Banking Newsletter

Analysis of China Listed Banks' Results for the First Quarter of 2016

May 2016

www.pwccn.com

Editor-in-Chief：Shirley Yeung

Deputy Editor-in-Chief：Candy Lu, Jason Zeng

Members of the editorial team：

Cynthia Chen, Hogan Deng, Jeff Deng, Marina Wang, Phoebe Zhang

(in alphabetical order of last names )

Editorial Team：

Advisory Board：

Raymond Yung, Jimmy Leung, Margarita Ho, Richard Zhu

PwC

We are pleased to present our Banking Newsletter (the Newsletter), PwC’s analysis of China’s listed banks and the industry spotlight, which is now in its 27th edition. The analysis covers 18 A-share and/or H-share listed banks that released their 2016 first quarter results. These banks are categorised into three groups as defined by the China Banking Regulatory Commission (CBRC):

Large Commercial Banks (LCBs)

• Industrial and Commercial Bank of China (ICBC)

• China Construction Bank (CCB)

• Agricultural Bank of China (ABC)

• Bank of China (BOC)

• Bank of Communications (BOCOM)

Joint-Stock Commercial Banks (JSCBs)

• China Merchants Bank(CMB)

• China Industrial Bank (CIB)

• Shanghai Pudong Development Bank (SPDB)

• China CITIC Bank (CITIC)

• China Minsheng Banking Corporation (CMBC)

• China Everbright Bank (CEB)

• Ping An Bank (PAB)

• Huaxia Bank (HXB)

City Commercial Banks & Rural Commercial banks (CCBs & RCBs)

• Bank of Beijing (BOB)

• Bank of Nanjing (NJB)

• Bank of Ningbo (NBB)

• Bank of Chongqing (BCQ)

• Chongqing Rural Commercial Bank (CQRCB)

The total assets of these banks as of 31 March 2016, accounted for 76.68% of the total assets of China’s commercial banking sector. Unless otherwise stated, all the information in this newsletter comes from publicly available sources, such as the listed banks’ annual reports and statistics published by regulatory bodies, and are presented in RMB (except for ratios) where applicable.

Preface

For more information, please talk to your PwC contacts or any of those listed in the Appendix as Banking and Capital Markets Contacts.

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Overview in 1Q 2016

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China economy is still on a downward trend in 1Q 2016, despite the fact that there are a few positive signs. In the previous issue of Banking Newsletter, Review and Outlook of China Banking Industry in 2015, three major trends were identified in 2016. While some of these trends are obvious, others are yet to be observed.

Profits peaks: closer to the reality

The listed banks’ earnings are more and more affected by the macro environment. This newsletter predicted that listed banks’ net profits will reach the peak in the short term in the previous issue, which has been closer to the reality in 1Q 2016. As summarised in this newsletter, Large Commercial Banks (LCBs), Joint-stock commercial banks (JSCBs), City Commercial Banks & Rural Commercial banks’ (CCBs & RCBs) recorded net profit growth of 0.96%, 7.04% and 10.12% respectively.

All listed banks’ credit risk is increasing, with both non-performing loan (NPL) balance and ratio on the rise. This has also made banks to increase their loan provisions. Another factor that erodes listed banks’ net profits are the effect of five times’ reductions on interest rates by the People’s Bank of China (PBoC or the central bank) in 2015, causing banks’ net interest income under pressure. This effect is most significant to LCBs, with their net interest income recorded negative growth in 1Q 2016 for the first time. These factors also have negative impact to the net profit of the banks.

Managing NPL: continue to explore multi-channels for disposal

This newsletter pointed out that listed banks need to strictly control the quality of credit assets and look beyond the traditional approach to explore a multi-channel disposal strategy, which might be a “new normal“ for banking sector.

Listed banks’ credit risk continues to rise in 1Q 2016, on top of the level of 2015. The 18 listed banks in the sample recorded an aggregate NPL of RMB 1,062.48 bn, representing an increase of 7.44% from the end of 2015. Their aggregate NPL ratio, at the end of 2016 were 1.69%, up by 0.05 percentage points (ppts) from 31 December 2015.

Listed banks did not disclosure their NPL disposal details (e.g. write-offs and transfers) in 1Q 2016. Nor did the pilot scheme of banks’ NPL securitisation see any significant progress. Anyway, listed banks still need to explore a multi-channel disposal strategy to cope with the growing trend of NPL.

Embracing FinTech: helps business diversification

In previous issue, this newsletter argued that in future listed banks need to further leverage FinTech to help strengthening channel integration and enhance the efficiency of financial services.

The 18 listed banks in the sample maintained a relatively fast growth pace for fee & commission income and other non-interest income in 1Q 2016. As a result, the income structure of those banks are different from what they were in 1Q 2015, with intermediate business income increasing obviously.

The change of income structure is partly due to the growth of net interest income is slowing down. On the other hand, banks have also made great efforts in leveraging innovative technology to integrate channels, improve service quality, explore new clients and look for diversification.

For a detail analysis please refer to the remainder of this newsletter.

PwC

Table of Contents

Credit

risk

Exposed further

Provision

coverage ratios

Some banks

below regulatory

requirement

Net profits - Growth slowdownNet interest

margin

Narrowed across

most banks

Net interest income

Large Commercial Banks

recorded negative growth

for the first time

1 Spotlight 07

2 Macro Overview 09

3 Operating Performance 13

4 Financial Positions 21

5 Capital Management 29

6 Appendix 33

VAT reform

Banks’ tax burden under

pressure in the short term

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Spotlight

• VAT reform to be implemented: Banks’ tax burden under pressure in the short term

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VAT reform to be implemented: Banks’ tax burden under pressure in the short term

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On 18 March 2016, the State Council of China officially approved the pilot scheme of “Business Tax to Value-added Tax” reform (VAT reform) to a wider group, which will be expanded to cover the construction sector, real estate sector, financial services and consumer services since 1 May 2016.

The VAT rate applicable to financial services industry is 6%, which is a bit increment as compared to the previous business tax rate of 5%. As the largest sector among financial services industry, banks’ tax burden will be increased in the short term. Anyway, most banks are actively taking many measures to face these changes.

1. Increasing investments to improve infrastructure and systems within the banks

The VAT reform requires new standard for banks’ infrastructure and system development. In terms of infrastructure, it requires the necessary installation of new devices supporting the tax system, and ensure online connection with the State Administration of Tax’s “Golden Tax” System, so as to ensure timely and accurately issuance of VAT invoices. In terms of system development, it requires upgrading of existing business systems, increasing new module to separate price and tax, so as to ensure VAT being accurately computed.

2. Assessing the change in tax burden

VAT is an off-price tax, i.e. the revenue in the income statement does not include VAT. Whether the VAT cost can be transferred out or not will directly affect the revenue on the income statement. According to the latest analysis, most banks believe that it is difficult for them to transfer out the VAT cost, as a result, the net profit will be reduced while the tax burden will

be increased.

According to our observation on the new policies, comparing with Business Tax, the range of taxable income under VAT regime may be enlarged and that of VAT exemption items may be narrowed. Overall, the tax base may expand for some service categories.

3. Looking for alternatives

The VAT reform is expected to increase banks investments in infrastructure and system development in the short term, not to mention the increase of compliance cost. Nevertheless, the reform might be an opportunity for banks to review and optimise their business flow and internal control, which helps to improve management capability and compliance.

The bank can claim more input VAT credit from the expenditure (for example: computer system procurement, professional services expenses and purchase of immoveable properties etc.), which will help reduce the operation cost of the banks and also ease the new tax burden to a certain extent. With the deep implementation of VAT reform policy, more and more tax-payers will follow VAT policy to carry out their business, accordingly, there would be more valid input VAT documents available and help the bank further reduce its operation cost.

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Macro Environment

• Chinese Economy saw some positive signs

• Money supply and loans growth rebounded slightly

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Chinese Economy saw some positive signs

Graph 1 China’s GDP growth rate by quarters

6%

7%

8%

9%

10%

11%

12%

13%

Note: the growth rates in the figure are by each quarter’s end. For example, 2013 Q2

means the cumulative growth rate by the end of 2Q in 2013.

Source: National Bureau of Statistics

1Q 2016，6.70%

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In 1Q 2016, global economic environment remained complicated. The US kept a moderate recovery; the Euro zone and Japan sustained weak growth under deflation pressure; emerging economies continually suffered downside risk.

China’s economic slowdown extended in 1Q 2016, as the Gross Domestic Product (GDP) year-on-year growth slipped to 6.70% from 6.90% in 2015. However, export growth rebounded while industrial production stablised, which indicated positive signs emerging in the economy.

In March, the total export-import volume increased by 8.60% year-on-year, among which export rose 18.70% and it improved from the negative growth during the first two months. Industrial output growth accelerated to 6.80% in March, compared with 5.40% in January and February.

In addition, fixed-asset investment increased by 10.70% in 1Q, 0.70 ppts higher than 2015, due to the fast growth of infrastructure construction and real estate investment, which also played an active role on stablising the whole economy.

Consumer Price Index (CPI) moderately increased by 2.10% in 1Q, higher than 1.40% in 2015; while the decline of Producer Price Index (PPI) narrowed to -4.80%, compared with -5.20% in 2015.

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Money supply and loans growth rebounded slightly

10%

11%

12%

13%

14%

15%

16%

-

5,000

10,000

15,000

20,000

25,000

30,000

Newly issued amount Y-o-y growth rate

Newly issued amount (RMB 100 million) Y-o-y growth

Source: People’s Bank of China

Graph 2 RMB loans growth

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After five cuts to the RMB reserve requirement ratio (RRR) and the benchmark loan and deposit interest rates, People’s Bank of China (PBoC) further lowered the RRR by 0.5 ppts on 29 February, 2016, to inject liquidity in financial market and enhance support on economic growth.

In the relatively loose monetary policy environment, broad money supply (M2) rose 13.40% year-on-year by March – 0.10 ppts higher than the year end of 2015 and 1.80 ppts higher than the 1Q last year.

RMB loans growth accelerated to 14.70% in 1Q, up from 14.30% in 2015. Both lending and total social financing (TSL) showed faster rebound during the period.

It is worth noting that in the past three years, new loans usually increased very rapidly in

January, with this January showed relatively higher growth rate than before. Along with the rapid rebound of RMB loans, the country’s Debt-to-GDP ratio is rising fast, which again sparked market concerns on the high leverage level.

In 1Q 2016, risk in the bond market accumulated rapidly. By the end of March, total fund raised by corporate bonds was more than RMB 690 bn, which was a record high level. As the restructuring reform deepens in industries which are trapped by excessive capacity, the default risk in bond market is continually rising.

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Operating performance

• Net profit growth continued to slow down

• The profitability indicators presented a downward trend

• Net interest income of Large Commercial Banks showed negative growth for the first time

• Intermediary business income increased obviously in small and medium-sized banks

• Net interest margin continued to narrow

• Cost control remained strong

• Credit costs continued to rise

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Net profit growth continued to slow down

Table 1 Net profit and growth of listed banksIn 1Q 2016, China’s economy continued to face downward pressure. Due to the deepening of interest rate liberalisation, the disruption of internet finance and the central bank’s five interest rate cuts in 2015, the yield on loans, which were re-priced annually, was obviously narrowed since 1 January 2016. Net profit growth of the 18 listed banks covered in this newsletter continued to slow, from 3.14% in 1Q 2015 to 2.71% in 1Q 2016 (see Graph 3).

Three out of the five Large Commercial Banks (LCBs) saw their net profit growth fell below 1.00%. Three out the eight Joint-stock Commercial Banks’ (JSCBs) growth fell below 3.00% (see Table 1).

On the basis of quarterly comparison, 17 listed banks’ growth were slower than that of 1Q 2015. BCQ was not included in the comparison as it did not disclose its quarterly data in 2014 thus unable to calculate the growth rate for 1Q 2015.

Graph 3 Net profit growth of listed banks

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Listed Bank 1Q 2016 (RMB million) 2015 1Q (RMB million) Y-o-y growth

ICBC 74,904 74,457 0.60%CCB 67,911 67,129 1.16%ABC 54,568 54,319 0.46%BOC 48,633 47,769 1.81%BCM 19,231 19,053 0.93%LCBs 265,247 262,727 0.96%CMB 18,419 17,303 6.45%CIB 15,801 14,900 6.05%

SPDB 14,035 11,309 24.10%CITIC 11,203 11,097 0.96%CMBC 13,949 13,567 2.82%CEB 8,460 8,372 1.05%PAB 6,086 5,629 8.12%HXB 4,462 4,156 7.36%

JSCBs 92,415 86,333 7.04%BOB 5,294 4,999 5.90%NJB 2,138 1,790 19.42%NBB 2,034 1,760 15.55%BCQ 989 897 10.34%

CQRCB 2,206 2,052 7.54%CCBs & RCBs total 12,661 11,498 10.12%Listed Banks total 370,323 360,558 2.71%

11.86%

3.14%2.71%

-3%

0%

3%

6%

9%

12%

15%

18%

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Net profit Q-o-Q growth

Net profit (RMB million)

2014 2015 2016

Q-o-Q growth

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The profitability indicators presented a downward trend

Most listed banks’ profitability indicators weakened in 1Q 2016 due to a slight drop in net profit growth, with their Return on Average Assets (ROA) dropped except for SPDB. Lower ROA was due to the fact that the net profit growth rate was smaller than that of assets. (see Graph 4).

Another profitability indicator -Return on Equity (ROE) presented a similar downward trend for most listed banks, except for SPDB and NBB.

ICBC

CCBABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

BOB

NJB

NBB

BCQ

CQRCB

13%

15%

17%

19%

21%

23%

25%

Return on Equity（ROE）

2016 1Q 2015 1Q

Graph 4 Profitability indicators of listed banks

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

BOB

NJB

NBB

BCQ

CQRCB

0.8%

0.9%

1.0%

1.1%

1.2%

1.3%

1.4%

1.5%

1.6%

1.7% Return on Average Assets（ROA）

2016 1Q 2015 1Q

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Net interest income of Large Commercial Banks showed negative growth for the first time

Five LCBs recorded negative growth in net interest income for the first time in 1Q 2016 (see Graph 5) amid the economic downturn in 1Q 2016 and the deepening of interest rate liberalisation. Net interest income of small and medium-sized banks (i.e. JSCBs and CCBs & RCBs) still increased year-on-year.

Graph 6 Net fee and commission income of listed banks

441,964

190,257

26,755

462,027

182,767

22,607

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

LCBs JSCBs CCBs & RCBs

2016 1Q 2015 1Q

(RMB million)

Graph 5 Net interest income of listed banks

147,278

82,676

7,144

132,346

65,042

4,378

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

LCBs JSCBs CCBs & RCBs

2016 1Q 2015 1Q

(RMB million)

In 1Q 2016, most listed banks’ net fee and commission income increased year-on-year as they actively expanded channels of intermediary business (see Graph 6).

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Intermediary business income increased

obviously in small and medium-sized banks

Most listed banks saw a notable change in income structure in 1Q 2016 when compared with 1Q 2015 (see Graph 7). While most listed banks’ growth in both net interest income and bottom line slowed in 1Q 2016 as a result of a narrowing interest margin, their net fee and commission income and other non-interest income grew relatively fast thanks to their active expansion of intermediary business.

The proportion f other non-interest income of LCBs rose by 6.58 ppts in 1Q 2016 compared with 1Q 2015, whereas the proportion of fee and commission income rose only by 0.84 ppts.

The proportion of other non-interest income of JSCBs rose by 3.13 ppts in 1Q 2016 compared with 1Q 2015, whereas the proportion of fee and commission income rose by 2.74 ppts.

CCBs & RCBs’ fee and commission income recorded a rapid growth, which led to a rise in proportion by 4.58 ppts in 1Q 2016 from 1Q 2015, whereas other non- interest income’s proportion rose by 0.99 ppts.

Note: Other non-interest income include income in fair value, investment income,

foreign exchange gains, insurance, leasing and business of precious metals.

Graph 7 Fee and commission income structure of listed banks

63.25%70.67%

66.02%71.89%

77.08%82.64%

21.08%

20.24% 28.69%25.95%

20.58%16.00%

15.67%9.09%

5.29% 2.16% 2.34% 1.36%

2016 1Q 2015 1Q 2016 1Q 2015 1Q 2016 1Q 2015 1Q

LCBs JSCBs CCBs & RCBs

Net Interest Income Fee and commission income Other non-interest income

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Net interest margin continued to narrow

The banking industry in China enjoyed a much wider floating range for deposit rate in 1Q 2016, as the central bank’s rate cuts in 2015 and the deepening of interest rate liberalisation. It was against this backdrop that most banks who disclosed their net interest margin (NIM) saw a narrowing trend except for PAB and BCQ (see Graph 8). Only 11 banks disclosed their NIM in 1Q 2016.

CCB

BOC

BOCOM

CMB

CITIC CMBC

PAB

NJB

NBB

BCQ

CQRCB

1.5%

1.7%

1.9%

2.1%

2.3%

2.5%

2.7%

2.9%

3.1%

3.3%

3.5%

2016 1Q 2015 1Q

Graph 8 Net interest margin (NIM) of listed banks

Note: NIMs of 1Q 2016 were not released by ICBC, ABC, SPDB, CIB, CEB AND HXB.

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Cost control remained strong

Listed banks continued to strengthen their cost control in 1Q 2016 in response to the pressure from earnings, with most of their cost-to-income ratios going down (see Graph 9).

Thanks to the cost control measures, most listed banks managed to ensure the growth of cost was lower than that of operating income.

Graph 9 Cost-to-income ratios of listed banks

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

BOB

NJB

NBB

BCQ

CQRCB

16%

18%

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

40%

2016 1Q 2015 1Q

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Credit costs continued to rise

Most listed banks’ had a higher asset impairment loss in 1Q 2016 compared with 1Q 2015, except for ABC. Most banks increased their provisions in response to the economic downturn (see Graph 10).

Graph 10 Assets impairment loss of listed banks in 1Q 2016

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

2016 Q1 2015 Q1

(RMB million)

Most banks’ annualised credit costs rose in 1Q 2016 except for ABC, BOCOM , CQRCB and CEB. Seventeen listed banks disclosed their gross loan balance (see Graph 11) in 1Q 2016.

Graph 11 Credit costs of listed banks (annualised)

Note：BOB did not disclose its gross loan balance in 1Q 2016 thus unable to calculate

credit cost.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2016 1Q 2015

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Financial Position

• Asset growth slowed down

• Loan balance increased steadily

• Credit risk continued to rise

• Provisions coverage ratio for some Large Commercial Banks fell below the “red line”

• Investments growth remained stable

• The proportion of investments classified as receivables progressively increased

• Liabilities structure remained stable

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Asset growth slowed down

The total assets of 18 listed banks covered in this newsletter expanded to RMB 124.33 tn as of the end of 1Q 2016, representing an increase of 3.71% compared to the end of 2015.

Total assets of Large Commercial Banks (LCBs) amounted to RMB 84.88 tn at the end of 1Q 2016, increased by 3.11% compared to the end of 2015.

Total assets of Joint-stock Commercial Banks (JSCBs) amounted to RMB 34.70 tn at the end of 1Q 2016, increased by 4.65% compared to the end of 2015.

Total assets of City Commercial Banks and Rural Commercial Banks (CCBs & RCBs) amounted to RMB 4.75 tn at the end of 1Q 2016, increased by 7.81% compared to the end of 2015.

The asset structure of listed banks remained relatively stable at the end of 1Q 2016, with the proportions of loans rising and interbank assets falling slightly (see Graph 12).

The falling of interbank assets in proportion was mainly due to the decline in trading of reverse repurchase agreements. The interbank assets’ proportion for LCBs, JSCBs and CCBs & RCBs dropped by 0.98 ppts, 1.99 ppts and 1.84 pptsrespectively in 1Q 2016, compared to the end of 4Q 2015.

In contrast most banks expanded their investment portfolios in 1Q 2016. As a result the proportion of investments for LCBs, JSCBs and CCBs & RCBs rose by 0.22 ppts, 1.69 ppts and 1.88 ppts respectively, compared to the end of 4Q 2015.

Graph 12 Changes in the asset structures of listed banks

52.48% 52.19%44.93% 44.65%

36.50% 36.75%

23.36% 23.14%32.96% 31.27%

36.51% 34.63%

6.24% 7.22%8.62% 10.61% 15.42% 17.26%

13.92% 13.65%9.85% 9.98% 9.56% 9.42%

4.00% 3.79% 3.65% 3.48% 2.01% 1.94%

2016.03.31 2015.12.31 2016.03.31 2015.12.31 2016.03.31 2015.12.31

LCBs JSCBs CCBs & RCBs

Loans and advances Investments Interbank assets Cash and deposits with central bank Others

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Loan balance increased steadily

The total loan balances of the 18 listed banks covered in this newsletter expanded to RMB 62.82 tn at the end of 1Q 2016, increased by 4.16% compared to the end of 2015.

The quarter on quarter growth in 1Q 2016 was higher by 1.12 ppts than in 4Q 2015, suggesting that most listed banks’ credit growth were accelerating as a result of the continued easing of monetary policy and the rebound of real estate market (see Graph 13).

LCBs reported a total loan balance of RMB 44.55 tn, which increased by RMB 1.59 tn or 3.70% compared to 2015 year-end; the total loan balance of JSCBs was RMB 15.59 tn, up by 5.27% or 0.78 tn compared to 2015 year-end; CCBs & RCBs’ total loan balance was RMB 1.73 tn, which increased by 6.79% or RMB 0.11 tn.

Graph 13 Change in loan balances

44.55

15.59

1.73

42.96

14.81

1.62

0

5

10

15

20

25

30

35

40

45

LCBs JSCBs CCBs & RCBs

2016.03.31 2015.12.31

RMB trillion

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Credit risk continued to rise

The credit risk of listed banks continued to rise in 1Q 2016. The non-performing loan (NPLs) balance of 18 listed banks covered in this newsletter reached RMB 1,062.48 bn, increased by 7.44% from the end of 2015. The aggregate NPL ratio rose by 0.05 ppts to 1.69%.

Most list banks reported a slight rise in NPL ratios from the end of 2015, except for CITIC, CEB, BOB and NBB. By group of banks, the NPL ratios for LCBs, JSCBs and CCBs & RCBs were 1.74%, 1.59% and 0.93% respectively.

ICBCCCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

BOB

NJB

NBB

BCQ

CQRCB

0.5%

1.0%

1.5%

2.0%

2.5%

2016.03.31. 2015.12.31

14%

6%

4% 4%

7%

12%

14%

7%

3%

9%

2%

12%

5%

15%

6%

23%

3%

0%

5%

10%

15%

20%

25%

Graph 14 NPL ratios of listed banks

Graph 15 Growth of NPL balances, 1Q 2016 vs 2015 year-end

*BOB did not disclosed its NPL balance in 1Q 2016.

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The economic downturn, structural reforms, manufactory upgrading, weakening operating performance of small and medium-sized enterprises (SMEs) and overcapacity all contributed to the rise in NPL ratios.

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Provisions coverage ratio for some Large Commercial Banks fell below the “red line”

With credit asset quality deteriorating, listed banks’ provisions were under greater pressure, with the provision coverage ratios of ICBC and BOC fell to 141.21% and 149.07% respectively at the end of 1Q 2016 (see Graph 16). These level were lower than the regulatory minimum.

The provision coverage ratio of CCB, BOCOM, CMBC and CEB were also close to the minimum.

Graph 16 Provision coverage ratio of listed banks

ICBCCCB

ABC

BOC

BOCOM

CMB

CIBSPDB

CITIC

CMBC

CEB

PAB

HXB

BOB

NJB

NBB

BCQ

CQRCB

100%

150%

200%

250%

300%

350%

400%

450%

500%

550%

2016.03.31. 2015.12.31.

Graph 17 Provisions-to-loan ratio of listed banks

ICBCCCB

ABC

BOC

BOCOM

CMBCIB

SPDB

CITICCMBC

CEB

PAB

HXB

BOB

NJB

NBB

BCQ

CQRCB

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

2016.3.31 2015.12.31

At the end of 1Q 2016, the provisions-to-loans ratio of listed banks remained almost unchanged. Among the five LCBs, ICBC, ABC and BOC reported a slight fall whereas CCB and BOCOM demonstrated a modest rise.

Among JSCBs, there were a small rise for most banks except for CITIC and CEB.

Among CCBs & RCBs, BOB and CQRCB fell, while the other three rose (see Graph 17).

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Investments growth remained stable

The total investment balance of listed banks amounted to RMB 32.97 tn at the end of 1Q 2016, increased by 2.05 tn or 6.63% from the end of 2015. By holding purposes, investments classified as receivables recorded a relative fast growth of 8.34%.

LCBs’ investments increased by 0.78 tn or 4.09% at the end of 1Q 2016 compared to 2015 year-end, the increase of JSCBs and CCBs & RCBs was faster, with double-digit growth of 10.32% and 13.82% respectively, or 1.07 tn and 0.21 tn (see Graph 18).

Note：Investments include financial assets at fair value through profit or loss,

available-for-sale financial assets, held-to-maturity investments and receivables.

Graph 18 Growth of investments of listed banks

19.83

11.44

1.73

19.05

10.37

1.52

0

2

4

6

8

10

12

14

16

18

20

LCBs JSCBs CCBs&RCBs

2016.03.31 2015.12.31

(RMB trillion)

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The proportion of investments classified as receivables continued to rise

By holding purposes, LCBs’ investment portfolio remained stable in 1Q 2016, with the majority being held to maturity (See Graph 19).

The majority of most JSCBs’ investment portfolio were investments classified as receivables in 1Q 2016, with an increase of 10.39% from the end of 4Q 2015 (see Graph 19).

The majority of most CCBs & RCBs’ investment portfolio were also investments classified as receivables in 1Q 2016, with an increase of 19.78% from the end of 4Q 2015 (see Graph 19).

Graph 19 Changes in investment portfolio by hold purposes

27.23%

26.61%

16.54%

17.44%

31.48%

34.05%

53.94%

54.91%

17.84%

18.04%

21.67%

22.51%

11.06%

11.60%

61.28%

61.22%

42.36%

40.19%

2016.03.31

2015.12.31

2016.03.31

2015.12.31

2016.03.31

2015.12.31

Financial assets at fair value through profit or loss Available-for-sale financial assets

Held-to-maturity investments Receivables

LCBs

JSCBs

CCBs&RCBs

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Liabilities structure remained stable

Total liabilities of 18 listed banks covered in this newsletter was RMB 115.15 tn at the end of 1Q 2016, representing an increase of 3.63% from the end of 2015. The growth rate was slower by 0.45 ppts compared to 1Q 2015.

The quarter on quarter increase of liabilities for LCBs, JSCBs and CCBs & RCBs were 3.04%, 4.51% and 8.04% respectively at the end of 1Q 2016. The quarter on quarter growth continued to rise.

The liability structures of listed banks remained stable, with LCBs and CCBs & RCBs saw a slight rise in proportion for deposits, and JSCBs showed a slight fall. Due to banks and central bank of listed banks fell in proportion in 1Q 2016.

The interbank liabilities of LCBs decreased by 11.77% in 1Q 2016 compared to 2015 year-end, while that of JSCBs and CCBs & RCBs remained unchanged. For CCBs & RCBs, customer deposits increased by 2.44% in 1Q 2016 compared to 2015 year-end, while the interbank liabilities and due to central bank balances showed a decrease of 3.42% in 1Q 2016.

LCBs experienced a slight fall in proportion for their bonds payable, while JSCBs and CCBs & RCBs witnessed a rise in proportion for bonds payable (see Graph 20).

Graph 20 Changes in the liabilities structure of listed banks

Note: Other liabilities mainly include financial liabilities and derivative financial liabilities at fair value

through profit or loss

80.33% 78.59%

63.17% 64.48% 64.39% 61.95%

12.31% 13.99%

25.61% 26.41%20.42% 23.84%

2.06% 2.41% 8.48% 6.53%12.65% 11.14%

5.30% 5.01%2.73% 2.58% 2.55% 3.07%

2016.3.31 2015.12.31 2016.3.31 2015.12.31 2016.3.31 2015.12.31

LCBs JSCBs CCBs & RCBs

Deposits Due to banks and central bank borrowing Bonds payable Others

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Capital Management

• Capital adequacy ratio of banks presented different trends

• Continuous issuance of different capital instruments

May 2016

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PwC

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEBPAB

HXB

BOB

NJB

NBB

BCQ

9%

10%

11%

12%

13%

14%

15%

16%

2016.03.31. 2015.12.31.

Graph 21 Capital adequacy ratios of listed banks

Capital adequacy ratio presented different trends

Note：Tier-one core capital adequacy ratios of ICBC, CCB, ABC, BOC, BOCOM AND

CMB were calculated through advance measurement approach. In addition, BOB did

not disclose its 1Q 2016 information.

ICBC

CCB

ABC

BOCBOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

BOBNJB

NBB

BCQ

8%

9%

10%

11%

12%

13%

14%

2016.03.31. 2015.12.31.

Graph 22 Tier-1 core capital adequacy ratios of listed banks

Note：Capital Adequacy Ratios of ICBC, CCB, ABC, BOC and CMB were calculated

through advance measurement approach. In addition, BOB did not disclose its 1Q

2016 information.

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2016 is the second year of parallel period since CBRC officially approved six banks, namely ICBC, CCB, ABC ,BOC, BOCOM and CMBC to implement Advanced Approach of Capital Management (the ‘ advanced approach’). During the parallel period, these six banks are supposed to comply with both the advance approach and the regulatory requirement of other approaches, and meet the minimum capital requirement.

Compared to the end of 2015, the capital adequacy ratios and core tier-1 capital adequacy ratios of the listed banks were above the regulatory red line in 1Q 2016, except for BOB which did not disclose such information in 1Q 2016.

Nine listed banks saw different degrees of rise in CAR (see Graph 21); seven increased their core tier-1 capital ratiosaccording to their own business operation (see Graph 22). The growth in CAR and core tier-1 CAR of CMBC was much higher than other listed banks.

PwC

Continuous issuance of different capital instruments

In 1Q 2016, a number of listed banks enriched their capital by issuing tier-2 capital bonds, preferred stock, common stock and other instruments. There are more capital instruments under issuance in the pipeline. This newsletter summarised such information as below:

Table 2 Issuances of capital instruments by listed banks

Banks Issuances in 2015 Issuances in 1Q 2016 Announced Issue Plane of 1Q 2016

ICBC

• Overseas issuance of tier-2 capital bonds: USD 2

billion

• Domestic issuance of preferred stock: RMB 45

million

• Domestic issuance of tier-2 capital

bonds: USD 500 million

• Overseas issuance of tier-2 capital bonds: USD

18 billion

CCB

• Overseas issuance of tier-2 capital bonds: USD 2

billion

• Domestic issuance of tier-2 capital bonds：RMB

24 million

• Overseas issuance of preferred stock: USD 3.05

billion

ABC• Domestic issuance of 400 million shares of

preferred stock: RMB 40 billion

BOC• Domestic issuance of 280 million shares of

preferred stocks: RMB 28 billion

• Overseas issuance of tier-2 capital

bonds: USD 20 billion

BOCOM• Overseas issuance of preferred stocks: USD

2.45 billion

• Domestic issuance of no more than 450 million

shares of preferred stock: less than RMB 45

billion

SPDB

• Domestic issuance of preferred stocks: RMB 15

billion

• Domestic issuance of tier-2 capital bonds: RMB

30 billion

• Domestic issuance of tier-2 capital

bonds: RMB 20 billion

• Domestic issuance of no more than 922 million

shares of A-share common stock: less than RMB

14.83 billion

CITIC• Issuance of 2.147billion shares of A-share

common stock: RMB 11.918 billion

• Domestic issuance of no more than 350 million

shares of preferred stock: less than RMB 35

billion

CMBC• Domestic issuance of tier-2 capital bonds: RMB

20 billion

• Domestic issuance of no more than 200 million

shares of preferred stock: less than RMB 20

billion

• Domestic issuance of tier-2 capital bonds: less

than RMB 50 billion

CEB• Domestic issuance of preferred stocks: RMB 20

billion

PAB• Issuance of 599 million shares of A-share

common stock: RMB 9.94 billion

• Domestic issuance of tier-2 capital

bonds: RMB 10 billion

• Issuance of no more than 200 million

shares of preferred stock: less than

RMB 20 billion

HXB• Domestic issuance of 200 million shares

of preferred stock: RMB 20 billion

BCQ

• Placement of 420 million shares of H-share

common stock, to rise the amount of HKD

3.227billion

• Domestic issuance of tier-2 capital bonds: RMB 6

billion

• Domestic issuance of non-capital financial bonds:

less than RMB 20 billion

• Domestic placement of no more than 781 million

shares of A-share common stock

CQRCB

• Domestic issuance of tier-2 capital bonds:

RMB 4 billion

• Domestic issuance of no more than 100 million

shares of preferred stock: less than RMB 10

billion

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Appendix

• Financial highlights of listed banks

• Banking and Capital Markets Contacts

• PwC Offices in China

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PwC

Financial highlights of listed banks (I)

Operating Results in 1Q 2016 ICBC CCB ABC BOC BOCOM LCBs Total

Operating income 193,889 187,944 138,046 122,819 56,033 698,731

Net interest income 118,810 107,886 101,704 79,536 34,028 441,964

Net fee & commission income 43,485 38,376 28,918 25,727 10,772 147,278

Other non-interest income 31,594 41,682 7,424 17,556 11,233 109,489

Operating expenses -96,367 -100,425 -69,162 -60,296 -31,393 -357,643

Business tax and surcharges -10,176 -8,926 -7,389 -6,765 -3,242 -36,498

Business & administration expenses -37,646 -31,891 -38,573 -30,231 -12,812 -151,153

Allowance for impairment losses -23,668 -26,701 -18,168 -15,953 -6,901 -91,391

Other business expenses -24,877 -32,907 -5,032 -7,347 -8,438 -78,601

Operating profit 97,522 87,519 68,884 62,523 24,640 341,088

Profit before tax 97,922 88,144 69,076 62,902 24,707 342,751

Income tax expense -23,018 -20,233 -14,508 -14,269 -5,476 -77,504

Net profit 74,904 67,911 54,568 48,633 19,231 265,247

Non-controlling interests 140 -41 -120 2,014 165 2,158

Profit attributable to shareholders 74,764 67,952 54,688 46,619 19,066 263,089

Large Commercial Banks (In RMB millions)

Financial Position,

as of 31 March 2016ICBC CCB ABC BOC BOCOM LCBs Total

Total assets 22,883,325 19,143,791 18,413,470 17,039,969 7,404,417 84,884,972

Loans and advances, net 12,056,705 10,560,189 8,861,208 9,272,248 3,798,965 44,549,315

Loans and advances 12,345,706 10,827,847 9,261,073 9,474,727 3,889,728 45,799,081

Less: Allowance for impairment losses -289,001 -267,658 -399,865 -202,479 -90,763 -1,249,766

Investments 5,275,444 4,364,240 4,806,986 3,593,852 1,787,899 19,828,421

Interbank assets 1,323,758 964,218 1,532,465 893,299 580,839 5,294,579

Cash & deposits with central bank 3,323,225 2,701,506 2,661,987 2,246,584 883,002 11,816,304

Other assets 904,193 553,638 550,824 1,033,986 353,712 3,396,353

Total liabilities 21,009,246 17,633,567 17,150,375 15,637,012 6,847,508 78,277,708

Deposits from customers 17,038,081 14,582,213 14,389,805 12,234,691 4,638,570 62,883,360

Interbank liabilities 2,377,744 1,714,766 1,369,812 1,841,825 1,498,126 8,802,273

Debt securities issued 311,938 381,975 336,114 288,125 294,203 1,612,355

Due to central bank 182 107,624 117,103 435,060 170,768 830,737

Other liabilities 1,281,301 846,989 937,541 837,311 245,841 4,148,983

Total owners’ equity 1,874,079 1,510,224 1,263,095 1,402,957 556,909 6,607,264

Non-controlling interests 10,899 10,819 1,494 54,800 3,245 81,257

Total equity attributable to equity

shareholders1,863,180 1,499,405 1,261,601 1,348,157 553,664 6,526,007

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Financial highlights of listed banks (II)

Operating Results in 1Q 2016 CMB CIB SPDB CITIC CMBC CEB PAB HXB JSCBs Total

Operating income 58,252 40,917 42,191 40,479 40,134 23,540 27,532 15,119 288,164

Net interest income 34,306 29,581 27,812 27,562 24,106 16,424 18,398 12,068 190,257

Net fee & commission income 19,824 7,673 11,618 11,037 14,572 6,902 8,101 2,949 82,676

Other non-interest income 4,122 3663 2,761 1880 1456 214 1033 102 15,231

Operating expenses -34,557 -20,745 -23,758 -25,738 -22,293 -12,419 -19,518 -9,180 -168,208

Business tax and surcharges -3,347 -3,327 -2,409 -2,627 -2,500 -1,721 -1,888 -1039 -18,858

Business & administration expenses -12,627 -7,305 -7,948 -10,088 -9,534 -5,882 -8,080 -5,282 -66,746

Allowance for impairment losses -18,516 -10,040 -13,285 -13,023 -9,990 -4,786 -9,550 -2,854 -82,044

Other business expenses -67 -73 -116 0 -269 -30 0 -5 -560

Operating profit 23,695 20,172 18,433 14,741 17,841 11,121 8,014 5,939 119,956

Profit before tax 23,796 20,199 18,451 14,805 17,858 11,147 8,029 5,950 120,235

Income tax expense -5,377 -4,398 -4,416 -3,602 -3,909 -2,687 -1,943 -1,488 -27,820

Net profit 18,419 15,801 14,035 11,203 13,949 8,460 6,086 4,462 92,415

Non-controlling interests 69 101 113 3 243 14 0 31 574

Profit attributable to shareholders 18,350 15,700 13,922 11,200 13,706 8,446 6,086 4,431 91,841

Joint-stock Commercial Banks (In RMB millions)

Financial Position,

as of 31 March 2016CMB CIB SPDB CITIC CMBC CEB PAB HXB JSCBs Total

Total assets 5,432,042 5,470,783 5,227,980 5,477,758 4,820,798 3,493,951 2,681,155 2,094,457 34,698,924

Loans and advances, net 2,835,496 1,825,057 2,259,817 2,603,911 2,157,006 1,589,781 1,230,985 1,087,671 15,589,724

Loans and advances 2,932,746 1,885,313 2,342,499 2,665,723 2,211,513 1,629,339 1,262,786 1,116,541 16,046,460

Less: Allowance for

impairment losses-97,250 -60,256 -82,682 -61,812 -54,507 -39,558 -31,801 -28,870 -456,736

Investments 1,452,458 2,780,505 2,057,997 1,952,003 1,063,456 1,027,113 713,650 388,075 11,435,257

Interbank assets 405,915 206,037 296,020 193,978 879,536 403,765 302,128 304,050 2,991,429

Cash & deposits with

central bank595,289 415,615 450,048 582,208 428,039 369,353 296,144 279,536 3,416,232

Other assets 142,884 243,569 164,098 145,658 292,761 103,939 138,248 35,125 1,266,282

Total liabilities 5,051,991 5,137,144 4,879,630 5,147,189 4,501,347 3,261,081 2,493,586 1,951,664 32,423,632

Deposits from customers 3,579,090 2,363,274 3,001,159 3,368,747 2,836,851 2,126,783 1,854,365 1,352,576 20,482,845

Interbank liabilities 851,805 2,018,308 1,081,543 1,263,601 1,147,928 730,630 312,850 333,025 7,739,690

Debt securities issued 353,156 556,064 600,816 340,317 187,349 305,156 247,360 160,927 2,751,145

Due to central bank 101,600 100,900 67,938 82,000 119,921 29,840 2,783 59,040 564,022

Other liabilities 166,340 98,598 128,174 92,524 209,298 68,672 76,228 46,096 885,930

Total owners’ equity 380,051 333,639 348,350 330,569 319,451 232,870 187,569 142,793 2,275,292

Non-controlling interests 911 3,809 4,730 1,949 8,601 568 0 741 21,309

Total equity attributable to

equity shareholders379,140 329,830 343,620 328,620 310,850 232,302 187,569 142,052 2,253,983

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Financial highlights of listed banks (III)

Operating Results in 1Q 2016 BOB NJB NBB BCQ CQRCB CCBs & RCBs Total

Operating income 12,702 7,848 6,076 2,477 5,608 34,711

Net interest income 9,375 5,928 4,464 2,000 4,988 26,754

Net fee & commission income 3,071 1,457 1,542 468 607 7,144

Other non-interest income 256 463 70 10 14 813

Operating expenses -6,080 -5,014 -3,659 -1,142 -2,713 -18,607

Business tax and surcharges -741 -598 -319 No data No data -1,658

Business & administration expenses -2,740 -1,454 -1,915 -571 -2,149 -8,829

Allowance for impairment losses -2,593 -2,951 -1,423 -570 -563 -8,101

Other business expenses -6 -11 -2 0 0 -19

Operating profit 6,622 2,834 2,417 1,335 2,895 16,104

Profit before tax 6,626 2,833 2,417 1,335 2,931 16,143

Income tax expense -1,332 -695 -383 -346 -725 -3,481

Net profit 5,294 2,138 2,034 989 2,206 12,661

Non-controlling interests 19 18.862 3.63 0 12.79 54

Profit attributable to shareholders 5,275 2,119 2,030 989 2,193 12,607

City Commercial Banks & Rural Commercial Banks* (In RMB millions)

Financial Position,

as of 31 March 2016BOB NJB NBB BCQ CQRCB CCBs & RCBs Total

Total assets 1,905,056 966,742 814,210 335,248 725,471 4,746,726

Loans and advances, net 793,549 269,735 265,083 130,357 273,644 1,732,368

Loans and advances No data 280,415 273,277 133,695 285,183 972,570

Less: Allowance for impairment losses No data -10,680 -8,195 -3,337 -11,539 -33,751

Investments 443,996 531,461 425,814 108,911 222,926 1,733,107

Interbank assets 480,177 53,412 30,838 41,421 126,147 731,995

Cash & deposits with central bank 154,452 89,910 72,761 48,124 88,554 453,802

Other assets 32,882 22,224 19,715 6,435 14,200 95,455

Total liabilities 1,783,054 912,401 766,877 312,869 674,966 4,450,167

Deposits from customers 1,050,687 630,683 450,823 214,560 518,565 2,865,317

Interbank liabilities 389,524 132,062 150,222 59,879 100,196 831,883

Debt securities issued 243,019 123,334 134,378 33,407 28,637 562,776

Due to central bank 46030 8,930 5,700 0 16,099 76,759

Other liabilities 53,794 17,392 25,754 5,024 11,468 113,432

Total owners’ equity 122,002 54,341 47,333 22,379 50,504 296,559

Non-controlling interests 284 406 100 0 1,558 2,349

Total equity attributable to equity

shareholders121,718 53,935 47,233 22,379 48,946 294,210

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Financial highlights of listed banks (IV)

Financial Ratios for 1Q 2016 ICBC CCB ABC BOC BOCOM

Profitability (Jan - Mar 2016)

Return on average total assets (ROA) 1.33% 1.45% 1.21% 1.15% 1.06%

Return on weighted average equity (ROE) 17.12% 18.53% 18.72% 14.77% 14.40%

Net Interest Spread (NIS) No Data 2.25% No Data No Data No Data

Net Interest Margin (NIM) 2.28% 2.40% No Data 1.97% 2.01%

Cost to income ratio 19.42% 16.97% 27.94% 24.61% 22.87%

Income Mix (Jan -Mar 2016)

Net interest income 61.28% 57.40% 73.67% 64.76% 60.73%

Fee and commission income 22.43% 20.42% 20.95% 20.95% 19.22%

Other non-interest income 16.29% 22.18% 5.38% 14.29% 20.05%

Asset Quality (As of 31 Mar, 2016)

Non performing loan (NPL) balance, in millions 204,659 176,424 221,623 135,829 59,902

NPL ratio 1.66% 1.63% 2.39% 1.43% 1.54%

Allowance to total loans ratio 2.34% 2.47% 4.32% 2.14% 2.33%

Provision coverage ratio 141.21% 151.71% 180.43% 149.07% 151.52%

Capital Adequacy (As of 31 Mar, 2016)

Common Equity Tier 1 capital adequacy ratio 12.87% 13.46% 10.21% 11.25% 11.08%

Tier 1 capital adequacy ratio 13.45% 13.65% 10.90% 12.20% 11.39%

Capital adequacy ratio 14.66% 15.55% 13.11% 14.07% 13.22%

Total equity to total assets ratio 8.19% 7.89% 6.86% 8.23% 7.52%

Risk-weighted assets to total assets ratio No Data No Data 62.60% No Data 65.46%

Financial Ratios for 1Q 2016 CMB CIB SPDB CITIC CMBC CEB PAB HXB

Profitability (Jan - Mar 2016)

Return on average total assets (ROA) 1.35% 1.17% 1.09% 0.85% 1.19% 1.02% 0.94% 0.87%

Return on weighted average equity (ROE) 19.84% 21.24% 18.00% 13.94% 17.94% 16.25% 14.01% 14.80%

Net Interest Spread (NIS) 2.49% No Data No Data No Data No Data No Data 2.76% No Data

Net Interest Margin (NIM) 2.62% No Data No Data 2.13% 2.11% No Data 2.87% No Data

Cost to income ratio 21.68% 17.85% 18.84% 24.92% 23.76% 24.99% 29.35% 34.94%

Income Mix (Jan -Mar 2016)

Net interest income 58.89% 72.30% 65.92% 68.09% 60.06% 69.77% 66.82% 79.82%

Fee and commission income 34.03% 18.75% 27.54% 27.27% 36.31% 29.32% 29.42% 19.51%

Other non-interest income 7.08% 8.95% 6.54% 4.64% 3.63% 0.91% 3.75% 0.67%

Asset Quality (As of 31 Mar, 2016)

Non performing loan (NPL) balance, in millions 53,066 29,637 37,430 37,235 35,829 24,936 19,750 17,083

NPL ratio 1.81% 1.57% 1.60% 1.40% 1.62% 1.53% 1.56% 1.53%

Allowance to total loans ratio 3.32% 3.20% 3.53% 2.32% 2.46% 2.43% 2.52% 2.59%

Provision coverage ratio 183.26% 203.31% 220.90% 166.01% 152.13% 158.64% 161.02% 169.00%

Capital Adequacy (As of 31 Mar, 2016)

Common Equity Tier 1 capital adequacy ratio 12.13% 8.69% 8.37% 8.91% 9.36% 9.09% 8.70% 8.89%

Tier 1 capital adequacy ratio 12.13% 9.42% 9.23% 8.94% 9.38% 9.95% 9.81% 10.35%

Capital adequacy ratio 13.94% 11.34% 11.89% 11.39% 11.55% 11.61% 11.61% 12.22%

Total equity to total assets ratio 7.00% 6.10% 6.66% 6.03% 6.63% 6.66% 7.00% 6.82%

Risk-weighted assets to total assets ratio No Data 64.30% 66.57% 67.02% No Data 66.35% 66.97% 65.85%

Large Commercial Banks

Joint-stock Commercial Banks

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Financial highlights of listed banks (V)

Financial Ratios for 1Q 2016 BOB NJB NBB BCQ CQRCB

Profitability (Jan - Mar 2016)

Return on average total assets (ROA) 1.13% 0.97% 1.06% 1.21% 1.22%

Return on weighted average equity (ROE) 18.48% 17.60% 19.68% 18.23% 17.76%

Net Interest Spread (NIS) No Data 2.42% 2.25% No Data No Data

Net Interest Margin (NIM) No Data 2.57% 2.20% 2.53% 2.96%

Cost to income ratio 21.57% 18.53% 31.52% 23.06% 38.33%

Income Mix (Jan -Mar 2016)

Net interest income 73.81% 75.53% 73.48% 80.74% 88.94%

Fee and commission income 24.18% 18.57% 25.37% 18.88% 10.82%

Other non-interest income 2.02% 5.90% 1.15% 0.38% 0.24%

Asset Quality (As of 31 Mar, 2016)

Non performing loan (NPL) balance, in millions No Data 2,082 2,500 1,484 2,703

NPL ratio 1.11% 0.83% 0.91% 1.11% 0.95%

Allowance to total loans ratio 3.20% 3.57% 3.00% 2.50% 4.05%

Provision coverage ratio 286.56% 430.88% 327.84% 224.90% 426.89%

Capital Adequacy (As of 31 Mar, 2016)

Common Equity Tier 1 capital adequacy ratio No Data 8.21% 8.50% 10.42% 9.85%

Tier 1 capital adequacy ratio No Data 9.03% 9.47% 10.42% 9.86%

Capital adequacy ratio No Data 13.15% 12.39% 12.22% 12.02%

Total equity to total assets ratio 6.40% 5.62% 5.81% 6.68% 6.96%

Risk-weighted assets to total assets ratio No Data 61.88% No Data No Data No Data

City Commercial Banks & Rural Commercial Banks

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Banking and Capital Markets Contacts

Assurance Advisory Tax

Raymond Yung – Beijing James Chang – Beijing Oliver Kang – Beijing

Tel: +86 (10) 6533 2121 Tel: +86 (10) 6533 2755 Tel：+86 (10) 6533 3012

raymond.yung@cn.pwc.com james.chang@cn.pwc.com oliver.j.kang@cn.pwc.com

Margarita Ho – Beijing Addison Everett – Beijing Matthew Wong – Shanghai

Tel: +86 (10) 6533 2368 Tel: +86 (10) 6533 2345 Tel: +86 (21) 2323 3052

margarita.ho@cn.pwc.com addison.l.everett@cn.pwc.com matthew.mf.wong@cn.pwc.com

Richard Zhu – Beijing William Gee – Beijing Florence Yip – Hong Kong

Tel: +86 (10) 6533 2236 Tel：+86 (10) 6533 2269 Tel：+852 2289 1833

richard.y.zhu@cn.pwc.com william.gee@cn.pwc.com florence.kf.yip@hk.pwc.com

Jimmy Leung – Shanghai William Yung – Shanghai

Tel: +86 (21) 2323 3355 Tel：+86 (21) 2323 1984

jimmy.leung@cn.pwc.com william.sw.yung@cn.pwc.com

Michael Hu －Shanghai Matthew Phillips – Hong Kong Assurance – Risk & Quality

Tel: +86 (21) 2323 2718 Tel: +852 2289 2303

michael.l.hu@cn.pwc.com matthew.phillips@hk.pwc.com Tracy Chen – Shanghai

Tel: +86 (21) 2323 3070

Shirley Yeung – Guangzhou Chris Chan – Hong Kong tracy.yh.chen@cn.pwc.com

Tel：+86 (20) 3819 2218 Tel：+852 2289 2824

shirley.yeung@cn.pwc.com chris.st.chan@hk.pwc.com Nigel Dealy – Hong Kong

Tel: +852 2289 1221

Charles Chow – Shenzhen nigel.dd.dealy@hk.pwc.com

Tel: +86 (755) 8261 8988

charles.s.chow@cn.pwc.com

May 2016

40

Banking Newsletter

PwC

PwC Offices in China

Beijing Shanghai Hong Kong26/F, Office Tower A, Beijing Fortune Plaza 11/F, PricewaterhouseCoopers Center, 2 Corporate Avenue 22/F, Prince's Building

7 Dongsanhuan Zhong Road, Chaoyang District 202 Hu Bin Road, Huangpu District Central, Hong Kong

Beijing, P.R.C Shanghai, P.R.C Tel: +852 2289 8888

Zip: 100020 Zip: 200021 Fax: +852 2810 9888

Tel: +86 (10) 6533 8888 Tel: +86 (21) 2323 8888

Fax: +86 (10) 6533 8800 Fax: +86 (21) 2323 8800

Shenzhen Guangzhou Tianjin34/F, Tower A, Kingkey100 18/F, PricewaterhouseCoopers Centre 36/F, The Exchange Tower Two,

5016 Shennan East Road, Luohu District 10 Zhujiang Xi Road, Pearl River New City, Tianhe District 189 Nanjing Road, Heping District

Shenzhen, P.R.C Guangzhou, P.R.C Tianjin, P.R.C.

Zip: 518001 Zip: 510623 Zip: 300051

Tel: +86 (755) 8261 8888 Tel: +86 (20) 3819 2000 Tel: +86 (22) 2318 3333

Fax: +86 (755) 8261 8800 Fax: +86 (20) 3819 2100 Fax: +86 (22) 2318 3300

Dalian Qingdao Hangzhou8F Senmao Building 37/F, Tower One, HNA IMC Centre Unit 3205, Canhigh Center

147 Zhongshan Road, Xigang District 234 Yanan Third Road, Shinan District 208 North Huancheng Rd

Dalian, P.R.C Qingdao, P.R.C Hangzhou, P.R.C

Zip: 116011 Zip: 266071 Zip: 310006

Tel: +86 (411) 8379 1888 Tel: +86 (532) 8089 1888 Tel: +86 (571) 2807 6388

Fax: +86 (411) 8379 1800 Fax: +86 (532) 8089 1800 Fax: +86 (571) 2807 6300

Chongqing Ningbo XiamenRoom 1905, 19/F Metropolitan Tower Room 1203, Tower E, Ningbo International Financial Center Unit B, 11/F, International Plaza

68 Zou Rong Road 268 Min An Road East, Jiangdong District 8 Lujiang Road, Siming District

Chongqing, P.R.C. Ningbo, P.R.C Xiamen, P.R.C.

Zip: 400010 Zip: 315040 Zip: 361001

Tel: +86 (23) 6393 7888 Tel: +86 (574) 8187 1788 Tel: +86 (592) 210 7888

Fax: +86 (23) 6393 7200 Fax: +86 (574) 8187 1700 Fax: +86 (592) 210 8800

Suzhou Nanjing Xi'an

Room 1501, Genway Tower Unit 12A01, Nanjing International Centre7/F, Block D, Chang'an Metropolis Center

188 Wang Dun Road, Suzhou Industrial Park 201 Zhongyang Road, Gulou District 88 Nanguan Street

Suzhou, P.R.C Nanjing, P.R.C Xi'an, P.R.C

Zip: 215028 Zip: 210009 Zip: 710068

Tel: +86 (512) 6273 1888 Tel: +86 (25) 6608 6288 Tel: +86 (29) 8469 2688

Fax: +86 (512) 6273 1800 Fax: +86 (25) 6608 6210 Fax: +86 (29) 8469 2600

Macau Wuhan Shenyang29/F, Bank of China Building Unit 04, 41/F Wuhan Wanda Centre Room 705, EnterpriseSquare Tower A

323 Avenida Doutor Mario Soares, Macau 96 Linjiang Avenue, Jiyuqiao, Wuchang District 121 Qingnian Avenue, Shenhe District

Tel: +853 8799 5111 Wuhan, P.R.C Shenyang, P.R.C

Fax: +853 8799 5222 Zip: 430060 Zip: 110013

Tel: +86 (27) 5974 5818 Tel: +86 (24) 2332 1888

Fax: +86 (27) 5974 5800 Fax: +86 (24) 2326 3888

May 2016

41

Banking Newsletter

www.pwccn.com

This content is for general information purposes only, and should not be used as a substitute for consultation with professional

advisors.

© 2016 PricewaterhouseCoopers Zhong Tian LLP. All rights reserved. PwC refers to the China member firm, and may sometimes

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