Summary of Annual Report 2016 of CHINA BOHAI … of Annual...Summary of Annual Report 2016 of CHINA BOHAI BANK CO., LTD. 1. Important Notice 1.1 The Board of Directors, the Board of

Summary of Annual Report 2016 of CHINA BOHAI BANK CO., LTD.

1. Important Notice

1.1 The Board of Directors, the Board of Supervisors, directors, supervisors and senior

executives of the Bank guarantee that the Annual Report 2016 contains no false records,

misleading statements or material omissions, and agree to be jointly and severally responsible

for the authenticity, accuracy and completeness of the report. The summary is abstracted from

the Annual Report 2016 of the Bank, please refer to the full text of the report for further details.

1.2 The Annual Report 2016 and Summary of the Bank was reviewed and approved at the 10th

Meeting of the Fourth Board of Directors and the 3rd Meeting of the Fourth Board of Supervisors

on 21 March 2017. On the same date, the 41st General Meeting of the Bank considered and

approved the profit distribution plan proposing not paying dividends for 2016 temporarily.

1.3 Mr. Li Fuan, Legal Representative and Chairman of the Bank, Mr. Fu Gang, President of the

Bank, Mr. Wu Siqi, executive in charge of finance and accounting, and Ms. Zhang Hui, Head

of Finance Department guarantee the authenticity, accuracy and completeness of the financial

reports disclosed in the Annual Report 2016.

1.4 The 2016 Financial Statements of the Bank have been audited by KPMG Huazhen LLP in

accordance with the China Standards on Auditing and the International Standards on Auditing

respectively, and standard unqualified auditor's reports have been issued.

1.5 Unless otherwise specified, financial data and indicators in this summary are denominated

in Renminbi (RMB).

01

2. Corporate Information

2.1 Basic information

Legal name and abbreviation in Chinese: 渤海银行股份有限公司（渤海银行）

Legal name and abbreviation in English: CHINA BOHAI BANK CO., LTD. (CBHB)

Legal Representative: Li Fuan

Registered & office address: 218 Haihe East Road, Hedong District, Tianjin, PRC

Postcode: 300012

Unified credit code: 911200007109339563

Website: http://www.cbhb.com.cn

Service hotline: (86) 95541, (86) 400 888 8811

2.2 Contact information

Secretary to the Board of Directors: Zhao Zhihong

Address: 218 Haihe East Road, Hedong District, Tianjin, PRC

Telephone: (86) 22-5855 5765

Fax: (86) 22-5831 6358

Postcode: 300012

2.3 Locations where copies of the annual report are kept

The Board's Office and main outlets of the Bank

Summary of Annual Report 2016 is published on the Bank's website and in the Financial News.

2.4 Accounting firm for the annual audit

Auditor: KPMG Huazhen LLP

Address: 8th Floor, Tower E2, Oriental Plaza, 1 East Chang An Avenue, Dongcheng District,

Beijing 100738, PRC

CPAs signing the auditor's reports: Shi Jian, Jin Naiwen

02

3. Financial Summary

3.1 Major accounting data and financial indicators(Unit: RMB1,000)

Item 2016 2015

(Audited, PRC GAAP)

Increase/ decrease (%)

(Audited, PRC GAAP)

2014 (Audited,

PRC GAAP)Audited

(PRC GAAP)Audited (IFRS)

Operating results:Operating income 21,865,161 21,893,372 18,479,527 18.32 15,572,510

Operating profit 7,971,469 7,997,224 7,129,263 11.81 6,441,774

Net income before tax 7,997,224 7,997,224 7,134,650 12.09 6,481,334

Net profit 6,473,428 6,473,428 5,688,512 13.80 5,031,271

Net profit attributable to shareholders 6,473,428 6,473,428 5,688,512 13.80 5,031,271

Net profit attributable to shareholders after extraordinary items 6,454,112 6,454,112 5,684,472 13.54 5,001,601

Net cash inflow from operating activities -55,802,138 -55,802,138 62,903,794 -188.71 48,856,538

Per share data (in RMB yuan): Basic earnings per share attributable to shareholders 0.47 0.47 0.41 14.63 0.36

Diluted earnings per share attributable to shareholders 0.47 0.47 0.41 14.63 0.36

Basic earnings per share attributable to shareholders after extraordinary items 0.47 0.47 0.41 14.63 0.36

Diluted earnings per share attributable to shareholders after extraordinary items 0.47 0.47 0.41 14.63 0.36

Net cash inflow per share from operating activities -4.03 -4.03 4.54 -188.77 3.53

Financial ratios (%): Return on average total assets attributable to shareholders 0.80 0.80 0.79

Up 0.01 percentage

point 0.81

Fully diluted ROE attributable to shareholders 15.61 15.61 16.00

Down 0.39 percentage

point 17.06

Return on weighted average equity attributable to shareholders 16.77 16.77 17.51


point 18.71

Fully diluted ROE attributable to shareholders after extraordinary items 15.57 15.57 15.99


point 16.96

Return on weighted average equity attributable to shareholders after extraordinary items 16.73 16.73 17.50


point 18.60

03

(Unit: RMB1,000)

Item31 December 2016 31 December

2015 (Audited,

PRC GAAP)

Increase/ decrease (%)

(Audited, PRC GAAP)

31 December 2014

(Audited, PRC GAAP)

Audited (PRC GAAP)

Audited (IFRS)

Scale:Total assets 856,119,678 856,119,678 764,235,440 12.02 667,147,543

Loans and advances 353,681,707 353,681,707 274,576,781 28.81 205,361,253

- Corporate loans 268,267,563 268,267,563 206,458,074 29.94 161,099,934

- Discounted bills 5,757,055 5,757,055 23,594,661 -75.60 12,314,981

- Personal loans 79,657,089 79,657,089 44,524,046 78.91 31,946,338

Allowance for impairment losses on loans 10,838,506 10,838,506 7,617,896 42.28 5,056,691

Total liabilities 814,656,311 814,656,311 728,678,444 11.80 637,651,250

Customer deposits 490,190,821 490,190,821 409,436,008 19.72 374,559,457

- Demand 229,444,563 229,444,563 158,810,643 44.48 138,360,142

- Time 258,331,301 258,331,301 247,455,486 4.40 216,369,508

- Others 2,414,957 2,414,957 3,169,879 -23.82 19,829,807

Placements from banks and other financial institutions 12,243,173 12,243,173 5,918,918 106.85 3,467,643

Equity attributable to shareholders 41,463,367 41,463,367 35,556,996 16.61 29,496,293

Net assets per share attributable to shareholders (in RMB yuan) 2.99 2.99 2.57 16.34 2.13

Total share capital 13,855,000 13,855,000 13,855,000 - 13,855,000

Note: From the reporting period of 2016, the Bank records funds from issuing capital-guaranteed

wealth management products in "Customer deposits" instead of "Other liabilities" according to

the No. 8 Explanation to the Accounting Standards for Business Enterprises promulgated by the

Ministry of Finance. Relevant data of comparative periods have been readjusted accordingly.

3.2 Supplementary financial indicators(In %)

Item 2016 2015 2014Profitability: Net interest spread 1.70 1.89 2.00

Net interest margin 1.87 2.11 2.22

Cost-to-income ratio 34.61 33.07 34.89

Item 31 December 2016 31 December 2015 31 December 2014Asset quality:Nonperforming loan ratio 1.69 1.35 1.20

Reserve coverage ratio 181.59 205.17 204.39

Loan loss reserve ratio 3.06 2.77 2.46

Capital adequacy: Capital adequacy ratio 11.44 11.61 11.09

Tier 1 capital adequacy ratio 7.89 7.75 8.64

Core tier 1 capital adequacy ratio 7.89 7.75 8.64

Leverage ratio 4.15 3.89 3.69

04

Item 31 December 2016 31 December 2015 31 December 2014Other indicators: Liquidity ratio RMB 45.92 49.41 39.94

Foreign currencies equivalent to RMB 53.37 116.96 427.04

RMB and foreign currencies 46.00 49.91 42.20

Percentage of loans to the largest borrower 7.25 7.74 5.74

Percentage of loans to top 10 borrowers 44.20 45.07 43.26

Percentage of interbank borrowing and lending (RMB)

Percentage of interbank borrowing 0.15 0.01 0.10

Percentage of interbank lending 0.14 0.48 1.11

Note: 1. Capital adequacy ratios are calculated according to the Capital Rules for Commercial Banks (Provisional) of CBRC.

2. Leverage ratio is calculated according to the Capital Rules for Commercial Banks (Provisional) and the Leverage Ratio Rules for Commercial Banks (Revised) issued by CBRC as well as the

PRC GAAP.

3. Based on the Capital Rules for Commercial Banks (Provisional) , net capital of the Bank was

RMB60,026 million as at the end of 2016.

4. "Percentage of loans to the largest borrower" and "percentage of loans to top 10 borrowers"

are proportions of the respective loan amount to net capital.

3.3 Extraordinary items and corresponding amount (Unit: RMB1,000)

Extraordinary item 2016 2015 2014

Non-operating income 28,211 13,490 53,168

Non-operating expenses 2,456 8,103 13,608

Net non-operating income 25,755 5,387 39,560

Less: Income tax on extraordinary items 6,439 1,347 9,890

Total 19,316 4,040 29,670

3.4 Differences in financial accounting pursuant to the PRC GAAP and the IFRS

There is no difference in the net profit for 2016 and the net assets as of 31 December 2016 presented

in the financial statements of the Bank prepared pursuant to the PRC GAAP and the IFRS.

05

(In %)

4. Changes in Share Capital and Particulars of Shareholders

4.1 Number of shareholders and particulars of shareholding

As at the end of 2016, the Bank had seven shareholders. Changes in their shareholdings in 2016 are

as follows.

Shareholder 31 December 2015 +/- shares

in 2016 31 December 2016

In shares In % In shares In %

Tianjin TEDA Investment Holding Co., Ltd. 2,125,000,000 25.00 - 2,125,000,000 25.00

Standard Chartered Bank (Hong Kong) Limited 1,699,150,000 19.99 - 1,699,150,000 19.99

China Ocean Shipping (Group) Company 1,161,950,000 13.67 -1,161,950,000 - -

China Shipping Investment Co., Ltd. - - +1,161,950,000 1,161,950,000 13.67

State Development & Investment Corporation 991,950,000 11.67 - 991,950,000 11.67

China Baowu Steel Group Corporation Limited 991,950,000 11.67 - 991,950,000 11.67

Tianjin Trust Co., Ltd. 850,000,000 10.00 - 850,000,000 10.00

Tianjin Shanghui Investment (Holdings) Co., LTD. 680,000,000 8.00 - 680,000,000 8.00

Total 8,500,000,000 100.00 - 8,500,000,000 100.00

Note: 1. On 30 December 2016, CBRC permitted China Shipping Investment Co., Ltd. to be the transferee of the 1,161,950,000 shares in the Bank held by China Ocean Shipping (Group) Company in the Reply to Share Transfer of CHINA BOHAI BANK CO., LTD . (Y.J.F.[2016]No.462). On the same day, China Shipping Investment Co., Ltd. sent the Bank the Letter on Receiving the 13.67% Shares of China Bohai Bank . Subsequent to this transfer, China Shipping Investment Co., Ltd. holds 1,161,950,000 shares (13.67% share capital) of the Bank. This equity transfer is subject to a change of registration with the industrial and commercial administration.

2. On 1 December 2016, China Baowu Steel Group Corporation Limited sent the Bank a Letter in Respect of the Change of Company Name and Legal Representative , stating that upon the approval of the Shanghai Administration for Industry & Commerce, Baosteel Group Corporation has been renamed "China Baowu Steel Group Corporation Limited" as of 17 November 2016, and the business entity and its legal relations remain unchanged.

3. Tianjin Trust Co., Ltd. invests in the Bank with collective trust funds.

4. The Bank launched its second capital increase in 2011. Except that RMB595 million subscribed for by Tianjin Trust Co., Ltd. will be paid upon satisfaction of regulatory requirements on capital increase, subscriptions by the other shareholders were paid in within 2011. As at the end of 2016, shares subscribed for amounted to RMB14,450 million and the paid-in amount was RMB13,855 million. The completion of this capital increase is subject to the approval of CBRC and the registration change thereafter. Consequently, the registered capital of the Bank was still RMB8,500 million as at the end of 2016.

06

4.2 Changes in shares

There was no change in shares of the Bank in 2016, detailed as follows.

31 December 2015 +/- shares in 2016 31 December 2016

In shares In % New shares Others Subtotal In shares In %

State-owned shares - - - - - - -

Shares held by state-owned legal persons 5,270,850,000 62.01 - - - 5,270,850,000 62.01

Shares held by other domestic investors 1,530,000,000 18.00 - - - 1,530,000,000 18.00

Shares held by foreign investors 1,699,150,000 19.99 - - - 1,699,150,000 19.99

Total 8,500,000,000 100.00 - - - 8,500,000,000 100.00

Note: "Shares held by other domestic investors" include shares held by Tianjin Trust Co., Ltd. (investing

with collective trust funds) and Tianjin Shanghui Investment (Holdings) Co., LTD.

4.3 Association between shareholders as well as share transfer, share pledge, custody of shares and locked-up shares

In 2016, there was no association between the seven shareholders of the Bank. Neither were any of

their shares in the Bank pledged, locked up or under custody. Except for the transfer of 1,161,950,000

shares from China Ocean Shipping (Group) Company to China Shipping Investment Co., Ltd., there

was no share transfer by shareholders in 2016.

4.4 Controlling shareholder, de facto controller and employee share

In 2016, the Bank had no controlling shareholder, de facto controller or employee share.

07

5. Directors, Supervisors and Senior Executives

5.1 Basic information of directors, supervisors and senior executives in 2016

Name Title Gender Year of birth Term of office

Li Fuan Director Representing Shareholder, Chairman

Male Dec. 1962 18/06/2015-28/04/2019

Fung, Joi Lun Alan Director Representing Shareholder,

Vice Chairman

Male Apr. 1948 16/08/2010-28/04/2019

Zhang Bingjun Director Representing Shareholder

Male Aug. 1963 05/02/2013-28/04/2019

Shen Xiaolin Director Representing Shareholder

Male Jul. 1967 21/03/2012-28/04/2019

Wan Min Director Representing Shareholder

Male Jun. 1968 02/02/2016-28/04/2019

Ye Baishou Director Representing Shareholder

Male Jun. 1962 23/04/2014-28/04/2019

Wang Chengran Director Representing Shareholder

Male Apr. 1959 06/01/2010-28/04/2019

Zhang Yunji Director Representing Shareholder

Male Aug. 1954 06/02/2009-28/04/2019

Fu Gang Executive Director

President

Male Mar. 1959 09/04/2015-28/04/2019

13/02/2015-28/04/2019

Li Yi Executive Director

Vice President

Chief Risk Officer

Male Dec. 1967 29/04/2016-28/04/2019

16/12/2009-28/04/2019

05/08/2009-28/04/2019

Wang Jinhong Executive Director

Vice President

Male Dec. 1971 29/04/2016-28/04/2019

27/02/2014-28/04/2019

Zhang Junxi Independent Director Male Aug. 1963 05/02/2013-28/04/2019

Li Xiwen Independent Director Male Aug. 1948 29/04/2016-28/04/2019

Mao Zhenhua Independent Director Male Jan. 1964 29/04/2016-28/04/2019

Chi Guotai Independent Director Male Jul. 1955 29/04/2016-28/04/2019

Yuan Fuhua Employee Supervisor, Chairman of the Board

of Supervisors

Male Jan. 1961 23/12/2016-28/04/2019

Bai Jie Supervisor Representing Shareholder

Female Mar. 1978 05/09/2014-28/04/2019

Qi Ershi External Supervisor Male Feb. 1953 29/04/2016-28/04/2019

Diao Qinyi External Supervisor Male Mar. 1955 29/04/2016-28/04/2019

Wang Wei Employee Supervisor Female Jul. 1970 29/04/2016-28/04/2019

Feng Jiankuan Secretary of Discipline Inspection Commission

Male Nov. 1960 Since 21 May 2015

08

Name Title Gender Year of birth Term of office

Wu Siqi Vice President Male Feb. 1965 02/02/2016-28/04/2019

Zhao Zhihong Secretary to the Board of Directors

Male Jan. 1966 29/04/2016-28/04/2019

Li Yunpeng Director Representing Shareholder

Male Jan. 1959 27/02/2014-02/02/2016

Zhu Yuanliang Independent Director Male Jan. 1945 06/02/2009-29/04/2016

Nan Jingming Independent Director Male Feb. 1951 05/02/2013-29/04/2016

Zhang Jiaxing External Supervisor Male Sep. 1952 29/07/2009-29/04/2016

Han Ping External Supervisor Female Jan. 1950 05/02/2013-29/04/2016

Chang Guangwei Employee Supervisor Male Aug. 1971 05/02/2013-29/04/2016

Sun Liguo Employee Supervisor, Chairman of the Board

of Supervisors

Vice President

Secretary to the Board of Directors

Male Dec. 1963 18/06/2015-23/12/2016

16/12/2009-18/06/2015

22/12/2005-18/06/2015

Note: On 4 September 2014, the 5th Meeting of the Third Board of Supervisors of the Bank reviewed

and approved Zhang Jiaxing's resignation as external supervisor due to personal reasons. On

5 September 2014, the 26th General Meeting listened to the report of the Board of Supervisors

on approving Mr. Zhang's resignation. On the same day, the meeting also reviewed and

approved Zhu Yuanliang's resignation as independent director because of his age and Han

Ping's resignation as external supervisor due to personal reasons. On 18 June 2015, the

31st General Meeting reviewed and approved Nan Jingming's resignation from the post of

independent director due to his physical condition. According to the Articles of Association ,

the resignation letter of an independent director/external supervisor may not take effect until a

replacement fills the vacancy.

5.2 Remuneration of directors, supervisors and senior executives

The Bank keeps improving remuneration management and performance evaluation of directors,

supervisors and senior executives under the guidance of the central and local governments.

Remuneration policies of the Bank are submitted for consideration by the Nomination &

Remuneration Committee of the Board of Directors. In 2016, directors, supervisors and senior

executives received a total pre-tax remuneration of RMB2,907.3 thousand from the Bank. The total

remuneration of the Chairman of the Board of Directors, the President, the Chairman of the Board

of Supervisors and other senior executives for 2016 is subject to the approval of competent authority

and will be disclosed when determined. The total pre-tax appraisal-based remuneration of the

Chairman of the Board of Directors, the President, the Chairman of the Board of Supervisors and

other senior executives for 2015 approved by competent authority is RMB3,157.6 thousand (excluding

benefits).

09

10

6. Report of the Board of Directors

6.1 Discussion and analysis of business performance

6.1.1 Business performance

Businesses enjoyed sound development. As at the end of 2016, total assets of the Bank stood at

RMB856,120 million, an increase of 12.02% over the year beginning, of which total loans (including

discounted bills) recorded RMB353,682 million, a rise of 28.81%, investments and other financial

assets registered RMB389,667 million, up 2.19%. Total liabilities were RMB814,656 million, a rise of

11.80% over the year beginning, of which total deposits (excluding due to banks) increased 19.72%

to RMB490,191 million and due to banks and other financial institutions decreased 27.36% to

RMB175,208 million.

Profitability increased remarkably. In 2016, the Bank's operating income increased 18.32% year-on-

year to RMB21,865 million, net fee and commission income rose 72.15% to RMB5,900 million, while

cost-to-income ratio increased 1.54 percentage points to 34.61%. Net profit reached RMB6,473

million, up by 13.80% over 2015.

Asset quality remained stable. As at the end of 2016, the Bank's NPLs stood at RMB5,969 million,

an increase of RMB2,256 million over the year beginning. The NPL ratio stood at 1.69%, a rise

of 0.34 percentage point. Provisions for loan losses were sufficient, as witnessed by an allowance

for impairment losses on loans of RMB10,839 million, up RMB3,221 million, and an allowance

for impairment losses on investment receivables of RMB2,870 million. The Bank secured a loan

loss reserve ratio of 3.06% and a reserve coverage ratio of 181.59%. Asset quality and provisions

maintained at acceptable levels.

Business performance improved steadily. As at the end of 2016, the Bank's net profit grew by 13.80%

year-on-year to RMB6,473 million, demonstrating solid momentum.

6.1.2 Items of income statement

6.1.2.1 Changes in items of income statement

In 2016, the Bank's net income before tax reached RMB7,997 million, an increase of 12.09% over

the previous year, while its net profit stood at RMB6,473 million, an increase of 13.80%. The profit

growth was primarily attributed to the increase of operating income.

In 2016, the Bank reaped an operating income of RMB21,865 million, a year-on-year increase of

18.32%. This was mainly due to the remarkable growth of net fee and commission income.

The table below sets forth the changes in major items of the Bank's income statement for the periods

indicated.

11

(Unit: RMB1,000)

Item 2016 2015 Increase/ decrease (%)

Operating income 21,865,161 18,479,527 18.32 Incl.: Net interest income 15,992,394 15,427,914 3.66

Net fee and commission income 5,900,478 3,427,492 72.15

Investment loss -206,443 -183,376 12.58

Gain/(loss) on changes in fair value 282,075 75,687 272.69

Foreign exchange loss -118,810 -195,815 -39.33

Other operating income/(loss) 15,467 -72,375 121.37

Operating expenses 13,893,692 11,350,264 22.41 Incl.: Tax and surcharges 542,400 1,002,559 -45.90

General and administrative expenses 7,568,451 6,111,967 23.83

Impairment losses on assets 5,693,711 4,192,805 35.80

Other operating expenses 89,130 42,933 107.60

Net non-operating income 25,755 5,387 378.10 Net income before tax 7,997,224 7,134,650 12.09 Less: Income tax expense 1,523,796 1,446,138 5.37

Net profit 6,473,428 5,688,512 13.80

6.1.2.2 Net interest incomeIn 2016, the Bank recorded a net interest income of RMB15,992 million, an increase of 3.66% from the

previous year.

6.1.2.2.1 Interest income

In 2016, the Bank achieved an interest income of RMB38,476 million, down 5.06% from 2015, of which

interest income from loans and advances was RMB15,178 million, up 8.02%; interest income from

financial assets purchased under resale agreements posted RMB759 million, down 70.76%; and interest

income from investment receivables totaled RMB17,846 million, down 9.05%.

The table below sets forth the composition of the Bank's interest income for the periods indicated.

(Unit: RMB1,000)


Interest income from loans and advances 15,178,001 14,051,277 8.02 Incl.: Interest income from corporate loans and advances 11,947,443 10,899,180 9.62

Interest income from personal loans and advances 2,664,609 2,148,642 24.01

Interest income from discounted bills 565,949 1,003,455 -43.60

Interest income from due from banks and other financial institutions 111,899 370,984 -69.84

Interest income from balances with the central bank 1,193,841 1,088,523 9.68

Interest income from placements with banks and other financial institutions 154,921 318,364 -51.34

Interest income from financial assets purchased under resale agreements 759,212 2,596,853 -70.76

Interest income from debt investments 3,232,605 2,477,422 30.48

Interest income from investment receivables 17,845,880 19,622,030 -9.05

Total interest income 38,476,359 40,525,453 -5.06

12

Interest income from loans and advances

In 2016, the Bank achieved an interest income of RMB15,178 million from loans and advances, a

year-on-year increase of 8.02%. The increase was mainly attributed to the greater expansion of the

average balance of loans (including discounted bills) compared with that of the previous year.

The table below sets forth the average balance, interest income and average rate of return of the

Bank's loans and advances for the periods indicated.

(Unit: RMB1,000)

Item2016 2015

Average balance

Interest income

Average rate of return (%)

Average balance

Interest income

Average rate of return (%)

Corporate loans and discounted bills 268,502,116 12,513,392 4.66 211,163,115 11,902,635 5.64

Personal loans 60,155,695 2,664,609 4.43 36,615,256 2,148,642 5.87

Total loans and advances 328,657,811 15,178,001 4.62 247,778,371 14,051,277 5.67

Interest income from balances with the central bank, due from and placements with banks and other financial institutions, and interest income from financial assets purchased under resale agreements

In 2016, the Bank's interest income from balances with the central bank and due from and placements

with banks and other financial institutions totaled RMB1,461 million, a decrease of 17.84% over 2015.

And interest income from financial assets purchased under resale agreements stood at RMB759 million,

down by 70.76%.

Interest income from debt investments and from investment receivables

In 2016, the Bank recorded an interest income of RMB3,233 million from debt investments and an

interest income of RMB17,846 million from investment receivables, representing an increase of 30.48%

and a decrease of 9.05% respectively over the previous year.

6.1.2.2.2 Interest expenses

In 2016, the Bank's interest expenses were RMB22,484 million, a decrease of 10.41% over 2015.

The table below sets forth the composition of the Bank's interest expenses for the periods indicated.

(Unit: RMB1,000)


Interest expenses on due to banks and other financial institutions 8,353,344 12,338,769 -32.30

Interest expenses on placements from banks and other financial institutions 337,550 117,315 187.73

Interest expenses on customer deposits 9,731,243 10,001,173 -2.70

Interest expenses on financial assets sold under repurchase agreements 396,792 433,149 -8.39

Interest expenses on debt securities in issue 3,129,898 1,701,341 83.97

Interest expenses on due to the central bank 535,138 505,792 5.80

Total interest expenses 22,483,965 25,097,539 -10.41

13

Interest expenses on customer deposits

In 2016, the Bank recorded interest expenses on customer deposits of RMB9,731 million, down 2.70%.

The table below sets forth the average balance, interest expenses and average cost ratio of the Bank's

customer deposits for the periods indicated.

(Unit: RMB1,000)

Item2016 2015

Average balance

Interest expenses

Average cost ratio (%)

Average balance

Interest expenses

Average cost ratio (%)

Corporate deposits 440,350,599 9,021,222 2.05 356,357,142 9,016,227 2.53

Incl.: Demand 180,416,946 1,132,812 0.63 128,752,747 1,069,593 0.83

Time 259,933,653 7,888,410 3.03 227,604,395 7,946,634 3.49

Deposits from individuals 27,073,493 590,478 2.18 27,197,806 864,007 3.18

Incl.: Demand 10,843,082 39,285 0.36 7,749,354 31,639 0.41

Time 16,230,411 551,193 3.40 19,448,452 832,368 4.28

Other deposits 3,299,773 119,543 3.62 4,813,534 120,939 2.51

Total customer deposits 470,723,865 9,731,243 2.07 388,368,482 10,001,173 2.58

Interest expenses on due to the central bank, due to and placements from banks and other financial institutions, and interest expenses on financial assets sold under repurchase agreements

In 2016, the Bank's interest expenses on due to the central bank, due to and placements from banks

and other financial institutions declined by 28.82% from last year to RMB9,226 million, and interest

expenses on financial assets sold under repurchase agreements decreased by 8.39% to RMB397 million.

Interest expenses on debt securities in issue

In 2016, the Bank recorded interest expenses of RMB3,130 million on debt securities in issue, an

increase of 83.97% over the previous year.

6.1.2.2.3 Net interest spread and net interest margin

In 2016, the Bank's net interest spread was 1.70%, a decrease of 0.19 percentage point from the

previous year. The net interest margin decreased by 0.24 percentage point to 1.87%.

6.1.2.3 Net fee and commission income

In 2016, the Bank's net fee and commission income increased by 72.15% to RMB5,900 million, mainly

resulting from the remarkable growth in consulting service fee and agency service commission.

14

The table below sets forth the major components of the Bank's net fee and commission income for the

periods indicated.

(Unit: RMB1,000)

Item 2016 2015 Increase/decrease (%)

Fee and commission income 6,053,231 3,594,765 68.39 Incl.: Settlement and clearing fee 346,079 328,151 5.46

Custodian service fee 794,812 794,448 0.05

Agency service commission 1,795,167 954,398 88.09

Consulting service fee 2,662,273 1,188,656 123.97

Credit commitment and asset management fee 381,218 285,014 33.75

Bank card fee 32,983 21,347 54.51

Others 40,699 22,751 78.89

Fee and commission expenses 152,753 167,273 -8.68 Incl.: Settlement expenses 33,334 37,943 -12.15

Consulting service expenses 33,584 25,735 30.50

Agency service expenses 55,644 49,723 11.91

Bank card expenses 20,400 29,806 -31.56

Others 9,791 24,066 -59.32

Net fee and commission income 5,900,478 3,427,492 72.15

6.1.2.4 Investment loss

In 2016, the Bank's investment loss amounted to RMB206 million, up 12.58% from the previous year.

The table below sets forth the major components of the Bank's investment loss for the periods

indicated.

(Unit: RMB1,000)


Derivative financial instruments -137,032 -190,872 -28.21

Available-for-sale investments 18,565 38,720 -52.05

Trading financial assets -85,187 -54,879 55.23

Others -2,789 23,655 -111.79

Total -206,443 -183,376 12.58

6.1.2.5 General and administrative expenses

In 2016, the general and administrative expenses totaled RMB7,568 million, up 23.83% over 2015.

15

The table below sets forth the major components of the Bank's general and administrative expenses

for the periods indicated.

(Unit: RMB1,000)


Staff costs 4,048,812 3,328,663 21.63

Business expenses 2,290,211 1,784,937 28.31

Operating lease expenses 703,238 598,730 17.45

Depreciation and amortization 526,190 399,637 31.67

Total 7,568,451 6,111,967 23.83

6.1.2.6 Impairment losses on assets

The Bank prudently sets aside provisions in strict compliance with regulatory requirements. In

2016, RMB5,694 million was recognized as impairment losses on assets, up by 35.80% over 2015.

Specifically, RMB4,167 million was recognized as impairment losses on loans and advances and

RMB1,527 million as impairment losses on non-credit assets.

6.1.2.7 Income tax expense

In 2016, the Bank's income tax expense was RMB1,524 million, with an effective tax rate of 19.05%,

down by 1.22 percentage points from 2015. The decrease in effective tax rate was primarily attributed

to the increase of non-taxable income such as the interest income from government bonds.

6.1.3 Items of balance sheet

6.1.3.1 Asset items

As at the end of 2016, the Bank's total assets were RMB856,120 million, an increase of 12.02% over

the year beginning. The growth of assets was primarily attributed to the rapid increase of loans and

advances, as well as of cash and balances with the central bank.

6.1.3.1.1 Loans and advances

As at the end of 2016, the Bank's loans and advances (including discounted bills) amounted to

RMB353,682 million, an increase of 28.81% over the year beginning.

The table below sets forth the Bank's loans and advances by product type on the dates indicated.

(Unit: RMB1,000)

Item31 December 2016 31 December 2015 Increase/

decrease (%)Amount Percentage

(%) Amount Percentage (%)

Corporate loans and advances 268,267,563 75.85 206,458,074 75.19 29.94

Discounted bills 5,757,055 1.63 23,594,661 8.59 -75.60

Personal loans and advances 79,657,089 22.52 44,524,046 16.22 78.91

Total loans and advances 353,681,707 100.00 274,576,781 100.00 28.81

16

6.1.3.1.2 Placements with banks and other financial institutions and financial assets purchased under resale agreements

As at the end of 2016, the Bank's placements with banks and other financial institutions totaled

RMB1,826 million, down by 60.90% over the year beginning. To be specific, placements with domestic

non-banking financial institutions increased by 74.90% to RMB1,062 million and placements with

domestic banks decreased by 81.19% to RMB764 million.

The table below sets forth the composition of the Bank's placements with banks and other financial

institutions on the dates indicated.(Unit: RMB1,000)

Item 31 December 2016 31 December 2015 Increase/



Placements with domestic non-banking financial institutions 1,061,866 58.15 607,139 13.00 74.90

Placements with domestic banks 764,258 41.85 4,063,740 87.00 -81.19

Total 1,826,124 100.00 4,670,879 100.00 -60.90 Less: Allowance for impairment

losses - - - - -

Net book value 1,826,124 100.00 4,670,879 100.00 -60.90

As at the end of 2016, the Bank's financial assets purchased under resale agreements totaled RMB1,640

million, down by 90.22% over the year beginning, of which, beneficial interests decreased by 85.53% to

RMB1,640 million.

The table below sets forth the particulars about the Bank's financial assets purchased under resale

agreements on the dates indicated.(Unit: RMB1,000)

Item 31 December 2016 31 December 2015 Increase/



Beneficial interests 1,640,000 100.00 11,337,000 67.61 -85.53

Bonds - - 5,432,000 32.39 -Incl.: Financial bonds - - 4,686,000 27.94 -

Government bonds - - 746,000 4.45 -

Total 1,640,000 100.00 16,769,000 100.00 -90.22Less: Allowance for impairment

losses - - - - -

Net book value 1,640,000 100.00 16,769,000 100.00 -90.22

Note: "Beneficial interests" represent asset management products offered by securities companies and

other institutions, including asset management plans, which contain a provision of forward

commitment for unconditional repurchase by these financial institutions.

17

6.1.3.1.3 Investments and other financial assets

As at the end of 2016, the Bank's investments and other financial assets reached RMB389,667 million,

an increase of 2.19% over the year beginning. Specifically, financial assets at fair value through

profit or loss stood at RMB2,564 million, up by 116.90%, available-for-sale financial assets increased

by 26.42% to RMB38,283 million, held-to-maturity investments were up by 17.55% to RMB66,086

million, and investment receivables down by 3.74% to RMB282,266 million.

The table below sets forth the composition of the Bank's investments and other financial assets on the

dates indicated.

(Unit: RMB1,000)

Item31 December 2016 31 December 2015 Increase/



Financial assets at fair value through profit or loss 2,564,073 0.66 1,182,143 0.31 116.90

Derivative financial assets 418,195 0.11 342,599 0.09 22.07

Available-for-sale financial assets 38,283,122 9.82 30,282,836 7.94 26.42

Held-to-maturity investments 66,085,930 16.96 56,218,193 14.75 17.55

Investment receivables 282,266,052 72.44 293,228,897 76.90 -3.74

Long-term equity investments 50,035 0.01 50,035 0.01 -

Total 389,667,407 100.00 381,304,703 100.00 2.19

6.1.3.1.4 Top 10 government bonds held by the Bank as at the end of 2016

(Unit: RMB1,000)

Bond Amount Rate of return (%) Maturity date

Government Bond A 3,000,000 2.8600 01/06/2021

Government Bond B 2,570,000 3.1400 08/09/2020

Government Bond C 2,530,000 3.1000 28/05/2020

Government Bond D 2,500,000 2.9200 24/09/2018

Government Bond E 2,500,000 2.7300 11/06/2018

Government Bond F 2,500,000 3.2200 26/03/2018

Government Bond G 2,500,000 3.3100 05/02/2020

Government Bond H 2,490,000 2.4400 25/06/2017

Government Bond I 2,370,000 2.5500 28/04/2019

Government Bond J 1,890,000 2.5500 28/01/2019

18

6.1.3.1.5 Top 10 financial bonds held by the Bank as at the end of 2016

(Unit: RMB1,000)

Bond Amount Rate of return (%) Maturity date

Financial Bond A 2,530,000 3.8300 10/03/2018

Financial Bond B 1,650,000 3.5300 08/06/2018

Financial Bond C 1,590,000 3.8100 08/06/2020

Financial Bond D 1,550,000 3.2600 27/08/2018

Financial Bond E 1,550,000 4.1800 03/04/2018

Financial Bond F 1,180,000 2.7900 27/07/2019

Financial Bond G 1,110,000 5.2462 08/04/2017

Financial Bond H 1,070,000 3.1600 30/05/2021

Financial Bond I 1,010,000 4.1000 24/03/2020

Financial Bond J 1,000,000 3.8500 17/02/2021

6.1.3.1.6 Financial derivatives trading

The Bank's financial derivatives trading includes interest rate swaps, forex forwards, forex swaps

and gold swaps. In 2016, the nominal principal of RMB interest rate swaps reported RMB24,728

million and the forex swaps were around USD1,792 million. Given sharp fluctuations in the interest

rate of RMB in the year, the trading scale was put under effective control to avoid interest rate

risk. Besides, the Bank vigorously boosted the growth of financial derivatives trading on behalf of

customers, formed specialized business teams, further regulated pertinent business procedures,

enhanced trainings on derivative knowledge to practitioners at both head office and front-line units,

and intensified marketing and technical support to key customers in a bid to expand business scale.

In addition, to facilitate bank-wide liquidity management, it vigorously leveraged derivative financial

instruments to hedge against risk exposure of transactions and to manage liability structure.

The contractual amount and fair value of outstanding derivative financial instruments held by the

Bank as at the end of 2016 are as follows.

(Unit: RMB1,000)

Item

31 December 2016 31 December 2015

Contractual/ nominal amount

Fair value Contractual/ nominal amount

Fair value

Assets Liabilities Assets Liabilities

Exchange rate derivatives 10,516,195 335,853 (123,175) 13,525,124 244,234 (109,192)

Incl.: Currency swaps 8,674,948 210,397 (4,299) 12,111,110 183,269 (51,197)

Currency forwards 1,841,247 125,456 (118,876) 1,414,014 60,965 (57,995)

Interest rate derivatives 45,492,113 26,885 (65,908) 70,034,940 98,365 (337,433)

Incl.: Interest rate swaps 45,492,113 26,885 (65,908) 70,034,940 98,365 (337,433)

Precious metal derivatives 6,959,003 55,457 (57,788) 476,285 - (7,758)

Incl.: Gold swaps 6,959,003 55,457 (57,788) 476,285 - (7,758)

Total 62,967,311 418,195 (246,871) 84,036,349 342,599 (454,383)

19

6.1.3.1.7 Items related to fair value measurement

In 2016, the Bank prudently calculated the fair value of financial instruments in strict compliance with

relevant provisions and the scope specified in the Accounting Standards for Business Enterprises .

The table below sets forth items related to fair value measurement of the Bank.

(Unit: RMB1,000)

Item31

December 2015

Gain/loss from changes

in fair value in 2016

Cumulative changes in fair

value recognized in equity

Impairment made in

2016

31 December

2016

Financial assets 31,607,578 　74,563 -122,237 - 40,960,765Incl.: 1. Financial assets at fair value

through profit or loss 1,182,143 -1,033 - - 2,564,073

2. Derivative financial assets 342,599 75,596 - - 418,195

3. Available-for-sale financial assets 30,082,836 - -122,237 - 37,978,497

Financial liabilities 454,383 -207,512 - - 246,871Incl.: Derivative financial liabilities 454,383 -207,512 - - 246,871

Note: 1. "Available-for-sale financial assets" does not include equity investments.

2. Changes in the assets and liabilities mentioned above are not necessarily interrelated.

6.1.3.2 Liability items

As at the end of 2016, the Bank's total liabilities reached RMB814,656 million, an increase of 11.80%

over the year beginning. The growth was primarily driven by the increase of debt securities in issue,

placements from banks and other financial institutions and customer deposits.

6.1.3.2.1 Customer deposits

As at the end of 2016, the Bank's customer deposits stood at RMB490,191 million, an increase of

19.72% over the year beginning.

The table below sets forth the Bank's customer deposits by product type and customer type on the dates

indicated.

(Unit: RMB1,000)

Item31 December 2016 31 December 2015

Increase/ decrease (%)Amount Percentage


Corporate deposits 462,175,223 94.28 380,151,156 92.85 21.58

Incl.: Demand 217,560,581 44.38 150,452,139 36.75 44.60

Time 244,614,642 49.90 229,699,017 56.10 6.49

Deposits from individuals 25,600,641 5.23 26,114,973 6.38 -1.97

Incl.: Demand 11,883,982 2.43 8,358,504 2.04 42.18

Time 13,716,659 2.80 17,756,469 4.34 -22.75

Other deposits 2,414,957 0.49 3,169,879 0.77 -23.82

Total 490,190,821 100.00 409,436,008 100.00 19.72

20

The table below sets forth the Bank's customer deposits by currency on the dates indicated.

(Unit: RMB1,000)

Item 31 December 2016 31 December 2015

Increase/ decrease (%)Amount Percentage


RMB 476,488,072 97.20 389,269,958 95.07 22.41

Foreign currencies equivalent to RMB 13,702,749 2.80 20,166,050 4.93 -32.05

Total 490,190,821 100.00 409,436,008 100.00 19.72

The table below sets forth the Bank's customer deposits by residual maturity on the dates indicated.

(Unit: RMB1,000)

Item31 December 2016 31 December 2015

Amount Percentage (%) Amount Percentage (%)

Demand (spot) 225,048,489 45.91 155,117,964 37.88

Less than 1 month 28,172,431 5.75 35,352,948 8.63

1 to 3 months 28,871,714 5.89 46,784,409 11.43

3 months to 1 year 97,878,629 19.97 97,596,509 23.84

1 to 3 years 98,452,635 20.08 52,234,948 12.76

Over 3 years 11,766,923 2.40 22,349,230 5.46

Total 490,190,821 100.00 409,436,008 100.00

6.1.3.2.2 Financial assets sold under repurchase agreements

As at the end of 2016, the Bank's financial assets sold under repurchase agreements totaled RMB8,000

million, up by 651.88% over the year beginning.

The table below sets forth the particulars about the Bank's financial assets sold under repurchase

agreements on the dates indicated.(Unit: RMB1,000)


Increase/ decrease (%) Amount Percentage


Bills 499,577 6.25 1,063,948 100.00 -53.04

Bonds 7,500,000 93.75 - - -

Incl.: Government bonds 7,440,000 93.00 - - -

Financial bonds 60,000 0.75 - - -

Total 7,999,577 100.00 1,063,948 100.00 651.88

6.1.3.3 Shareholders' equity

As at the end of 2016, the Bank's shareholders' equity was RMB41,463 million, up by RMB5,906 million

or 16.61% over the year beginning, which was mainly due to the growth of net profit in 2016.

21

The table below sets forth the composition of the shareholders' equity of the Bank on the dates

indicated.(Unit: RMB1,000)

Item 31 December 2016 31 December 2015 31 December 2014

Share capital 13,855,000 13,855,000 13,855,000

Capital surplus 20,000 20,000 20,000

Other comprehensive income -122,237 444,820 72,629

Surplus reserve 2,792,661 2,145,318 1,576,467

General reserve for risk assets 10,486,754 9,505,261 8,495,738

Retained earnings 14,431,189 9,586,597 5,476,459

Total 41,463,367 35,556,996 29,496,293

6.1.3.4 Off-balance sheet items that might exert material impact on financial position and business performance of the Bank

The table below sets forth the balance of the Bank's major off-balance sheet items as at the end of

2016.

(Unit: RMB1,000)


Bank acceptances 92,997,845 99,529,878

Letters of credit 66,614,270 32,532,966

Letters of guarantee 27,601,086 22,253,948

Credit card overdraft commitments 1,705,667 475,156

Irrevocable loan commitments 16,864,594 11,680,718

Operating lease commitments 4,211,545 4,139,287

Capital commitments 424,271 592,333

6.1.3.5 Market share of major products and services

According to the Summary of Sources & Uses of Credit Funds of December 2016 issued by PBC, the

Bank's market share among 12 national joint-stock commercial banks in Chinese Mainland in terms

of deposits and loans as at the end of 2016 is shown below.

Item Market share (%)

Total deposits 2.10

Incl.: Total savings deposits 0.64

Total loans 1.77

22

6.1.4 Items of cash flow statement

In 2016, the Bank's net cash outflow from operating activities, net cash inflow from investing activities

and net cash inflow from financing activities were RMB55,802 million, RMB10,898 million and

RMB53,202 million respectively. The year-end balance of cash and cash equivalents was RMB34,681

million.

6.1.5 Other financial information

6.1.5.1 Changes in interest receivables on and off the balance sheet and bad debt provisions

6.1.5.1.1 Change in on-balance sheet interest receivables(Unit: RMB1,000)

Item 31 December 2015 Increase Recovery 31 December 2016

On-balance sheet interest receivables 3,998,862 40,301,677 39,766,411 4,534,128

6.1.5.1.2 Change in off-balance sheet interest receivables(Unit: RMB1,000)

Item 31 December 2015 Increase Recovery 31 December 2016

Off-balance sheet interest receivables 430,533 938,394 309,344 1,059,583

6.1.5.1.3 Bad debt provisions

The Bank did not set aside any bad debt provisions for loan interest receivables or other receivables.

The balance of the Bank's bad debt provisions was zero as at the end of 2016.

6.1.5.2 Foreclosed assets

The Bank had no foreclosed assets in 2016.

6.1.5.3 Allowance for impairment losses on assets

In 2016, the Bank set aside allowance for impairment losses on credit and some of its investments.

6.1.5.4 Overdue debts

The Bank had no overdue debts as at the end of 2016.

23

6.1.6 Analysis of capital adequacy ratio (CAR)

The Bank calculates its capital adequacy ratios according to CBRC's Capital Rules for Commercial

Banks (Provisional) and other pertinent regulations. As at the end of 2016, core tier 1 CAR, tier 1 CAR

and CAR of the Bank stood at 7.89%, 7.89% and 11.44% respectively, with core tier 1 CAR and CAR

meeting regulatory requirements and tier 1 CAR meeting regulatory requirements for the transitional

period.

The calculation of capital adequacy ratios covers the Bank and financial institutions directly or

indirectly invested by the Bank as specified in the capital rules. The table below sets forth the items

concerning CAR calculation at all tiers in accordance with the capital rules.

(Unit: RMB1,000)


Core tier 1 capital 41,463,367 35,556,996

Regulatory deductions from core tier 1 capital -80,548 -72,270

Net core tier 1 capital 41,382,819 35,484,726

Other tier 1 capital - -

Net tier 1 capital 41,382,819 35,484,726

Tier 2 capital 18,843,062 17,881,395

Incl.: Recognizable part of tier 2 capital entitled to preferential policy in the transitional period 1,892,449 1,893,052

Regulatory deductions from tier 2 capital -200,000 -200,000

Net capital 60,025,881 53,166,121

Capital adequacy ratio (%) 11.44 11.61

Tier 1 capital adequacy ratio (%) 7.89 7.75

Core tier 1 capital adequacy ratio (%) 7.89 7.75

The table below sets forth the risk-weighted assets measured according to the capital rules. To be

specific, credit risk weighted assets, market risk weighted assets and operational risk weighted assets are

measured by method of weighting, the standard approach and the basic index approach respectively.

(Unit: RMB1,000)


Credit risk weighted assets 487,305,310 425,510,901

Incl.: On-balance sheet credit risk 426,652,276 361,854,087

Off-balance sheet credit risk 60,520,983 63,446,440

Credit risk of counterparties 132,051 210,374

Market risk weighted assets 2,283,462 3,265,767

Operational risk weighted assets 35,184,891 29,351,736

Total 524,773,663 458,128,404

24

The table below sets forth the particulars of the CAR and core CAR of the Bank calculated according

to the Regulation Governing Capital Adequacy Ratio of Commercial Banks .(Unit: RMB1,000)

Item 31 December 2016 31 December 2015 31 December 2014

Core capital 41,251,812 34,929,333 29,411,756Incl.: Share capital 13,855,000 13,855,000 13,855,000

Reserves 27,396,812 21,074,333 15,556,756

Supplementary capital 21,607,062 19,642,031 9,740,513Incl.: General provisions for

impairment losses on loans 7,422,376 5,323,309 3,713,304

Long-term subordinated bonds 13,973,130 13,976,508 5,984,941

Other supplementary capital 211,556 342,214 42,268

Total capital base before deductions 62,858,874 54,571,364 39,152,269Deductions 149,030 149,030 78,643Incl.: Unconsolidated equity

investments 100,000 100,000 50,000

Others 49,030 49,030 28,643

Net capital 62,709,844 54,422,334 39,073,626Net core capital 41,177,297 34,854,818 29,372,435Risk-weighted and market risk assets adjustment 485,090,705 417,438,978 299,488,897Capital adequacy ratio (%) 12.93 13.04 13.05Core capital adequacy ratio (%) 8.49 8.35 9.81

Note: 1. According to the Regulation Governing Capital Adequacy Ratio of Commercial Banks, "reserves"

includes recognizable parts of capital surplus and of retained earnings as well as surplus reserve

and general reserve for risk assets, "unconsolidated equity investments" shall be deducted by

100% and 50% respectively when calculating net capital and net core capital.

2. "Deductions: others" includes gain/loss on trading financial assets, changes in fair value of

available-for-sale financial assets and subordinated bonds issued by other commercial banks.

6.1.7 Leverage ratio

In 2016, the Bank measured the leverage ratio according to the Leverage Ratio Rules for Commercial

Banks (Revised) and other applicable regulations, detailed as follows. (Unit: RMB1,000)

Item 31 December 2016 31 December 2015Tier 1 capital 41,382,819 35,484,726

Deductions from tier 1 capital - -

Total on- and off-balance sheet assets after adjustments 996,465,868 912,296,701Incl.: Total on-balance sheet assets after adjustments 855,828,398 758,968,786

Total off-balance sheet assets after adjustments 140,061,611 147,292,304

Others 575,859 6,035,611

Leverage ratio (%) 4.15 3.89

Note: "Others" include the balances of derivatives and securities margin trading.

25

6.1.8 Loan quality analysis

6.1.8.1 Distribution of loans by five-category classification (Unit: RMB1,000)

Category 31 December 2016 31 December 2015 31 December 2014

Amount Percentage (%) Amount Percentage


Normal 336,567,202 95.16 262,620,593 95.65 198,982,184 96.90

Special-mention 11,145,930 3.15 8,243,178 3.00 3,905,064 1.90

NPLs 5,968,575 1.69 3,713,010 1.35 2,474,005 1.20Incl.: Substandard 4,172,857 1.18 2,655,769 0.97 1,827,342 0.89

Doubtful 1,547,708 0.44 881,495 0.32 265,951 0.13

Loss 248,010 0.07 175,746 0.06 380,712 0.18

Total 353,681,707 100.00 274,576,781 100.00 205,361,253 100.00

Note: The amount of loans above includes the amount of discounted bills.

6.1.8.2 Loan migration(In %)

Item 31 December 2016 31 December 2015 31 December 2014Normal loan migration ratio 2.12 6.66 4.98

Special-mention loan migration ratio 35.14 69.10 77.57

Substandard loan migration ratio 40.56 100.00 77.10

Doubtful loan migration ratio 7.94 73.34 93.27

6.1.8.3 Distribution of loans and NPLs by product type(Unit: RMB1,000)

Category31 December 2016 31 December 2015

Loans Percentage (%) NPLs NPL

ratio (%) Loans Percentage (%) NPLs NPL

ratio (%)Corporate loans 268,267,563 75.85 5,504,473 2.05 206,458,074 75.19 3,358,107 1.63Incl.: Short-term corporate

loans 105,642,117 29.87 4,621,274 4.37 95,870,945 34.92 2,987,724 3.12

Medium and long-term corporate loans 162,625,446 45.98 883,199 0.54 110,587,129 40.27 370,383 0.33

Discounted bills 5,757,055 1.63 - - 23,594,661 8.59 - -Incl.: Bank acceptances 4,805,032 1.36 - - 20,797,631 7.57 - -

Commercial acceptances 952,023 0.27 - - 2,797,030 1.02 - -

Personal loans 79,657,089 22.52 464,102 0.58 44,524,046 16.22 354,903 0.80Incl.: Housing loans 65,458,875 18.51 121,565 0.19 30,967,868 11.28 87,826 0.28

Auto loans 1,415 0.00 671 47.42 6,072 0.00 627 10.33

Business loans 9,968,825 2.82 310,037 3.11 10,088,760 3.67 241,881 2.40

Credit cards 467,382 0.13 594 0.13 16,481 0.01 - -

Others 3,760,592 1.06 31,235 0.83 3,444,865 1.26 24,569 0.71

Total 353,681,707 100.00 5,968,575 1.69 274,576,781 100.00 3,713,010 1.35

Note: The percentage of personal auto loans for 2016 and 2015 is 0.0004% and 0.0022%.

26

6.1.8.4 Distribution of corporate loans and NPLs by industry

(Unit: RMB1,000)




ratio (%)Lease, commerce and business services 62,452,301 17.66 - - 42,175,346 15.36 - -

Real estate 53,358,233 15.09 279,075 0.52 32,120,515 11.70 114,484 0.36

Manufacturing 52,040,007 14.71 3,202,163 6.15 38,830,112 14.14 2,039,539 5.25

Water, environment and public facilities management 30,469,289 8.61 30,000 0.10 20,919,696 7.62 30,000 0.14

Wholesale and retail 22,219,857 6.28 1,399,091 6.30 27,251,785 9.93 843,902 3.10

Construction 15,166,440 4.29 75,996 0.50 11,154,704 4.06 96,000 0.86

Mining 8,927,660 2.52 272,836 3.06 11,188,818 4.07 80,000 0.71

Transportations and communications, storage and post 8,125,918 2.30 43,459 0.53 7,162,416 2.61 40,620 0.57

Production and supply of electricity, gas and water 4,953,542 1.40 111,365 2.25 4,033,572 1.47 85,220 2.11

Information transfer, software and IT services 1,788,436 0.51 - - 1,062,983 0.39 - -

Accommodation and catering 740,196 0.21 16,500 2.23 1,221,754 0.44 - -

Farming, forestry, livestock and fishery 443,130 0.13 54,000 12.19 1,448,542 0.53 28,342 1.96

Resident services and other services 361,393 0.10 - - 244,334 0.09 - -

Others 7,221,161 2.04 19,988 0.28 7,643,497 2.78 - -

Total corporate loans 268,267,563 75.85 5,504,473 2.05 206,458,074 75.19 3,358,107 1.63

Note: "Percentage" means proportion of loans to each industry in total loans of the Bank.

27

6.1.8.5 Distribution of loans and NPLs by geographical area(Unit: RMB1,000)




ratio (%)

Northern and Northeastern China 181,986,024 51.46 2,921,838 1.61 149,438,020 54.42 1,147,741 0.77

Eastern China 86,939,485 24.58 1,332,549 1.53 64,203,065 23.38 1,199,064 1.87

Central and Southern China 66,860,856 18.90 529,953 0.79 48,232,877 17.57 537,552 1.11

Western China 17,895,342 5.06 1,184,235 6.62 12,702,819 4.63 828,653 6.52

Total 353,681,707 100.00 5,968,575 1.69 274,576,781 100.00 3,713,010 1.35

Note: The regions are classified as follows:

Northern and Northeastern China: Beijing, Tianjin, Hebei, Shanxi, Liaoning and Inner Mongolia

Eastern China: Shanghai, Jiangsu, Zhejiang, Shandong and Anhui

Central and Southern China: Hu'nan, Hubei, Guangdong, Fujian and He'nan

Western China: Sichuan and Shaanxi

6.1.8.6 Distribution of loans and NPLs by guarantee type(Unit: RMB1,000)




ratio (%)

Mortgage loans 124,859,115 35.30 2,577,758 2.06 88,061,865 32.07 1,627,126 1.85

Pledged loans 37,902,901 10.72 144,037 0.38 35,783,452 13.03 106,571 0.30

Guaranteed loans 124,796,251 35.28 3,187,283 2.55 77,804,382 28.34 1,918,439 2.47

Unsecured loans 60,366,385 17.07 59,497 0.10 49,332,421 17.97 60,874 0.12

Discounted bills 5,757,055 1.63 - - 23,594,661 8.59 - -

Total 353,681,707 100.00 5,968,575 1.69 274,576,781 100.00 3,713,010 1.35

6.1.8.7 Distribution of loans by overdue period

The overdue loans were RMB11,142.58 million at the year end, up RMB3,532.38 million over the beginning of

2016.

(Unit: RMB1,000)


Loans Percentage (%) Loans Percentage (%)Overdue for less than 3 months 3,826,477 1.08 2,897,019 1.05

Overdue for 3 months to 1 year 3,690,199 1.04 3,711,740 1.35

Overdue for 1 to 3 years 3,531,739 1.00 980,858 0.36

Overdue for more than 3 years 94,167 0.03 20,582 0.01

Total overdue loans 11,142,582 3.15 7,610,199 2.77Total loans 353,681,707 100.00 274,576,781 100.00

28

6.1.8.8 Loans to top 10 borrowers(Unit: RMB1,000)

Borrower Industry31 December 2016

Loans NPLs Proportion in net capital (%)

Proportion in total loans (%)

Customer A Real estate 4,349,809 - 7.25 1.23

Customer B Lease, commerce and business services

3,300,000 - 5.50 0.93

Customer C Real estate 3,150,000 - 5.25 0.89

Customer D Manufacturing 2,802,000 - 4.67 0.79

Customer E Manufacturing 2,581,272 - 4.30 0.73

Customer F Lease, commerce and business services

2,170,000 - 3.61 0.61

Customer G Transportations and communications, storage and post

2,119,500 - 3.53 0.60

Customer H Manufacturing 2,056,549 - 3.43 0.58

Customer I Water, environment and public facilities management

2,000,000 - 3.33 0.57

Customer J Lease, commerce and business services

2,000,000 - 3.33 0.57

Total - 26,529,130 - 44.20 7.50

6.1.8.9 Restructured loans

Restructured loans are loans rescheduled to accommodate borrowers' deteriorating financial position or inability to repay loans. As at the end of 2016, balance of restructured loans totaled RMB354,435.1 thousand, up 341.83%.

6.1.8.10 Discount loans

Discount loans refer to the loan arrangements for which the borrower only need to repay the principal and a small proportion of the interest or no interest while the rest or the whole of the interest is paid by government agencies or other organizations. As at the end of 2016, the Bank's balance of discount loans was zero.

6.1.8.11 Risk management of credit to group companies

The Bank attached great importance to and kept enhancing capabilities for risk management of credit to group companies. In 2016, it developed the "Information System for Managing Group Customer Relations" (phase I), which brought customer relation management of group companies online. The Bank improved risk identification and control in the investigation, review and approval of credit, avoided uncertainties incurred from complex equity structure and diversified operations. It strictly reviewed the authenticity of borrowing background and the credibility of payment source to prevent enterprises from whitewashing financial statements or transferring funds through illegal related party transactions. It made better judgment on development prospect of group companies, extended credit to core companies and businesses of such groups, and prevented embezzlement, long-term utilization of short-term loans and credit repurposed for other projects or operations. In addition, the Bank made in-depth analysis of each group company on its scale, growth potential, risk tolerance and credit from other banks, rationally decided every credit line based on the capital position and risk tolerance of the Bank, to avoid risks arising from over-concentration of credit. It established an early warning mechanism for collecting and analyzing customer information to issue alerts and take countermeasures in a timely manner.

29

6.1.8.12 Allowance for impairment losses on loans

The Bank sets aside allowance for impairment losses on loans by individual assessment and collective

assessment.

Individual assessment is conducted on large-value credit with evidence that impairment has been

incurred. The Bank identifies individual impairment losses through risk classification, early warning

and other systems and procedures. To determine the exact amount of allowance, the Bank assesses

the losses on each loan for which allowance is required on the balance sheet date. In the assessment,

the Bank estimates the recoverable cash flow based on the borrower's financial condition, disposal

of collaterals, compensations by warrantor or other parties. Meanwhile, the Bank discounts the

recoverable amount to present value and sets the difference between the book value and the estimated

present value as the allowance for impairment losses on the very loan.

For small-value credit or credit with no evidence of impairment, the Bank conducts collective

assessment to determine the allowance. An elementary instrument for collective assessment is the

Expected Loss Model, which groups credit by industry, product and risk level and sets essential

adjustment parameters in light of macroeconomic situations, changes in state policies and credit risk

management needs of the Bank in the year.

(Unit: RMB1,000)

Item 2016 2015 2014

Balance at the year beginning 7,617,896 5,056,691 3,706,275

Accrued in the year 4,166,774 3,404,874 2,099,479

Transferred back in the year (1,031,959) (850,517) (699,489)

Written-off in the year - - (51,011)

Recovery of the transferred or written-off loans 47,950 - 763

Movement due to exchange rate fluctuations 37,845 6,848 674

Balance at the year end 10,838,506 7,617,896 5,056,691

Allowance for impairment losses on loans 2016 2015 2014

Individual assessment 2,234,269 1,454,467 1,226,070Incl.: Corporate loans 2,217,158 1,442,368 1,218,123

Personal loans 17,111 12,099 7,947

Collective assessment 8,604,237 6,163,429 3,830,621Incl.: Corporate loans 7,012,396 5,238,411 3,173,021

Personal loans 1,591,841 925,018 657,600

Total 10,838,506 7,617,896 5,056,691

6.2 Equity investmentAs at the end of 2016, the Bank had shareholding in China UnionPay Co., Ltd., Nanyang Country

Bank Co., Ltd. and Hawtai Auto Finance Co., Ltd., with an equity investment totaling RMB250 million.

6.2.1 Use of raised capital

The Bank did not use any raised capital for equity investment in 2016.

30

6.2.2 Use of non-raised capital

The Bank did not use any non-raised capital for equity investment in 2016.

6.2.3 Shareholding in listed companies and financial institutions

6.2.3.1 Shareholding in listed companies

The Bank did not hold any shares in listed companies in 2016.

6.2.3.2 Shareholding in financial institutions(Unit: RMB1,000)

Company Initial investment

Shareholding at thebeginning of 2016

Shareholding at the end of 2016

Book value at the end of 2016

Gain/ loss in

2016

Change in owner's

equity in 2016

Accounting item

Source of shareholdingIn 10,000

shares In % In 10,000 shares In %

China UnionPay Co., Ltd.

150,000 6,000 2.05 6,000 2.05 150,000 3,900 - Available- for-sale

equity investment

Investment

Nanyang Country BankCo., Ltd.

50,000 5,000 10.00 5,000 10.00 50,000 5,000 - Available- for-sale

equity investment

Investment

Hawtai Auto Finance Co., Ltd.

50,000 5,000 10.00 5,000 10.00 50,035 - - Long-term equity

investment

Investment

6.3 2016 profit distribution plan

On 21 March 2017, the 41st General Meeting passed a resolution on the appropriation of RMB647,343 thousand,

10% of the after-tax profit RMB6,473,428 thousand on the 2016 Financial Statements (audited under the PRC GAPP)

to the statutory surplus reserve, and the appropriation of RMB981,493 thousand to the general reserve for risk assets.

No discretionary surplus reserve was provided and no dividend was distributed for the time being.

6.4 Cash dividends for the previous three years(Unit: RMB1,000)

Item 2015 2014 2013Cash dividends (pre-tax) - - -

Net profit 5,688,512 5,031,271 4,562,366

Ratio of cash dividends (pre-tax) to net profit (%) - - -

6.5 Other issues requiring disclosure

The Bank had no other issues to disclose in 2016.

31

7. Major Issues

7.1 Major litigation and arbitration

The Bank was not involved in any major litigation or arbitration with significant impacts on its

operation and management in 2016.

7.2 Increase or decrease of registered capital, acquisition & disposal of assets and merger

The Bank did not make any changes to its registered capital, nor did it acquire or dispose of any

material assets or go through any mergers in 2016.

7.3 Equity incentives

The Bank did not implement any equity incentive plan in 2016.

7.4 Material related party transactions

As at the end of 2016, the Bank's credit balance with related parties totaled RMB6,376,465.8 thousand,

all categorized as "normal". Of the credit balance, eight were material related party transactions with a

total balance of RMB6,057,402.4 thousand (excluding security deposits, CDs and T-bonds).

As at the end of 2016, the Bank's customer loans guaranteed by related parties totaled RMB1,554

million, deposits from related parties having material transactions with the Bank totaled RMB540

million, the Bank's foreign currency deposits with related parties totaled 418 million RMB equivalent,

and interbank lending to related parties totaled RMB50 million.

7.5 Major contracts and executions

7.5.1 Material custody, contracting and leasing

On 28 April 2016, the Bank entered into a three-year contract with CEEC Technology Development

Corporation to lease out an area of 2,546.53 square meters from 1 September 2016 to 31 August

2019 with an annual rent (including property management fee) of RMB6,130,582.20. In 2016, a rent

(including property management fee) of RMB2,043,527.40 was collected.

7.5.2 Material guarantee

The Bank had no material guarantee that needed to be disclosed except for guarantee services

rendered within its business scope in 2016.

7.5.3 Other major contracts

7.5.3.1 Business Complex Project of the Head Office

The 18th General Meeting of the Bank approved the project with an estimated investment of RMB2,812

million (including land cost of RMB740 million and construction cost of RMB2,072 million) and a

32

floor area of 187,000 square metres (137,000 square metres overground and 50,000 square metres

underground).

As at the end of 2016, the Bank had obtained the Property Ownership Certificate of Tianjin for the

business complex. Settlement of this project was under way.

As at the end of 2016, a total of RMB2,437,480.4 thousand (including VAT of RMB1.82 million) had

been spent on the project, of which, RMB132,664.0 thousand (including VAT of RMB1.82 million) was

expended in 2016.

7.5.3.2 Service Centre Project of the Head Office

As at the end of 2016, final accounting of the project was completed. Tianjin TZU CPA has issued the

Audit Report on Final Accounting of the Service Centre Project of CHINA BOHAI BANK CO., LTD. (J.ZH.

SH.L.J.J.SH.Zi.[2016]No.358), which was approved at the 8th Meeting of the Fourth Board of Directors.

According to the resolutions of the President's Meeting and of the Board of Directors of the Bank,

the budget for the project was RMB430,364.0 thousand. Upon completion of the project, a total of

RMB430,217.5 thousand was reckoned as assets, including fixed assets of RMB419,028.7 thousand

and intangible assets of RMB11,188.8 thousand.

7.6 Shareholder's commitments

In the second capital increase of the Bank, the seven shareholders of the Bank presented the letters

of commitments on full subscription in October 2010. Except the RMB595 million subscribed for

by Tianjin Trust Co., Ltd. to be paid upon satisfaction of regulatory requirements, subscriptions by

the other shareholders were fully paid as scheduled in 2011. The six shareholders had honored

their subscription commitments. In 2016, Tianjin Trust Co., Ltd. made further efforts to honor its

subscription commitment.

No commitment was made by shareholders in 2016.

7.7 Capital tied up by controlling shareholder and other related parties

The Bank had no controlling shareholder. Neither had it any capital tied up by any related parties.

Statement on Capital Tied up by Controlling Shareholder and Other Related Parties of CHINA BOHAI

BANK CO., LTD. had been issued by the external auditor.

7.8 Appointment and dismissal of accounting firm

In 2016, the Bank appointed KPMG Huazhen LLP to audit its 2016 Financial Statements and Notes

prepared in accordance with PRC GAAP and IFRS pursuant to the resolution of the General Meeting.

7.9 Penalties imposed on the Bank and on directors, supervisors and senior executives

In 2016, no regulatory penalty with significant impacts on operation and management was imposed

on the Bank. None of the directors, supervisors or senior executives was penalized.

33

7.10 Integrity information of the Bank

In 2016, there was no significant court judgment with which the Bank did not comply, neither was

there any default on the Bank's debts of considerable amount.

7.11 Other major issues

7.11.1 Change of address

On 21 December 2015, the 32nd General Meeting of the Bank passed a resolution on changing the

Bank's address to 218 Haihe East Road, Hedong District, Tianjin. The Bank subsequently submitted the

Application of CHINA BOHAI BANK CO., LTD. for Change of Address to CBRC. On 18 February 2016,

CBRC approved the application with its Reply to Change of Legal Person's Address by China Bohai

Bank, and renewed the Bank's Financial Licence on 1 March. On 21 March 2016, Tianjin Market and

Quality Supervision Administration granted the updated Corporate Business Licence to the Bank.

7.11.2 Shareholding in the financial leasing company

On 21 October 2016, the 5th Meeting of the Fourth Board of Directors of the Bank reviewed and

approved the proposal on incorporation of CBHB Financial Leasing Co., Ltd., agreeing to participate in

the establishment of the financial leasing company.

7.11.3 Obtaining qualifications

On 5 January 2016, Chengdu Branch of the Bank signed the Agency Agreement on Special Provincial

Fiscal Accounts with the Finance Department of Sichuan Province, whereby the two parties agreed on

terms for opening special zero-balance fiscal accounts.

On 11 May 2016, Ji'nan Branch of the Bank entered into the Agency Agreement on Non-tax Revenues

with the Finance Bureau of Ji'nan, whereby the Bank is allowed to collect municipal-level non-tax

revenues.

7.11.4 Opening branches

7.11.4.1 Tier 1 branch

On 4 February 2016, in the Reply to the Opening of Zhengzhou Branch of China Bohai Bank

(Y.Y.J.F.[2016]No.59), CBRC He'nan Office approved the opening of Zhengzhou Branch, which is

situated at Bldg 2, 88 Jinshui East Rd, Zhengdong New Dist, Zhengzhou, He'nan Prov.

On 5 August 2016, in the Reply to the Opening of Xi'an Branch of China Bohai Bank (SH.Y.J.F.[2016]

No.42), CBRC Shaanxi Office approved the opening of Xi'an Branch, which is situated at 1-2 & 14-17/F,

36 Jinye Rd, Xi'an High-tech Industries Development Zone, Shaanxi Prov.

7.11.4.2 Tier 2 branch

On 20 June 2016, in the Reply to the Opening of Langfang Branch of China Bohai Bank (J.Y.J.F.[2016]

No.114), CBRC Hebei Office approved the opening of Langfang Branch, which is subordinate to

Shijiazhuang Branch and situated at 1-2/F & B1, Tower B of Communications Complex, 80 Xinhua Rd,

Guangyang Dist, Langfang, Hebei Prov.

34

On 14 September 2016, in the Reply to the Opening of Ziyang Branch of China Bohai Bank (CH.

Y.J.F.[2016]No.330), CBRC Sichuan Office approved the opening of Ziyang Branch, which is

subordinate to Chengdu Branch and situated at T (7-9)-T7 (F) No. 2-18 to 2-27, 3-1 to 3-12 of Wanda

Plaza, the Crossing of 2nd Ring Rd and Jiaozi Ave, Yanjiang Dist, Ziyang, Sichuan Prov.

On 28 September 2016, in the Reply to the Opening of Zhuhai Branch of China Bohai Bank

(Y.Y.J.F.[2016]No.307), CBRC Guangdong Office approved the opening of Zhuhai Branch, which is

subordinate to Guangzhou Branch and situated at Room 01-07 of 1/F, Room 01-08 of 2/F, Room 01-

09 of 3/F, Quanfu Commercial Mansion, 325 Renmin East Rd, Xiangzhou Dist, Zhuhai, Guangdong

Prov.

On 13 October 2016, in the Reply to the Opening of Shenzhen Qianhai Branch of China Bohai Bank

(SH.Y.J.F.[2016]No.223), CBRC Shenzhen Office approved the opening of Shenzhen Qianhai Branch,

which is subordinate to Shenzhen Branch and situated at Unit 01, 1/F, Yihua Fintech Mansion, 2388

Houhai Ave, Nanshan Dist, Shenzhen, Guangdong Prov.

On 9 November 2016, in the Reply to the Opening of Yichang Branch of China Bohai Bank

(E.Y.J.F.[2016]No.236), CBRC Hubei Office approved the opening of Yichang Branch, which is

subordinate to Wuhan Branch and situated at Fujiang Mingzuo, T162 Yanjiang Ave, Wujiagang Dist,

Yichang, Hubei Prov.

On 29 November 2016, in the Reply to the Opening of Nantong Branch of China Bohai Bank

(T.Y.J.F.[2016]No.89), CBRC Nantong Sub-Office approved the opening of Nantong Branch, which is

subordinate to Nanjing Branch and situated at Ruiting Mansion, 114 Gongnong South Rd, Chongchuan

Dist, Nantong, Jiangsu Prov.

35

8. Financial Statements

8.1 Audit opinion

The 2016 Financial Statements of the Bank have been audited by KPMG Huazhen LLP in

accordance with the China Standards on Auditing and the International Standards on Auditing

respectively, and standard unqualified auditor's reports have been issued.

8.2 The balance sheet, income statement, statement of changes in shareholders' equity and cash flow statement of the Bank

BALANCE SHEET AS AT 31 DECEMBER 2016

(Expressed in Renminbi '000 unless otherwise indicated)

ASSETS 31 December 2016 31 December 2015

Cash and balances with the central bank 102,474,809 78,958,440

Due from banks and other financial institutions 4,806,388 4,798,387

Placements with banks and other financial institutions 1,826,124 4,670,879

Financial assets at fair value through profit or loss 2,564,073 1,182,143

Derivative financial assets 418,195 342,599

Financial assets purchased under resale agreements 1,640,000 16,769,000

Interest receivable 4,534,128 3,998,862

Loans and advances to customers 342,843,201 266,958,885

Available-for-sale financial assets 38,283,122 30,282,836

Held-to-maturity investments 66,085,930 56,218,193

Investment receivables 282,266,052 293,228,897

Long-term equity investments 50,035 50,035

Fixed assets 3,666,384 3,701,868

Intangible assets 568,885 575,332

Deferred tax assets 3,033,049 1,811,080

Other assets 1,059,303 688,004

Total assets 856,119,678 764,235,440

36

BALANCE SHEET AS AT 31 DECEMBER 2016 (Continued)


LIABILITIES AND SHAREHOLDERS' EQUITY 31 December 2016 31 December 2015

Liabilities

Due to the central bank 13,000,000 10,000,000

Due to banks and other financial institutions 175,208,282 241,187,629

Placements from banks and other financial institutions 12,243,173 5,918,918

Derivative financial liabilities 246,871 454,383

Financial assets sold under repurchase agreements 7,999,577 1,063,948

Customer deposits 490,190,821 409,436,008

Tax payable 1,623,312 1,103,469

Interest payable 8,729,430 10,883,464

Provisions 60,410 60,410

Debt securities in issue 100,324,806 43,915,531

Other liabilities 5,029,629 4,654,684

Total liabilities 814,656,311 728,678,444

Shareholders' equity

Share capital 13,855,000 13,855,000

Capital surplus 20,000 20,000

Other comprehensive income (122,237) 444,820

Surplus reserve 2,792,661 2,145,318

General reserve for risk assets 10,486,754 9,505,261

Retained earnings 14,431,189 9,586,597

Total shareholders' equity 41,463,367 35,556,996

Total liabilities and shareholders' equity 856,119,678 764,235,440

37

INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016


2016 2015

Operating income

Interest income 38,476,359 40,525,453

Interest expense (22,483,965) (25,097,539)

Net interest income 15,992,394 15,427,914

Fee and commission income 6,053,231 3,594,765

Fee and commission expense (152,753) (167,273)

Net fee and commission income 5,900,478 3,427,492

Investment loss (206,443) (183,376)

Gain/(loss) on changes in fair value 282,075 75,687

Foreign exchange loss (118,810) (195,815)

Other operating income/(loss) 15,467 (72,375)

Sub-total 21,865,161 18,479,527

Operating expense

Taxes and surcharges (542,400) (1,002,559)

General and administrative expenses (7,568,451) (6,111,967)

Impairment losses on assets (5,693,711) (4,192,805)

Other operating expenses (89,130) (42,933)

Sub-total (13,893,692) (11,350,264)

Operating profit 7,971,469 7,129,263

Non-operating income 28,211 13,490

Non-operating expenses (2,456) (8,103)

Profit before income tax 7,997,224 7,134,650

Income tax expense (1,523,796) (1,446,138)

Net profit 6,473,428 5,688,512

Other comprehensive income (567,057) 372,191

Other comprehensive income that may be reclassified to profit or loss

Gain or loss from changes in fair value of available-for-sale financial assets (567,057) 372,191

Total comprehensive income for the year 5,906,371 6,060,703

Earnings per share (expressed in RMB per share)

-Basic earnings per share 0.47 0.41

-Diluted earnings per share 0.47 0.41

38

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED 31 DECEMBER 2016


Sharecapital

Capitalsurplus

Other comprehensive

income

Surplus reserve

Generalreserve for risk assets

Retainedearnings Total

At 1 January 2016 13,855,000 20,000 444,820 2,145,318 9,505,261 9,586,597 35,556,996

Net profit - - - - - 6,473,428 6,473,428

Other comprehensive income - - (567,057) - - - (567,057)

Total comprehensive income for the year - - (567,057) - - 6,473,428 5,906,371

Appropriation for statutory surplus reserve - - - 647,343 - (647,343) -

Appropriation for general reserve for risk assets - - - - 981,493 (981,493) -

At 31 December 2016 13,855,000 20,000 (122,237) 2,792,661 10,486,754 14,431,189 41,463,367

Sharecapital

Capitalsurplus

Other comprehensive

income

Surplus reserve

Generalreserve for risk assets

Retainedearnings Total

At 1 January 2015 13,855,000 20,000 72,629 1,576,467 8,495,738 5,476,459 29,496,293

Net profit - - - - - 5,688,512 5,688,512

Other comprehensive income - - 372,191 - - - 372,191

Total comprehensive income for the year - - 372,191 - - 5,688,512 6,060,703

Appropriation for statutory surplus reserve - - - 568,851 - (568,851) -

Appropriation for general reserve for risk assets - - - - 1,009,523 (1,009,523) -

At 31 December 2015 13,855,000 20,000 444,820 2,145,318 9,505,261 9,586,597 35,556,996

39

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016


2016 2015

1. Cash flows from operating activities

Net increase in customer deposits 80,754,813 51,536,479

Interest, fee and commission received 23,655,790 22,050,650

Net decrease in purchased assets under resale agreements 9,697,000 60,812,077

Net increase in financial assets sold under repurchase agreements 6,935,629 -

Net increase in placements from banks and other financial institutions 6,324,255 2,451,275

Net decrease in placements with banks and other financial institutions 3,364,340 1,005,660

Net increase in amounts due to the central bank 3,000,000 -

Net decrease in balances at central bank and due from banks and other financial institutions - 7,417,968

Net decrease in financial assets at fair value through profit or loss - 1,815,311

Net increase in due to banks and other financial institutions - 45,807,440

Cash received relating to other operating activities 83,323 14,242

Sub-total of cash inflows 133,815,150 192,911,102

Net increase in loans and advances to customers (79,772,696) (70,066,045)

Net decrease in due to banks and other financial institutions (65,979,347) -

Interest, fee and commission paid (21,600,809) (23,150,077)

Net increase in balances at central bank and due from banks and other financial institutions (10,170,380) -

Cash paid to and on behalf of employees (3,617,247) (3,191,770)

Taxes and surcharges paid (3,607,114) (3,082,760)

Net increase in financial assets at fair value through profit or loss (1,382,963) -

Net decrease in financial assets sold under repurchase agreements - (12,514,687)

Cash paid relating to other operating activities (3,486,732) (18,001,969)

Sub-total of cash outflows (189,617,288) (130,007,308)

Net cash inflows from operating activities (55,802,138) 62,903,794

40

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016 (Continued)


2016 2015

2. Cash flows from investing activities

Proceeds from disposal of investment 226,619,901 132,345,018

Investment income received 20,622,125 21,258,288

Proceeds from disposal of fixed assets, intangible assets and other long-term assets 1,051 2,980


Cash paid for investments (235,844,464) (237,164,943)

Cash paid to acquire fixed assets, intangible assets and other long-term assets (500,328) (680,441)


Net cash outflows from investing activities 10,898,285 (84,239,098)

3. Cash flows from financing activities

Proceeds from issuance of debt securities 65,530,168 18,964,695


Repayment of debt securities in issue (10,000,000) (1,000,000)

Interest expense paid to securities in issue (2,328,518) (1,251,423)


Net cash inflows from financing activities 53,201,650 16,713,272

4. Effect of foreign exchange rate changes on cash and cash equivalents 143,778 (185,591)

5. Net increase in cash and cash equivalents 8,441,575 (4,807,623)

Add: Cash and cash equivalents at the beginning of the year 26,239,082 31,046,705

6. Cash and cash equivalents at the end of the year 34,680,657 26,239,082

Documents

Summary of Annual Report 2016 of CHINA BOHAI … of Annual...Summary of Annual Report 2016 of CHINA BOHAI BANK CO., LTD. 1. Important Notice 1.1 The Board of Directors, the Board of