RMB billion

Small and micro lending balance

13

CAGR 17.62%

+18.21%

C A G R 6 8 . 4 %

+44.70%

RMB billion

Corporate deposit balance2

C A G R 1 . 3 %

+7.17%

Note

• 1. Does not include discounted bills

2 Includes corporate deposits in other deposits

77.74% 75.82% 84.87%

Robust retail banking business growth

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Note

• 1. Include retail deposits in other deposits

RMB billion, thousand

Private banking AUM and No. of customers

AUM CAGR 23.73%

• No. of customers CAGR 24.13%

%

% of retail banking revenue to total of the Bank

3 yr average increase of 2.16ppts

1.76ppts

+16.34%

Steady growth of treasury business

RMB billion

Proprietary bond portfolio of the Bank

C A G R 4 . 7 %

RMB trillion

RMB bonds settlement volume

+53.78%

C A G R 3 . 5 %

+5.86%

15

RMB billion

Ending balance of the gold lease

CAGR 120.71%

+ 3 1 . 5 1 %

The size of proprietary bond portfolio has maintained steady

• growth. An optimized structure and safer portfolio were in line

with overall market trends of “prevent risk and deleverage” Interbank trading business maintained good momentum with RMB bonds settlement totaled RMB21.31trillion, representing a three-year CAGR of over 30%; In 2016, income from the trading on behalf of customers continued to increase, precious metal segment maintained a sound growth, and the balance of gold lease surged 301.51%

Strengthen treasury management and enhance efficiency

Increasing contribution driven by featured businesses

Asset management 1 Credit card 2 E-banking 3 4 Asset custody and agency business

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Asset management

1

C A G R 2 6 . 4 9 %

+11.48%

CAGR 49.37%

17

C A G R 3 6 . 1 8 %

+28.25% Further increased the deployment of capital in corporate bonds Developed new structured investment and financing models to achieve optimized investment portfolio mix Launched various measure, together with supply- side reform to reduce excess capacity to support the development of real economy Further optimized WM product lines and expanded the categories of cash management products to support financial inclusion development Enlarged issuance size of floating rate products and enhanced the proportion of net value products Emphasized on the lawful offering of WM products and continued to enhance information disclosure to improve the transparency of WM products Optimized risk control mechanism to improve the specificity and effectiveness of asset management review Adhering to the principle of full coverage and transparency, maintained active management and response Launched online asset management and internal credit risk assessment systems to strengthen business administration tools and maintain our leading position +3.02%

Support the development of real economy Enhanced business management Transformation of WM products

RMB million

Net fee income of wealth management business

RMB trillion

Wealth management product balance Issuance of wealth management products in the whole year

RMB trillion

Credit card

2

Million

Total cards issued

C A G R 2 3 . %

+26.91%

RMB billion

Accumulated transaction volume

• f the year

C A G R 2 6 . 8 4 %

+27.30%

RMB billion

Point overdraft balance

C A G R 2 3 . 8 5 %

+22.41%

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Innovative product system Mobile finance business development Widen the horizon for customer acquisition

Worked with premium corporate partners for innovative, cross-sector integration of credit card products and development of multi-level product system in the “Internet+” scenarios Upgraded the customer version of “ Sunshine Life APP” based on consumption scenarios and insights of customer demand Leveraged 3rd party data and bid data technology to build a precise, three-dimensional marketing system Applied advanced technologies e.g. AI and cloud calculation to build a big data distributed (Hadoop) platform for integrated risk control

Develop risk control platform

“Open Finance”

RMB million

Net revenue of open platfroms1

“Smart Services”

%

Replacement ratio of e-channels

“Mobile First”

Million users

# of mobile banking customers

3 E-banking business

Direct sales platform Sunshine bank: Establish a full-process and internet-enabled financial service system by breaking time, space and bank card restrictions, and introduce 4.6732mm customers, up 749.67% yoy, with customers from other banks accounting for 75.24%

Asset custody and agency business

4

RMB billion

Assets under custody Fee income from agency business

The AUM under custody hit historical high in 2016, up 31.45 yoy and CAGR over the past three years reached 25.02% The bank leads industrial peers in terms of the size of trust assets under custody and the size of funds under custody for insurance debt plan Actively develop businesses like agency insurance and agency trust. In 2016, fee income from agency business achieved fast growth to RMB1,854 million, up 58.60% yoy, with a CAGR of 47.95% over the past three years

CAGR 25.02% 31.45%

2014 2015 2016

20

2014 2015 2016

RMB million 58.60% CAGR 47.95%

Strengthened brand recognition with increasing market influence

Best Comprehensive Wealth Management Capability Award；Best Yield Award；Best Innovation Award； Best Compliance Award；Best Product Transformation Award Best Social Responsibility Practice Case of the Year Award of Innovative e-Bank The Best Public Image Financial Institution The Most Popular Credit Card Brand Innovative Product Award for Commercial Banks Customer Satisfaction Award for Commercial banks Best High-end Customer Marketing Award of the Year by VISA International Card Organization Best Card Issuing Bank of the Year by JCB International Card Organization

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Contents

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2017 Outlook

n Opportunities and challenges n Development strategies

3

Opportunities and challenges in 2017

Opportunities Challenges Deeply push forward the three national strategies New-type urbanization Industrial transformation and upgrading Upgrade of citizens' consumption Thorough integration of finance and technology

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Great uncertainties in global economy growth Interest rate liberalization, and development of internet finance intensifying banking competition The banking industry is still subject to serious risks and continuously tightened regulatory oversight In the digital era, the evolving financial needs from customers raise higher requirements for financial innovation

Development Strategies for 2017

Strengthen capital constrains and improve return on capital to establish a capital-saving bank Speed up asset mix adjustment Speed up revenue structure adjustment Speed up investment banking-oriented transformation of corporate finance Speed up transformation of retail finance and wealth management business Accelerate construction of an intelligent bank Push ahead with smart client services Invest more in technology innovation, continuing to promote BIG-Data technology application

“Well-managed first class joint-stock commercial bank providing prime services with high efficiency and being active in markets with prominent features” Forge ahead comprehensive development Push ahead characterization development Push ahead light development Push ahead smart development

Asset management Credit card E-banking Investment banking Custody 24 Promote internal resource integration for improved internal collaboration Enhance asset business coordiantion to improve the overall efficiency of the bank Work more closely with third party institutions, aiming to become a financial service integrator Speed up construction of the subsidiary platform